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Exhibit 10.7
REVOLVING CREDIT AGREEMENT
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This Agreement is made effective the 4th day of August, 1995 by and
between FIRST NEW ENGLAND DENTAL CENTERS, INC., a Delaware corporation having
its place of business at 0 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxxx 00000 (the
"Lender"), and XXXXXX AND XXXXXX, D.M.D., P.C., a Massachusetts professional
corporation operating a dental practice (the "Practice") at 0 Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxxxxxxx 00000 (the "Borrower").
WHEREAS, Borrower has entered into a Management Agreement with Lender of
even date herewith (the "Management Agreement") pursuant to which Lender will
provide Borrower with certain management services in connection with Borrower's
Practice; and
WHEREAS, Borrower has requested Lender to provide loans herein described
principally for the purpose of meeting cash flow needs of the Practice;
NOW, THEREFORE, in consideration of the mutual promises and conditions set
forth herein, and other valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Lender and Borrower agree as follows:
1. Amounts and Terms of Loans.
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1.1 During the period commencing on the date first written above and
ending on the first anniversary hereof, Lender agrees to lend up to $1,000,000
to Borrower (the "Revolving Loan"), subject to and upon the terms and conditions
herein set forth and in reliance upon the representations, warranties and
covenants of Borrower contained herein. To effect borrowing hereunder, Borrower
shall give Lender written notice specifying the amount and date of each proposed
borrowing under the Revolving Loan, which notice shall be given at least ten
(10) business days prior to each such borrowing; provided that Borrower shall be
entitled hereunder to only one such request per week.
1.2 Lender agrees, on the terms and conditions hereinafter set forth,
to make advances (referred to hereinafter individually as an "Advance" and
collectively as the "Advances") to Borrower to the extent that the Gross Income
received by the Borrower is less than the budgeted business expenses actually
paid by Borrower (on a cash basis) in the usual and ordinary course of the
Practice ("Reasonable and Necessary Business Expenses"); provided that in no
event shall the outstanding principal amount advanced to Borrower by Lender
hereunder at any time exceed $1,000,000. For purposes of this Agreement, "Gross
Income" means the amount collected by or on behalf of Borrower (on a cash basis)
for professional services of any nature
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rendered to any person in connection with the Practice, whether by Borrower or
any other licensed or certified professional or technical staff employed or
engaged by Borrower to render services in connection with the Practice
(collectively, the "professional staff"). The foregoing obligation of Lender
shall be referred to hereafter as the "Revolving Loan Commitment".
1.3 Borrower's budgeted expenses for the first year of this Agreement
are set forth in the budget attached hereto as EXHIBIT A and incorporated herein
by reference ("Budget"). Only expenses reflected in the Budget, and such other
expenses of the Borrower as Lender may approve from time to time, shall qualify,
for purposes of this Agreement, as Reasonable and Necessary Business Expenses.
Reasonable and Necessary Business Expenses shall include, but not be limited to
Budgeted: base salary, bonus, compensation, and fringe benefits of Borrower's
professional staff, premium payments for professional liability insurance
policies Borrower is required to obtain and maintain under the Management
Agreement, and the Management Fee to be paid by Borrower to Lender under the
Management Agreement.
1.4 Interest shall accrue on each Advance from the date of disbursement
at an interest rate per annum equal to the prime rate plus two (2%) percent, as
published in the WALL STREET JOURNAL from time to time. Interest shall be
compounded monthly.
1.5 In the event that the Gross Income of the Borrower exceeds the
Reasonable and Necessary Business Expenses of the Borrower in any quarter during
the term of this Agreement, Borrower agrees to pay to Lender one hundred percent
(100%) of such excess within thirty (30) days of the end of any such quarter, up
to the aggregate amount of any unpaid Advances, together with interest accrued
thereon, made to Borrower by Lender hereunder.
1.6 The sum of the aggregate Advances made by Lender to Borrower which
has not previously been repaid to Lender under Section 1.5 hereof, plus any
accrued interest on aggregate Advances which has not previously been repaid to
Lender under Section 1.5 hereof ("Outstanding Balance"), shall be repaid to
Lender by Borrower, together with any interest accrued thereon, as provided in
Section 1.7 below. Interest shall accrue on the Outstanding Balance from the
date of termination or expiration of this Agreement at the interest rate
specified in Section 1.4 hereof.
