EXHIBIT 4.07
Archangel Diamond Corporation
December 19, 2002
Xx. Xxxxxxx X. Xxxxxx
000 Xxxx Xxxxxx
Xxxxxx, Xxxxxxxx
00000
Dear Xx. Xxxxxx:
The purpose of this letter is to set forth the arrangement between
Archangel Diamond Corporation (the "Company") and Xxxxxxx X. Xxxxxx ("Xxxxxx")
with respect to (a) certain options to purchase common shares of the Company
("Options") that were previously issued to Haddon under the Company's 1999
Equity Incentive Plan, as Amended and Restated in 2001 ("the Option Plan") and
(b) certain deferred compensation ("Deferred Compensation") payable to Haddon
under the terms of his Executive Employment Agreement with the Company, as
amended January 1, 2002 (the "Employment Agreement").
The parties acknowledge and agree that:
(a) Haddon has agreed to resign as a director and office of the Company,
effective December 19, 2002 and to terminate the Employment Agreement;
(b) under the Option Plan, all Options held by Haddon would expire 30 days
from the date on which Haddon ceases to be an officer or director of
the Company, unless otherwise determined by the Board of Directors;
(c) on December 19, 2002 the Board of Directors agreed to waive the 30-day
expiry period of the Options referred to in (b) above and permit the
Options to expire on the final expiry date provided when those Options
were first issued;
(d) as of the date hereof, Haddon holds 1,500,000 Options exercisable at
C$0.11/share and expiring November 25, 2006 and 1,000,000 Options
exercisable at C$0.10/share and expiring November 28, 2007 for a total
of 2,500,000 Options (the "Haddon Options"); and
(e) the Deferred Compensation payable to Haddon under the Employment
Agreement is US$139,870.50
In consideration of Haddon agreeing to resign as an officer and director of the
Company and for other good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the parties agree as follows:
1. Haddon shall be permitted to keep all of the Haddon Options, at their
current exercise price, until their respective final expiry dates stated in
such Options.
2. Haddon agrees to defer his right to payment of the Deferred Compensation
under the Employment Agreement as provided in paragraph 4 below.
3. If at any time Haddon chooses to exercise any of the Haddon Options, the
Deferred Compensation shall be used to pay the exercise price and shall be
automatically reduced by an amount equal to the funds required to exercise
such Options.
4. On the earlier of (a) the date on which Haddon has exercised all the Haddon
Options and (b) the date on which Haddon's Options expire, the Company
shall pay Haddon the balance of the Deferred Compensation after all
reductions referred to in paragraph 3 above.
5. Haddon agrees that he hereby relinquishes all rights to any other payments
that may be payable by the Company under the Employment Agreement.
6. This agreement shall be binding upon and shall enure to the benefit of the
parties hereto and their respective successors and assigns, provided that
Haddon may not assign this agreement without the prior consent of the
Company.
7. This agreement shall be subject to, governed by, and construed in
accordance with the laws of the Province of Ontario and the federal laws of
Canada applicable therein.
ARCHANGEL DIAMOND
CORPORATION
By: /s/ Xxxxxxx X.X. Xxxxxxxx
---------------------------------
Name:
Title:
**********
Agreed to and accepted by the undersigned this 19th day of December, 2002.
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/s/ Xxxxxxxxxxx Xxxx ) /s/ Xxxxxxx X. Xxxxxx
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Witness ) Xxxxxxx X. Xxxxxx
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