Exhibit 99.1
EXTINGUISHMENT AND TERMINATION AGREEMENT
EXTINGUISHMENT AND TERMINATION AGREEMENT dated the 6th day of December,
2004 BETWEEN:
XXXXXXX & CO. INTERNATIONAL, a corporation incorporated under the
laws of the State of Delaware
(the "Purchaser")
OF THE FIRST PART
and
ABER DIAMOND CORPORATION (formerly known as Aber Resources Ltd.), a
corporation continued under the laws of Canada
("Aber" or the "Company")
OF THE SECOND PART
WHEREAS the Purchaser and the Company are parties to a private placement
subscription agreement dated July 16, 1999 (the "Private Placement Subscription
Agreement") pursuant to which the Company issued and sold to the Purchaser
8,000,000 common shares (the "Purchased Shares") in the capital of the Company;
AND WHEREAS the Purchaser desires to sell the Purchased Shares and the
Company is prepared, subject to the terms and conditions of this Agreement, to
cancel and extinguish certain provisions of the Private Placement Subscription
Agreement in respect of such sale.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the mutual
covenants and agreements contained herein and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged by
each of the parties hereto, the parties hereto covenant and agree as follows:
1. EXTINGUISHMENT
Under Section 9.1(b) of the Private Placement Subscription Agreement, the
Company has certain rights with respect to the sale by the Purchaser of the
Purchased Shares (the "Rights"). The Company hereby agrees to cancel and
extinguish the Rights with respect to the sale by the Purchaser of all (but not
less than all) of the Purchased Shares through Xxxxxxx Xxxxx Canada Inc. and its
affiliates in association with one or more of the following firms: CIBC World
Markets Inc., Scotia Capital Inc. and UBS Securities Canada Inc. and their
respective affiliates
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(such dealers, and/or such other dealers as the Company may approve in writing,
such approval not to be unreasonably withheld, being hereinafter collectively
referred to as the "Agents") upon the payment by the Purchaser to the Company of
the sum of US$7 million (the "Extinguishment Fee") provided that:
(a) such cancellation and extinguishment of the Rights shall only be
applicable to a sale of the Purchased Shares to or through the
Agents;
(b) the Agents shall have covenanted and agreed with the Company in an
enforceable agreement that:
(i) they shall promptly disclose in reasonable detail to the
satisfaction of the Company the identities of the persons (the
"Ultimate Purchasers") who have agreed to purchase from the
Agents the Purchased Shares;
(ii) the Agents shall not sell to any Ultimate Purchaser or group
of Ultimate Purchasers under common control more than
2,000,000 of the Purchased Shares without the Company's prior
written consent; and
(c) the Board of Directors of the Company shall have received the
written resignation (such resignation to be substantially in the
form attached as Schedule "A") of Xxxxx Xxxxxxxxx as a director of
the Company, such resignation to take effect immediately.
2. COVENANTS OF THE COMPANY
The Company covenants and agrees that, contemporaneously with the
execution and delivery of this Agreement, the Company shall provide written
confirmation to the Agent(s) that, as of the time of execution of this
Agreement, other than as disclosed in the press release of Aber to be issued
upon execution of this Agreement, since the time of issuance of Aber's press
release and management's discussion and analysis on December 6, 2004, there has
not occurred any "material change" (as such term is defined in the Securities
Act (Ontario)) in respect of the Company.
3. EFFECTIVE TIME OF EXTINGUISHMENT
The cancellation and extinguishment of the Rights shall be effective
immediately, subject to the provisions of paragraph 1(a) above.
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4. PAYMENT
The Purchaser agrees to pay the Extinguishment Fee by wire transfer to the
account of the Company as specified in Schedule "B", such wire transfer to be
sent not later than 12:00 noon EST on Thursday, December 9, 2004.
5. TERMINATION OF COVENANTS
The Purchaser and the Company covenant and agree that with effect as of
the date hereof:
(a) the covenants of the Company under clauses 8.1(c), (d), (e) and (f)
of the Private Placement Subscription Agreement shall terminate and
be of no further force or effect;
(b) the Purchaser and the Company irrevocably acknowledge and agree that
the respective covenants, representations, warranties and agreements
of the Purchaser and the Company set forth in Articles 2 through 7,
inclusive, of the Private Placement Subscription Agreement have, as
applicable, been satisfied and fulfilled and that no basis exists
for a claim by the Company or the Purchaser under Article 10 exists
in respect of any breach thereof.
6. INDEMNIFICATION
If, at any time, the Company is assessed an amount by any Canadian taxing
authority for any value added or sales taxes in respect of any amount paid to
the Company under this Agreement, the Purchaser shall immediately pay to the
Company, in addition to any amounts payable to the Company under this Agreement,
any amount so assessed, and required to be borne by the Company, including any
value-added or sales tax and any penalties and interest which may be payable or
assessed against the Company in connection therewith (the "Assessed Amount"). In
addition, the Purchaser shall indemnify and hold harmless the Company's
directors and officers for any and all liabilities they may have in respect of
the Assessed Amount, which obligation the Company shall hold in trust for the
benefit of its directors and officers.
