EXHIBIT 10.2
U.S. AGENCY AGREEMENT
July 17, 2002
Golden Star Resources Ltd.
00000 Xxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxx
00000-0000
ATTENTION: XX. XXXXX X. XXXXXXXX, PRESIDENT AND CHIEF EXECUTIVE OFFICER
Dear Sir:
Golden Star Resources Ltd. (the "CORPORATION" ), proposes to issue, at
the Time of Closing (as hereinafter defined), 6,916,000 units (collectively, the
"UNITS" and individually, a "UNIT") of the Corporation (the "OFFERED SECURITIES"
or the "SECURITIES"), each Unit consisting of one (1) common share (a "COMMON
SHARE") of the Corporation and one-half ( 1/2) common share purchase warrant,
each whole warrant exercisable at a price per Common Share of Cdn. $2.28 until
July 24, 2004 (each whole warrant, a "WARRANT") at an offering price of Cdn.
$1.90 per Unit for aggregate gross proceeds of Cdn. $13,140,400. Based upon and
subject to the terms and conditions set out below, Canaccord Capital Corporation
(USA) Inc. (the "U.S. LEAD MANAGER") and BMO Xxxxxxx Xxxxx Corp. (collectively
the "U.S. AGENTS" and, individually, a "U.S. AGENT") hereby propose to offer the
Offered Securities for sale, as agents of the Corporation, on a best efforts
basis with no minimum or dollar amount requirement, in the manner contemplated
in this Agreement. The offering of the Offered Securities by the Corporation
pursuant to this U.S. Agreement is hereinafter referred to as the "OFFERING".
It is understood and agreed to by all parties that the Corporation is
concurrently entering into an agreement (the "CANADIAN UNDERWRITING AGREEMENT")
providing for the sale by the Corporation of 14,000,000 Units in Canada, through
arrangements with Canaccord Capital Corporation and BMO Xxxxxxx Xxxxx Inc.
(together, the " CANADIAN UNDERWRITERS"). Anything herein or therein to the
contrary notwithstanding, the closing under this Agreement is expressly
conditional on the closing under the Canadian Underwriting Agreement. Two forms
of prospectus are to be used in connection with the offering and sale of the
Securities contemplated by the foregoing, one relating to the Securities offered
hereunder and the other related to the Securities offered by the Canadian
Underwriters. The latter form of prospectus will be identical to the former
except for the addition of certain pages in respect of Canadian Securities Laws
requirements as included in the U.S. Registration Statement and amendments
thereto.
The Corporation shall pay to the U.S. Lead Manager, on behalf of the
U.S. Agents, a fee (the "AGENTS' FEE") at the Time of Closing equal to Cdn.
$0.1045 per Offered Security sold
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pursuant to the terms of this U.S. Agreement (being 5.5% of the issue price per
Offered Security) in consideration of the services to be rendered by the U.S.
Agents in connection with the Offering. Such services shall include, without
limitation: (i) acting as financial advisors to the Corporation in the
preparation of documentation relating to the sale of the Securities; (ii)
forming and managing banking, selling and other groups for the sale of the
Securities; (iii) distributing the Securities to the public both directly and
through other registered dealers and brokers; (iv) assisting the Corporation in
connection with the preparation and finalization of the U.S. Preliminary
Prospectus, the U.S. Prospectus (each as hereinafter defined) and the Canadian
forms of such prospectuses, qualifying the distribution of, or registering, as
the case may be, the Securities; (v) performing administrative work in
connection with these matters; and (vi) all other services arising out of the
agreement resulting from the Corporation's acceptance of this offer.
The U.S. Agents and the Corporation acknowledge that Schedule A,
Schedule B and Schedule C form a part of this U.S. Agreement.
The following in addition to the above preamble are the terms and
conditions of the agreement between the Corporation and the U.S. Agents:
SECTION 1 DEFINITIONS AND INTERPRETATION
(1) In this U.S. Agreement:
"BUSINESS DAY" means any day other than a Saturday, Sunday or statutory
or civic holiday in the City of Toronto, Ontario and the City of New
York, New York;
"CANADIAN SECURITIES LAWS" means, collectively, all applicable
securities laws of each of the Qualifying Provinces and the respective
rules and regulations under such laws, together with applicable
published policy statements, notices and orders of the securities
regulatory authorities in the Qualifying Provinces;
"EXCHANGES" means the Toronto Stock Exchange ("TSX") and the American
Stock Exchange ("AMEX");
"INTER-DEALER AGREEMENT" means that certain inter-dealer agreement,
dated the date hereof, between the Canadian Underwriters and the U.S.
Agents;
"MATERIAL SUBSIDIARIES" means the entities set out in Schedule A in
which the Corporation holds the types and percentages of securities or
other ownership interests therein set forth;
"MATERIAL RESOURCE PROPERTIES" has the meaning ascribed thereto in
Section 6(1)(j) hereof;
"QUALIFYING PROVINCES" means the provinces of Canada in which the
Corporation has filed a Canadian preliminary short form prospectus and
a (final) short form prospectus in respect to the Securities to be sold
by the Canadian Underwriters in Canada;
"RESOURCE PROPERTIES" has the meaning ascribed thereto in Section
6(1)(j) hereof;
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"SEC" means the United States Securities and Exchange Commission;
"STOCK OPTION PLANS" means the stock option plans of the Corporation as
approved by the shareholders of the Corporation, as constituted on the
date hereof;
"TIME OF CLOSING" has the meaning ascribed thereto in Section 10(1)
hereof;
"UNITED STATES" means the United States of America, its territories and
possessions, any state of the United States, the District of Columbia,
and the areas subject to the jurisdiction of the United States of
America;
"U.S. EXCHANGE ACT" means the United States Securities Exchange Act of
1934, as amended;
"U.S. SECURITIES ACT" means the United States Securities Act of 1933,
as amended;
"U.S. SECURITIES LAWS" means the applicable blue sky or securities
legislation in the United States, together with the U.S. Exchange Act
and the U.S. Securities Act and the rules and regulations of the SEC
and the applicable state securities regulatory authorities thereunder;
and
"WARRANT INDENTURE" means the warrant indenture to be entered into
between the Corporation and CIBC Mellon Trust Company, as warrant
agent, providing for the creation and issue of the Warrants.
