EXHIBIT 10.38
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT OR AN EXEMPTION THEREFROM UNDER THE ACT, THE RULES AND
REGULATIONS THEREUNDER AND APPLICABLE STATE LAWS. THE TRANSFER OF THIS NOTE IS
SUBJECT TO THE CONDITIONS SPECIFIED IN THE SENIOR SUBORDINATED NOTE PURCHASE
AGREEMENT DATED AS OF APRIL 13, 2006, BY AND AMONG COMPBENEFITS CORPORATION, THE
SUBSIDIARY GUARANTORS NAMED THEREIN AND THE PURCHASERS PARTY THERETO AS AMENDED,
MODIFIED AND SUPPLEMENTED FROM TIME TO TIME (THE "AGREEMENT").
THIS NOTE AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE
IN THE MANNER AND TO THE EXTENT SET FORTH IN THE AGREEMENT AND EACH HOLDER, BY
ITS ACCEPTANCE HEREOF, SHALL BE BOUND BY THE PROVISIONS THEREOF.
11.75% SENIOR SUBORDINATED NOTE DUE APRIL 12, 2016
No. 5 $5,042,554.00
COMPBENEFITS CORPORATION
promises to pay to NEW YORK LIFE INVESTMENT MANAGEMENT MEZZANINE
PARTNERS, LP
or registered assigns,
the principal sum of FIVE MILLION FORTY-TWO THOUSAND FIVE HUNDRED
FIFTY-FOUR AND NO/100 Dollars on April 12, 2016
Interest Payment Dates: June 30, December 31
Record Dates: June 15, December 15
COMPBENEFITS CORPORATION
Date: April 13, 2006 By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxxx
Its: Chief Financial Officer and
Treasurer
11.75% SENIOR SUBORDINATED NOTE DUE APRIL 12, 2016
Capitalized terms used herein shall have the meanings ascribed to them in the
Agreement (as defined below) unless otherwise indicated.
1. INTEREST. CompBenefits Corporation, a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note at
11.75% per annum from April 13, 2006 until maturity. Subject to Section 8 of the
Agreement (as defined in Section 3 below), the Company will pay interest
semi-annually in cash on June 30 and December 31 of each year, or if any such
day is not a Business Day, on the next succeeding business day (each an
"Interest Payment Date"). Interest on the Notes will accrue from the most recent
date on which interest has been paid or, if no interest has been paid, from the
date of issuance; provided, that the first Interest Payment Date shall be June
30, 2006. The Company shall pay interest (including post-petition interest in
any proceeding under Bankruptcy Law) on all past due and unpaid amounts
outstanding under the Notes (including overdue installments of principal,
premium, if any, or interest), from time to time on demand at a default rate
equal to 13.75% per annum, compounded semi-annually, to the extent lawful.
Interest will be computed on the basis of a 360-day year of twelve 30 day
months.
2. METHOD OF PAYMENT. The Company will pay interest on the Notes to the
Persons who are registered Holders of Notes at the close of business on the June
15 or December 15 next preceding the Interest Payment Date, even if such Notes
are canceled after such record date and on or before such Interest Payment Date.
The Notes will be payable both as to principal and interest by Federal funds
wire transfer of Dollars to each Holder's account in any bank in the United
States as may be designated and specified in writing by such Holder at least two
Business Days prior thereto.
3. NOTE PURCHASE AGREEMENT. The Company issued the Notes under the Senior
Subordinated Note Purchase Agreement dated as of April 13, 2006 (as amended,
modified and supplemented from time to time, the "Agreement") by and among the
Company, the Subsidiary Guarantors named therein and the purchasers party
thereto (the "Purchasers"). The Notes are subject to, and qualified by, all such
terms, certain of which are summarized herein, and Holders of Notes are referred
to the Agreement for a statement of such terms. In the event of any conflict
between the terms of the Notes and the Agreement, the Agreement shall control.
The Notes are general obligations of the Company. The Notes are limited to
$36,000,000 in aggregate principal amount.
