GUARANTEE AND PLEDGE AGREEMENT
GUARANTEE AND PLEDGE AGREEMENT dated as of April 1, 1997 between
3189503 Canada Ltd., a corporation duly organized and validly existing under
the laws of Canada (the "GUARANTOR"); and 611852 SASKATCHEWAN LTD., a
corporation duly organized under the laws of the Province of Saskatchewan
("SASKCO").
RECITALS
1. Canadian Forest Oil Ltd., a corporation duly organized under the
laws of Alberta ("CANADIAN FOREST"), each of the Subsidiaries that becomes a
party to the Credit Agreement as provided therein (individually a "SUBSIDIARY
BORROWER" and collectively with Canadian Forest, the "BORROWERS") and Saskco
are parties to a Second Amended and Restated Credit Agreement dated as of
April 1, 1997 (as amended, restated, modified and supplemented or further
restated and in effect from time to time, the "CREDIT AGREEMENT"), providing,
subject to the terms and conditions thereof, for extensions of credit (by
making of loans or the provision of Letters of Credit) by Saskco to the
Borrowers in an aggregate principal or face amount not exceeding C$80,000,000.
2. All of the issued and outstanding shares of Canadian Forest are
currently pledged to Saskco pursuant to a Guarantee and Pledge Agreement
dated February 8, 1996 given by Atcor Resources Ltd. (then an indirect
wholly-owned subsidiary of the Guarantor and the direct parent of Canadian
Forest). Through a series of amalgamations, including the amalgamation of
Canadian Forest and Atcor Resources Ltd., the Guarantor is the successor to
Atcor Resources Ltd. as the direct owner of all of such shares.
3. To induce Saskco to enter into the Credit Agreement and to extend
credit thereunder and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Guarantor has agreed to
guarantee the Guaranteed Obligations (as hereinafter defined), and to
continue the security interest currently held by Saskco in the shares of
Canadian Forest and the other Collateral (as herein defined) as security for
the Secured Obligations (as herein defined). Accordingly, the parties hereto
agree as follows:
SECTION 1
DEFINITIONS
Terms defined in the Credit Agreement are used herein as defined
therein. In addition, as used herein:
"ALBERTA PPSA" shall mean the PERSONAL PROPERTY SECURITY ACT (Alberta)
as in effect from time to time in the Province of Alberta.
"COLLATERAL" shall have the meaning ascribed thereto in Section 4
hereof.
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"COLLATERAL ACCOUNT" shall have the meaning ascribed thereto in
Section 5.01 hereof.
"GUARANTEED OBLIGATIONS" shall have the meaning ascribed thereto in
Section 2.01 hereof.
"LETTER OF CREDIT LIABILITIES" shall have the meaning ascribed thereto
in the Credit Agreement.
"OBLIGORS" shall mean, collectively, the Borrowers.
"PLEDGED STOCK" shall have the meaning ascribed thereto in
Section 4(a) hereof.
"SECURED OBLIGATIONS" shall mean, collectively, (a) all obligations of
the Guarantor in respect of its Guarantee under Section 2 hereof and
(b) all other obligations of the Guarantor to Saskco hereunder.
SECTION 2
THE GUARANTEE
2.01 THE GUARANTEE. The Guarantor hereby guarantees to Saskco and its
successors and assigns the prompt payment in full when due (whether at stated
maturity, by acceleration or otherwise) of the principal of and interest on
the Loans made by Saskco to, and the Note(s) held by Saskco of, the Borrowers
and all other amounts from time to time owing to Saskco by the Borrowers
under the Credit Agreement, the Notes and the other Loan Documents (such
obligations being herein collectively called the "GUARANTEED OBLIGATIONS").
The Guarantor hereby further agrees that if the Obligors shall fail to pay in
full when due (whether at stated maturity, by acceleration or otherwise) any
of the Guaranteed Obligations, the Guarantor will promptly pay the same,
without any demand or notice whatsoever and without regard to any defence,
counterclaim or right of set-off available to the Guarantor, and that in the
case of any extension of time of payment or renewal of any of the Guaranteed
Obligations, the same will be promptly paid in full when due (whether at
extended maturity, by acceleration or otherwise) in accordance with the terms
of such extension or renewal.
2.02 OBLIGATIONS UNCONDITIONAL. The obligations of the Guarantor under
Section 2.01 hereof are absolute and unconditional irrespective of the value,
genuineness, validity, regularity or enforceability of the Credit Agreement,
the Notes, the other Loan Documents or any other agreement or instrument
referred to herein or therein, or any substitution, release or exchange of
any other guarantee of or security for any of the Guaranteed Obligations,
and, to the fullest extent permitted by applicable law, irrespective of any
other circumstance whatsoever that might otherwise constitute a legal or
equitable discharge or defence of a surety or guarantor. The Guarantor's
obligations hereunder shall not be diminished in any way except by the
payments in full of the Guaranteed Obligations. Without limiting the
generality of the foregoing, it is agreed that the occurrence of any one or
more of the following shall not alter, reduce or impair the liability of the
Guarantor hereunder which liability shall remain absolute and unconditional
as described above:
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(i) at any time or from time to time, without notice to the Guarantor,
the time for any performance of or compliance with any of the Guaranteed
Obligations shall be extended, or such performance or compliance shall be
waived;
(ii) any of the acts mentioned in any of the provisions of the Credit
Agreement, the Notes or any other agreement or instrument referred to herein
or therein shall be done or omitted;
(iii) the maturity of any of the Guaranteed Obligations shall be
accelerated, or any of the Guaranteed Obligations shall be modified,
supplemented or amended in any respect, or any right under the Credit
Agreement, the Notes or any other agreement or instrument referred to herein
or therein shall be waived or any other guarantee of any of the Guaranteed
Obligations or any security therefor shall be released or exchanged in whole
or in part or otherwise dealt with;
(iv) any lien or security interest granted to, or in favour of, Saskco
as security for any of the Guaranteed Obligations shall fail to be perfected;
(v) the bankruptcy, insolvency, liquidation, dissolution or winding up
of any Obligor, the Guarantor or any other guarantor of the Guaranteed
Obligations;
(vi) any change in the name, capital structure, constitution or
capacity of any Obligor or any of those parties being merged, consolidated,
reorganized or amalgamated with another corporation (in this latter case the
guarantee provided in this Section 2 shall apply to the liabilities of the
resulting corporation, and the term "Borrower" shall include such resulting
corporation);
(vii) any loss of, or in respect of, or under, any other guarantee or
other security which Saskco may now or hereafter hold in respect of the
Guaranteed Obligations, whether occasioned by the fault of Saskco, the Agent,
the lenders under the Funding Credit Agreement or otherwise;
(viii) any dealings with any security that Saskco holds or may hold for
payment of the Guaranteed Obligations and the performance of the obligations
of the Borrowers under the Credit Agreement or the Guarantor under this
Agreement including the taking and giving up of securities, the accepting of
compositions and the granting of releases and discharges;
(ix) any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of the Guaranteed Obligations or the rights of
Saskco with respect thereto;
(x) any contest by any Obligor or any other Person of the validity or
enforceability of any terms of this Agreement or any security provided for
the Guaranteed Obligations or the priority of any such security or of the
amount of the Guaranteed Obligations or any part of the Guaranteed
Obligations;
(xi) the assignment of all or any parts of the benefits of this
Agreement; or
(xii) any defence, counterclaim or right of set-off available to the
Guarantor.
