(2)
| Amounts reflect the grant date fair value of the RSU awards granted to the named executive officers, as computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, but excluding any impact of estimated forfeiture rates as required by SEC regulations, rather than the amounts paid to or realized by the named individual. We provide information regarding the assumptions used to calculate the value of all equity awards granted to executives in 2023 in Note 14 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 20202023. With respect to Drs. Abdou and December 31, 2021:Sherif Abdou
Chief Executive Officer
| | | 2021 | | | 750,000 | | | 750,000 | | | 81,081(4) | | | 2,824 | | | 1,583,905 | | 2020 | | | 743,075 | | | 750,000 | | | | | | 3,160 | | | 1,496,235 |
| | | | | | | | | | | | | | | | | | | Amir Bacchus
Chief Medical Officer
| | | 2021 | | | 500,000 | | | 500,000 | | | 56,474(4) | | | 1,927 | | | 1,058,401 | | 2020 | | | 514,615 | | | 500,000 | | | | | | 1,615 | | | 1,016,230 |
| | | | | | | | | | | | | | | | | | | Eric Atkins(5)
Chief Financial Officer
| | | 2021 | | | 350,000 | | | 175,000 | | | 1,019,315 | | | 538 | | | 1,544,853 |
(1)
| Amounts reflect annual discretionary bonuses paid to the named executive officers for services performed in 2021, paid in 2022. |
(2)
| Amounts reflect the aggregate grant date fair value of Incentive Units in P3 Health Group Holdings, LLC granted under the 2017 Management Incentive Plan to the named executive officers during the applicable year computed in accordance with FASB ASC Topic 718. For additional information regarding the awards granted to our named executive officers, please see Note 18 “Capitalization and Management Incentive Units” and Note 19 “Share-Based Compensation” in our consolidated statements included in our Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Form 10-K”) for a discussion of the relevant assumptions used in calculating this amount. |
(3)
| Amounts reflect Company-paid term life insurance premiums. |
(4)
| Amounts reflect the incremental fair value associated with the time-vesting Incentive Units held by Sherif Abdou, M.D. and Amir Bacchus, M.D. that vested and were converted into the right to receive a portion of the consideration upon the closing of the merger by and between FAC Merger Sub LLC and P3 Health Group Holdings, LLC effected as a part of the Business Combinations (the “P3 Merger”), as computed in accordance with FASB ASC Topic 718. |
(5)
| On October 14, 2022, Eric Atkins resigned as Chief Financial Officer of the Company, effective November 1,Bacchus, amounts in 2023 represent the incremental additional value of a grant of fully-vested restricted stock units (“RSUs”) that were granted in satisfaction of the second installment of transaction bonuses described in their transaction bonus agreements dated May 2022. |
Narrative to Summary Compensation Table
2021 Salaries
In 2021, the named executive officers received an annual base salary to compensate them for services rendered to our company. The base salary payable to each named executive officer is intended to provide a fixed component of compensation reflecting the executive’s skill set, experience, role and responsibilities. The 2021 annual base salaries for our named executive officers were $750,000 for Sherif Abdou, M.D., $500,000 for Amir Bacchus, M.D., and $350,000 for Eric Atkins. The actual base salaries(3)
| Amounts represent bonuses earned by our named executive officers for services in 2021 are set forth above inNEOs under our annual bonus program. Please see the Summary Compensation Table in the column entitled “Salary”.2021 Bonuses
Our named executive officers were eligible to earn cash bonuses for work performed in calendar year 2021, as determined by our Board (or a subcommittee thereof). For 2021, Sherif Abdou, M.D. and Amir Bacchus, M.D. and Eric Atkins were eligible to receive annual target bonuses of 100%, 100% and 50%, respectively, of their respective base salaries. Based on a review of Company performance for 2021 and each named executive officer’s individual performance and contributions to the Company’s success, the Board approved bonuses equal to 100% of each named executive officer’s respective 2021 target bonus opportunity.
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The actual cash bonus amounts awarded to our named executive officers for 2021 performance are set forth above in the Summary Compensation Table in the column entitled “Bonus.”
Equity-Based Compensation
2017 Management Incentive Plan
Prior to the P3 Merger, we maintained the P3 Health Group Holdings, LLC Amended and Restated 2017 Management Incentive Plan (the “2017 Plan”) which provided our service providers the opportunity to acquire a proprietary interest in our success. Awards that were granted under the 2017 Plan were intended to qualify as profits interests within the meaning of Internal Revenue Service Revenue Procedures 93-27 and 2001-43 (“Incentive Units”). Following the P3 Merger and the effectivenessdescription of the P3 Health Partners Inc. 2021 Incentive Award Plan (the “2021 Plan”), the 2017 Plan terminated and no further awards will be madeannual bonus program under the plan. In connection with the P3 Merger, each Incentive Unit that was outstanding immediately prior to the effective time of the P3 Merger and that was vested (after taking into account any accelerated vesting that occurred in connection with the P3 Merger) was canceled and converted into the right to receive a portion of the Merger consideration, which consisted of P3 LLC Units and, in certain cases, cash. Each outstanding Incentive Unit that was subject to time-based vesting but had not vested immediately prior to the effective time of the P3 Merger was converted into the right to receive a portion of the Merger consideration, which Merger consideration remained subject to the original vesting conditions. Each outstanding Incentive Unit that was subject to performance-vesting requirements that were not achieved in connection with the P3 Merger was forfeited without consideration. For each P3 LLC Unit held by the named executive officer (whether vested or unvested), the officer was also entitled to a share of Class V common stock on a one-for-one basis.
In 2021, we awarded time-vesting Incentive Units to Eric Atkins under the 2017 Plan. Eric Atkins’ 2021 grant (215,000 Incentive Units) is subject to vesting 20% annually on each anniversary of January 20, 2021, provided that Eric Atkins remains employed through such vesting date, such that all time-vested units will be vested as of January 20, 2026. In addition, under the terms of Eric Atkins’ grant agreement, if his employment is terminated at any time other than for “cause,” then the Incentive Units that would have vested on the next vesting date (had he remained employed) will vest on a pro-rated basis (based on the number of months he was employed between vesting dates). Upon the occurrence of a Sale of“2023 Bonuses” below.
|
(4)
| Mr. Kavthekar received 401(k) matching contributions from the Company (as defined in Eric Atkins’ award agreement), if Eric Atkins remains employed by the Company as of the date$4,154 and cellphone reimbursement of the sale, 50% of his unvested Incentive Units would become vested.$900. |
Narrative to Summary Compensation Table In 2023, the named executive officers received an annual base salary to compensate them for services rendered to our company. The base salary payable to each named executive officer is intended to provide a fixed component of compensation reflecting the executive’s skill set, experience, role and responsibilities. The 2023 annual base salaries for Dr. Abdou, Dr. Bacchus and Mr. Kavthekar were $800,000, $600,000 and $500,000, respectively. In August 2023, Mr. Kavthekar’s annual base salary was increased from $450,000 to $500,000, effective August 6, 2023. Our named executive officers were eligible to earn cash bonuses based upon the achievement of pre-established performance goals for 2023, including goals related to revenue, operating expense and Adjusted EBITDA achievement. The 2023 target bonuses for Drs. Abdou and Bacchus was 100% of their respective annual base salaries and for Mr. Kavthekar was 75% of his annual base salary. Based on the achievement of these goals, our named executive officers earned a bonus equal to 30% of their respective target bonus amounts. TABLE OF CONTENTS Equity-Based Compensation We maintain the 2021 Incentive Award Plan (the “2021 Plan”), in order to facilitate the grant of cash and equity incentives to directors, employees (including our named executive officers) and consultants of our company and certain of our affiliates and to enable us to obtain and retain services of these individuals, which is essential to our long-term success. In 2023, we granted Mr. Kavthekar 750,000 RSUs that vest over a four-year period following the grant date, in equal annual installments, subject to Mr. Kavthekar’s continued employment through the applicable vesting date. Drs. Abdou and Bacchus received fully-vested RSUs in satisfaction of the second installment of their transaction bonuses described in their transaction bonus agreements dated May 2022. All of our full-time employees, including our named executive officers, are eligible to participate in our health and welfare plans. In addition, we maintain a 401(k) retirement savings plan for our employees, including certain of our named executive officers, who satisfy certain eligibility requirements. Our named executive officers who are employees are eligible to participate in the 401(k) plan on the same terms as other full-time employees. The Internal Revenue Code allows eligible employees to defer a portion of their compensation, within prescribed limits, on a pre-tax basis through contributions to the 401(k) plan. Currently, we match contributions made by participants in the 401(k) plan up to a specified percentage of the employee contributions. We generally do not provide perquisites to our named executive officers, and we do not view perquisites or other personal benefits as a significant component of our executive compensation program. We do not make gross-up payments to cover our named executive officers’ personal income taxes that may pertain to any of the compensation or perquisites paid or provided by our company. Outstanding Equity Awards at Fiscal Year-End The following table summarizes information regarding the outstanding equity awards held by each named executive officer as of December 31, 2023. Sherif Abdou | | | — | | | — | | | — | | | — | | | — | | | — | Amir Bacchus | | | — | | | — | | | — | | | — | | | — | | | — | Atul Kavthekar | | | 150,000(3) | | | 450,000(3) | | | 3.70 | | | 12/12/2032 | | | 750,000(4) | | | 1,057,500 |
Upon the closing of the P3 Merger and pursuant to action taken by the Board, all of the time-vesting Incentive Units held by Sherif Abdou, M.D. and Amir Bacchus, M.D. vested and were converted into the right to receive a portion of the P3 Merger consideration. In addition, in connection with the P3 Merger, 50% of Eric Atkins’ unvested Incentive Units (107,500) vested and converted into 203,160 P3 LLC Units and shares of Class V common stock. The remaining 50% of Eric Atkins’ Incentive Units (107,500) converted into 203,160 unvested P3 LLC Units and Class V common stock, of which 81,264 vested on January 20, 2022, 81,264 shares will vest on January 20, 2023 and the remaining 40,632 will vest on January 20, 2024, subject, in each case, to Eric Atkins’ continued employment through such date.
Sherif Abdou, M.D. and Amir Bacchus, M.D. did not receive any incentive(1)
| Outstanding equity awards in 2021. All of the incentive equity awards held by our named executive officers as of December 31, 2021 are further described below in the section entitled, “—Outstanding Equity Awards at Fiscal Year-End.”2021 Incentive Award Plan
In connection with the Business Combinations, the Company’s Board adopted, and its stockholders approved, the 2021 Plan, in order to facilitate the grant of cash and equity incentives to directors, employees (including our named executive officers) and consultants of our company and certain of our affiliates and to enable us to obtain and retain services of these individuals, which is essential to our long-term success. The 2021 Plan became effective on December 3, 2021.
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Benefits and Perquisites
Health and Welfare Plans
In 2021, the named executive officers participated in a 401(k) retirement savings plan maintained by P3. The Internal Revenue Code allows eligible employees to defer a portion of their compensation, within prescribed limits, on a pre-tax basis through contributions to the 401(k) plan. In 2021, the Company did not make matching contributions under the 401(k) plan.
In 2021, the named executive officers participated in standard health and welfare plans maintained by P3.
We believe the benefits described above are necessary and appropriate to provide a competitive compensation package to our named executive officers.
No Tax Gross-Ups
We do not make gross-up payments to cover our named executive officers’ personal income taxes that may pertain to any of the compensation or perquisites paid or provided by our company.
Outstanding Equity Awards at Fiscal Year-End
The following table summarizes information regarding the outstanding equity awards held by each named executive officer as of December 31, 2021.
Sherif Abdou
| | | —
| | | —
| Amir Bacchus
| | | —
| | | —
| Eric Atkins
| | | 203,160(2)
| | | 1,430,246
|
(1)
| There is no public market for the P3 LLC Units, which are exchangeable for shares of Class A common stock of the Company on a one-for-one basis. For purposes of this disclosure, we have valued the P3 LLC Units based on the closing price of our Class A common stock of $7.04 per share on December 31, 2021. |
(2)
| Represents P3 LLC Units that were converted in connection with the P3 Merger from the unvested Incentive Units that had been awarded to the executive on March 1, 2021, and that remained unvested as of December 31, 2021. In connection with the P3 Merger, 50% of Eric Atkins’ unvested Incentive Units (107,500) vested and converted into 203,160 P3 LLC Units and shares of Class V common stock. The remaining 50% of Eric Atkins’ unvested Incentive Units (107,500) converted into 203,160 unvested P3 LLC Units and shares of Class V common stock, of which 81,264 P3 LLC Units and Class V Units vested on January 20, 2022, 81,264 shares will vest on January 20, 2023 and the remaining 40,632 will vest on January 20, 2024, in each case subject to Eric Atkins’ continued employment through such date. |
Executive Compensation Arrangements
We have entered into offers of employment letters or employment agreements with each of our named executive officers. The material terms of these agreements are described below.
Sherif Abdou, M.D. and Amir Bacchus, M.D. 2017 Employment Agreements
Each of our founders, Sherif Abdou, M.D. and Amir Bacchus, M.D., was party to an employment agreement that was entered into in April 2017 (collectively, the “2017 Employment Agreements”), which were in effect through 2021. We entered into new employment agreements with Sherif Abdou, M.D. and Amir Bacchus, M.D. in May 2022. The following describes the 2017 Employment Agreements as they were in effect in 2021.
Pursuant to their respective agreements, Sherif Abdou, M.D. served as our Chief Executive Officer and President and Amir Bacchus, M.D. served as our Chief Medical Officer. The 2017 Employment Agreements provided for a base salary ($600,000 in the case of Sherif Abdou, M.D. and $400,000 in the case of Amir Bacchus, M.D.) and eligibility to earn an annual bonus (100% of base salary). Each of Sherif Abdou, M.D. and Amir Bacchus, M.D. was entitled to participate in any employee benefit plan adopted by the Company or its affiliates, and we agreed to maintain short-term and long-term disability insurance coverage for Sherif Abdou, M.D. and Amir Bacchus, M.D. during the term of their respective employment.
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The 2017 Employment Agreements included customary restrictive covenants, including confidentiality, non-disparagement, non-competition (36 months post-employment), and employee non-solicitation and noninterference covenants (each 36 months post-employment). The term of the noncompetition covenant would have been reduced from 36 months to zero months post-employment if the executive’s employment would have been terminated without cause (as defined in the applicable agreement).
