Subordinated Promissory Note between APS Healthcare Bethesda, Inc. and CC Holdings, LLC dated March 29, 2002
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Summary
APS Healthcare Bethesda, Inc. promises to pay CC Holdings, LLC $10 million plus interest under this promissory note. Payments are due in annual installments, with all amounts becoming due sooner if a qualified IPO occurs. The note is subordinated, meaning repayment is subject to the prior payment of certain senior debts. If APS Healthcare Bethesda, Inc. defaults or certain corporate events occur, the full amount becomes immediately due. The agreement is governed by Wisconsin law and includes provisions for prepayment, assignment, and default interest rates.
EX-10.12 17 a2044217zex-10_12.txt EXHIBIT 10.12 EXHIBIT 10.12 THIS NOTE IS SUBJECT TO THE SUBORDINATION AGREEMENT, DATED MARCH 29, 2002, BY AND AMONG APS HEALTHCARE BETHESDA, INC., CC HOLDINGS, LLC, INNOVATIVE RESOURCE GROUP, LLC, CAPITALSOURCE FINANCE LLC AND CANPARTNERS INVESTMENTS IV, LLC, UNDER WHICH THIS NOTE AND APS HEALTHCARE BETHESDA, INC.'S OBLIGATIONS HEREUNDER ARE SUBORDINATED IN THE MANNER SET FORTH THEREIN TO THE PRIOR INDEFEASIBLE PAYMENT OF CERTAIN OBLIGATIONS OWING BY APS HEALTHCARE BETHESDA, INC. TO THE HOLDERS OF SENIOR INDEBTEDNESS AS DEFINED THEREIN. $10,000,000 Milwaukee, Wisconsin March 29, 2002 SUBORDINATED PROMISSORY NOTE APS Healthcare Bethesda, Inc., an Iowa corporation ("Payor"), for value received, promises to pay to the order of CC Holdings, LLC, a Wisconsin limited liability company ("Payee"), the principal sum of Ten Million Dollars ($10,000,000.00), with interest as herein provided, payable in three equal annual installments of interest on the first (1st), second (2nd) and third (3rd) anniversaries of the date of issuance of this Note indicated above, plus one installment of principal and interest on June 30, 2005; PROVIDED HOWEVER, in the event of a closing of a Qualified IPO (as defined below in Section 10), then all amounts due hereunder shall become immediately due and payable on the third (3rd) business day after the closing of such Qualified IPO (subject to the terms of the Subordination Agreement). Payment of interest due shall be made annually on each anniversary date (or the first business day thereafter, if the anniversary date falls on a day on which banks in Milwaukee, Wisconsin are authorized or required to be closed) while any principal balance is outstanding. All amounts due shall be paid and delivered to Payee at its corporate offices, 20855 Watertown Road, Suite 140, Waukesha, Wisconsin 53186, or to such other address as Payee shall from time to time direct Payor in writing. Payments shall be made in lawful money of the United States of America and shall be credited only when received in available funds by Payee. Payment by check shall constitute payment only when the amount paid has been collected. 1. INTEREST. Interest shall accrue on the unpaid principal amount hereof at the rate which is three and one-half percent (3.5%) per annum above the per annum rate of interest announced from time to time by Bank of America, N.A. or its successor as its "prime" rate, such rate of interest under this Note changing when and as such prime rate changes. Such rate of interest shall be calculated on the basis of a three hundred sixty-five (365) day year and the number of days elapsed in any period. 2. PREPAYMENT. Payor may prepay all or any portion of the principal amount of this Note at any time AND from time to time, without premium or penalty. 