EXHIBIT 10.7
DATED 24th June 2005
FORESTRE (HOLDINGS) LIMITED
as Borrower
and
STRATEGY INSURANCE LIMITED
as Lender
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LOAN AGREEMENT
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CLYDE&CO
Ref: AH/DGW/0500093
THIS AGREEMENT is made on 24th June 2005
BETWEEN:
(1) FORESTRE (HOLDINGS) LIMITED, a company incorporated in England with
registered number 4968264 whose registered office is at Beech Trees
Cottage, Well Lane, Mollington, ▇▇▇▇▇▇▇ ▇▇▇ 6LD (the "Borrower"); and
(2) STRATEGY INSURANCE LIMITED, a company incorporated in Barbados the
registered office of which is at Sagicor Corporate Centre, ▇▇▇▇▇▇, St.
▇▇▇▇▇▇▇, Barbados, West Indies BB15113 (the "Lender").
IT IS AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 In this Agreement the following words and expressions shall, except where
the context otherwise requires, have the following respective meanings:
"Advance" means, save as otherwise provided herein, an advance made or to
be made by the Lender hereunder.
"Articles" means the Articles of Association of ForestRe (Holdings)
Limited adopted from time to time.
"Available Facility" means, at any time and save as otherwise provided
herein, United States Dollars two hundred thousand (US$200,000) per
calendar month less the aggregate of any Advances which are then
outstanding in that calendar month adjusted in the case of any proposed
drawdown, so as to take into account any Advance which, pursuant to any
other drawdown, is to be made in that calendar month on or before the
proposed drawdown date.
"Availability Period" means the period from 1st February 2005 and ending
on 31st January 2006 or such later date as the parties may agree.
"Business Day" means a day (other than a Saturday or Sunday) which is not
a public holiday and on which banks are open for general business in
London.
"Board" means the board of directors of ForestRe (Holdings) Limited as
constituted from time to time or any committee appointed by such board in
accordance with the Articles.
"Contact Office Services Agreement" means the agreement between Strategy
Insurance Company Limited (1) and ForestRe Limited (2) by which ForestRe
Limited has agreed to provide certain contact office services to Strategy
Insurance Company Limited.
"Documents" means:
(a) this Agreement;
(b) any other documents under or pursuant to which the Lender and the
Borrower agree any provisions for the repayment of all or part of
the Advances; and
(c) any other documents designated as such by the Lender and the
Borrower at any time.
"Drawdown Date" means, in relation to an Advance, the date, being a
Business Day, on which it is drawn down.
"Drawdown Notice" means, in relation to an Advance, a notice from the
Borrower substantially in the form set out in the Schedule to this
Agreement or in such other form as may be agreed by the Borrower and the
Lender.
"Facility" means the loan facility provided under this Agreement.
"Final Availability Date" means 31st January 2006 or such later date as
the parties may agree.
"Financial Plan" means any detailed operating plan and financial budget
for the Company and any of its subsidiaries prepared in accordance with
the provisions of clause 5 of the Shareholders Agreement.
"Loan" means, at any time, the aggregate principal amount outstanding of
all borrowings under this Agreement.
"Repayment Date" means, in relation to any Advance, the date to be
determined by the Board having regard to the positive accumulated cash
balances of the Borrower and the Financial Plan or if later the 31st
December 2010.
"Shareholders Agreement" means the agreement of even date entered into by
the shareholders of the Borrower.
"Tax" means any tax, levy, impost, duty or other charge or withholding of
a similar nature (including any penalty or interest payable in connection
with any failure to pay or any delay in paying any of the same).