Under the terms of the 2017 Employment Agreements, if the employment of Sherif Abdou, M.D. or Amir Bacchus, M.D. was terminated by us without cause, then, in addition to the accrued benefits through the date of termination, the executive would have been entitled to receive continued base salary payments for a period of 12 months (to be paid according to the Company’s normal payroll cycle). In the event Drs. Abdou or Bacchus terminate his own employment with “cause” (as defined in the Employment Agreements), then, in addition to the accrued benefits through the date of termination of employment, the executive would have been entitled to receive continued base salary payments for a period of 18 months.
Sherif Abdou, M.D. and Amir Bacchus, M.D. 2022 Employment Agreements
We entered into new employment agreements with each of Sherif Abdou, M.D. and Amir Bacchus, M.D. in May 2022, which superseded the 2017 Employment Agreements (collectively, the “2022 Employment Agreements”). The initial term of the 2022 Employment Agreements will end on January 1, 2025, and the term automatically will renew for successive one-year terms unless advance written notice of non-renewal is given by either party (such term, the “employment term”). In addition, during the employment term, for so long as Sherif Abdou, M.D. or Amir Bacchus, M.D. serve as Chief Executive Office or Chief Medical Officer, respectively, the Company will nominate the executive for re-election as a member of the board of directors. The 2022 Employment Agreements provide for a base salary ($800,000 in the case of Sherif Abdou, M.D. and $600,000 in the case of Amir Bacchus, M.D.) and eligibility to earn an annual bonus (100% of base salary in the case of each of Sherif Abdou, M.D. and Amir Bacchus, M.D.). Each of Sherif Abdou, M.D. and Amir Bacchus, M.D. are entitled to participate in any employee benefit plan that the Company and its affiliates adopts, and the Company has agreed to maintain short-term and long-term disability insurance coverage for Sherif Abdou, M.D. and Amir Bacchus, M.D. during the term of their respective employment.
The 2022 Employment Agreements include customary confidentiality and mutual non-disparagement provisions, as well as a standard non-compete restriction effective during employment and for 18 months thereafter and service provider/customer non-solicitation restrictions effective during employment and for 24 months thereafter.
Under the terms of the 2022 Employment Agreements, if the employment of Sherif Abdou, M.D. or Amir Bacchus, M.D. is terminated by the Company without “cause” or by the executive for “cause” (each, as defined in the 2022 Employment Agreements), then, in addition to any accrued benefits through the date of termination, the executive will be entitled to receive the following severance payments and benefits, subject to the executive’s and the Company’s timely execution (and non-revocation) of a mutual release of claims: (i) cash severance in an aggregate amount equal to one-and-one-half times the sum of the executive’s (a) annual base salary then in effect and (b) target annual bonus amount, payable in equal monthly installments over an 18-month period following the date of termination; and (ii) Company-subsidized COBRA premiums for up to 18 months. If the executive’s employment is terminated without “cause” by the executive, then, in addition to any accrued benefits through the date of termination, the executive will be entitled to receive cash severance in an aggregate amount equal to one-and-one-half times the sum of the executive’s (i) annual base salary then in effect and (ii) target annual bonus amount, payable in equal monthly installments over an 18-month period following the date of termination. In addition, if the executive’s employment is terminated due to his death, then, in addition to any accrued benefits through the date of termination, the executive will be entitled to receive a pro-rated portion of his target bonus for the year of termination.
Sherif Abdou, M.D. and Amir Bacchus, M.D. Transaction Bonus Agreements
In connection with the consummation of the Business Combination, the Board of the Company approved Transaction Bonus Agreements with each of Sherif Abdou, M.D. and Amir Bacchus, M.D. in May 2022. The Transaction Bonus Agreements provide for the payment of bonuses in an aggregate amount equal to $6,300,000 (for Sherif Abdou, M.D.) and $3,700,000 (for Amir Bacchus, M.D.)(each, a “Transaction Bonus”).
Pursuant to the Transaction Bonus Agreements, the first installment of the Transaction Bonus ($3,300,000 for Sherif Abdou, M.D. and $1,700,000 for Amir Bacchus, M.D.) was paid within five days
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following the execution of the Transaction Bonus Agreement. The second installment of the Transaction Bonus ($3,000,000 for Sherif Abdou, M.D. and $2,000,000 for Amir Bacchus, M.D.) will be paid on December 15, 2022. The second installment will not be paid if the executive’s employment is terminated for “cause” by the Company or without “cause” by the executive prior to the payment date. If the executive fails to comply with the Transaction Bonus Terms (as described below), the executive will be required to repay the Transaction Bonus (or forfeit any portion of the Transaction Bonus that has not yet been paid).
The Transaction Bonus Terms include: (i) a restriction on the executive’s ability to offer, sell, or announce an intention to dispose of any shares of the Company’s Class A common stock until the closing of the Company’s first underwritten offering and sale of common stock (the “First Secondary Sale”); (ii) a requirement that, following the First Secondary Sale, the executive will only sell shares of the Company’s Class A common stock pursuant to a customary 10b5-1 plan; and (iii) a limitation on the number of shares of Class A common stock of the executive may sell under such 10b5-1 plan. These restrictions apply toCompany.
|
(2)
| Amounts are calculated based on multiplying the number of shares shown in the table by the per share closing price of our Class A common stock held directly byon December 29, 2023 (i.e., the executive or in a trust established by the executive.Eric Atkins Offer Letter Agreement
We entered into an offer letter agreement with Eric Atkins on January 13, 2021 (the “Atkins Offer Letter”). Pursuant to the termslast trading day of his agreement, Eric Atkins serves as our Chief Financial Officer and reports to the Chief Executive Officer. The Atkins Offer Letter provides for a starting annual salary of $350,000 and a target bonus of 50% if target bonus goals are met. In addition, the Atkins Offer Letter provides for the grant of time-vesting Incentive Units, as described in the section entitled, “—Equity-Based Compensation.”
Eric Atkins is entitled to participate in any employee benefit plan that the Company adopts. The Atkins Offer Letter provides for an employee non-solicitation covenant that continues for a 24 month period following the termination of Eric Atkins’ employment, as well as a confidentiality covenant. The Atkins Offer Letter also provides that if Eric Atkins’ employment is terminated by the Company for any reason other than for “cause,” a portionlast completed fiscal year), which was $1.41.
|
(3)
| Twenty-five percent (25%) of the unvested Incentive Units will becomeoption vested in connection with such termination, as discussed in more detail inand became exercisable on December 12, 2023, and the section entitled, “—Equity-Based Compensation.” As described above, in connection with the P3 Merger, a portion of the unvested Incentive Units was converted to unvested P3 LLC Units (and paired with shares of Class V common stock) thatremaining seventy-five percent (75%) will vest and become exercisable in equal annual installments on each of December 12, 2024, 2025 and 2026, subject to Mr. Kavthekar’s continued employment through the applicable vesting date. |
(4)
| These RSUs will vest in equal annual installments on each of August 2, 2024, 2025, 2026 and 2027, subject to Mr. Kavthekar’s continued employment through the applicable vesting date. |
TABLE OF CONTENTS Executive Compensation Arrangements We have entered into offers of employment letters or employment agreements with each of our named executive officers. The material terms of these agreements are described below. Sherif Abdou, M.D. and Amir Bacchus, M.D. 2022 Employment Agreements We entered into employment agreements with each of Drs. Abdou and Bacchus in May 2022, which superseded their earlier employment agreements (collectively, the “2022 Employment Agreements”). The initial term of the 2022 Employment Agreements will end on January 1, 2025, and the term automatically will renew for successive one-year terms unless advance written notice of non-renewal is given by either party (such term, the “employment term”). In addition, during the employment term, for so long as Dr. Abdou or Dr. Bacchus serve as Chief Executive Office or Chief Medical Officer, respectively, the Company will nominate the executive for re-election as a member of the board of directors. The 2022 Employment Agreements provide for a base salary ($800,000 in the case of Dr. Abdou and $600,000 in the case of Dr. Bacchus) and eligibility to earn an annual bonus (100% of base salary in the case of each of Drs. Abdou or Bacchus). Each of Drs. Abdou and Bacchus are entitled to participate in any employee benefit plan that the Company and its affiliates adopts, and the Company has agreed to maintain short-term and long-term disability insurance coverage for Drs. Abdou and Bacchus during the term of their respective employment. The 2022 Employment Agreements include customary confidentiality and mutual non-disparagement provisions, as well as a standard non-compete restriction effective during employment and for 18 months thereafter and service provider/customer non-solicitation restrictions effective during employment and for 24 months thereafter. Under the terms of the 2022 Employment Agreements, if the employment of either of Drs. Abdou or Bacchus is terminated by the Company without “cause” or by the executive for “cause” (each, as defined in the 2022 Employment Agreements), then, in addition to any accrued benefits through the date of termination, the executive will be entitled to receive the following severance payments and benefits, subject to the executive’s and the Company’s timely execution (and non-revocation) of a mutual release of claims: (i) cash severance in an aggregate amount equal to one-and-one-half times the sum of the executive’s (a) annual base salary then in effect and (b) target annual bonus amount, payable in equal monthly installments over an 18-month period following the date of termination; and (ii) Company-subsidized COBRA premiums for up to 18 months. If the executive’s employment is terminated without “cause” by the executive, then, in addition to any accrued benefits through the date of termination, the executive will be entitled to receive cash severance in an aggregate amount equal to one-and-one-half times the sum of the executive’s (i) annual base salary then in effect and (ii) target annual bonus amount, payable in equal monthly installments over an 18-month period following the date of termination. In addition, if the executive’s employment is terminated due to his death, then, in addition to any accrued benefits through the date of termination, the executive will be entitled to receive a pro-rated portion of his target bonus for the year of termination. Atul Kavthekar Letter Agreement In connection with his appointment as Chief Financial Officer, on November 27, 2022, the Company entered into an offer letter agreement with Mr. Kavthekar (the “Kavthekar Letter Agreement”), effective as of December 12, 2022. Under the Kavthekar Letter Agreement, Mr. Kavthekar’s annual base salary was $450,000 and his target annual bonus was 50% of his base salary. In August 2023, Mr. Kavthekar’s annual base salary was increased to $500,000 and his target annual bonus was increased to 75% of his base salary, effective August 6, 2023. In addition, pursuant to the Kavthekar Letter Agreement, Mr. Kavthekar received a $50,000 signing bonus on the six month anniversary of his start date (the “Signing Bonus”). The Signing Bonus is subject to repayment by Mr. Kavthekar on a pro-rata basis if his employment terminates for any reason before the 18-month anniversary of his start date. Pursuant to his letter agreement, Mr. Kavthekar also was granted an option to purchase 600,000 shares of Class A common stock of the Company, of which 25% vested on the first anniversary of his start date, and the remaining 75% will vest in equal annual installments over the next three years on each anniversary thereafter, subject to Mr. Kavthekar’s continued employment through the applicable vesting date. In addition, if Mr. Kavthekar’s employment is terminated without cause, he will be entitled to receive a lump-sum severance payment equal to six months of his base salary, subject to his execution and non-revocation of a general release of claims and continued compliance with restrictive covenants. TABLE OF CONTENTS Pay Versus Performance Table As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K, we are providing the following information regarding executive pay and performance. The table below shows pay both as reported in the Summary Compensation Table (“Summary Compensation Table Total Pay”) for the applicable fiscal year and as “compensation actually paid” (or “CAP”) for our principal executive officer (“CEO”) and as an average of all of our other named executive officers (“Non-CEO NEOs”) for the applicable fiscal year. Both Summary Compensation Table Total Pay and CAP are calculated in accordance with the requirements of Regulation S-K and may differ substantially from the manner in which the Compensation Committee makes decisions regarding executive pay. The following table sets forth information concerning the compensation of our CEO and other named executive officers for each of the fiscal years ended December 31, 2022 and 2023, and our total shareholder return and net income (loss) for each such fiscal year: 2023 | | | 1,370,000 | | | 1,370,000 | | | 1,602,143 | | | 1,256,393 | | | 20.03 | | | (186,426,000) | 2022 | | | 7,100,000 | | | 7,100,000 | | | 2,832,059 | | | 2,471,124 | | | 26.14 | | | (1,561,557,000) |
(1)
| Amounts reflect Summary Compensation Table “Total” compensation disclosed above for our CEO and, with respect to our other named executive officers, the average of the “Total” compensation disclosed for the applicable named executive officers for each corresponding year. |
(2)
| Amounts represent compensation actually paid to our CEO and the average compensation actually paid to our remaining named executive officers for the relevant fiscal year, as determined under SEC rules (and described below), which includes the individuals indicated in accordance with the vesting schedule described above.table below for each fiscal year: |
272023
| | | Sherif Abdou | | | Amir Bacchus and Atul Kavthekar | 2022 | | | Sherif Abdou | | | Amir Bacchus and Atul Kavthekar |
Compensation actually paid to our CEO and other named executive officers represents the “Total” compensation reported in the Summary Compensation Table for the applicable fiscal year, as adjusted as follows: Deduction for Amounts Reported under the “Stock Awards” and “Option Awards” Columns in the Summary Compensation Table for Applicable FY | | | $— | | | $(663,174) | | | $(330,000) | | | $(893,750) | Increase based on ASC 718 Fair Value of Awards Granted during Applicable FY that Remain Unvested as of Applicable FY End, determined as of Applicable FY End | | | — | | | 302,239 | | | — | | | 528,750 | Increase based on ASC 718 Fair Value of Awards Granted during Applicable FY that Vested during Applicable FY, determined as of Vesting Date | | | — | | | — | | | 330,000 | | | 110,000 | Increase/deduction for Awards Granted during Prior FY that were Outstanding and Unvested as of Applicable FY End, determined based on change in ASC 718 Fair Value from Prior FY End to Applicable FY End | | | — | | | — | | | — | | | (56,250) | Increase/deduction for Awards Granted during Prior FY that Vested During Applicable FY, determined based on change in ASC 718 Fair Value from Prior FY End to Vesting Date | | | — | | | — | | | — | | | (34,500) | TOTAL ADJUSTMENTS | | | $— | | | $(360,935) | | | $— | | | $(345,750) |
(3)
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Non-Employee Director Compensation
None
| The amounts reflect the cumulative total shareholder return (TSR) of our non-employee directors received compensation fromcommon stock at the Companyend of each fiscal year. The TSR value listed in each year reflects what the cumulative value of $100 would be if invested on December 31, 2021. TSR is calculated on a cumulative basis by dividing the sum of the cumulative amount of dividends for their services on our boardthe measurement period, assuming dividend reinvestment (if any), and the difference between the Company’s share price at the end and the beginning of the measurement period by the Company’s share price at the beginning of the measurement period. Historical stock price performance is not necessarily indicative of future stock performance. |
(4)
| The dollar amounts reported represent the net income (loss) reflected in 2021. Effective as of March 24, 2022, our Board adoptedthe Company’s audited financial statements for the applicable year. |
TABLE OF CONTENTS Relationship Between Compensation Actually Paid and Financial Performance Measures As shown in the table above, the CAP amount for our CEO and the average CAP amount for our other NEOs are directionally aligned with the Company’s TSR. From 2022 to 2023, the CAP amount for our CEO and the average CAP amount for our other NEOs decreased. In addition, our TSR decreased from 2022 to 2023. Although our executive compensation program does not significantly rely on equity-based compensation, the CAP amount for our non-CEO NEOs is, in part, impacted by the potential value of equity-based compensation awards that fluctuates depending on the movement of our stock price. Net income (loss) generally is a key indicator of company profitability; however, we do not use net income (loss) as a financial measure in our executive compensation program. Accordingly, there is not a direct relationship between the CAP amounts to our NEOs and net income (loss). However, as shown in the table above, our net loss significantly improved from 2022 to 2023, even though the CAP amount for our CEO and the average CAP amount for our other NEOs decreased from 2022 to 2023. TABLE OF CONTENTS We maintain a non-employee director compensation program (the “Director Compensation Program”). The Director Compensation Program provides for annual cash retainer fees and long-term equity awards for each of our non-employee directors (each, an “Eligible Director”). The Director Compensation Program consists of the following components: Cash Compensation Annual Retainer: $65,000 Annual Committee Chair Retainer: ○ | Compensation and Nominating: $25,000 |
Audit: $25,000 Compensation and Nominating: $25,000 Annual Committee Member (Non-Chair) Retainer: ○ | Compensation and Nominating: $12,500 |
Chairperson:Audit: $12,500
Compensation and Nominating: $12,500 Chair: $95,000 The annual cash retainers will beare paid in quarterly installments in arrears, but effective as of January 1 of each calendar year (including 2022). Annual cash retainers will beand are pro-rated for any partial calendar quarter of service. Equity Compensation An Eligible Director who is serving on our Board as of the date of an annual meeting of stockholders (beginning with calendar year 2022) automatically will be granted, on the date of such annual meeting, an option to purchase shares of the Company’s Class A common stock with an aggregate fair market value of $170,000 and, in the case of the ChairpersonChair of the Board, an aggregate fair market value of $340,000 (an “Annual Grant”). Each Annual Grant will vest in full on the earlier to occur of the first anniversary of the grant date and the date of the next annual meeting following the grant date, subject to continued service. The directors were not eligible to receive Annual Grants for calendar year 2023. However, to compensate the Eligible Directors for calendar years 2022their significant services rendered in 2023 and anticipated additional services in 2024, in October 2023 the Board approved the grant to each Eligible Director of Mr. Kazarian, Mr. Leisure, Mr. Price, Mr. Park, Ms. Tolan, and Mr. Wasson received a stock option grant on March 24, 2022an award of RSUs with an aggregate fair market value of $340,000 or, in($680,000 for the caseChair of Mr. Thierer, an aggregate fair market value of $680,000 (the “2022/2023 Grant”)the Board). The 2022/2023 GrantRSU awards will vest aswith respect to 50% of the RSUs on each of the first anniversaryand second anniversaries of the grant date and 50% on the second anniversary of theOctober 23, 2023 grant date, subject to continued service. Each of these directors will not be eligible to receive the Annual Grant for calendar years 2022 and 2023. The Annual Grant and the 2022/2023 Grant will vest and become exercisable in full immediately prior to the occurrence of a Change in Control (as defined in the 2021 Plan).