1.7 The Outstanding Balance, plus accrued interest shall be and become
immediately due and payable to the Lender, on demand: (i) in one lump sum, on
the date of the termination or expiration of this Agreement, as applicable; or
(ii) thereafter, on such other terms and conditions as the Lender may specify in
writing. The parties specifically acknowledge that any amounts
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which are subject to repayment by the Borrower under this Agreement are
repayable solely from the assets of the Borrower, and Lender shall have no
recourse against any officer, director or shareholder of Borrower for any such
amounts.
1.8 The total of each Advance made by Lender to Borrower under the
Revolving Loan and all payments made by Borrower to Lender shall be recorded by
Lender on the schedule attached as EXHIBIT B hereto and incorporated herein by
reference. Payments made by Borrower hereunder shall be applied first to accrued
interest and then to the outstanding principal balance of Advances hereunder or
the Outstanding Balance, as applicable.
1.9 On or before the thirtieth day of each month during the term of
this Agreement, Borrower shall render, or shall arrange to render, to Lender a
written report of monthly Gross Income, accounts receivable, unbilled services,
accounts payable and all Reasonable and Necessary Business Expenses incurred and
paid in connection with the Practice for the immediately preceding month.
Borrower shall maintain its financial books and records so as to record Gross
Income, accounts receivable, Advances, unbilled services, accounts payable and
all Reasonable and Necessary Business Expenses. During the term of this
Agreement and any period thereafter during which Borrower has any Outstanding
Balance due to Lender, Borrower shall provide to Lender reasonable access to
such books and records of Borrower as may be reasonably necessary to carry out
the provisions of this Agreement.
1.10 Borrower, at Lender's request, shall execute a promissory note
evidencing the amount of outstanding Advances hereunder. Borrower shall also, at
Lender's request, execute security agreements, financing statements, and other
documents reasonably necessary to secure Borrower's repayment obligations
hereunder by granting to Lender a security interest in Borrower's accounts and
accounts receivable, equipment, fixtures, tangible and intangible property (the
"Collateral") and cooperating with Lender to perfect such security interest.
Borrower shall not grant any other security interest in the Collateral without
the prior written consent of Lender.
2. REGULATORY. No amount advanced hereunder is intended to be nor shall it
be construed to be, an inducement or payment for, or recommendation of, referral
of patients by Borrower or any member of the professional staff of Borrower to
Lender or any of Lender's affiliates, or by Lender or any of Lender's affiliates
to Borrower or any member of the professional staff of Borrower. In addition,
nothing herein is intended to or shall be construed to authorize or require
Lender or any of Lender's affiliates to practice dentistry, invest in or own the
Borrower, or to exercise any control or direction over any aspect of the
Borrower or the Practice. Borrower and its professional staff
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remain free to exercise their professional judgment, in their sole discretion,
in the diagnosis and treatment of patients of the Practice.
3. NOTICE OF DEFAULTS; DISPUTES AND OTHER MATTERS. Borrower shall give
written notice to Lender of the following matters forthwith upon any officer of
Borrower obtaining knowledge thereof:
3.1 Any default or notice of default with respect to any indebtedness
of Borrower.
3.2 Any actions, proceedings or claims which may be commenced or
asserted against Borrower in which the amount involved is not fully covered by
insurance or which, if not solely a claim for monetary damages, could, if
adversely determined, have a material adverse effect on the business or assets
of Borrower.
3.3 The occurrence of any Event of Default as defined in Section 4 of
this Agreement.
3.4 The occurrence of any event which constitutes, or with notice or
lapse of time or both, would constitute, a default under any contractual
obligation of Borrower which, if adversely determined, could have a material
adverse effect on the business or assets of Borrower.