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The Guarantor hereby expressly waives diligence, presentment, demand of
payment, protest and all notices whatsoever, and any requirement that Saskco
exhaust any right, power or remedy or proceed against any Obligor under the
Credit Agreement, Notes or any other Loan Documents, or any other agreement
or instrument referred to herein or therein, or against any other Person
under any other guarantee of, or security for, any of the Guaranteed
Obligations.
2.03 REINSTATEMENT. The obligations of the Guarantor under this Section
2 shall be automatically reinstated if and to the extent that for any reason
any payment by or on behalf of any of the Obligors in respect of the
Guaranteed Obligations is rescinded or must be otherwise restored by any
holder of any of the Guaranteed Obligations, whether as a result of any
proceedings in bankruptcy or reorganization or otherwise, and the Guarantor
agrees that it will indemnify Saskco on demand for all reasonable costs and
expenses (including, without limitation, fees of counsel) incurred by Saskco
in connection with such rescission or restoration, including any such costs
and expenses incurred in defending against any claim alleging that such
payment constituted a preference, fraudulent transfer of similar payment
under any bankruptcy, insolvency or similar law.
2.04 SUBROGATION. The Guarantor hereby agrees that until the payment
and satisfaction in full of all Guaranteed Obligations and the expiration or
termination of the Commitment and all Letter of Credit Liabilities of the
Obligors under the Credit Agreement it shall not exercise any right or remedy
arising by reason of any performance by it of its guarantee in Section 2.01
hereof, whether by subrogation or otherwise, against any Obligor or any other
guarantor of any of the Guaranteed Obligations or any security for any of the
Guaranteed Obligations.
2.05 REMEDIES. The Guarantor agrees that, as between the Guarantor and
Saskco, the obligations of the Borrowers under the Credit Agreement and Notes
may be declared to be forthwith due and payable as provided in Section 9 of
the Credit Agreement (and shall be deemed to have become automatically due
and payable in the circumstances provided in said Section 9) for purposes of
Section 2.01 hereof notwithstanding any stay, injunction or other prohibition
preventing such declaration (or such obligations from becoming automatically
due and payable) as against the applicable Obligor and that, in the event of
such declaration (or such obligations being deemed to have become
automatically due and payable), such obligations (whether or not due and
payable by the applicable Obligor) shall forthwith become due and payable by
the Guarantor for purposes of said Section 2.01.
2.06 CONTINUING GUARANTEE. The guarantee in this Section 2 is a
continuing guarantee, and shall apply to all Guaranteed Obligations whenever
arising.
2.07 POSTPONEMENT AND SUBORDINATION OF CLAIMS. All debts owed by the
Obligors to the Guarantor and all claims that the Guarantor has against any
one or more of the Obligors, both present and future, shall be postponed to
the Guaranteed Obligations and Saskco shall have the right to rank in
priority to the Guarantor for its full claim in respect of the Guaranteed
Obligations until its claims in respect of the Guaranteed Obligations have
been paid in full and the Guarantor shall continue to be liable for any
balance which may be owing to Saskco by the Obligors.
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2.08 PRINCIPAL DEBTOR. Notwithstanding any other obligations of the
Guarantor under this Agreement, any amounts which may not be recoverable from
the Guarantor as guarantor under this Agreement shall be recoverable from the
Guarantor as principal debtor of respect thereof and shall be paid to Saskco
by the Guarantor after demand therefor.
2.09 GUARANTOR'S AGREEMENTS. The Guarantor agrees that:
(a) Saskco shall not be concerned to see or inquire into the powers of
the Obligors or their respective directors, officers or agents acting or
purporting to act on their behalf, and moneys, advances or credits in fact
borrowed or obtained from Saskco pursuant to the Credit Agreement in the
professed exercise of such powers shall be deemed to form part of the
Guaranteed Obligations, even though such borrowing or obtaining thereof may
have been irregularly, defectively or informally effected or in excess of the
powers of any of the Obligors or their respective directors, officers or
agents or notwithstanding that the Obligors may not be a legal or suable
entity; and
(b) the Guarantor shall not have any recourse against Saskco for any
invalidity, non-perfection or unenforceability of any security held by Saskco
in respect of the Guaranteed Obligations or any irregularity or defect in the
manner or procedure by which Saskco realizes on such security, whether
occasioned by the fault of Saskco or otherwise.
2.10 DISCUSSION AND DIVISION. Should Saskco elect to realize on any
security that Saskco may hold, either before, concurrently with or after
demand for payment to the Guarantor, the Guarantor shall have no right of
discussion or division.
2.11 ACCOUNTS. Any account settled or stated by or between Saskco and
the Obligors or if any such account has not been settled or stated
immediately before demand for payment of the Guaranteed Obligations, any
account thereafter stated by Saskco, shall in the absence of manifest error,
constitute prima facie evidence that the balance or amount thereof thereby
appearing due by the Obligors to Saskco is so due.
2.12 OTHER SECURITY. The guarantee provided in this Section 2 shall be
in addition to and not in substitution for any other guarantees or other
security which Saskco may now or hereafter hold in respect of the Guaranteed
Obligations, and Saskco shall be under no obligation to xxxxxxxx in favour of
the Guarantor any other guarantees or other security or any monies or other
assets which Saskco may be entitled to receive or may have a claim upon.
2.13 CURRENCY OF PAYMENTS. The Guarantor acknowledges that the
Guaranteed Obligations may be payable either in U.S. Dollars or Canadian
Dollars or partly in one currency and partly in the other, and, without
limiting the effect of Section 8.10 hereof, agrees to make payment in the
currency or currencies in which such Guaranteed Obligations are owing.
2.14 TAXES. If any payment made by the Guarantor to Saskco hereunder
becomes subject to any withholding or deduction with respect to Covered Taxes
(as defined in the Funding Credit Agreement), the Guarantor shall also duly
and punctually pay to Saskco such additional amount as may be necessary to
ensure that Saskco receives an amount, after taking into account all
applicable
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Covered Taxes, equal to the amount which would have been received by Saskco
had such payment not been made subject to any withholding or deduction. In
any such circumstance, the Guarantor shall also promptly remit to Saskco the
relevant official receipts or other evidence satisfactory to Saskco
evidencing payment to the appropriate taxing authority of each such Covered
Tax by the Guarantor on behalf of Saskco.
2.15 CHANGE OF RESIDENCY OF GUARANTOR. If any payment made to Saskco
becomes subject to any Tax from any taxation authority having jurisdiction
over such payment as a consequence of the change of residency of the
Guarantor to a jurisdiction other than Canada, Saskco shall be entitled to
all the rights and benefits arising under Section 2.14 hereof.
