Document:

Exhibit 10.26

 

FORM OF

 

CONTRIBUTION, ASSIGNMENT AND ASSUMPTION AGREEMENT

 

This CONTRIBUTION, ASSIGNMENT AND ASSUMPTION AGREEMENT (this “Agreement”), dated as of [   ], 2016, is by and between American Renal Associates LLC, a Delaware limited liability company (“Assignor”), and Term Loan Holdings LLC, a Delaware limited liability company (“NewCo”).

 

W I T N E S S E T H:

 

WHEREAS, Assignor has executed and delivered, with [   ] majority-owned affiliates of Assignor listed as “Borrowers” in a computer file (marked as “NewCo Borrowers”) delivered to NewCo on the date hereof (each a “Borrower” and collectively the “Borrowers”), sets of loan documents, consisting of, with respect to each Borrower, a Loan and Security Agreement, a Revolving Note, a Term Loan Note (in some instances, referred to as a Term Note), and two (2) or more Guaranties (in some instances, referred to as Personal Guaranties), all as more fully described in the loan summaries (the “Loan Summaries”) set forth in a computer file (marked as “Loan Summaries”) delivered to NewCo on the date hereof (collectively, and as further defined below, the “Loan Documents”); and

 

WHEREAS, Assignor desires to contribute, assign, transfer, convey and deliver to NewCo, and NewCo desires to accept and assume from Assignor, all of Assignor’s right, title and interest in and to the indebtedness and obligations of the Borrowers arising pursuant to the Term Loan Notes and Term Notes (each a “Term Loan,” and, collectively, the “Term Loans”), along with all of Assignor’s right, title and interest in, to and under the other Loan Documents to the extent pertaining to the Term Loans, including, without limitation, all of Assignor’s right, title and interest in and to the security interest granted to Assignor by each of the Borrowers in the Collateral securing each Term Loan and all remedies, in each case on the terms and conditions set forth herein.

 

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Assignor and NewCo hereby agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

Section 1.1            Certain Definitions.  Capitalized terms used herein shall either have the meanings assigned to them in the Loan Documents, assigned to them in other Sections of this Agreement or as assigned to them below:

 

“Agreement” has the meaning set forth in the preamble to this Contribution, Assignment and Assumption Agreement.

 

“Assignor” has the meaning set forth in the preamble to this Agreement.

 

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“Assignor’s Retained Rights” means, subject to NewCo’s rights with respect to the Term Loans arising under this Agreement: (a) all of Assignor’s rights under the Loan Documents pertaining to the Obligations arising thereunder with respect to the Revolving Loans; (b) the right to reimbursement from Obligors with respect to advances made by Assignor to pay Taxes or insurance premiums, provided that the same shall not be included in Assignor’s Retained Rights upon reimbursement of the same by NewCo; and (c) the right to the payment of indemnities and insurance proceeds and payments made pursuant to general liability claims, in each case which are now or hereafter payable to Assignor, in its capacity as lender or secured party under the Loan Documents, to the extent such payments or proceeds relate to events and periods prior to the Closing Date with respect to the Term Loans.

 

“Borrower” has the meaning set forth in the preamble to this Agreement.

 

“Business Day” means any day other than a Saturday, a Sunday or national holiday, or a day on which banking and savings and loan institutions in the State of New York are authorized or obligated by law or executive order to be closed.

 

“Closing Date” means the date hereof.

 

“Collateral” with respect to a particular Borrower means such term as defined in the applicable Loan and Security Agreement.

 

“Contribution and Assignment” has the meaning set forth in Section 2.1 hereof.

 

“Default” means an Event of Default, an event of default or similar event (however designated or defined) under any Loan Document.

 

“Guarantors” means with respect to each Term Loan, the Guarantors named in the Loan Summary with respect to such Term Loan.

 

“Insolvency” means that there shall have occurred one or more of the following events with respect to a particular Borrower: dissolution; liquidation; termination of existence; “insolvency” within the meaning of the United States Bankruptcy Code or other applicable statute; or appointment of a receiver of any part of the property of, execution of a trust mortgage or any assignment for the benefit of creditors by, or the filing of a petition in bankruptcy or the commencement of any proceedings under any bankruptcy or insolvency laws or any laws relating to the relief of debtors, readjustment of indebtedness or reorganization of debtors by or against such Borrower, or the offering of a plan to creditors of such Borrower for composition or extension, except for any involuntary proceeding commenced against such Borrower which is dismissed within 60 days after the commencement thereof without the entry of an order for relief or the appointment of a trustee.

 

“Lien” means any security interest, pledge, lien, charge, disposition of title, encumbrance, lease, mortgage sublease, right of others of any kind, including any thereof arising under any conditional sales or other title retention agreement.

 

“Loan and Security Agreement” means the Loan and Security Agreements listed among the Loan Documents on the Loan Summaries.

 

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“Loan Documents” means those Loan Documents listed in the first “Whereas” clause above, along with certificates of Borrowers and the guarantors party thereto, and any other agreements, documents, certificates or instruments evidencing a payment obligation under or providing security for a particular Term Loan or Revolving Loan or otherwise relating to such Term Loan or Revolving Loan (and all exhibits, addenda, schedules and amendments thereto), whether in paper form or stored in an electronic medium, including, without limitation, those documents listed on the Loan Summaries.

 

“Loan Servicing Agreement” means that certain Loan Servicing Agreement, dated as of [ ], 2016 (as the same may be amended, supplemented or modified) by and among Assignor and NewCo.

 

“Loan Summaries” has the meaning set forth in the preamble to this Agreement.

 

“NewCo” has the meaning set forth in the preamble of this Agreement.

 

“Obligations” means, with respect to any Borrower, “Obligations” as such term is defined in the applicable Loan and Security Agreement.

 

“Obligor” means any Borrower, Guarantor or other party named as an obligor in any Loan Document.

 

“Permitted Liens” means (a) rights of Assignor under the Loan Documents, including, without limitation, Liens in favor of Assignor in Collateral securing Assignor’s Retained Rights; (b) Liens for Taxes not yet due and payable; (c) Liens for Taxes being contested in good faith by appropriate proceedings for which adequate reserves have been taken; (d) Liens with respect to obligations not yet due and payable arising in the ordinary course of Borrower’s business created or deemed to exist by the establishment of trusts for the purpose of satisfying government reimbursement program costs and other actions or claims pertaining to the same or related matters or other medical reimbursement programs; (e) any other Lien with respect to which an Obligor is contesting such Lien in good faith by appropriate proceedings and such Lien does not subject the Collateral subject thereto to imminent risk of foreclosure or seizure; and (f) other Liens consisting of purchase money security interests for office furniture and equipment arising in the ordinary course of Borrower’s business.

 

“Person” means any individual, corporation, estate, partnership, limited liability company, joint venture, association, joint-stock company, trust (including any beneficiary thereof), unincorporated organization, or government or any agency or political subdivision thereof.

 

“Revolving Loans” means indebtedness and obligations of the Borrowers arising pursuant to the Revolving Notes listed in the Loan Summaries.

 

“Secured Parties” means each of Assignor and Newco and their permitted successors, assigns and transferees.

 

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“Taxes” means any and all federal, state and local taxes, fees, charges or assessments of any nature upon or pertaining to a Term Loan or a Revolving Loan (and Loan Documents and Collateral relating thereto) levied or assessed at any time.