4. Events of Default.
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4.1 "Events of Default" wherever used herein means any one of the
following events (whatever the reason for such Event of Default, whether it
shall relate to one or more of the parties hereto and whether it shall be
voluntary or involuntary or occur by operation of law or pursuant to any
judgment, decree or order of any court, or any order, rule or regulation of any
administrative or governmental instrumentality):
4.1.1 If any indebtedness of Borrower for money borrowed shall not
be paid as and when the same becomes due and payable, or there shall occur any
event which constitutes, or which with the giving of notice or lapse of time, or
both, would constitute an event of default under any instrument, agreement or
evidence of indebtedness relating to any such obligation of Borrower; or
4.1.2 If Borrower should default in a payment or performance of
any material obligation or indebtedness to others (other than as set forth in
Section 4.1.1 hereof), whether now or hereafter incurred; or
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4.1.3 If there shall occur a default in the due performance or
observance of any term, covenant or agreement to be performed or observed
pursuant to Section 3 hereof; or
4.1.4 If there shall occur any default in the due performance or
observance of any other term, covenant or agreement to be performed or observed
pursuant to the provisions of this Agreement and such default shall continue
unremedied for a period of thirty (30) days;
4.1.5 If the stockholder of Borrower breaches that certain Stock
Transfer Restriction Agreement of even date herewith between the Lender and the
stockholder of the Borrower, or if that Stock Transfer Restriction Agreement is
terminated for any reason;
4.1.6 Upon (a) the termination or expiration of the Management
Agreement or any other agreement of even date herewith between the parties; (b)
the making of a general assignment by Borrower for the benefit of creditors; (c)
the filing of a voluntary petition or the commencement of any proceeding by
Borrower for any relief under any bankruptcy or insolvency laws, or any laws
relating to the relief of debtors, readjustment of indebtedness, reorganization,
composition or extension; (d) the filing of any involuntary petition or the
commencement of any proceeding by or against Borrower for any relief under any
bankruptcy or insolvency laws, or any laws relating to the relief of debtors,
readjustment of indebtedness, reorganization, composition or extension, which
petition or proceeding is not dismissed within ninety (90) days of the date on
which it is filed or commenced; (e) suspension of the transaction of the usual
business of the Borrower for a period in excess of thirty (30) days; or (f)
dissolution, liquidation or winding up of the affairs of Borrower; or
4.1.7 If there shall occur or be threatened any of the events
described in Section 3 hereof and, in Lender's judgment, such event jeopardizes
or could reasonably be expected to jeopardize repayment of any sums borrowed
under this Agreement; or
4.1.8 If any judgment(s) for the payment of money shall be
rendered against Borrower, and such judgment shall remain unpaid, unstayed on
appeal, undischarged, unbonded or undismissed for a period of thirty (30) days
or more.
4.2 Acceleration; Remedies.
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4.2.1 Upon the occurrence of any Event of Default, or at any time
thereafter, if any Event of Default shall then be continuing, Lender may, by
written notice to Borrower, declare the entire unpaid principal balance or any
portion of the principal balance of all or any of the Advances or Outstanding
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Balance, as applicable, and interest accrued thereon, to be immediately due and
payable by Borrower. Such principal and interest shall thereupon become and be
immediately due and payable, without presentation, demand, protest, notice of
protest or other notice of dishonor of any kind, all of which are hereby
expressly waived by Borrower; and Lender may proceed to protect and enforce its
rights hereunder in any manner or order it deems expedient without regard to any
equitable principles of marshaling or otherwise. It is agreed that, in addition
to all other rights hereunder or under law, Lender shall have the right to
institute proceedings in equity or other appropriate proceedings for the
specific performance of any covenant or agreement made herein or in any document
executed in connection herewith or for an injunction against the violation of
any of the terms hereof or thereof or in aid of the exercise of any power
granted hereby or thereby or by law or otherwise. All rights and remedies given
by the Management Agreement are cumulative and not exclusive of any other rights
or remedies available to Lender and its affiliates, and no course of dealing
between Borrower and Lender or Lender's affiliates or any delay or omission in
exercising any right or remedy shall operate as a waiver of any right or remedy,
and every right and remedy may be exercised from time to time and as often as
shall be deemed appropriate by Lender.
4.2.2 Lender may, by notice to Borrower at any time and from time
to time waive in whole or in part, and absolutely or conditionally, any Event of
Default. Any such waiver shall be for such period and subject to such conditions
or limitations as may be specified in any such notice. In the case of any such
waiver, the rights of Lender shall be otherwise unaffected and any Event of
Default so waived shall be deemed to be cured and not continuing only to the
extent and on the conditions or limitations set forth in such waiver (unless
such waiver shall state to the contrary), but no such waiver shall extend to any
subsequent or other Event of Default, or impair any right thereupon.
5. Miscellaneous.
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5.1 NOTICES. Any notices to be given hereunder by either party to the
other shall be deemed to be received by the intended recipient (a) when
delivered personally, (b) the day following delivery to a nationally recognized
overnight courier service with proof of delivery, or (c) three (3) days after
mailing by certified mail, postage prepaid with return receipt requested, in
each case addressed to the parties at the addresses set forth above or at any
other address designated by the parties in writing.
5.2 PAYMENT OF EXPENSES. Borrower agrees to pay, and to hold Lender
harmless against liability for the payment of, all out-of-pocket expenses
arising in connection with the execution,
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delivery or administration (including, without limitation, any insurance
premiums paid by Lender on behalf of Borrower, any modification of, or any
consent or waiver under, this Agreement, and any enforcement of, or the
preservation of any rights under this Agreement) of the transactions
contemplated by this Agreement. The obligations of Borrower under this Section
5.2 shall survive the termination of this Agreement.