1.2 Unless otherwise defined herein or except where the context otherwise
requires, any reference in this Agreement to:
(a) any person shall be construed so as to include its and any
subsequent successors and permitted assigns and permitted
transferees in accordance with their respective interests;
(b) this Agreement or any other agreement or document shall be construed
as a reference to this Agreement or, as the case may be, such other
agreement or document as the same may have been, or may from time to
time be, amended, varied, novated or supplemented with the consent
of all parties from whom consent is required pursuant to any
provisions in the Documents;
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(c) any "applicable law" includes, without limitation, (a) applicable
laws, statutes, decrees, decree-laws, acts, codes, legislation,
treaties, conventions and similar instruments and, in respect of any
of the foregoing, any instrument passed in substitution therefor or
for the purposes of consolidation thereof with any other instrument
or instruments, in each case, as amended, modified, varied or
supplemented from time to time, (b) applicable final judgments,
orders, determinations or awards of any court from which there is no
right of appeal or if there is a right of appeal such appeal is not
prosecuted within the allowable time, and (c) applicable orders,
guidelines, notices, guidance, rules and regulations of any
Governmental Authority which, if not having the force of law,
compliance with which is customary;
(d) a "Clause" shall, subject to any contrary indication, be construed
as a reference to a clause of this Agreement;
(e) "indebtedness" means indebtedness for or in respect of money
borrowed or any other obligation (whether incurred as principal or
surety) for the payment or repayment of money, whether present or
future, actual or contingent;
(f) "obligation" means any obligation, duty or liability of any kind;
(g) a "person" shall be construed as a reference to any person, firm,
company, corporation, government, state or agency of a state or any
association or partnership (whether or not having separate legal
personality) of two or more of the foregoing;
(h) "repay" (or any derivative form thereof) shall, subject to any
contrary indication, be construed to include "prepay" or (as the
case may be, the corresponding derivative form thereof);
(i) a "Schedule" shall, subject to any contrary indication, be construed
as a reference to the schedule hereto;
(j) a "successor" shall be construed so as to mean a successor in title
of a party who under the applicable laws of its jurisdiction of
incorporation or domicile has assumed the rights and obligations of
such party under this Agreement or to which, under such laws, such
rights and obligations have been transferred; and
(k) "VAT" shall be construed as a reference to value added tax, sales
tax, goods and services tax or any tax of a similar nature to any of
the foregoing which replaces the same or is levied in addition
thereto.
1.3 Clause and Schedule headings are for ease of reference only and shall be
ignored in the interpretation of this Agreement.
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2. THE FACILITY
2.1 Loan Facility
The Lender hereby grant to the Borrower, upon the terms and subject to the
conditions hereof, a loan facility in a maximum aggregate amount of two
million United States Dollars (US$2,000,000). No interest shall be payable
by the Borrower to the Lender in respect of the Loan and no interest shall
accrue thereon.
2.2 Advances
An Advance will be made by the Lender to the Borrower if.
(a) on or before the proposed date for the making of such Advance, the
Lender has received a completed Drawdown Notice;
(b) the proposed date for the making of such Advance is a Business Day
within the Availability Period;
(c) the proposed amount of such Advance is less than or equal to the
amount of the Available Facility; and
(d) on and as of the proposed date for the making of such Advance no
Event of Default is continuing.
2.3 Drawdown Details
Each Drawdown Notice delivered to the Lender pursuant to Clause 2.2 shall
specify:
(a) the proposed date for the making of the Advance requested, which
shall be a Business Day falling before the Final Availability Date;
(b) the amount of the Advance requested, which shall be an amount equal
to or less than the Available Facility; and
(c) the account to which the proceeds of the proposed drawdown are to be
paid.
3. REPAYMENT
The Borrower shall repay each Advance on the Repayment Date.
4. PREPAYMENT
The Borrower may at any time prepay the whole or any part of an Advance.
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5. CURRENCY OF ACCOUNT
The United States Dollar is the currency of account and payment for each
and every sum at any time due from the Borrower hereunder provided that
each payment in respect of costs and expenses shall be made in the
currency in which the same were incurred.