 

Section 1.2            Interpretations.  In this Agreement (a) any reference to the “best knowledge” of either party shall be deemed to be after due inquiry of such party with respect to the matter in question, (b) any reference to either party’s “knowledge” shall be deemed to be actual knowledge of such party of particular facts or events, which knowledge is acquired in the ordinary course of the business of such party, without special inquiry and (c) all references to the singular shall include the plural, and vice versa.

 

ARTICLE II

 

CONTRIBUTION AND ASSIGNMENT

 

Section 2.1            Contribution and Assignment.  Assignor hereby contributes, assigns, transfers, conveys and delivers to NewCo, and NewCo hereby accepts and assumes from the Assignor, as of the Closing Date, all of Assignor’s rights, title, and interest with respect to all of the Term Loans, and the Loan Documents and the Collateral as they pertain to such Term Loans, together with all of the obligations of Assignor in its capacity as lender under the applicable Loan Documents to the extent such obligations pertain to such Term Loans (the “Contribution and Assignment”).  For the avoidance of doubt, NewCo and Assignor acknowledge and agree that the Contribution and Assignment shall not include any assignment of Assignor’s Retained Rights or assumption of Assignor’s obligations with respect to or arising under any of the Loan Documents to the extent they pertain to the Revolving Loans.

 

Section 2.2            Issuance of NewCo Interests.  As consideration and in exchange for the Contribution and Assignment, NewCo hereby issues and delivers to Assignor [•] membership interests of NewCo (the “NewCo Interests”), free and clear of any and all Liens.  The NewCo Interests, together with the membership interests of NewCo held by Assignor prior to the Closing Date, constitute one hundred percent (100%) of the membership interests of NewCo as of the date hereof.

 

Section 2.3            Cutoff Date.  The parties acknowledge that the Loan Summaries were prepared as of the close of business on the Closing Date.  Accordingly, the parties agree that, subject to the provisions of Article V hereto, all payments and transactions involving the Term Loans occurring after the Closing Date are for the account of NewCo.

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES

 

Section 3.1            Representations of Assignor.  Assignor represents and warrants to NewCo that, as of the Closing Date, with respect to each Term Loan contributed hereunder:

 

(a)           Principal of Term Loans.  The outstanding principal amount of each Term Loan is set forth in the amortization schedule delivered to NewCo on or prior to the Closing Date.

 

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(b)           Ownership; Security Interest.  Assignor is the sole legal, record and beneficial owner of each Term Loan, free and clear of all Liens in favor of third parties, other than Permitted Liens.  Subject to Permitted Liens, Assignor’s Lien on the Collateral securing each Term Loan is a first priority Lien which has been properly perfected, and by the execution and delivery hereof Assignor has assigned to NewCo all of its rights and title to, and interest in, its security interest in the Collateral with respect to the Term Loans.  Subject to the terms contained herein, Assignor hereby affirmatively authorizes NewCo to take any actions NewCo reasonably believes to be necessary or appropriate to evidence NewCo’s rights acquired pursuant to and as contemplated by this Agreement.

 

Section 3.2            No Other Representations and Warranties.

 

(a)           No Other Warranties.  THE REPRESENTATIONS AND WARRANTIES OF ASSIGNOR IN SECTIONS 3.1 ABOVE ARE IN LIEU OF ALL OTHER REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE AND MERCHANTABILITY.  THERE ARE NO REPRESENTATIONS OR WARRANTIES REGARDING THE TERM LOANS OR REVOLVING LOANS, THE OBLIGORS, THE COLLATERAL OR ASSIGNOR EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT.

 

(b)           NewCo Acknowledgments.  Notwithstanding anything to the contrary contained herein or otherwise, NewCo acknowledges and agrees that Assignor, in its capacity as the lender under any of the Loan Documents (as distinguished from Assignor in its capacity as a Guarantor) shall have no obligation to NewCo with respect to, and makes no warranties or representations regarding, express or implied, the creditworthiness, financial condition or solvency of any Obligor or the value of Collateral.  Except as otherwise expressly provided in this Agreement, Assignor, in its capacity as Assignor (as distinguished from its capacity as Guarantor), shall have no obligations to NewCo by reason of any breach or default by any Obligor under the Loan Documents or in the event that any Term Loan shall prove to be uncollectible.  NewCo hereby acknowledges further and agrees for the benefit of Assignor, in its capacity as Assignor, that Assignor, in its capacity as Assignor (as distinguished from its capacity as Guarantor),  has not made any representations or warranties to NewCo, except as expressly set forth in this Agreement.

 

ARTICLE IV

 

COVENANTS

 

Section 4.1            Covenants of Assignor.  Assignor covenants with NewCo as follows:

 

(a)           Non Interference; Turnover of Funds.  Assignor shall not make any demands for any payments payable on the Term Loans (or any other Obligations expressly relating thereto) on or after the Closing Date and shall not take any action with respect to the Term Loans under any of the Loan Documents or otherwise at any time after the Closing Date, in each case except to the extent permitted pursuant to this Agreement and Article II of the Loan Servicing Agreement.  In the event Assignor receives any payment which NewCo is entitled to

 

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receive on account of any of the Term Loans then, subject to the provisions of Article V of this Agreement and any applicable provision of the Loan Servicing Agreement, Assignor shall deliver the amount of such payment to NewCo promptly upon receipt, with clear and appropriate detail thereof.  Assignor acknowledges that its receipt of any such payments is as fiscal agent for the benefit of NewCo.

 

(b)           Further Assurances.  Subject to the provisions of Article V hereto, Assignor shall execute and deliver all such instruments or cause such instruments to be executed and delivered, and take such further actions or cause such actions to be taken, as NewCo reasonably may request, in order to give full effect to this Agreement and the transactions contemplated herein.

 

(c)           Inspection of Loan Documents and Records, Audits.  Assignor shall make the Loan Documents, all books and records and other information maintained by Assignor pertaining to the Term Loans available for inspection and copying by NewCo as provided in Article IV of the Loan Servicing Agreement.

 

Section 4.2            Covenants of NewCo.  NewCo covenants with Assignor as follows:

 

(a)           Non Interference; Turnover of Funds.  NewCo shall not make any demands for any payments from any Obligor in respect of any of Assignor’s Retained Rights and shall not take any action with respect to any of Assignor’s Retained Rights under any of the Loan Documents or otherwise at any time, in each case except to the extent permitted pursuant to this Agreement and Article II of the Loan Servicing Agreement.  In the event NewCo receives any payment which Assignor is entitled to receive on account of any of Assignor’s Retained Rights, subject to the provisions of Article V of this Agreement, NewCo shall deliver the amount of such payment to Assignor promptly upon receipt, with clear and appropriate detail thereof.  NewCo acknowledges that its receipt of any such payments is as fiscal agent for the benefit of Assignor.

 

(b)           Further Assurances.  Subject to the provisions of Article V hereto, NewCo shall execute and deliver all such instruments or cause such instruments to be executed and delivered, and take such further actions or cause such actions to be taken, as Assignor reasonably may request, in order to give full effect to this Agreement and the transactions contemplated herein.

 

(c)           Return of Loan Documents.  Upon payment in full of all amounts owed by the applicable Obligor with respect to a Term Loan, NewCo shall promptly return to each Borrower any original Loan Document relating to such Term Loan then in NewCo’s possession (including but not limited to any original promissory note evidencing such Borrower’s Term Loan (marked paid in full)).

 

Section 4.3            Tax Returns.  On and after the Closing Date, Assignor and NewCo shall cooperate with each other by furnishing any additional information and executing and delivering any additional documents as may be reasonably requested by the other party to aid in the preparation of any regulatory filing, financial statement or tax return; provided, however, that any such additional documents must not impose upon either party any material liability, risk, obligation, loss, cost or expense not contemplated by this Agreement.  Notwithstanding the

 

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foregoing, neither Assignor nor NewCo shall be obligated to provide to the other its federal or state tax returns.

