SECOND SECURITY CONFIRMATION AND
AMENDMENT AGREEMENT
This Second Security Confirmation and Amendment Agreement (the
"AGREEMENT") is made as of April 1, 1997 among Canadian Forest Oil Ltd.
("CANADIAN FOREST"), Producers Marketing Ltd. ("PROMARK"), 3189503 Canada Ltd.
("HOLDCO"), 611852 Saskatchewan Ltd. ("FUNDCO"), Forest Oil Corporation ("FOREST
OIL"), and The Chase Manhattan Bank of Canada ("CHASE" or the "AGENT") in its
capacity as Administrative Agent for the Lenders (the "LENDERS") now or
hereafter party to the Second Amended and Restated Fundco Credit Agreement (as
defined below).
WHEREAS:
1. The parties hereto (or certain of them, as applicable) are parties to
various notes, guarantees and security documents given to assure and secure
payment and performance of obligations under the following credit agreements:
(a) Credit Agreement dated as of February 8, 1996 between Fundco and Chase
(the "ORIGINAL FUNDCO CREDIT AGREEMENT"),
(b) Credit Agreement dated as of February 8, 1996 between Canadian Forest,
the "Subsidiary Borrowers" (as defined therein), and Fundco (the
"ORIGINAL CANADIAN FOREST CREDIT AGREEMENT"), and
(c) Letter of Credit and Reimbursement Agreement dated as of February 8,
1996 between ProMark and Fundco (the "PRODUCERS MARKETING AGREEMENT").
2. The parties subsequently agreed to certain changes to the above
facilities, including the addition of new lenders to the Original Fundco Credit
Agreement, the inclusion of ProMark as a direct Borrower under the Original
Canadian Forest Credit Agreement, and the termination of the Producers Marketing
Agreement, and agreed to effect such changes by entering into:
(a) the Amended and Restated Credit Agreement dated July 17, 1996 among
Fundco, as borrower, and Chase, Bank of Montreal and Royal Bank of
Canada, as lenders, and Chase as Administrative Agent for the Lenders,
and
(b) the Amended and Restated Credit Agreement dated July 17, 1996 among
Canadian Forest, ProMark, and other "Subsidiary Borrowers" (as defined
therein), as borrowers, and Fundco, as lender.
In that regard, the parties entered into a Security Confirmation and Amendment
Agreement dated July 17, 1996 (the "FIRST CONFIRMATION") to effect certain
confirmations and amendments in respect of the Loan Documents, and to terminate
certain Loan Documents.
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3. In order to reflect, firstly, certain corporate changes affecting
Canadian Forest (namely, the amalgamation of 3189490 Canada Ltd. and Atcor
Resources Ltd. to form 721940 Alberta Ltd. as the continuing corporation
resulting therefrom, and the amalgamation of 721940 Alberta Ltd. and Canadian
Forest to form Canadian Forest as the continuing corporation resulting
therefrom), and secondly, certain asset sales from Canadian Forest to Forest Oil
and the continued secured position of Fundco with respect to such assets, the
parties hereto (or certain of them) have agreed to effect certain additional
amendments by entering into:
(a) the Second Amended and Restated Credit Agreement dated as of April 1,
1997 among Fundco, as borrower, and Chase, Bank of Montreal and Royal
Bank of Canada, as Lenders, and Chase as Administrative Agent for the
Lenders (as amended, restated or otherwise modified from time to time,
the "SECOND AMENDED AND RESTATED FUNDCO CREDIT AGREEMENT");
(b) the Second Amended and Restated Credit Agreement dated as of April 1,
1997 among Canadian Forest, ProMark, and other "Subsidiary Borrowers"
(as defined therein), as borrowers, and Fundco, as lender (as amended,
restated or otherwise modified from time to time, the "SECOND AMENDED
AND RESTATED CANADIAN FOREST CREDIT AGREEMENT").
4. The parties desire to confirm that in connection with the amendments
and restatements referred to in Recital 3 above, certain guarantees and security
given in connection with the original agreements referred to in Recital 1 above
continue in effect with certain amendments as herein and in the First
Confirmation set out, while certain other instruments are terminated as herein
set out.
NOW THEREFORE, in consideration of Chase and the Lenders agreeing to
the further amendment and restatement of the Original Fundco Credit Agreement
and the Original Canadian Forest Credit Agreement and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. DEFINITIONS
Capitalized terms used but not defined in this Agreement shall have
the meanings ascribed to them in the Second Amended and Restated Fundco Credit
Agreement.
