EXHIBIT 3
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PLEDGE AGREEMENT RESPECTING NOTES
Teck Cominco Limited (hereinafter called "Teck") hereby pledges,
assigns, hypothecates and deposits with The Bank of New York (the "Trustee")
those documents described in Schedule "A" hereto (as amended or supplemented
from time to time, collectively hereinafter called the "Pledged Documents")
for valuable consideration, and Teck hereby covenants and agrees with the
Trustee as follows:
1. The Pledged Documents, as the same may be amended or supplemented from
time to time, are hereby pledged, assigned, hypothecated and deposited
to and in favour of the Trustee on behalf of the holders of each of the
5.375% notes of Teck due 2015 and the 6.125% notes of Teck due 2035
(collectively, the "Securities"), issued under the Indenture between
Teck and the Trustee dated September 12, 2002, as amended or
supplemented from time to time (the "Indenture"), as general and
continuing collateral security for the payment and fulfillment of all
debts, liabilities and obligations, present or future, direct or
indirect, absolute or contingent, matured or not, extended or renewed
of Teck to the holders of the Securities of whatsoever nature and kind
arising in any way from the Indenture or the Securities (the
"Obligations").
2. Except as provided in Section 12, Teck acknowledges and agrees that for
as long as the Pledged Documents are subject to the Security Interest
created hereunder, Teck shall not initiate or pursue any independent
enforcement of its rights pursuant to the Pledged Documents or make any
demand for payment thereunder. Further, Teck agrees that all payments
and other proceeds of the Pledged Documents are, until release of the
Security Interest hereunder, to be paid directly to the Trustee and to
the extent not so directly paid, Teck agrees to hold all such payments
and other proceeds in trust for the sole benefit of the Trustee and the
holders of the Securities, provided that until an Event of Default has
occurred and is continuing under the Indenture, Teck shall be entitled
to receive (i) all scheduled interest payments under the Pledged
Documents, and (ii) all other amounts paid to Teck by Teck Cominco
Metals Ltd. (hereinafter called "Cominco") from time to time which are
not payments or other proceeds of the Pledged Documents, which
payments, in both cases, shall not be impressed with such trust and may
be retained or used by Teck as it shall determine.
3. Cominco acknowledges and agrees that, for as long as the Pledged
Documents are subject to the Security Interest created hereunder, (i)
Cominco shall not be entitled to repay the principal amount outstanding
under the Pledged Documents, in whole or in part, unless there shall
have occurred an Event of Default under the Indenture, (ii) all
payments Cominco shall make pursuant to the Pledged Documents (other
than regularly scheduled interest payments) shall be made to the
Trustee, provided that until an Event of Default has occurred and is
continuing under the Indenture, Cominco shall be entitled to make (a)
regularly scheduled interest payments to Teck under the Pledged
Documents, and (b) advances and repayments to Teck in the ordinary
course of business which shall not constitute advances or payments
pursuant to the Pledged Documents, (iii) upon the occurrence and during
the continuance of an Event of Default under the Indenture, all amounts
which may be owing to Cominco by Teck from time to time or any claim
Cominco may have against Teck at any time shall be subordinated and
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postponed in right of payment to the Obligations, and (iv) Cominco
shall not at any time be entitled to set off amounts owing by Cominco
to Teck under the Pledged Documents against any obligations or other
amounts owing at any time by Teck to Cominco.
4. The Trustee shall not be bound to exercise any of the rights afforded
to it hereunder, or to collect, dispose of, realize on or enforce any
of the Pledged Documents. The Trustee will not be liable or responsible
to Teck for the fulfillment or non-fulfillment of this Agreement or the
terms, agreements, provisions, conditions, obligations or covenants set
out in the Pledged Documents or for any loss or damage incurred or
suffered by Teck or any other person as a result of any delay by, or
any failure of, the Trustee to exercise any of the rights afforded to
it under this Agreement or to collect, dispose of, realize on or
enforce any of the Pledged Documents (except for liabilities or damages
arising by reason of negligence or bad faith of the Trustee).
5. The Security Interest created hereunder shall become enforceable only
upon the occurrence and during the continuance of an Event of Default
under the Indenture.
