Exhibit 10.3

 

EXECUTION VERSION

 

TAX RECEIVABLE AGREEMENT

 

between

 

AMERICAN RENAL ASSOCIATES HOLDINGS, INC.

 

and

 

CENTERBRIDGE CAPITAL PARTNERS, L.P.

 

Dated as of April 26, 2016

 

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TABLE OF CONTENTS

 

 

Page

ARTICLE I DEFINITIONS

1

 

 

 

Section 1.1

Definitions

1

 

 

 

ARTICLE II DETERMINATION OF CERTAIN REALIZED TAX BENEFIT

7

 

 

 

Section 2.1

Option Deduction Schedule

7

Section 2.2

Tax Benefit Schedule

8

Section 2.3

Procedures, Amendments

8

 

 

 

ARTICLE III TAX BENEFIT PAYMENTS

9

 

 

 

Section 3.1

Payments

9

Section 3.2

No Duplicative Payments

10

 

 

 

ARTICLE IV TERMINATION

10

 

 

 

Section 4.1

Early Termination of Agreement; Breach of Agreement

10

Section 4.2

Early Termination Notice

12

Section 4.3

Payment upon Early Termination

13

Section 4.4

Termination Following the Exercise or Lapse of All Relevant Stock Options

13

 

 

 

ARTICLE V SUBORDINATION AND LATE PAYMENTS

13

 

 

 

Section 5.1

Subordination

13

Section 5.2

Late Payments by the Corporate Taxpayer

14

 

 

 

ARTICLE VI NO DISPUTES; CONSISTENCY; COOPERATION

14

 

 

 

Section 6.1

Participation in the Corporate Taxpayer’s Tax Matters

14

Section 6.2

Consistency

14

Section 6.3

Cooperation

14

 

 

 

ARTICLE VII MISCELLANEOUS

15

 

 

 

Section 7.1

Notices

15

Section 7.2

Counterparts

15

Section 7.3

Entire Agreement; Third Party Beneficiaries

15

Section 7.4

Governing Law

16

Section 7.5

Severability

16

Section 7.6

Successors; Assignment; Amendments; Waivers

16

Section 7.7

Titles and Subtitles

17

Section 7.8

Resolution of Disputes

17

Section 7.9

Reconciliation

18

Section 7.10

Withholding

19

 

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Section 7.11

Admission of the Corporate Taxpayer into a Consolidated Group; Transfers of
Corporate Assets

19

Section 7.12

Confidentiality

19

Section 7.13

Stockholder Representative

20

 

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TAX RECEIVABLE AGREEMENT

 

This TAX RECEIVABLE AGREEMENT (this “Agreement”), is dated as of April 26, 2016,
and is between American Renal Associates Holdings, Inc., a Delaware corporation
(including any successor corporation, the “Corporate Taxpayer”), and
Centerbridge Capital Partners, L.P., a Delaware limited partnership (the
“Stockholder Representative”). This Agreement shall be effective as of the IPO
Date (as defined below).

 

RECITALS

 

WHEREAS, following the IPO Date, the income, gain, loss, deduction and other Tax
(as defined below) items of the Corporate Taxpayer may be affected by the Option
Deductions (as defined below); and

 

WHEREAS, the parties to this Agreement desire to make certain arrangements with
respect to the effect of the Option Deductions on the liability for Taxes of the
Corporate Taxpayer.

 

NOW, THEREFORE, in consideration of the foregoing and the respective covenants
and agreements set forth herein, and intending to be legally bound hereby, the
parties hereto agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

Section 1.1                                   Definitions. As used in this
Agreement, the terms set forth in this Article I shall have the following
meanings (such meanings to be equally applicable to both the singular and plural
forms of the terms defined).

 

“Affiliate” means, with respect to any Person, any other Person that directly or
indirectly, through one or more intermediaries, Controls, is Controlled by, or
is under common Control with, such first Person.

 

“Agreed Rate” means LIBOR plus 100 basis points.

 

“Agreement” is defined in the Preamble to this Agreement.

 

“Amended Schedule” is defined in Section 2.3(b) of this Agreement.

 

“Applicable Percentage” means, in respect of any Stockholder, with respect to
any amount determined hereunder, such amount multiplied by the quotient,
expressed as a percentage set forth opposite such Stockholder’s name on a
computer file maintained by the Corporate Taxpayer and delivered to the
Stockholder Representative on the date hereof, obtained by dividing (i) the
number of outstanding shares of Common Stock owned by such Stockholder as of
4:30PM, New York time, on April 20, 2016, by (ii) the aggregate number of shares
of Common Stock issued and outstanding as of 4:30PM, New York time, on April 20,
2016.

 

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“Applicable Premium” means, with respect to any Early Termination Effective Date
that is (i) on or before the second anniversary of the date of this Agreement,
40 percent (40%); (ii) after the second anniversary of the date of this
Agreement but on or before the third anniversary of the date of this Agreement,
30 percent (30%); (iii) after the third anniversary of the date of this
Agreement but on or before the fourth anniversary of the date of this Agreement,
20 percent (20%); (iv) after the fourth anniversary of the date of this
Agreement but on or before the fifth anniversary of the date of this Agreement,
10 percent (10%); and (v) following the fifth anniversary of the date of this
Agreement, 0 percent (0%).

 

A “Beneficial Owner” of a security is a Person who directly or indirectly,
through any contract, arrangement, understanding, relationship or otherwise, has
or shares: (i) voting power, which includes the power to vote, or to direct the
voting of, such security; and/or (ii) investment power, which includes the power
to dispose of, or to direct the disposition of, such security. The terms
“Beneficially Own” and “Beneficial Ownership” shall have correlative meanings.

 

“Board” means the Board of Directors of the Corporate Taxpayer.

 

“Business Day” means Monday through Friday of each week, except that a legal
holiday recognized as such by the government of the United States of America or
the State of New York or Massachusetts shall not be regarded as a Business Day.

 

“Change of Control” means the occurrence of any of the following events:

 

(i)                                     any Person or any group of Persons
acting together that would constitute a “group” for purposes of Section 13(d) of
the Securities and Exchange Act of 1934, or any successor provisions thereto
(excluding (a) a corporation or other entity owned, directly or indirectly, by
the stockholders of the Corporate Taxpayer in substantially the same proportions
as their ownership of stock of the Corporate Taxpayer or (b) a group of Persons
in which one or more Affiliates of Permitted Investors, directly or indirectly
hold Beneficial Ownership of securities representing more than 50% of the total
voting power held by such group) is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Corporate Taxpayer representing more than 50%
of the combined voting power of the Corporate Taxpayer’s then outstanding voting
securities; or

 

(ii)                                  the following individuals cease for any
reason to constitute a majority of the number of directors of the Corporate
Taxpayer then serving: individuals who, on the IPO Date, constitute the Board
and any new director whose appointment or election by the Board or nomination
for election by the Corporate Taxpayer’s shareholders was approved or
recommended by a vote of at least two-thirds (2/3) of the directors then still
in office who either were directors on the IPO Date or whose appointment,
election or nomination for election was previously so approved or recommended by
the directors referred to in this clause (ii); or

 

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(iii)                               there is consummated a merger or
consolidation of the Corporate Taxpayer with any other corporation or other
entity, and, immediately after the consummation of such merger or consolidation,
either (x) the Board immediately prior to the merger or consolidation does not
constitute at least a majority of the board of directors of the company
surviving the merger or, if the surviving company is a Subsidiary, the ultimate
parent thereof, or (y) the voting securities of the Corporate Taxpayer
immediately prior to such merger or consolidation do not continue to represent
or are not converted into more than 50% of the combined voting power of the then
outstanding voting securities of the Person resulting from such merger or
consolidation or, if the surviving company is a Subsidiary, the ultimate parent
thereof; or

 

(iv)                              the shareholders of the Corporate Taxpayer
approve a plan of complete liquidation or dissolution of the Corporate Taxpayer
or there is consummated an agreement or series of related agreements for the
sale, lease or other disposition, directly or indirectly, by the Corporate
Taxpayer of all or substantially all of the Corporate Taxpayer’s assets, other
than such sale or other disposition by the Corporate Taxpayer of all or
substantially all of the Corporate Taxpayer’s assets to an entity at least 50%
of the combined voting power of the voting securities of which are owned by
shareholders of the Corporate Taxpayer in substantially the same proportions as
their ownership of the Corporate Taxpayer immediately prior to such sale.