5.3 WAIVER OR SET-OFF. Borrower hereby waives the right to interpose
any set-off or counter-claim or cross-claim in connection with any litigation or
dispute under this Agreement, or any instrument or document delivered pursuant
to this Agreement, irrespective of the nature of such set-off, counterclaim or
cross-claim.
5.4 NO WAIVER. No failure or delay on the part of Lender in exercising
any right, power or privilege hereunder and no course of dealing between
Borrower and Lender shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege hereunder preclude any other
further exercise thereof or the exercise of any right, power or privilege. The
rights and remedies herein expressly provided are cumulative and not exclusive
of any rights or remedies which Lender would otherwise have. No notice to or
demand on Borrower in any case shall entitle Borrower to any other or further
notice or demand in similar or other circumstances or shall constitute a waiver
of the right of Lender to any other or further action in any circumstances
without notice or demand.
5.5 ENTIRE AGREEMENT AND AMENDMENTS. This Agreement represents the
entire Agreement between the parties hereto with respect to the Advances and the
transactions contemplated hereunder and, except as expressly provided herein,
shall not be affected by reference to any other documents. Neither this
Agreement nor any provision hereof may be changed, waived, discharged or
terminated orally, but such may be accomplished only by an instrument in writing
signed by the party against whom enforcement of the change, waiver, discharge or
termination is sought.
5.6 BENEFIT OF AGREEMENT. This Agreement shall be binding upon and
inure to the benefit of Borrower and Lender and their respective successors and
assigns. Borrower expressly acknowledges that Lender is not prohibited or
restricted from assigning rights or participation hereunder to another party or
parties selected by Lender without notice to or consent of Borrower. Without the
prior written consent of Lender, Borrower may not assign any of its rights or
delegate any of its duties or obligations hereunder.
5.7 DESCRIPTIVE HEADINGS. The descriptive headings of the several
Sections of this Agreement are inserted for
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convenience only and shall not affect the meaning or construction of any of the
provisions hereof.
5.8 GOVERNING LAW. This Agreement and the rights and obligations of
the parties hereunder shall be construed in accordance with and shall be
governed by the laws of the Commonwealth of Massachusetts.
5.9 HOLIDAYS. Whenever any payment to be made hereunder shall become
due and payable on a day which is not a business day, such payment may be made
on the next succeeding business day and such extension of time shall in such
case be included in computing interest on such payment.
5.10 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original Agreement, but all of
which together shall constitute one and the same instrument.
5.11 MAXIMUM LAWFUL INTEREST RATE. Notwithstanding any provision
contained herein, the total liability of Borrower for payment of interest
pursuant hereto, shall not exceed the maximum amount of such interest permitted
by law to be charged, collected, or received from Borrower, and if any payment
by Borrower includes interest in excess of such a maximum amount, Lender shall
apply such excess to the reduction of the unpaid principal amount due pursuant
hereto, or if none is due, such excess shall be refunded to Borrower.
5.12 REGULATORY MATTERS. To the extent that any act or service required
or permitted of the Lender or the Borrower by any provision of this Agreement
may be construed or deemed to constitute the practice of dentistry or the
operation of a health care facility or service requiring licensure under
applicable law, said provision of this Agreement shall be void AB INITIO and the
performance of said act or service by the Lender or the Borrower shall be deemed
waived by the other party.
5.13 CONFIDENTIALITY. The existence, and the terms and conditions of
this Agreement, are confidential and shall not be disclosed to any third party
by any party to this Agreement except with the prior written consent of all
other parties to this Agreement.
5.14 SEVERABILITY. Every provision of this Agreement is intended to be
severable, and if any term or provision hereof shall be invalid, illegal or
unenforceable for any reason, the validity, legality and enforceability of the
remaining provisions hereof shall not be affected or impaired thereby, and any
invalidity, illegality or unenforceability in any jurisdiction shall not affect
the validity, legality or enforceability of any such term or provision in any
other jurisdiction.
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IN WITNESS WHEREOF, Lender and Borrower have caused this Agreement to be
duly executed as of the date first above written.
Lender: FIRST NEW ENGLAND DENTAL CENTERS, INC.
By:/s/Xxxxxx Xxxxxxx
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Its President
Borrower: XXXXXX AND WATKIN, D.M.D., P.C.
By:/s/Xxxxxx Xxxxxx
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Its President
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EXHIBIT A
Budget
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EXHIBIT B
Schedule of Loans
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Amount Date Borrowed
