Senior Subordinated Note Purchase Agreement (2006)Full Document 

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                            COMPBENEFITS CORPORATION

                                     and the

                       SUBSIDIARY GUARANTORS NAMED HEREIN

                          $36,000,000 Principal Amount

                                       of

             11.75% Senior Subordinated Notes Due April 12, 2016 of

                            COMPBENEFITS CORPORATION

                   SENIOR SUBORDINATED NOTE PURCHASE AGREEMENT

                           Dated as of April 13, 2006

================================================================================



                                TABLE OF CONTENTS



                                                                            Page
                                                                            ----
                                                                         
Section 1. PURCHASE AND SALE OF NOTES....................................     1
   1.1   Issue of Notes..................................................     1
   1.2   Purchase and Sale of Notes......................................     1
   1.3   Registration of Notes...........................................     3
   1.4   Delivery Expenses...............................................     3
   1.5   Issue Taxes.....................................................     3
   1.6   Direct Payment..................................................     3
   1.7   Lost Notes, Etc.................................................     4
   1.8   Indemnification.................................................     5
   1.9   Further Actions.................................................     6
   1.10  Other Covenants.................................................     7

Section 2. CLOSING CONDITIONS............................................     7
   2.1   Delivery of Documents...........................................     7
   2.2   Legal Investment, Purchase Permitted by Applicable Laws.........     9
   2.3   Payment of Fees.................................................    10
   2.4   Compliance with Agreements......................................    10
   2.5   Completion of Other Transactions................................    10
   2.6   Representations and Warranties..................................    11
   2.7   No Event of Default.............................................    11
   2.8   Equity Acquisition..............................................    11
   2.9   Proceedings Satisfactory........................................    11
   2.10  Consents and Permits............................................    11
   2.11  No Material Adverse Effect......................................    11
   2.12  No Material Judgment or Order...................................    12

Section 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................    12
   3.1   Organization, Authorization, Capitalization.....................    12
   3.2   No Violation or Conflict, No Default............................    14
   3.3   Use of Proceeds.................................................    14
   3.4   No Material Adverse Change; No Internal Control Event; Financial
         Statements......................................................    15
   3.5   Full Disclosure.................................................    16
   3.6   Third Party Consents............................................    16
   3.7   No Violation of Regulations of Board of Governors of Federal
         Reserve System..................................................    17
   3.8   Private Offering................................................    17
   3.9   Governmental Regulations........................................    17
   3.10  Brokers.........................................................    18
   3.11  Solvency........................................................    18
   3.12  Ownership of Personal Property; Liens...........................    18
   3.13  Litigation......................................................    18



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   3.14  Labor Relations.................................................    19
   3.15  Taxes...........................................................    19
   3.16  Environmental Matters...........................................    20
   3.17  ERISA...........................................................    21
   3.18  Intellectual Property...........................................    22
   3.19  Compliance with Laws............................................    23
   3.20  Indebtedness....................................................    24
   3.21  Investments.....................................................    24
   3.22  Insurance.......................................................    24
   3.23  Survival of Representations and Warranties......................    24
   3.24  Compliance with HIPAA...........................................    25
   3.25  Stockholders Agreements.........................................    25
   3.26  No Burdensome Restrictions; Material Agreements.................    25
   3.27  Nature of Business..............................................    26
   3.28  Transactions with Affiliates....................................    26

Section 4. REPRESENTATIONS AND WARRANTIES OF EACH PURCHASER..............    26
   4.1   Purchase for Own Account........................................    27
   4.2   Accredited Investor.............................................    27
   4.3   Authorization...................................................    27
   4.4   Notes Restricted................................................    27
   4.5   Source of Funds.................................................    28

Section 5. COVENANTS.....................................................    29
   5.1   Payment of Notes, Satisfaction of Obligations...................    29
   5.2   Financial Statements and Reports................................    29
   5.3   Compliance Certificate..........................................    31
   5.4   Limitation on Restricted Payments...............................    32
   5.5   Limitation on Additional Indebtedness and Issuance of
         Disqualified Stock..............................................    34
   5.6   Limitation on Transactions With Affiliates......................    35
   5.7   Restrictions on Liens...........................................    36
   5.8   Limitation on Sale of Assets....................................    36
   5.9   Limitation on Capital Expenditures..............................    39
   5.10  Limitation on Dividend and Other Payment Restrictions Affecting
         Subsidiaries....................................................    39
   5.11  Change of Control...............................................    40
   5.12  Financial Covenants.............................................    41
   5.13  Fiscal Year; Organizational and Certain Other Documents.........    42
   5.14  Limitation on Ranking of Future Indebtedness....................    42
   5.15  Usury Laws......................................................    43
   5.16  Corporate Existence, Merger; Successor Corporation..............    43
   5.17  Same Business...................................................    46
   5.18  Taxes...........................................................    46
   5.19  Investment Company Act..........................................    47
   5.20  Ownership of Subsidiaries.......................................    47
   5.21  Insurance.......................................................    47
   5.22  Employee Plans..................................................    48