 

Notwithstanding the foregoing, except with respect to clause (ii) and clause
(iii)(x) above, a “Change of Control” shall not be deemed to have occurred by
virtue of the consummation of any transaction or series of integrated
transactions immediately following which the record holders of the shares of the
Corporate Taxpayer immediately prior to such transaction or series of
transactions continue to have substantially the same proportionate ownership in,
and own substantially all of the shares of, an entity which owns, directly or
indirectly, all or substantially all of the assets of the Corporate Taxpayer
immediately following such transaction or series of transactions.

 

“Code” means the United States Internal Revenue Code of 1986, as amended.

 

“Common Stock” means the common stock, $0.01 par value per share, of the
Corporate Taxpayer.

 

“Control” means the possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of a Person, whether through
ownership of voting securities, by contract or otherwise.

 

“Corporate Taxpayer” is defined in the Preamble to this Agreement; provided that
the term “Corporate Taxpayer” shall include any company that is a member of any
consolidated tax return of which American Renal Associates Holdings, Inc. is the
common parent, where such company may be obligated to pay Taxes on a
separate-company basis.

 

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“Corporate Taxpayer Return” means the federal and/or state and/or local Tax
Return, as applicable, of the Corporate Taxpayer filed with respect to Taxes of
any Taxable Year.

 

“Cumulative Net Realized Tax Benefit” for a Taxable Year means the cumulative
amount of Realized Tax Benefits for all Taxable Years of the Corporate Taxpayer,
up to and including such Taxable Year. The Realized Tax Benefit for each Taxable
Year shall be determined based on the most recent Tax Benefit Schedules or
Amended Schedules, if any, in existence at the time of such determination.

 

“Default Rate” means LIBOR plus 500 basis points.

 

“Determination” shall have the meaning ascribed to such term in
Section 1313(a) of the Code or similar provision of state, foreign or local tax
law, as applicable, or any other event (including the execution of IRS
Form 870-AD) that finally and conclusively establishes the amount of any
liability for Tax.

 

“Dispute” is defined in Section 7.8(a) of this Agreement.

 

“Early Termination Date” means the date of an Early Termination Notice for
purposes of determining the Early Termination Payment.

 

“Early Termination Effective Date” means the date on which an Early Termination
Schedule becomes binding pursuant to Section 4.2.

 

“Early Termination Notice” is defined in Section 4.2 of this Agreement.

 

“Early Termination Schedule” is defined in Section 4.2 of this Agreement.

 

“Early Termination Payment” is defined in Section 4.3(b) of this Agreement.

 

“Early Termination Rate” means the lesser of (i) 6.5% per annum, compounded
annually, and (ii) LIBOR plus 100 basis points.

 

“Expert” is defined in Section 7.9 of this Agreement.

 

“Family Group” means, with respect to any individual, such individual’s spouse
and descendants (whether natural or adopted) and any trust, partnership, limited
liability company or similar vehicle established and maintained solely for the
benefit of (or the sole members or partners of which are) such individual, such
individual’s spouse and/or such individual’s descendants.

 

“Hypothetical Tax Liability” means, with respect to any Taxable Year, the
liability for Taxes of the Corporate Taxpayer using the same methods, elections,
conventions and similar practices used on the relevant Corporate Taxpayer
Return, but without taking into account the Option Deductions, if any. For the
avoidance of doubt, Hypothetical Tax Liability shall be determined without
taking into account the carryover or carryback of any Tax item (or portions
thereof) that is attributable to the Option Deductions.

 

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“Interest Amount” is defined in Section 3.1(b) of this Agreement.

 

“IPO” means the initial public offering of Common Stock by the Corporate
Taxpayer.

 

“IPO Date” means the closing date of the IPO.

 

“IRS” means the United States Internal Revenue Service.

 

“LIBOR” means during any period, an interest rate per annum equal to the
one-year LIBOR reported, on the date two (2) days prior to the first day of such
period, on the Telerate Page 3750 (or if such screen shall cease to be publicly
available, as reported on Reuters Screen page “LIBOR01” or by any other publicly
available source of such market rate) for London interbank offered rates for
United States dollar deposits for such period.

 

“Market Value” means the closing price of the Common Stock on the relevant date
on the national securities exchange or interdealer quotation system on which
such Common Stock is then traded or listed; provided that if the closing price
is not reported for such date, then the Market Value means the closing price of
the Common Stock on the Business Day immediately preceding such date on the
national securities exchange or interdealer quotation system on which such
Common Stock is then traded or listed; provided, further, that if the Common
Stock is not then listed on a national securities exchange or interdealer
quotation system, “Market Value” means the fair market value of the Common
Stock, as determined by the Board in good faith.

 

“Material Objection Notice” is defined in Section 4.2 of this Agreement.

 

“Objection Notice” is defined in Section 2.3(a) of this Agreement.

 

“Option Deduction Schedule” is defined in Section 2.1 of this Agreement.

 

“Option Deductions” means any deductions (including net operating losses
resulting from such deductions) attributable to any Option Event.

 

“Option Event” means any exercise of, or the making of any payment (including
any dividend-equivalent right or payment) in respect of, any Relevant Stock
Option.

 

“Permitted Investors” means investment funds managed by Centerbridge Capital
Partners, L.P., Centerbridge Capital Partners Strategic, L.P., Centerbridge
Capital Partners SBS, L.P., or any of their Affiliates.

 

“Person” means any individual, corporation, firm, partnership, joint venture,
limited liability company, estate, trust, business association, organization,
governmental entity or other entity.

 

“Realized Tax Benefit” means, for a Taxable Year, the excess, if any, of the
Hypothetical Tax Liability for such Taxable Year over the actual liability for
Taxes of the

 

5

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Corporate Taxpayer for such Taxable Year. If all or a portion of the actual
liability for such Taxes for the Taxable Year arises as a result of an audit by
a Taxing Authority of any Taxable Year, such liability shall not be included in
determining the Realized Tax Benefit unless and until there has been a
Determination.

 

“Reconciliation Dispute” is defined in Section 7.9 of this Agreement.

 

“Reconciliation Procedures” is defined in Section 2.3(a) of this Agreement.

 

“Relevant Stock Option” means any compensatory stock option to acquire Common
Stock that is outstanding (whether vested or unvested) as of 4:30PM, New York
time, on April 20, 2016, as such option may be modified or adjusted (including,
without limitation, any reduction in exercise price, any increase in the number
of shares of Common Stock subject to such option or any substitute or
replacement options or equity awards) from time to time.

 

“Schedule” means any of the following: (i) an Option Deduction Schedule; (ii) a
Tax Benefit Schedule; or (iii) the Early Termination Schedule.

 

“Stockholders” means the Stockholders of the Corporate Taxpayer as of 4:30PM,
New York time, on April 20, 2016, as listed on the schedule maintained in
electronic form by the Corporate Taxpayer, and any assignees of their rights
hereunder as reflected on such schedule (as it may be amended from time to
time).

 

“Stockholders Agreement” means the Amended and Restated Stockholders Agreement,
dated as of June 28, 2010, by and among American Renal Associates
Holdings, Inc., and the other parties thereto, as amended by Amendment No. 1,
dated as of April 21, 2016.

 

“Senior Obligations” is defined in Section 5.1 of this Agreement.

 

“Subsidiaries” means, with respect to any Person, as of any date of
determination, any other Person as to which such Person, owns, directly or
indirectly, or otherwise controls more than 50% of the voting power or other
similar interests or the sole general partner interest or managing member or
similar interest of such Person.

 

“Tax Benefit Payment” is defined in Section 3.1(b) of this Agreement.

 

“Tax Benefit Schedule” is defined in Section 2.2(a) of this Agreement.

 

“Tax Return” means any return, declaration, report or similar statement required
to be filed with respect to Taxes (including any attached schedules), including,
without limitation, any information return, claim for refund, amended return and
declaration of estimated Tax.

 

“Taxable Year” means a taxable year of the Corporate Taxpayer as defined in
Section 441(b) of the Code or comparable section of state or local tax law, as
applicable (and, therefore, for the avoidance of doubt, may include a period of
less than 12 months for which a Tax Return is made), ending on or after the IPO
Date.

 

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“Taxes” means any and all United States federal, state, local and foreign taxes,
assessments or similar charges that are based on or measured with respect to net
income or profits, and any interest related to such Tax.