(2) The division of this Agreement into sections, subsections, paragraphs
and other subdivisions and the insertion of headings are for
convenience of reference only and shall not affect the construction or
interpretation of this Agreement. Unless something in the subject
matter or context is inconsistent therewith, references herein to
sections, subsections, paragraphs and other subdivisions are to
sections, subsections, paragraphs and other subdivisions of this U.S.
Agreement.
(3) Except as otherwise indicated, all amounts expressed herein in terms of
money refer to lawful currency of the United States and all payments to
be made hereunder shall be made in such currency.
SECTION 2 COMPLIANCE WITH SECURITIES LAWS
The Corporation represents and warrants to, and covenants and agrees
with, each of the U.S. Agents that:
(1) A registration statement on Form S-3 (File No. 333-91666) (the "INITIAL
REGISTRATION STATEMENT"), including the exhibits thereto, and including
the Incorporated Documents (as defined below) in respect of the
Securities has been filed with the SEC in compliance with the U.S.
Securities Act and all applicable rules and regulations thereunder.
(2) The Initial Registration Statement and any post-effective amendment
thereto, each in the form heretofore delivered by the Corporation, and,
excluding exhibits thereto but including all documents incorporated by
reference in the form of prospectus, to be used
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in the United States by the U.S. Agents to market the Securities
contained therein, delivered by the Corporation, has been declared
effective by the SEC in such form; and no stop order suspending the
effectiveness of the Initial Registration Statement has been issued and
no proceeding for that purpose has been initiated or threatened by the
SEC (any form of preliminary prospectus, to be used in the United
States by the U.S. Agents to market the Securities included in the
Initial Registration Statement is hereinafter called a "U.S.
PRELIMINARY PROSPECTUS" and any form of preliminary prospectus to be
used in Canada by the Canadian Underwriters to market the Securities is
hereafter called a "CANADIAN PRELIMINARY PROSPECTUS"); the various
parts of the Initial Registration Statement, including all exhibits
thereto and including (A) the information contained in the forms of
final prospectuses timely filed with the SEC pursuant to 424(b) under
the U.S. Securities Act and deemed by virtue of Rule 430A under the
U.S. Securities Act to be part of the Initial Registration Statement at
the time it was declared effective, and (B) the documents incorporated
by reference in the form of prospectuses contained in the Initial
Registration Statement at the time such part of the Initial
Registration Statement became effective, as amended at the time such
part of the Initial Registration Statement became effective, are
hereinafter collectively referred to as the "U.S. REGISTRATION
STATEMENT"; such final prospectus, to be used in the United States by
the U.S. Agents to market the Securities is hereinafter called the
"U.S. PROSPECTUS" and any form of final prospectus to be used in Canada
by the Canadian Underwriters to market the Securities is hereinafter
called a "CANADIAN PROSPECTUS"; any reference herein to any U.S.
Preliminary Prospectus or the U.S. Prospectus shall be deemed to refer
to and include the documents incorporated by reference therein pursuant
to Item 12 of Form S-3 under the U.S. Securities Act (the "INCORPORATED
DOCUMENTS"), as of the date of such U.S. Preliminary Prospectus or the
U.S. Prospectus shall be deemed to refer to and include any documents
filed after the date of such U.S. Preliminary Prospectus or U.S.
Prospectus, as the case may be, under the U.S. Exchange Act, and
incorporated by reference in such U.S. Preliminary Prospectus or U.S.
Prospectus, as the case may be.
(3) No order preventing or suspending the use of any U.S. Preliminary
Prospectus or Canadian Preliminary Prospectus has been issued by the
SEC or an applicable Canadian securities regulatory authority in any of
the Qualifying Provinces, and each U.S. Preliminary Prospectus and
Canadian Preliminary Prospectus, at the time of filing thereof,
conformed in all material respects to the requirements of the U.S.
Securities Act and the rules and regulations of the SEC thereunder, and
the Canadian Securities Laws, respectively, and did not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(4) The documents incorporated by reference in the U.S. Prospectus, when
they became effective or were filed with the SEC, as the case may be,
conformed in all material respects to the requirements of the U.S.
Securities Act or the U.S. Exchange Act, as applicable, and the rules
and regulations of the SEC thereunder, and none of such documents
contained an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading; and any further documents so filed and
incorporated by reference in the U.S. Prospectus or any further
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amendment or supplement thereto, when such documents became effective
or are filed with the SEC, as the case may be, will conform in all
material respects to the requirements of the U.S. Securities Act or the
U.S. Exchange Act, as applicable, and the rules and regulations of the
SEC thereunder, and will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(5) The U.S. Registration Statement and any U.S. Preliminary Prospectus, at
the time each was filed with the SEC pursuant to Rule 424(b) under the
U.S. Securities Act and when delivered to the U.S. Agents for their use
in marketing the Securities conform, and the U.S. Prospectus at the
time it is filed with the SEC pursuant to Rule 424(b) under the U.S.