Compensation under the Director Compensation Program is subject to the annual limits on non-employee director compensation set forth in the 2021 Plan. TABLE OF CONTENTS Non-Employee Director Compensation Table The table below sets forth information regarding the compensation paid to our non-employee directors for the year ended December 31, 2023. Mark Thierer | | | 160,000 | | | 680,000 | | | 840,000 | Gregory N. Kazarian | | | 65,000 | | | 340,001 | | | 405,001 | Lawrence B. Leisure | | | 77,500 | | | 340,001 | | | 417,501 | Jeffrey G. Park | | | 90,000 | | | 340,001 | | | 430,001 | Thomas E. Price | | | 90,000 | | | 340,001 | | | 430,001 | Mary A. Tolan | | | 90,000 | | | 340,001 | | | 430,001 | Greg Wasson | | | 90,000 | | | 340,001 | | | 430,001 |
(1)
| Amounts reflect the grant date fair value of the RSU awards granted to the non-employee directors, as computed in accordance with FASB ASC Topic 718, but excluding any impact of estimated forfeiture rates as required by SEC regulations. We provide information regarding the assumptions used to calculate the value of all equity awards granted to executives in 2023 in Note 14 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023. The table below shows the aggregate number of vested and unvested stock option awards and unvested RSUs held as of December 31, 2023 by each director. |
Mark Thierer | | | 371,069 | | | 433,121 | Gregory N. Kazarian | | | 85,535 | | | 216,561 | Lawrence B. Leisure | | | 85,535 | | | 216,561 | Jeffrey G. Park | | | 85,535 | | | 216,561 | Thomas E. Price | | | 85,535 | | | 216,561 | Mary A. Tolan | | | 85,535 | | | 216,561 | Greg Wasson | | | 85,535 | | | 216,561 |
TABLE OF CONTENTS SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth certain information as of October 25, 2022, the Record Date for the Annual Meeting, with respect to holdings of our Class A common stock and our Class V common stock by: stockholders who beneficially owned more than 5% of the outstanding shares of our Class A common stock or our Class V common stock; each of our named executive officers and directors; and all directors and executive officers as a group. The number of shares beneficially owned by each stockholder is determined under rules issued by the SEC and includes voting or investment power with respect to securities. These rules generally provide that a person is the beneficial owner of securities if such person has or shares the power to vote or direct the voting thereof, or to dispose or direct the disposition thereof or has the right to acquire such powers within 60 days. As described under “Certain Relationships and Related PersonParty Transactions,” each unit of P3 Health Group, LLC (the “P3 LLC Units”)Unit (other than P3 LLC Units held by us) is redeemable from time to time at each holder’s option (subject in certain circumstances to time-based vesting requirements) for, at our election (determined solely by a majority of our directors who are disinterested), shares of our Class A common stock on a one-for-one basis, or to the extent there is cash available from a secondary offering, a cash payment equal to a volume weighted average market price of one share of Class A common stock for each P3 LLC Unit so redeemed, in each case, in accordance with the terms of the P3 LLC A&R LLC Agreement; provided that, at our election (determined by a majority or our directors who are disinterested), we may effect a direct exchange of such Class A common stock or such cash, as applicable, for such P3 LLC Units. The P3 LLC Unitholders may, subject to certain exceptions, exercise such redemption right for as long as their P3 LLC Units remain outstanding. See “Certain Relationships and Related Person Transactions— AmendedTransactions- Transactions in connection with the Business Combinations-Amended and Restated Limited Liability Company Agreement of P3 LLC.” In connection with the Closing of the Business Combinations, we issued to certain holders ofeach P3 Health Group Holdings (the “P3 Equityholders”),Equityholder, for nominal consideration, one share of Class V common stock for each P3 LLC Unit such P3 Equityholder owned. As a result, the number of shares of Class V common stock listed in the table below correlates to the number of P3 LLC Units the P3 Equityholders own as of October 25, 2022.April 12, 2024. The number of shares beneficially owned by the holders in the table below assume the maximum number of P3 LLC Units and shares of Class V common stock or shares of Class A common stock, as applicable, are released from escrow to each holder. See the disclosure underin the section entitled “Certain Relationships and Related Party Transactions - Related Person TransactionsTransactions-Transactions in connection with the Business Combinations-Escrow Agreement.” Unless otherwise noted, the business address of each of those listed in the table below is 2370 Corporate Circle, Suite 300, Henderson, NV 89074. We have based our calculation of the percentage of beneficial ownership on 243,603,813315,903,414 shares of Common Stockcommon stock outstanding as of October 25, 2022,April 12, 2024 consisting of 41,578,890119,408,994 shares of our Class A common stock and 202,024,923196,494,420 shares of our Class V common stock. TABLE OF CONTENTS Unless otherwise indicated, we believe, based on information provided to us, that each of the stockholders listed below has sole voting and investment power with respect to the shares beneficially owned by the stockholder unless noted otherwise, subject to community property laws where applicable. TABLE OF CONTENTS
Directors and Named Executive Officers:
| | | | | | | | | | | | | | | | Mark Thierer | | | — | | | — | | | — | | | — | | | — | Sherif Abdou(3) | | | — | | | — | | | 28,185,982 | | | 14.0% | | | 11.6% | Amir Bacchus(4) | | | — | | | — | | | 18,790,658 | | | 9.3% | | | 7.7% | Greg Wasson(5) | | | 7,753,525 | | | 18.6% | | | — | | | — | | | 3.2% | Lawrence Leisure | | | — | | | — | | | — | | | — | | | — | Mary Tolan | | | — | | | — | | | — | | | — | | | — | Greg Kazarian(6) | | | — | | | — | | | 1,177,659 | | | * | | | * | Thomas Price(7) | | | — | | | — | | | 1,177,659 | | | * | | | * | Jeffrey Park | | | — | | | — | | | — | | | — | | | — | Eric Atkins(8) | | | — | | | — | | | 450,517 | | | * | | | * | All Directors and Executive Officers of post-combination Company as a group (9 individuals)(9) | | | 7,753,525 | | | 18.6% | | | 49,782,475 | | | 24.6% | | | 23.6% | Five Percent Holders:
| | | | | | | | | | | | | | | | Chicago Pacific Founders(10) | | | 8,732,517 | | | 21.0% | | | 91,269,317 | | | 45.2% | | | 41.1% | Hudson Vegas Investment SPV, LLC(11) | | | — | | | — | | | 43,974,331 | | | 21.8% | | | 18.1% | FMR LLC(12) | | | 10,120,307 | | | 24.3% | | | — | | | — | | | 4.2% | Foresight Sponsor Group, LLC(13) | | | 7,753,525 | | | 18.6% | | | — | | | — | | | 3.2% | Leavitt Equity Partners II, L.P.(14) | | | — | | | — | | | 7,505,383 | | | 3.7% | | | 3.1% | Ameriprise Financial, Inc.(15) | | | 4,200,863 | | | 10.1% | | | — | | | — | | | 1.7% | LMR Partners LLP(16) | | | 2,463,719 | | | 5.9% | | | — | | | — | | | 1.0% | The Vanguard Group(17) | | | 2,140,558 | | | 5.1% | | | — | | | — | | | 0.9% |
Directors and Named Executive Officers:
| | | | | | | | | | | | | | | | Mark Thierer(3) | | | 730,416 | | | * | | | — | | | — | | | * | Sherif Abdou(4) | | | 1,608,225 | | | 1.3% | | | 28,185,982 | | | 14.3% | | | 9.4% | Amir Bacchus(5) | | | 3,198,860 | | | 2.7% | | | 18,790,658 | | | 9.6% | | | 6.9% | Greg Wasson(6) | | | 945,183 | | | * | | | — | | | — | | | * | Lawrence Leisure(7) | | | 85,535 | | | * | | | — | | | — | | | * | Mary Tolan(8) | | | 85,535 | | | * | | | — | | | — | | | * | Greg Kazarian(9) | | | 85,535 | | | * | | | 1,177,659 | | | * | | | * | Thomas Price(10) | | | 85,535 | | | * | | | 1,177,659 | | | * | | | * | Jeffrey Park(11) | | | 85,535 | | | * | | | — | | | — | | | * | Atul Kavthekar(12) | | | 168,868 | | | * | | | — | | | — | | | * | All Current Directors and Executive Officers (10 individuals)(13) | | | 7,079,227 | | | 5.8% | | | 49,331,958 | | | 25.1% | | | 17.7% | Five Percent Holders:
| | | | | | | | | | | | | | | | Chicago Pacific Founders(14) | | | 69,714,029 | | | 55.5% | | | 91,269,317 | | | 46.4% | | | 49.99% | Hudson Vegas Investment SPV, LLC(15) | | | — | | | — | | | 43,974,331 | | | 22.4% | | | 13.9% | Entities affiliated with Leavitt Equity Partners(16) | | | 17,218,245 | | | 13.6% | | | 7,505,383 | | | 3.8% | | | 7.6% |
(1)
| Class V common stock entitles the holder thereof to one vote per share. |
(2)
| Represents the percentage of voting power of the holders of Class A common stock and Class V common stock of the Company voting together as a single class. |
(3)
| Includes 304,402 shares of Class A common stock issuable upon the exercise of stock options that are currently exercisable or exercisable within 60 days of April 12, 2024. Also includes 426,014 shares of Class A common stock held by AssetBlue Ventures, LLC, an entity controlled by Mark Thierer and Nasrin Thierer. |
(4)
| Includes 1,608,225 shares of Class A common stock held directly by Dr. Abdou, 7,907,484 shares of Class V common stock held by the NA 2021 GRAT, a grantor retained annuity trust of which SherifDr. Abdou M.D. and his spouse serve as trustees, 3,058,479 shares of Class V common stock held by the NA 2021 Trust, a trust for the benefit of SherifDr. Abdou M.D. and his children, of which SherifDr. Abdou M.D. and his spouse serve as trustees, 1,408,437 shares of Class V common stock held by the NA Charitable Trust, a charitable remainder trust of which SherifDr. Abdou, M.D., his spouse and his children serve as trustees, 7,907,484 shares of Class V common stock held by the SA 2021 GRAT, a grantor retained annuity trust of which SherifDr. Abdou M.D. and his spouse serve as trustees, 3,058,479 shares of Class V common stock held by the SA 2021 Trust, a trust for the benefit of SherifDr. Abdou M.D. and his children, of which SherifDr. Abdou M.D. and his spouse serve as trustees, 1,408,437 shares of Class V common stock held by the SA Charitable Trust, a charitable remainder trust of which SherifDr. Abdou, M.D., his spouse and his children serve as trustees, and 3,437,182 shares of Class V common stock held by the Abdou Family Trust, a revocable trust of which SherifDr. Abdou M.D. and his spouse serve as trustees, and of which SherifDr. Abdou M.D. and his spouse are beneficiaries. Includes an aggregate of 2,653,044 shares of Class V common stock and 2,653,044 P3 LLC Units being held in escrow until the resolution of the Class D Dispute and the Cash Preference Dispute. |
(4)
| Includes 15,032,528 shares held by Amir Bacchus, M.D. and 3,758,130 shares held by Charlee Co LLC, of which Amir Bacchus, M.D. serves as managing member. Includes 1,768,698 shares of Class V common stock and 1,768,698associated P3 LLC Units being held in escrow until the resolution of the Class D Dispute and the Cash Preference Dispute. |
(5)
| ConsistsIncludes (i) 2,005,193 shares of Class A common stock, (ii) 753,895 shares of Class A common stock issuable upon the securitiesexercise of warrants to purchase shares of Class A common stock, and (iii) 15,032,528 shares of Class V common stock held by Foresight Sponsor Group, LLC (“FSG”) identified in footnote (11) below. FSG is governed by a boardDr. Bacchus and (i) 251,298 shares of managers consistingClass A common stock, (ii) 188,474 shares of Greg WassonClass A common stock issuable upon the exercise of warrants to purchase shares of Class A common stock, and Michael Balkin. Accordingly, each(iii) 3,758,130 shares of Mr. Wasson and Mr. Balkin may be deemed to beneficially own the securitiesClass V common stock held by FSG. The principal business officeCharlee Co LLC, of Mr. Wasson is 2045 W. Grand Avenue, Ste. B, PMB 8512, Chicago, Illinois 60612. |
(6)
| which Dr. Bacchus serves as managing member. Includes 102,7851,768,698 shares of Class V common stock and 102,785 P3 LLC Units being held in escrow until the resolution of the Class D Dispute. Includes 706,595 shares that Mr. Kazarian owns directly and 471,064 shares owned through the Kazarian 2020 Irrevocable Trust, for which Mr. Kazarian serves as Trustee. |
(7)
| Includes 102,785 shares of Class V common stock and 102,785 P3 LLC Units being held in escrow until the resolution of the Class D Dispute. |
(8)
| Includes 44,197 shares of Class V common stock and 44,197 P3 LLC Units being held in escrow until the resolution of the Class D Dispute. Also includes 203,160 shares of restricted Class V common stock and 203,160 restricted Common Units that vest in five equal annual installments beginning on January 20, 2022. |
(9)
| Includes 4,671,509 shares of Class V common stock and 4,671,509associated P3 LLC Units being held in escrow until the resolution of the Class D Dispute and the Cash Preference Dispute. This does not include any |
(6)
| Includes 85,535 shares beneficially owned by Erin Darakjian. Ms. Darakjian was appointed as the Company’s interim Chief Financial Officer, effective November 1, 2022, succeeding Eric Atkins in such role. Ms. Darakjian did not own anyof Class A common stock issuable upon the exercise of stock options that are currently exercisable or exercisable within 60 days of April 12, 2024. Also includes 859,648 shares of Class A common stock held by G&K Investment Holdings LLC, an entity controlled by Greg Wasson. |
(7)
| Includes 85,535 shares of Class A common stock issuable upon the exercise of stock options that are currently exercisable or exercisable within 60 days of April 12, 2024. |
(8)
| Includes 85,535 shares of Class A common stock issuable upon the exercise of stock options that are currently exercisable or exercisable within 60 days of April 12, 2024. |
(9)
| Includes (i) 85,535 shares of Class A common stock issuable upon the exercise of stock options that are currently exercisable or exercisable within 60 days of April 12, 2024, (ii) 706,595 shares of Class V common stock that Mr. Kazarian owns directly, of which 102,785 shares of Class V common stock and the associated P3 LLC Units are being held in escrow until the resolution of the Class D Dispute, and (iii) 471,064 shares of Class V common stock owned through the Kazarian 2020 Irrevocable Trust, for which Mr. Kazarian serves as of October 25, 2022.Trustee. |
TABLE OF CONTENTS (10)