2. EXISTING FUNDCO NOTES
Each of the four existing Notes dated July 17, 1996 and issued by
Fundco pursuant to Sections 2.09(a) and (b) of the Amended and Restated Credit
Agreement referred to in Recital 2(a) of this Agreement shall continue in full
force and effect, with each reference to "Amended and Restated Credit Agreement"
therein being deemed to refer to and include the Second Amended and Restated
Fundco Credit Agreement.
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3. FUNDCO ASSIGNMENT OF SECURITY (RE: CANADIAN FOREST)
The Assignment of Security (Canadian Forest Credit Agreement) made
February 8, 1996 by Fundco in favour of Chase, as amended by the First
Confirmation, is hereby confirmed as continuing security in favour of Chase for
the timely payment of the principal, interest (including interest on amounts in
default) and all other indebtedness and liabilities, present or future, direct
or indirect, now or hereafter owing by Fundco under the Second Amended and
Restated Fundco Credit Agreement and for the due performance by Fundco of all of
its covenants and obligations under that Second Amended and Restated Fundco
Credit Agreement, with the following deemed references and amendments:
(a) each reference to "Credit Agreement" therein shall be deemed to refer
to and include the Second Amended and Restated Fundco Credit
Agreement, and each reference to "Canadian Forest Credit Agreement"
shall be deemed to refer to and include the Second Amended and
Restated Canadian Forest Credit Agreement;
(b) the reference to "Sections 6.02(e) and (f) of the Credit Agreement"
found in the last line of Section 5.1(a) thereto is deleted and
replaced with a reference to "Sections 6.02(d) and (e) of the Credit
Agreement";
(c) the references to "Atcor Resources" in Sections 5.1(d) and (e) thereof
shall be deleted and replaced with references to "3189503"; and
(d) Item 4 of Schedule A thereto is deleted, and the following items are
added to such Schedule A:
"8. Guarantee and Pledge Agreement of 3189503 in favour of 611852
Saskatchewan Ltd. dated April 1, 1997.
9. Limited Recourse Secured Guarantee of Forest Oil Corporation in
favour of 611852 Saskatchewan Ltd. dated April 1, 1997.
10. Limited Recourse Demand Debenture and Negative Pledge of Forest
Oil Corporation in favour of 611852 Saskatchewan Ltd. dated April
1, 1997.
11. Deposit Agreement of Forest Oil Corporation in favour of 611852
Saskatchewan Ltd. dated April 1, 1997."
4. FUNDCO ASSIGNMENT OF PAYMENTS (RE: CANADIAN FOREST)
The Assignment of Payments (Canadian Forest Credit Agreement) dated
effective February 8, 1996 and executed by Fundco in favour of Chase, as amended
by the First Confirmation, is hereby confirmed as continuing security in favour
of Chase for the timely payment of the principal, interest (including interest
on amounts in default) and all other indebtedness and liabilities, present or
future, direct or indirect, now or hereafter owing by Fundco under the Second
Amended and Restated Fundco Credit Agreement and for the due performance by
Fundco of all of its
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covenants and obligations under that Second Amended and Restated Fundco
Credit Agreement, with "(the "CREDIT AGREEMENT") and (the "CANADIAN FOREST
CREDIT AGREEMENT")" found in Section 1 thereof being deleted and replaced by
"(as at any time amended, restated, supplemented or modified, the "CREDIT
AGREEMENT")", and "(as at any time amended, restated, supplemented or
modified in the "CANADIAN FOREST CREDIT AGREEMENT")" respectively, and with
each reference to "Credit Agreement" therein being deemed to refer to and
include the Second Amended and Restated Fundco Credit Agreement, and each
reference to "Canadian Forest Credit Agreement" being deemed to refer to and
include the Second Amended and Restated Canadian Forest Credit Agreement.