 

“Taxing Authority” means any domestic, federal, national, state, county or
municipal or other local government, any subdivision, agency, commission or
authority thereof, or any quasi-governmental body exercising any taxing
authority or any other authority exercising Tax regulatory authority.

 

“Treasury Regulations” means the final, temporary and proposed regulations under
the Code promulgated from time to time (including corresponding provisions and
succeeding provisions) as in effect for the relevant taxable period.

 

“Valuation Assumptions” means, as of an Early Termination Date, the assumptions
that in each Taxable Year ending on or after such Early Termination Date,
(1) the Corporate Taxpayer will have taxable income sufficient to fully utilize
any Option Deductions arising during such Taxable Year or future Taxable Years
in which any Option Deductions would become available, (2) the United States
federal, state and local income tax rates that will be in effect for each such
Taxable Year will be those specified for each such Taxable Year by the Code and
other law as in effect on the Early Termination Date and (3) if, at the Early
Termination Date, there are any Relevant Stock Options for which there has not
been an Option Event, then each such Relevant Stock Option shall be deemed
vested and exercised assuming the Market Value of the Common Stock that would be
issued as a result of such exercise would be the Market Value of the Common
Stock as of the Early Termination Date.

 

ARTICLE II

 

DETERMINATION OF CERTAIN REALIZED TAX BENEFIT

 

Section 2.1                                   Option Deduction Schedule. Within
ninety (90) calendar days after the filing of the United States federal income
tax return of the Corporate Taxpayer for each Taxable Year, the Corporate
Taxpayer shall deliver to the Stockholder Representative a schedule (the “Option
Deduction Schedule”) that shows, in reasonable detail necessary to perform the
calculations required by this Agreement, the amount of any payments made with
respect to any Relevant Stock Options during such Taxable Year and the Market
Value of any Common Shares delivered as a result of the exercise of any Relevant
Stock Options during such Taxable Year. Furthermore, (1) the Corporate Taxpayer
shall, upon the request of the Stockholder Representative, provide to the
Stockholder Representative any information reasonably requested by it regarding
(A) the Relevant Stock Options outstanding at the time of such request and
(B) any payments made with respect to any Relevant Stock Options and the Market
Value of any Common Shares delivered as a result of the exercise of any Relevant
Stock Options, in each case, since the Taxable Year with respect to which the
most recently delivered Option Deduction Schedule was prepared (or, if no Option
Deduction Schedule has yet been delivered, since the date of this Agreement),
provided, that the Corporate Taxpayer shall not be required to provide such
information referred to in (1)(A) or (1)(B) more than four (4) times per
calendar year, and (2) if the Corporate Taxpayer obtains a valuation of its
obligations under this Agreement from a third party which is used in connection
with the preparation of its quarterly or annual financial

 

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statements, upon the request of the Stockholder Representative, the Corporate
Taxpayer shall promptly provide a copy of such valuation to the Stockholder
Representative.

 

Section 2.2                                   Tax Benefit Schedule.

 

(a)                                 Tax Benefit Schedule. Within ninety (90)
calendar days after the filing of the United States federal income tax return of
the Corporate Taxpayer for any Taxable Year ending after the date hereof, the
Corporate Taxpayer shall provide to the Stockholder Representative a schedule
showing, in reasonable detail, the calculation of the Tax Benefit Payments, if
any, to be made to each Stockholder for such Taxable Year (a “Tax Benefit
Schedule”). Each Tax Benefit Schedule will become final as provided in
Section 2.3(a) and may be amended as provided in Section 2.3(b) (subject to the
procedures set forth in Section 2.3(b)).

 

(b)                                 Applicable Principles. The Realized Tax
Benefit for each Taxable Year is intended to measure the decrease in the actual
liability for Taxes of the Corporate Taxpayer for such Taxable Year attributable
to the Option Deductions, determined using a “with and without” methodology.
Carryovers or carrybacks of any Option Deductions shall be considered to be
subject to the rules of the Code and the Treasury Regulations or the appropriate
provisions of U.S. state and local income and franchise tax law, as applicable,
governing the use, limitation and expiration of carryovers or carrybacks of the
relevant type. If a carryover or carryback of any Tax item includes a portion
that is attributable to any Option Deductions and another portion that is not,
such portions shall be considered to be used in accordance with the “with and
without” methodology.

 

Section 2.3                                   Procedures, Amendments.

 

(a)                                 Procedure. Every time the Corporate Taxpayer
delivers to the Stockholder Representative an applicable Schedule under this
Agreement, including any Amended Schedule delivered pursuant to Section 2.3(b),
and any Early Termination Schedule or amended Early Termination Schedule, the
Corporate Taxpayer shall also (x) deliver to the Stockholder Representative
supporting schedules and work papers, as determined by the Corporate Taxpayer or
as reasonably requested by the Stockholder Representative, providing reasonable
detail regarding data and calculations that were relevant for purposes of
preparing the Schedule and (y) allow the Stockholder Representative reasonable
access at no cost to the appropriate representatives at the Corporate Taxpayer,
as determined by the Corporate Taxpayer or as reasonably requested by the
Stockholder Representative, in connection with a review of such Schedule.
Without limiting the generality of the preceding sentence, the Corporate
Taxpayer shall ensure that any Tax Benefit Schedule that is delivered to the
Stockholder Representative, along with any supporting schedules and work papers,
provides a reasonably detailed presentation of the calculation of the actual
liability of the Corporate Taxpayer for Taxes and the Hypothetical Tax
Liability, and identifies any material assumptions or operating procedures or
principles that were used for purposes of such calculations. An applicable
Schedule or amendment thereto shall become final and binding on all parties
thirty (30) calendar days from the date on which the Stockholder Representative
is treated as having received the applicable Schedule or amendment thereto under
Section 7.1 unless the Stockholder Representative (i) within thirty (30)
calendar days from such date provides the Corporate Taxpayer with notice of a
material objection to such Schedule (“Objection Notice”) made in good faith or
(ii) provides a

 

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written waiver of such right of any Objection Notice within the period described
in clause (i) above, in which case such Schedule or amendment thereto becomes
binding on the date the waiver is received by the Corporate Taxpayer. If the
Corporate Taxpayer and the Stockholder Representative, for any reason, are
unable to successfully resolve the issues raised in the Objection Notice within
thirty (30) calendar days after receipt by the Corporate Taxpayer of an
Objection Notice, the Corporate Taxpayer and the Stockholder Representative
shall employ the reconciliation procedures as described in Section 7.9 of this
Agreement (the “Reconciliation Procedures”).

 

(b)                                 Amended Schedule. The applicable Schedule
for any Taxable Year may be amended from time to time by the Corporate Taxpayer
(i) in connection with a Determination affecting such Schedule, (ii) to correct
inaccuracies in the Schedule identified as a result of the receipt of additional
factual information relating to a Taxable Year after the date the Schedule was
provided to the Stockholder Representative, (iii) to comply with the Expert’s
determination under the Reconciliation Procedures, (iv) to reflect a change in
the Realized Tax Benefit for such Taxable Year attributable to a carryback or
carryforward of a loss or other tax item to such Taxable Year, or (v) to reflect
a change in the Realized Tax Benefit for such Taxable Year attributable to an
amended Tax Return filed for such Taxable Year (any such Schedule, an “Amended
Schedule”). The Corporate Taxpayer shall provide an Amended Schedule to the
Stockholder Representative within thirty (30) calendar days of the occurrence of
an event referenced in clauses (i) through (v) of the preceding sentence.

 

ARTICLE III

 

TAX BENEFIT PAYMENTS

 

Section 3.1                                   Payments.

 

(a)                                 Payments. Within five (5) Business Days
after a Tax Benefit Schedule delivered to the Stockholder Representative becomes
final in accordance with Section 2.3(a), the Corporate Taxpayer shall pay to
each Stockholder the Tax Benefit Payment for such Taxable Year in respect of
such Stockholder determined pursuant to Section 3.1(b). Each such Tax Benefit
Payment shall be made by wire transfer of immediately available funds to the
bank account previously designated by such Stockholder to the Corporate Taxpayer
or as otherwise agreed by the Corporate Taxpayer and such Stockholder or, in the
absence of such designation or agreement, by check mailed to the last mailing
address provided by such Stockholder to the Corporate Taxpayer. For the
avoidance of doubt, no Tax Benefit Payment shall be made in respect of estimated
tax payments, including, without limitation, federal estimated income tax
payments.