SECTION 3
REPRESENTATIONS AND WARRANTIES
The Guarantor represents and warrants to Saskco that:
3.01 CORPORATE EXISTENCE. Each of the Guarantor and its Subsidiaries:
(a) is a corporation duly organized and validly existing under the laws of
the jurisdiction of its incorporation; (b) has all requisite corporate power,
and, subject to the provisions in the Sale Agreement relating to "Constrained
Gas Marketing Agreements", has all material governmental licenses,
authorizations, consents and approvals necessary to own its assets and carry
on its business as now being or as proposed to be conducted; and (c) is
qualified to do business in all jurisdictions in which the nature of the
business conducted by it makes such qualification necessary and where failure
to so qualify would (either individually or in the aggregate) have a material
adverse effect on the consolidated financial condition, operations, business
or prospects taken as a whole of the Guarantor and its consolidated
Subsidiaries.
3.02 LITIGATION. Except as disclosed to Saskco in writing prior to the
date hereof, there are no legal or arbitral proceedings or any proceedings by
or before any governmental or regulatory authority or agency, now pending or
(to the knowledge of the Guarantor) threatened against the Guarantor or any
of its Subsidiaries that, if adversely determined, could (either individually
or in the aggregate) have a material adverse effect on the consolidated
financial condition, operations, business or prospects taken as a whole of
the Guarantor and its consolidated Subsidiaries.
3.03 NO BREACH. None of the execution and delivery of this Agreement,
the consummation of the transactions herein contemplated or compliance with
the terms and provisions hereof will conflict with or result in a breach of,
or require any consent under, the organizational documents of the Guarantor,
or any applicable law or regulation, or any order, writ, injunction or decree
of any court or governmental authority or agency, or any agreement or
instrument to which the Guarantor or any of its Subsidiaries is a party or by
which any of them is bound or to which any of them is subject, or constitute
a default under any such agreement or instrument, or (except for Liens
created pursuant to the Security Documents) result in the creation or
imposition of any Lien upon any of the revenues or assets of the Guarantor or
any of its Subsidiaries pursuant to the terms of any such agreement or
instrument.
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3.04 CORPORATE ACTION. The Guarantor has all necessary corporate power
and authority to execute, deliver and perform its obligations under this
Agreement; the execution, delivery and performance by the Guarantor of this
Agreement have been duly authorized by all necessary corporate action on its
part (including without limitation, any required shareholder approvals); and
this Agreement has been duly and validly executed and delivered by the
Guarantor and constitutes its legal, valid and binding obligations,
enforceable in accordance with its terms, except as such enforceability may
be limited by (a) bankruptcy, insolvency, reorganization, moratorium or
similar laws of general applicability affecting the enforcement of creditors'
rights and (b) the application of general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at
law).
3.05 APPROVALS. No authorizations, approvals or consents of (including
any exchange control approval), and no filings or registrations with, any
governmental or regulatory authority or agency, or any securities exchange
are necessary for the execution, delivery or performance by the Guarantor of
this Agreement or for the validity or enforceability hereof except for
filings and recordings in respect of Liens created herein.
3.06 TAXES. The Guarantor and its Subsidiaries have filed all Canadian
federal income tax returns required to be filed pursuant to the INCOME TAX
ACT (Canada) and all other material tax returns that are required to be filed
by the Guarantor and its Subsidiaries and have paid all taxes due pursuant to
such returns or pursuant to any assessment received by the Guarantor or any
of its Subsidiaries. The charges, accruals and reserves on the books of the
Guarantor and its Subsidiaries in respect of taxes and other governmental
charges are, in the opinion of the Guarantor, adequate. Except as disclosed
in writing to the Lenders and the Agent prior to the Closing Date, the
Guarantor has not given or been requested to give a waiver of the statute of
limitations relating to the payment of any taxes or other impositions.
3.07 LEGAL FORM. This Agreement is in proper legal form under the laws
of the Province of Alberta and the laws of Canada applicable therein for the
enforcement thereof against the Guarantor under such laws. All formalities
required in the Province of Alberta and the laws of Canada applicable therein
for the validity and enforceability of this Agreement (including, without
limitation, any necessary registration, recording or filing with any court or
other authority in Alberta or Canada) have been accomplished, and no Taxes
are required to be paid and no notarization is required for the validity and
enforceability thereof.
3.08 RANKING. This Agreement and the obligations evidenced hereby are
and will at all times be direct and unconditional general obligations of the
Guarantor, and rank and will at all times rank in right of payment and
otherwise at least PARI PASSU with all unsecured Indebtedness of the
Guarantor, whether now existing or hereafter outstanding. There exists no
Lien (including any Lien arising out of any attachment, judgment or
execution), other than (i) inchoate Liens arising by operation of law or
statute, or (ii) as permitted by the Credit Agreement and the Funding Credit
Agreement, nor any segregation or other preferential arrangement of any kind,
on, in or with respect to any of the Property or revenues of any Subsidiaries
of the Guarantor.
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3.09 COMMERCIAL ACTIVITY. The Guarantor is subject to civil and
commercial law with respect to its obligations under this Agreement. The
execution, delivery and performance by the Guarantor of this Agreement
constitute private and commercial acts rather than public or governmental
acts. The Guarantor is not, nor is any of its Properties or revenues,
entitled to any right of immunity in any jurisdiction from suit, court
jurisdiction, judgment, attachment (whether before or after judgment),
set-off or execution of a judgment or from any other legal process or remedy
relating to the obligations of such Guarantor under this Agreement.
3.10 PLEDGED STOCK.
(a) The Guarantor is the sole beneficial owner of the Collateral and no
Lien, other than inchoate Liens arising by operation of law or statute,
exists or will exist upon the Collateral at any time (and no right or option
to acquire the same exists in favour of any other Person), except for the
pledge and security interest in favour of Saskco created or provided for
herein, which pledge and security interest constitute a first priority
perfected pledge and security interest in and to all of the Collateral.
(b) The Pledged Stock represented by certificate No. 1 is, and all
other Pledged Stock in which the Guarantor shall hereafter grant a security
interest pursuant to Section 4 hereof will be, duly authorized, validly
existing, fully paid and non-assessable and none of such Pledged Stock is or
will be subject to any contractual restriction, or any restriction under the
charter or by-laws of Canadian Forest, upon the transfer of such Pledged
Stock (except for any such restriction contained herein).
(c) The authorized capital stock of Canadian Forest is one class of
shares, designated as "Common Shares", in an unlimited number.
(d) The Pledged Stock represented by certificated No. 1 constitutes all
of the issued and outstanding shares of capital stock of any class of
Canadian Forest beneficially owned by the Guarantor on the date hereof
(whether or not registered in the name of the Guarantor) and such
certificates represent 100 common shares of Canadian Forest, and the
Guarantor is the registered owner of all such shares.
(e) No person, firm or corporation has any agreement or option or any
right or privilege (whether by law, preemptive or contractual) capable of
becoming an agreement or option for the purchase or for the subscription and
issue of any unissued shares in the capital of Canadian Forest.
(f) The Guarantor is not a party to any agreement relating to any of
the Pledged Stock.
3.11 INVESTMENT COMPANY ACT. The Guarantor is not an "investment
company", or a company "controlled" by an "investment company", within the
meaning of the INVESTMENT COMPANY ACT of 1940, as amended.