5. CANADIAN FOREST/ATCOR RESOURCES CONSENT AND AGREEMENT (RE: CANADIAN
FOREST)
The Consent and Agreement (Canadian Forest Credit Agreement) made
February 8, 1996 and executed by Canadian Forest and Atcor Resources Ltd. in
favour of Chase, as amended by the First Confirmation, is hereby confirmed as a
continuing consent and agreement in favour of Chase for the timely payment of
the principal, interest (including interest on amounts in default) and all other
indebtedness and liabilities, present or future, direct or indirect, now or
hereafter owing by Fundco under the Second Amended and Restated Fundco Credit
Agreement and for the due performance by Fundco of all of its covenants and
obligations under that Second Amended and Restated Fundco Credit Agreement, with
the following deemed references and amendments:
(a) by their execution of this Agreement each of Forest Oil and Holdco
hereby becomes a party to such Consent and Agreement as one of the
"Canadian Forest Companies"; the term "Canadian Forest Companies"
shall be deemed to include Forest Oil and Holdco throughout that
Consent and Agreement; and Forest Oil and Holdco hereby provide the
consents, confirmations and acknowledgements, and assume the
representations, covenants, agreements and other obligations, of the
Canadian Forest Companies thereunder. The "Address for Notices" for
Forest Oil and Holdco shall be the same as that set out in respect of
Forest Oil on the signature page for Fundco in the Second Amended and
Restated Fundco Credit Agreement;
(b) each reference to "Credit Agreement" therein shall be deemed to refer
to and include the Second Amended and Restated Fundco Credit
Agreement, and each reference to "Canadian Forest Credit Agreement"
shall be deemed to refer to and include the Second Amended and
Restated Canadian Forest Credit Agreement; and
(c) Item 4 of Schedule A thereto is deleted, and the following items are
added to such Schedule A:
"8. Guarantee and Pledge Agreement of 3189503 in favour of 611852
Saskatchewan Ltd. dated April 1, 1997.
9. Limited Recourse Secured Guarantee of Forest Oil Corporation in
favour of 611852 Saskatchewan Ltd. dated April 1, 1997.
10. Limited Recourse Demand Debenture and Negative Pledge of Forest
Oil Corporation in favour of 611852 Saskatchewan Ltd. dated
April 1, 1997.
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11. Deposit Agreement of Forest Oil Corporation in favour of 611852
Saskatchewan Ltd. dated April 1, 1997."
6. FUNDCO DEMAND DEBENTURE
The Demand Debenture and Negative Pledge issued February 8, 1996 by
Fundco in favour of Chase, as amended by the First Confirmation, is hereby
confirmed as continuing security in favour of Chase for the timely payment of
the principal, interest (including interest on amounts in default) and all other
indebtedness and liabilities, present or future, direct or indirect, now or
hereafter owing by Fundco under the Second Amended and Restated Fundco Credit
Agreement and for the due performance by Fundco of all of its covenants and
obligations under that Second Amended and Restated Fundco Credit Agreement, with
each reference to "Credit Agreement" in that Demand Debenture being deemed to
refer to and include the Second Amended and Restated Fundco Credit Agreement.
7. FUNDCO DEPOSIT AGREEMENT
The Deposit Agreement made February 8, 1996 by Fundco in favour of
Chase, as amended by the First Confirmation, is hereby confirmed as continuing
security in favour of Chase for the timely payment of the principal, interest
(including interest on amounts in default) and all other indebtedness and
liabilities, present or future, direct or indirect, now or hereafter owing by
Fundco under the Second Amended and Restated Fundco Credit Agreement and for the
due performance by Fundco of all of its covenants and obligations under that
Second Amended and Restated Fundco Credit Agreement, with each reference to
"Credit Agreement" in that Deposit Agreement being deemed to refer to and
include the Second Amended and Restated Fundco Credit Agreement.
8. CHASE CONFIRMATION RE: INCREMENTAL INTEREST RATE
The letter acknowledgement of Chase dated February 8, 1996 to Fundco,
as amended by the First Confirmation, is confirmed as a continuing
acknowledgement in favour of Fundco, with each reference to "Credit Agreement"
therein being deemed to refer to and include the Second Amended and Restated
Fundco Credit Agreement.
9. CANADIAN FOREST AND PROMARK NOTES
Each of the two existing Notes dated July 17, 1996 issued by Canadian
Forest, and each of the two existing Notes dated July 17, 1996 issued by
ProMark, in each case pursuant to Sections 2.09(a) and (b) of the Amended and
Restated Credit Agreement referred to in Recital 2(b) of this Agreement, shall
continue in full force and effect, with each reference to "Amended and Restated
Credit Agreement" therein being deemed to refer to and include the Second
Amended and Restated Canadian Forest Credit Agreement.