 

(b)                                 A “Tax Benefit Payment” in respect of a
Stockholder for a Taxable Year means an amount, not less than zero, equal to the
sum of such Stockholder’s Applicable Percentage of the Net Tax Benefit and the
Interest Amount with respect thereto. The “Net Tax Benefit” for a Taxable Year
shall be an amount equal to the excess, if any, of 85% of the Cumulative Net
Realized Tax Benefit as of the end of such Taxable Year, over the total amount
of payments previously made under Section 3.1(a) (excluding payments
attributable to Interest Amounts); provided, for the avoidance of doubt, that no
Stockholder shall be required to return

 

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any portion of any previously made Tax Benefit Payment. The “Interest Amount”
shall equal the interest on the Net Tax Benefit calculated at the Agreed Rate
from the due date (without extensions) for filing the Corporate Taxpayer Return
with respect to Taxes for the Taxable Year for which the Net Tax Benefit is
being measured until the payment date under Section 3.1(a). Notwithstanding the
foregoing, for each Taxable Year ending on or after the date of a Change of
Control that occurs after the IPO Date (and provided that the Stockholder
Representative does not elect with respect to such Change of Control to
accelerate the Corporate Taxpayer’s obligations hereunder pursuant to
Section 4.1(c)), all Tax Benefit Payments shall be calculated by utilizing
clause (1) in the definition of “Valuation Assumptions.”

 

Section 3.2                                   No Duplicative Payments. It is
intended that the provisions of this Agreement will not result in duplicative
payment of any amount (including interest) required under this Agreement. The
provisions of this Agreement shall be construed in the appropriate manner to
ensure such intentions are realized.

 

ARTICLE IV

 

TERMINATION

 

Section 4.1                                   Early Termination of Agreement;
Breach of Agreement.

 

(a)                                 Within 30 calendar days after a Change of
Control described in clause (i) or (iii)(y) of the definition of “Change of
Control” has occurred, or at any time after December 31, 2018 (whether or not
such a Change of Control has occurred), the Corporate Taxpayer may terminate
this Agreement with respect to all amounts payable to the Stockholders at any
time by paying to each Stockholder the Early Termination Payment in respect of
such Stockholder; provided, however, that this Agreement shall only terminate
upon the receipt of the Early Termination Payment by all of the Stockholders,
and provided, further, that the Corporate Taxpayer may withdraw any notice to
execute its termination rights under this Section 4.1(a) prior to the time at
which any Early Termination Payment has been paid. Upon payment of the Early
Termination Payment in respect of each Stockholder by the Corporate Taxpayer,
the Corporate Taxpayer shall have no further payment obligations under this
Agreement, other than for any (i) Tax Benefit Payment due and payable and that
remains unpaid as of the date the Early Termination Notice is delivered and
(ii) Tax Benefit Payment due for the Taxable Year ending with or including the
date of the Early Termination Notice (except to the extent that the amount
described in this clause (ii) is included in the Early Termination Payment). If
the Corporate Taxpayer terminates this Agreement and, at the Early Termination
Date, any Relevant Stock Options remain outstanding, the Early Termination
Payment shall be calculated by utilizing the Valuation Assumptions, substituting
the terms “the sum of (x) the Applicable Premium for the Early Termination
Effective Date multiplied by the Market Value of the Common Stock as of the
Early Termination Date and (y) the Market Value of the Common Stock as of the
Early Termination Date” for “the Market Value of the Common Stock as of the
Early Termination Date.”

 

(b)                                 In the event that (1) the Corporate Taxpayer
breaches any of its material obligations under this Agreement, whether as a
result of failure to make any payment when due or failure to honor any other
material obligation required hereunder or (2) (A) the Corporate

 

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Taxpayer shall commence any case, proceeding or other action (i) under any
existing or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an
order for relief entered with respect to it, or seeking to adjudicate it a
bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with respect
to it or its debts or (ii) seeking an appointment of a receiver, trustee,
custodian, conservator or other similar official for it or for all or any
substantial part of its assets, or it shall make a general assignment for the
benefit of creditors or (B) there shall be commenced against the Corporate
Taxpayer any case, proceeding or other action of the nature referred to in
clause (A) above that remains undismissed or undischarged for a period of 60
days, all obligations hereunder shall be (subject in the case of clause (1) of
this Section 4.1(b) to the final proviso to this sentence) automatically
accelerated and shall be immediately due and payable, and such obligations shall
be calculated as if an Early Termination Notice had been delivered on the date
of such breach and shall include, but not be limited to, (x) the Early
Termination Payments calculated as if an Early Termination Notice had been
delivered on the date of a breach, (y) any Tax Benefit Payment due and payable
and that remains unpaid as of the date of a breach, and (z) any Tax Benefit
Payment due for the Taxable Year ending with or including the date of a breach;
provided that procedures similar to the procedures of Section 4.2 shall apply
with respect to the determination of the amount payable by the Corporate
Taxpayer pursuant to this sentence; provided, further, that in the event of a
breach described in clause (1) of this Section 4.1(b), (I) the obligations of
the Corporate Taxpayer hereunder shall not be so accelerated (and, for the
avoidance of doubt, such obligations shall not be calculated as if an Early
Termination Notice had been delivered on the date of such breach) unless the
Stockholder Representative provides notice to the Corporate Taxpayer that it has
elected to so accelerate such obligations and (II) if the Stockholder
Representative does not provide the notice described in clause (I), the
obligations of the Corporate Taxpayer hereunder shall nevertheless continue in
full force and effect. In the event of a material breach of the obligations of
the Corporate Taxpayer under this Agreement (other than as a result of any case,
proceeding or other action described in clause (B) of the preceding sentence),
the Stockholder Representative shall be required to give written notice to the
Corporate Taxpayer of such breach and so long as such breach is cured within
five Business Days of the delivery of such notice to the Corporate Taxpayer, the
Corporate Taxpayer shall no longer be deemed to be in material breach of its
obligations under this Agreement. The parties agree that the failure to make any
payment due pursuant to this Agreement within three months of the date such
payment is due shall be deemed to be a breach of a material obligation under
this Agreement for all purposes of this Agreement, and that it will not be
considered to be a breach of a material obligation under this Agreement to make
a payment due pursuant to this Agreement within three months of the date such
payment is due. Notwithstanding anything in this Agreement to the contrary, it
shall not be a breach of this Agreement if the Corporate Taxpayer fails to make
any Tax Benefit Payment when due to the extent that the Corporate Taxpayer has
insufficient funds to make such payment in the Corporate Taxpayer’s sole
judgment exercised in good faith; provided that the interest provisions of
Section 5.2 shall apply to such late payment (unless the Corporate Taxpayer does
not have sufficient cash to make such payment as a result of limitations imposed
by existing credit agreements to which it or any its Subsidiaries is a party, in
which case Section 5.2 shall apply, but the Default Rate shall be replaced by
the Agreed Rate).

 

(c)                                  In the event of a Change of Control, the
Corporate Taxpayer shall notify the Stockholder Representative that such a
Change of Control has occurred and, at the

 

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Stockholder Representative’s election, all obligations hereunder with respect to
any Relevant Stock Options that have become vested prior to (or in connection
with) such Change of Control may be accelerated, in which case such obligations
shall be calculated as if an Early Termination Notice had been delivered on the
date of such Change of Control and shall include (1) the Early Termination
Payments calculated with respect to such Relevant Stock Options as if the Early
Termination Date is the date of such Change of Control, (2) any Tax Benefit
Payment due and payable and that remains unpaid as of the date of such Change of
Control, and (3) any Tax Benefit Payment in respect of any Stockholder due for
the Taxable Year ending with or including the date of such Change of Control. In
the event of a Change of Control, any Early Termination Payment described in the
preceding sentence shall be calculated by utilizing the Valuation Assumptions,
(a) substituting the terms “date of a Change of Control” for an “Early
Termination Date,” and (b) if the Change of Control is described in clauses
(i) or (iii) of the definition of “Change of Control,” substituting the terms
“the fair market value of the consideration paid for the Common Stock, as
reasonably determined by the Stockholder Representative, in the event giving
rise to the Change of Control” for the “the Market Value of the Common Stock as
of the Early Termination Date.” Any Relevant Stock Options with respect to which
a payment has been made pursuant to the first sentence of this
Section 4.1(c) shall be excluded in calculating any future Tax Benefit Payments
or Early Termination Payment, and this Agreement shall have no further
application to such Relevant Stock Options. In the event that the Stockholder
Representative does not make an election pursuant to the first sentence of this
Section 4.1(c) with respect to a Change of Control, (1) the obligations of the
Corporate Taxpayer (including to make payments with respect to subsequent
Taxable Years pursuant to Section 3.1) and the rights of the Stockholders under
this Agreement shall continue in full force and effect, except that, for
purposes of calculating the Realized Tax Benefit for any Taxable Year ending
after the occurrence of such Change of Control, the Corporate Taxpayer shall be
treated as having taxable income sufficient to fully utilize any Option
Deductions arising during such Taxable Year or future Taxable Years in which any
Option Deductions would become available, and (2) the Stockholder Representative
shall have the right to make the election described in the first sentence of
this Section 4.1(c) with respect to any subsequent Change of Control.