Securities Act, when delivered to the U.S. Agents for their use in
making confirmations of sales of the Securities, and at the Closing
Date (as defined herein) do not and will not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading and any further amendments or supplements to the U.S.
Registration Statement or the U.S. Prospectus will conform, in all
material respects to the requirements of the U.S. Securities Act and
the rules and regulations of the SEC thereunder and do not and will
not, as of the applicable effective date as to the U.S. Registration
Statement and any amendment thereto and as of the applicable filing
date as to the U.S. Prospectus and any amendment or supplement thereto,
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading.
(6) The Canadian Preliminary Prospectus, at the time it was filed with the
SEC pursuant to Rule 424(b) under the U.S. Securities Act and when
delivered to the Canadian Underwriters for their use in marketing the
Securities conforms, and the Canadian Prospectus at the time it is
filed with the SEC pursuant to Rule 424(b) under U.S. Securities Act,
when delivered to the Canadian Underwriters for their use in making
confirmations of sales of the Securities, and at the Closing Date (as
defined herein) will not and any further amendments or supplements to
the Canadian Prospectus will conform, in all material respects to the
requirements of the U.S. Securities Act and the rules and regulations
of the SEC thereunder and do not and will not, as of the applicable
filing date, contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading.
(7) The U.S. Prospectus and the Canadian Prospectus, and any supplements
thereto, shall each have been filed with the SEC within the time period
prescribed for such filing by Rule 424(b) under the U.S. Securities
Act; and all requests for additional information on the part of the SEC
in connection with the U.S. Registration Statement shall have been
complied with to the reasonable satisfaction of the U.S. Agents.
SECTION 3 DUE DILIGENCE
Prior to the Time of Closing, and, if applicable, prior to the filing
of any amendment to the U.S. Prospectus, including on any intervening weekends,
the Corporation shall allow the U.S. Agents to participate fully in the
preparation of such documents and shall allow the U.S.
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Agents to conduct all due diligence that the U.S. Agents may require to conduct
in order to fulfil their obligations as agents and in order to enable the U.S.
Agents responsibly to execute any certificate required to be executed by them,
provided, however, that this Section 3 is not intended to operate as a condition
of the Offering.
SECTION 4 CONDITIONS OF THE OFFERING
The U.S. Agents' obligations under this Agreement are conditional upon
and subject to:
(1) the U.S. Agents receiving at the Time of Closing favourable legal
opinions to be delivered to the U.S. Agents by Field Xxxxxxxx Perraton
LLP, Canadian counsel to the Corporation and Stoel Rives LLP, the
Corporation's U.S. counsel (who may rely, to the extent appropriate in
the circumstances, on the opinions of local counsel acceptable to
counsel to the Corporation as to the qualification or the registration
of the Securities for sale to the public in Canada and the United
States and as to other matters governed by the laws of the Qualifying
Provinces other than the provinces in which they are qualified to
practice and may rely, to the extent appropriate in the circumstances,
as to matters of fact on certificates of officers, of public officials
and Exchange officials or of the auditors or transfer agent of the
Corporation) dated the Closing Date, addressed to the U.S. Agents and
their counsel, as to those matters set forth in Schedule B hereto,
dated the Closing Date, and in form and substance satisfactory to the
U.S. Agents and their counsel;
(2) the U.S. Agents having received the comfort letter referred to in
Section 9(1)(a);
(3) the U.S. Agents having received a comfort letter, dated the Closing
Date, in form and substance satisfactory to the U.S. Agents, acting
reasonably, bringing forward to a date not more than two business days
prior to the Closing Date the information contained in the comfort
letter referred to in Section 9(1)(a);
(4) the U.S. Agents receiving at the Time of Closing a legal opinion (or
opinions), dated the Closing Date in form and substance satisfactory to
the U.S. Agents and their counsel, addressed to the U.S. Agents and
their counsel, from local counsel to the Corporation, as to mining
title matters with respect to each of the Material Resource Properties;
(5) the U.S. Agents receiving at the Time of Closing a legal opinion (or
opinions) dated the Closing Date, in form and substance satisfactory to
the U.S. Agents and their counsel, addressed to the U.S. Agents and
their counsel, from local counsel to the Corporation, stating that each
of Caystar Holdings, Bogoso Holdings, Bogoso Gold Limited and Wasford
Holdings has been duly created and is validly existing under the laws
of the jurisdiction in which it was incorporated, amalgamated or
continued, and that the Corporation or a Material Subsidiary owns all
of the issued and outstanding share capital of each such corporation,
except as set out in Schedule A, in each case addressed to the U.S.
Agents and their counsel, dated the Closing Date, and in form and
substance satisfactory to the U.S. Agents and their counsel;
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(6) at the Time of Closing, there having been no material adverse change in
the business, affairs, operations, assets, liabilities or financial
condition of the Corporation on a consolidated basis since the date
hereof;
(7) at the Time of Closing, CIBC Mellon Trust Company, at its principal
office in Vancouver, having been duly appointed as the transfer agent
and registrar for the Common Shares and warrant trustee for the
Warrants and the Warrant Indenture relating to the Warrants having been
executed by the Corporation and CIBC Mellon Trust Company; and
(8) the Canadian Underwriting Agreement having been executed by the
Corporation and the Canadian Underwriters, and none of the Canadian
Underwriters shall have relied upon any rights of termination in the
Canadian Underwriting Agreement to terminate the offering of the
Securities in Canada and all conditions to the Canadian Underwriters
obligations thereunder having been waived or satisfied;
(9) the Corporation delivering a certificate signed on behalf of the
Corporation by the Chief Executive Officer of the Corporation and the
Chief Financial Officer of the Corporation, addressed to the U.S.