| Includes (i) 85,535 shares of Class A common stock issuable upon the exercise of stock options that are currently exercisable or exercisable within 60 days of April 12, 2024 and (ii) 1,177,659 shares of Class V common stock, of which 102,785 shares of Class V common stock and the associated P3 LLC Units are being held in escrow until the resolution of the Class D Dispute. |
(11)
| Includes 85,535 shares of Class A common stock issuable upon the exercise of stock options that are currently exercisable or exercisable within 60 days of April 12, 2024. |
(12)
| Includes (i) 18,868 shares of Class A common stock and (ii) 150,000 shares of Class A common stock issuable upon the exercise of stock options that are currently exercisable or exercisable within 60 days of April 12, 2024 held by Mr. Kavthekar. |
(13)
| Includes (i) 1,909,981 shares of Class A common stock issuable upon the exercise of stock options that are currently exercisable or exercisable within 60 days of April 12, 2024 and (ii) 4,627,312 shares of Class V common stock and the associated P3 LLC Units being held in escrow until the resolution of the Class D Dispute and the Cash Preference Dispute. |
(14)
| Based solely on the Schedule 13D13D/A filed with the SEC on December 13, 2021April 21, 2023 by (i) Chicago Pacific Founders UGP, LLC (“Founders UGP”), (ii) Chicago Pacific FounderFounders GP, L.P. (“Founders GP”), (iii) Chicago Pacific Founders Fund, L.P. (“Founders Fund LP”), and (iv) Chicago Pacific Founders Fund B, L,P. Includes 89,183,894 shares of Class V common stock held byFund-A, L.P. (“Fund-A”), (v) Chicago Pacific Founders Fund,Fund-B, L.P. (“Fund-B”), 2,085,333 shares of Class V common stock held by(vi) VBC Growth SPV, LLC (“VBC”), (vii) Chicago Pacific Founders UGP III, LLC (“Founders UGP-III”), (viii) Chicago Pacific Founders GP III, L.P., 2,778,931(ix) CPF III PT SPV, LLC (“SPV III”) and (x) CPF III-A PT SPV, LLC (“SPV III-A) and information known to the Company. Includes (i) 98,082,332 shares of Class A common stock held by Chicago Pacific Founders Fund-A, L.P.Fund LP, of which 89,183,984 shares are issuable upon redemption or exchange of P3 LLC Units and 5,953,586Class V common stock, 4,223,631 shares are shares of Class A common stock currently held, 3,813,578 shares are issuable upon exercise of the Common Warrants (as defined herein) and 861,149 shares are issuable upon exercise of the Pre-Funded Warrants (as defined herein), (ii) 2,085,333 shares of Class A common stock held by Chicago Pacific Founders Fund-B, L.P. The General Partner of each of Chicago Pacific Founders Fund, L.P., Chicago Pacific Founders Fund-A, L.P. and Chicago Pacific Founders Fund-B, L.P. is Chicago Pacific Founders GP, L.P. The General Partnerall of Chicago Pacific Founders GP, L.P. is Chicago Pacific Founders UGP,which are issuable upon redemption or exchange of P3 LLC Units and Class V common stock, (iii) 3,387,493 shares of Class A common stock held by Fund-A, of which is managed3,205,926 shares are shares of Class A common stock currently held, 148,120 shares are issuable upon exercise of the Common Warrants and 33,447 shares are issuable upon exercise of the Pre-Funded Warrants, (iv) 6,431,080 shares of Class A common stock held by Mary Tolan, Lawrence LeisureFund-B, of which 6,042,090 shares are shares of Class common stock currently held, 317,333 shares are issuable upon exercise of the Common Warrants and Vance Vanier.71,657 shares are issuable upon exercise of the Pre-Funded Warrants, (v) 79,659,938 shares of Class A common stock held by SPV III, of which 38,662,709 shares are shares of Class A common stock currently held, 33,444,972 shares are issuable upon exercise of the Common Warrants and 7,552,257 shares are issuable upon exercise of the Pre-Funded Warrants, (vi) 23,595,389 shares of Class A common stock held by SPV III-A, of which 11,451,999 shares are shares of Class A common stock currently held, 9,906,410 shares are issuable upon exercise of the Common Warrants and 2,236,980 shares are issuable upon exercise of the Pre-Funded Warrants, and (vii) 429,180 shares issuable upon exercise of warrants held by VBC. Included in the number of shares of Class V common stock and Class A common stock are 8,224,897 shares of Class V common stock and 723,291 shares of Class A common stock, respectively, that are being held in escrow until the resolution of the Class D Dispute and the Cash Preference Dispute, as applicable, described above and will be voted in accordance with the proportional vote totals that a matter receives by all voting securities other than those being held in escrow. Each of Founders Fund LP, Founders GP, Fund-A, Fund-B, SPV III, SPV III-A and VBC (collectively, the “CPF Holders”) may not exercise any portion of the Common Warrants or Pre-Funded Warrants, which would result in the aggregate number of shares of Class A common stock and Class V common stock held by the CPF Holders and its affiliates to exceed 49.99% of the total number of issued and outstanding shares of Class A common stock and Class V common stock immediately after giving effect to the exercise. Founders UGP, is the general partner of Founders GP, which is the general partner of each of Founders Fund LP, Fund-A, Fund-B and VBC. Founders UGP-III, is the general partner of Chicago Pacific Founders GP III, L.P., which is the manager of each of SPV-III and SPV III-A. Founders UGP and Founders UGP III are managed by Mary Tolan, Lawrence Leisure and Vance Vanier. None of Mary Tolan, Lawrence Leisure or Vance Vanier are deemed beneficial holders of any of the securities of the Company held by the CPF Holders. The business address for the reporting persons is 980 North Michigan Avenue, Suite 1998, Chicago, IL 60611. |
(11)(15)
| Based solely on the Schedule 13D filed by Hudson Vegas Investment SPV, LLC, Hudson Vegas Investment Manager, LLC and Daniel Straus with the SEC on December 17, 2021. Hudson Vegas Investment Manager, LLC and Daniel Straus each may be deemed to share voting and dispositive power over the shares of Class V common stock which are held by Hudson Vegas Investment SPV, LLC. Each of Hudson Vegas Investment Manager, LLC and Daniel Straus disclaims beneficial ownership of any shares other than to the extent they may have a pecuniary interest therein. Included in the number of shares of Class V common stock are 1,126,765an aggregate of 4,542,624 shares of Class V common stock that areand the associated P3 LLC Units being held in escrow until the resolution of the Cash Preference Dispute and 3,315,859 shares of Class V common stock that are being held in escrow until the resolution of the Class D Dispute, and will be voted in accordance with the proportional vote totals that a matter receives by all voting securities other than those being held in escrow. The principal business address of each of the reporting persons is 173 Bridge Plaza North, Fort Lee, New JerseyNJ 07024. |
(12)(16)
| Based solely on the Schedule 13G filed by FMR LLC, Fidelity Contrafund and Abigail P. Johnson with the SEC on January 7, 2022. FMR LLC and Abigail P. Johnson may be deemed to have beneficial ownership over 10,120,307 shares. Fidelity Contrafund may be deemed to have beneficial ownership over 2,735,364 shares. FMR LLC has sole voting power with respect to 3,473,042 shares and sole dispositive power with respect to 10,120,307 shares. Abigail P. Johnson has sole voting power with respect to no shares and sole dispositive power with respect to 10,120,307 shares. Fidelity Contrafund has sole voting power with respect to 2,735,364 shares and sole dispositive power with respect to no shares. Abigail P. Johnson is a Director, the Chairman, and the Chief Executive Officer of FMR LLC. Members of the Johnson family, including Abigail P. Johnson, are the predominant owners, directly or through trusts, of Series B voting common shares of FMR LLC, representing 49% of the voting power of FMR LLC. The Johnson family group and all other Series B shareholders have entered into a shareholders’ voting agreement under which all Series B voting common shares will be voted in accordance with the majority vote of Series B voting common shares. Accordingly, through their ownership of voting common shares and the execution of the shareholders’ voting agreement, members of the Johnson family may be deemed, under the Investment Company Act, to form a controlling group with respect to FMR LLC. Neither FMR LLC nor Abigail P. Johnson has the sole power to vote or direct the voting of the shares owned directly by the various investment companies registered under the Investment Company Act (the “Fidelity Funds”) advised by Fidelity Management & Research Company LLC (“FMR Co. LLC”), a wholly owned subsidiary of FMR LLC, which power resides with the Fidelity Funds’ Boards of Trustees. FMR Co. LLC carries out the voting of the shares under written guidelines established by the Fidelity Funds’ Boards of Trustees. The principal business address of FMR LLC is 245 Summer Street, Boston, MA 02210. |
(13)
| Based solely on the Schedule 13G13D/A filed with the SEC on January 18, 2022 by FSG, Michael P. Balkin and Gregory D. Wasson. Each of the reporting persons may be deemed to have beneficial ownership of 7,753,525 shares of Class A common stock consisting of (1) 7,526,025 shares of Class A common stock held by FSG and (2) 227,500 shares of Class A common stock issuable upon exercise of a warrant held by FSG (the “FSG Warrant”). Each of the reporting persons has shared voting and dispositive power with respect to 7,753,525 shares. The principal business office of Mr. Wasson and FSG is 2045 W. Grand Avenue, Ste. B, PMB 82152, Chicago, Illinois 60612. The principal business office of Mr. Balkin is 3201 South Ocean Boulevard, Unit 404, Highland Beach, Florida 33487. |
(14)
| Based solely on the Schedule 13D filed with the SEC on September 12, 2022April 19, 2023 by Leavitt Equity Partners II, L.P. (“LEP II LP”), Leavitt Equity Partners II, LLC (“LEP II LLC”), Leavitt Equity Partners III, L.P. (“LEP III LP”), Leavitt Equity Partners III, LLC (“LEP III LLC”), LEP Management, LLC (“LEP Management”), Leavitt Legacy LLC (“Legacy”), and Taylor Leavitt (collectively, the “Leavitt Reporting Persons”). Includes (i) 894,454 shares of Class A common stock, (ii) 670,841 warrants to purchase shares of Class A common stock, and (iii) 7,505,383 shares of Class V common stock and the associated P3 LLC Units held of record by LEP II LP and (i) 8,944,543 shares of Class A common stock and (ii) 6,708,407 warrants to purchase shares of Class A common stock held of record by LEP III LLP. LEP II LLC is the general partner of LEP II LP, which is an investment limited partnership.partnership, and, as a result, may be deemed to beneficially own the securities held by LEP II LP. LEP III LLC is the general partner of LEP III LP, which is an investment limited partnership, and, as a result, may be deemed to beneficially own the securities held by LEP III LP. LEP Management is the investment advisor of LEP II LP and LEP III LP, and, as a result, may be deemed to beneficially own the securities held by LEP II LP and LEP III LP. Legacy is the manager of LEP LLC.II LLC and LEP III LLC, and, as a result, may be deemed to beneficially own the securities held by LEP II LP and LEP III LP. Mr. Leavitt is the sole owner of Legacy, and, as a result, may be deemed to beneficially own the securities held by LEP II LP and LEP III LP. Mr. Leavitt is the sole owner of Legacy. In accordance with Rule 13d-3 under the Securities Exchange Act of 1934, the Leavitt Reporting Persons would be deemed to beneficially own more than five percent of Class A common stock as result of the Reporting Persons’ ownership of P3 LLC Units. Each of the Levitt Reporting Persons is deemed to have shared voting and shared dispositive power with respect to 7,505,383 shares. Includes 676,360 shares of Class V common stock and 676,360the associated P3 LLC Units being held in escrow until the resolution of the Class D Dispute. The principal business address of the Leavitt Reporting Persons is 299 South Main Street, Suite 2300, Salt Lake City, UT 84111. |
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| Based solely on the Schedule 13G filed with the SEC on April 11, 2022 by Ameriprise Financial, Inc. (“AFI”), Columbia Management Investment Advisers, LLC (“CMIA”), Columbia Wanger Asset Management, LLC (“CWAM”), and Columbia Acord Fund (the “Fund”). CMIA, CWAM and AFI do not directly own any shares. As the investment adviser to the Fund and various other unregistered and registered investment companies and other managed accounts, CMIA and CWAM may be deemed to beneficially own the Fund’s shares. AFI, as the parent company of CMIA and CWAM, may be deemed to beneficially own CMIA and CWAM’s shares. AFI and CMIA reported shared voting and dispositive power over 4,200,863 shares and sole voting and dispositive power over no shares. CWAM reported shared voting and dispositive power with respect to 4,197,373 shares and sole voting power and dispositive power over no shares. The Fund reported sole voting power and dispositive power over 2,500,000 shares and shared voting and dispositive power over no shares. The principal business address of AFI is 45 Ameriprise Financial Center, Minneapolis, MN 55474. The principal business address of CMIA is 290 Congress Street, Boston, MA 02210. The principal business address of CWAM and the Fund is 71 S Wacker Drive, Suite 2500, Chicago, IL 60606. |
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| Based solely on the Schedule 13G filed with the SEC on April 12, 2022 by LMR Master Fund Ltd (“LMR Master Fund”), LMR CCSA Master Fund Ltd. (“CCSA Master Fund”), LMR Partners LLP, LMR Partners Limited, LMR Partners LLC, LMR Partners AG, Ben Levine and Stefan Renold (collectively, the “LMR Reporting Persons”). Represents 2,463,719 shares of Class A common stock issuable upon the exercise of Public Warrants held by LMR Master Fund and CCSA Master Fund. Ben Levine and Stefan Renold are ultimately in control of the investment and voting decisions of the LMR Investment Managers with respect to the securities held by LMR Master Fund and CCSA Master Fund. The principal business address of each of the LMR Reporting Persons is c/o LMR Partners LLP, 9th Floor, Devonshire House, 1 Mayfair Place, London, W1J 8AJ, United Kingdom.