 

ARTICLE V

 

INTERCREDITOR ARRANGEMENTS

 

Section 5.1            Equal Priority of Liens.

 

(a)           Each Secured Party hereby acknowledges and agrees that (i) upon the consummation of the Contribution and Assignment and all related transactions contemplated by this Agreement, each Secured Party will hold a perfected security interest in the Collateral, (ii) notwithstanding the date, time, method, manner or order of grant, attachment or perfection of any Liens securing any obligations granted in the Collateral and notwithstanding any provision of the Uniform Commercial Code of any jurisdiction, or any other applicable law or the Loan Documents or any defect or deficiencies in the Liens securing such obligations or any other circumstance whatsoever, the Liens securing such obligations on any Collateral shall be of equal priority, whether or not in connection with any Insolvency or related proceeding, and (iii) subject to the limitations of Section 5.3 hereof, each of Assignor and NewCo may exercise the rights of a secured creditor under the terms of each Loan and Security Agreement to the fullest extent provided therein and by applicable law.

 

(b)           In furtherance of the foregoing, Assignor shall (i) file UCC-3 amendments to the financing statements previously filed by Assignor to perfect its security interests in the Collateral of the Borrowers, evidencing NewCo as an additional secured party, and (ii) arrange for the delivery of certificates of Insurance evidencing each Borrower’s compliance with the requirements of each Loan and Security Agreement naming NewCo as “additional insured” and “loss payee.”

 

Section 5.2            Bailee.  Assignor shall hold all Collateral that constitutes possessory collateral (including but not limited to the Term Loan Notes) in its possession or control (or in the possession or control of its agents or bailees) as gratuitous bailee for the benefit of NewCo and any assignee solely for the purpose of perfecting the security interest granted in such Collateral, if any; provided that Assignor shall, at any time upon NewCo’s written request, promptly deliver any of the Term Loan Notes and corresponding allonges to NewCo (or otherwise allow NewCo to obtain control of such Possessory Collateral).

 

Section 5.3            Actions with Respect to Collateral. Each Secured Party hereby agrees that it will not (and hereby waives any right to) take any action under any Loan Document with respect to any Collateral, including, without limitation, foreclosing as provided under the terms of any applicable Loan and Security Agreement after a Default or releasing any Lien on any Collateral, without the prior written consent of the other Secured Parties, which consent shall not be unreasonably withheld.

 

Section 5.4            Application of Payments and Proceeds.

 

(a)           During such time as there is no outstanding Default, (i) Assignor may retain any payment it receives from a Borrower intended to repay the outstanding principal

 

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balance of a Revolving Loan or interest thereon in the ordinary course of business consistent with past practices and may apply such payment as so intended and (ii) NewCo may retain any payment it receives from a Borrower intended to repay or prepay the outstanding principal balance of a Term Loan or interest thereon in the ordinary course of business consistent with past practices and may apply such payment as so intended.

 

(b)           Notwithstanding anything to the contrary contained in this Agreement or in any Loan Document, during any such time as there is in existence a Default with respect to a particular Borrower, all payments, Collateral, and proceeds (including but not limited to any proceeds resulting from the exercise by any Secured Party of its rights under the applicable Loan and Security Agreement in accordance with the terms set forth in Section 5.3 hereof), and received by any Secured Party under such Loan Document (including, for the avoidance of doubt, as a result of any suit or any Insolvency or related proceeding) from or with respect to such Borrower shall be distributed first, to pay any fees and expenses incurred under, and in accordance with, the terms set forth in the Loan Servicing Agreement, and second, ratably among all Secured Parties in proportion to the aggregate amount of Obligations to which such Secured Party is then entitled in accordance with such Loan Document.

 

Section 5.5            Amendments to Loan Documents.  Unless otherwise specifically contemplated in this Agreement,

 

(a)           NewCo shall not, without the prior written consent of Assignor, enter into any agreement or take any action directly or indirectly: (i) permitting amendment or modification of, or deviation from, any of the terms of any Loan Document except to the extent such amendment or modification relates solely to the Term Loans and otherwise is not inconsistent with the terms of this Agreement; (ii) releasing any Obligor from any liability under any Loan Document, except to the extent such release relates solely to the Term Loans; (iii) terminating any Lien securing any of the Revolving Loans; or (iv) accelerating or otherwise changing the payment terms of any Loan Document with respect to any Revolving Loan; and

 

(b)           Except to the extent otherwise permitted under the Loan Servicing Agreement, Assignor shall not, without the prior written consent of NewCo, enter into any agreement or take any action directly or indirectly: (i) permitting amendment or modification of, or deviation from, any of the terms of any Loan Document except to the extent such amendment or modification relates solely to the Revolving Loans or any other of Assignor’s Retained Rights and otherwise is not inconsistent with the terms of this Agreement; (ii) releasing any Obligor from any liability under any Loan Document, except to the extent such release relates solely to the Revolving Loans or any other of Assignor’s Retained Rights; (iii) terminating any Lien securing any of the Term Loans; or (iv) accelerating or otherwise changing the payment terms of any Loan Document with respect to any Term Loan.  Notwithstanding the foregoing, Assignor may, without NewCo’s consent, amend one or more Guarantee(s) of any Term Loan (and make conforming changes to Guarantee(s) of the related Revolving Loan) to reflect a reduction (or increase) in the Maximum Liability (as such term is defined in each Guaranty) thereunder, which amendment shall be consistent with the reduction (or increase) of such Guarantor’s Ownership Interest (as defined in each Guaranty) in the Borrower of such

 

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Term Loan, but only in the event that another member of Borrower has executed a Guaranty or amended a Guaranty of such Term Loan in favor of NewCo to cover such other member’s increase (or reduction) in Maximum Liability so that at all times 100% of the members of a Borrower guaranty the Guaranteed Obligations (as defined in each Guaranty) in a maximum amount not to exceed such member’s Ownership Percentage in such Borrower.

 

ARTICLE VI
 INDEMNIFICATION

 

Section 6.1            Assignor’s Indemnification.  Assignor hereby agrees to defend, indemnify and hold NewCo, including NewCo’s affiliates, successors and assigns and their respective officers, directors, employees, shareholders, counsel and other representatives, harmless from and against any and all loss, cost, damage, injury or expense (including, without limitation, court costs and reasonable attorneys’ fees) wheresoever and howsoever arising which any of such Persons may incur or suffer to the extent arising out of (a) any breach by Assignor of any of the warranties, representations, certifications, covenants or other obligations of Assignor set forth in this Agreement, (b) any acts or omissions of Assignor, its officers, directors, shareholders, agents or employees relating to Assignor’s Retained Rights, or (c) events occurring prior to the Closing Date and pertaining to the Term Loans or any transaction with any Obligor pertaining thereto.

 

Section 6.2            NewCo’s Indemnification.  NewCo hereby agrees to defend, indemnify and hold Assignor, including Assignor’s affiliates, successors and assigns and their respective officers, directors, employees, shareholders, counsel and other representatives, harmless from and against any and all loss, cost, damage, injury or expense (including, without limitation, court costs and reasonable attorneys’ fees) wheresoever and howsoever arising which any of such Persons may incur or suffer to the extent arising out of (a) any breach by NewCo of any of the warranties, representations, certifications, covenants or other obligations of NewCo set forth in this Agreement, or (b) events occurring after the Closing Date and pertaining to the Term Loans or any transaction with any Obligor pertaining thereto, other than those acts or omissions of NewCo, its officers, directors, shareholders, agents or employees taken at Assignor’s request with respect to Assignor’s Retained Rights or any breach by Assignor of its representations, warranties, covenants or other obligations hereunder.

