DEPOSIT AGREEMENT
THIS DEPOSIT AGREEMENT is made as of April 1, 1997 by FOREST OIL
CORPORATION, a corporation under the laws of New York (the "CORPORATION") in
favour of 611852 SASKATCHEWAN LTD. (who and whose successors and assigns are
herein called the "HOLDER").
WHEREAS:
The Corporation has issued a Guarantee in favour of the Holder
dated as of April 1, 1997 guaranteeing obligations in respect of credit
facilities established by the Holder in favour of Canadian Forest Oil Ltd.
and "Borrowing Subsidiaries" (such guarantee as amended, modified, restated
or supplemented from time to time is herein called the "GUARANTEE");
The Corporation has issued its Demand Debenture and Negative Pledge
dated as of April 1, 1997 in the principal amount of Cdn. $80,000,000 (such
debenture as amended, supplemented or reissued and all renewals thereof,
substitutions therefor, accretions thereto, interest thereon and proceeds
thereof is herein called the "DEBENTURE"); and
The Corporation has agreed to deposit the Debenture with the Holder
as general and continuing collateral security for the present and future
indebtedness and obligations of the Corporation under the Guarantee;
NOW THEREFORE in consideration of the premises and of the sum of
$10.00 now paid to the Corporation, the receipt and sufficiency of which are
hereby acknowledged, the Corporation agrees with the Holder as follows:
1. DEFINED TERMS; HEADINGS
(a) Terms and expressions which are defined in the Guarantee shall, when
used herein, and unless otherwise defined, have the meanings as
therein ascribed to them.
(b) The division of this Agreement into Sections and the insertion of
headings is for convenience of reference only and shall not affect the
construction or interpretation of this Agreement.
(c) The terms "this Agreement", "hereof", "hereunder" and similar
expressions refer to this Deposit Agreement and not to any particular
Section or other portion hereof and include any amendments or
supplements hereto. Unless otherwise stated, references herein to
Sections are to Sections of this Deposit Agreement.
(d) Words importing the singular number shall include the plural and vice
versa, and words importing gender shall include the masculine,
feminine and neuter genders.
(e) The word "including" shall not be construed to limit or restrict the
matter that precedes it.
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2. DEPOSIT OF DEBENTURE
The Corporation hereby transfers, assigns, mortgages, charges,
hypothecates, grants a security interest in and pledges and delivers the
Debenture to and deposits the Debenture with the Holder to be held by the
Holder as general and continuing collateral security for the payment and
performance by the Corporation of all its obligations, indebtedness and
liabilities, present or future, direct or indirect, absolute or contingent,
matured or not, extended or renewed, pursuant to the Guarantee, wheresoever
and howsoever incurred and any ultimate unpaid balance thereunder and whether
the same are from time to time reduced and thereafter increased or entirely
extinguished and thereafter incurred again and whether the Corporation be
bound alone or with another or others and whether as principal or surety
(collectively, the "LIABILITIES").
The Corporation acknowledges that:
(a) value has been given;
(b) the Corporation has rights in the Debenture;
(c) the time of attachment of the security interest created by this
Agreement has not been postponed; and
(d) the security interest created by this Agreement is effective forthwith
on the Corporation's execution of this Agreement.
3. RIGHTS AS HOLDER TO ENFORCE DEBENTURE
The Holder is hereby authorized as the holder of the Debenture, and
without selling or purchasing the Debenture, to exercise any and all rights
of a holder of the Debenture, both before and after the occurrence of an
Event of Default (as defined in the Guarantee) or as defined in the Debenture
(in either case, an "EVENT OF DEFAULT"), to enforce all terms, covenants,
provisions and agreements therein contained, and after an Event of Default
has occurred and during its continuance, to enforce the security thereby
constituted and to exercise or cause to be exercised for its benefit all or
any of the remedies therein provided for the benefit of the holder of the
Debenture. Except as provided in Section 7 hereof, nothing herein shall be
deemed to suspend or otherwise modify or affect the obligations of the
Corporation or the rights of a holder of the Debenture, all as provided
therein.