Agents and dated the Closing Date, in a form satisfactory to the U.S.
Agents and their counsel, certifying for and on behalf of the
Corporation and not in their personal capacities that, to the actual
know ledge of the persons signing such certificate, after having made
due inquiry:
(a) the Corporation has complied in all respects with all
covenants and satisfied all terms and conditions of this U.S.
Agreement on its part to be complied with and satisfied at or
prior to the Time of Closing on the Closing Date;
(b) no order, ruling or determination having the effect of ceasing
or suspending trading in any securities of the Corporation or
prohibiting the sale of the Securities or any of the
Corporation's issued securities has been issued and no
proceeding for such purpose is pending or, to the knowledge of
such officers, threatened; and
(c) all of the representations and warranties made by the
Corporation in this U.S. Agreement are true and correct as of
the Time of Closing with the same force and effect as if made
at and as of the Time of Closing after giving effect to the
transactions contemplated hereby;
(10) the National Association of Securities Dealers, Inc. ("NASD") has
confirmed that it has not raised any objection with respect to the
fairness and reasonableness of the underwriting terms and arrangements
related to the offering;
(11) the U.S. Agents shall have received favourable opinions of Stikeman
Elliott and Xxxxxx & Xxxxxxx LLP, their Canadian and U.S. counsel,
respectively, as to such matters as the U.S. Agents shall reasonably
request; and
(12) the U.S. Agents receiving at the Time of Closing such further
certificates, opinions of counsel and other documentation from the
Corporation as are consistent with the transactions contemplated
herein.
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SECTION 5 COVENANTS OF THE U.S. AGENTS
The U.S. Agents:
(a) shall offer or arrange the offer of the Securities for sale to
the public, directly and through other investment dealers and
brokers (the U.S. Agents, together with such other investment
dealers and brokers, are referred to herein as the "SELLING
FIRMS"), only as permitted by and in compliance with all
relevant laws and regulatory requirements (including under the
U.S. Securities Act), upon the terms and conditions set forth
in the U.S. Prospectus and in this U.S. Agreement and will
require each Selling Firm to so agree;
(b) shall not solicit offers to purchase or sell the Securities so
as to require registration thereof or the filing of a
prospectus or similar document with respect thereto under the
laws of any jurisdiction other than the United States, and
will require each Selling Firm to agree with the U.S. Agents
not to so solicit or sell. In this connection, the U.S. Agents
agree that they will not offer or sell any of the Securities
constituting a part of their allotment within Canada except,
if applicable, through the Canadian Underwriters on the terms
and conditions set forth in the Canadian Underwriting
Agreement and the Inter-Dealer Agreement and in compliance
with the Canadian Securities Laws;
(c) agree that if they offer to sell or sell any Securities in
jurisdictions other than the United States and Canada (which
may include Europe), such offers and sales shall be effected
in accordance and compliance with the applicable laws of such
jurisdictions and shall be effected in such manner so as not
to: (i) require registration of the Securities, or the filing
of a prospectus or other document with respect thereto; or
(ii) subject the Corporation to any continuous disclosure or
similar reporting requirements under the laws of any
jurisdiction outside the provinces of Canada or the United
States;
(d) shall use all reasonable efforts to complete and to cause the
other Selling Firms to complete the distribution of the
Securities as soon as practicable;
(e) shall notify the Corporation when, in their opinion, the U.S.
Agents and the other Selling Firms have ceased distribution of
the Securities; and
(f) shall comply with all U.S. Securities Laws with respect to the
use of "green sheets" and other marketing materials.
(2) Notwithstanding the foregoing, no U.S. Agent shall be liable to the
Corporation with respect to any other U.S. Agent under this Section 5.