4. SUBORDINATION. The Company's payment of the principal, premium, if any,
and interest on the Notes is subordinated to the prior payment in full and in
cash of the Senior Indebtedness as set forth in the Agreement.
5. OPTIONAL REDEMPTION.
(a) The Company may redeem all or any of the Notes, in whole or in part, at
any time at the redemption price equal to the percentages of principal set forth
below (if the Redemption Date occurs during the twelve-month period commencing
on April 13 of the year set forth below), plus accrued and unpaid interest
thereon to the Redemption Date:
% of Principal Amount
---------------------
2006 101%
2007 101%
2008 and thereafter 100%
Notwithstanding the foregoing, if the Redemption Date occurs prior to April 13,
2008, in connection with obtaining any financing for or refinancing or refunding
of any Indebtedness of the Company, in whole or in part, including, without
limitation, the refinancing of the Company as part of a merger, and the Holders
are allowed to purchase a minimum of $20,000,000 of debt securities issued in
the refinancing, the redemption price of the Notes shall equal 100% of the
principal amount thereof, plus accrued and unpaid interest thereon to the
Redemption Date.
(b) In the event of sale, conveyance, lease or sublease, transfer or other
disposition of, of all or substantially all of the assets of the Company or
sale, conveyance, lease or sublease, transfer or other disposition of,
(including any transaction of merger or consolidation) of a majority of Equity
Interest of the Company, the Company may redeem all or any of the Notes, in
whole or in part, at a redemption price equal to the principal amount thereof,
together with accrued and unpaid interest to the date of redemption.
(c) If there is an IPO, the Company may, within 60 days of the consummation
of such IPO, redeem all or any of the Notes, in whole or in part, at a
redemption price equal to the principal amount thereof, together with accrued
and unpaid interest to the date of redemption.
6. MANDATORY REDEMPTION.
(a) The Company shall redeem all outstanding Notes on April 12, 2016.
(b) Following the occurrence of any Change of Control, the Company will be
required to offer to purchase all outstanding Notes upon the terms set forth in
the Agreement. Following the occurrence of an Asset Sale, the Company will be
required to apply the Excess Net Proceeds therefrom to an offer to purchase
outstanding Notes upon the terms set forth in the Agreement.
7. NOTICE OF REDEMPTION. Notice of redemption pursuant to Section 5(a) and
5(b) hereof shall be mailed at least 30 days but not more than 60 days before a
Redemption Date by first class mail to each Holder whose Notes are to be
redeemed at such Holder's registered address. Notice of redemption pursuant to
Section 5(c) hereof shall be mailed within 10 days of such IPO by first class
mail to each Holder whose Notes are to be redeemed at such Holder's registered
address. If, on or prior to the Redemption Date, the Company deposits in a
segregated account or otherwise sets aside funds sufficient to pay the
Redemption Price of the Notes called for redemption, then, on and after the
Redemption Date, interest ceases to accrue on Notes or portions thereof called
for redemption, unless the Company defaults in paying the Redemption Price.
8. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are without coupons. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the
Agreement. The Company may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents, and the Company may require a
Holder to pay any taxes and fees required by law or permitted by the Agreement.
The Company need not exchange or register the transfer of any Note or portion of
a Note selected for redemption, except for the unredeemed portion of any Note
being redeemed in part. Also, the Company need not exchange or register the
transfer of any Notes for a period of 15 days before a selection of Notes to be
redeemed or during the period between a record date and the corresponding
Interest Payment Date.
9. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated as
its owner for all purposes.
10. AMENDMENTS AND WAIVERS. Subject to certain exceptions, the Agreement
and the Notes may be amended or supplemented and any existing Default or Event
of Default under, or compliance with any provision of, the Agreement may be
waived with the written consent of the Majority Holders.
The right of any Holder to participate in any consent required or sought
pursuant to any provision of the Agreement (and the obligation of the Company to
obtain any such consent otherwise required from such Holder) may be subject to
the requirement that such Holder shall have been the Holder of record of any
Notes with respect to which such consent is required or sought as of a date
identified by the Company in a notice furnished to Holders in accordance with
the terms of this Agreement.