The Holder shall not be responsible for any loss occasioned by any
sale or other dealing with the Debenture or by the retention of or failure to
sell or otherwise deal with the same and the Holder shall not be bound to
protect the Mortgaged Property (as that term is defined in the Debenture)
from depreciating in value or becoming worthless.
4. REALIZATION BY SALE
In addition to the foregoing rights and remedies, the Holder shall
be entitled, upon an Event of Default occurring and during its continuance,
to sell or otherwise dispose of the
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Debenture by public sale (including public auction) or private or closed
tender or by private contract, with only those notices, if any, as are
required by Applicable Law, and with or without advertising and without any
other formality (except as otherwise required by Applicable Law), and such
sale or disposition shall be on such terms and conditions as to title, credit
and otherwise and as to upset or reserve bid or price as may seem
advantageous to the Holder, and the Holder shall not be required to accept
the highest or any bid or tender at any public sale. The Holder may itself
purchase the Debenture unless prohibited from doing so by Applicable Law.
The Holder may rescind or vary any contract for the sale or other disposition
of the Debenture and may resell the Debenture without being answerable for
any loss occasioned thereby, and may delay any sale or disposition of the
Debenture in whole or in part.
5. POWER OF ATTORNEY
To give full effect hereto, the Holder or any officer of the Holder
is hereby irrevocably appointed attorney of the Corporation, with full power
of substitution, for and in the name of the Corporation to sign and seal all
documents and to fill in all blanks in signed powers of attorney and
transfers necessary in order to complete the transfer of the Debenture to the
Holder or its officers or to any purchaser.
6. RECORDS OF HOLDER
The records of the Holder as to payment of any Liabilities being in
default or of any demand for payment having been made will be conclusive
evidence of such default or demand, absent manifest error.
7. SATISFACTION OF INTEREST
Full payment of interest under the Credit Agreement for any period
shall be deemed to satisfy the interest payable for that same period under
the Debenture.
8. CHARGES AND EXPENSES
The Corporation shall pay to the Holder all reasonable
out-of-pocket costs and expenses, including all legal fees (on a solicitor
and his own client basis) and other reasonable expenses incurred by the
Holder from time to time in the documentation, execution, registration,
enforcement, realization and collection of or in respect of this Agreement.
All such amounts shall become part of the Liabilities, shall be payable by
the Corporation on demand, shall bear interest at the rate set forth in the
Debenture in respect of the principal amount thereof calculated from the date
incurred by the Holder to the date paid by the Corporation, and such amounts
and interest shall be secured by the Debenture and be a first charge on the
proceeds of any such enforcement, realization or collection. This provision
shall not be construed to limit any other provisions of the Guarantee or the
Debenture dealing with the charge-back to the Corporation of expenses
incurred by the Holder.
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9. REMEDIES NOT EXCLUSIVE
Each and every right, remedy and power conferred by this Agreement
is in supplement of and in addition to and not in substitution for any other
right, remedy or power the Holder may have from time to time under this
Agreement, the Guarantee, the Debenture or in any other agreement or under
the law in force at the time of the exercise of such right, remedy or power.
The Holder may proceed by way of any action, suit, remedy or other proceeding
at law or in equity and no such remedy for the enforcement of the rights of
the Holder shall be exclusive of or dependent on any other such remedy. Any
one or more of such remedies may from time to time be exercised separately or
in combination. Notwithstanding the foregoing, the Holder shall not be bound
to deal with the Debenture, to exercise any right or remedy as aforesaid, or
to preserve rights against other Persons.
The Holder shall not be obliged to exhaust its recourse against the
Corporation or any other Person or Persons, or against any other security it
may hold in respect of the Liabilities before realizing upon or otherwise
dealing with the Debenture in such manner as the Holder considers desirable.
10. EXTENSIONS
The Holder may grant renewals, extensions of time and other
indulgences, take, release and give up securities, accept compositions, grant
releases and discharges, perfect or fail to perfect any securities, and
otherwise deal or fail to deal with the Corporation, guarantors, sureties and
others and with the Debenture and other securities as the Holder may see fit,
all without prejudice to the liability of the Corporation to the Holder or
the Holder's rights and powers under this Agreement or the Debenture.
