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EXHIBIT 99.1
PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT
DATED the 16th day of July, 1999
BETWEEN:
XXXXXXX & CO. INTERNATIONAL, a corporation incorporated under the laws
of the State of Delaware
(the "Purchaser")
OF THE FIRST PART,
- and -
ABER RESOURCES LTD., a corporation amalgamated under the laws of the
Province of British Columbia
(the "Company")
OF THE SECOND PART.
WHEREAS the Purchaser understands that the Company is prepared to issue and
sell to the Purchaser 8,000,000 common shares of the Company (the "Purchased
Shares") on the terms and conditions set forth below;
AND WHEREAS the Purchaser, subject to the terms and conditions set out
below, offers to purchase from the Company, and by its acceptance of this
Agreement, the Company agrees to issue and sell the Purchased Shares to the
Purchaser;
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:
Article 1
INTERPRETATION
1.1 Definitions
In this Agreement, except as otherwise expressly provided, the
following words or expressions shall have the meanings set out below:
(a) "Affiliate" has the meaning ascribed thereto in the Securities
Act;
(b) "Agreement" means this agreement and all amendments made
hereto by
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written agreement between the parties hereto together with
all schedules hereto and thereto;
(c) "Authority" means any governmental or regulatory authority,
body, agency or department, whether federal, provincial, municipal or
local, and any court, tribunal or similar body;
(d) "Business Day" means a day of the year other than a Saturday
or Sunday or statutory holiday in the Province of British Columbia or
the State of New York;
(e) "Board of Directors" means the board of directors of the
Company;
(f) "Closing Date" means July 19, 1999;
(g) "Common Shares" means the common shares in the capital of the
Company;
(h) "Company's Opinion" means the opinion or opinions of the
Company's legal counsel to be delivered at or prior to closing in the
form of Schedule 1.1(h);
(i) "Confidentiality Agreement" means the confidentiality
agreement to be dated the Closing Date between the Purchaser or an
Affiliate of the Purchaser and the Company in the form of Schedule
1.1(i);
(j) "Diamond Supply Agreement" means the diamond supply agreement
to be entered into between the Purchaser, the Company (or Affiliates of
each of them) and the Partnership in the form of Schedule 1.1(j);
(k) "Diavik JV Agreement" means the Diavik joint venture agreement
made as of March 23, 1995 between the Company and Kennecott Canada
Inc.;
(l) "Diavik Mine" means the Diavik Diamonds Project in the
Northwest Territories of Canada situated on the Property;
(m) "Environmental Laws" means all federal, municipal or local
laws, statutes, regulations, ordinances, rules, guidelines, orders,
directives and other requirements of any government or political
subdivision, agency or instrumentality or of any court, tribunal or
other similar body, relating to environmental or health matters,
including legislation governing the labelling, use and storage of
Hazardous Substances;
(n) "Environmental Orders" means applicable orders, decisions, or
the like rendered by any Authority under or pursuant to any
Environmental Laws;
(o) "Environmental Permits" means all permits, certificates,
approvals, registrations and licenses issued by any Authority and
relating to or required for the operation by the Company or the
Subsidiaries of their Properties in
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compliance with all Environmental Laws or Environmental Orders;
(p) "ETA" means the Excise Tax Act (Canada);
(q) "Financial Information" means the information contained in the
audited consolidated financial statements of the Company for the year
ended January 31, 1999 together with the auditors report thereon, and
the interim unaudited financial statements of the Company in respect of
the three month period ended April 30, 1999;
(r) "GST" means all Taxes payable under the ETA or under any
provincial legislation similar to the ETA and any reference to a
specific provision of the ETA or any such provincial legislation shall
refer to any successor provision thereto of like or similar effect;
(s) "Hazardous Substances" means PCBs, asbestos, urea formaldehyde
foam insulation or any other substance or material that is prohibited,
controlled or regulated under any Environmental Laws;
(t) "Hazardous Waste" means any contaminants, pollutants,
dangerous substances, including asbestos, liquid waste, special waste,
toxic substances, hazardous or toxic chemicals, hazardous materials or
Hazardous Substances as defined in or pursuant to any Environmental
Laws;
(u) "Knowledge" or "Know" means, with respect to any Person, the
actual knowledge of such Person or any director or officer of such
Person, or all of them, as the case may be, as well as matters that
such Person or any director or officer of such Person, or all of them,
as the case may be, should have reasonably known, after due inquiry,
which due inquiry shall extend only to:
(i) the financial, legal and investment advisors of the
Company and its Subsidiaries in connection with this
transaction who are not employees of the Company or
its Subsidiaries; and
(ii) any auditor or bookkeeper retained or employed in
connection with the business of the Company or the
Subsidiaries;
(v) "Legal Proceeding" means any litigation, action, suit,
investigation, hearing, claim, complaint, grievance, arbitration,
administrative or other proceeding and includes any appeal or review
and any application for same;
(w) "License" means any authorization, permit, approval, grant,
license, quota, consent, commitment, right or privilege issued or
granted by any Authority;
(x) "Material Adverse Effect" means any effect that is or could
reasonably be expected to be materially adverse to the financial
condition or the earnings,
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business, affairs or prospects of the Company and the Subsidiaries
considered as a whole;
(y) "Operative Agreements" means this Agreement, the
Confidentiality Agreement, the Partnership Agreement, the Diamond
Supply Agreement and the Rough Diamond Agreement;
(z) "Partnership" means the partnership to be formed between the
Purchaser and the Company (or Affiliates of each of them) pursuant to
the Partnership Agreement;
(aa) "Partnership Agreement" means the partnership agreement
governing the Partnership to be entered into prior to or at Closing
between the Purchaser and the Company (or Affiliates of each of them)
in the form of Schedule 1.1(aa);
(bb) "Person" means an individual, partnership, limited
partnership, unincorporated association, organization, syndicate,
corporation, trust and a trustee, executor, administrator or other
legal or personal representative;
(cc) "Properties" means all of the mining claims and mining leases
listed in Schedule 1.1(cc) and all mining leases which may replace such