 

Section 4.2                                   Early Termination Notice. If the
Corporate Taxpayer chooses to exercise its right of early termination under
Section 4.1(a) above, the Corporate Taxpayer shall deliver to the Stockholder
Representative notice of such intention to exercise such right (“Early
Termination Notice”) and a schedule (the “Early Termination Schedule”)
specifying the Corporate Taxpayer’s intention to exercise such right and showing
in reasonable detail the calculation of the Early Termination Payment for each
Stockholder. The Early Termination Schedule shall become final and binding on
all parties thirty (30) calendar days from the first date on which the
Stockholder Representative is treated as having received such Schedule or
amendment thereto under Section 7.1 unless the Stockholder Representative
(i) within thirty (30) calendar days after such date provides the Corporate
Taxpayer with notice of a material objection to such Schedule made in good faith
(“Material Objection Notice”) or (ii) provides a written waiver of such right of
a Material Objection Notice within the period described in clause (i) above, in
which case such Schedule becomes binding on the date the waiver is received by
the Corporate Taxpayer. If the Corporate Taxpayer and the Stockholder
Representative, for any reason, are unable to successfully resolve the issues
raised in such notice within thirty (30) calendar days after receipt by the
Corporate Taxpayer of the Material Objection Notice, the

 

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Corporate Taxpayer and the Stockholder Representative shall employ the
Reconciliation Procedures in which case such Schedule becomes binding ten
(10) days after the conclusion of the Reconciliation Procedures.

 

Section 4.3                                   Payment upon Early Termination.

 

(a)                                 Within three (3) calendar days after the
Early Termination Effective Date, the Corporate Taxpayer shall pay to each
Stockholder an amount equal to the Early Termination Payment in respect of such
Stockholder. Such payment shall be made by wire transfer of immediately
available funds to a bank account or accounts designated by such Stockholder or
as otherwise agreed by the Corporate Taxpayer and such Stockholder or, in the
absence of such designation or agreement, by check mailed to the last mailing
address provided by such Stockholder to the Corporate Taxpayer.

 

(b)                                 The “Early Termination Payment” in respect
of a Stockholder shall equal such Stockholder’s Applicable Percentage of the
present value, discounted at the Early Termination Rate as of the Early
Termination Effective Date, of the Tax Benefit Payments that would be required
to be paid by the Corporate Taxpayer to such Stockholder beginning from the
Early Termination Date and assuming that the Valuation Assumptions are applied.

 

Section 4.4                                   Termination Following the Exercise
or Lapse of All Relevant Stock Options. Except as provided in the proviso to
this sentence, this Agreement shall be considered terminated on the date
(x) when all Relevant Stock Options have either been exercised or lapsed and all
Option Deductions have been utilized or, if earlier, (y) that is the last day of
the second Taxable Year following the Taxable Year in which all Relevant Stock
Options have either been exercised or lapsed; provided that this Agreement shall
continue in full force and effect with respect to the obligations of the
Corporate Taxpayer to pay any (a) Tax Benefit Payment due and payable and that
remains unpaid as of such date and (b) Tax Benefit Payment due for the Taxable
Year ending with or including such date.

 

ARTICLE V

 

SUBORDINATION AND LATE PAYMENTS

 

Section 5.1                                   Subordination. Notwithstanding any
other provision of this Agreement to the contrary, any Tax Benefit Payment or
Early Termination Payment required to be made by the Corporate Taxpayer to any
Stockholder under this Agreement shall rank subordinate and junior in right of
payment to any principal, interest or other amounts due and payable in respect
of any obligations in respect of indebtedness for borrowed money of the
Corporate Taxpayer and its Subsidiaries (“Senior Obligations”) and shall rank
pari passu in right of payment with all current or future unsecured obligations
of the Corporate Taxpayer that are not Senior Obligations. To the extent that
any payment under this Agreement is not permitted to be made at the time payment
is due as a result of this Section 5.1 and the terms of agreements governing
Senior Obligations, such payment obligation nevertheless shall accrue for the
benefit of the Stockholders and the Corporate Taxpayer shall make such payments
at the first

 

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opportunity that such payments are permitted to be made in accordance with the
terms of the Senior Obligations.

 

Section 5.2                                   Late Payments by the Corporate
Taxpayer. The amount of all or any portion of any Tax Benefit Payment or Early
Termination Payment not made to the Stockholders when due under the terms of
this Agreement, whether as a result of Section 5.1 or otherwise, shall be
payable together with any interest thereon, computed at the Default Rate and
commencing from the date on which such Tax Benefit Payment or Early Termination
Payment was first due and payable until, but not including, the date of actual
payment.

 

ARTICLE VI

 

NO DISPUTES; CONSISTENCY; COOPERATION

 

Section 6.1                                   Participation in the Corporate
Taxpayer’s Tax Matters. Except as otherwise provided herein, the Corporate
Taxpayer shall have full responsibility for, and sole discretion over, all Tax
matters concerning the Corporate Taxpayer, including without limitation the
preparation, filing or amending of any Tax Return and defending, contesting or
settling any issue pertaining to Taxes. Notwithstanding the foregoing, the
Corporate Taxpayer shall notify the Stockholder Representative of, and keep the
Stockholder Representative reasonably informed with respect to, the portion of
any audit of the Corporate Taxpayer by a Taxing Authority the outcome of which
is reasonably expected to materially affect the rights and obligations of any
Stockholder under this Agreement, and shall provide to the Stockholder
Representative reasonable opportunity to provide information and other input to
the Corporate Taxpayer and its advisors concerning the conduct of any such
portion of such audit.

 

Section 6.2                                   Consistency. The Corporate
Taxpayer and the Stockholders (through the Stockholder Representative), by
accepting the benefits of this Agreement, agree to report and cause to be
reported for all purposes, including federal, state and local Tax purposes and
financial reporting purposes, all Tax-related items (including, without
limitation, each Tax Benefit Payment) in a manner consistent with that
contemplated by this Agreement or specified by the Corporate Taxpayer in any
Schedule required to be provided by or on behalf of the Corporate Taxpayer under
this Agreement unless otherwise required by law. The Corporate Taxpayer shall
(and shall cause its Subsidiaries to) use reasonable efforts (for the avoidance
of doubt, taking into account the interests and entitlements of all of the
Stockholders under this Agreement) to defend the Tax treatment contemplated by
this Agreement and any Schedule in any audit, contest or similar proceeding with
any Taxing Authority.

 

Section 6.3                                   Cooperation. By accepting the
benefits of this Agreement, each Stockholder agrees to (a) furnish to the
Corporate Taxpayer in a timely manner such information, documents and other
materials as the Corporate Taxpayer may reasonably request for purposes of
making any determination or computation necessary or appropriate under this
Agreement, preparing any Tax Return or contesting or defending any audit,
examination or controversy with any Taxing Authority, (b) make itself available
to the Corporate Taxpayer and its representatives to provide explanations of
documents and materials and such other information as the Corporate Taxpayer or
its representatives may reasonably request in connection with any of the matters
described in clause (a) above, and (c) reasonably cooperate in connection with
any such matter,

 

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and the Corporate Taxpayer shall reimburse each such Stockholder for any
reasonable and documented out-of-pocket costs and expenses incurred pursuant to
this Section.

 

ARTICLE VII

 

MISCELLANEOUS

 

Section 7.1                                   Notices. All notices, requests,
claims, demands and other communications hereunder shall be in writing and shall
be deemed duly given and received (a) on the date of delivery if delivered
personally, or by facsimile or email with confirmation of transmission by the
transmitting equipment or (b) on the first Business Day following the date of
dispatch if delivered by a recognized next-day courier service. All notices
hereunder shall be delivered as set forth below, or pursuant to such other
instructions as may be designated in writing by the party to receive such
notice:

 

If to the Corporate Taxpayer, to:

 

Michael R. Costa, Esq.