 

Section 6.3            Survival of Indemnity.  Notwithstanding anything to the contrary contained herein or otherwise, NewCo and Assignor agree that the provisions of this Article VI shall survive any termination of this Agreement.

 

ARTICLE VII

 

MISCELLANEOUS

 

Section 7.1            Survival.  The covenants, agreements, representations and warranties made herein by Assignor and NewCo shall survive the execution and delivery of this Agreement.

 

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Section 7.2            Amendments.  This Agreement may not be altered, modified or amended except by a writing signed by the party against whom such alteration, modification or amendment is sought to be enforced.

 

Section 7.3            Successors and Assigns.  The rights and obligations of the parties hereto shall inure to the benefit of, and be binding and enforceable upon, the respective successors, assigns and transferees of the parties hereto.

 

Section 7.4            Notices.  All notices and correspondence hereunder shall be in writing and sent by certified or registered mail, return receipt requested, or by a nationally recognized overnight delivery service, or telecopy, with all charges prepaid, to the applicable party at the addresses set forth below or, as to each party, at such other address or telecopy number as shall be designated by such party in a written notice to the other party complying as to delivery with the terms of this Section.  All such notices and correspondence shall be deemed given upon the earliest to occur of (i) actual receipt, (ii) if sent by certified or registered mail, three (3) Business Days after being postmarked, or (iii) if sent by overnight delivery service, when received at the above stated addresses or when delivery is refused.

 

	
If   to NewCo:
    	
Term Loan Holdings LLC

375 Park Avenue,   12th Floor

New York, New   York 10152

Facsimile: (212)   672-5001

Attention:   Steven M. Silver

Jared   S. Hendricks

 
    
	
If   to Assignor:
    	
American Renal   Associates LLC 
   500 Cummings Center, Suite 6550

Beverly,   Massachusetts 01915

Facsimile:  (978) 232-4060

Attention:  General Counsel
    

 

Section 7.5            Notices of Assignment.  Contemporaneously with the closing of the transactions contemplated by this Agreement, NewCo is providing a notice of the Contribution and Assignment to American Renal Management LLC, as manager of each of the Borrowers.

 

Section 7.6            Severability.  The provisions hereof shall be deemed independent and severable, and a determination of invalidity or partial invalidity or unenforceability of any one provision or portion thereof by a court of competent jurisdiction shall not affect the validity or enforceability of any other provision hereof.

 

Section 7.7            Governing Law.  This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York.

 

Section 7.8            Captions.  The captions used herein are inserted for reference purposes only and shall not affect the interpretation or construction of this Agreement.

 

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Section 7.9            Further Assurance.  Each party hereto shall execute and deliver all such further instruments and documents as reasonably may be requested by the other party in order to carry out fully the intent and accomplish the purposes of this Agreement and the transactions referred to herein.

 

Section 7.10          Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same agreement, it being understood that the parties need not sign the same counterpart.  Signatures to this Agreement transmitted by facsimile transmission, by electronic mail in “portable document format” (“.pdf”) form, or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing the original signature.

 

Section 7.11          Entire Agreement.  This Agreement and the Loan Summaries contain the entire agreement between the parties hereto with respect to the matters set forth herein and supersedes all prior agreements between the parties hereto with respect to such matters.  Nothing in this Agreement shall be deemed to constitute an amendment or modification of, and this Agreement shall not in any way amend or modify, any of the Loan Documents.

 

Section 7.12          Waivers; Remedies Cumulative.  No waiver of any provision of this Agreement, or consent to any departure by Assignor or NewCo therefrom, shall be effective unless it is in writing and signed by the party to be affected thereby, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.  No failure on the part of either party to exercise, and no delay in exercising, any right hereunder or under any related document shall operate as a waiver thereof by such party, nor shall any single or partial exercise of any right hereunder or under any other related document preclude any other or further exercise thereof or the exercise of any other right.  The rights and remedies of each party provided herein are exclusive of any other rights or remedies provided by law.

 

Section 7.13          Waiver of Consequential Damages.  If and to the extent any party shall be in default under this Agreement, the party claiming damages as a result of such default hereby waives its right to make a claim for any consequential damages which such party has suffered as a result of such default.

 

Section 7.14          Waiver of Trial by Jury.  EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES (TO THE EXTENT PERMITTED BY APPLICABLE LAW) ANY RIGHT THAT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION ARISING UNDER OR RELATING TO THIS AGREEMENT AND ANY SUCH LITIGATION SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.

 

Section 7.15          Assignment or Sale.  In the event that NewCo assigns or sells all or any part of its interest in the Term Loans to a third party or parties, such third parties shall agree in writing to be bound by the terms hereof with respect to Assignor’s Retained Rights and shall succeed to all of the rights and obligations of NewCo hereunder for the portion purchased, and this Agreement shall remain in full force and effect with respect thereto.  In the event that

 

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Assignor assigns or sells all or any part of Assignor’s Retained Rights to a third party or parties, such third parties shall agree in writing to be bound by the terms hereof and shall succeed to all of the rights and obligations of Assignor hereunder for the portion purchased, and this Agreement shall remain in full force and effect with respect thereto.

 

[Remainder of page intentionally left blank. Signature pages follow.]

 

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IN WITNESS WHEREOF, NewCo and Assignor have executed this Contribution, Assignment and Assumption Agreement as of the date first set forth above.

 

 

	
ASSIGNOR:
    	
AMERICAN   RENAL ASSOCIATES LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
(Signature)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(Printed   Name and Title)
    
	
 
    	
 
    
	
 
    	
 
    
	
NEWCO:
    	
TERM   LOAN HOLDINGS LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
(Signature)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(Printed   Name and Title)
    
	
 
    	
 
    

 

13crk-ex104_925.htm

 

Exhibit 10.4

COMSTOCK RESOURCES, INC.

2009 Long-term Incentive Plan
Amended and Restated Effective as of May 7, 2015

I.  GENERAL

1. Purpose.  The COMSTOCK RESOURCES, INC. 2009 Long-term Incentive Plan (the “Plan”) has been established by COMSTOCK RESOURCES, INC. (the “Company”) to:

(a)attract and retain key executive and managerial employees;

(b)motivate participating employees, by means of appropriate incentive, to achieve long-range goals;

(c)attract and retain well-qualified individuals to serve as members of the Company’s Board of Directors;

(d)provide incentive compensation opportunities which are competitive with those of other public corporations; and

(e)further align Participants’ interests with those of the Company’s other stockholders through compensation alternatives based on the Company’s common stock;

and thereby promote the long-term financial interest of the Company and its Subsidiaries, including the growth in value of the Company’s equity and enhancement of long-term shareholder return.

2. Effective Date.  The Plan was originally effective May 19, 2009, upon approval by the stockholders at the Company’s 2009 annual meeting.  As amended and restated, the Plan is effective May 7, 2015, upon approval by the stockholders at the Company’s 2015 annual meeting.

3. Definitions.  The following definitions are applicable to the Plan.

“Award” means the grant of any Stock Option, share of Restricted Stock, Restricted Stock Unit, Performance Unit or Stock Appreciation Right under the Plan pursuant to the terms, conditions, and limitations that the Committee may establish in order to fulfill the objectives of the Plan.

“Board” means the Board of Directors of the Company.