mining claims and all other interests in real property which are
acquired and held subject to the Diavik JV Agreement;
(dd) "Public Record" means the annual information form of the
Company dated June 15, 1999, the comparative audited financial
statements of the Company for the fiscal year ended January 31, 1999
together with the report of the auditors thereon, the Company's 1998
annual report, the unaudited consolidated financial statements of the
Company for the fiscal quarter ended April 30, 1999, and for the
comparative period and fiscal 1998, as contained in the Company's first
quarter report to shareholders, the management information circular of
the Company dated June 10, 1999 to be used in connection with the
Company's July 30, 1999 annual general meeting of shareholders together
with all press releases of the Company filed since January 31, 1999
under the Securities Laws with Canadian or United States regulators;
(ee) "Purchased Shares" has the meaning attributed to it in the
first recital;
(ff) "Release" means a releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping,
leaching, disposing or dumping which is in breach of any Environmental
Law or Environmental Order;
(gg) "Rough Diamond Agreement" means the rough diamond supply
agreement to be entered into between the Purchaser, the Company (or
Affiliates of each of them) and the Partnership in the form of Schedule
1.1(gg);
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(hh) "Securities Act" means the Securities Act (Ontario);
(ii) "Securities Laws" means, collectively, the applicable
securities laws of each of the provinces and territories of Canada and
the respective regulations made thereunder together with all applicable
rules, orders, notices and rulings of the securities regulatory
authorities in such provinces and territories, the rules of The Toronto
Stock Exchange together with the United States Securities Act of 1933,
the United States Securities and Exchange Act of 1934, the rules and
regulations adopted, in each case, thereunder by the Securities and
Exchange Commission, and any applicable state or blue sky securities
laws;
(jj) "Subsidiaries" means Aber Diamond Mines Ltd.;
(kk) "Tax Act" means the Income Tax Act (Canada);
(ll) "Tax" means all governmental taxes, levies, duties,
assessments, reassessments and other charges of any nature whatsoever,
whether direct or indirect, including income tax, profits tax, gross
receipts tax, corporation tax, sales and use tax, wage tax, payroll
tax, worker's compensation levy, capital tax, stamp duty, real and
personal property tax, land transfer tax, customs or excise duty,
excise tax, turnover or value added tax on goods sold or services
rendered, withholding tax, social security and unemployment insurance
charges or retirement contributions, and any interest, fines, additions
to tax and penalties thereon;
(mm) "Time of Closing" means 10:00 a.m. (Toronto time) on the
Closing Date; and
(nn) "TSE Questionnaire" means The Toronto Stock Exchange
questionnaire and undertaking of the form of which is attached as
Schedule 1.1(nn).
1.2 Construction
In this Agreement:
(a) words denoting the singular include the plural and vice versa
and words denoting any gender include all genders;
(b) the words "including", "include", and "includes" shall mean
"including without limitation", "include, without limitation"
and "includes, without limitation", respectively;
(c) any reference to a statute shall mean the statute in force as
at the date hereof and any regulation in force thereunder,
unless otherwise expressly provided;
(d) the use of headings is for convenience of reference only and
shall not affect the construction of this Agreement;
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(e) when calculating the period of time within which or following
which any act is to be done or step taken, the date which is
the reference day in calculating such period shall be
excluded. If the last day of such period is not a Business
Day, the period shall end on the next Business Day; and
(f) any tender of documents or money under this Agreement may be
made upon the parties or their respective counsel and money
may be tendered by bank draft drawn upon a Canadian chartered
bank or by negotiable cheque payable in Canadian funds and
certified by a Canadian chartered bank.
1.3 Accounting Principles
Wherever in this Agreement reference is made to generally accepted
accounting principles, such reference shall be deemed to be the Canadian
generally accepted accounting principles from time to time approved by the
Canadian Institute of Chartered Accountants, or any successor institute,
applicable as at the date on which such calculation is made or required to be
made in accordance with generally accepted accounting principles.
1.4 Schedules
The following are the schedules annexed hereto and incorporated by
reference herein and deemed to be part of this Agreement:
Schedule 1.1(h) - Company's Opinion
Schedule 1.1(i) - Confidentiality Agreement
Schedule 1.1(j) - Diamond Supply Agreement
Schedule 1.1(aa) - Partnership Agreement
Schedule 1.1(cc) - Properties
Schedule 1.1(gg) - Rough Diamond Agreement
Schedule 1.1(nn) - TSE Questionnaire
Article 2
Subscription for Shares
2.1 Subscription for Shares
The Purchaser hereby subscribes for the purchase from the Company,
subject to the terms and conditions set forth herein, of the Purchased Shares at
a deemed price of Cdn.$13.00 per Purchased Share, for an aggregate subscription
price of Cdn.$104,000,000 (the "Purchase Price").
2.2 Payment of Purchase Price
The Purchaser shall satisfy the Purchase Price by delivering at Closing
to the Company a certified cheque made payable to the Company in Canadian funds
in an amount equal to the Purchase Price.
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Article 3
Closing
3.1 Closing
Closing of the transactions contemplated by this Agreement (the
"Closing") will be completed at the offices of Stikeman, Elliott, Xxxxxxxx Xxxxx
Xxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx, at the Time of Closing on the Closing Date
or at such place and time as may be agreed to by the parties.
3.2 Closing Procedures
(a) At or before Closing, the Company and the Purchaser shall take or
cause to be taken all actions, steps and corporate proceedings
necessary or desirable to validly and effectively approve or authorize
the completion of the transactions herein provided for and the
instruments executed or to be executed and delivered hereunder; and the
Company shall deliver or cause to be delivered to the Purchaser at the
Time of Closing and subject to fulfillment of the provisions of Section
3.2(b) all documents required to be delivered hereunder consisting of:
(i) a certificate for the Purchased Shares registered in
the name of the Purchaser;
(ii) the Confidentiality Agreement and the Partnership
Agreement duly executed by the Company or an
Affiliate of the Company;
(iii) the officers' certificate of the Company referred to
in Section 4.1(d) of this Agreement; and
(iv) the Company's Opinion.