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| Based solely on the Schedule 13G filed by The Vanguard Group with the SEC on February 9, 2022. The 13G reports that The Vanguard Group has sole dispositive power with respect to 2,140,558 shares, shares dispositive power with respect to no shares, and sole voting and dispositive power with respect to no shares. The Vanguard Group, Inc.'s clients, including investment companies registered under the Investment Company Act of 1940 and other managed accounts, have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the securities reported. The principal business address of The Vanguard Group is 100 Vanguard Blvd., Malvern, PA 19355. |
Delinquent Section 16(a) Reports Section 16(a) of the Exchange Act requires our officers and directors, and persons who beneficially own more than 10% of our common stock to file with the SEC reports of their ownership and changes in their ownership of our common stock. To our knowledge, based solely on review of the copies of such reports and amendments to such reports with respect to the year ended December 31, 20212023 filed with the SEC and on written representations by our directors and executive officers, all required Section 16 reports under the Exchange Act for our directors, officers and beneficial owners of greater than 10% of our common stock were filed on a timely basis during the year ended December 31, 20212023 other than the following, which were inadvertently filed late: (i) one Form 3 filed jointly by Hudson Vegas InvestmentChicago Pacific Founders UGP III, LLC, Chicago Pacific Founders GP III, L.P. and CPF III-A PT SPV, LLC Hudson Vegas Investment Manager,(together, the “CPF Entities”); (ii) one Form 4 reporting one transaction each by each of Thomas Price, Mark Thierer, Gregory Wasson, Mary Tolan, Jeffrey G. Park, Lawrence B. Leisure, Gregory Kazarian, and Atul Kavthekar; (iii) one Form 4 reporting two transactions filed jointly by Leavitt Legacy LLC, Leavitt Equity Partners II, L.P., Leavitt Equity Partners II, LLC, Leavitt Equity Partners III, L.P., Leavitt Equity Partners III, LLC, LEP Management LLC and Daniel Straus, which wasTaylor S. Leavitt; and (iv) one Form 4 reporting three transactions filed late.jointly by the CPF Entities. TABLE OF CONTENTS CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS Policies and Procedures for Approval of Related Person Transactions Our Board has adopted a written Related Person Transaction Policy, setting forth the policies and procedures for the review and approval or ratification of related person transactions. Under the policy, our legal team is primarily responsible for developing and implementing processes and procedures to obtain information regarding related persons with respect to potential related person transactions and then determining, based on the facts and circumstances, whether such potential related person transactions do, in fact, constitute related person transactions requiring compliance with the policy. If our legal team determines that a transaction or relationship is a related person transaction requiring compliance with the policy, our General Counsel is required to present to the Audit Committee all relevant facts and circumstances relating to the related person transaction. Our Audit Committee must review the relevant facts and circumstances of each related person transaction, including if the transaction is on terms comparable to those that could be obtained in arm’s length dealings with an unrelated third party and the extent of the related person’s interest in the transaction, take into account the conflicts of interest and corporate opportunity provisions of our Code of Business Conduct and Ethics, and either approve or disapprove the related person transaction. If advance Audit Committee approval of a related person transaction requiring the Audit Committee’s approval is not feasible, then the transaction may be preliminarily entered into by management upon prior approval of the transaction by the chairpersonchair of the Audit Committee subject to ratification of the transaction by the Audit Committee at the Audit Committee’s next regularly scheduled meeting; provided, that if ratification is not forthcoming, management will make all reasonable efforts to cancel or annul the transaction. If a transaction was not initially recognized as a related person, then upon such recognition the transaction will be presented to the Audit Committee for ratification at the Audit Committee’s next regularly scheduled meeting; provided, that if ratification is not forthcoming, management will make all reasonable efforts to cancel or annul the transaction. Our management will update the Audit Committee as to any material changes to any approved or ratified related person transaction and will provide a status report at least annually of all then current related person transactions. No director may participate in approval of a related person transaction for which he or she isf a related person. Relationships and Transactions with Directors, Executive Officers and Significant Stockholders The following are certain transactions, arrangements and relationships with our directors, executive officers and stockholders owning 5% or more of our outstanding Common Stock,common stock, or any member of the immediate family of any of the foregoing persons, since January 1, 2021,2022, other than equity and other compensation, termination, change in control and other arrangements, which are described under “Executive Compensation.” Transactions in connection with the Business Combinations Subscription Agreements Contemporaneously with the execution of the Merger Agreement and the Transaction and Combination Agreement, we entered into the Subscription Agreements with the various Subscribers party thereto. Under the Subscription Agreements, the investors agreed to purchase and subscribe for, and we agreed to sell and issue to such investors, an aggregate of 20,870,307 PIPE Shares (as defined above) for a purchase price of $10.00 per share, in a private placement. The primary purpose of the sale of the PIPE Shares was to raise additional capital for use in connection with the Business Combinations and to meet the minimum available cash requirement provided in the Merger Agreement. Pursuant to the Subscription Agreements, we agreed that, within 30 calendar days after the consummation of the Business Combinations (the “Filing Deadline”), we would file with the SEC a registration statement registering the resale of the PIPE Shares, and use our commercially reasonable efforts to have that registration statement declared effective as soon as practicable after the filing thereof, but no later than the earlier of (i) the 75th calendar day following the earlier of the Filing Deadline and the initial filing date of the registration statement if the SEC notifies us that it will “review” the registration statement and (ii) the 5th business day after the date we are notified (orally or in writing, whichever is earlier) by the SEC that the registration statement will not be “reviewed” or will not be subject to further review. Our obligations to include the PIPE Shares held by a Subscriber in the registration statement is contingent upon the relevant Subscriber furnishing in writing, to us such information regarding the Subscriber, the PIPE Shares held by such Subscriber and the intended method of TABLE OF CONTENTS disposition of the PIPE Shares, as is reasonably requested by us to effect the registration of such PIPE Shares, and must execute such documents in connection with such registration as we may reasonably request, which will be what is customary of a selling stockholder in similar situations. Support Agreement
Contemporaneously with the execution of the Merger Agreement and the Transaction and Combination Agreement, the Sponsors, Foresight and Legacy P3 entered into the Sponsor Support Agreement (the “Support Agreement”). Pursuant to the Support Agreement, the Sponsors agreed, among other things: (i) not to sell, pledge or otherwise dispose of (or agree to dispose of) any of their securities in Foresight; (ii) to vote or cause to be voted at any meeting in favor of each proposal in favor of the Business Combinations and against any merger or other similar business combination transaction with any party other than Legacy P3 or other proposal that would prevent the Business Combinations; (iii) to vote or cause to be voted at any meeting in favor of any amendment to warrants issued by Foresight, and any amendment thereto proposed in the Warrant Exchange Offer/Solicitation contemplated by the Merger Agreement (which did not occur); (iv) to comply with their obligations under that certain letter agreement, dated as of February 9, 2021, by and among Foresight, the Sponsors, Greg Wasson, Michael Balkin, Gerald Muizelaar, Brian Gamache, Robert Zimmerman and John Svoboda; and (v) comply with Foresight’s non-solicitation covenants under the Merger Agreement (with respect to the provisions thereof applicable to representatives of Foresight).
Pursuant to the Support Agreement, our Sponsor (but not FA Co-Investment LLC) agreed to tender or cause to be tendered any and all Foresight Warrants that our Sponsor owns of record or beneficially (as defined in the Securities Act) pursuant to and in accordance with the terms of the Warrant Exchange Offer/Solicitation. Our Sponsor also agreed that once its Foresight Warrants are tendered, it will not withdraw or cause or permit to be withdrawn any of such Foresight Warrants from the Warrant Exchange Offer/Solicitation, unless and until the Support Agreement has been terminated.