6. TAXES
All payments to be made by the Borrower under the Documents shall be made
free and clear of and without deduction for or on account of Tax unless
the Borrower is required to make such payment subject to deduction or
withholding of Tax, in which case the sum payable by the Borrower in
respect of which such deduction or withholding is required to be made
shall be increased to the extent necessary to ensure that the Lender
receives (and is able to retain) a net sum equal to the amount it would
have received had no such deduction or withholding been made or required
to be made.
7. REPRESENTATIONS
The Borrower makes the representations and warranties set out in this
Clause 7 and acknowledges that the Lender has entered into this Agreement
in reliance on those representations and warranties.
7.1 Status
It is a corporation duly organised under the laws of England and Wales.
7.2 Binding Obligations
The obligations expressed to be assumed by it in this Agreement are legal
and valid obligations binding on it and enforceable against it in
accordance with the terms hereof.
7.3 Execution of this Agreement
Its execution of this Agreement and its exercise of its rights and
performance of its obligations hereunder do not and will not:
(a) conflict with any agreement, mortgage, bond or other instrument or
treaty to which it is a party or which is binding upon it or any of
its assets;
(b) conflict with its constitutive documents; or
(c) conflict with any applicable law.
It has the power to enter into this Agreement and all corporate and other
action required to authorise the execution of this Agreement and the
performance of its obligations hereunder has been duly taken.
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7.4 No Winding-up
It has not taken any corporate action nor have any steps been taken or
legal proceedings been started or (to the best of its knowledge and
belief) threatened against it for its winding-up, dissolution,
administration or re-organisation (whether by voluntary arrangement,
scheme of arrangement or otherwise) or for the appointment of a receiver,
administrator, administrative receiver, trustee, examiner or similar
officer of it or of any or all of its assets or revenues.
7.5 Repetition of Representations
The representations detailed in this Clause 7 shall be deemed to be
repeated by the Borrower by reference to the facts and circumstances then
existing on the first day of each month of the Availability Period.
8. COVENANTS
8.1 Maintenance of Legal Validity
The Borrower shall obtain, comply with the terms of and do all that is
necessary to maintain in full force and effect all authorisations,
approvals, licences and consents required in or by the laws of its
jurisdiction of incorporations to enable it lawfully to enter into and
perform its obligations under this Agreement and to ensure the legality,
validity, enforceability or admissibility in evidence in its jurisdiction
of incorporation of this Agreement.
8.2 Notification of Events of Default
The Borrower shall promptly inform the Lender of the occurrence of any
Event of Default.
9. EVENTS OF DEFAULT
This Clause 9 sets out the circumstances which constitute an Event of
Default for the purposes of this Agreement.
9.1 Misrepresentation
Any representation or statement made or deemed to be made or repeated by
the Borrower in the Documents is or proves to have been incorrect or
misleading in any material respect when made or deemed to be made.
9.2 Covenants
The failure by the Borrower duly to perform or comply with any of the
obligations expressed to be assumed by it pursuant to Clause 8
(Covenants).
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9.3 Insolvency and Rescheduling
The Borrower is unable to pay its debts as they fall due, commences
negotiations with any one or more of its creditors with a view to the
general readjustment or rescheduling of its indebtedness, suspends
payments of its debts or makes a general assignment for the benefit of or
a composition with its creditors (other than for the purposes of a solvent
re-organisation approved by the Lender).
9.4 Winding-up
The Borrower takes any corporate action or other steps are taken or legal
proceedings are started by the Borrower for its winding-up, dissolution,
examinership, administration, bankruptcy or re-organisation (other than a
solvent re-organisation approved by the Lender).
9.5 Execution or Distress
Any execution or distress is levied against, or an encumbrancer takes
possession of the whole or any material part of, the property, undertaking
or assets of the Borrower and such execution, distress or possession is
not discharged within thirty (30) days of having been so effected provided
that any such event shall not constitute an Event of Default if it is
being contested with due diligence, in good faith and on reasonable
grounds and adequate reserves have been made against such action and such
execution, distress or possession is, in any event, discharged within
sixty (60) days of having been so effected.