(b) At the Time of Closing and subject to fulfillment of the foregoing
provisions of Section 3.2(a), the Purchaser shall deliver or cause to
be delivered to the Company all documents and payments required to be
delivered hereunder consisting of:
(i) the certified cheque referred to in Section 2.2;
(ii) the Confidentiality Agreement and the Partnership
Agreement duly executed by the Purchaser or an
Affiliate of the Purchaser;
(iii) the officers' certificate of the Purchaser referred
to in Section 5.1(d) of this Agreement; and
(iv) the TSE Questionnaire duly completed and executed by
the Purchaser.
Article 4
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Conditions of Closing in favour of THE PURCHASER
4.1 Conditions
The Purchaser's obligation to subscribe for and purchase the Purchased
Shares, to execute or cause an Affiliate of the Purchaser to execute the
Confidentiality Agreement and the Partnership Agreement, and to otherwise fulfil
its obligations hereunder on the Closing Date is conditional upon the
satisfaction of the following conditions, each of which is for the exclusive
benefit of the Purchaser and may be waived in whole or in part by the Purchaser
at any time:
(a) the representations and warranties of the Company other than the
representations and warranties made in Section 6.1(g) herein shall
remain true and correct as of the Time of Closing;
(b) the Company shall have performed or complied with all of the terms,
covenants and conditions of this Agreement to be performed or complied
with by the Company at or prior to the Time of Closing;
(c) all necessary corporate action shall have been taken by the Company
to authorize the execution and delivery of this Agreement and the
performance of its provisions;
(d) the Company shall have delivered to the Purchaser a certificate
dated the Closing Date, duly executed by the President and Chief
Executive Officer, and the Vice-President Corporate Development and
Secretary of the Company, confirming the accuracy of items (a), (b) and
(c) above;
(e) the Company shall have delivered to the Purchaser a certificate
dated within two Business Days of the Closing Date issued by the
Company's registrar and transfer agent certifying the number of Common
Shares which are issued and outstanding as of the date on which such
certificate is dated; and
(f) at or before the Time of Closing, the Purchaser shall have received
the Company's Opinion, satisfactory in form and substance to the
Purchaser and its counsel, acting reasonably, which shall include the
following:
(i) the Company is incorporated and is existing under the
laws of the Province of British Columbia;
(ii) the authorized capital of the Company consists of
100,000,000 Common Shares;
(iii) the Company has the requisite corporate power and
authority to perform its obligations under the terms
of this Agreement and each of the Company and the
Subsidiaries has the requisite corporate power and
authority to perform its obligations under the terms
of each of the
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Operative Agreements to which it is a party;
(iv) each of the Subsidiaries is duly incorporated and is
validly subsisting under the laws of the jurisdiction
of its incorporation;
(v) the authorized capital of Aber Diamond Mines Ltd.
("ADM") consists of an unlimited number of Class A
shares without nominal or par value and an unlimited
number of Class B shares without nominal or par value
of which 20,600,002 Class A shares are issued and
outstanding;
(vi) the Company is the registered owner of all of the
securities of ADM;
(vii) the Purchased Shares have been issued as fully paid
and non-assessable shares;
(viii) the issuance by the Company to the Purchaser of the
Purchased Shares pursuant to the terms of this
Agreement is exempt from the registration and
prospectus requirements of the Securities Laws and
the first trade of the Purchased Shares by the
Company will be exempt from the Securities Laws of
British Columbia and Ontario subject to the
applicable "hold period" prescribed by such
Securities Laws having elapsed;
(ix) the Company has received all necessary approvals to
permit the issuance of the Purchased Shares to the
Purchaser pursuant to the terms of this Agreement;
(x) the execution, delivery and performance of this
Agreement and each of the Operative Agreements to
which either the Company or the Subsidiaries is a
party have been duly authorized by the Company or the
Subsidiaries, as applicable, and this Agreement and
each of the Operative Agreements to which either the
Company or the Subsidiaries is a party have been duly
executed and delivered by the Company or the
Subsidiaries, as the case may be, and are legally
binding obligations of the Company or the
Subsidiaries, as the case may be, enforceable against
one of them in accordance with each of such
agreements' terms, subject to usual opinion
qualifications; and
(xi) The Toronto Stock Exchange has accepted notice for
filing of the transactions contemplated hereby and
shall have conditionally listed the Purchased Shares.
Article 5
Conditions of Closing in favour of the Company
5.1 Conditions
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The Company's obligation to sell the Purchased Shares to the Purchaser,
to execute or cause an Affiliate of the Company to execute the Confidentiality
Agreement and the Partnership Agreement, and to otherwise fulfil its obligations
hereunder on the Closing Date is conditional upon the satisfaction of the
following conditions, each of which are for the Company's exclusive benefit and
may be waived in whole or in part by the Company at any time:
(a) the representations and warranties of the Purchaser herein shall
remain true and correct as of the Time of Closing;
(b) the Purchaser shall have performed or complied with all of the
terms, covenants and conditions of this Agreement to be performed or
complied with it at or prior to the Time of Closing;
(c) all necessary corporate action shall have been taken by the
Purchaser to authorize the execution and delivery of this Agreement and
the performance of its provisions;
(d) the Purchaser shall have delivered to the Company a certificate
dated the Closing Date, duly executed by the President and Chief
Executive Officer, and the Chief Financial Officer of the Purchaser,
confirming the accuracy of items (a), (b) and (c) above; and
(e) the Purchaser shall have delivered to the Company an opinion of its
counsel addressing those matters in respect of the Purchaser or its
Affiliates as are to be addressed in respect of the Company or its
Affiliates pursuant to the opinions described in paragraphs 4.1(f)(i),
(iii) and (x) above.