7. INDEMNIFICATION CLAIMS
(a) If any Canadian taxation authority asserts that the Company is
responsible for an Assessed Amount (a "Claim"), the Company shall
promptly notify the Purchaser of such Claim, and the provisions of
Section 7(b) or 7(c), as the case may be, shall apply.
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(b) With respect to any administrative or judicial proceeding regarding
a Claim, to the extent the Company is able to separate the issue
contested with respect to such Claim from other issues involving the
Company without adversely affecting the Company (as determined by
the Company in good faith), the Company shall permit the Purchaser
(but the Purchaser shall be under no obligation) to contest and
defend (and at its option to settle) any such Claim on behalf of the
Company, provided that the Purchaser shall bear the full costs of
such action. Notwithstanding the foregoing, the Purchaser shall,
prior to commencing any such contest or defense as provided in this
Section 7(b), provide a written acknowledgment of its liability to
the Company in respect of the Claim and shall have paid the full
amount of the Claim to the Company. The Company shall provide the
Purchaser with such assistance as the Purchaser may reasonably
request in connection with any such proceeding, which assistance
shall include, without limitation, providing the Purchaser with such
documents and other tangible items as the Purchaser may reasonably
request in connection with such proceeding.
(c) With respect to any administrative or judicial proceeding regarding
a Claim, to the extent the Company is not able to separate the issue
contested with respect to such Claim from other issues involving the
Company without adversely affecting the Company (as determined by
the Company in good faith), the Company shall at the expense of the
Purchaser (including reasonable legal and accounting fees, and other
expenses), and after giving reasonable consideration to the views of
the Purchaser and its advisors, contest and defend any such Claim
and, if requested by the Purchaser, shall appeal any adverse
administrative or judicial decision to the highest authorities as
allowed by law. Notwithstanding the foregoing, the Company shall not
be required to commence any such contest or defense as provided in
this Section 7(c) unless prior to such commencement the Purchaser
has provided a written acknowledgment of its liability to the
Company with respect to the Claim and has paid the full amount of
the Claim to the Company.
(d) Where the Purchaser has made a payment to the Company in respect of
a Claim, as contemplated by either Section 7(b) or (c), and as a
result of a successful contestation or defense of such Claim, a
refund is received by the Company, the Purchaser shall be entitled
to receive that portion of such refund (including the interest
component of such refund) which is commensurate with the amount of
the payment which the Purchaser has made to the Company, the amount
of any
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payment which the Company has made to the applicable taxation
authority and the degree of success which has been achieved.
8. ASSIGNMENT
Nether of the parties may assign any right, benefit or interest in this
Agreement without the written consent of the other, and any purported assignment
without such consent will be void.
9. ENTIRE AGREEMENT
This Agreement together with the Private Placement Subscription Agreement
constitutes the entire agreement between the parties and supersedes every
previous agreement, communication, expectation, negotiation, representation,
warranty or understanding whether oral or written, express or implied, statutory
or otherwise, between the parties with respect to the subject matter of this
Agreement.
10. TIME OF THE ESSENCE
Time is expressly declared to be of the essence of this Agreement. Any
extension of time hereunder shall not be deemed to be or to operate in law as a
waiver on the part of that party granting the extension that time is no longer
of the essence.
11. FURTHER ACTS
Each party will execute and deliver such further agreements and documents
and do such further acts and things as any other party hereto reasonably
requests to evidence, carry out or give full force and effect to the intent of
this Agreement.
12. ENUREMENT
This Agreement will enure to the benefit of and be binding upon the
respective legal representatives and successors and permitted assigns of the
parties.
13. COUNTERPARTS AND FACSIMILE COPIES
This Agreement may be executed in any number of counterparts and by
facsimile copies with the same effect as if all parties to this Agreement had
signed the same document and all counterparts and facsimile copies will be
construed together and will constitute one and the same instrument.
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IN WITNESS WHEREOF the parties hereto have hereunto duly executed this
Agreement on the date first above written.
XXXXXXX & CO. INTERNATIONAL
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Authorized Signing Officer
ABER DIAMOND CORPORATION
By: /s/ Xxxxxx Gannicot
-----------------------------------
Authorized Signing Officer
SCHEDULE "A"
RESIGNATION
The undersigned, Xxxxx Xxxxxxxxx (the "Director"), hereby tenders his
resignation as a director of Aber Diamond Corporation (the "Corporation") to be
effective immediately.
DATED this 6th day of December, 2004.
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Witness XXXXX XXXXXXXXX