3.12 PUBLIC UTILITY HOLDING COMPANY ACT. The Guarantor is not a "holding
company", or an "affiliate" of a "holding company" or a "subsidiary company"
of a "holding company", within the meaning of the PUBLIC UTILITY HOLDING
COMPANY ACT of 1935, as amended.
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The representations and warranties herein set forth or contained in any
certificates or documents delivered to Saskco or the Agent pursuant hereto
shall not merge in or be prejudiced by and shall survive any act done
pursuant hereto or to the Credit Agreement and shall continue in full force
and effect so long as any amount is owing, contingent or otherwise, by the
Guarantor to Saskco.
SECTION 4
THE PLEDGE
As continuing collateral security for the prompt payment in full
when due (whether at stated maturity, by acceleration or otherwise) of the
Secured Obligations, the Guarantor hereby pledges and grants to Saskco as
hereinafter provided, and hereby continues the original pledge and grant by
Atcor Resources Ltd. of, a security interest in all of the Guarantor's right,
title and interest in the following property, whether now owned by the
Guarantor or hereafter acquired and whether now existing or hereafter coming
into existence (all being collectively referred to herein as "COLLATERAL"):
(a) the shares of common stock of Canadian Forest, without par value,
represented by certificate No. 1 and all other shares of capital stock of
whatever class of Canadian Forest, now or hereafter owned by the Guarantor,
in each case together with the certificates evidencing the same
(collectively, the "PLEDGED STOCK");
(b) all shares, securities, moneys or property representing a dividend
on any of the Pledged Stock, or representing a distribution or return of
capital upon or in respect of the Pledged Stock, or resulting from a
split-up, revision, reclassification or other like change of the Pledged
Stock or otherwise received in exchange therefor, and any subscription
warrants, rights or options issued to the holders of, or otherwise in respect
of, the Pledged Stock;
(c) without affecting the obligations of the Guarantor under any
provision prohibiting such action hereunder, in the event of any
consolidation or merger in which Canadian Forest is not the surviving
corporation, all shares of each class of the capital stock of the successor
corporation (unless such successor corporation is the Guarantor itself)
formed by or resulting from such consolidation or merger;
(d) the balance from time to time in the Collateral Account; and
(e) all proceeds of and to any of the property of the Guarantor
described in the preceding clauses of this Section 4 (including, without
limitation, all causes of action, claims and warranties now or hereafter held
by the Guarantor in respect of any of the items listed above) and, to the
extent related to any property described in said clauses or such proceeds,
all books, correspondence, credit files, records, invoices and other papers.
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SECTION 5
CASH PROCEEDS OF COLLATERAL
5.01 COLLATERAL ACCOUNT. The Guarantor and Saskco hereby acknowledge
and confirm the existence of a cash collateral account at Chase Canada (the
"COLLATERAL ACCOUNT") in the name and under the control of Saskco established
pursuant to the Guarantee and Pledge Agreement referenced in the second
paragraph of the recitals hereto, into which there shall be deposited from
time to time the cash proceeds of any of the Collateral required to be
delivered to Saskco pursuant hereto and into which the Guarantor may from
time to time deposit any additional amounts that it wishes to pledge to
Saskco as additional collateral security hereunder. The balance from time to
time in the Collateral Account shall constitute part of the Collateral
hereunder and shall not constitute payment of the Secured Obligations until
applied as hereinafter provided. Except as expressly provided in the next
sentence, Saskco shall direct Chase Canada to remit the collected balance
outstanding to the credit of the Collateral Account to or upon the order of
the Guarantor as the Guarantor shall from time to time instruct. However, at
any time following the occurrence and during the continuance of an Event of
Default, Saskco may in its discretion apply or cause to be applied (subject
to collection) the balance from time to time outstanding to the credit of the
Collateral Account to the payment of the Secured Obligations in the manner
specified in Section 7.09 hereof. The balance from time to time in the
Collateral Account shall be subject to withdrawal only as provided herein.
In addition to the foregoing, the Guarantor agrees that if the proceeds of
any Collateral hereunder shall be received by it, the Guarantor shall as
promptly as possible deposit such proceeds into the Collateral Account. Until
so deposited, all such proceeds shall be held in trust by the Guarantor for
and as the property of Saskco and shall not be commingled with any other
funds or property of the Guarantor.
5.02 INVESTMENT OF BALANCE IN COLLATERAL ACCOUNT. Amounts on deposit in
the Collateral Account shall be invested from time to time in such Permitted
Investments as the Guarantor (or, after the occurrence and during the
continuance of a Default, Saskco) shall determine, which Permitted
Investments shall be held in the name and be under the control of Saskco,
PROVIDED that at any time after the occurrence and during the continuance of
an Event of Default, Saskco may in its discretion at any time and from time
to time elect to liquidate any such Permitted Investments and to apply or
cause to be applied the proceeds thereof to the payment of the Secured
Obligations in the manner specified in Section 7.09 hereof.
5.03 COVER FOR LETTER OF CREDIT LIABILITIES. Amounts deposited into the
Collateral Account as cover for Letter of Credit Liabilities by the Guarantor
shall be held by Saskco in a separate sub-account (designated "Letter of
Credit Liabilities Sub-Account") and all amounts held in such sub-account
shall constitute collateral security FIRST for the Letter of Credit
Liabilities outstanding from time to time and SECOND as collateral security
for the other Secured Obligations hereunder.