Amended and Restated Limited Liability Company Agreement of P3 LLC We operate our business through P3 LLC (as the successor of P3) and its subsidiaries. At the closing of the Business Combinations (the “Closing”), the limited liability company agreement of P3 LLC was amended and restated into the P3 LLC A&R LLC Agreement, which sets forth, among other things, the rights and obligations of the members of P3 LLC after the Closing. Sole Manager. Pursuant to the P3 LLC A&R LLC Agreement, P3 is the sole manager of P3 LLC. As the sole manager, P3 is generally able to control all of the day-to-day business affairs and decision-making of P3 LLC without the approval of any member of P3 LLC, unless otherwise stated in the P3 LLC A&R LLC Agreement. As the sole manager of P3 LLC, P3, through its officers and directors, is responsible for all operational and administrative decisions of P3 LLC and the day-to-day management of P3 LLC’s business. Pursuant to the terms of the P3 LLC A&R LLC Agreement, P3 cannot be removed or replaced as the sole manager of P3 LLC except by its resignation, which may be given at any time by written notice to the other members of P3 LLC. Compensation, Expenses. P3 is not entitled to compensation for its services as the manager of P3 LLC except as expressly provided for in the P3 LLC A&R LLC Agreement. P3 is entitled to reimbursement by P3 LLC for reasonable out-of-pocket expenses incurred on behalf of P3 LLC, including all expenses associated with P3 being a public company and maintaining its corporate existence. Distributions. The P3 LLC A&R LLC Agreement requires tax distributions to be made by P3 LLC to its members on a pro rata basis, except to the extent such distributions would render P3 LLC insolvent or are otherwise prohibited by law. Tax distributions are made on a quarterly basis, to each member of P3 LLC, including P3, based on such member’s allocable share of the taxable income of P3 LLC and an assumed tax rate that will be determined by P3, as described below. The assumed tax rate for purposes of determining tax distributions from P3 LLC to its members will be the highest combined federal, state, and local tax rate that may potentially apply to a corporate or individual taxpayer (whichever is higher) resident in New York City, New York, taking into account certain assumptions and without regard to the actual final tax liability of any such member. The P3 LLC A&R LLC Agreement also allows for cash distributions to be made by P3 LLC (subject to P3’s discretion as the sole manager of P3 LLC) to its members on a pro rata basis out of cash available for distribution in accordance with the P3 LLC A&R LLC Agreement. We expect P3 LLC may make distributions TABLE OF CONTENTS
out of distributable cash periodically and as necessary to enable us to cover P3’s operating expenses and other obligations, including tax liability and other obligations under the Tax Receivable Agreement, except to the extent such distributions would render P3 LLC insolvent or are otherwise prohibited by law. Transfer Restrictions. The P3 LLC A&R LLC Agreement generally does not permit transfers of P3 LLC Units by members, except for transfers to permitted transferees, transfers pursuant to the participation right described below and other limited exceptions. The P3 LLC A&R LLC Agreement imposes additional restrictions on transfers (including on exchanges of P3 LLC Units and Class V common stock for Class A common stock) that are necessary or advisable so that P3 LLC is not treated as a “publicly traded partnership” for U.S. federal income tax purposes. In the event of a permitted transfer under the P3 LLC A&R LLC Agreement, the transferring member will be required to simultaneously transfer shares of Class V common stock held by such transferring member to such transferee equal to the number of P3 LLC Units that were transferred to such transferee in such permitted transfer. The P3 LLC A&R LLC Agreement permits holders of P3 LLC Units to participate in a tender offer, share exchange offer, issuer bid, take-over bid, recapitalization or similar transaction with respect to Class A common stock that is approved by our board of directors by delivering a participation redemption notice, which shall be effective immediately prior to, and contingent upon, the consummation of such transaction. Permitted transferees of P3 LLC Units will be required to assume all of the obligations of a transferring member with respect to the transferred P3 LLC Units by executing a joinder to the P3 LLC A&R LLC Agreement, and such transferee shall be bound by any limitations and obligations under the P3 LLC A&R LLC Agreement. TABLE OF CONTENTS Maintenance of One-to-One Ratios. The P3 LLC A&R LLC Agreement includes provisions intended to ensure that P3 at all times maintains (i) a one-to-one ratio between the number of P3 LLC Units owned, directly or indirectly, by P3 and the aggregate number of shares of Class A common stock issued and outstanding, and (ii) a one-to-one ratio between the aggregate number of P3 LLC Units owned, directly or indirectly, by the members of P3 LLC (other than P3 and its subsidiaries) and the number of shares of Class V common stock issued and outstanding. These ratio requirements disregard (1) shares of Class A common stock issuable under unvested equity incentive awards granted by P3, (2) treasury stock, and (3) preferred stock or other debt or equity securities (including warrants, options or rights) issued by P3 that are convertible into or exercisable or exchangeable for shares of Class A common stock, except to the extent P3 has contributed the net proceeds from such other securities, including any exercise or purchase price payable upon conversion, exercise or exchange thereof, to the equity capital of P3 LLC. Excluding certain warrants, options or similar instruments granted pursuant to any equity plan or stock option plan in effect on, or adopted after, the date of the P3 LLC A&R LLC Agreement by P3 LLC or P3, in the event any holder of P3 Warrants exercises a P3 Warrant, then P3 will cause a corresponding exercise of a warrant to purchase P3 LLC Units with similar terms held by P3, such that the number of shares of Class A common stock issued in connection with the exercise of such P3 Warrants will be matched with a corresponding number of P3 LLC Units issued by P3 LLC to P3. In the event that a P3 Warrant is redeemed, P3 LLC will redeem a warrant to purchase P3 LLC Units with similar terms held by P3. Issuance of P3 LLC Units upon Exercise of Options or Issuance of Other Equity Compensation. The P3 LLC A&R LLC Agreement contemplates the manner in which various types of equity incentive awards will be treated by P3 and P3 LLC. Dissolution. The P3 LLC A&R LLC Agreement provides that the consent of P3, as the manager of P3 LLC, and members holding a majority of the P3 LLC Units then outstanding (excluding P3 LLC Units held directly or indirectly by P3) will be required to voluntarily dissolve P3 LLC. In addition to a voluntary dissolution, P3 LLC will be dissolved upon the entry of a decree of judicial dissolution or other circumstances in accordance with Delaware law. Upon a dissolution event, the proceeds of a liquidation will be distributed in the following order: (1) first, to pay the expenses of winding up P3 LLC; (2) second, to pay debts, liabilities and obligations owed to creditors of P3 LLC other than members; (3) third, to pay debts, liabilities and obligations owed to the members (other than payments or distributions owed to the members in their capacity as such pursuant to the P3 LLC A&R LLC Agreement); and (4) fourth, to the members pro-rata in accordance with their respective percentage ownership interests in P3 LLC (as determined based on the number of P3 LLC Units held by a member relative to the aggregate number of all outstanding P3 LLC Units). TABLE OF CONTENTS
Confidentiality. Each member of P3 LLC (other than P3) agrees to maintain the confidentiality of P3 LLC’s confidential information. This obligation excludes information (i) that is independently developed by the members without use of or reference to such confidential information, (ii) that is or becomes generally available to the public other than as a direct or indirect result of a disclosure by a member or its affiliates or representatives, (iii) that is or becomes available to a member from a source other than P3, P3 LLC, any of its subsidiaries or their respective representatives, provided that such source is not, and was not, known by such member to be bound by a confidentiality agreement with, or any other confidentiality obligation owed to P3, P3 LLC or any of their respective affiliates or representatives, or (iv) approved for release by written authorization of the Chief Executive Officer, the Chief Financial Officer or the General Counsel of either P3 LLC or P3. Fiduciary Duties; Indemnification. The P3 LLC A&R LLC Agreement provides (i) that the manager of P3 LLC owes P3 LLC and its members the same fiduciary duties as the manager would owe to a Delaware corporation and its stockholders if such manager were a member of the board of directors of such corporation, and (ii) that the officers of P3 LLC owe P3 LLC and its members duties of the type owed by the officers of a Delaware corporation to such corporation and its stockholders. The P3 LLC A&R LLC Agreement also provides for indemnification to the fullest extent permitted by law of (1) the manager (and its directors, officers, employees and agents), (2) officers, employees and agents of P3 LLC and (3) persons serving at P3 LLC’s request as a manager, officer, director, employee or agent of another entity, in each case, subject to certain exceptions, including in the case of fraud, willful misconduct, knowing violations of law and breaches of representations, warranties or covenants under the P3 LLC A&R LLC Agreement. TABLE OF CONTENTS P3 LLC Unit Exchange Right. The P3 LLC A&R LLC Agreement provides a redemption right to the members of P3 LLC (other than P3 and its subsidiaries) which entitles them to have their P3 LLC Units redeemed for, at P3’s election, newly-issued shares of Class A common stock on a one-for-one basis, or a cash payment equal to the volume weighted average market price of one share of Class A common stock for each P3 LLC Unit so redeemed. As holders of P3 LLC Units exercise their redemption rights, P3’s economic interest in P3 LLC will be correspondingly increased and the number of shares of Class V common stock outstanding will be correspondingly reduced. Each member’s (other than P3 and its subsidiaries) redemption rights are subject to certain customary limitations, including the expiration of any contractual lock-up period relating to the shares of Class A common stock that may be applicable to such member, and may be conditioned on the closing of an underwritten distribution of the shares of Class A common stock that may be issued in connection with such proposed redemption. Whether by redemption or exchange, P3 is obligated to ensure that at all times the number of P3 LLC Units that P3 owns equals the number of outstanding shares of Class A common stock (subject to certain exceptions for treasury shares and shares underlying certain convertible or exchangeable securities). Amendments. In addition to certain other requirements, P3’s prior written consent, as manager, and the prior written consent of members holding a majority of the P3 LLC Units then outstanding and entitled to vote (excluding P3 LLC Units held directly or indirectly by P3) will generally be required to amend or modify the P3 LLC A&R LLC Agreement. Tax Receivable Agreement In connection with the Business Combinations, we entered into the Tax Receivable Agreement (the “TRA”) with certain of the P3 Equityholders and P3 LLC. The TRA provides for the payment by us to the P3 Equityholders of 85% of the amount of tax benefits, if any, that we actually realize, or in some circumstances are deemed to realize, as a result of the transactions described above, including tax benefits attributable to payments made under the TRA (such as deductions attributable to imputed interest deemed paid pursuant to the TRA). P3 LLC has in effect an election under Section 754 of the Code effective for each taxable year in which a redemption or exchange of P3 LLC Units for shares of Class A common stock or cash occurs. These TRA payments are not conditioned upon any continued ownership interest in either P3 LLC or us by the P3 Equityholders. The rights of the P3 Equityholders under the TRA are assignable to transferees, including transferees of the P3 LLC Units (other than us or P3 LLC as transferee pursuant to subsequent redemptions or exchanges of the transferred P3 LLC Units). We expect to benefit from the remaining 15% of tax benefits, if any, that we may actually realize. Pursuant to our election under Section 754 of the Internal Revenue Code, (the “Code”), we expect to obtain an increase in our share of the tax basis in the net assets of P3 LLC when its units are redeemed or exchanged. We intend to treat any redemptions and exchanges of P3 LLC units as direct purchases of the units for U.S. federal income tax purposes. These increases in tax basis may reduce the amounts that we would otherwise pay in the future to various tax authorities. They may also decrease gains (or increase losses) on future dispositions of certain capital assets to the extent the tax basis is allocated to those capital assets. In connection with the Business Combinations, we entered into a TRA that provides for the payment by us of 85% of the amount of any tax benefits that we actually realize, or in some cases are deemed to realize, as a result of (i) increases in our share of the tax basis in the net assets of P3 LLC resulting from any redemptions or exchanges of P3 LLC, (ii) tax basis increases attributable to payments made under the TRA, and (iii) deductions attributable to imputed interest pursuant to the TRA (the “TRA Payments”). We expect to benefit from the remaining 15% of any tax benefits that we may actually realize.
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The estimation of a liability under the TRA is, by its nature, imprecise and subject to significant assumptions regarding a number of factors, including (but not limited to) the amount and timing of taxable income generated by the Company each year as well as the tax rate then applicable. As a result of the Business Combinations, the potential future tax benefits are estimated to be $5.4 million, of which $4.6 million is estimated to be the associated TRA liability.
As noted above, the Company has no recorded tax benefits associated with the increase in tax basis as a result of the Business Combinations. As a result, the Company determined that payments to TRA holders are not probable and no TRA liability has been recorded as of December 31, 2021.
As non-controlling interest holders exercise their right to exchange their units in P3 LLC, a TRA liability may be recorded based on 85% of the estimated future tax benefits that the Company may realize as a result of increases in the tax basis of P3 LLC. The amount of the increase in the tax basis, the related estimated tax benefits, and the related TRA liability to be recorded will depend on the price of the Company’s Class A Common Stockcommon stock at the time of the relevant redemption or exchange. We expect to obtain an increase in our proportionate share of the tax basis of the assets of P3 LLC (1) as a result of the purchase of the membership interests of P3 Health Group Holdings (the “P3 Existing Units”) from the P3 Equityholders in connection with the Business Combinations, (2) if and when (as described above under “—Amended and Restated Limited Liability Company Agreement of P3 LLC”) the P3 Equityholders receive shares of Class A common stock or cash in connection with any future redemption or exchange of P3 LLC Units pursuant to the P3 LLC A&R LLC Agreement and (3) in connection with certain distributions (or deemed distributions) by P3 LLC (any such basis increase, the “Basis Adjustments”). The parties intend to treat the purchase of P3 Existing Units described in clause (1) and any such redemption or exchange of P3 LLC Units described in clause (2) above as a direct purchase by us of P3 Existing Units and P3 LLC Units, as applicable, from the P3 Equityholders for U.S. federal income and other applicable tax purposes, regardless of whether such P3 Existing Units or P3 LLC Units are surrendered by the P3 Equityholders to P3 LLC or sold to us upon the exercise of our election to acquire P3 LLC Units directly. A Basis Adjustment may have the effect of increasing (for income tax purposes) depreciation and amortization deductions allocable to us and thereby reducing the amounts that we would otherwise pay in the future to various tax authorities. The Basis Adjustments may also decrease gains (or increase losses) on future dispositions of certain assets to the extent tax basis is allocated to those assets.
In connection with the Business Combinations, we entered into the Tax Receivable Agreement with certain of the P3 Equityholders and P3 LLC. The Tax Receivable Agreement provides for the payment by us to the P3 Equityholders of 85% of the amount of tax benefits, if any, that we actually realize, or in some circumstances are deemed to realize, as a result of the transactions described above, including tax benefits attributable to payments made under the Tax Receivable Agreement (such as deductions attributable to imputed interest deemed paid pursuant to the Tax Receivable Agreement). P3 LLC has in effect an election under Section 754 of the Code effective for each taxable year in which a redemption or exchange of P3 LLC Units for shares of Class A common stock or cash occurs. These Tax Receivable Agreement payments are not conditioned upon any continued ownership interest in either P3 LLC or us by the P3 Equityholders. The rights of the P3 Equityholders under the Tax Receivable Agreement are assignable to transferees, including transferees of the P3 LLC Units (other than us or P3 LLC as transferee pursuant to subsequent redemptions or exchanges of the transferred P3 LLC Units). We expect to benefit from the remaining 15% of tax benefits, if any, that we may actually realize.
