Exhibit 10.7
SECTION 1307 LOAN AGREEMENT
THIS AGREEMENT, made and entered into as of the ___ day of July, 1998, by
and between LIPH, LLC, a limited liability company duly created, organized, and
existing under and by virtue of the Laws of the State of New York and having its
principal office at Xxx Xxxxxxxxxx Xxxxxxxxxx, Xxxxx 0X00, Xxxxxxxx, Xxx Xxxx,
00000 (hereinafter referred to as "Lender"), and MDNY HEALTHCARE, INC., a
corporation duly created, organized, and existing under and by virtue of the
Laws of the State of New York and having its principal office at Xxx Xxxxxxxxxx
Xxxxxxxxxx, Xxxxx 0X00, Xxxxxxxx, Xxx Xxxx 00000 (hereinafter referred to as
"Borrower").
W I T N E S S E T H:
WHEREAS, Borrower desires to borrow the sum of $1.0 million and Lender is
willing to lend said sum to Borrower upon the terms, provisions and conditions
hereinafter set forth; and
WHEREAS, the Insurance Law of the State of New York, Section 1307
(Contingent liability for borrowings) provides that a domestic insurer or health
maintenance organization may, without pledging any of its assets, borrow funds
pursuant to said Section 1307 upon the approval of the Superintendent of
Insurance of the State of New York.
NOW THEREFORE, in consideration of the premiums and for other good and
valuable consideration, and intending to be legally bound hereby, Lender and
Borrower agree as follows:
1. Upon approval of this Agreement by the Superintendent of Insurance of
the State of New York, Pursuant to Section 1307 of the New York Insurance Law,
Lender agrees to lend to Borrower, and Borrower agrees to borrow from Lender,
the sum of ONE MILLION DOLLAWS ($1,000,000) (THE "Loan"). Upon receipt of such
approval, Lender shall promptly disburse the full amount of the Loan to Borrower
in good and immediately available funds.
2. Interest shall accrue on the principal amount of the Loan at a per
annum rate equal to the Prime Rate (as defined in this Section 2) in effect on
the date hereof, adjusted as
of each Interest Payment Date (as defined below in Section 3), until the Loan
has been repaid in full. "Prime Rate" means the rate of interest publicly
announced by Citibank N.A., New York, New York, or any successor to such bank,
as its prime rate from time to time. Notwithstanding the foregoing, the per
annum rate of interest on the Loan shall at no time exceed that rate then
permitted pursuant to the provisions of Section 5-501 of the General Obligations
Law of the State of New York and as further defined in Section 14-a of the
Regulations of the Department of Banking of the State of New York, as amended.
3. Accrued interest on the principal amount of the Loan shall be due and
payable to Lender on the first day of each calendar quarter, commencing with the
calendar quarter beginning on October 1, 1998 (each, an "Interest Payment
Date"), and the principal amount of the Loan shall be repaid to Lender in a lump
sum of July 1, 1999; provided, however, that in no event shall any principal or
interest payment in respect of the Loan be made except in accordance with the
provisions of Sections 4 and 6 hereof; and provided, further, that no default in
respect of the Loan shall have occurred or be deemed to have occurred if any
principal or interest payment that would otherwise be due and payable is not
made by reason of the provision of Sections 4 and 6 hereof.
4. Notwithstanding anything to the contrary contained herein, repayment of
the principal of, and payment of accrued interest on, the Loan shall only be
made out of free and divisible surplus of the Borrower and all such amounts to
be paid or repaid will be subject to the prior approval of the Superintendent of
Insurance of the State of New York.
5. The Loan made pursuant to this Agreement shall not form a part of the
Borrower's legal liabilities and shall not be a basis of any setoff, but, until
repaid, all statements published or filed with the Superintendent of Insurance
of the State of New York by Borrower shall show, as a footnote thereto, the
amount thereof then remaining unpaid.
6. In the event of the liquidation of the Borrower, repayment of any
outstanding principal balance of the Loan and payment of any accrued and unpaid
interest then due and owing shall be paid to Lender out of any assets remaining
after the payment of all policy obligations and all other liabilities of the
Borrower but before distribution of assets to shareholders.
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7. All payments of principal and interest payable by Borrower in respect
of the Loan shall be made to Lender at its offices at Xxx Xxxxxxxxxx Xxxxxxxxxx,
Xxxxx 0X00, Xxxxxxxx, Xxx Xxxx 00000, or as otherwise directed by Lender in
writing. All interest payments shall be computed on the basis of a year of 365
days, in each case for the actual days elapsed (including the first day but
excluding the last) occurring in the period for which such interest is payable.
All payments in respect of the Loan shall be made in such coin or currency of
the United States as at the time of payment shall be legal tender for the
payment of public and private debts.
8. This Agreement, and all of the comments and conditions hereinabove
contained, shall be binding upon and inure to the benefit of Lender and Borrower
and their respective successors, or assigns, and on request of Lender, Borrower
shall furnish to Lender such note, loan certificate, or other evidence of this
indebtedness, as Lender may request.
9. This Agreement, and the rights and obligations of the parties
hereunder, shall be construed in accordance with, and governed by, the
provisions of Section 1307 of the New York Insurance Law.
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IN WITNESS WHEREOF, the parties hereto have caused these premiums to be
executed by their proper corporation officers as of the day and year first above
written.
BORROWER:
ATTEST:
/s/ By: /s/
________________________________ ________________________________
Secretary President
Board of Director MDNY
LENDER:
ATTEST:
/s/ By: /s/
________________________________ ________________________________
Secretary President
Treasurer, LIPH
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