9.6 Repudiation
The Borrower repudiates any of the Documents or does or causes to be done
any act or thing evidencing an intention to repudiate any of the
Documents.
9.7 Illegality
At any time it is or becomes unlawful for the Borrower to perform or
comply with any of its obligations under the Documents or any of the
obligations of the Borrower under the Documents are not or cease to be
legal, valid, binding and enforceable.
9.8 Regulation
At any time the Borrower ceases to be authorised in the United Kingdom to
carry some or all of the services set out in Clause 3.1 of the Contact
Office Services Agreement.
10. ACCELERATION AND CANCELLATION
Upon the occurrence of one or more Events of Default as set out in Clause
9 (Events of Default) at any time thereafter the Lender may by notice to
the Borrower:
(a) declare the Loan to be immediately due and payable; and/or
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(b) declare that any undrawn portion of the Facility shall be cancelled
and the Available Facility shall be reduced to zero.
11. COSTS AND EXPENSES
The Borrower shall pay all stamp, registration and other taxes in
connection with the Facility or the Documents (but not, for the avoidance
of doubt, any document assigning the Lender's rights and benefits).
12. BENEFIT OF AGREEMENT
12.1 This Agreement shall be binding upon and enure to the benefit of each
Party and its successors and permitted assigns.
12.2 Neither Party shall be entitled to assign and/or transfer all or any of
its rights and/or obligations under the Documents without the prior
written consent of the other Party.
13. MISCELLANEOUS
13.1 Counterparts
This Agreement may be executed in any number of counterparts all of which
taken together shall constitute one and the same instrument.
13.2 Partial Invalidity
If, at any time, any provision of this Agreement is or becomes illegal,
invalid or unenforceable in any respect under the law of any jurisdiction,
neither the legality, validity or enforceability of the remaining
provisions nor the legality, validity or enforceability of such provision
under the law of any other jurisdiction shall in any way be affected or
impaired thereby.
13.3 Third Party Rights
No term of this Agreement is enforceable under the Contracts (Rights of
Third Parties) ▇▇▇ ▇▇▇▇ by anyone other than a party to this Agreement.
13.4 Set-Off
Any repayments made in connection with the Loan shall be paid without
right of set-off other than those referred to in Clause 3.
14. GOVERNING LAW AND JURISDICTION
14.1 This Agreement shall be governed by and construed in accordance with the
laws of England.
14.2 Each Party irrevocably agrees for the benefit of the other Party that the
courts of England shall have jurisdiction to hear and determine any suit,
action or proceeding, and to settle any disputes which may arise out of or
in connection with this Agreement and for such purpose irrevocably submits
to the jurisdiction of such courts.
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AS WITNESS the hands of the duly authorised representatives of the Parties the
day and year first above written.
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SCHEDULE
FORM OF DRAWDOWN NOTICE
From: ForestRe (Holdings) Limited
as Borrower
To: Strategy Insurance Limited
as Lender
Date: [ ]
Loan Agreement dated [ ] June 2005 (the "Loan Agreement") between ForestRe
(Holdings) Limited, as Borrower, and Strategy Insurance Limited, as Lender
1. We refer to the Loan Agreement. Terms defined in the Loan Agreement
shall have the same respective meanings when used in this notice.
2. We hereby give notice in accordance with the provisions of the Loan
Agreement that we wish an Advance to be made as follows:
(a) Amount: US$[ ]
(b) Drawdown Date: [ ]
3. The proceeds of this drawdown should be credited to such account as we
shall separately designate to you.
Yours faithfully
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for and on behalf of
FORESTRE (HOLDINGS) LIMITED
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EXECUTION PAGE
LOAN AGREEMENT
Borrower
/s/ illegible
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for and on behalf of
FORESTRE (HOLDINGS) LIMITED
Name: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Director
Lender
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
for and on behalf of
STRATEGY INSURANCE LIMITED
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chief Underwriting Officer
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