11. DEFAULTS AND REMEDIES. An Event of Default (as defined in the
Agreement) and including, in general: default in the payment of the principal or
premium, if any, of any Note; default in the payment of interest on any Note for
a period of five Business Days; failure by the Company for 30 days after notice
to it to comply with provisions of the Agreement or the Notes or, in the case of
the failure to comply with certain specified covenants, without such notice; if
any of the representations or warranties of the Company made in or in connection
with the Agreement (including those representations and warranties incorporated
by reference therein) are untrue in any respect, the result of which could
reasonably be expected to have a Material Adverse Effect; certain defaults under
and/or acceleration prior to maturity of certain other indebtedness of the
Company; certain final judgments which remain undischarged after notice; or
certain events of bankruptcy or insolvency. If an Event of Default occurs and is
continuing, the Majority Holders may declare all the Notes to be due and payable
immediately. The Company is obligated to furnish a quarterly compliance
certificate to the Holders.
12. NO RECOURSE AGAINST OTHERS. A director, officer, employee or
stockholder of the Company, as such, shall not have any liability for any
obligations of the Company under the Notes or the Agreement or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for the issuance of the Notes.
13. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).
The Company will furnish to any Holder upon written request and without
charge a copy of the Agreement. Requests may be made to:
CompBenefits Corporation
000 Xxxxxxx Xxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: President
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
________________________________________________________________________________
(Insert assignee's Soc. Sec. or tax I.D. no.)
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint ________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date:
-------------------------------
Your Signature:
------------------------
(Sign exactly as your
name appears on the face
of this Note)
Signature Guarantee
By:
---------------------------------
(Bank or trust company having an
office or correspondent in the
United States or a broker or
dealer which is a member of a
registered securities exchange
or the National Association of
Securities Dealers, Inc.)
OPTION OF HOLDER TO ELECT PURCHASE
1. If you want to elect to have this Note purchased by the Company pursuant
to Section 5.8 of the Agreement (Asset Sale Offer), state the amount you elect
to have purchased: $______________.
2. If you want to elect to have this Note purchased by the Company pursuant
to Section 5.11 of the Agreement (Change of Control Offer), state the amount you
elect to have purchased: $_______________.
Date:
-------------------------------
Your Signature:
------------------------
(Sign exactly as your
name appears on the face
of this Note)
Tax Identification No.: __________
Signature Guarantee
By:
---------------------------------
(Bank or trust company having an
office or correspondent in the
United States or a broker or
dealer which is a member of a
registered securities exchange
or the National Association
of Securities Dealers, Inc.)
GUARANTY
For value received, each of the undersigned, jointly and severally, hereby
unconditionally guarantee to the Holder of the Note upon which this Guaranty is
endorsed, on a subordinated basis as set forth in Section 8 and Section 11.5 of
the Agreement, (a) the due and punctual payment of the principal of, premium (if
any) and interest on such Note when and as the same shall become due and payable
for any reason according to the terms of such Note and Section 11 of the
Agreement, and (b) that all other obligations of the Company under the Agreement
or the Notes will be promptly paid in full or performed in accordance with the
terms of the Agreement and the Notes.
COMPBENEFITS DENTAL AND VISION COMPANY
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chief Financial Officer
and Treasurer
DENTAL HEALTH MANAGEMENT, INC.
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chief Financial Officer
and Treasurer
COMPBENEFITS OF GEORGIA, INC.
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chief Financial Officer
and Treasurer
OHS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chief Financial Officer
and Treasurer
ULTIMATE OPTICAL, INC.
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chief Financial Officer
and Treasurer
COMPBENEFITS DIRECT, INC.
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chief Financial Officer
and Treasurer
TEXAS DENTAL PLANS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chief Financial Officer
and Treasurer
DENTAL CARE PLUS MANAGEMENT CORP.
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chief Financial Officer
and Treasurer