1 3. DEFAULT. The entire unpaid principal amount of this Note and all accrued and unpaid interest thereon shall immediately be due and payable if any of the following events occur (each, an "Event of Default"): (a) Payor shall fail to pay when due any amount due under this Note. (b) There shall occur with respect to Payor, any direct or indirect parent corporation of Payor (each a "Parent"), or Innovative Resource Group, LLC, a Wisconsin limited liability company ("IRG"), any "Insolvency Event" as defined below in Section 10. (c) Payor, any Parent or IRG shall take any steps, including any action by the board of directors or shareholders of Payor, such Parent or IRG to such end: (i) to dissolve or liquidate its business, or (ii) to merge with or into or to consolidate with or into any other corporation or entity except a merger of IRG into any Parent or into Payor (and such Parent or Payor is the surviving entity) or any merger of a Parent into another Parent, or (iii) to sell, lease, transfer or otherwise dispose of all or substantially all of its property, assets or business, or (iv) to sell all or any substantial portion of the stock or other equity interests in IRG, Payor or any Parent, other than as a result of a Qualifying IPO. (d) Any transaction shall be consummated the result of which is that any "person" (as such term is used in Section 13(d)(3) of the Securities Exchange Act of 1934 and the regulations promulgated thereunder (the "Exchange Act")) becomes the "beneficial owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that a person shall be deemed to have "beneficial ownership" of all securities that such person has the right to acquire, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition), directly or indirectly of more than 50% of the voting stock of APS Healthcare, Inc., a Delaware corporation ("APS Healthcare") (measured by voting power rather than number of shares), other than as a result of a Qualifying IPO. (e) Any representation or warranty under Section 3 of the Purchase and Sale Agreement (defined below) related to this Note as an "Ancillary Instrument" (as defined in the Purchase and Sale Agreement), shall be untrue in any material respect when made, including on the date hereof and on the Closing Date (as defined in the Purchase and Sale Agreement). 4. DEFAULT INTEREST RATE. Upon the occurrence and from the date of an Event of Default, all sums due under this Note shall bear interest at a rate which is two percent (2%) per annum in excess of the rate that would otherwise be applicable to the outstanding principal balance hereof. 2 5. WAIVERS. Payor waives demand for payment, notice of nonpayment, presentment, notice of dishonor, protest and notice of payment. If Payor fails to make any payment or payments required by this Note to be made by it, Payor shall pay all the costs of collection (including reasonable attorneys' fees) thereupon incurred by Payee. Failure by Payee to assert any right contained in this Note, or any delay in asserting any such right, shall not constitute a waiver of such right. 6. ACKNOWLEDGEMENT OF BUSINESS PURPOSES; CHOICE OF LAW. Payor hereby represents and warrants to Payee that this Note has been entered into by Payor solely for business purposes and that Payor is not entitled to the benefits of any usury or similar provisions of law. This Note shall be governed by and construed in accordance with the laws of the State of Wisconsin, without reference to principles of conflict of laws. 7. MISCELLANEOUS. If any provision of this Note is held to be void or unenforceable, such provision at the option of Payee shall be deemed omitted and this Note, with such provision omitted, shall remain in full force and effect. All notices, requests, demands and other communications required or permitted to be given under this Note shall be in writing and shall be deemed duly given when given in accordance with Section 11.9 of the Purchase and Sale Agreement. Payee may freely transfer and assign all or any part of its interests under this Note as long as prior to any such transfer or assignment the