Article 6
Representations and Warranties of the Company
6.1 Representations and Warranties
The Company makes, as of the date hereof and the Closing Date, the
following representations and warranties and acknowledges that the Purchaser is
relying on such representations and warranties in entering into this Agreement
and purchasing the Purchased Shares from the Company:
(a) each of the Company and each Subsidiary that carries on a material
portion of the business of the Company (on a consolidated basis) has
been duly incorporated and is validly existing under the laws of its
jurisdiction and is conducting its business in compliance with all
applicable laws, rules and regulations of each jurisdiction in which it
carries on business, except for such non-compliances that, in the
aggregate, has not and will not result in a Material Adverse Effect and
each of the Company and each Subsidiary holds all material licences,
registrations and qualifications in all jurisdictions in which it
carries on business necessary to carry on its business as now conducted
by it, except where
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and to the extent that the failure to do so has not had and will not
result in a Material Adverse Effect;
(b) each of the Company and each Subsidiary is not: (i) in violation of
its articles or by-laws; or (ii) in default in the performance or
observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan agreement, note,
lease or other instrument to which it is a party or by which it may be
bound or to which any of its property or assets are subject, other than
defaults that in the aggregate, have not had and will not have a
Material Adverse Effect;
(c) no material consent, approval or action of, filing with or notice
to any Authority on the part of the Company or the Subsidiaries is
required, including in respect of the Properties, in connection with
the execution, delivery and performance by the Company of this
Agreement or any of the other Operative Agreements or the consummation
of the transactions contemplated hereby or thereby by the Company;
(d) this Agreement and each of the other Operative Agreements to which
the Company is a party and the transactions to be completed by the
Company hereunder and thereunder have been duly authorized by all
necessary corporate action on the party of the Company and this
Agreement and each of the other Operative Agreements to which the
Company is a party has been duly executed and delivered by the Company;
(e) the execution and delivery of this Agreement, the Operative
Agreements to which the Company is a party, the fulfillment of the
terms hereof by the Company and the issue, sale and delivery at the
Time of Closing of the Purchased Shares do not and will not result in
any breach of the articles, by-laws or resolutions of the Company or
any agreement or instrument to which the Company or any of the
Subsidiaries is a party or by which the Company or a Subsidiary is
contractually bound;
(f) the Company is a reporting issuer not in default or has equivalent
status under all of the Securities Laws;
(g) the authorized capital of the Company consists of 100,000,000
Common Shares of which, as of the date hereof, there are 45,827,883
Common Shares issued and outstanding and of which there are 2,245,000
the subject of employee stock options granted pursuant to the Company's
stock option plan;
(h) no person has any agreement, option, right or privilege with or
against the Company for the purchase, subscription or issuance of
securities, issued or unissued of the Company, other than pursuant to
the provisions of: (i) this Agreement; and (ii) the Company's employee
stock option plan;
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(i) each of the Subsidiaries is duly incorporated and is validly
subsisting under the laws of the jurisdiction of its incorporation;
(j) the authorized capital of ADM consists of an unlimited number of
Class A shares without nominal or par value and an unlimited number of
Class B shares without nominal or par value of which 20,600,002 Class A
shares are issued and outstanding;
(k) the Company is the registered owner of all of the securities of
ADM;
(l) Diavik Diamond Mines Inc. is the recorded holder of each of the
Properties listed in Schedule 1.1(cc);
(m) the issuance by the Company to the Purchaser of the Purchased
Shares pursuant to the terms of this Agreement is exempt from the
registration and prospectus requirements of the Securities Laws and the
first trade of the Purchased Shares by the Company will be exempt from
the Securities Laws subject to the applicable "hold period" prescribed
by the Securities Laws having elapsed;
(n) the Company has received all necessary approvals to permit the
issuance of the Purchased Shares to the Purchaser pursuant to the terms
of this Agreement;
(o) the Company has complied in all material respects with all
Securities Laws, has filed all material change reports required to be
filed under the Securities Laws and no confidential material change
reports have been filed pursuant thereto and the Public Record does not
contain any misrepresentation as such term is defined by the Securities
Laws;
(p) the Financial Information presents fairly the consolidated
financial position of the Company as at the dates indicated and the
results of its operations for the periods specified and the said
Financial Information has been prepared in conformity with generally
accepted accounting principles in Canada applied on a consistent basis;
(q) the Diavik JV Agreement is in good standing, enforceable against
the parties thereto in accordance with its terms and neither the
Company nor any of its Subsidiaries is in default thereunder or has
received any notice of non-compliance thereunder;
(r) there is no restriction, including without limitation a requirement
to obtain a License or an approval from an Authority but excluding any
requirement to obtain a License or approval from an Authority to
commence operations at the Diavik Mine, on the ability of the Company
or its Subsidiaries to: (i) preserve the Company's Participating
Interest (as
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such term is defined in the Diavik JV Agreement); (ii) take the
Company's production from its Participating Interest (as such term is
defined in the Diavik JV Agreement) in the Properties in kind,
including without limitation, in diamonds; or (iii) dispose of, sell,
polish, treat or market all of the Products (as defined in the Diavik
JV Agreement) to which the Company is entitled pursuant to the Diavik
JV Agreement;
(s) to the Company's Knowledge, Diavik Diamond Mines Inc. is: (i) a
subsidiary of Rio Tinto plc; and (ii) subject to the terms of the
Diavik JV Agreement, has the exclusive right to deal with and dispose
of the Properties;
(t) pursuant to the Diavik JV Agreement, Diavik Diamond Mines Inc. is