11. APPLICATION OF PROCEEDS
The proceeds of the Debenture may be applied by the Holder on
account of such part of the Liabilities as it chooses.
12. LIMITED RECOURSE
The Holder acknowledges that its recourse in respect of enforcing
the Guarantee is limited to realizing upon the Liens created by the Debenture
in accordance with the provisions of this Agreement and the Debenture, and
that the Corporation is not liable on the Guarantee or the Debenture for any
deficiency that may exist following such realization.
13. AMENDMENTS OR SUPPLEMENTAL DEBENTURES
Any amendments or supplements to the Debenture shall, upon
execution by the Corporation and delivery to the Holder, be deemed to be
deposited hereunder and included in the term "Debenture" for the purposes
hereof, unless expressly provided otherwise.
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14. NO MERGER
Subject to Section 12, neither the taking of any judgment nor the
exercise of any power of sale shall operate to extinguish the liability of
the Corporation to make payment of, or to satisfy the Liabilities nor shall
the acceptance of any payment or alternate security constitute or create any
novation, and it is further agreed that the taking of a judgment or judgments
under any of the covenants herein contained shall not operate as a merger of
such covenants.
15. 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. The Corporation
irrevocably submits to the non-exclusive jurisdiction of the courts of the
Province of Alberta, without prejudice to the rights of the Holder to take
proceedings in any other jurisdictions.
16. ASSIGNMENT BY CORPORATION
The Corporation shall not and cannot assign its obligations under
this Agreement, or take any steps or enter into any transaction of any nature
which would have that effect, without the prior written consent of the
Holder. Subject thereto, all obligations of the Corporation hereunder shall
bind the Corporation and its successors and assigns.
17. ASSIGNMENT BY HOLDER
This Agreement shall extend to and enure to the benefit of the
Holder and its successors and assigns. The Holder may at any time assign
this Agreement in accordance with the provisions of the Credit Agreement.
18. COPY RECEIVED
The Corporation acknowledges having received from the Holder a copy
of this executed Agreement 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.
19. 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.
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20. SECURITY IN ADDITION
The rights hereby constituted are in addition to and not in
substitution for any other security for the Liabilities, or for any other
agreement between the Corporation and the Holder whether or not creating any
security interest in all or part of the property of the Corporation 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 in a writing signed by the Corporation and the Holder. The
taking of any action or proceedings or refraining from so doing, or any other
dealing with any other security for the Liabilities or any part thereof shall
not release or affect this Agreement and neither the taking of any
proceedings hereunder or under the Debenture for the realization of any
security shall release or affect any other security held by the Holder for
the payment or performance of the Liabilities.
21. 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.
22. HOLDER NOT BOUND TO ADVANCE
Neither the execution and delivery nor the registration of the
Debenture or this Agreement shall for any reason whatsoever obligate or bind
the Holder to advance any moneys or, having advanced a portion, obligate the
Holder in any way to advance the balance or any further portion thereof; but
nevertheless this Agreement, the Debenture and the mortgages, charges and
security interests thereby constituted shall take effect forthwith upon
execution of the Debenture and shall operate as security for the Liabilities.
23. FURTHER ASSURANCES
The Corporation shall from time to time, whether before or after
default being made in the payment of any part of the Liabilities or the
occurrence of any default in the performance of any other obligation of the
Corporation to the Holder under the Guarantee, do all such acts and things
and execute and deliver all such deeds, transfers, assignments and
instruments as the Holder may require for perfecting the security constituted
hereby or by the Debenture, for facilitating the sale of the Debenture in
connection with any realization thereof and for exercising all powers,
authorities and discretions hereby conferred upon the Holder.
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24. EFFECTIVE NOTICE
Any and all notices or other communications required or permitted
pursuant to this Agreement shall be in writing and shall be given in the
manner stipulated in the Debenture.
IN WITNESS WHEREOF the Corporation has executed this Agreement.
FOREST OIL CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx (c/s)
Vice President and Treasurer