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10. CANADIAN FOREST AND PROMARK DEMAND DEBENTURES
The Demand Debenture and Negative Pledge issued February 8, 1996 by
Canadian Forest in favour of Fundco, as amended by the First Confirmation (the
"CANADIAN FOREST DEBENTURE"), and the Demand Debenture and Negative Pledge
issued July 17, 1996 by ProMark in favour of Fundco, are hereby confirmed as
continuing security in favour of Fundco for the timely payment of the principal,
interest (including interest on amounts in default) and all other indebtedness
and liabilities, present or future, direct or indirect, now or hereafter owing
by the Borrowers under the Second Amended and Restated Canadian Forest Credit
Agreement and for the due performance by the Borrowers of all of their covenants
and obligations under that Second Amended and Restated Canadian Forest Credit
Agreement with the following deemed reference and amendment:
(a) each reference to "Canadian Forest Credit Agreement" therein shall be
deemed to refer to and include the Second Amended and Restated
Canadian Forest Credit Agreement; and
(b) Section 12.6(a) of the Canadian Forest Debenture is deleted and
replaced with "the occurrence of an event described in Section 12.2(b)
or (c); or".
11. CANADIAN FOREST AND PROMARK DEPOSIT AGREEMENTS
The Deposit Agreement made February 8, 1996 by Canadian Forest in
favour of Fundco, as amended by the First Confirmation, and the Deposit
Agreement made July 17, 1996 by ProMark in favour of Fundco, are hereby
confirmed as continuing security in favour of Fundco for the timely payment of
the principal, interest (including interest on amounts in default) and all other
indebtedness and liabilities, present or future, direct or indirect, now or
hereafter owing by the Borrowers under the Second Amended and Restated Canadian
Forest Credit Agreement and for the due performance by the Borrowers of all of
their covenants and obligations under that Second Amended and Restated Canadian
Forest Credit Agreement, with each reference to "Credit Agreement" therein being
deemed to refer to and include the Second Amended and Restated Canadian Forest
Credit Agreement.
12. ATCOR GUARANTEE AND PLEDGE AGREEMENT
The Guarantee and Pledge Agreement dated as of February 8, 1996 by
Atcor Resources Ltd. in favour of Fundco, as amended by the First Confirmation,
is hereby terminated concurrently with the execution by Holdco of the Guarantee
and Pledge Agreement in favour of Fundco dated April 1, 1997 (the "NEW
GUARANTEE") with that security and all payments thereunder and under the Powers
of Attorney referred to in Section 13 hereof being assigned to Chase pursuant to
the Assignment of Security (Canadian Forest Credit Agreement) referred to in
Section 3 hereof and the Assignment of Payments (Canadian Forest Credit
Agreement) referred to in Section 4 hereof. Notwithstanding the immediately
preceding sentence, such termination shall not become effective until the New
Guarantee is in full force and effect and such termination shall be without
prejudice to the security interest in the Pledged Stock and other Collateral (as
defined in the New Guarantee) created in favour of Fundco by the New Guarantee,
and Chase shall continue in possession of the
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Pledged Stock and other Collateral (as assignee of the New Guarantee) as
continuing collateral security for the obligations secured by the New
Guarantee on the terms set out in the New Guarantee.
13. ATCOR RESOURCES POWERS OF ATTORNEY
Each Power of Attorney dated February 8, 1996 given by Atcor Resources
Ltd. in respect of the share certificates of Canadian Forest in connection with
the security interests granted by it to Fundco, is terminated concurrently with
the granting of a Power of Attorney by Holdco in respect of the sole share
certificate issued in respect of all of the issued and outstanding shares in the
capital of Canadian Forest and delivered pursuant to the New Guarantee.
14. CANADIAN FOREST POWER OF ATTORNEY
The Powers of Attorney dated February 8, 1996 given by Canadian Forest
in respect of the share certificates of ProMark in connection with the security
interest granted by Canadian Forest to Fundco shall continue in full force and
effect.