The actual Basis Adjustments, as well as any amounts paid to the P3 Equityholders under the Tax Receivable Agreement,TRA, varies depending on a number of factors, including: the price of shares of Class A common stock in connection at the time of redemptions or exchangesexchanges——the Basis Adjustments, as well as any related increase in any tax deductions, are directly related to the price of shares of Class A common stock at the time of each redemption or exchange; the timing of any subsequent redemptions or exchanges—exchanges—for instance, the increase in any tax deductions will vary depending on the fair market value, which may fluctuate over time, of the depreciable or amortizable assets of P3 LLC at the time of each redemption or exchange or distribution (or deemed distribution); TABLE OF CONTENTS the extent to which such redemptions or exchanges are taxable—if a redemption or exchange is not taxable for any reason, the Basis Adjustments, as well as any related increase in tax deductions, relating to such redemption or exchange will not be available; and the amount and timing of our incomeincome——the Tax Receivable AgreementTRA generally requires us to pay 85% of the tax benefits as and when those benefits are treated as realized under the terms of the Tax Receivable Agreement.TRA. If we do not have taxable income, we generally will not be required (absent a change of control or other circumstances requiring an early termination payment) to make payments under the Tax Receivable AgreementTRA for that taxable year because no tax benefits will have been actually realized. However, any tax benefits that do not result in realized tax benefits in a given taxable year will likely generate tax attributes that may be utilized to generate tax benefits in previous or future taxable years. The utilization of any such tax attributes generally will result in payments under the Tax Receivable Agreement.TRA. Decisions made by us in the course of running our business, such as with respect to mergers, asset sales, other forms of business combinations, or other changes in control, may influence the timing and amount of payments that are received by the P3 Equityholders under the Tax Receivable Agreement.TRA. For example, the earlier disposition of assets following a transaction that results in a Basis Adjustment will generally accelerate payments under the Tax Receivable AgreementTRA and increase the present value of such payments. For purposes of the Tax Receivable Agreement,TRA, cash savings in income tax are computed by comparing our actual income tax liability (subject to certain assumptions relating to state and local income taxes) to the amount of such taxes that we would have been required to pay had there been no Basis Adjustments and had the Tax Receivable AgreementTRA not been entered into. The Tax Receivable AgreementTRA generally applies to each of our taxable years, beginning with the first taxable year ending after the Business Combinations. There is no maximum term for the Tax Receivable Agreement;TRA; however, the Tax Receivable AgreementTRA may be voluntarily terminated by us pursuant to an early termination procedure and shall be terminated upon the occurrence of certain mergers, asset sales, other forms of business combinations, or other changes of control or our material breach of our material obligations under the Tax Receivable AgreementTRA under certain circumstances, and in each case we will be obligated to pay the P3 Equityholders an agreed upon amount equal to the estimated present value of the remaining payments to be made under the agreement (calculated based on certain assumptions, including regarding tax rates and utilization of the Basis Adjustments). However, our ability to make such payment may be subject to various limitations and restrictions, such as restrictions on distributions that would either violate any contract or agreement to which we or P3 LLC are then a party, or any applicable law. The payment obligations under the Tax Receivable AgreementTRA are our obligations and not of P3 LLC. Although the actual timing and amount of any payments that may be made under the Tax Receivable AgreementTRA will vary, we expect that the payments that we may be required to make to the P3 Equityholders will be substantial. Any payments made by us to the P3 Equityholders under the Tax Receivable AgreementTRA will generally reduce the amount of cash that might have otherwise been available to us. To the extent that we are unable to make payments under the Tax Receivable AgreementTRA for any reason, the unpaid amounts will be deferred and will accrue interest until paid. Our failure to make any payment required under the Tax Receivable AgreementTRA (including any accrued and unpaid interest) within 90 calendar days of the date on which the payment is required to be made will constitute a material breach of a material obligation under the Tax Receivable Agreement,TRA, which will generally terminate the Tax Receivable AgreementTRA and accelerate payments thereunder, unless the applicable payment is not made because (i) we are prohibited from making such payment under the terms of the Tax Receivable AgreementTRA or the terms governing certain of our indebtedness or (ii) we do not have, and despite using commercially reasonable efforts cannot obtain, sufficient funds to make such payment. The Tax Receivable AgreementTRA provides that if (i) we materially breach any of our material obligations under the Tax Receivable Agreement,TRA, (ii) certain mergers, asset sales, other forms of business combinations, or other changes of control were to occur, or (iii) we elect an early termination of the Tax Receivable Agreement,TRA, then our obligations, or our successor’s obligations, under the Tax Receivable AgreementTRA would accelerate and become due and payable, based on certain assumptions, including an assumption that we would have sufficient taxable income to fully utilize all potential future tax benefits that are subject to the Tax Receivable Agreement,TRA, and an assumption that, as of the effective date of the acceleration, any P3 Equityholder that has P3 LLC Units that have not been exchanged is deemed to have exchanged such P3 LLC Units for the fair market value of the TABLE OF CONTENTS
shares of Class A common stock or the amount of cash that would be received by such P3 Equityholder had such P3 LLC Units actually been exchanged on such date, whichever is lower. However, as noted above, our ability to make such payments may be limited by restrictions on distributions that would either violate any contract or agreement to which we or P3 LLC are then a party, or any applicable law. TABLE OF CONTENTS As a result of the foregoing, we would be required to make an immediate cash payment equal to the estimated present value (calculated based on a discount rate equal to 10%) of the anticipated future tax benefits that are the subject of the Tax Receivable AgreementTRA based on certain assumptions, which payment may be made significantly in advance of the actual realization, if any, of those future tax benefits and, therefore, we could be required to make cash payments to the P3 Equityholders that are greater than the specified percentage of the actual benefits we ultimately realize in respect of the tax benefits that are subject to the Tax Receivable Agreement.TRA. In these situations, our obligations under the Tax Receivable AgreementTRA could have a material adverse effect on our liquidity and could have the effect of delaying, deferring or preventing certain mergers, asset sales, other forms of business combinations, or other changes of control. We cannot assure that we will be able to finance our obligations under the Tax Receivable AgreementTRA or that we will be able to make the immediate cash payment described above to the extent our or P3 LLC’s ability to make such payment is restricted as described above. Payments under the Tax Receivable AgreementTRA are based on the tax reporting positions that we determine, and the IRS or another tax authority may challenge all or part of the Basis Adjustments, as well as other related tax positions we take, and a court could sustain any such challenge. If the outcome of any such challenge to any Basis Adjustments or the deduction of imputed interest deemed paid pursuant to the Tax Receivable AgreementTRA would reasonably be expected to materially affect a recipient’s payments under the Tax Receivable Agreement,TRA, then we will not be permitted to settle or to fail to contest such challenge without the consent (not to be unreasonably withheld or delayed) of each P3 Equityholder, and any such restrictions will apply for as long as the Tax Receivable AgreementTRA remains in effect. We will not be reimbursed for any cash payments previously made to the P3 Equityholders pursuant to the Tax Receivable AgreementTRA if any tax benefits initially claimed by us are subsequently challenged by a taxing authority and ultimately disallowed. Instead, in such circumstances, any excess cash payments made by us to the P3 Equityholders will be netted against any future cash payments that we might otherwise be required to make under the terms of the Tax Receivable Agreement.TRA. However, we might not determine that we have effectively made an excess cash payment to the P3 Equityholders for a number of years following the initial time of such payment. As a result, it is possible that we could make cash payments under the Tax Receivable AgreementTRA that are substantially greater than our actual cash tax savings. Payments are generally due under the Tax Receivable AgreementTRA within a specified period of time following the filing of our tax return for the taxable year with respect to which the payment obligation arises, although interest on such payments will begin to accrue at a rate of LIBOR plus 100 basis points from the due date (without extensions) of such tax return. Any late payments that may be made under the Tax Receivable AgreementTRA will continue to accrue interest at LIBOR (or alternate replacement rate) plus 500 basis points until such payments are made, including any late payments that we may subsequently make because we did not have enough available cash to satisfy our payment obligations at the time at which they originally arose or were prohibited from making such payments under the terms governing certain of our indebtedness (although such payments are not considered late payments and therefore would accrue interest at the lower interest if we make such payments promptly after such limitations are removed). Subject to certain exceptions as noted above, our failure to make any payment required under the Tax Receivable AgreementTRA (including any accrued and unpaid interest) within 90 calendar days of the date on which the payment is required to be made will constitute a material breach of a material obligation under the Tax Receivable AgreementTRA under certain circumstances, in which case, the Tax Receivable AgreementTRA will terminate and future payments thereunder will be accelerated, as noted above. Registration Rights and Lock-Up Agreement At the Closing, the Sponsors, the Blocker Sellers, certain P3 Equityholders, Brian Gamache, John Svoboda and Robert Zimmerman (collectively, the “Holders”) and Foresight entered into the Registration Rights and Lock-Up Agreement. The Registration Rights and Lock-Up Agreement (i) amends, restates and replaces the registration rights agreement entered into by Foresight with the Sponsors, Brian Gamache, John Svoboda and Robert Zimmerman on February 9, 2021, and (ii) provides registration rights to the Holders pursuant to which P3 will be required to file a shelf registration statement to register the resale shares of Class A common stock or any TABLE OF CONTENTS
other equity security held by the Holders upon the Closing, including the shares of Class A common stock issuable upon the future redemption of P3 LLC Units and shares of Class V common stock by such Holders and the Private Placement Units (including the Foresight Warrants and Class A common stock included therein and the Class A common stock issuable upon exercise of the Foresight Warrants included therein), in each case held by them upon the Closing (collectively, “Registrable Securities”). Assuming all of the P3 LLC Units are redeemed for Class A common stock and all of the Private Placement Warrants are exercised, the Registrable Securities consist of an aggregate of 239,866,497 shares of Class A common stock and 277,500 Private Placement Warrants. In addition, subject to certain requirements and customary conditions, the Holders may demand, at any time or from time to time, that Foresight file a shelf registration statement on Form S-3, or if Form S-3 is not TABLE OF CONTENTS available, a Form S-1 to register the Registrable Securities held by such Holders. The Registration Rights and Lock-Up Agreement also provides the Holders with “piggy-back” registration rights, subject to certain requirements and customary conditions. Subject to certain exceptions, the Registration Rights and Lock-Up Agreement further provides for the Class A common stock, the Class V common stock and the Class A common stock issuable upon the future exchange of P3 LLC Units and shares of Class V common stock held by the P3 Equityholders and the Blocker Sellers after the Closing to be locked-up for a period of six months following the Closing, while the Class A common stock received by the Sponsors upon conversion of the Class B Common Stockcommon stock on the Closing Date will be locked-up for a period of one year following the Closing, subject to earlier release upon (i) the date on which the last reported sale price of the Class A common stock equals or exceeds $12.00 per share for any 20 trading days within any 30-day trading period commencing at least 150 days after the Closing or (ii) the date on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction after the Closing that results in all of the Company’s stockholders having the right to exchange their shares of Class A common stock for cash, securities or other property. The Private Placement Units, including the Class A common stock included therein, the Private Placement Warrants and Class A common stock issuable upon exercise of the Private Placement Warrants will be locked-up for a period of thirty days following the Closing. Except as set forth in the Registration Rights and Lock-Up Agreement, P3 will beis required to bear all expenses incurred in connection with the filing of any such registration statements and any such offerings, other than underwriting discounts and commissions on the sale of Registrable Securities, brokerage fees, underwriter marketing costs and, except as specified in the Registration Rights and Lock-Up Agreement, the fees and expenses of counsel to holders of Registrable Securities. The Registration Rights and Lock-Up Agreement also includes customary provisions regarding indemnification and contribution. Escrow Agreement On December 3, 2021, we entered into an escrow agreement (the “Escrow Agreement”) with P3 Health Group Holdings, P3 LLC, Hudson Vegas Investment SPV, LLC (the “Class D Member”), Mary Tolan and Sherif Abdou, M.D. (the “Unitholder Representatives”) and PNC Bank, N.A. (“Escrow Agent”). Pursuant to the Escrow Agreement, certain of the consideration for the Business Combinations was set aside in an escrow until resolution of the disputes described below. At Closing, (i) cash, certain units of P3 LLC (“P3 LLC Units”) and shares of Class V common stock and Class A common stock were placed in escrow, to be allocated upon resolution of the dispute regarding the Class D purchase option described in our Annual Report on Form 10-K the fiscal year ended December 31, 2022, as amended in the section titled “Business—Legal Proceedings—Class“Business-Legal Proceedings-Class D Dispute” in our 2021 Form 10-K (the “Class D Dispute”), and (ii) certain members of P3 LLC (the “Contributing P3 Equityholders”) contributed cash, and Hudson contributed P3 LLC Units and shares of Class V common stock, into escrow, to be allocated upon resolution of a dispute regarding Hudson’s right to a preference on the cash portion of the Merger consideration (the “Cash Preference Dispute”). If the Class D Dispute is (i) resolved in favor of Hudson, Hudson will receive cash, the P3 LLC Units and shares of Class V common stock escrowed for the Class D Dispute and the shares of Class A common stock escrowed for the Class D Dispute will be retired or (ii) resolved in favor of the former members of P3 Health Group Holdings (other than Hudson), the former members of P3 Health Group Holdings (including Hudson) will receive cash, the P3 LLC Units and Class V common stock or shares of Class A common stock, as applicable, escrowed for the Class D Dispute. If the Cash Preference Dispute is (i) resolved in favor of Hudson, the Contributing P3 Equityholders will receive the P3 LLC Units and shares of Class V common stock escrowed for the Cash Preference Dispute or shares of Class A TABLE OF CONTENTS
common stock, as applicable, and Hudson will receive cash, or (ii) resolved in favor of the former members of P3 Health Group Holdings (other than Hudson), Hudson will receive the P3 LLC Units and shares of Class V common stock escrowed for the Cash Preference Dispute and the Contributing P3 Equityholders will receive cash. In the Escrow Agreement, the parties authorized the Unitholder Representatives to direct the voting power of any of the securities in escrow, as applicable, on any matter put to a vote of the applicable securityholders in accordance with the proportional vote totals that such matter received by all voting securities other than those in escrow. Foresight Transactions
Founder Shares and Private Placement Units
Founder Shares
In October 2020, our Sponsors purchased an aggregate of 7,906,250 founder shares for a capital contribution of $25,000. In January 2021, our Sponsor transferred 25,000 founder shares to each Messrs. Gamache, Svoboda and Zimmerman, our initial director nominees. On October 4, 2021, all outstanding shares of Class B Common Stock were converted into shares of Class A common stock on a one-for-one basis.
Private Placement Units
Our Sponsors purchased an aggregate of 832,500 Private Placement Units for a purchase price of $10.00 per unit in a private placement that occurred simultaneously with the closing of our IPO on February 12, 2021. 682,500 of the Private Placement Units were purchased by our Sponsor and 150,000 Private Placement Units were purchased by FA Co-Investment LLC, an affiliate of one of the underwriters in the IPO.
Transfer Restrictions
The founder shares and the Private Placement Units (including the underlying Private Placement Warrants, the Private Placement Shares and the shares of Class A common stock issuable upon exercise of the Private Placement Warrants) are each subject to transfer restrictions pursuant to lock-up provisions in the letter agreement with us entered into by our initial stockholders, officers and directors on February 9, 2021. Those lock-up provisions provide that, subject to limited exceptions, such securities are not transferable or salable (1) in the case of the founder shares, until the earlier of (A) one year after the completion of our Business Combinations and (B) subsequent to our Business Combinations, (x) the date on which we complete a liquidation, merger, stock exchange, reorganization or other similar transaction that results in all of our public stockholders having the right to exchange their shares of Class A common stock for cash, securities or other property or (y) if the last reported sale price of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after our Business Combinations, and (2) in the case of the Private Placement Units (including the underlying Private Placement Warrants, the Private Placement Shares and the shares of Class A common stock issuable upon exercise of the Private Placement Warrants), until 30 days after the completion of our Business Combinations.
Waiver of Redemption Rights
In addition, pursuant to the letter agreement, dated February 9, 2021, our initial stockholders, officers and directors have agreed to waive: (1) their redemption rights with respect to any founder shares, the Private Placement Shares and public shares held by them, as applicable, in connection with the completion of our Business Combinations; (2) their redemption rights with respect to any founder shares, the Private Placement Shares and public shares held by them in connection with a stockholder vote to approve an amendment to our Charter (A) to modify the substance or timing of our obligation to allow redemptions in connection with our Business Combinations or to redeem 100% of our public shares if we have not consummated our Business Combinations by February 12, 2023 or (B) with respect to any other provision relating to stockholders’ rights or pre-Business Combinations activity; and (3) their rights to liquidating distributions from the Trust Account with respect to any founder shares and Private Placement Shares they hold if we fail to complete our Business
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Combinations by February 12, 2023 or during any extension period (although they will be entitled to liquidating distributions from the Trust Account with respect to any public shares they hold if we fail to complete our Business Combinations within the prescribed time frame).
Voting
Pursuant to the letter agreement, dated February 9, 2021, our initial stockholders, officers and directors have agreed to vote any shares of Class A common stock or founder shares owned by them in favor of the Business Combinations Proposal.
Administrative Services Agreement
On February 9, 2021, we entered into an Administrative Services Agreement pursuant to which we paid our Sponsor a total of $10,000 per month for office space, administrative and support services. Upon completion of our Business Combinations, we ceased paying these monthly fees. From the period commencing February 9, 2021 through December 31, 2021, we paid the Sponsor an aggregate of $96,071 for such services under the Administrative Services, as well as an additional $149,838 aggregate amount in support fees.
