Exhibit 10.4

 

Execution Version

 

TRA Waiver and Assignment Agreement

 

This TRA waiver and assignment agreement (this “Agreement”), dated as of
September 8, 2017, is hereby entered into by and among Surgery Partners, Inc., a
Delaware corporation (the “Corporation”), and Michael T. Doyle, the Makayla
Doyle 2012 Irrevocable Trust under agreement dated July 20, 2012, the Michael
Doyle 2012 Irrevocable Trust under agreement dated July 20, 2012 and the Mason
Doyle 2012 Irrevocable Trust under agreement dated July 20, 2012 (each, a “Doyle
Party” and, collectively, the “Doyle Parties”). Reference is hereby made to that
certain Income Tax Receivable Agreement, by and among the Corporation, the
Stockholders Representative, the Doyle Parties and the other parties referred to
therein, dated as of September 30, 2015 and amended by that certain Amendment
No. 1 to Income Tax Receivable Agreement dated as of May 9, 2017 (as amended or
otherwise modified, the “Tax Receivable Agreement”).  All capitalized terms used
and not otherwise defined herein shall have the meanings ascribed thereto in the
Tax Receivable Agreement.  In consideration of the respective covenants and
agreements set forth herein, and intending to be legally bound hereby, the
parties hereto agree as follows:

 

1.             The Corporation hereby agrees to pay to each Doyle Party the
amount set forth opposite such Doyle Party’s name below, in each case, on or
before the date which is ten (10) days after the date of this Agreement, by wire
transfer of immediately available funds to such account or accounts as may be
designated in writing by such Doyle Party no later than two (2) Business Days
prior to such date:

 

Doyle Party

 

Amount

 

Michael T. Doyle

 

$

4,910,686.10

 

Makayla Doyle 2012 Irrevocable Trust under agreement dated July 20, 2012

 

$

75,630.76

 

Michael Doyle 2012 Irrevocable Trust under agreement dated July 20, 2012

 

$

75,630.76

 

Mason Doyle 2012 Irrevocable Trust under agreement dated July 20, 2012

 

$

75,630.76

 

 

2.             In consideration for the payments payable by the Corporation to
the Doyle Parties pursuant to Section 1 of this Agreement, each of the Doyle
Parties hereby agrees to assign and transfer to the Corporation, and otherwise
hereby waives, fifty percent (50%) of such Doyle Party’s right, title and
interest in and to any ITR Payment payable pursuant to the Tax Receivable
Agreement.  The Corporation hereby accepts such assignment and transfer and
hereby agrees to hold such right, title and interest in accordance with and
subject to the terms of the Tax Receivable Agreement and accordingly to be bound
by the terms thereof to the extent applicable to such right, title and
interest.  The Corporation hereby acknowledges that any and all requirements
under Section 7.06(a) of the Tax Receivable Agreement with respect to such
assignment and transfer are hereby satisfied.  For the avoidance of doubt,
pursuant to and in accordance with this Section 2, with respect to each ITR
Payment payable after the date of this Agreement, each of the Doyle Parties will
only be entitled to receive fifty percent (50%) of its share of such ITR Payment
and the Corporation shall be entitled to receive or retain the other fifty
percent (50%) of such Doyle Party’s share of such ITR Payment.

 

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

 

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4.             The amount of all or any portion of any payment payable by the
Corporation to the Doyle Parties pursuant to Section 1 of this Agreement not
made to the Doyle Parties when due under the terms of this Agreement shall be
payable together with any interest thereon, computed at the Default Rate and
commencing from the date on which such payment was due and payable. 
Notwithstanding anything in this Agreement to the contrary, it shall not be a
breach of this Agreement if the Corporation fails to make or cause to be made
any payment payable by the Corporation to the Doyle Parties pursuant to
Section 1 of this Agreement when due to the extent that the Corporation
determines in good faith that the Corporation has insufficient funds (taking
into account funds of its wholly-owned Subsidiaries that are permitted to be
distributed or loaned to the Corporation pursuant to the terms of any applicable
credit agreements or other documents evidencing indebtedness (each as reasonably
interpreted by the Corporation), but not taking into account funds of its
wholly-owned Subsidiaries that are not permitted to be distributed or loaned
pursuant to the terms of such agreements or documents and not taking into
account funds reasonably reserved for reasonably expected liabilities or
expenses) to make such payment; provided that the interest provisions of the
previous sentence shall apply to such late payment (unless the Corporation
determines in good faith that (x) the Corporation does not have sufficient cash
to make such payment as a result of limitations imposed by credit agreements or
any other documents evidencing indebtedness to which the Corporation or its
wholly-owned Subsidiaries is a party, guarantor or otherwise an obligor as of
the date of this Agreement (the “Initial Debt Documents”) or any other document
evidencing indebtedness to which the Corporation or its wholly-owned
Subsidiaries becomes a party, guarantor or otherwise an obligor thereafter to
the extent the terms of such other documents are not materially more restrictive
in respect of the Corporation’s ability to receive from its direct or indirect
Subsidiaries funds sufficient to make such payments compared to the terms of the
Initial Debt Documents, as determined by the Corporation in good faith (any such
document, collectively with the Initial Debt Documents, the “Permitted Debt
Documents”), or (y) such payments could (I) be set aside as fraudulent transfers
or conveyances or similar actions under fraudulent transfer laws or (II) could
cause the Corporation and/or its wholly-owned Subsidiaries to be
undercapitalized, in which case the interest provisions of the previous sentence
shall apply, but the Default Rate shall be replaced by the Agreed Rate).  The
Corporation represents to the Doyle Parties that it has sufficient funds to make
the payments pursuant to Section 1, there are no limitations pursuant to any
agreements, including any credit agreements or other documents evidencing
indebtedness, which would prevent the Corporation from making such payments, and
the making of the payments under Section 1 will not result in it and/or its
wholly-owned Subsidiaries being undercapitalized or result in the payment
potentially being set aside as a fraudulent transfer or conveyance under
fraudulent transfer laws.