SECTION 6 REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
(1) The Corporation hereby represents and warrants to the U.S. Agents,
intending that the same may be relied upon by the U.S. Agents, that:
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(a) each of the Corporation and the Material Subsidiaries has been
duly incorporated, continued or amalgamated and organized and
is validly existing under the laws of its jurisdiction of
incorporation, continuance or amalgamation, has all requisite
corporate power and authority to carry on its business as now
conducted and as contemplated by the U.S. Prospectus, and to
own, lease and operate its properties and assets, and the
Corporation has all requisite power and authority to carry out
its obligations under this U.S. Agreement;
(b) the only major operating subsidiaries of the Corporation are
listed in Schedule A;
(c) the Corporation or one of its Material Subsidiaries owns the
issued and outstanding shares of each of the Material
Subsidiaries as set out in Schedule A, in each case free and
clear of any pledge, lien, security interest, charge, claim or
encumbrance;
(d) upon completion of the acquisition of the Wassa Transactions
(as defined below) as described in the U.S. Preliminary
Prospectus and the U.S. Prospectus, Wasford Holdings will own
90% of the issued and outstanding shares of Wexford Goldfields
Limited, free and clear of any pledge, lien, security
interest, charge, claim or encumbrance, other than as is held
for the benefit of Bayerische Hypo-und Vereinsbank AG,
Dresdner Bank AG, Fortis Bank (Nederland) N.V. and Standard
Bank London Limited (the "SECURED BANKS"), which banks are
providing funding in respect of the acquisition;
(e) the Corporation meets the requirements for the use of Form S-3
under the U.S. Securities Act;
(f) no order, ruling or determination having the effect of
ceasing, suspending or restricting trading in any securities
of the Corporation or the sale of the Common Shares or
Warrants comprised in the Securities has been issued and no
proceedings, investigations or inquiries for such purpose are
pending or, to the Corporation's knowledge, threatened;
(g) the Corporation's Common Shares are posted and listed for
trading on the Exchanges and the Corporation is not in default
in any material respect of any of the listing requirements of
the Exchanges;
(h) other than options under the Corporation's Stock Option Plans,
the Corporation is not a party to and has not entered into any
agreement, warrant, option, right or privilege reasonably
capable of becoming an agreement, for the purchase,
subscription or issuance of any Common Shares or securities
convertible into or exchangeable for Common Shares other than
as set out in Schedule C;
(i) as at the date hereof, the authorized share capital of the
Corporation consists of an unlimited number of Common Shares
and an unlimited number of First Preferred shares, of which
67,000,703 Common Shares and no First Preferred shares are
issued and outstanding;
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(j) the Corporation and each of the Material Subsidiaries have
conducted and are conducting their respective businesses in
compliance with all applicable laws, rules, regulations,
tariffs, orders and directives, including without limitation,
all laws, regulations and statutes relating to mining and to
mining claims, concessions or leases, and environmental,
health and safety laws, rules, regulations, or policies or
other lawful requirements of any governmental or regulatory
bodies having jurisdiction over the Corporation and the
Material Subsidiaries in each jurisdiction in which the
Corporation or the Material Subsidiaries carries on their
respective businesses, other than those in respect of which
the failure to comply would not individually or in the
aggregate be material, and each of the Corporation and the
Material Subsidiaries holds all certificates, authorities,
permits, licenses, registrations and qualifications
(collectively, the "AUTHORITIES") in all jurisdictions in
which each carries on its business and which are material for
and necessary or desirable to carry on their respective
businesses as now conducted and to the best of the
Corporation's knowledge, information and belief all the
Authorities are valid and existing and in good standing and
none of the Authorities contain any burdensome term,
provision, condition or limitation which has or is likely to
have any material adverse effect on the business of the
Corporation and the Material Subsidiaries (taken as a whole)
as now conducted or as proposed to be conducted, and neither
the Corporation nor any of the Material Subsidiaries has
received any notice of proceedings relating to the revocation
or modification of any of the Authorities which, singly or in
the aggregate, if the subject of an unfavourable decision,
ruling or finding, would materially adversely affect the
business, operations, financial condition, or income of the
Corporation or the Material Subsidiaries (taken as a whole) or
any notice of the revocation or cancellation of, or any
intention to revoke or cancel, any of the mining claims,
concessions or leases comprising:
(i) the Bogoso property;
(ii) the Prestea property;
(iii) the Xxxx Xxxxxx property;
(iv) the Yaou and Dorlin properties; and
(v) the St. Elie property;
(each as described in the Form 10-K of the Corporation dated
March 25, 2002, collectively referred to herein as the
"RESOURCE PROPERTIES", and the Bogoso property and the Prestea
property collectively being referred to herein as the "
MATERIAL RESOURCE PROPERTIES");
(k) neither the Corporation nor any of the Material Subsidiaries
has received any notice of the revocation or cancellation of,
or any intention to revoke or cancel, any of the material
mining claims, concessions or leases comprising the Wassa
property;
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(l) the Corporation and each of its Material Subsidiaries have
good and marketable title to all assets owned by them free and
clear of all liens, charges and encumbrances, other than as
will be held for the benefit of the Secured Banks, which banks
are providing funding in respect of the acquisition of Wexford
Goldfields Limited, upon completion of such acquisition, and
other than such liens, charges and encumbrances that are not
individually or in the aggregate material to the Corporation
or the Material Subsidiaries;
(m) all interests in the Resource Properties are owned, leased or
held by the Corporation or its Material Subsidiaries as owner
or lessee thereof, are so owned with good and marketable title
or are so leased with good and valid title, are in good
standing, are valid and enforceable, are free and clear of any
liens, charges or encumbrances and no royalty is payable in
respect of any of them, except as set out in the U.S.
Prospectus or the Incorporated Documents or as are not
individually or in the aggregate material to the Corporation
or the Material Subsidiaries, or other than as would not have
a material effect on the value of such interests; no other
material property rights are necessary for the conduct or
intended conduct of the Corporation's or the Material
Subsidiaries' business and there are no restrictions on the
ability of the Corporation or the Material Subsidiaries to
use, transfer or otherwise exploit any such property rights,
except as set out in the U.S. Prospectus or the Incorporated
Documents;
(n) the Corporation is in the process of acquiring, through its
wholly-owned subsidiary Wasford Holdings, 90% of the equity of
Wexford Goldfields Limited, which is in the process of
acquiring all interests in the Wassa gold property in Ghana`
(the "Wassa Transactions"). The Wassa property and the current
terms of the Wassa Transactions are as described in the U.S.