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

“Committee” means the Compensation Committee of the Board.

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“Disability” means the inability of a Participant, by reason of a physical or mental impairment, to engage in any substantial gainful activity, of which the Committee shall be the sole judge.

“Effective Date” means May 7, 2015, with respect to this Amendment and Restatement.  The original “Effective Date” was May 19, 2009. 

“Fair Market Value” of any Stock means, as of any date, the last sale price for such Stock as reported by the New York Stock Exchange on the date or, if Stock is not traded on that date, on the next preceding date on which Stock was traded.

“Non-employee Director” means each member of the Board who is not an employee of the Company.

“Option Date” means, with respect to any Stock Option, the date on which the Stock Option is awarded under the Plan.

“Participant” means any employee or Non-employee Director of the Company or any Subsidiary who is selected by the Committee to participate in the Plan.

“Performance Unit” shall have the meaning ascribed to it in Part V.

“Permitted Transferees” means members of the immediate family of the Participant, trusts for the benefit of such immediate family members, and partnerships in which substantially all of the interests are held by the Participant and members of his or her immediate family.  An immediate family member shall mean any descendant (children, grandchildren and more remote descendants), including step-children and relationships arising from legal adoption, and any spouse of a Participant or a Participant’s descendant.

“Related Company” means any corporation during any period in which it is a Subsidiary, or during any period in which it directly or indirectly owns 50% or more of the total combined voting power of all classes of stock of the Company that are entitled to vote.

“Restricted Period” has the meaning ascribed to it in Part IV.

“Restricted Stock” has the meaning ascribed to it in Part IV.

“Retirement” means (i) Termination of Service in accordance with the retirement procedures set by the Company from time to time; or (ii) a Termination of Service voluntarily with the consent of the Company (of which the Committee shall be the sole judge).

“Stock” means the Company’s common stock, $.50 par value per share.

“Stock Appreciation Right” has the meaning ascribed to it in Part VI.

“Stock Option” means the right of a Participant to purchase Stock pursuant to an Incentive Stock Option or Non-Qualified Option awarded pursuant to the provisions of the Plan.

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“Subsidiary” means any corporation during any period of which 50% or more of the total combined voting power of all classes of stock entitled to vote is owned, directly or indirectly, by the Company.

“Termination of Service” means the termination of employment of an employee by the Company and all Subsidiaries or the termination of service by an Non-employee Director as a member of the board of directors of the Company and all Subsidiaries.  A Participant’s service shall not be deemed to have terminated because of a change in the entity for which the Participant renders such service, provided that there is no interruption or termination of the Participant’s service.  Furthermore, a Participant’s service with the Company shall not be deemed to have terminated if the Participant takes any military leave, sick leave, or other bona fide leave of absence approved by the Company or a Subsidiary; provided, however, that if any such leave exceeds 90 days, on the 91st day of such leave the Participant’s service shall be deemed to have terminated unless the Participant’s leave of absence is approved by the Committee.  The Participant’s service shall be deemed to have terminated upon the entity for which the Participant performs service ceasing to be a Subsidiary (or any successor).  Subject to the foregoing, the Company, in its discretion, shall determine whether a Participant’s service has terminated and the effective date of such termination.

4. Administration.  The authority to manage and control the operation and administration of the Plan shall be vested in the Committee.  Subject to the provisions of the Plan, the Committee will have authority to select Participants to receive Awards, to determine the time or times of receipt, to determine the types of Awards and the number of shares covered by the Awards, to establish the terms, conditions, performance criteria, restrictions, and other provisions of such Awards, to determine the number and value of Performance Units awarded and earned, and to cancel or suspend Awards.  In making such determinations, the Committee may take into account the nature of services rendered by the Participant, his or her present and potential contribution to the Company’s success and such other factors as the Committee deems relevant.  The Committee is authorized to interpret the Plan, to establish, amend, and rescind any rules and regulations relating to the Plan, to determine the terms and provisions of any agreements made pursuant to the Plan, and to make all other determinations that may be necessary or advisable for the administration of the Plan.

A majority of the Committee shall constitute a quorum, and the acts of a majority of the members present at any meeting at which a quorum is present, or acts approved in writing by all members of the Committee, shall be the acts of the Committee, unless provisions to the contrary are embodied in the Company’s Bylaws or resolutions duly adopted by the Committee.  All actions taken and decisions and determinations made by the Committee pursuant to the Plan shall be binding and conclusive on all persons interested in the Plan.  No member of the Board or the Committee shall be liable for any action or determination taken or made in good faith with respect to the Plan.

5. Participation.  Subject to the terms and conditions of the Plan, the Committee shall determine and designate, from time to time, the key executives, managerial employees, and Non-employee Directors of the Company and/or its Subsidiaries who will participate in the Plan.  In the discretion of the Committee, a Participant may be awarded Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units or Performance Units or any 

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combination thereof, and more than one Award may be granted to a Participant.  Except as otherwise agreed to by the Company and the Participant, any Award under the Plan shall not affect any previous Award to the Participant under the Plan or any other plan maintained by the Company or its Subsidiaries.

6. Shares Subject to the Plan.  The shares of Stock with respect to which Awards may be made under the Plan shall be either authorized and unissued shares or authorized and issued shares held in the treasury by the Company (including, in the discretion of the Committee, shares purchased in the market).

(a)Shares Reserved for Awards.  Effective as of May 7, 2015, and subject to the provisions of paragraph I.11, the number of shares of Stock available under the Plan for the grant of Awards shall not exceed 5,200,000 shares in the aggregate.  If, for any reason, any Award under the Plan otherwise distributable in shares of Stock, or any portion of the Award, shall expire, terminate or be forfeited or canceled, or be settled in cash pursuant to the terms of the Plan and, therefore, any such shares are no longer distributable under the Award, such shares of Stock shall again be available for award under the Plan.

(b)Annual Limit on Grants to Employees.  Subject to the provisions of paragraph I.11, the number of shares of Stock with respect to which Stock Options or Stock Appreciation Rights under the Plan may be granted in any calendar year to any employee shall not exceed 1,000,000 shares.

7. Terms of Awards.  Awards may be granted generally on the terms and conditions set forth in Parts II through VI.  In addition, the Committee may impose on any Award or the exercise thereof, at the date of grant, such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall determine and specify in the Award Agreement.

(a)Minimum Vesting Requirements.  Awards granted under the Plan shall be subject to the following minimum vesting requirements.  If the vesting of an Award is not based on the achievement of one or more performance conditions, such Award will vest over a minimum period of three years after the date of grant.  If the vesting of an Award is based on the achievement of one or more performance conditions, such Award will vest over a minimum period of one year after the date of grant.  For purposes of this paragraph I.7(a), (i) vesting over a three-year period will include periodic graded vesting over such period; and (ii) notwithstanding those requirements, up to five percent (5%) of the shares reserved for Awards under the Plan, or 260,000 shares, subject to the provisions of paragraph I.11, may be granted as non-performance-based Awards with vesting terms not conforming to the three-year minimum vesting requirement.  Notwithstanding the foregoing, these minimum vesting requirements may be accelerated or waived in the event of a Participant’s death or Disability, or in the event of a Change in Control of the Company.

(b)Maximum Term of Awards.  The terms of each Award shall be for such period as may be determined by the Committee, except that the term of any Stock Option or Stock Appreciation Right shall not exceed ten years from the date of grant of the Award.