the Manager (as such term is defined in the Diavik JV Agreement), holds
title to the Properties in trust for ADM in proportion to the ADM's
Participating Interest (as such term is defined in the Diavik JV
Agreement) and the Company has not received notice of its resignation
pursuant to Section 7.4 of the Diavik JV Agreement;
(u) the Company by itself or together with its Subsidiaries holds a 40%
undivided Participating Interest (as such term is defined in the Diavik
JV Agreement) in the portion of the Properties on which the Diavik Mine
is to be located subject only to the royalty interests referenced in
Section 6.1(v);
(v) there are no royalties of any kind in respect of production from
the Company's Participating Interest in the Properties except for the
royalties disclosed in the schedules to the Diavik JV Agreement;
(w) to the Company's knowledge, there are no aboriginal claims of any
kind with respect to the Properties other than those listed in the
Comprehensive Study Report dated June, 1999;
(x) other than the Diavik JV Agreement and the agreements that are
schedules thereto, there are no other material contracts of the Company
or its Subsidiaries and copies of such material contracts have been
provided to the Purchaser and its legal and financial advisers, and
each of such materials contracts has not been breached by the Company
or the Subsidiaries and is in good standing and enforceable against the
Company and the Subsidiaries in accordance with its terms;
(y) except as contemplated in the Diavik JV Agreement with respect to
the Participants (as defined in the Diavik JV Agreement), no Person has
any right to earn an interest of any kind in the Properties, to acquire
one or more of the Properties or has any option to acquire one or more
Properties or an interest in one or more Properties;
(z) except for the Common Shares which are the subject of options
granted pursuant to the Company's employee stock option plan and except
for the securities of the Company and/or the Subsidiaries which may be
pledged as
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security pursuant to the Section 9.4 of the Diavik JV Agreement,
neither the securities of the Company or its Subsidiaries nor any
interest in the Properties belonging to the Company or its Subsidiaries
has been pledged as security or is subject of an option of any kind;
(aa) to the Company's Knowledge: (i) each of the Company and the
Subsidiaries is now complying and has at all times since February 1,
1996 complied with all laws applicable to the Properties and the Diavik
Mine, except where failure to so comply would not have a Material
Adverse Effect; (ii) neither the Company nor any Subsidiaries has at
any time since February 1, 1996 received notice that any of them are or
have at any time since February 1, 1996 been, in violation of or in
default in any material respect under, any License or any law
applicable to any of them or to the Properties or the Diavik Mine
except where any such violation or default would not have a Material
Adverse Effect; and (iii) neither the Company, its Subsidiaries nor any
party to the Diavik JV Agreement has given or received a notice issued
pursuant to or in complying with Section 2.3(a) of the Diavik JV
Agreement;
(bb) the Common Shares are listed and posted for trading on The Toronto
Stock Exchange;
(cc) except for conditional approval of The Toronto Stock Exchange, no
authorization, approval or consent of any court or governmental or
regulatory authority is required to be obtained by the Company in
connection with the sale and delivery of the Purchased Shares
hereunder, except such as have been obtained;
(dd) since January 31, 1999, there has been no change in the overall
business, results of operations, prospects, assets, liabilities and
condition (financial or otherwise) of the Company, its Subsidiaries or
the Properties except as publicly disclosed pursuant to the Securities
Laws which would have or reasonably be expected to have a Material
Adverse Effect;
(ee) each of the Company and its Subsidiaries has filed all required
tax returns. All such tax returns were correct and complete in all
material respects. All taxes due and owed by any of the Company and its
subsidiaries have been paid, except where a delinquency in payment
would not, individually or in the aggregate, have a Material Adverse
Effect. The Company is not aware of any dispute or claim concerning any
liability for taxes of the Company or any of its subsidiaries;
(ff) except as disclosed in the Public Record, there is not now pending
against the Company or any of the Subsidiaries or, to the knowledge of
the Company, threatened against the Company or any of the Subsidiaries,
nor has the Company or a Subsidiary received notice in respect of, any
claim or potential claim which could lead to any Legal Proceeding that
may seek to enjoin the transactions contemplated herein or that, if
successful, could have, in the aggregate, a Material
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Adverse Effect;
(gg) no broker, investment banker, financial advisor or other person,
is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions
contemplated by this Agreement or any of the other Operative
Agreements;
(hh) neither the Company nor a Subsidiary has conducted its business so
as to cause, permit or suffer the violation of any Environmental Law in
any material respect (including those requiring any Licenses), and has
not transported, released, purchased or sold any Hazardous Substance in
any material respect in violation of applicable Environmental Laws. No
action or proceeding is pending or to the Knowledge of the Company
threatened against the Company, a Subsidiary, the Properties or the
Diavik Mine that involves any Environmental Law to any extent;
(ii) the Company's assets exceed its liabilities and the Company is
able to pay its obligations as they come due in the ordinary course of
business;
(jj) the corporate records of the Company and each Subsidiary are duly
maintained in all material respects, in accordance with all applicable
legal requirements and contain in all material respects, full and
accurate records of all matters required to be dealt with in such
records; and
(kk) no representation or warranty contained in this Agreement, taken
together with the statements contained in the Schedules to this
Agreement and all written material provided to the Purchaser or to
which the Purchaser was given access, contains any untrue statement of
a material fact or omits to state a material fact necessary in order to
make all such statements, in the light of the circumstances under which
they were made, not misleading in any material respect.
6.2 Survival
The representations and warranties of the Company contained in this 0
shall survive the execution and delivery of this Agreement and the Closing of
the transactions contemplated hereby for a period of three (3) years following
the Closing Date.