6. If the Security Interest created hereunder shall become enforceable,
then the Trustee or its nominee shall be entitled to:
(a) from time to time, sell at public or private sale or otherwise
realize upon and enforce all or any of the Pledged Documents
for such price in money or other consideration and upon such
terms and considerations as it deems best, the whole without
advertisement or notice to Teck or others;
(b) hold all income from the Pledged Documents, and the proceeds
of any collection or realization of the Pledged Documents,
after deduction of all expenses thereof, as security as
aforesaid and/or applied against any of the Obligations as the
Trustee deems best;
(c) compound, compromise, grant extensions, accept compositions,
grant releases and discharges and otherwise deal with Teck and
others and the Pledged Documents as it sees fit, without
prejudice to any of its rights; and
(d) exercise all rights and powers and perform all acts of
ownership in respect of the Pledged Documents to the same
extent as Teck might do including, but not limited to, to
demand payment on the Pledged Documents, and to enforce the
obligations under the Pledged Documents, including giving
notice to Cominco to make payment under the Pledged Documents
to the Trustee; and for the foregoing purpose, Teck hereby
irrevocably constitutes and appoints the Trustee (which shall
include any receiver or receiver and manager appointed by the
Trustee or the court with respect to Teck) the true and lawful
attorney of Teck with power of substitution, to do any of the
foregoing in the name of Teck.
7. The Trustee may grant extensions of time and other indulgences, amend
the Indenture and otherwise deal with Teck as the Trustee may see fit,
all without prejudice to the debts, liabilities and obligations of any
person under the Pledged Documents, or the Trustee's rights in respect
of the Pledged Documents.
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8. This Agreement and the Security Interest created hereunder may be
released and terminated in the following manner:
(a) Teck shall notify each debt rating agency known to Teck which
has assigned a rating to the Securities and which is
designated by the Securities and Exchange Commission as a
"Nationally Recognized Statistical Rating Organization" (a
"Participating NRSRO") and the Trustee of its intention to
terminate the Security Interest created hereunder at least
forty-five (45) days prior to the proposed date of such
termination (the "Release Date"). In order to effect the
termination of the Security Interest created hereunder on the
proposed Release Date, Teck shall deliver to the Trustee an
Officers' Certificate stating that each of the conditions in
8(b) below has been satisfied;
(b) after delivery of such Officers' Certificate, Teck may, at its
option and without the consent of the holders of the
Securities, permanently terminate this Agreement and the
Security Interest created hereunder and upon such termination
the Trustee shall execute such documents as Teck may
reasonably request to release the Security Interest created
hereunder, provided that at the time of such termination:
(i) Cominco shall not be the primary obligor or guarantor
with respect to any Indebtedness, other than
Indebtedness which in the aggregate does not exceed
an amount equal to 10% of Consolidated Net Tangible
Assets;
(ii) the rating assigned to the Securities by at least two
Participating NRSRO's (or if there is only one
Participating NRSRO, by that one Participating NRSRO)
is within one of the ratings categories assigned by
them designating "investment grade" corporate debt
securities;
(iii) at least two Participating NRSRO's (or if there is
only one Participating NRSRO, that one Participating
NRSRO) have affirmed that the rating assigned by them
to the Securities shall not be downgraded as a result
of the termination of the Security Interest created
hereunder or notice thereof; and
(iv) no default or Event of Default has occurred and is
continuing under the Indenture; and
(c) upon termination and release as described in 8(b) above, the
Trustee shall execute such documents as Teck may reasonably
request to release and discharge any filings or notices filed
against Cominco by or on behalf of the Trustee.
9. If, upon realization of the Security Interest created hereunder, the
Trustee realizes more money than the amount of the Obligations the
Trustee shall pay the excess to Teck.
10. The Pledged Documents shall not operate as a merger of any simple
contract debt or suspend the fulfillment of, or affect the rights,
remedies or powers of the Trustee in respect of, any present or future
debts, liabilities or obligations of Teck to the Trustee or any
promises now or hereafter made to the Trustee for the payment or
fulfillment thereof.
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11. Subject to Section 8 hereof, any Security Interest created hereunder:
(a) is continuing and additional collateral security granted to
the Trustee without novation or impairment of any other
existing or future security held by the Trustee, in order to
secure payment and performance of the Obligations;
(b) is in addition to and not in substitution for any other
security hereinafter granted to, or held by, the Trustee in
connection with the Obligations, and
(c) is continuing and shall remain in full force and effect
without regard to and shall not be affected or impaired by:
(i) any exercise, delay in exercising, or non-exercise of
any right, remedy, power or privilege hereunder, or
in respect of the Security Interest created hereunder
or the Pledged Documents;
(ii) any waiver, consent, extension, indulgence or other
action, inaction or omission hereunder;
(iii) any default by Teck or any invalidity or
unenforceability of, or any limitation on the
liability of Teck or on the method or terms of
payment under, or any irregularity or other defect of
this Agreement;
(iv) any merger, consolidation or amalgamation of Teck
into or with any other person; or
(v) any insolvency, bankruptcy, liquidation,
reorganization, arrangement, composition, winding-up,
dissolution or similar proceeding involving or
affecting Teck;
except to the extent expressly provided for by any of the foregoing.