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8. Compliance With Applicable Laws and Withholding of Taxes.  Notwithstanding any other provision of the Plan, the Company shall have no liability to issue any shares of Stock under the Plan unless such issuance would comply with all applicable laws and the applicable requirements of any securities exchange or similar authority.  Prior to the issuance of any shares of Stock under the Plan, the Company may require a written statement that the recipient is acquiring the shares for investment and not for the purpose or with the intention of distributing as amended, the shares.  In the case of a Participant who is subject to Section 16(a) and 16(b) of the Securities Exchange Act of 1934, as amended, the Committee may, at any time, add such conditions and limitations to any election to satisfy tax withholding obligations through the withholding or surrender of shares of Stock as the Committee, in its sole discretion, deems necessary or desirable to comply with Section 16(a) or 16(b) and the rules and regulations thereunder or to obtain any exemption therefrom.  All Awards and payments under the Plan to employees are subject to withholding of all applicable taxes, which withholding obligations may be satisfied, with the consent of the Committee, through the surrender of shares of Stock which the Participant already owns, or to which a Participant is otherwise entitled under the Plan.

9. Transferability.  Incentive Stock Options, Performance Units, and, during the period of restriction, Restricted Stock awarded under the Plan are not transferable except as designated by the Participant by will or by the laws of descent and distribution.  Incentive Stock Options may be exercised during the lifetime of the Participant only by the Participant or his guardian or legal representative.  If expressly permitted by the terms of the Award Agreement, Non-Qualified Stock Options may be transferred by a Participant to Permitted Transferees, provided that there is not any consideration for the transfer.

10. Employment and Stockholder Status.  The Plan does not constitute a contract of employment, and selection as a Participant will not give any employee the right to be retained in the employ of the Company or any Subsidiary.  The Plan does not constitute or serve as evidence of an agreement or understanding, express or implied, that the Company will retain a director for any period of time.  Subject to the provisions of paragraph IV.3(a), no award under the Plan shall confer upon the holder thereof any right as a stockholder of the Company prior to the date on which he fulfills all service requirements and other conditions for receipt of shares of Stock.  If the redistribution of shares is restricted pursuant to paragraph I.8, certificates representing such shares may bear a legend referring to such restrictions.

11. Adjustments to Number of Shares Subject to the Plan.  In the event of any change in the outstanding shares of Stock of the Company by reason of any Stock dividend, split, spinoff, recapitalization, merger, consolidation, combination, exchange of shares or other similar change, the aggregate number of shares of Stock with respect to which Awards may be made under the Plan, the terms and the number of shares of any outstanding Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units and Performance Units, and the purchase price or base price of a Stock Option or Stock Appreciation Right, shall be equitably adjusted by the Committee in its sole discretion.

12. Change in Control.  Notwithstanding any other provision of the Plan, in the event of a “Change in Control”, all outstanding Stock Options, Stock Appreciation Rights and Restricted Stock will automatically become fully exercisable and/or vested, and Performance Units may be 

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paid out in such manner and amounts as determined by the Committee.  A “Change in Control” of the Company shall be deemed to have taken place if:

(a)a third person shall cause or bring about (through solicitation of proxies or otherwise) the removal or resignation of a majority of the then existing members of the Board or if a third person causes or brings about (through solicitation of proxies or otherwise) an increase in the size of the Board such that the then existing members of the Board thereafter represent a minority of the total number of persons comprising the entire Board;

(b)a third person, including a “group” as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, becomes the beneficial owner of shares of any class of the Company’s stock having 20% or more of the total number of votes that may be cast for the election of directors of the Company;

(c)the Company shall merge with or consolidate into any other corporation, pursuant to which the Company does not survive or survives only as a subsidiary of another corporation, or the Company disposes of all or substantially all of the assets of the Company, or any combination of the foregoing.

For purposes hereof, a person will be deemed to be the beneficial owner of any voting securities of the Company which it would be considered to beneficially own under Securities and Exchange Commission Rule 13d-3 (or any similar or superseding statute or rule from time to time in effect).

13. Agreement With Company.  At the time of any Awards under the Plan, the Committee will require a Participant to enter into an agreement (the “Award Agreement”) with the Company in a form specified by the Committee, agreeing to the terms and conditions of the Plan and to such additional terms and conditions, not inconsistent with the Plan, as the Committee may, in its sole discretion, prescribe.

14. Amendment and Termination of Plan.

(a)Subject to the following provisions of this paragraph 14, the Board may at any time and in any way amend, suspend or terminate the Plan.  No amendment of the Plan and, except as provided in paragraph I.11, no action by the Board shall, without further approval of the stockholders of the Company, materially increase the total number of shares of Stock with respect to which Awards may be made under the Plan, materially increase the benefits accruing to Participants under the Plan or materially modify the requirements as to eligibility for participation in the Plan, if stockholder approval of such amendment is a condition to the availability of the exemption provided by Securities and Exchange Commission Rule 16b-3 or of the Code at the time such amendment is adopted.  No amendment, suspension or termination of the Plan shall alter or impair any Award previously made under the Plan without the consent of the holder thereof.

(b)No Awards may be granted hereunder after the date that is ten (10) years from the earlier of (a) the Effective Date and (b) the date the Plan is approved by the stockholders of the Company.

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(c)Neither the Board nor the Committee may, without further approval of the stockholders of the Company, reduce the exercise price of a Stock Option or the grant value of a Stock Appreciation Right, except in accordance with the adjustments pursuant to paragraph I.11. Neither the Board nor the Committee may accelerate the vesting of an Award, except in the event of a Participant’s death or Disability. Neither the Board nor the Committee shall offer a cash buy-out of “underwater” Stock Options, and such buyouts of “underwater” Stock Options shall be prohibited. 

15. Prohibition on Deferred Compensation.  It is the intention of the Company that no Award shall be “deferred compensation” subject to Code Section 409A unless and to the extent that the Committee specifically determines otherwise, and the Plan and the terms and conditions of all Awards shall be interpreted accordingly.  The terms and conditions governing any Awards that the Committee determines will be subject to Code Section 409A, including any rules for elective or mandatory deferral of the delivery of cash or Shares pursuant thereto, shall be set forth in the applicable Award Agreement, and shall comply in all respects with Code Section 409A.  Notwithstanding any provision herein to the contrary, any Award issued under the Plan that constitutes a deferral of compensation under a “nonqualified deferred compensation plan” as defined under Code Section 409A(d)(1) and is not specifically designated as such by the Committee shall be modified or cancelled to comply with the requirements of Code Section 409A, including any rules for elective or mandatory deferral of the delivery of cash or Shares pursuant thereto.

II.  INCENTIVE STOCK OPTIONS

1. Definition.  The Award of an Incentive Stock Option under the Plan entitles the Participant to purchase shares of Stock at a price fixed at the time the option is awarded, subject to the following terms of this Part II.

2. Eligibility.  The Committee shall designate the Participants to whom Incentive Stock Options, as described in Code Section 422(b) or any successor section thereto, are to be awarded under the Plan and shall determine the number of option shares to be offered to each of them.  Incentive Stock Options shall be awarded only to key employees of the Company, and no Non-employee Director shall be eligible to receive an Award of an Incentive Stock Option.  In no event shall the aggregate Fair Market Value (determined at the time the option is awarded) of Stock with respect to which Incentive Stock Options are exercisable for the first time by an individual during any calendar year (under all plans of the Company and all Related Companies) exceed $100,000.