Article 7
Representations and Warranties of THE PURCHASER
7.1 Representations and Warranties
The Purchaser makes, as of the date hereof and the Closing date, the
following representations and warranties and acknowledges that the Company is
relying on such representations and warranties in entering into this Agreement:
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(a) it is a company duly incorporated and validly subsisting under the
laws of its incorporation, with good and sufficient power, authority
and right to enter into and deliver this Agreement and the Operative
Agreements to which it is a party, and to complete the transactions to
be completed by it contemplated in such agreements;
(b) this Agreement and the transactions to be completed by the
Purchaser hereunder have been duly authorized by all necessary
corporate action on the part of the Purchaser and this Agreement has
been duly executed and delivered by the Purchaser;
(c) the execution and delivery of this Agreement, the Operative
Agreements to which the Purchaser is a party, and the fulfillment of
the terms hereof by the Purchaser do not and will not result in a
breach of the certificate of incorporation, by-laws or resolutions of
the Purchaser or any agreement or instrument to which the Purchaser is
a party or by which it is contractually bound, which breach would
materially adversely affect the Purchaser or the completion of the
transactions contemplated hereby;
(d) the Purchaser is purchasing the Purchased Shares as principal for
its own account and not for the benefit of any other person;
(e) the Purchased Shares are being acquired for the Purchaser's own
account for investment only and not with a view to resale or
distribution nor for the purposes of acquiring control of the Company
either by itself or in concert with any other shareholder or
shareholders;
(f) neither the Purchaser nor any of its Affiliates currently own,
directly or indirectly, any Common Shares and following the completion
of the purchase and sale contemplated by Article 2 hereof, the
Purchaser and its Affiliates will own, directly or indirectly, or
exercise control or direction over, 8,000,000 Common Shares; and
(g) the issue and sale of the Purchased Shares is exempt from the
prospectus and registration statement requirements of applicable United
States federal and state Securities Laws.
7.2 Survival
The representations and warranties of the Purchaser contained in this
Article 7 shall survive the execution and delivery of this Agreement and the
Closing of the transactions contemplated hereby for a period of three (3) years
following the Closing Date.
Article 8
Covenants of the Company
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8.1 Covenants
The Company covenants and agrees with the Purchaser that:
(a) subject to receipt of the Purchase Price therefor, the Purchased
Shares will at the Time of Closing be duly and validly issued to the
Purchaser as fully-paid and non-assessable shares of the Company;
(b) the Company shall cause the Board of Directors to authorize an
increase in the size of the Board of Directors to nine (9) directors
and shall appoint a nominee of the Purchaser to the Board of Directors
immediately after the occurrence of the Company's meeting of
shareholders scheduled to be held July 30, 1999;
(c) so long as the Purchaser and its Affiliates own, directly or
indirectly, not less than 8,000,000 outstanding Common Shares (as may
be adjusted appropriately from time to time for share consolidations,
stock splits, share reclassifications, capital reorganizations or
similar transactions affecting either the designation or number of
shares of the Company), there shall be nominated by the Company for
election as directors of the Company at each meeting of shareholders at
which directors are to be elected, one legally qualified individual
nominated by the Purchaser;
(d) if any director of the Company who was nominated by the Purchaser
pursuant to Section 8.1(b) or Section 8.1(c) shall cease to be a
director for any reason whatsoever, provided that the condition
specified in Section 8.1(c) entitling the Purchaser to nominate one
individual as its nominee continues to be satisfied at such time, a
legally qualified individual designated by the Purchaser shall
thereafter be nominated by the Company for election to, and in the
event that the vacancy is to be filled by appointment by the Board of
Directors rather than election by the shareholders, promptly appointed
to, the Board of Directors;
(e) the Company shall solicit proxies from its shareholders for such
nominees to be voted in favour of the individual designated by the
Purchaser in accordance with this Agreement;
(f) the Company shall provide the nominee or nominees, as the case may
be, to the Board of Directors with indemnities and directors' and
officers' liability insurance coverage from the commencement of his or
their appointment on the same basis as other directors;
(g) the Company shall obtain the Purchaser's consent, not to be
unreasonably withheld, to the timing, subject to applicable Securities
Laws, of the dissemination and the form of the press release or other
public announcement of the transactions contemplated in this Agreement;
and
(h) prior to the termination of the Rough Diamond Agreement, the
Company
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shall not and shall not permit a Subsidiary to alter in any material
respect, its arrangements under the Diavik JV Agreement, including by
failing to make all contributions, payments and cash calls under the
Diavik JV Agreement in order to maintain the Company's Participating
Interest (as such term is defined in the Diavik JV Agreement) or
relinquishing its Participating Interest (as defined in the Diavik JV
Agreement) pursuant to Section 5.6 of the Diavik JV Agreement, except
with the prior written consent of the Purchaser, not to be unreasonably
withheld and not to be withheld if such proposed alteration does not
adversely affect the ability of the Company or its Subsidiaries to
supply to the Purchaser the Product (as defined in the Rough Diamond
Agreement) in accordance with the requirements of the Rough Diamond
Agreement, and provided that the Company shall consult the Purchaser in
good faith with respect to any such proposed alteration which could
reasonably be expected to result in an adverse affect to the ability of
the Company or its Subsidiaries to supply to the Purchaser such Product
in accordance with the Rough Diamond Agreement.
8.2 Survival
The covenants of the Company contained in this Article 8 shall survive
the execution and delivery of this Agreement and the Closing of the transactions
contemplated hereby indefinitely.
Article 9
Covenants OF THE PURCHASER
9.1 Covenants
The Purchaser covenants and agrees with the Company as follows:
(a) the Purchaser will:
(i) execute and deliver all such documentation as may be
required by applicable Securities Laws, including the
TSE Questionnaire; and
(ii) sell the Purchased Shares only in compliance with
applicable Securities Laws;
(b) the Purchaser shall not and shall not permit any of its Affiliates
to sell or otherwise dispose of any Common Shares prior to the second
anniversary of the last day of the first month of commercial production from the
Diavik Mine except: (i) in acceptance of a take-over bid made by circular by a
third party at arm's-length to the Purchaser in accordance with the requirements
of the Securities Laws; (ii) in participating in a merger, amalgamation or
similar transaction involving the Company which has received the approval of the
Board of Directors; or (iii) otherwise in accordance with the following
provisions of this Section 9.1(b). In the event that the Purchaser wishes to
sell or cause to be sold any Common Shares owned, directly or indirectly, by it
or its Affiliates, it shall first give to the Company not less than 90 and not
more than 120 days' written notice (the "Sale Notice") of such proposed sale,
specifying the number of
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Common Shares (the "Subject Shares") it wishes to sell, the date on which it
proposes to effect such sale (the "Sale Date") and the proposed purchaser, if
any. Upon receipt of a Sale Notice, the Company shall be permitted during the
period up to 5:00 p.m. (Toronto local time) on the third business day (the
"Designation Deadline") prior to the Sale Date to designate a purchaser (the
"Designated Purchaser") of the Subject Shares by written notice to the Purchaser
in which event the Purchaser shall sell the Subject Shares to the Designated
Purchaser on the Sale Date for a cash purchase price per Subject Share (the
"Market Price") equal to the simple average closing trading price of the Common
Shares on The Toronto Stock Exchange (or other principal trading market if the
Common Shares are not then so listed) for the 20 trading days immediately
preceding the Designation Deadline (appropriately adjusted to reflect any stock
split or consolidation occurring during such 20 trading day period). In the
event the Company fails to give notice of a Designated Purchaser prior to the
Designation Deadline, the Purchaser shall be free to effect a sale of the
Subject Shares, or any of them, on the Sale Date and for a period of 30 days
thereafter at a price per Subject Share which is not less than the Market Price;
and
(c) the Purchaser shall obtain the Company's consent, not to be
unreasonably withheld, to the timing, subject to applicable Securities Laws, of
the dissemination and the form of the press release or other public announcement
of the transactions contemplated in this Agreement.