SECTION 6
COVENANTS
The Guarantor agrees that, until the payment and satisfaction in
full of the Secured Obligations and the expiration or termination of the
Commitments and all Letter of Credit Liabilities under the Credit Agreement:
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6.01 FINANCIAL STATEMENTS. The Guarantor shall deliver to Saskco (in
the case of clauses (a) and (b) below only to the extent financial statements
are not delivered by Canadian Forest pursuant to Section 8.01 of the Credit
Agreement):
(a) as soon as available and in any event within 60 days after the end
of each quarterly fiscal period of each fiscal year of the Guarantor,
consolidated and consolidating statements of income, retained earnings and
cash flows of the Guarantor and its consolidated Subsidiaries for such period
and for the period from the beginning of the respective fiscal year to the
end of such period, and the related consolidated and consolidating balance
sheets of the Guarantor and its consolidated Subsidiaries as at the end of
such period, setting forth in each case in comparative form the corresponding
consolidated and consolidating figures for the corresponding periods in the
preceding fiscal year (except that, in the case of balance sheets, such
comparison shall be to the last day of the prior fiscal year), accompanied by
a certificate of a senior financial officer of the Guarantor, which
certificate shall state that said financial statements fairly present in all
material respects the consolidated financial condition and results of
operations of the Guarantor and its consolidated Subsidiaries, and said
consolidating financial statements fairly present in all material respects
the respective individual unconsolidated financial condition and results of
operations of the Guarantor and of each of its consolidated Subsidiaries, in
each case in accordance with generally accepted accounting principles,
consistently applied, as at the end of, and for, such period (subject to
normal year-end audit adjustments);
(b) as soon as available and in any event within 100 days after the end
of each fiscal year of the Guarantor, consolidated and consolidating
statements of income, retained earnings and cash flows of the Guarantor and
its consolidated Subsidiaries for such fiscal year and the related
consolidated and consolidating balance sheets of the Guarantor and its
consolidated Subsidiaries as at the end of such fiscal year, setting forth in
each case in comparative form the corresponding consolidated and
consolidating figures for the preceding fiscal year, and accompanied (i) in
the case of said consolidated statements and balance sheet of the Guarantor,
by an opinion thereon of independent chartered accountants of recognized
national standing, which opinion shall state that said consolidated financial
statements fairly present in all material respects the consolidated financial
condition and results of operations of the Guarantor and its consolidated
Subsidiaries as at the end of, and for, such fiscal year in accordance with
generally accepted accounting principles, and (ii) in the case of said
consolidating statements and balance sheets, by a certificate of a senior
financial officer of the Guarantor, which certificate shall state that said
consolidating financial statements fairly present in all material respects
the respective individual unconsolidated financial condition and results of
operations of the Guarantor and of each of its consolidated Subsidiaries, in
each case in accordance with generally accepted accounting principles,
consistently applied, as at the end of, and for, such fiscal year;
(c) promptly upon their becoming available, copies of all prospectuses,
registration statements and regular periodic reports, if any, that the
Guarantor shall have filed with any securities commission in Canada having
jurisdiction or any Canadian or United States national securities exchange;
GUARANTEE AND PLEDGE AGREEMENT
-12-
(d) promptly upon the mailing thereof to the public shareholders of the
Guarantor generally, if any, or to holders of Indebtedness of the Guarantor
generally, copies of all financial statements, reports and proxy statements so
mailed;
(e) promptly after the Guarantor knows or has reason to believe that any
Default under the Credit Agreement has occurred, a notice of such Default
(unless a notice of such Default has been delivered pursuant to Section 8.01(f)
of the Credit Agreement) describing the same in reasonable detail and, together
with such notice or as soon thereafter as possible, a description of the action
that the Guarantor has taken or proposes to take with respect thereto; and
(f) from time to time such other information regarding the financial
condition, operations, business or prospects of the Guarantor or any of its
Subsidiaries as Saskco, the Agent or any lender under the Funding Credit
Agreement may reasonably request (to the extent such information is not provided
by Canadian Forest pursuant to Section 8.01(h) of the Credit Agreement).
The Guarantor will furnish to Saskco and the Agent, at the time it furnishes
each set of financial statements pursuant to paragraph (a) or (b) above, a
certificate of a senior financial officer of the Guarantor to the effect that no
Default under the Credit Agreement has occurred and is continuing (or, if any
Default under the Credit Agreement has occurred and is continuing, describing
the same in reasonable detail and describing the action that the Guarantor has
taken or proposes to take with respect thereto).
6.02 LITIGATION. The Guarantor will promptly give to Saskco and the Agent
notice of all legal or arbitral proceedings, and of all proceedings by or before
any governmental or regulatory authority or agency, affecting the Guarantor or
any of its Subsidiaries (unless a notice of such proceeding has been given to
Saskco and the Agent pursuant to Section 8.02 of the Credit Agreement) except
proceedings that, if adversely determined, would not (either individually or in
the aggregate) have a material adverse effect on the consolidated financial
condition, operations, business or prospects taken as a whole of the Guarantor
and its consolidated Subsidiaries.
6.03 CORPORATE EXISTENCE, ETC. The Guarantor will, and will cause each of
its Subsidiaries (except as otherwise permitted by the Credit Agreement) to:
preserve and maintain its corporate existence and all of its material rights,
privileges and franchises; comply with the requirements of all applicable laws,
rules, regulations and orders of governmental or regulatory authorities if
failure to comply with such requirements could (either individually or in the
aggregate) materially and adversely affect the consolidated financial condition,
operations, business or prospects taken as a whole of the Guarantor and its
consolidated Subsidiaries; pay and discharge all taxes, assessments and
governmental charges or levies imposed on it or on its income or profits or on
any of its property prior to the date on which penalties attach thereto, except
for any such tax, assessment, charge or levy the payment of which is being
contested in good faith and by proper proceedings and against which adequate
reserves are being maintained; maintain all of its properties used or useful in
its business in good working order and condition, ordinary wear and tear
excepted; and keep insured by financially sound and reputable insurers all
property of a character usually insured by corporations engaged in the same or
similar business similarly situated against loss or damage of the
GUARANTEE AND PLEDGE AGREEEMENT
-13-
kinds and in the amounts customarily insured against by such corporations and
carry such other insurance as is usually carried by such corporations.
6.04 LINES OF BUSINESS. The Guarantor will not engage in any business
other than the ownership of the common stock of Canadian Forest and activities
reasonably related thereto.
SECTION 7
FURTHER ASSURANCES; REMEDIES
In furtherance of the pledge and security interest granted and
continued pursuant to Section 4 hereof, the Guarantor hereby agrees with Saskco
as follows:
7.01 DELIVERY AND OTHER PERFECTION. The Guarantor shall:
(a) if any of the shares, securities, moneys or property required to be
pledged by the Guarantor under clauses (a), (b) and (c) of Section 4 hereof are
received by the Guarantor, forthwith either (x) transfer and deliver to Saskco
such shares or securities so received by the Guarantor (together with the
certificates for any such shares and securities duly endorsed in blank or
accompanied by undated stock powers of attorney duly executed in blank), all of
which thereafter shall be held by Saskco, pursuant to the terms of this
Agreement, as part of the Collateral or (y) take, without limiting the rights of
the Guarantor under Section 7.04(3) hereof, such other action as Saskco shall
deem necessary or appropriate to duly record the Lien created hereunder in such
shares, securities, moneys or property in said clauses (a), (b) and (c);
(b) give, execute, deliver, file and/or record any financing statement,
notice, instrument, document, agreement or other papers that may be necessary or
desirable (in the judgement of Saskco) to create, preserve, perfect or validate
the security interest granted pursuant hereto or to enable Saskco to exercise
and enforce its rights hereunder with respect to such pledge and security
interest, including, without limitation, if so requested by Saskco or the Agent,
causing any or all of the Collateral to be transferred of record into the name
of Saskco or its nominee, (and Saskco agrees that if any Collateral is
transferred into its name or the name of its nominee, Saskco will thereafter
promptly give to the Guarantor copies of any notices and communications received
by it with respect to the Collateral);
(c) keep full and accurate books and records relating to the Collateral,
and stamp or otherwise xxxx such books and records in such manner as Saskco may
reasonably require in order to reflect the security interests granted by this
Agreement; and
(d) permit representatives of Saskco, the Agent and any lender under the
Funding Credit Agreement upon reasonable notice, at any time during normal
business hours to inspect and make abstracts from its books and records
pertaining to the Collateral, and permit representatives of Saskco, the Agent
and any lender under the Funding Credit Agreement to be present at the
Guarantor's place of business to receive copies of all communications and
remittances relating to the Collateral, and forward copies of any notices or
communications received by the Guarantor with respect to the Collateral, all in
such manner as Saskco may require.
GUARANTEE AND PLEDGE AGREEEMENT
-14-
Without limiting the generality of the foregoing, the Guarantor agrees
that it will promptly obtain from time to time at its own expense all such
governmental licenses, authorizations, consents, permits and approvals as may be
required for the Guarantor to (a) comply with its obligations, and preserve its
rights under, this Agreement and (b) maintain the existence, priority and
perfection of the Liens purported to be created and continued hereunder.