15. NEW FOREST SECURITY
The parties acknowledge that in connection with the sale transaction
referred to in Recital 3 of this Agreement, Forest Oil is granting the following
new security, with that security and all payments thereunder being assigned to
Chase pursuant to the Assignment of Security (Canadian Forest Credit Agreement)
referred to in Section 3 hereof and the Assignment of Payments (Canadian Forest
Credit Agreement) referred to in Section 4 hereof:
(a) Limited Recourse Secured Guarantee of Forest Oil dated as of April 1,
1997;
(b) Limited Recourse Demand Debenture and Negative Pledge of Forest Oil
dated as of April 1, 1997; and
(c) Deposit Agreement of Forest Oil dated as of April 1, 1997;
(collectively, the "NEW FOREST SECURITY").
Fundco (and Chase, as Fundco's assignee) acknowledge that their
recourse in respect of enforcing the New Forest Security is limited to realizing
upon the Liens created by the Limited Recourse Demand Debenture and Negative
Pledge referred to in clause (b) above, all as provided in the New Forest
Security, and that Forest is not liable on the aforesaid Guarantee or Demand
Debenture for any deficiency that may exist following such realization.
16. GOVERNING LAW
This Agreement shall be governed by and interpreted in accordance with
the laws of the Province of Alberta and the laws of Canada applicable therein
and shall be treated as an Alberta contract. Each party hereby irrevocably
submits to the non-exclusive jurisdiction of the courts of
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the Province of Alberta, without prejudice to the rights of a party to take
proceedings in any other jurisdictions.
17. SEVERABILITY
If one or more of the provisions of this Agreement is, or is adjudged
to be, invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions hereof shall not in any way be
affected or impaired thereby, and such invalid, illegal or unenforceable
provision shall, to the extent permitted at law, be severable.
18. SECURITY IN ADDITION
The rights hereby constituted are in addition to and not in
substitution for any other security, or for any other agreement between the
parties whether or not creating any security interest in all or part of the
property of any party hereto whether heretofore or hereafter made, and such
security and such agreement shall be deemed to be continued and not affected
hereby unless expressly provided to the contrary herein. The taking of any
action or proceedings or refraining from so doing, or any other dealing with any
other security or any part thereof shall not release or affect this Agreement
and neither the taking of any proceedings hereunder or under the documents
continued hereunder for the realization of any security shall release or affect
any other security held by Chase.
19. CONTINUING SECURITY
Without limiting the generality of the foregoing, Forest Oil, Holdco,
Canadian Forest, ProMark and Fundco acknowledge and agree with the Agent that
the Security Documents (as defined in the Second Amended and Restated Fundco
Credit Agreement), as amended as provided in this Agreement, are and shall
remain in full force and effect and shall continue to constitute collateral
security for the fulfilment of all debts and liabilities, present and future,
direct and indirect, absolute and contingent, matured or not, at any time owing
by Fundco under the Second Amended and Restated Fundco Credit Agreement,
howsoever arising.
20. WAIVERS AND CONSENTS
No waiver of any provision hereof, or consent to any action or
inaction shall be effective unless the same is in writing and signed by the
party granting the same. Such waivers and consents shall not extend to any
matters other than those in respect of which the same were given, and the same
may be subject to such conditions as the party giving the same may stipulate.
21. COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one and the same instrument and any of the
parties hereto may execute this Agreement by signing any such counterpart.
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22. FURTHER ASSURANCES
Each of Forest Oil, Holdco, Canadian Forest, ProMark and Fundco shall
from time to time, whether before or after the occurrence of any default in the
performance of any obligation to Chase under the Second Amended and Restated
Fundco Credit Agreement or the Second Amended and Restated Canadian Forest
Credit Agreement, do all such acts and things and execute and deliver all such
deeds, transfers, assignments and instruments as Chase may require to give
effect to the intent of this Agreement.
IN WITNESS WHEREOF the parties have executed this Agreement.
3189503 CANADA LTD.
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------
Xxxxxxx X. Xxxxxx
Secretary
CANADIAN FOREST OIL LTD.
By: /s/ Xxxxxx X. Xxxxx
----------------------------------
Xxxxxx X. Xxxxx
Vice President, Finance
PRODUCERS MARKETING LTD.
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------
Xxxxxx X. Xxxxx
Secretary
FOREST OIL CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------
Xxxxxx X. Xxxxxxx
Vice President and Treasurer
611852 SASKATCHEWAN LTD.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxx
Secretary
THE CHASE MANHATTAN BANK OF
CANADA, AS ADMINISTRATIVE AGENT
By: /s/ (Illegible)
----------------------------------
Vice President