Preliminary Prospectus and the U.S. Prospectus. The
Corporation expects that the Wassa Transactions will close by
September 1, 2002. The Corporation knows of no fact, event,
occurrence, announcement or any other thing that would, or
might reasonably be expected to, materially increase the costs
of the closing of the Wassa Transactions, or materially delay
the closing of the Wassa Transactions;
(o) (A) the Corporation and its Material Subsidiaries are in
compliance with all material terms and provisions of all
contracts, agreements, indentures, leases, instruments and
licences material to the conduct of its business and (B) all
such contracts, agreements, indentures, leases, policies,
instruments and licences are valid and binding in accordance
with their terms and in full force and effect;
(p) to the best of the Corporation's knowledge, information and
belief none of the real property (and the buildings
constructed thereon) in which the Corporation or any of the
Material Subsidiaries has a direct or indirect interest,
whether leasehold or fee simple or otherwise (the "REAL
PROPERTY"), or upon or within which it has operations, is
subject to any judicial or administrative proceeding alleging
the violation of any federal, provincial, state or municipal
environmental, health or safety statute or regulation,
domestic or foreign, or is subject to any investigation
concerning whether any remedial action is needed to
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respond to a release of any Hazardous Material (as defined
below) into the environment. Neither the Corporation nor any
Material Subsidiary nor, to the Corporation's knowledge, any
occupier of the Real Property, has filed any notice under any
federal, provincial, state or municipal law, domestic or
foreign, indicating past or present treatment, storage or
disposal of a Hazardous Material. Except in compliance with
applicable environmental laws, none of the Real Property has
at any time been used by the Corporation or a Material
Subsidiary or, to the best of the Corporation's knowledge,
information and belief by any other occupier, as a waste
storage or waste disposal site. The Corporation, on a
consolidated basis, has no contingent liability of which it
has knowledge in connection with any release of any Hazardous
Material on or into the environment from any of the Real
Property or operations thereon. Neither the Corporation nor
any Material Subsidiary nor, to the best of the Corporation's
knowledge, any occupier of the Real Property, generates,
transports, treats, processes, stores or disposes of any waste
on any of the Real Property in contravention of applicable
federal, provincial, state or municipal laws or regulations
enacted for the protection of the natural environment
(including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata) or human
health or wildlife. To the Corporation's knowledge, no
underground storage tanks or surface impoundments containing a
petroleum product or Hazardous Material are located on any of
the Real Property in contravention of applicable federal,
provincial, state or municipal laws or regulations, domestic
or foreign, enacted for the protection of the natural
environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface
strata), human health or wildlife. For the purposes of this
Section 6(1)(p), "HAZARDOUS MATERIAL" means any contaminant,
chemical, pollutant, subject waste, hazardous waste,
deleterious substance, industrial waste, toxic matter or any
other substance that when released into the natural
environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface
strata) is likely to cause, at some immediate or future time,
harm or degradation to the natural environment (including,
without limitation, ambient air, surface water, ground water,
land surface or subsurface strata) or risk to human health
and, without restricting the generality of the foregoing,
includes any contaminant, chemical, pollutant, subject waste,
deleterious substance, industrial waste, toxic matter or
hazardous waste as defined by applicable federal, provincial,
state or municipal laws or regulations enacted for the
protection of the natural environment (including, without
limitation, ambient air, surface water, ground water, land
surface or subsurface strata), or human health or wildlife;
(q) except as disclosed in the U.S. Prospectus or the Incorporated
Documents, the Corporation and each of its Material
Subsidiaries maintain appropriate insurance against loss of,
or damage to, their assets for all insurable risks on a
repair, reinstatement or replacement cost basis, and all of
the policies in respect of such insurance coverage are in good
standing in all respects and not in default;
- 13 -
(r) the consolidated audited financial statements of the
Corporation for its fiscal years ended December 31, 1999,
December 31, 2000 and December 31, 2001 and the unaudited
interim financial statements of the Corporation for the
quarter ended March 31, 2002 (collectively the "CORPORATION'S
FINANCIAL STATEMENTS"), copies of which are incorporated by
reference in the U.S. Preliminary Prospectus and the U.S.
Prospectus, including any reconciliation of financial
statements prepared in accordance with generally accepted
accounting principles in Canada with generally accepted
accounting principles in the United States, are true and
correct in every material respect and present fairly and
accurately the financial position and results of the
operations of the Corporation on a consolidated basis for the
periods then ended and the Corporation's Financial Statements
have been prepared in accordance with generally accepted
accounting principles in Canada applied on a consistent basis,
and comply as to form in all material respects with the
applicable accounting requirements of the U.S. Securities Act
and the U.S. Exchange Act, as applicable, and the related
published rules and regulations thereunder;
(s) the execution and delivery of and the performance by the
Corporation of this U.S. Agreement and the Canadian
Underwriting Agreement and the consummation of the
transactions contemplated hereby and thereby, including the
issuance and sale of the Common Shares comprised in the
Securities, the creation, issuance and sale of the Warrants
comprised in the Securities and the creation and issuance of
the Underwriters' Warrants (as defined in the Canadian
Underwriting Agreement) have been authorized by all necessary
action on the part of the Corporation;
(t) this U.S. Agreement and the Canadian Underwriting Agreement
have been duly executed and delivered by the Corporation and
each such agreement is a legal, valid and binding obligation
of, and is enforceable against, the Corporation in accordance
with its terms (subject to bankruptcy, insolvency or other
laws affecting the rights of creditors generally, the
availability of equitable remedies and the qualification that
rights to indemnity and waiver of contribution may be contrary
to public policy);
(u) except as disclosed in the U.S. Prospectus or the Incorporated
Documents, since March 31, 2002: (A) there has been no
material change in the business, affairs, operations, assets,
liabilities or financial condition of the Corporation on a
consolidated basis; (B) no current reports or other documents
have been filed on a confidential basis with the SEC; (C)
there has been no transaction entered into by the Corporation
and not disclosed which is material to the Corporation; (D)
the Corporation and its Material Subsidiaries, on a
consolidated basis, have not incurred any material liability
or obligation, indirect, direct or contingent, not in the
ordinary course of business, nor entered into any material