7.02 OTHER FINANCING STATEMENTS AND LIENS. Without the prior written
consent of Saskco (granted with the prior written consent of the Agent as
specified in Section 10.04 of the Credit Agreement), the Guarantor shall not
file or suffer to be on file (other than any filing by a Person in Alberta,
filed without the consent of the Guarantor), or authorize or permit to be filed
or to be on file, in any jurisdiction, any financing statement or like
instrument with respect to the Collateral in which Saskco (or the Agent as
assignee of Saskco) is not named as the sole secured party. The Guarantor shall
use reasonable efforts to discharge any financing statements filed without the
Guarantor's consent in Alberta.
7.03 PRESERVATION OF RIGHTS. Saskco shall not be required to take steps
necessary to preserve any rights against prior parties to any of the Collateral.
7.04 COLLATERAL.
(a) The Guarantor will cause the Collateral to constitute at all times
100% of the total number of shares of each class of capital stock of Canadian
Forest then outstanding.
(b) So long as no Event of Default shall have occurred and be continuing,
the Guarantor shall have the right to exercise all voting, consensual and other
powers of ownership pertaining to the Collateral for all purposes not
inconsistent with the terms of this Agreement, the Credit Agreement, the Notes,
or any other instrument or agreement referred to herein or therein, PROVIDED
that the Guarantor agrees that it will not vote the Collateral in any manner
that is inconsistent with the terms of this Agreement, the Credit Agreement, the
Notes or any such other instrument or agreement; and Saskco shall execute and
deliver to the Guarantor or cause to be executed and delivered to the Guarantor
all such proxies, powers of attorney, dividend and other orders, and all such
instruments, without recourse, as the Guarantor may reasonably request for the
purpose of enabling the Guarantor to exercise the rights and powers that it is
entitled to exercise pursuant to this Section 7.04(c).
(c) Unless and until an Event of Default has occurred and is continuing,
the Guarantor shall be entitled to receive and retain any dividends on the
Collateral (i) paid in cash out of earned surplus or (ii) paid in shares of
common stock of Canadian Forest, provided such shares of common stock are
pledged to Saskco in accordance with Section 4(b) hereof.
(d) If any Event of Default shall have occurred, then so long as such
Event of Default shall continue, and whether or not Saskco exercises any
available right to declare any Secured Obligation due and payable or seeks or
pursues any other relief or remedy available to it under applicable law or under
this Agreement, the Credit Agreement, the Notes, or any other agreement relating
to such Secured Obligation, all dividends and other distributions on the
Collateral shall be paid directly to Saskco and retained by it in the Collateral
Account as part of the Collateral, subject
GUARANTEE AND PLEDGE AGREEEMENT
-15-
to the terms of this Agreement, and, if Saskco shall so request in writing,
the Guarantor agrees to execute and deliver to Saskco appropriate additional
dividend, distribution and other orders and documents to that end, PROVIDED
that if such Event of Default is cured, any such dividend or distribution
theretofore paid to Saskco shall, upon request of the Guarantor (except to
the extent theretofore applied to the Secured Obligations), be returned by
Saskco to the Guarantor.
7.05 EVENTS OF DEFAULT, ETC. During the period during which an Event of
Default shall have occurred and be continuing:
(a) Saskco shall have all of the rights and remedies with respect to the
Collateral of a secured party under the Alberta PPSA (whether or not said
Alberta PPSA is in effect in the jurisdiction where the rights and remedies are
asserted) and such additional rights and remedies to which a secured party is
entitled under the laws in effect in any jurisdiction where any rights and
remedies hereunder may be asserted, including, without limitation, the right, to
the maximum extent permitted by law, to exercise all voting, consensual and
other powers of ownership pertaining to the Collateral as if Saskco were the
sole and absolute owner thereof (and the Guarantor agrees to take all such
action as may be appropriate to give effect to such right);
(b) Saskco in its discretion may, in its name or in the name of the
Guarantor or otherwise, demand, xxx for, collect or receive any money or
property at any time payable or receivable on account of or in exchange for any
of the Collateral, but shall be under no obligation to do so; and
(c) Saskco may, upon 10 Business Days' prior written notice to the
Guarantor of the time and place, with respect to the Collateral or any part
thereof that shall then be or shall thereafter come into the possession, custody
or control of Saskco or any of its agents or assignees, sell, lease, assign or
otherwise dispose of all or any part of such Collateral, at such place or places
as the Agent deems best, and for cash or for credit or for future delivery
(without thereby assuming any credit risk), at public or private sale, without
demand of performance or notice of intention to effect any such disposition or
of the time or place thereof (except such notice as is required above or by
applicable statute and cannot be waived), and Saskco, its assignees hereunder or
anyone else may be the purchaser, lessee, assignee or recipient of any or all of
the Collateral so disposed of at any public sale (or, to the extent permitted by
law, at any private sale) and thereafter hold the same absolutely, free from any
claim or right of whatsoever kind, including any right or equity of redemption
(statutory or otherwise), of the Guarantor, any such demand, notice and right or
equity being hereby expressly waived and released. Saskco may, without notice
or publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for the
sale, and such sale may be made at any time or place to which the sale may be so
adjourned.
The proceeds of each collection, sale or other disposition under this
Section 7.05 shall be applied in accordance with Section 7.09 hereof.
The Guarantor recognizes that, by reason of certain prohibitions
contained in Canadian federal and provincial securities laws, the UNITED STATES
SECURITIES ACT of 1933, as amended, and applicable state securities laws, Saskco
may be compelled, with respect to any sale of all or any part of the Collateral,
to limit purchasers to those who will agree, among other things, to acquire the
Collateral for their own account, for investment and not with a view to the
distribution
GUARANTEE AND PLEDGE AGREEEMENT
-16-
or resale thereof. The Guarantor acknowledges that any such private sales
may be at prices and on terms less favourable to Saskco than those obtainable
through a public sale without such restrictions, and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to have been
made in a commercially reasonable manner and that the Agent shall have no
obligation to engage in public sales and no obligation to delay the sale of
any Collateral for the period of time necessary to permit Canadian Forest or
the issuer thereof to register it for public sale.
7.06 DEFICIENCY. If the proceeds of sale, collection or other realization
of or upon the Collateral pursuant to Section 7.05 hereof are insufficient to
cover the costs and expenses of such realization and the payment in full of the
Secured Obligations, the Guarantor shall remain liable for any deficiency.
7.07 REMOVALS, ETC. Without at least 30 days' prior written notice to
Saskco and the Agent, the Guarantor shall not (i) maintain any of its books and
records with respect to the Collateral at any office or maintain its principal
place of business at any place other than at the address indicated beneath its
signature hereto or (ii) change its corporate name, or the name under which it
does business, from the name shown on the signature pages hereto.
7.08 PRIVATE SALE. Saskco and its assignees hereunder shall incur no
liability as a result of the sale of the Collateral, or any part thereof, at any
private sale pursuant to Section 7.05 hereof conducted in a commercially
reasonable manner. The Guarantor hereby waives any claims against Saskco and
its assignees hereunder arising by reason of the fact that the price at which
the Collateral may have been sold at such a private sale was less than the price
that might have been obtained at a public sale or was less than the aggregate
amount of the Secured Obligations, even if Saskco accepts the first offer
received and does not offer the Collateral to more than one offeree.
