| Item 5.02 |
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
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Appointment of New Chief Legal Officer
ATI Physical Therapy, Inc. (the “Company”) announced the appointment of Erik Kantz as the Company’s Chief Legal Officer and
Corporate Secretary effective as of November 4, 2022 (the “Effective Date”). Mr. Kantz replaces Diana Chafey, who resigned effective November 4, 2022, as previously reported on the Company’s Current Report on Form 8-K filed on September 23,
2022.
Mr. Kantz previously served as the Vice President & Deputy General Counsel of the Company after joining the Company in 2016
as Associate General Counsel, Mergers & Acquisitions. Mr. Kantz has more than 20 years’ experience in corporate and securities law. Prior to joining the Company, Mr. Kantz was a partner and Co-Chair of the Business Group of Arnstein &
Lehr LLP (now Saul Ewing Arnstein & Lehr LLP), where he represented clients across a variety of industries, including healthcare, manufacturing and financial and professional services. Mr. Kantz received his B.A. from Illinois Wesleyan
University and his J.D. from DePaul University.
In connection with his appointment, the Company and Mr. Kantz have entered into a written employment agreement (the
“Employment Agreement”) for an initial of three-years that automatically renews for one-year terms thereafter, unless notice of non-renewal is provided 30 days before the end of the term then in effect, and a minimum base salary of $390,000 per
year. In addition, the Employment Agreement provides for an annual target bonus equal to 75% of his base salary (“Target Bonus”). Mr. Kantz will also be granted long-term incentive equity awards in 2023 pursuant to the Company’s 2021 Equity
Incentive Plan, with a grant-date fair market value of $250,000, and each year thereafter in an amount determined by the Company’s Compensation Committee. Each annual grant is to be comprised of 50% stock options and 50% restricted stock units
vesting in three equal annual tranches. Mr. Kantz is eligible to participate in the Company’s employee benefit plans as in effect from time to time on the same basis as generally made available to other senior executives of the Company.
In addition, the Employment Agreement also provides for certain payments and benefits in the event of a termination of his
employment under specific circumstances. If, during the term of the Employment Agreement, his employment is terminated by the Company other than for “Discharge For Cause,” death or disability (each as defined in his agreement), he would be entitled
to: (a) upon termination at any time other than during the 18-month period following a Change in Control (as defined in his agreement), (i) an amount equal to 1.25 times the sum of (x) Mr. Kantz’s base salary and (y) Target Bonus, in substantially
equal installments over 15 months from termination, (ii) an annual bonus for the then-current fiscal year based on actual performance for such year, pro-rated from the first date of such fiscal year through Mr. Kantz’s last date of continued active
employment, payable at the same time as annual bonuses are paid other senior executives of the Company and (iii) if elected, the employer and employee portion of any COBRA health and welfare premiums for a period equal to twelve (12) months from
the date of termination, or, if earlier, (x) the first date that Mr. Kantz is no longer eligible for COBRA, or (y) the first date that Mr. Kantz becomes eligible for health benefits from another employer; or (b) upon termination during the 18-month
period following a Change in Control (i) an amount equal to 1.5times the sum of (x) Mr. Kantz’s base salary and (y) Target Bonus, in a lump sum on the first payroll date following the date of the release contemplated under his agreement, (ii) an
annual bonus for the then-current fiscal year based on actual performance for such year, pro-rated from the first date of such fiscal year through Mr. Kantz’s last date of continued active employment, payable at the same time as annual bonuses are
paid other senior executives of the Company, (iii) if elected, the employer and employee portion of any COBRA health and welfare premiums for a period equal to twelve (12) months from the date of such termination, or, if earlier, (x) the first date
that Mr. Kantz is no longer eligible for COBRA or (y) the first date that Mr. Kantz becomes eligible for health benefits from another employer, and (iv) all prior unvested grants of equity incentive compensation made to Mr. Kantz pursuant to the
Company’s 2021 Equity Incentive Plan as of the date of such termination.
Mr. Kantz’s receipt of the termination payments and benefits is contingent upon execution of a general release of any and all
claims arising out of or related to his employment with the Company and the termination of his employment, and compliance with the restrictive covenants described in the following paragraph.
Pursuant to his Employment Agreement, Mr. Kantz has also agreed to customary restrictions with respect to the disclosure and
use of the Company’s confidential information and has agreed that work product or inventions developed or conceived by his while employed with the Company relating to its business is the Company’s property. In addition, during the term of his
employment and for the 15-month period following his termination of employment if Mr. Kantz is eligible to receive severance benefits and an 12-month period following his termination in any other circumstance, Mr. Kantz has agreed not to (1)
solicit or induce any of the Company’s employees or independent contractors to terminate their employment with the Company or (2) solicit any actual or prospective customers with whom he had contact on behalf of a competing business. In addition,
his Employment Agreement mandates that his confidentiality obligations continue after the termination of employment.
Mr. Kantz has no family relationship with any of the executive officers or directors of the Company. There are no arrangements
or understandings between Mr. Kantz and any other person pursuant to which he was appointed as an officer of the Company.
The foregoing summary of the Employment Agreement does not purport to be complete and is qualified in its entirety by reference
to the complete text of the Employment Agreement, a copy of which is attached as Exhibit 10.1.