3. Price.  The purchase price of a share of Stock under each Incentive Stock Option shall be determined by the Committee, provided, however, that in no event shall such price be less than the greater of (a) 100% of the Fair Market Value of a share of Stock as of the Option Date (or 110% of such Fair Market Value if the holder of the Incentive Stock Option owns stock possessing more than 10% of the combined voting power of all classes of stock of the Company or any Related Company) or (b) the par value of a share of Stock on such date.  To the extent provided by the Committee, the full purchase price of each share of Stock purchased upon the exercise of any Incentive Stock Option shall be paid in cash or in shares of Stock (valued at Fair Market Value as of the day of exercise), or in any combination thereof, at the time of such 

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exercise and, as soon as practicable thereafter, a certificate representing the shares so purchased shall be delivered to the person entitled thereto.

4. Exercise.  No Incentive Stock Option may be exercised by a Participant after the Expiration Date (as defined in paragraph II.5 below) applicable to that option.  Each Stock Option shall become and be exercisable at such time or times and during such period or periods, in full or in such installments as may be determined by the Committee at the Option Date.

5. Option Expiration Date.  The “Expiration Date” with respect to an Incentive Stock Option or any portion thereof awarded to a Participant under the Plan means the earliest of:

(a)the date that is 10 years after the date on which the Incentive Stock Option is awarded;

(b)the date established by the Committee at the time of the Award;

(c)the date that is one year after the Participant’s employment with the Company and all Related Companies is terminated because of death or permanent and total disability; as defined in Code Section 22(e)(3); or

(d)the date that is three months after the date the Participant’s employment with the Company and all Related Companies is terminated for reasons other than death or permanent and total disability.

III.  NON-QUALIFIED STOCK OPTIONS

1. Definition.  The Award of a Non-Qualified Stock Option under the Plan entitles the Participant to purchase shares of Stock at a price fixed at the time the option is awarded, subject to the following terms of this Part III.

2. Eligibility.  The Committee shall designate the Participants to whom Non-Qualified Stock Options are to be awarded under the Plan and shall determine the number of option shares to be offered to each of them.

3. Price.  The purchase price of a share of Stock under each Non-Qualified Stock Option shall be determined by the Committee; provided, however, that in no event shall such price be less than the greater of (a) 100% of the Fair Market Value of a share of Stock as of the Option Date or (b) the par value of a share of such Stock on such date.  To the extent provided by the Committee, the full purchase price of each share of Stock purchased upon the exercise of any Non-Qualified Stock Option shall be paid in cash or by tendering, by either actual delivery of shares or by attestation, shares of Stock (valued at Fair Market Value as of the day of exercise), or in any combination thereof, at the time of such exercise.  Shares of Stock acquired pursuant to the exercise of a Non-Qualified Stock Option shall be subject to such conditions, restrictions and contingencies as the Committee may establish in the Award Agreement.  If the Company shall have a class of its Stock registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended, an option holder may also make payment at the time of exercise of a Non-Qualified Stock Option by delivering to the Company a properly executed exercise notice together with irrevocable instructions to a broker approved by the Company, that upon such 

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broker’s sale of shares of Stock with respect to which such option is exercised, it is to deliver promptly to the Company the amount of sale proceeds necessary to satisfy the option exercise price and any required withholding taxes.

4. Exercise.  No Non-Qualified Stock Option may be exercised by a Participant after the Expiration Date applicable to that option.  Unless otherwise specified herein, each Stock Option shall become and be exercisable at such time or times and during such period or periods, in full or in such installments as may be determined by the Committee at the Option Date.

5. Stock Option Expiration Date.  The “Expiration Date” with respect to a Non-Qualified Stock Option or any portion thereof awarded to a Participant under the Plan means the earliest of:

(a)the date that is 10 years after the date on which the Non-Qualified Stock Option is awarded;

(b)the date established by the Committee at the time of the Award;

(c)the date that is three months after the employee Participant’s employment with the Company and all Subsidiaries or the Non-employee Director Participant’s service as a member of the Board is terminated for reasons other than Retirement, Disability or death; or

(d)the date that is three years after the date the employee Participant’s employment with the Company and all Subsidiaries or the Non-employee Director Participant’s service as a member of the Board is terminated by reason of Retirement, Disability or death.

IV.  RESTRICTED STOCK

1. Definition.  Restricted Stock Awards are grants of Stock to Participants, the vesting of which is subject to a required period of employment and any other conditions established by the Committee or by the terms of this Plan.

2. Eligibility.  The Committee shall designate the Participants to whom Restricted Stock is to be awarded and the number of shares of Stock that are subject to the Award.

3. Terms and Conditions of Awards.  All shares of Restricted Stock awarded to Participants under the Plan shall be subject to the following terms and conditions and to such other terms and conditions, not inconsistent with the Plan, as shall be prescribed by the Committee in its sole discretion and as shall be contained in the Award Agreement.

(a)Restricted Stock awarded to Participants may not be sold, assigned, transferred, pledged or otherwise encumbered, except as hereinafter provided, for a period of ten years or such shorter period as the Committee may determine, but no less than one year, after the time of the award of such Stock (the “Restricted Period”).  Such restrictions shall lapse as to the Restricted Stock in accordance with the time(s) and number(s) of shares as to which the Restricted Period expires, as set forth in the Award Agreement with the Participant.  Except for such restrictions, the Participant as owner of such shares shall have all the rights of a 

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stockholder, including but not limited to the right to vote such shares and, except as otherwise provided by the Committee, the right to receive all dividends paid on such shares. 

(b)An employee Participant whose employment with the Company and all Subsidiaries terminates prior to the end of the Restricted Period other than by reason of death or Disability shall forfeit all shares of Restricted Stock remaining subject to any outstanding Restricted Stock Award which have not then vested in accordance with the Award Agreement.  Notwithstanding the foregoing and the provisions of paragraph I.7(a) hereof, the Committee may in its discretion accelerate the vesting of shares of Restricted Stock in the event of a Participant’s death or Disability.

(c)Each certificate issued in respect of shares of Restricted Stock awarded under the Plan shall be registered in the name of the Participant and, at the discretion of the Committee, each such certificate may be deposited in a bank designated by the Committee.  Each such certificate shall bear the following (or a similar) legend:

“The transferability of this certificate and the shares of stock represented hereby are subject to the terms and conditions (including forfeiture) contained in the COMSTOCK RESOURCES, INC. 2009 Long-term Incentive Plan and an agreement entered into between the registered owner and COMSTOCK RESOURCES, INC.  A copy of such plan and agreement is on file in the office of the Secretary of COMSTOCK RESOURCES, INC., 5300 Town and Country Blvd., Suite 500, Frisco, Texas  75034 or, if the Company changes its principal office, at the address of such new principal office.”

(d)As the Restricted Period for Restricted Stock expires and such restrictions lapse, such Restricted Stock shall be held by a Participant (or his or her legal representative, beneficiary or heir) free of all restrictions imposed by the Plan and the Award Agreement.  Such shares shall nevertheless continue to be subject to any restriction imposed under applicable securities laws.

V.  RESTRICTED STOCK UNITS AND PERFORMANCE UNITS

1. Definition.  A “Restricted Stock Unit” Award is the grant of a right to receive shares of Stock in the future. Performance Units are Awards to Participants who may receive value for the units at the end of a Performance Period.  The number of units earned, and value received for them, will be contingent on the degree to which the performance measures established at the time of the initial Award are met.  The term “Performance Units” as used in Parts I through IV and Part VII of the Plan shall be deemed to include both Restricted Stock Units and Performance Units.

2. Eligibility.  The Committee shall designate the Participants to whom Restricted Stock Units or Performance Units are to be awarded, and the number of units to be the subject of such Awards.