transaction or agreement not in the ordinary course of
business; and (E) there has been no dividend or distribution
of any kind declared, paid or made by the Corporation or,
except for dividends paid to the Corporation or its Material
Subsidiaries, any of its Material Subsidiaries, on any class
of capital stock or repurchase or
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redemption by the Corporation or any of its Material
Subsidiaries of any class of capital stock;
(v) the directors and officers of the Corporation and their
compensation arrangements with the Corporation, whether as
directors, officers or employees of the Corporation, are as
disclosed in the U.S. Prospectus or in the Incorporated
Documents if required to be so disclosed;
(w) all of the material contracts and agreements of the
Corporation and of its Material Subsidiaries not made in the
ordinary course of business (collectively the "MATERIAL
CONTRACTS") have been disclosed in the Incorporated Documents;
(x) all tax returns, reports, elections, remittances and payments
of the Corporation and of its Material Subsidiaries required
by law to have been filed or made in any applicable
jurisdiction, have been filed (or are in the process of being
prepared for filing, which delayed filing will not have an
adverse effect on the Corporation or any of its Material
Subsidiaries) or made (as the case may be), other than for
taxes being contested in good faith, or with respect to which
the failure to file or make would not have a material adverse
effect, either individually or in the aggregate, to the
Corporation and the Material Subsidiaries, and, to the
knowledge of the Corporation, are substantially true, complete
and correct and all taxes of the Corporation and of its
Material Subsidiaries, in respect of which payment or accrual
is required under applicable law, other than taxes being
contested in good faith, have been so paid or accrued in the
Corporation's Financial Statements;
(y) the Corporation is not and, after giving effect to the
offering and sale of the Securities, will not be an
"investment company" or an entity "controlled" by an
"investment company" within the meaning of the United States
Investment Company Act of 1940, as amended;
(z) there is no material action, suit, proceeding, investigation
or judgment pending, or to the Corporation's knowledge,
threatened or outstanding against or affecting the Corporation
or any Material Subsidiary (or their respective officers and
directors) at law or in equity or before or by any federal,
provincial, state, municipal or other governmental department,
commission, board or agency, domestic or foreign, which in any
way materially adversely affects or may materially adversely
affect the business, operations or condition of the
Corporation or any Material Subsidiary (financial or
otherwise) or its property or assets or which questions or may
question the validity of the creation, issuance or sale, of
the Securities or any action taken or to be taken by the
Corporation or any Material Subsidiary pursuant to or in
connection with this U.S. Agreement or any other material
contract to which the Corporation or any Material Subsidiary
is a party, as the case may be;
(aa) except as have been made or obtained prior to Closing, under
the laws of the Qualifying Provinces and the United States, no
consent, approval, authorization, order, filing, registration
or qualification of or with any court, governmental
- 15 -
agency or body or regulatory authority is required for the
creation, issue, sale and delivery (as the case may be) of the
Securities or the Underwriters' Warrants or the consummation
by the Corporation of the transactions contemplated in this
Agreement and the Canadian Underwriting Agreement;
(bb) all necessary corporate action has been taken or will have
been taken prior to the Time of Closing by the Corporation so
as to validly issue and sell the Common Shares comprised in
the Securities, to validly create and issue the Underwriters'
Warrants to the Canadian Underwriters and to validly create,
issue and sell the Warrants comprised in the Securities and
upon receipt by the Corporation of the purchase price as
consideration for the issue of the Securities, the Common
Shares comprised in the Securities will be validly issued and
outstanding as fully paid and non-assessable shares of the
Corporation;
(cc) the attributes of the Securities conform in all material
respects with the description thereof contained in the U.S.
Registration Statement;
(dd) (i) neither the Corporation nor any of its Material
Subsidiaries nor, any employee or agent of the Corporation or
any Material Subsidiary, has made any unlawful contribution or
other payment to any official of, or candidate for, any
federal, state, provincial or foreign office, or failed to
disclose fully any contribution, in violation of any law, or
(ii) made any payment to any foreign, United States or state
governmental officer or official, or other person charged with
similar public or quasi-public duties, other than payments
required or permitted by the laws of the United States;
(ee) the Corporation and each of its Material Subsidiaries
maintains a system of internal accounting controls sufficient
to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with
generally accepted accounting principles in Canada and to
maintain asset accountability; (iii) access to assets is
permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability
for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any
differences;
(ff) neither the Corporation nor any of the Company's officers,
directors or affiliates has taken, and at the Closing Date
will have taken, directly or indirectly, any action which has
constituted, or might reasonably be expected to constitute,
the stabilization or manipulation of the price of sale or
resale of the Securities;
(gg) the Corporation has timely and properly filed (i) with the SEC
all reports and other documents required to have been filed by
it with the SEC pursuant to the U.S. Securities Act and the
rules and regulations, and (b) all reports or other documents
required to have been filed by it with the securities
commission or similar regulatory body of each province in
Canada, the Toronto Stock Exchange or any other applicable
Canadian governmental authorities. True and complete
- 16 -
copies of all such reports and other documents have been
delivered to the U.S. Agents;
(hh) neither the Corporation nor any Material Subsidiary (x) was a
personal holding company within the meaning of Section 542 of
the Internal Revenue Code of 1986, as amended (the "CODE") (a
"PHC"), a foreign personal holding company with the meaning of
Section 542 of the Code (an "FPHC"), or a controlled foreign
corporation with the meaning of Section 957 of the Code (a
"CFC") for its taxable year ended December 31, 1995 or for any
previous taxable year, or (y) expects that it will constitute
a PHC, a FPHC or a CFC for its current taxable year ending
December 31, 2001;
(ii) the Corporation (x) was not a passive foreign investment
company (a "PFIC") within the meaning of section 1296 of the
Code for its taxable year ended December 31, 2001 or for any
previous taxable year and (y) expects that it will not
constitute a PFIC for its current taxable year ending December
31, 2002;
(jj) CIBC Mellon Trust Company, at its principal office in
Vancouver, has been duly appointed as the transfer agent and
registrar for the Common Shares; and
(kk) the forms of the certificate representing the Warrants have
been duly approved by the Corporation and comply with the
provisions of the Canada Business Corporations Act and of the
TSX.