Registration Rights
Pursuant to a registration rights agreement entered into by us on February 9, 2021, the holders of the founder shares, Private Placement Units (including the underlying securities) and units (including the underlying securities) that may be issued upon conversion of working capital loans, and any shares of Class A common stock issuable upon the exercise of the Private Placement Warrants or upon the exercise of any warrants included within Working Capital Units issued upon conversion of working capital loans are entitled to registration rights requiring the Company to register such securities for resale (in the case of the founder shares, only after conversion to shares of Class A common stock). The holders of these securities will be entitled to make up to three demands, excluding short form registration demands, that we register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of our Business Combinations and rights to require us to register for resale such securities pursuant to Rule 415 under the Securities Act. Notwithstanding the foregoing, FA Co-Investment LLC, an affiliate of one of the underwriters in the IPO, may not exercise its demand or “piggyback” registration rights after five and seven years, respectively, after the effective date of the IPO registration statement and may not exercise its demand rights on more than one occasion. The registration rights agreement does not contain liquidated damages or other cash settlement provisions resulting from delays in registering our securities. We will bear the expenses incurred in connection with the filing of any such registration statements.
Promissory Notes—Related Parties
On October 22, 2020 and October 27, 2020, the Sponsors issued unsecured promissory notes to us, pursuant to which we may borrow up to an aggregate principal amount of $300,000. The promissory notes were non-interest bearing and payable on the earlier of (i) March 31, 2021 or (ii) the consummation of the IPO. The outstanding balance under the promissory notes of $275,000 as of December 31, 2020 was repaid upon the closing of the IPO on February 12, 2021 out of the portion of offering proceeds that was allocated for the payment of offering expenses (other than underwriting commissions) not held in the Trust Account.
On August 19, 2021, our Sponsor committed to providing us with an aggregate of $300,000 in loans. We borrowed $150,000 under the loan, which was non-interest bearing, unsecured and subsequently repaid upon the consummation of the Business Combinations.
Working Capital Loans
On August 19, 2021, the Sponsor committed to provide up to $300,000 in working capital loans as needed by the Company in order to finance transaction costs in connection with a Business Combinations. On October 27, 2021, the Sponsor committed to provide up to an additional $600,000 in working capital loans as needed by the Company in order to finance transaction costs in connection with a Business Combinations. The loans will follow the same structure as the $300,000 working capital loans as described above. The total commitment provided by the Sponsor will total $900,000, where none of which has been borrowed as of December 31, 2021.
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P3 Transactions Atrio Health Plans In 2019, Chicago Pacific Founders, a P3 Equityholder, made an equity investment in Atrio Holding Company, LLC (“Atrio Holdings”). Atrio Health Plans, Inc. (“Atrio”) is a wholly owned subsidiary of TABLE OF CONTENTS Atrio Holdings. Two members of P3’s board of directors, Mary Tolan and Lawrence B. Leisure, serve as Managing Partners of Chicago Pacific Founders, and one member of P3’s board of directors, Greg Kazarian, serves as an Operating Partner of Chicago Pacific Founders. Beginning in 2020, P3 entered into a Full-Risk capitation agreement with Atrio pursuant to which P3 is delegated to perform services on behalf of Atrio’s members assigned to P3, including provider network credentialing, patient authorizations and medical management (care management, quality management and utilization management). In 2021,2023, P3 earned capitation revenue from Atrio assigned members of $154.4$192.6 million and management fees of $2.2 million;$2.7 million, and paid claims of $160.9$197.6 million for Atrio assigned members. In 2020,2022, P3 earned capitation revenue from Atrio assigned members of $146.5$158.9 million and management fees of $2.2 million;$2.3 million, and paid claims of $148.9$178.3 million for Atrio assigned members. Unsecured Promissory Note and Warrant Issuance On December 13, 2022, P3 LLC entered into a financing transaction with VGS, consisting of the issuance of the VGS Promissory Note, which provided for funding to us of up to $40.0 million, and the issuance of the VGS Warrants to purchase 429,180 shares of our Class A common stock. VGS is a Delaware limited liability company managed by Chicago Pacific Founders GP, L.P., an affiliate of one of our principal stockholders. The members of VGS include Greg Wasson and Mark Thierer, each of whom serves on our Board, Sherif Abdou, M.D., our Chief Executive Officer and director, and Amir Bacchus, M.D., our Chief Medical Officer and director. Mary Tolan, Lawrence B. Leisure and Greg Kazarian, each of whom serves on our Board, hold interests in Chicago Pacific Founders, GP, L.P. The entry into the VGS Promissory Note and the issuance of the VGS Warrants was approved by a committee of our independent, disinterested directors. For additional information on the VGS Promissory Note and Warrants, see Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources” of the Form 10-K for the fiscal year ended December 31, 2023 (the “2023 Form 10-K”). March 2023 Private Placement On March 30, 2023, we entered into a Securities Purchase Agreement (the “Purchase Agreement”) with the purchasers named therein (the “Purchasers”) pursuant to which, on April 6, 2023, we issued 79,912,635 units (the “Units”) at a price of $1.1180 per unit for institutional investors, and a purchase price of $1.1938 per unit for employees and consultants. Each Unit consists of one share of Class A common stock, and 0.75 of a warrant to purchase one share of common stock at an exercise price of $1.13. Certain institutional investors elected to receive pre-funded warrants to purchase Class A common stock in lieu of a portion of their Class A common stock. In total, we sold (i) an aggregate of 69,157,145 shares of Class A common stock (the “Shares”), (ii) warrants to purchase an aggregate of 59,934,479 shares of Class A common stock (the “Common Warrants”), and (iii) pre-funded warrants to purchase an aggregate of 10,755,490 shares of Class A common stock (the “Pre-Funded Warrants” and, together with the Common Warrants, the “Warrants”), to the Purchasers for aggregate gross proceeds of approximately $89.5 million (collectively, the “March 2023 Private Placement”). Each Common Warrant has an exercise price per share of Common Stock equal to $1.13 per share. Each Pre-Funded Warrant has an exercise price per share of Common Stock equal to $0.0001 per share. The exercise price and the number of shares of Common Stock issuable upon exercise of each Warrant are subject to appropriate adjustments in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting the Common Stock. Entities affiliated with Chicago Pacific Founders purchased an aggregate of 52,751,725 shares of Class A common stock, 10,755,490 Pre-Funded Warrants and 47,630,413 Warrants for aggregate gross proceeds of approximately $71 million. Chicago Pacific Founders may not exercise any portion of any Warrant, which, upon giving effect to such exercise, would cause the aggregate number of shares of Class A common stock beneficially owned by Chicago Pacific Founders (together with its affiliates) to exceed 49.99% of the number of shares of Class A common stock and Class V common stock issued and outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the Warrants. As a result, Chicago Pacific Founders’ ownership of shares does not represent more than 49.99% of the aggregate voting power of our Class A common stock and Class V common stock. Amir Bacchus, M.D., our Chief Medical Officer and a director, and Charlee Co LLC, an entity of which Dr. Bacchus is the managing member, purchased 1,005,193 and 251,298 Units, respectively, in the March 2023 Private Placement at a purchase price of approximately $1.1938 per Unit. TABLE OF CONTENTS Two members of our board of directors, Mary Tolan and Lawrence B. Leisure, serve as Managing Partners of Chicago Pacific Founders, and one member of the our board of directors, Greg Kazarian, serves as an Operating Partner of Chicago Pacific Founders. Entry into the Purchase Agreement was approved by a committee of our independent, disinterested directors. March 2023 Registration Rights Agreement On April 6, 2023, in connection with the Purchase Agreement, we entered into a Registration Rights Agreement (the “March 2023 Registration Rights Agreement”) with the Purchasers pursuant to which we agreed to prepare and file a registration statement with the SEC within 30 days after the closing of the March 2023 Private Placement for purposes of registering the resale of the Shares and shares of Class A common stock issuable upon exercise of the Warrants. We agreed to use its reasonable best efforts to cause this registration statement to be declared effective by the SEC within 120 days after the date thereof. The March 2023 Registration Rights Agreement also contains certain shelf takedown and piggyback rights. We also agreed, among other things, to indemnify the Purchasers, their officers, directors, members, employees and agents, successors and assigns under the registration statement from certain liabilities and to pay all fees and expenses incident to the Company’s obligations under the March 2023 Registration Rights Agreement. Chicago Pacific Letter Agreement On April 6, 2023, in connection with the Purchase Agreement, we entered into a letter agreement (the “CPF Letter Agreement”) with Chicago Pacific Founders GP, L.P., a Delaware limited partnership (“CPF GP I”), Chicago Pacific Founders GP III, L.P., a Delaware limited partnership (“CPF GP III”) (on behalf of the funds of which CPF GP I is the general partner, certain funds of which CPF GP III is the general partner) and/or certain of their affiliated entities and funds (collectively, the “CPF Parties”). Pursuant to the CPF Letter Agreement, (i) for as long as the CPF Parties own 40% of the Company’s outstanding Class A common stock, Chicago Pacific Founders will be entitled to designate one additional independent member of our Board, who must be independent and satisfy all applicable requirements regarding service as a director under applicable law and SEC and stock exchange rules, (ii) for as long as the CPF Parties own 40% of our outstanding Class A common stock, Chicago Pacific Founders will be entitled to certain information rights and protective provisions, and (iii) subject to the terms of the CPF Letter Agreement, the CPF Parties agreed to a standstill restriction from the date of the closing of the March 2023 Private Placement to June 30, 2024 that limits the ownership of the CPF Parties to 49.99% of our Class A common stock and Class V common stock. March 2024 Promissory Note On March 22, 2024, P3 LLC entered into a financing transaction with VBC Growth SPV 2, LLC (“VGS 2”) in the form of an unsecured promissory note (the “VGS 2 Promissory Note”) which provides for funding to us of up to $25.0 million. VGS 2 is a Delaware limited liability company managed by Chicago Pacific Founders GP III, L.P., an affiliate of one of our principal stockholders. Mary Tolan, Lawrence Leisure and Greg Kazarian, each of whom serves on our Board, holds interests in Chicago Pacific Founders GP III, L.P. The entry into the VGS 2 Promissory Note was approved by a committee of independent, disinterested directors of the Company. For additional information on the VGS 2 Promissory Note, see Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources” of the 2023 Form 10-K. TABLE OF CONTENTS Stockholders who intend to have a proposal considered for inclusion in our proxy materials for presentation at our 20232025 Annual Meeting of Stockholders (“2023(the “2025 Annual Meeting”) pursuant to Rule 14a-8 under the Exchange Act must submit the proposal to our Secretary at our offices at 2370 Corporate Circle, Suite 300, Henderson, Nevada 89074 in writing not later than July 6, 2023.December 27, 2025. Stockholders intending to present a proposal at the 20232025 Annual Meeting, but not to include the proposal in our proxy statement, or to nominate a person for election as a director, must comply with the requirements set forth in our Bylaws. Our Amended and Restated Bylaws require, among other things, that our Secretary receive written notice from the stockholder of record of their intent to present such proposal or nomination not earlier than the 120th day and not later than the 90th day prior to the anniversary of the preceding year’s annual meeting. Therefore, we must receive notice of such a proposal or nomination for the 20232025 Annual Meeting no earlier than August 18, 2023February 6, 2025 and no later than September 17, 2023.March 8, 2025. The notice must contain the information required by the Bylaws, a copy of which is available upon request to our Secretary. In the event that the date of the 20232025 Annual Meeting of Stockholders is more than 30 days before or more than 60 days after December 16, 2023,June 6, 2025, then our Secretary must receive such written notice not later than the 90th day prior to the 20232025 Annual Meeting or, if later, the 10th day following the day on which public disclosure of the date of such meeting is first made by us. Any notice of director nomination submitted to P3 other than through proxy access must include the additional information required by Rule 14a-19(b) under the Exchange Act. We reserve the right to reject, rule out of order, or take other appropriate action with respect to any proposal that does not comply with these or other applicable requirements. Our Board is not aware of any matter to be presented for action at the Annual Meeting other than the matters referred to above and does not intend to bring any other matters before the Annual Meeting. However, if other matters should come before the Annual Meeting, it is intended that holders of the proxies named on the Company’s proxy card will vote thereon in their discretion. The accompanying proxy is solicited by and on behalf of our Board, whose Notice of Annual Meeting is attached to this proxy statement, and the entire cost of our solicitation will be borne by us. In addition to the use of mail, proxies may be solicited by personal interview, telephone, e-mail and facsimile by our directors, officers and other employees who will not be specially compensated for these services. We will also request that brokers, nominees, custodians and other fiduciaries forward soliciting materials to the beneficial owners of shares held by the brokers, nominees, custodians and other fiduciaries. We will reimburse these persons for their reasonable expenses in connection with these activities. Certain information contained in this proxy statement relating to the occupations and security holdings of our directors and officers is based upon information received from the individual directors and officers. TABLE OF CONTENTS In connection with our solicitation of proxies for our 2023 Annual Meeting, we intend to file a proxy statement and WHITE proxy card with the SEC. Stockholders may obtain our proxy statement (and any amendments and supplements thereto) and other documents as and when filed with the SEC without charge from the SEC’s website at: www.sec.gov.
P3’S ANNUAL REPORT ON FORM 10-K A copy of P3’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021,2023, including financial statements, schedules and schedulesamendments thereto but not including exhibits, as filed with the SEC, will be sent to any stockholder of record on October 25, 2022April 12, 2024 without charge upon written request addressed to: P3 Health Partners Inc.
Attention: General Counsel & Corporate Secretary
2370 Corporate Circle, Suite 300
Henderson, Nevada 89074 A reasonable fee will be charged for copies of exhibits. You also may access this proxy statement and our Annual Report on Form 10-K at www.proxyvote.com. You also may access our Annual Report on Form 10-K for the fiscal year ended December 31, 20212023 at ir.p3hp.org. You also may access this proxy statement and our 2023 Annual Report, including our Form 10-K for the fiscal year ended December 31, 2023, at www.proxyvote.com. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING ONLINE, WE URGE YOU TO VOTE YOUR SHARES VIA THE TOLL-FREE TELEPHONE NUMBER OR OVER THE INTERNET, AS DESCRIBED IN THIS PROXY STATEMENT. IF YOU RECEIVED A COPY OF THE PROXY CARD BY MAIL, YOU MAY SIGN, DATE AND MAIL THE PROXY CARD IN THE ENCLOSED RETURN ENVELOPE. PROMPTLY VOTING YOUR SHARES WILL ENSURE THE PRESENCE OF A QUORUM AT THE ANNUAL MEETING AND WILL SAVE US THE EXPENSE OF FURTHER SOLICITATION. By Order of the Board of Directors Jessica Puathasnanon
ChiefLeslie P. Fisher
SVP, Legal Officer andAffairs, General Counsel & Corporate Secretary
Henderson, Nevada
November 3, 2022April 26, 2024
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