Vice President and General Counsel

American Renal Associates Holdings, Inc.

500 Cummings Center, Suite 6550

Beverly, Massachusetts 01915

(978) 922-3080

 

If to the Stockholder Representative, to:

 

c/o Centerbridge Partners, L.P.

375 Park Ave., 12th Floor

New York, NY 10152

Attn: The Office of the General Counsel

(212) 672-5000

 

Any party may change its address, fax number or email by giving the other party
written notice of its new address, fax number or email in the manner set forth
above. Notice to any Stockholder shall be delivered to the last mailing address
provided by such Stockholder to the Corporate Taxpayer.

 

Section 7.2                                   Counterparts. This Agreement may
be executed in one or more counterparts, all of which shall be considered one
and the same agreement and shall become effective when one or more counterparts
have been signed by each of the parties and delivered to the other parties, it
being understood that all parties need not sign the same counterpart. Delivery
of an executed signature page to this Agreement by facsimile transmission shall
be as effective as delivery of a manually signed counterpart of this Agreement.

 

Section 7.3                                   Entire Agreement; Third Party
Beneficiaries. This Agreement constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof. This Agreement

 

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shall be binding upon and inure solely to the benefit of each party hereto and
their respective successors and permitted assigns. The parties to this Agreement
agree that the Stockholders and their respective assignees are expressly made
third party beneficiaries of this Agreement with respect to the provisions
applicable to Stockholders including, without limitation, Section 3.1 and
Section 4.3, in each case subject to the terms of this Agreement. Except as
otherwise provided in the preceding sentence, nothing in this Agreement, express
or implied, is intended to or shall confer upon any other Person any right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement.

 

Section 7.4                                   Governing Law. This Agreement
shall be governed by, and construed in accordance with, the law of the State of
New York.

 

Section 7.5                                   Severability. If any term or other
provision of this Agreement is invalid, illegal or incapable of being enforced
by any law or public policy, all other terms and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner in order that the transactions contemplated hereby are consummated as
originally contemplated to the greatest extent possible.

 

Section 7.6                                   Successors; Assignment;
Amendments; Waivers.

 

(a)                                 Except as provided in this Section 7.6(a),
no Stockholder (other than the Centerbridge Stockholders (as defined in the
Stockholders Agreement)) may, directly or indirectly, assign its rights under
this Agreement without the prior written consent of the Stockholder
Representative except for assignments (i) solely to or among such Stockholder’s
Family Group (as defined in the Stockholders Agreement), (ii) to the
Centerbridge Stockholders or (iii) to the Corporate Taxpayer; provided that
prior to and as a condition to any assignment by any Stockholder of its rights
under this Agreement, such assignee has executed and delivered or, in connection
with such assignment, executes and delivers, a joinder to this Agreement, in
form and substance similar to Exhibit A hereto, agreeing to be bound by all
provisions of this Agreement. If the Stockholder Representative assigns all or a
portion of its rights as a Stockholder under this Agreement, such assignee
shall, at the election of the Stockholder Representative, also be assigned the
rights and obligations of the Stockholder Representative in its capacity as
such; provided that the Stockholder Representative may assign its rights and
obligations in its capacity as such to an Affiliate at any time; provided,
further, that any assignment of the rights and obligations of the Stockholder
Representative in its capacity as such shall not be effective unless the
assignee has executed and delivered or, in connection with such assignment,
executes and delivers a joinder to this Agreement, in form and substance similar
to Exhibit B hereto. For the avoidance of doubt, the rights and obligations of
the Stockholder Representative in its capacity as such may only be assigned in
whole and not in part.

 

(b)                                 No provision of this Agreement may be
amended unless such amendment is approved in writing by both the Corporate
Taxpayer and the Stockholder Representative, whereupon all Stockholders shall be
bound. No provision of this Agreement may be waived

 

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unless such waiver is in writing and signed by the party against whom the waiver
is to be effective; provided that the Stockholder Representative on behalf of
any or all Stockholders may waive any provisions applicable to any Stockholder.
Notwithstanding the foregoing, no amendment or waiver that disproportionately
adversely affects the rights of any Stockholder relative to other Stockholders
hereunder shall be effective with respect to such Stockholder without the prior
written consent of such Stockholder.

 

(c)                                  All of the terms and provisions of this
Agreement shall be binding upon, shall inure to the benefit of and shall be
enforceable by the parties hereto and their respective successors, assigns,
heirs, executors, administrators and legal representatives. The Corporate
Taxpayer shall require and cause any direct or indirect successor (whether by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business or assets of the Corporate Taxpayer, by written agreement, expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Corporate Taxpayer would be required to perform if no such
succession had taken place.

 

Section 7.7                                   Titles and Subtitles. The titles
of the sections and subsections of this Agreement are for convenience of
reference only and are not to be considered in construing this Agreement.

 

Section 7.8                                   Resolution of Disputes.

 

(a)                                 Any and all disputes which are not governed
by Section 7.9 and cannot be settled amicably, including any ancillary claims of
any party, arising out of, relating to or in connection with the validity,
negotiation, execution, interpretation, performance or non-performance of this
Agreement (including the validity, scope and enforceability of this arbitration
provision) (each, a “Dispute”) shall be finally settled by arbitration conducted
by a single arbitrator in New York in accordance with the then-existing Rules of
Arbitration of the International Chamber of Commerce. If the parties to the
Dispute fail to agree on the selection of an arbitrator within thirty (30)
calendar days of the receipt of the request for arbitration, the International
Chamber of Commerce shall make the appointment. The arbitrator shall be a lawyer
admitted to the practice of law in the State of New York and shall conduct the
proceedings in the English language. Performance under this Agreement shall
continue if reasonably possible during any arbitration proceedings.

 

(b)                                 Notwithstanding the provisions of paragraph
(a), the Corporate Taxpayer may bring an action or special proceeding in any
court of competent jurisdiction for the purpose of compelling a party to
arbitrate, seeking temporary or preliminary relief in aid of an arbitration
hereunder, and/or enforcing an arbitration award and, for the purposes of this
paragraph (b), each Stockholder (through the Stockholder Representative)
(i) expressly consents to the application of paragraph (c) of this Section 7.8
to any such action or proceeding, and (ii) agrees that proof shall not be
required that monetary damages for breach of the provisions of this Agreement
would be difficult to calculate and that remedies at law would be inadequate.

 

(c)                                  (i) EACH PARTY HEREBY IRREVOCABLY SUBMITS
TO THE JURISDICTION OF COURTS LOCATED IN NEW YORK, NEW YORK FOR THE PURPOSE OF
ANY JUDICIAL PROCEEDING BROUGHT IN ACCORDANCE WITH THE

 

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PROVISIONS OF THIS SECTION 7.8, OR ANY JUDICIAL PROCEEDING ANCILLARY TO AN
ARBITRATION OR CONTEMPLATED ARBITRATION ARISING OUT OF OR RELATING TO OR
CONCERNING THIS AGREEMENT. Such ancillary judicial proceedings include any suit,
action or proceeding to compel arbitration, to obtain temporary or preliminary
judicial relief in aid of arbitration, or to confirm an arbitration award. The
parties acknowledge that the fora designated by this paragraph (c) have a
reasonable relation to this Agreement, and to the parties’ relationship with one
another; and

 

(ii) The parties hereby waive, to the fullest extent permitted by applicable
law, any objection which they now or hereafter may have to personal jurisdiction
or to the laying of venue of any such ancillary suit, action or proceeding
brought in any court referred to in the preceding paragraph of this Section 7.8
and such parties agree not to plead or claim the same.