 

5.             Sections 1.02, 7.02, 7.03, 7.04 and 7.05 of the Tax Receivable
Agreement are hereby incorporated by reference into this Agreement and shall
apply as if fully set forth herein mutatis mutandis.  No Doyle Party may assign
any of its rights and obligations under this Agreement without the prior written
consent of the Corporation.  No provision of this Agreement may be amended
unless such amendment is approved in writing by the Corporation and each Doyle
Party.  No provision of this Agreement may be waived unless such waiver is in
writing and signed by the party against whom the waiver is to be effective.  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, permitted assigns, heirs, executors, administrators and
legal representatives.

 

6.             All notices, requests, consents and other communications
hereunder shall be in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by delivery in person, by courier service, by fax,
by electronic mail (delivery receipt requested) or by certified or registered
mail (postage prepaid, return receipt requested) to the respective parties at
the following addresses (or at such other address for a party as shall be as
specified in a notice given in accordance with this Section 6):

 

2

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If to the Corporation, to:

Surgery Partners, Inc.

40 Burton Hills Boulevard
Suite 500
Nashville, Tennessee 37215
Fax: (615) 234-5998
Attention: General Counsel
Email: jbaldock@surgerypartners.com

 

with a copy (which shall not constitute notice) to:
Ropes & Gray LLP
1211 Avenue of the Americas
New York, NY 10036
Attention: Carl Marcellino
Facsimile: (646) 728-1523
Email: Carl.Marcellino@ropesgray.com

 

If to the Doyle Parties, to:

 

[Name of Doyle Party]

[***]

[***]

 

7.             Any and all disputes which cannot be settled amicably between the
Corporation and any Doyle Party, 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)
shall be finally settled by arbitration conducted by a single arbitrator in
accordance with the then existing Rules of Arbitration of the International
Chamber of Commerce. The place of arbitration shall be New York, New York. The
parties shall jointly select a single arbitrator who shall have the authority to
hold hearings and to render a decision in accordance with the then existing
Rules of Arbitration of the International Chamber of Commerce. If the
Corporation and such Doyle Party fail to agree on the selection of an arbitrator
within thirty (30) calendar days of the receipt of the request for arbitration,
the arbitrator shall be selected by the International Chamber of Commerce. The
arbitrator shall be a lawyer. The arbitration shall be governed by the Federal
Arbitration Act, 9 U.S.C. Section 1, et seq., and judgment on the award may be
entered by any court having jurisdiction thereof. Performance under this
Agreement shall continue if reasonably possible during any arbitration
proceedings.  Notwithstanding the foregoing, either the Corporation or such
Doyle Party 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 such purposes, Section 7.07(c) of the
Tax Receivable Agreement is hereby incorporated by reference into this Agreement
and shall apply to any such action or proceeding as if fully set forth herein
mutatis mutandis.

 

[Signature pages follow]

 

3

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IN WITNESS WHEREOF, the Corporation and each Doyle Party have duly executed this
Agreement as of the date first written above.

 

 

SURGERY PARTNERS, INC.

 

 

 

 

 

By:

/s/ Teresa F. Sparks

 

Name:

Teresa F. Sparks

 

Title:

Executive Vice President, Chief Financial Officer

 

[Signature Page to TRA Waiver and Assignment Agreement]

 

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/s/ Michael T. Doyle

 

Michael T. Doyle

 

 

 

 

 

THE MAKAYLA DOYLE 2012 IRREVOCABLE TRUST UNDER AGREEMENT DATED JULY 20, 2012

 

 

 

 

 

By:

/s/ Myra Fernandez Doyle

 

Name:

Myra Fernandez Doyle

 

Title:

Trustee

 

 

 

 

 

 

 

THE MICHAEL DOYLE 2012 IRREVOCABLE TRUST UNDER AGREEMENT DATED JULY 20, 2012

 

 

 

 

 

By:

/s/ Myra Fernandez Doyle

 

Name:

Myra Fernandez Doyle

 

Title:

Trustee

 

 

 

 

 

 

 

THE MASON DOYLE 2012 IRREVOCABLE TRUST UNDER AGREEMENT DATED JULY 20, 2012

 

 

 

 

 

By:

/s/ Myra Fernandez Doyle

 

Name:

Myra Fernandez Doyle

 

Title:

Trustee

 

[Signature Page to TRA Waiver and Assignment Agreement]

 

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