3. Terms and Conditions of Awards.  For each Participant, the Committee will determine the timing of Awards; the number of Restricted Stock Units or Performance Units awarded; the value of Performance Units, which may be stated either in cash or in shares of Stock; the performance measures used for determining whether the Performance Units are earned; the 

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performance period during which the performance measures will apply; the relationship between the level of achievement of the performance measures and the degree to which Performance Units are earned; whether, during or after the performance period, any revision to the performance measures or performance period should be made to reflect significant events or changes that occur during the performance period; the number of earned Performance Units that will be paid in cash and/or shares of Stock; and whether dividend equivalents will be paid on Restricted Stock Units, either currently or on a deferred basis.

4. Payment.  The Committee will compare the actual performance to the performance measures established for the performance period and determine the number of Performance Units to be paid and their value.  Payment for Performance Units earned shall be wholly in cash, wholly in Stock or in a combination of the two, in a lump sum or installments, and subject to vesting requirements and such other conditions as the Committee shall determine.  The Committee will determine the number of earned units to be paid in cash and the number to be paid in Stock.  For Performance Units awarded in shares of Stock, one share of Stock will be paid for each unit earned.  For Performance Units awarded in cash, cash will be paid for each unit earned equal to (a) its initial cash value, (b) the Fair Market Value of a share of Stock at the end of the performance period or (c) the Fair Market Value of a share of Stock averaged for a number of days determined by the Committee.

(a)Death or Disability.  Notwithstanding the provisions of paragraph I.7(a) hereof, the Committee may in its discretion accelerate the vesting of Restricted Stock Units in the event of a Participant’s death or Disability.  A Participant whose employment with the Company and all Subsidiaries, or service as a member of the Board, terminates during a performance period because of Disability or death shall be entitled to the prorated value of earned Performance Units issued with respect to that performance period, at the conclusion of the performance period based on the ratio of the months of service during the period to the total months of the performance period.  If an employee Participant’s employment with the Company and all Subsidiaries terminates, or if a Non-employee Director Participant’s service terminates, during a performance period for any reason other than Disability or death, the Performance Units issued with respect to that performance period will be forfeited on the date such Participant’s employment or service terminates.

VI.  STOCK APPRECIATION RIGHTS

1. Definition.  A Stock Appreciation Right is an Award that entitles the Participant to receive an amount equal to the difference between the Fair Market Value of the shares of Stock at the time of exercise of the Stock Appreciation Right and the Fair Market Value of the shares of Stock on the date of grant of the Stock Appreciation Right, subject to the following provisions of this Part VI.  Upon the grant of Stock Appreciation Rights that are to be settled in shares of Stock, the number of Stock Appreciation Rights awarded (and not the “net” number of shares of Stock issued upon exercise of the Stock Appreciation Rights) shall be considered awarded from the pool of authorized shares of Stock available under the Plan.

2. Exercise.  A Stock Appreciation Right may be exercised under the applicable terms and conditions of the Award Agreement. A Stock Appreciation Right shall entitle the Participant to receive, upon the exercise of the Stock Appreciation Right, either cash or shares of Stock (valued 

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at their Fair Market Value at the time of exercise), as specified in the Award Agreement, in an amount equal in value to the excess of the Fair Market Value of the shares of Stock subject to the Stock Appreciation Right as of the date of such exercise over the Fair Market Value of the shares of Stock as of the date of grant of the Stock Appreciation Right.

3. Expiration Date.  The “Expiration Date” with respect to a Stock Appreciation Right shall be determined by the Committee, but shall not be more than 10 years after the date on which the Stock Appreciation Right is awarded.  If the Stock Appreciation Right is not exercised before the end of the day on which the Stock Appreciation Right ceases to be exercisable, such Stock Appreciation Right shall be deemed exercised as of such date and payment shall be made to the holder in cash or shares of Stock (valued at their Fair Market Value at the time of exercise), as specified in the Award Agreement.

VII.  SECTION 162(m) PERFORMANCE AWARDS

1. Maximum Award.  The maximum aggregate Award of Performance Units that a Participant may receive in any one Fiscal Year shall be 750,000 Shares, if stated in shares of Stock, or $10,000,000, if stated in cash, determined as of the date of the Award.

2. Code Section 162(m) Compliance.  Notwithstanding any other terms of this Plan, the vesting, payout or value (as determined by the Committee) of each Award other than a Stock Option or Stock Appreciation Right that, at the time of grant, the Committee intends to be “performance-based compensation” to a “covered employee,” as such terms are defined in Code Section 162(m), shall be determined by the attainment of one or more performance goals as determined by the Committee in conformity with Code Section 162(m). The Committee shall specify in writing, by resolution or otherwise, the Participants eligible to receive such an Award (which may be expressed in terms of a class of individuals) and the performance goal(s) applicable to such Awards within 90 days after the commencement of the period to which the performance goal(s) relate(s), or such earlier time as required to comply with Code Section 162(m). No such Award shall be payable unless the Committee certifies in writing, by resolution or otherwise, that the performance goal(s) applicable to the Award were satisfied. In no case may the Committee increase the value of an Award of performance-based compensation above the maximum value determined under the performance formula by the attainment of the applicable performance goal(s), but the Committee retains the discretion to reduce the value below such maximum.

3. Performance Measures.  The performance goals, upon which the payment or vesting of an Award occurs that is intended to qualify as performance-based compensation, shall be limited to the following performance measures:

(a)Increases in, or levels of, net asset value; net asset value per share; pretax earnings; earnings before interest, taxes, depreciation, amortization, exploration and other non-cash expenses (“EBITDAX”); net income and/or earnings per share;

(b)Return on equity, return on assets or net assets, return on capital (including return on total capital or return on invested capital);

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(c)Share price or stockholder return performance (including, but not limited to, growth measures and total stockholder return, which may be measured in absolute terms and/or in comparison to a group of peer companies or an index); 

(d)Oil and gas reserve replacement, reserve growth and finding and development costs;

(e)Increases in, or levels of, oil and/or gas production;

(f)Performance of investments in oil and gas properties;

(g)Cash flow measures (including, but not limited to, cash flows from operating activities, discretionary cash flows, and cash flow return on investment, assets, equity or capital); and

(h)Decreases in the leverage ratio (defined as total debt over EBITDAX).

Any performance measure(s) may be used in comparison to the performance of a group of peer companies, or a published or special index that the Committee, in its sole discretion, deems appropriate. The Committee shall also have the authority to provide in Award Agreements for accelerated vesting of an Award based on the achievement of performance goal(s), a Participant’s death or Disability, or a Change in Control.

4. Evaluation of Performance.  The Committee may provide in any Award Agreement that any evaluation of attainment of a performance goal may include or exclude any of the following events that occurs during the relevant period: (a) asset write downs; (b) litigation judgments or settlements; (c) the effect of changes in tax laws, accounting principles, or other laws or regulations affecting reported results; (d) any reorganization or restructuring transactions; (e) extraordinary nonrecurring items as described in Accounting Principles Board Opinion No. 30 and/or in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s Annual Report on Form 10-K for the applicable year; and (f) significant acquisitions or divestitures. To the extent such inclusions or exclusions affect Awards to covered employees, they shall be prescribed in a form that meets the requirements of Code Section 162(m) for deductibility.

5. Discretion.  In the event that applicable tax and/or securities laws change to permit discretion by the Committee to alter the governing performance measures without obtaining stockholder approval of such changes, the Committee shall have sole discretion to make such changes without obtaining stockholder approval. In addition, in the event that the Committee determines that it is advisable to grant Awards to covered employees that shall not qualify as performance-based compensation, the Committee may make such grants without satisfying the requirements of Code Section 162(m).

 

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