 

Section 7.9                                   Reconciliation. In the event that
the Corporate Taxpayer and the Stockholder Representative are unable to resolve
a disagreement with respect to the matters governed by Sections 2.3 and 4.2
within the relevant period designated in this Agreement (“Reconciliation
Dispute”), the Reconciliation Dispute shall be submitted for determination to a
nationally recognized expert (the “Expert”) in the particular area of
disagreement mutually acceptable to both parties. The Expert shall be a partner
or principal in a nationally recognized accounting or law firm, and unless the
Corporate Taxpayer and the Stockholder Representative agree otherwise, the
Expert shall not, and the firm that employs the Expert shall not, have any
material relationship with the Corporate Taxpayer or the Stockholder
Representative or other actual or potential conflict of interest. If the
Corporate Taxpayer and the Stockholder Representative are unable to agree on an
Expert within fifteen (15) calendar days of receipt by the respondent(s) of
written notice of a Reconciliation Dispute, the Expert shall be appointed by the
International Chamber of Commerce Centre for Expertise. The Expert shall resolve
any matter relating to the Early Termination Schedule or an amendment thereto
within thirty (30) calendar days and shall resolve any matter relating to a Tax
Benefit Schedule or an amendment thereto within fifteen (15) calendar days or as
soon thereafter as is reasonably practicable, in each case after the matter has
been submitted to the Expert for resolution. Notwithstanding the preceding
sentence, if the matter is not resolved before any payment that is the subject
of a disagreement would be due (in the absence of such disagreement) or any Tax
Return reflecting the subject of a disagreement is due, the undisputed amount
shall be paid on the date prescribed by this Agreement and such Tax Return may
be filed as prepared by the Corporate Taxpayer, subject to adjustment or
amendment upon resolution. The costs and expenses relating to the engagement of
such Expert or amending any Tax Return shall be borne by the Corporate Taxpayer
except as provided in the next sentence. The Corporate Taxpayer and the
Stockholder Representative shall bear their own costs and expenses of such
proceeding, unless (i) the Expert adopts the Stockholder Representative’s
position, in which case the Corporate Taxpayer shall reimburse the Stockholder
Representative for any reasonable out-of-pocket costs and expenses in such
proceeding, or (ii) the Expert adopts the Corporate Taxpayer’s position, in
which case the Stockholder Representative shall reimburse the Corporate Taxpayer
for any reasonable out-of-pocket costs and expenses in such proceeding. Any
dispute as to whether a dispute is a Reconciliation Dispute within the meaning
of this Section 7.9 shall be decided by the Expert. The Expert shall finally
determine any Reconciliation Dispute and the determinations of the

 

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Expert pursuant to this Section 7.9 shall be binding on the Corporate Taxpayer
and each of the Stockholders and may be entered and enforced in any court having
jurisdiction.

 

Section 7.10                            Withholding. The Corporate Taxpayer
shall be entitled to deduct and withhold from any payment payable pursuant to
this Agreement such amounts as the Corporate Taxpayer is required to deduct and
withhold with respect to the making of such payment under the Code or any
provision of state, local or foreign tax law. To the extent that amounts are so
withheld and paid over to the appropriate Taxing Authority by the Corporate
Taxpayer, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the relevant Stockholder.

 

Section 7.11                            Admission of the Corporate Taxpayer into
a Consolidated Group; Transfers of Corporate Assets.

 

(a)                                 If the Corporate Taxpayer is or becomes a
member of an affiliated or consolidated group of corporations that files a
consolidated income tax return pursuant to Sections 1501 et seq. of the Code or
any corresponding provisions of state or local law, then: (i) the provisions of
this Agreement shall be applied with respect to the group as a whole; and
(ii) Tax Benefit Payments, Early Termination Payments and other applicable items
hereunder shall be computed with reference to the consolidated taxable income of
the group as a whole.

 

(b)                                 If any entity that is obligated to make a
Tax Benefit Payment or Early Termination Payment hereunder transfers one or more
assets to a corporation (or a Person classified as a corporation for United
States federal income tax purposes) with which such entity does not file a
consolidated tax return pursuant to Section 1501 of the Code or any
corresponding provisions of state, local or foreign law (including as a result
of any series of transactions or acts), such entity, for purposes of calculating
the amount of any Tax Benefit Payment or Early Termination Payment (e.g.,
calculating the gross income of the entity and determining the Realized Tax
Benefit of such entity) due hereunder, shall be treated as having disposed of
such asset in a fully taxable transaction on the date of such transfer. The
consideration deemed to be received by such entity shall be equal to the gross
fair market value of the transferred asset. For purposes of this
Section 7.11(b), a transfer of a partnership interest shall be treated as a
transfer of the transferring partner’s share of each of the assets and
liabilities of that partnership.

 

Section 7.12                            Confidentiality.

 

(a)                                 The Stockholder Representative acknowledges
and agrees that the information of the Corporate Taxpayer is confidential and,
except in the course of performing any duties as necessary for the Corporate
Taxpayer and its Affiliates, as required by law or legal process or to enforce
the terms of this Agreement, the Stockholder Representative shall keep and
retain in the strictest confidence and not disclose to any Person any
confidential matters, acquired pursuant to this Agreement, of the Corporate
Taxpayer and its Affiliates and successors learned by the Stockholder
Representative heretofore or hereafter. This Section 7.12 shall not apply to
(i) any information that has been made publicly available by the Corporate
Taxpayer or any of its Affiliates, becomes public knowledge (except as a result
of an act of any Stockholder in violation of this Agreement) or is generally
known to the business community and (ii) the disclosure of information to the
extent necessary for the Stockholders to prepare and file their

 

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Tax Returns, to respond to any inquiries regarding the same from any taxing
authority or to prosecute or defend any action, proceeding or audit by any
taxing authority with respect to such returns. Notwithstanding anything to the
contrary herein, (A) neither the Stockholder Representative nor the Corporate
Taxpayer shall be required to disclose to any Stockholder any information that
it reasonably deems to be confidential pursuant to the terms hereof unless such
Stockholder has executed an agreement pursuant to which such Stockholder agrees
to be bound by the terms of this Section 7.12 and (B) each Stockholder and each
of its assignees (and each employee, representative or other agent of the
Stockholder or its assignees, as applicable) may disclose to any and all
Persons, without limitation of any kind, the tax treatment and tax structure of
the Corporate Taxpayer and its Affiliates, and any of their transactions, and
all materials of any kind (including opinions or other tax analyses) that are
provided to the Stockholder relating to such tax treatment and tax structure.

 

(b)                                 If any of the Stockholder Representative or
any Stockholder or an assignee commits a breach, or threatens to commit a
breach, of any of the provisions of this Section 7.12, the Corporate Taxpayer
shall have the right and remedy to have the provisions of this
Section 7.12 specifically enforced by injunctive relief or otherwise by any
court of competent jurisdiction without the need to post any bond or other
security, it being acknowledged and agreed that any such breach or threatened
breach shall cause irreparable injury to the Corporate Taxpayer or any of its
Subsidiaries or the Stockholders and the accounts and funds managed by the
Corporate Taxpayer and that money damages alone shall not provide an adequate
remedy to such Persons. Such rights and remedies shall be in addition to, and
not in lieu of, any other rights and remedies available at law or in equity.

 

Section 7.13                            Stockholder Representative.

 

(a)                                 Appointment. Without further action of any
of the Corporate Taxpayer, the Stockholder Representative or any Stockholder,
and as partial consideration in respect of the benefits conferred by this
Agreement, the Stockholder Representative is hereby irrevocably constituted and
appointed as the Stockholder Representative, with full power of substitution, to
take any and all actions and make any decisions required or permitted to be
taken by the Stockholder Representative under this Agreement.

 

(b)                                 Expenses. If at any time the Stockholder
Representative shall incur out of pocket expenses in connection with the
exercise of its duties hereunder, upon written notice to the Corporate Taxpayer
from the Stockholder Representative of documented costs and expenses (including
fees and disbursements of counsel and accountants) incurred by the Stockholder
Representative in connection with the performance of its rights or obligations
under this Agreement and the taking of any and all actions in connection
therewith, the Corporate Taxpayer shall reduce any future payments (if any) due
to the Stockholders hereunder pro rata (based on their respective Applicable
Percentages) by the amount of such expenses which it shall instead remit
directly to the Stockholder Representative. In connection with the performance
of its rights and obligations under this Agreement and the taking of any and all
actions in connection therewith, the Stockholder Representative shall not be
required to expend any of its own funds (though, for the avoidance of doubt but
without limiting the provisions of this Section 7.13(b), it may do so at any
time and from time to time in its sole discretion).