9.2 Survival
The covenants of the Purchaser contained in this Article 9 shall
survive the execution and delivery of this Agreement and the Closing of the
transactions contemplated hereby indefinitely.
Article 10
INDEMNIFICATION
10.1 Indemnification by the Company
The Company covenants and agrees with the Purchaser to indemnify and
save harmless the Purchaser from and against any claims, demand, Legal
Proceeding, action, cause of action, damage, loss (excluding loss of profits),
costs, liability or expense (including professional fees and disbursements)
which may be made or brought against the Purchaser or which it may suffer or
incur, directly or indirectly, in respect of, as a result of, or arising out of:
(a) any non-fulfillment of any covenant or agreement on the part of the Company
under this Agreement; or (b) any inaccuracy in or breach of any of the Company's
representations or warranties contained in this Agreement or any document or
certificate given pursuant to this Agreement.
10.2 Indemnification by the Purchaser
The Purchaser covenants and agrees with the Company to indemnify and
save harmless the Company from and against any claim, demand, Legal Proceeding,
action, cause of action, damage, loss (excluding loss of profits), costs,
liability or expense (including professional fees and disbursements) which may
be made or brought against the Company or which it may suffer or incur, directly
or indirectly, in respect of, as a result of, or arising out of: (a) any
non-
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fulfillment of any covenant or agreement on the part of the Purchaser under this
Agreement; or (b) any inaccuracy in or breach of any of the Purchaser's
representations or warranties contained in this Agreement or any document or
certificate given pursuant to this Agreement.
10.3 Procedure for Indemnification
(a) Claims Other Than Third Party Claims. Following receipt from the
Company or the Purchaser, as the case may be (the "Indemnified Party"),
of a written notice of a claim for indemnification which has not arisen
in respect of a Third Party Claim (as defined in Section 10.3(b)
below), the party who is in receipt of such notice (the "Indemnifying
Party") shall have 30 days to make such investigation of the claim as
the Indemnifying Party considers necessary or desirable. For the
purpose of such investigation, the Indemnified Party shall make
available to the Indemnifying Party the information relied upon by the
Indemnified Party to substantiate the claim. If the Indemnified Party
and the Indemnifying Party agree at or prior to the expiration of such
30 day period (or any mutually agreed upon extension thereof) to the
validity and amount of the claim, the Indemnifying Party shall
immediately pay to the Indemnified Party the full agreed upon amount of
the claim. If the Indemnified Party and the Indemnifying Party do not
agree within such period (or any mutually agreed upon extension
thereof), such dispute shall be resolved by arbitration as set out in
Section 13.10.
(b) Third Party Claims. The Indemnified Party shall notify the
Indemnifying Party in writing as soon as is reasonably practicable
after being informed in writing that facts exist which may result in a
claim originating from a Person other than the Indemnified Party (a
"Third Party Claim") and in respect of which a right of indemnification
given pursuant to Section 10.1 or 10.2 may apply. The Indemnifying
Party shall have the right to elect, by written notice delivered to the
Indemnified Party within 10 days of receipt by the Indemnifying Party
of the notice from the Indemnified Party in respect of the Third Party
Claim, at the sole expense of the Indemnifying Party, to participate in
or assume control of the negotiation, settlement or defence of the
Third Party Claim, provided that:
(i) such will be done at all times in a diligent and bona
fide matter;
(ii) the Indemnifying Party acknowledges in writing its
obligation to indemnify the Indemnified Party in
accordance with the terms contained in this Agreement
in respect of that Third Party Claim; and
(iii) the Indemnifying Party shall pay all reasonable
out-of-pocket expenses incurred by the Indemnified
Party as a result of such participation or
assumption.
If the Indemnifying Party elects to assume such control, the Indemnified Party
shall co-operate with the Indemnifying Party and its counsel and shall have the
right to participate in the
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negotiation, settlement or defence of such Third Party Claim at its own expense.
If the Indemnifying Party does not so elect or, having elected to assume such
control, thereafter fails to proceed with the settlement or defence of any such
Third Party Claim, the Indemnified Party shall be entitled to assume such
control. In such case, the Indemnifying Party shall co-operate where necessary
with the Indemnified Party and its counsel in connection with such Third Party
Claim and the Indemnifying Party shall be bound by the results obtained by the
Indemnified Party with respect to such Third Party Claim.
