Exhibit 10.6

 

NOTICE OF OPTION AMENDMENTS

 

April 26, 2016

 

Dear Optionholder:

 

As you may know, on April 26, 2016, American Renal Associates Holdings, Inc.
(“we” or the “Company”) consummated its initial public offering (“IPO”) of
shares of common stock, par value $0.01 per share, of the Company (“Common
Stock”).  We are delighted to inform you that the board of directors (the
“Board”) of the Company has approved certain favorable modifications to the
vesting and other terms relating to the outstanding options granted to you
pursuant to the 2010 American Renal Associates Holdings, Inc. Stock Incentive
Plan (the “Plan”), which were effective upon and subject to the consummation of
the IPO.  Capitalized terms not defined herein shall have the meanings given to
such terms in the Plan, the 2010 Option Agreement, the 2013 Exchange Agreement
and the 2014 Option Agreement (each as defined below, collectively the “Option
Agreements”), as applicable.

 

The modifications will apply to the following options and other provisions under
the following agreements entered into between you and the Company:

 

1.              The 2.5x Exit Option and 3.0x Exit Option granted under one or
more Nonqualified Stock Option Agreement(s) (collectively, the “2010 Option
Agreement”);

2.              The clawback provisions applicable to the Performance Option
Advance Payment under the Exchange Agreement (the “2013 Exchange Agreement”);
and

3.              The EBITDA Option granted under the 2014 Incremental
Nonqualified Stock Option Agreement (the “2014 Option Agreement”).

 

2010 Option Agreement

 

In addition to the vesting terms set forth in Sections 3(b) and 3(c) the 2010
Option Agreement, (i) the 2.5x Exit Option will vest on the date the volume
weighted average price (“VWAP”) per Share reported on the principal exchange on
which the shares are listed for the prior 365 consecutive calendar days is equal
to or greater than $8.70 and (ii) the 3.0x Exit Option will vest following a
Qualified Public Offering on the date the VWAP per Share reported on the
principal exchange on which the shares are listed for the prior 365 consecutive
calendar days is equal to or greater than $13.28.

 

Notwithstanding Sections 3 and 4 of the 2010 Option Agreement, in the event your
employment with the Company and its subsidiaries is terminated (i) by the
Company and its Subsidiaries without Cause, (ii) due to your death or
Disability, or (iii) by you for Good Reason (if your 2010 Option Agreement
contains a definition for Good Reason), then the 2.5x Exit Option and 3.0x Exit
Option will remain outstanding and eligible to vest for a period of twelve (12)
months following the date of termination of your employment (the “Tail Period”),
and will become vested (if at all) when the applicable vesting criteria set
forth in the 2010 Option Agreement and this letter amendment is satisfied during
such Tail Period.

 

To the extent the 2.5x Exit Option and/or 3.0x Exit Option becomes vested during
the Tail Period, you will be able to exercise such options for the longer of the
applicable period set forth in Section 4 of the 2010 Option Agreement and 90
days following the date such 2.5x Exit Option and/or 3.0x Exit Option becomes
vested.  The 2.5x Exit Option and 3.0x Exit Option, to the extent unvested, will
automatically be cancelled and forfeited without consideration immediately
following the Tail Period.

 

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This letter constitutes an amendment to the 2010 Option Agreement in accordance
with Section 14 thereof.

 

2013 Exchange Agreement

 

Notwithstanding Section 3(c) of the 2013 Exchange Agreement, the Company hereby
waives and agrees not to require repayment of the Clawback Amount or the Excess
Amount described in Section 3(c) of the 2013 Exchange Agreement.  The foregoing
provision will not limit the Company’s other remedies under the 2013 Exchange
Agreement in the event of a breach of any Restrictive Covenant.

 

For the avoidance of doubt, any Dividend Equivalent Right that you are entitled
to receive in connection with the dividend declared on the Company’s Shares on
March 21, 2013, to the extent not yet paid to you and not included in the
Performance Option Advance Payment, shall be paid to you in accordance with the
terms of the Plan if and when the 2.5x Exit Option and the 3.0x Exit Option, as
applicable, become vested.

 

This letter constitutes an amendment to the 2013 Exchange Agreement in
accordance with Section 16 thereof.

 

2014 Option Agreement

 

In addition to the vesting terms set forth in Section 3(a) of the 2014 Option
Agreement, the EBITDA Option will vest following a Qualified Public Offering on
the date the VWAP per Share reported on the principal exchange on which the
shares are listed for the prior 60 consecutive trading days is equal to or
greater than $53.95.

 

This letter constitutes an amendment to the 2014 Option Agreement in accordance
with Section 14 thereof.

 

General

 

Except as expressly modified in this letter, there will not be any change to any
of the other existing terms of the Option Agreements and all of such other
existing terms and conditions of such agreements will remain the same.

 

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We are excited to deliver news of these favorable modifications to your
outstanding options and related rights to you and we look forward to continuing
the growth and success of the Company together.  If you have any questions
regarding the foregoing, please do not hesitate to contact Michael R. Costa at
(978) 922-3080 ext. 360.  You should retain this letter for your records
together with your Option Agreements.

 

 

Sincerely,

 

 

 

 

 

American Renal Associates Holdings, Inc.

 

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