assignee executes and delivers to the Senior Lenders an agreement satisfactory to Senior Lenders that the assignee takes this Note subject to the terms and provisions of the Subordination Agreements. Payor may not assign its obligations under this Note. This Note may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of Payor or Payee, but only by an agreement in writing signed by the party against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought. This Note, the Subordination Agreement and the Purchase and Sale Agreement contain the entire agreement between Payor and Payee with respect to the subject matter hereof, superseding all previous communications and negotiations, and no representation, undertaking, promise or condition concerning the subject matter hereof shall be binding upon Payee unless clearly expressed in this Note or the Purchase and Sale Agreement. The provisions of this Note shall inure to the benefit of Payee and its successors and assigns and shall be binding upon Payor its successors. 8. PURCHASE AND SALE AGREEMENT. This Note is issued under and pursuant to the terms of that certain Purchase and Sale Agreement, dated as of March 29, 2002, among Payee (and certain of its affiliates) and Payor (the "Purchase and Sale Agreement"), and reference is made to the Purchase and Sale Agreement for a more complete statement of certain of the rights and obligations of Payor and Payee with respect to the acquisition by Payor of the membership interests held by Payee in IRG. 9. SUBORDINATION. This Note is subject to the terms and provisions of the Subordination Agreement under which, among other things, this Note and the Payor's obligations hereunder are subordinated in the manner set forth therein to the prior indefeasible payment of certain obligations owing by Payor to the holders of Senior Indebtedness as defined therein. 3 10. DEFINITIONS. As used in this Note, the term: "CANPARTNERS" means CanPartners Investments IV, LLC, a California limited liability company. "CAPITALSOURCE" means CapitalSource Finance LLC, a Delaware limited liability company. "CAPITALSOURCE CREDIT AGREEMENT" means the Amended and Restated Credit Agreement (Term Loan) dated as of July 23, 2001 between APS Healthcare Holdings and CapitalSource, as amended, restated, supplemented or otherwise modified from time to time. "INSOLVENCY EVENT" means the occurrence of any of the following: any receivership, conservatorship, general meeting of creditors, insolvency or bankruptcy proceeding, assignment for the benefit of creditors, or any proceeding or action by or against Payor, any Parent or IRG for any relief under any bankruptcy or insolvency law or other laws relating to the relief of debtors, readjustment of indebtedness, reorganizations, dissolution, liquidation, compositions or extensions, or the appointment of any receiver, intervenor or conservator of or trustee, or similar officer for, Payor, any Parent or IRG or any substantial part of its properties or assets, including, without limitation, proceedings under the United States Bankruptcy Code, or under federal, state or local statutes, laws, rules and regulations, all whether now or hereafter in effect, or Payor, any Parent or IRG shall be or become insolvent, or shall admit in writing its inability to pay its debts as they come do. "Senior Lenders" means CapitalSource and CanPartners, and their respective successors and assigns. "SUBORDINATION AGREEMENT" means that certain Subordination Agreement dated March 29, 2002 by and among CapitalSource, CanPartners, IRG, Payee and Payor, as may be amended, modified or restated from time to time. "QUALIFIED IPO" means an underwritten public offering, pursuant to an effective registration statement under the Securities Act of 1933, as amended and under other applicable securities laws and regulations covering the offer and sale of capital stock, by APS Healthcare, Inc., a Delaware corporation, which generates a minimum of $30,000,000 of gross proceeds, and as to which offering CapitalSource has not, prior to effectiveness of such offering, indicated CapitalSource's reasonable objection. 11. CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL. PAYOR HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT SITUATED IN THE STATE OF WISCONSIN AND WAIVES ANY OBJECTION BASED ON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS, WITH REGARD TO ANY ACTIONS, CLAIMS, DISPUTES OR PROCEEDINGS RELATING TO THIS NOTE. PAYOR WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS, AND CONSENTS TO ALL SUCH SERVICE OF PROCESS MADE BY MAIL OR BY MESSENGER TO THE ADDRESS SPECIFIED IN THE PURCHASE AND SALE AGREEMENT. PAYOR HEREBY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION 4 OR PROCEEDING RELATING TO THIS NOTE. PAYOR REPRESENTS THAT THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY GIVEN. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 5 IN WITNESS WHEREOF, Payor has caused this Note to be executed by its duly authorized officer on and as of the day first above written. APS Healthcare Bethesda, Inc. By: /s/ Paul D. Barnes ------------------------ Paul D. Barnes ------------------------ Print Name President ------------------------ Title 6 ADMINISTRATACION DE SEGUROS DE SALUD FORMULARIO MEDULAR DE MEDICAMENTOS REQUEST FOR PROPOSAL FOR PHARMACY BENEFIT MANAGEMENT FOR REQUIRED PERSONS UNDER THE PRHLA AUGUST 3,2001
ADMINISTRATACION DE SEGUROS DE SALUD FORMULARIO MEDULAR DE MEDICAMENTOS REQUEST FOR PROPOSAL FOR PHARMACY BENEFIT MANAGEMENT FOR REQUIRED PERSONS UNDER THE PRHLA AUGUST 3,2001
ADMINISTRATACION DE SEGUROS DE SALUD FORMULARIO MEDULAR DE MEDICAMENTOS REQUEST FOR PROPOSAL FOR PHARMACY BENEFIT MANAGEMENT FOR REQUIRED PERSONS UNDER THE PRHLA AUGUST 3,2001
ADMINISTRATACION DE SEGUROS DE SALUD FORMULARIO MEDULAR DE MEDICAMENTOS REQUEST FOR PROPOSAL FOR PHARMACY BENEFIT MANAGEMENT FOR REQUIRED PERSONS UNDER THE PRHLA AUGUST 3,2001
ADMINISTRATACION DE SEGUROS DE SALUD FORMULARIO MEDULAR DE MEDICAMENTOS REQUEST FOR PROPOSAL FOR PHARMACY BENEFIT MANAGEMENT FOR REQUIRED PERSONS UNDER THE PRHLA AUGUST 3,2001
ADMINISTRATACION DE SEGUROS DE SALUD FORMULARIO MEDULAR DE MEDICAMENTOS REQUEST FOR PROPOSAL FOR PHARMACY BENEFIT MANAGEMENT FOR REQUIRED PERSONS UNDER THE PRHLA AUGUST 3,2001
ADMINISTRATACION DE SEGUROS DE SALUD FORMULARIO MEDULAR DE MEDICAMENTOS REQUEST FOR PROPOSAL FOR PHARMACY BENEFIT MANAGEMENT FOR REQUIRED PERSONS UNDER THE PRHLA AUGUST 3,2001
ADMINISTRATACION DE SEGUROS DE SALUD FORMULARIO MEDULAR DE MEDICAMENTOS REQUEST FOR PROPOSAL FOR PHARMACY BENEFIT MANAGEMENT FOR REQUIRED PERSONS UNDER THE PRHLA AUGUST 3,2001
ADMINISTRATACION DE SEGUROS DE SALUD FORMULARIO MEDULAR DE MEDICAMENTOS REQUEST FOR PROPOSAL FOR PHARMACY BENEFIT MANAGEMENT FOR REQUIRED PERSONS UNDER THE PRHLA AUGUST 3,2001
ADMINISTRATACION DE SEGUROS DE SALUD FORMULARIO MEDULAR DE MEDICAMENTOS REQUEST FOR PROPOSAL FOR PHARMACY BENEFIT MANAGEMENT FOR REQUIRED PERSONS UNDER THE PRHLA AUGUST 3,2001
ADMINISTRATACION DE SEGUROS DE SALUD FORMULARIO MEDULAR DE MEDICAMENTOS REQUEST FOR PROPOSAL FOR PHARMACY BENEFIT MANAGEMENT FOR REQUIRED PERSONS UNDER THE PRHLA AUGUST 3,2001
ADMINISTRATACION DE SEGUROS DE SALUD FORMULARIO MEDULAR DE MEDICAMENTOS REQUEST FOR PROPOSAL FOR PHARMACY BENEFIT MANAGEMENT FOR REQUIRED PERSONS UNDER THE PRHLA AUGUST 3,2001
ADMINISTRATACION DE SEGUROS DE SALUD FORMULARIO MEDULAR DE MEDICAMENTOS REQUEST FOR PROPOSAL FOR PHARMACY BENEFIT MANAGEMENT FOR REQUIRED PERSONS UNDER THE PRHLA AUGUST 3,2001
ADMINISTRATACION DE SEGUROS DE SALUD FORMULARIO MEDULAR DE MEDICAMENTOS REQUEST FOR PROPOSAL FOR PHARMACY BENEFIT MANAGEMENT FOR REQUIRED PERSONS UNDER THE PRHLA AUGUST 3,2001