12. If there are no Obligations outstanding at any time, then Teck is
released from all its obligations under this Agreement and the Security
Interest created hereunder is released without further action by any
person. If Teck redeems the Securities or any of them, in part, then
upon receipt by the Trustee of (i) a new note or notes with respect to
the Securities being redeemed, with identical terms to the note or
notes being redeemed, referred to in item 1 of Schedule A of this
Agreement (except such new note or notes shall be in a principal amount
equal to the principal amount remaining outstanding on the Securities
after such redemption) being issued and pledged, assigned, hypothecated
and deposited to and in favour of the Trustee on behalf of the holders
of the Securities pursuant to the terms of this Agreement, and (ii) an
Opinion of Counsel confirming the foregoing, notwithstanding Sections 2
and 3 above, Teck shall be entitled to demand repayment of, and Cominco
shall be entitled to repay to Teck, an amount on account of the
principal amount of the Pledged Documents equal to the principal amount
of the Securities redeemed, and the note or notes with respect thereto,
referred to in item 1 of Schedule A to this Agreement shall be released
from the pledge, assignment, hypothecation and deposit under this
Agreement and the parties hereto shall take all necessary steps to
effect such release.
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13. Teck represents, warrants to and covenants with the Trustee that:
(a) it has taken and shall take, subject to the provisions of
Sections 8 and 12, all actions required to maintain the
Security Interest created hereunder in good standing;
(b) any default under the provisions of the Pledged Documents,
this Agreement, or any of them, shall, if the breach continues
for a period of thirty (30) days, constitute an Event of
Default;
(c) the Trustee may exercise its remedies hereunder upon the
occurrence and during the continuance of an Event of Default;
and
(d) the Pledged Documents and this Agreement constitute valid and
binding obligations of Teck and Cominco, as the case may be,
enforceable in accordance with their terms, subject always to
the laws of bankruptcy and insolvency and similar laws
affecting creditors rights generally, principles of equity and
applicable personal property security laws.
14. No consent or waiver, express or implied, by any party hereto to or of
any breach or default by any other party hereto in the performance of
its obligations hereunder shall be deemed or construed to be a consent
to or waiver of any other breach or default in the performance by such
other party of its obligations hereunder. Failure on the part of any
party hereto to complain of any act or failure to act of any other
party hereto or to declare any other party hereto in default,
irrespective of how long such failure continues, shall not constitute a
waiver by any party hereto or its rights hereunder.
15. Without the consent of any holders of Securities, the Trustee, at the
written request of Teck shall consent to one or more amendments to this
Agreement or any Pledged Document or shall give its consent in respect
of this Agreement or any Pledged Document in order to cure ambiguity,
or to correct or supplement any provision herein or therein which may
be defective or inconsistent with any other provision herein or therein
or to make any other provisions with respect to matters or questions
arising hereunder or under any Pledged Document, provided that any such
action pursuant to this clause shall not, as evidenced by an Opinion of
Counsel delivered to the Trustee, adversely affect the interests of the
holders of Securities. With the consent of the holders of not less than
a majority in principal amount of the outstanding Securities, by Act of
said holders delivered to the Trustee, the Trustee shall consent to any
amendment to this Agreement or any Pledged Document or shall give its
consent in respect to this Agreement or any Pledged Document for the
purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or any Pledged
Document or of modifying in any manner the rights of the holders of
Securities or the obligations of Teck under this Agreement or any
Pledged Document, as applicable.
16. The Trustee is not the agent, representative or partner of or joint
venturer with Teck and Teck is not the agent, representative, partner
of or joint venturer with the Trustee.
17. The powers conferred on the Trustee hereunder are solely to protect the
interests of the Trustee and the holders of the Securities in the
Pledged Documents and shall not impose any duty upon it to exercise any
such powers. The Trustee shall have no duty or liability with respect
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to the validity, perfection or priority or any Security Interest
purported to be created hereunder. Except for the safe custody of the
Pledged Documents in its possession and the accounting or moneys
actually received by it hereunder, the Trustee shall have no duty as to
any Pledged Document, including, without limitation, the filing of any
financing statements or the taking of any necessary steps to preserve
rights against any parties or any other rights pertaining to the
Pledged Documents. The Trustee shall be deemed to have exercised
reasonable care in the custody and preservation of any Pledged
Documents in its possession if such Pledged Document is accorded
treatment substantially equal to that which it accords its own
property.