 

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(c)                                  Limitation on Liability. The Stockholder
Representative shall not be liable to any Stockholder for any act of the
Stockholder Representative arising out of or in connection with the acceptance
or administration of its duties under this Agreement, except to the extent any
liability, loss, damage, penalty, fine, cost or expense is actually incurred by
such Stockholder as a proximate result of the gross negligence, bad faith or
willful misconduct of the Stockholder Representative (it being understood that
any act done or omitted pursuant to the advice of legal counsel shall be
conclusive evidence of such good faith and reasonable judgment). The Stockholder
Representative shall not be liable for, and shall be indemnified by the
Stockholders (on a several but not joint basis) for, any liability, loss,
damage, penalty or fine incurred by the Stockholder Representative (and any cost
or expense incurred by the Stockholder Representative in connection therewith
and herewith and not previously reimbursed pursuant to subsection (b) above)
arising out of or in connection with the acceptance or administration of its
duties under this Agreement, and such liability, loss, damage, penalty, fine,
cost or expense shall be treated as an expense subject to reimbursement pursuant
to the provisions of subsection (b) above,  except to the extent that any such
liability, loss, damage, penalty, fine, cost or expense is the proximate result
of the gross negligence, bad faith or willful misconduct of the Stockholder
Representative (it being understood that any act done or omitted pursuant to the
advice of legal counsel shall be conclusive evidence of such good faith and
reasonable judgment); provided, however, in no event shall any Stockholder be
obligated to indemnify the Stockholder Representative hereunder for any
liability, loss, damage, penalty, fine, cost or expense to the extent (and only
to the extent) that the aggregate amount of all liabilities, losses, damages,
penalties, fines, costs and expenses indemnified by such Stockholder hereunder
is or would be in excess of the aggregate payments under this Agreement actually
remitted to such Stockholder.

 

(d)                                 Actions of the Stockholder Representative. A
decision, act, consent or instruction of the Stockholder Representative shall
constitute a decision of all Stockholders and shall be final, binding and
conclusive upon each Stockholder, and the Corporate Taxpayer may rely upon any
decision, act, consent or instruction of the Stockholder Representative as being
the decision, act, consent or instruction of each Stockholder. The Corporate
Taxpayer is hereby relieved from any liability to any person for any acts done
by the Corporate Taxpayer in accordance with any such decision, act, consent or
instruction of the Stockholder Representative.

 

[The remainder of this page is intentionally blank]

 

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IN WITNESS WHEREOF, the Corporate Taxpayer and the Stockholder Representative
have duly executed this Agreement as of the date first written above.

 

 

Corporate Taxpayer:

 

 

 

 

 

AMERICAN RENAL ASSOCIATES HOLDINGS, INC.

 

 

 

 

 

By:

/s/ Joseph A. Carlucci

 

Name:

Joseph A. Carlucci

 

Title:

CEO

 

 

 

 

 

Stockholder Representative:

 

 

 

 

 

CENTERBRIDGE CAPITAL PARTNERS, L.P.

 

 

 

 

 

By:

/s/ Susanne V. Clark

 

Name:

Susanne V. Clark

 

Title:

Authorized Signatory

 

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Exhibit A

 

Form of Joinder

 

This JOINDER (this “Joinder”) to the Tax Receivable Agreement (as defined
below), is by and among American Renal Associates Holdings, Inc., a Delaware
corporation (including any successor corporation the “Corporate Taxpayer”),
                (“Transferor”) and                (“Permitted Transferee”).

 

WHEREAS, on             , Permitted Transferee shall acquire (the “Acquisition”)
             percent of the Transferor’s right to receive payments that may
become due and payable under the Tax Receivable Agreement (as defined below)
(the “Acquired Interests”) from Transferor; and

 

WHEREAS, Transferor, in connection with the Acquisition, has required Permitted
Transferee to execute and deliver this Joinder pursuant to Section 7.6(a) of the
Tax Receivable Agreement, dated as of April 26, 2016, between the Corporate
Taxpayer and the Stockholder Representative (as defined therein) (the “Tax
Receivable Agreement”).

 

NOW, THEREFORE, in consideration of the foregoing and the respective covenants
and agreements set forth herein, and intending to be legally bound hereby, the
parties hereto agree as follows:

 

Section 1.1                                    Definitions.  To the extent
capitalized words used in this Joinder are not defined in this Joinder, such
words shall have the respective meanings set forth in the Tax Receivable
Agreement.

 

Section 1.2                                    Acquisition.  For good and
valuable consideration, the sufficiency of which is hereby acknowledged by the
Transferor and the Permitted Transferee, the Transferor hereby transfers and
assigns absolutely to the Permitted Transferee all of the Acquired Interests.

 

Section 1.3                                    Joinder.  Permitted Transferee
hereby acknowledges and agrees (i) that it has received and read the Tax
Receivable Agreement, (ii) that the Permitted Transferee is acquiring the
Acquired Interests in accordance with and subject to the terms and conditions of
the Tax Receivable Agreement and (iii) to become a “Stockholder” (as defined in
the Tax Receivable Agreement) for all purposes of the Tax Receivable Agreement.

 

Section 1.4                                    Notice.  Any notice, request,
consent, claim, demand, approval, waiver or other communication hereunder to
Permitted Transferee shall be delivered or sent to Permitted Transferee at the
address set forth on the signature page hereto in accordance with Section 7.1 of
the Tax Receivable Agreement.

 

Section 1.5                                    Governing Law. This Joinder shall
be governed by and construed in accordance with the law of the State of New
York.

 

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IN WITNESS WHEREOF, this Joinder has been duly executed and delivered by
Permitted Transferee as of the date first above written. [AMERICAN RENAL
ASSOCIATES HOLDINGS, INC.]

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

[TRANSFEROR]

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

[PERMITTED TRANSFEREE]

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

Address for notices:

 

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Exhibit B

 

Form of Joinder

 

This JOINDER (this “Joinder”) to the Tax Receivable Agreement (as defined
below), is by and among American Renal Associates Holdings, Inc., a Delaware
corporation (including any successor corporation the “Corporate Taxpayer”),
                (“Transferor”) and                (“Permitted Transferee”).

 

WHEREAS, on             , Permitted Transferee shall acquire (the “Acquisition”)
             percent of the Transferor’s right to receive payments that may
become due and payable under the Tax Receivable Agreement (as defined below)
(the “Acquired Interests”) from Transferor;

 

WHEREAS, pursuant to Section 7.6(a) of the Tax Receivable Agreement, in
connection with the Acquisition, Transferor assigned to Permitted Transferee all
or its rights and obligations as the Stockholder Representative; and

 

WHEREAS, Transferor, in connection with the Acquisition, has required Permitted
Transferee to execute and deliver this Joinder pursuant to Section 7.6(a) of the
Tax Receivable Agreement, dated as of April 26, 2016, between the Corporate
Taxpayer and the Stockholder Representative (as defined therein) (the “Tax
Receivable Agreement”).

 

NOW, THEREFORE, in consideration of the foregoing and the respective covenants
and agreements set forth herein, and intending to be legally bound hereby, the
parties hereto agree as follows:

 

Section 1.1                                    Definitions.  To the extent
capitalized words used in this Joinder are not defined in this Joinder, such
words shall have the respective meanings set forth in the Tax Receivable
Agreement.

 

Section 1.2                                    Acquisition.  For good and
valuable consideration, the sufficiency of which is hereby acknowledged by the
Transferor and the Permitted Transferee, the Transferor hereby transfers and
assigns absolutely to the Permitted Transferee all of the Acquired Interests.

 

Section 1.3                                    Joinder.  Permitted Transferee
hereby acknowledges and agrees (i) that it has received and read the Tax
Receivable Agreement, (ii) that the Permitted Transferee is acquiring the
Acquired Interests in accordance with and subject to the terms and conditions of
the Tax Receivable Agreement and (iii) to become “Stockholder Representative”
(as defined in the Tax Receivable Agreement) for all purposes of the Tax
Receivable Agreement.

 

Section 1.4                                    Notice.  Any notice, request,
consent, claim, demand, approval, waiver or other communication hereunder to
Permitted Transferee shall be delivered or sent to Permitted Transferee at the
address set forth on the signature page hereto, which for the

 

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avoidance of doubt will replace the address of Stockholder Representative
provided in Section 7.1 of the Tax Receivable Agreement for purposes thereof.

 

Section 1.5                                    Governing Law. This Joinder shall
be governed by and construed in accordance with the law of the State of New
York.

 

--------------------------------------------------------------------------------

 

 

IN WITNESS WHEREOF, this Joinder has been duly executed and delivered by
Permitted Transferee as of the date first above written. [AMERICAN RENAL
ASSOCIATES HOLDINGS, INC.]

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

[TRANSFEROR]

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

[PERMITTED TRANSFEREE]

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

Address for notices

 

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