10.4 Additional Rules and Procedures
The obligation of the parties to indemnify each other pursuant to this
Article 10 shall also be subject to the following:
(a) an Indemnified Party shall only be entitled to make a claim
for indemnification pursuant to Section 10.1 or 10.2, as the
case be, if written notice containing reasonable particulars
of such claim is delivered to the Indemnifying Party (within
the time periods provided for in Section 10.3(a) or Section
10.3(b), as the case may be);
(b) if any Third Party Claim is of a nature such that the
Indemnified Party is required by applicable law to make a
payment to any Person (a "Third Party") with respect to such
Third Party Claim before the completion of settlement
negotiations or related legal proceedings, the Indemnified
Party may make such payment and the Indemnifying Party shall,
forthwith after demand by the Indemnified Party, reimburse the
Indemnified Party for any such payment. If the amount of any
liability under the Third Party Claim in respect of which such
a payment was made, as finally determined, is less than the
amount which was paid by the Indemnifying Party to the
Indemnified Party, the Indemnified Party shall, forthwith
after receipt of the difference from the Third Party, pay such
difference to the Indemnifying Party;
(c) the Indemnifying Party shall, if it is providing full
indemnification in respect thereof and subject to obtaining a
full and final release of such Third Party Claims in favour of
the Indemnified Party, be permitted to settle and compromise
any Third Party Claim; and
(d) following notice of a Third Party Claim with respect to such
Third Party Claim, the Indemnifying Party and the Indemnified
Party shall provide each other on an ongoing basis with all
information which may be relevant to the other's liability
under the provisions of this Article 10 and shall supply
copies of all relevant documentation promptly as they become
available.
10.5 Rights Cumulative
The rights of indemnification contained in this Article 10 are
cumulative and are in
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addition to every other right or remedy of the parties contained in this
Agreement or otherwise.
10.6 GST
If the Company and the Purchaser acting reasonably determine that any
payment (the "Payment") made pursuant to this Article 10 is subject to GST or is
deemed by the ETA to be inclusive of GST, the Indemnifying Party agrees to pay
to the Indemnified Party in addition to the Payment an amount equal to the
Payment multiplied by the applicable rate of GST.
Article 11
CONFIDENTIALITY
11.1 Confidentiality Agreement
At the Time of Closing, the Purchaser shall execute and deliver in
favour of the Company the Confidentiality Agreement.
Article 12
General
12.1 Assignment
Neither 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.
12.2 Entire Agreement
This 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.
12.3 Severability
Any provision hereof which is prohibited or unenforceable shall be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof.
12.4 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.
12.5 Further Acts
Each party will execute and deliver such further agreements and
documents and do such
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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.
12.6 Governing Law
This Agreement is and will be deemed to have been made in British
Columbia, Canada, and for all purposes will be governed exclusively by and
construed and enforced in accordance with the laws prevailing in British
Columbia and the rights and remedies of the parties will be determined in
accordance with those laws.
12.7 Enurement
This Agreement will inure to the benefit of and be binding upon the
respective legal representatives and successors and permitted assigns of the
parties.
12.8 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.
12.9 Notices
All payments and communications which may be or are required to be
given by any party to any other party, shall be in writing and (i) delivered
personally, (ii) sent by prepaid courier service or mail, or (iii) sent by
prepaid telecopier or other similar means of electronic communication to the
parties at their following respective addresses:
For the Purchaser:
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
X.X.X.
Attention: Office of the General Counsel
Telecopier: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxxxxx & Xxxxxxxx
Barristers & Solicitors
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxx X0X 0X0
Attention: Xxxxxxx Xxxxxxxx
Telecopier: (000) 000-0000
and to:
00
00
Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx
00000-0000
Attention: Xxxxxx Xxxxxx
Telecopier: (000) 000-0000
For the Company:
Xxxxx 000-000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
Attention: Xxxxxxx X. Xxxxx
President and Chief Executive Officer
Telecopier: (000) 000-0000
with a copy to:
Stikeman, Xxxxxxx
Xxxxxxxx Xxxxx Xxxx
Xxxxx 0000
Xxxxxxx, Xxxxxx X0X 0X0
Attention: Xxxxxx Xxxxxxxx
Telecopier: (000) 000-0000
Any such notice so given shall be deemed conclusively to have been given and
received when so personally delivered or delivered by courier or on the day on
which termination is confirmed if sent by telecopier or other electronic
communication or on the fifth day following the sending thereof by mail. Any
party may from time to time change its address hereinbefore set forth by notice
to the other parties in accordance with this section.
12.10 Service
If any party is or becomes a party on which service or legal process
with respect to an action commenced in the Province of British Columbia must be
served out of the jurisdiction of the Province of British Columbia (an "Ex-Juris
Party"), the Ex-Juris Party shall in writing to the other parties designate,
appoint and empower a party or agent within the Province of British Columbia to
receive for and on behalf of the Ex-Juris Party service of process in the
Province of British Columbia in any legal action or proceeding with respect to
this Agreement, which agent shall undertake to enter an unconditional appearance
within 30 days after the date of such service. A copy of such process served on
the agent will be promptly forwarded by mail by the party initiating such
proceeding to the Ex-Juris Party at the address referred to in the next
sentence. Failure of the Ex-juris Party to receive such copy shall not affect in
any way the service of such process on the Ex-juris Party by service upon its
agent for service as designated above. Each party agrees that if it becomes a
Ex-juris Party and it fails to maintain such a duly
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appointed agent for service of process, it irrevocably consents to the service
of process out of any Court of the Province of British Columbia by mailing all
copies of such process by registered or certified mail, postage pre-paid to the
last address designated for delivery of notice to such Ex-juris Party under the
terms of Section 12.9, such service to be effective second Business Day after
the date of such mailing. The mailing to such Ex-Juris Party at such address
shall be deemed personal service and acceptance of service by such Ex-juris
Party for any action or proceeding with respect to any matter relating to this
Agreement. Service in accordance with the foregoing provisions shall not
preclude any other manner of service permitted by the laws of the Province of
British Columbia.
12.11 Currency
Except as otherwise expressly provided in this Agreement, all dollar
amounts referred to in this Agreement are stated in the lawful currency of
Canada.
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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
Per: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------------------
Authorized Signing Officer
ABER RESOURCES LTD.
Per: /s/ Xxxxxxx X. Xxxxx
------------------------------------------------
Authorized Signing Officer
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