18. Teck shall pay on demand, and shall indemnify and save the Trustee
harmless from, any and all out-of-pocket liabilities, costs, and
expenses (including reasonable legal fees and expenses and any sales,
goods and services, or other similar taxes payable to any governmental
authority with respect to any such liabilities, costs and expenses) (i)
incurred by the Trustee in preparation, registration or enforcement of
this Agreement, (ii) with respect to, or resulting from, any failure or
delay by Teck in performing or observing any of its obligations under
this Agreement or any Pledged Document, or (iii) incurred by the
Trustee arising out of or in connection with the performance or
exercise of any of its rights under this Agreement (except for
liabilities, costs and expenses arising by reason of the negligence or
bad faith of the Trustee).
19. If any portion of this Agreement or the application thereof to any
circumstance shall be held invalid or unenforceable by a court of
competent jurisdiction from which no further appeal has or is taken, to
an extent that does not affect in a fundamental way the operation of
this Agreement, the remainder of the provision in question, or its
application to any circumstance other than that to which it has been
held invalid or unenforceable, and the remainder of this Agreement
shall not be affected thereby and shall be valid and enforceable to the
fullest extent permitted by applicable law.
20. Time shall be of the essence of this Agreement.
21. Teck at its own cost and expense, shall execute all such further
assignments and other documents and so all such further acts and
things, including, without limitation, obtaining any consents which are
required, or which may be reasonably requested by the Trustee, from
time to time, to more effectively mortgage, charge and, if applicable,
assign the Pledge Documents to the Trustee and to perfect and keep
perfected the Security Interest created hereunder.
22. Teck acknowledges receipt of an executed copy of this Agreement and a
copy of the financing statement filed on behalf of the Trustee to
protect the Security Interest created hereunder at the British Columbia
Personal Property Registry.
23. This Agreement may be executed in any number of counterparts and by
different parties in separate counterparts (including facsimile
transmission), each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the
same instrument.
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24. Teck shall assign its rights and obligations under this Agreement and
the Pledged Documents if a successor Person replaces Teck under the
Indenture and:
(a) such successor Person shall expressly assume, by a document
executed and delivered to the Trustee, in form satisfactory to
the Trustee, or shall assume by operation of law, Teck's
obligations under this Agreement; and
(b) Teck or such successor Person shall deliver to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating
that such sale, assignment, transfer or other disposition and
the document executed and delivered to the Trustee under this
Section 24 comply with this Section.
Teck shall not sell, assign, transfer or otherwise dispose of its
rights or obligations under this Agreement or the Pledged Documents
except in accordance with this Section 24.
25. This Agreement shall be binding upon Teck and its Cominco and their
respective successors and assigns and shall enure to the benefit of the
holders of the Securities and the Trustee and their respective
successors and permitted assigns.
26. All capitalized terms used herein and not defined in this Agreement
shall have the meanings ascribed to them in the Indenture unless the
context requires otherwise.
27. This Agreement shall be governed by the laws of the Province of British
Columbia.
IN WITNESS WHEREOF Teck has caused this Agreement to be executed
under the hand of its proper officers duly authorized in that behalf as of the
28th day of September, 2005.
TECK COMINCO LIMITED
By: /s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
Title: President and Chief
Executive Officer
By: /s/ Xxxx X. Xxxxxx
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Name: Xxxx X. Xxxxxx
Title: Senior Vice President,
Finance and Chief
Financial Officer
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By its execution hereof, the undersigned hereby:
1. agrees to be bound by the terms of this Agreement;
2. consents to the Security Interest created hereunder; and
3. agrees that it is not entitled to a release or return of the Pledged
Documents so long as there are Securities outstanding except in
accordance with Section 8 of this Agreement.
IN WITNESS WHEREOF Cominco has caused this Agreement to be executed
under the hand of its proper officers duly authorized in that behalf as of the
28th day of September, 2005.
TECK COMINCO METALS LTD.
By: /s/ Xxxx X. Xxxxxx
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Name: Xxxx X. Xxxxxx
Title: Senior Vice President,
Finance and Chief
Financial Officer
By: /s/ Xxxxx X. Xxxxxx
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Name: Xxxxx X. Xxxxxx
Title: Corporate Secretary
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SCHEDULE "A"
TO
PLEDGE AGREEMENT RESPECTING NOTES
The "Pledged Documents" are:
1. a note in the amount of U.S.$300 million issued by Teck Cominco Metals
Ltd. in favour of Teck Cominco Limited dated September 28, 2005.
2. a note in the amount of U.S.$700 million issued by Teck Cominco Metals
Ltd. in favour of Teck Cominco Limited dated September 28, 2005.