7.09 APPLICATION OF PROCEEDS. Except as otherwise herein expressly
provided and except as provided below in this Section 7.09, the proceeds of any
collection, sale or other realization of all or any part of the Collateral
pursuant hereto, and any other cash at the time held by Saskco under Section 5
hereof or this Section 7, shall be applied by Saskco:
FIRST, the payment of the costs and expenses of such collection, sale
or other realization, including reasonable out-of-pocket costs and
expenses of Saskco and the reasonable fees and expenses of its agents
and counsel, and all expenses incurred and advances made by Saskco in
connection therewith;
NEXT, to the payment in full of the Secured Obligations, in each case
equally and ratably in accordance with the respective amounts thereof
then due and owing or as Saskco may otherwise agree; and
FINALLY, to the payment to the Guarantor, or its successors or
assigns, or as a court of competent jurisdiction may direct, of any
surplus then remaining.
GUARANTEE AND PLEDGE AGREEEMENT
-17-
Notwithstanding the foregoing, the proceeds of any cash or other amounts held in
the "Letter of Credit Liabilities Sub-Account" of the Collateral Account
pursuant to Section 5.03 hereof shall be applied FIRST to the Letter of Credit
Liabilities outstanding from time to time and SECOND to the other Secured
Obligations in the manner provided above in this Section 7.09.
As used in this Section 7, "PROCEEDS" of Collateral shall mean cash, securities
and other property realized in respect of, and distributions in kind of,
Collateral, including any thereof received under any reorganization, liquidation
or adjustment of debt of the Guarantor or any issuer of or obligor on any of the
Collateral.
7.10 ATTORNEY-IN-FACT. Without limiting any rights or powers granted by
this Agreement to Saskco while no Event of Default has occurred and is
continuing, upon the occurrence and during the continuance of any Event of
Default Saskco is hereby appointed the attorney-in-fact with full powers of
substitution of the Guarantor for the purpose of carrying out the provisions of
this Section 7 and taking any action and executing any instruments that Saskco
may deem necessary or advisable to accomplish the purposes hereof, which
appointment as attorney-in-fact is irrevocable and coupled with an interest.
Without limiting the generality of the foregoing, (a) so long as Saskco shall be
entitled under this Section 7 to make collections in respect of the Collateral,
Saskco shall have the right and power to receive, endorse and collect all checks
made payable to the order of the Guarantor representing any dividend, payment or
other distribution in respect of the Collateral or any part thereof and to give
full discharge for the same and (b) the Agent, as assignee of Saskco, as
described in Section 8.05(b) hereof, or such Person as the Agent shall
designate, shall act as such attorney-in-fact.
The attorney-in-fact for the Guarantor shall have full power to
endorse or transfer, or both, the Pledged Stock or any of them to the Agent, its
nominees or transferees, and the Agent and its nominees or transferees are
hereby empowered to exercise all rights and powers and to perform all acts of
ownership with respect to the Pledged Stock to the same extent as the Guarantor
might do, and any consequent outlay and expense shall be payable by the
Guarantor on demand with interest at the per annum rate of interest from time to
time in effect under the Credit Agreement. The power of attorney herein granted
is in addition to and not in substitution of, any stock power of attorney
delivered by the Guarantor with delivery of the Pledged Stock, and such powers
and attorney may be relied upon by Saskco and the Agent severally or in
combination.
7.11 PERFECTION. Prior to or concurrently with the execution and delivery
of this Agreement, the Guarantor shall deliver to Saskco all certificates
identified in Section 4(a) hereof, accompanied by undated stock powers of
attorney duly executed in blank.
7.12 TERMINATION. When all Secured Obligations shall have been paid in
full and the Commitment under the Credit Agreement and all Letter of Credit
Liabilities shall have expired or been terminated, this Agreement shall
terminate, and Saskco shall forthwith cause to be assigned, transferred and
delivered, against receipt but without any recourse, warranty or representation
whatsoever, any remaining Collateral and money received in respect thereof, to
or on the order of the Guarantor.
GUARANTEE AND PLEDGE AGREEEMENT
-18-
7.13 FURTHER ASSURANCES. The Guarantor agrees that, from time to time upon
the written request of Saskco or the Agent, the Guarantor will execute and
deliver such further documents and do such other acts and things as Saskco or
the Agent may reasonably request in order fully to effect the purposes of this
Agreement.
SECTION 8
MISCELLANEOUS
8.01 NO WAIVER. No failure on the part of Saskco to exercise, and no
course of dealing with respect to, and no delay in exercising, any right, power
or remedy hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise by Saskco of any right, power or remedy hereunder preclude any
other or further exercise thereof or the exercise of any other right, power or
remedy. The remedies herein are cumulative and are not exclusive of any
remedies provided by law.
8.02 NOTICES. All notices, requests, consents and demands hereunder shall
be in writing and telexed, telecopied or delivered to the intended recipient at
the "Address for Notices" specified beneath its name on the signature pages
hereof or, as to either party, at such other address as shall be designated by
such party in a notice to the other party. Except as otherwise provided in this
Agreement, all such communications shall be deemed to have been duly given when
transmitted by telex or telecopier or personally delivered or, in the case of a
mailed notice, upon receipt, in each case given or addressed as aforesaid.
8.03 EXPENSES. The Guarantor agrees to reimburse Saskco an amount equal to
the amount Saskco owes under the Funding Credit Agreement for all reasonable
costs and expenses of Saskco, the Agent and the lenders under the Funding Credit
Agreement (including, without limitation, the reasonable fees and expenses of
legal counsel) in connection with (i) any Default and any enforcement or
collection proceeding resulting therefrom, including, without limitation, all
manner of participation in or other involvement with (w) performance by Saskco
or the Agent of any obligations of the Guarantor in respect of the Collateral
that the Guarantor has failed or refused to perform, (x) bankruptcy, insolvency,
receivership, foreclosure, winding up or liquidation proceedings, or any actual
or attempted sale, or any exchange, enforcement, collection, compromise or
settlement in respect of any of the Collateral, and for the care of the
Collateral and defending or asserting rights and claims of Saskco or the Agent
in respect thereof, by litigation or otherwise, (y) judicial or regulatory
proceedings and (z) workout, restructuring or other negotiations or proceedings
(whether or not the workout, restructuring or transaction contemplated thereby
is consummated) and (ii) the enforcement of this Section 8.03, and all such
costs and expenses shall be Secured Obligations entitled to the benefits of the
collateral security provided pursuant to Section 4 hereof.
8.04 AMENDMENTS, ETC. The terms of this Agreement may be waived, altered
or amended only by an instrument in writing duly executed by the Guarantor and
Saskco (with the prior written consent of the Agent as specified in
Section 10.04 of the Credit Agreement). Any such amendment or waiver shall be
binding upon Saskco, each holder of any of the Secured Obligations and the
Guarantor.