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   5.23  ERISA Notices...................................................    48
   5.24  Inconsistent Agreements.........................................    49
   5.25  Compliance with Laws, Maintenance of Licenses...................    49
   5.26  Inspection of Properties and Records............................    49
   5.27  Board of Director Observation Rights............................    50
   5.28  Maintenance of Office or Agency.................................    50
   5.29  Private Placement Number........................................    50
   5.30  Senior Indebtedness Amendments..................................    50
   5.31  Limitation on the Company.......................................    51
   5.32  Notices of Certain Proceedings and Change of Senior Bank........    51

Section 6. REDEMPTION....................................................    51
   6.1   The Company's Right to Redeem...................................    51
   6.2   Selection of Notes to Be Redeemed...............................    51
   6.3   Notice of Redemption............................................    52
   6.4   Effect of Notice of Redemption..................................    52
   6.5   Payment of Redemption Price.....................................    53

Section 7. DEFAULTS AND REMEDIES.........................................    53
   7.1   Events of Default...............................................    53
   7.2   Acceleration of Notes, Remedies.................................    55
   7.3   Premium on Acceleration.........................................    55
   7.4   Other Remedies..................................................    55
   7.5   Waiver of Past Defaults.........................................    56
   7.6   Rights of Holders to Receive Payment............................    56
   7.7   Undertaking for Costs...........................................    56

Section 8. SUBORDINATION.................................................    56
   8.1   Notes Subordinated to Senior Indebtedness.......................    56
   8.2   No Payment on Notes in Certain Circumstances....................    56
   8.3   Notes Subordinated to Prior Payment of All Senior Indebtedness
         on Dissolution, Liquidation or Reorganization...................    59
   8.4   Noteholders to Be Subrogated to Rights of Holders of Senior
         Indebtedness....................................................    60
   8.5   Obligations of the Company Unconditional........................    60
   8.6   Subordination Rights Not Impaired by Acts or Omissions of the
         Company or Holders of Senior Indebtedness.......................    61
   8.7   Section 8 Not to Prevent Events of Default......................    61

Section 9. AMENDMENTS AND WAIVERS........................................    61
   9.1   With Consent of Holders.........................................    61
   9.2   Revocation and Effect of Consents...............................    62
   9.3   Notation on or Exchange of Notes................................    63
   9.4   Payment of Expenses.............................................    63

Section 10. DEFINITIONS..................................................    63
   10.1  Definitions.....................................................    63
   10.2  Rules of Construction...........................................    87



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   10.3  Accounting Terms................................................    87

Section 11. SUBSIDIARY GUARANTY..........................................    88
   11.1  Guaranty........................................................    88
   11.2  Execution and Delivery of Subsidiary Guaranty...................    89
   11.3  Future Subsidiary Guarantors....................................    90
   11.4  Certain Bankruptcy Events.......................................    90
   11.5  Subordination of Subsidiary Guarantees..........................    90

Section 12. MISCELLANEOUS................................................    91
   12.1  Notices.........................................................    91
   12.2  Successors and Assigns..........................................    92
   12.3  Counterparts....................................................    92
   12.4  Headings........................................................    92
   12.5  Governing Law, Submission to Jurisdiction.......................    92
   12.6  Entire Agreement................................................    93
   12.7  Severability....................................................    93
   12.8  Further Assurances..............................................    93
   12.9  Disclosure of Financial Information.............................    93
   12.10 Put and Call Agreements.........................................    93
   12.11 Tax Forms.......................................................    94



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                                     ANNEXES

Annex A   Form of Note
Annex A-1 Form of Subsidiary Guaranty
Annex B   Opinion of Counsel to the Company and its Subsidiaries
Annex C   Opinion of Counsel to Purchasers
Annex D   Form of Intercompany Note
Annex E   Joinder Agreement

SCHEDULES

Schedule 1.1   Purchaser Information
Schedule 1.2   Wire Transfer Instructions
Schedule 2.11  Material Changes
Schedule 3.1   Capitalization
Schedule 3.8   Private Offerings
Schedule 3.10  Brokers
Schedule 3.14  Collective Bargaining Agreements
Schedule 3.17  Employee Benefit Plans
Schedule 3.18  Intellectual Property
Schedule 3.19  Compliance with Laws
Schedule 3.20  Existing Indebtedness
Schedule 3.22  Insurance
Schedule 3.26  Material Contracts
Schedule 3.28  Transactions with Affiliates
Schedule 5.6   Transactions With Affiliates
Schedule 10.1A Existing Investments
Schedule 10.1B Existing Liens
Schedule 10.1C Investor Group


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                   SENIOR SUBORDINATED NOTE PURCHASE AGREEMENT

     This SENIOR SUBORDINATED NOTE PURCHASE AGREEMENT is dated as of April 13,
2006 (this "Agreement"), and entered into by and among CompBenefits Corporation,
a Delaware corporation (the "Company"), the Subsidiary Guarantors listed on the
signature pages hereto and the purchasers listed on the signature pages hereto
(each a "Purchaser" and collectively, the "Purchasers").

     Capitalized terms not otherwise defined herein shall have the meanings
ascribed to such terms in Section 10.1 hereof.

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