GUARANTEE AND PLEDGE AGREEEMENT
-19-
8.05 SUCCESSORS AND ASSIGNS.
(a) This Agreement shall be binding upon and inure to the benefit of the
respective successors and assigns of the Guarantor, Saskco and each holder of
any of the Secured Obligations (PROVIDED, however, that the Guarantor shall not
assign or transfer its rights hereunder without the prior written consent of
Saskco with the prior written consent of the Agent).
(b) The Guarantor understands that Saskco will assign and grant to the
Agent (as defined in the Funding Credit Agreement), as agent for the lenders
from time to time party to the Funding Credit Agreement, a security interest in
all of its right, title and interest under this Agreement and the Collateral.
The Guarantor consents to such assignment and grant and further agrees that
(i) all representations, warranties, covenants and agreements of the Guarantor
made herein shall also be for the benefit and inure to the Agent and such
lenders and all holders from time to time of the notes issued to, Bankers'
Acceptances accepted by and Letters of Credit issued by such lenders and
(ii) the Pledged Stock and power of attorney referred to in Section 7.11 hereof
shall be delivered to and held by the Agent in accordance with that assignment
and security interest and the Agent (or any Person designated by the Agent) may
be endorsed as the transferee in the transfer in blank for the Pledged Stock.
8.06 CAPTIONS. The captions and section headings appearing herein are
included solely for convenience of reference and are not intended to affect the
interpretation of any provision of this Agreement.
8.07 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and either of the parties hereto may execute this Agreement by
signing any such counterpart.
8.08 GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the law of the Province of Alberta and the laws of Canada
applicable therein.
8.09 JURISDICTION, SERVICE OF PROCESS AND VENUE.
(a) Each party hereto hereby agrees that any suit, action or proceeding
with respect to this Agreement or any judgment entered by any court in respect
thereof may be brought the courts of the Province of Alberta; and each party
hereto hereby irrevocably submits to the jurisdiction of such courts for the
purpose of any such suit, action, proceeding or judgement. Each party hereto
further submits, for the purpose of any such suit, action, proceeding or
judgment brought or rendered against it, to the appropriate courts of the
jurisdiction of its domicile.
(b) Nothing herein shall in any way be deemed to limit the ability of
Saskco, the Agent or any lender under the Funding Credit Agreement to serve any
such writs, process or summonses in any other manner permitted by applicable law
or to obtain jurisdiction over the Guarantor in such other jurisdictions, and in
such manner, as may be permitted by applicable law.
GUARANTEE AND PLEDGE AGREEEMENT
-20-
(c) The Guarantor hereby irrevocably waives any objection that it may now
or hereafter have to the laying of the venue of any suit, action or proceeding
arising out of or relating to this Agreement or any other Loan Document brought
in the Province of Alberta, and hereby further irrevocably waives any claim that
any such suit, action or proceeding brought in any such court has been brought
in an inconvenient forum.
8.10 JUDGMENT CURRENCY. This is an international loan transaction in which
the specification of Canadian Dollars or U.S. Dollars is of the essence, and
the stipulated Currency shall be the Currency of account and payment in all
instances. A payment obligation in one Currency hereunder (the "ORIGINAL
CURRENCY") shall not be discharged by an amount paid in another Currency (the
"OTHER CURRENCY"), whether pursuant to any judgment expressed in or converted
into any Other Currency or in another place except to the extent that such
tender or recovery results in the effective receipt by Saskco of the full amount
of the Original Currency payable to the Lender under this Agreement. If for the
purpose of obtaining judgment in any court it is necessary to convert a sum due
hereunder in the Original Currency into the Other Currency, the rate of exchange
that shall be applied shall be that at which, in accordance with normal banking
procedures, the Agent could purchase Original Currency at the Principal Office
with the Other Currency on the Business Day next preceding the day on which such
judgment is rendered. The obligation of the Guarantor in respect of any such
sum due from it to Saskco, the Agent or any lender under the Funding Credit
Agreement hereunder or under any other Loan Document (in this Section 8.10
called an "ENTITLED PERSON") shall, notwithstanding the rate of exchange
actually applied in rendering such judgment, be discharged only to the extent
that on the Business Day following receipt by such Entitled Person of any sum
adjudged to be due hereunder in the Other Currency such Entitled Person may in
accordance with normal banking procedures purchase and transfer the Original
Currency in Toronto with the amount of the judgment Currency so adjudged to be
due; and the Guarantor hereby, as a separate obligation and notwithstanding any
such judgment, agrees to indemnify such Entitled Person against, and to pay such
Entitled Person on demand, in the Original Currency, the amount (if any) by
which the sum originally due to such Entitled Person in the Original Currency
hereunder exceeds the amount of the Other Currency so purchased and transferred.
8.11 AGENTS AND ATTORNEYS-IN-FACT. Saskco may employ agents and
attorneys-in-fact in connection herewith and shall not be responsible for the
negligence or misconduct of any such agents or attorneys-in-fact selected by it
in good faith.
8.12 SEVERABILITY. If any provision hereof is invalid and unenforceable in
any jurisdiction, then, to the fullest extent permitted by law, (i) the other
provisions hereof shall remain in full force and effect in such jurisdiction and
shall be liberally construed in favour of Saskco in order to carry out the
intentions of the parties hereto as nearly as may be possible and (ii) the
invalidity or unenforceability of any provision hereof in any jurisdiction shall
not affect the validity or enforceability of such provision in any other
jurisdiction.
8.13 ATTACHMENT. The Guarantor acknowledges that:
(a) value has been given;
GUARANTEE AND PLEDGE AGREEEMENT
-21-
(b) the Guarantor has rights in the Pledged Stock; and
(c) the time of attachment of the security interest created and continued
by this Agreement has not been postponed.
8.14 RECEIPT. The Guarantor acknowledges receipt of the duplicate original
hereof and waives its rights to receive a copy of any financing, financing
change or other registration statement resulting from any registration of this
Agreement or any verification statement issued with respect thereto where such
waiver is not otherwise prohibited by law.
IN WITNESS WHEREOF, the parties hereto have caused this Guarantee and
Pledge Agreement to be duly executed and delivered as of the day and year first
above written.
3189503 CANADA LTD.
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------
Xxxxxxx X. Xxxxxx
Secretary
Address for Notices:
3189503 Canada Ltd.
c/o Canadian Forest Oil Ltd.
000-000 Xxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx X0X 0X0
Xxxxxx
Attention: Vice President-Finance
with a copy to:
Forest Oil Corporation
0000 Xxxxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
XXX
Attention: Vice President and Treasurer
GUARANTEE AND PLEDGE AGREEEMENT
-22-
611852 SASKATCHEWAN LTD.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxx
Secretary
Address for Notices:
611852 Saskatchewan Ltd.
c/o Canadian Forest Oil Ltd.
000-000 Xxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx X0X 0X0
Xxxxxx
Attention: Vice President-Finance
with a copy to:
The Chase Manhattan Bank of Canada
000 Xxxx Xxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx X0X 0X0
Xxxxxx
Attention: Vice President,
Corporate Finance
and:
Forest Oil Corporation
0000 Xxxxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
XXX
Attention: Vice President and Treasurer
GUARANTEE AND PLEDGE AGREEEMENT