(2) The representations and warranties made by the Corporation to the
Canadian Underwriters in the Canadian Underwriting Agreement are hereby
incorporated by reference, and shall have the same effect as though
they were made to the U.S. Agents under this U.S. Agreement.
SECTION 7 REPRESENTATIONS AND WARRANTIES OF THE U.S. AGENTS
Each U.S. Agent hereby severally, and not jointly, represents and warrants that:
(a) it is, and will remain so, until the completion of the
Offering, appropriately registered under applicable U.S.
Securities Laws so as to permit it to lawfully fulfil its
obligations hereunder and it is, and will remain so, until the
completion of the Offering, a member in good standing of the
National Association of Securities Dealers, Inc.; and
(b) it has good and sufficient right and authority to enter into
this U.S. Agreement and complete its transactions contemplated
under this U.S. Agreement on the terms and conditions set
forth herein.
SECTION 8 COVENANTS OF THE CORPORATION
(1) The Corporation covenants with the U.S. Agents that:
(a) during the period from the date hereof to the completion of
the distribution of the Securities, the Corporation will
promptly advise the U.S. Agents in writing of the full
particulars of any material change in the business, affairs,
operations,
- 17 -
assets, liabilities or financial condition of the Corporation,
on a consolidated basis, or any material change in any
statement contained in the U.S. Prospectus or the Canadian
Prospectus, as such documents exist immediately prior to such
change, which change is, or may be, of such nature as would
result in any of such documents, as they exist immediately
prior to such change, containing an untrue statement of a
material fact or an omission to state therein a material fact
that is required to be stated or that is necessary to make the
statements therein not misleading in light of the
circumstances in which they were made or which would result in
any of such documents, as they exist immediately prior to such
change not complying with the U.S. Securities Act. The
Corporation will promptly prepare and file with the SEC an
amendment to the U.S. Registration Statement or supplement to
the U.S. Prospectus and/or the Canadian Prospectus which in
the opinion of the U.S. Agents, acting reasonably, may be
necessary or advisable to correct such untrue or misleading
statement or omission. The Corporation shall in good faith
discuss with the U.S. Agents any change in circumstances
(actual, anticipated, contemplated or threatened) which is of
such a nature that there may be a reasonable doubt as to
whether written notice need be given to the U.S. Agents under
the provisions of this Section 8(1)(a);
(b) the Corporation will deliver without charge to the U.S.
Agents, as soon as practicable, and in any event no later than
July 18, 2002 in the case of the U.S. Prospectus and the
Canadian Prospectus, and thereafter from time to time during
the distribution of the Securities, in such cities as the U.S.
Agents shall notify the Corporation, as many commercial copies
of each of the U.S. Preliminary Prospectus, the Canadian
Preliminary Prospectus, the U.S. Prospectus and the Canadian
Prospectus, respectively (and in the case of an amendment or
supplement, such amendment or supplement), as the U.S. Agents
may reasonably request for the purposes contemplated by the
U.S. Securities Laws and the Canadian Securities Laws and such
delivery shall constitute consent by the Corporation to the
use by the U.S. Agents, the Canadian Underwriters and the
Selling Firms of such documents in connection with the
Offering in the United States and Canada, subject to the
provisions of applicable U.S. Securities Laws and Canadian
Securities Laws;
(c) the Corporation shall use its best efforts to arrange that the
Common Shares comprised in the Securities are listed and
posted for trading on the TSX and the AMEX on the Closing
Date, and that the Warrants comprised in the Securities are
listed and posted for trading on the TSX on the Closing Date
subject only to the documentary filing requirements of each
such exchange;
(d) it will not: (i) offer, pledge, sell, contract to sell any
option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to
purchase, or otherwise lend, transfer or dispose of, directly
or indirectly, any Common Shares or securities convertible
into or exercisable or exchangeable for Common Shares; or (ii)
enter into any swap or other arrangement that transfers, in
whole or in part, any of the economic consequences of
ownership of Common Shares or such other securities, whether
- 18 -
any such transaction described in clause (i) or (ii) above is
to be settled by delivery of Common Shares or such other
securities, in cash or otherwise (other than the Securities
and other than in connection with the grant or exercise of
options, issuances under the Corporation's existing Stock
Option Plans or employee share purchase plan or any other
existing rights of conversion or securities issued as
consideration for an acquisition of assets or shares), for a
period ending 90 days after the closing of the Offering
without the prior written consent of the U.S. Lead Manager,
such consent not to be unreasonably withheld;
(e) it will apply the net proceeds from the sale of the Securities
as set forth under "Use of Proceeds" in the U.S. Prospectus;
(f) it will use its reasonable best efforts to make all necessary
arrangements with the Alternative Investment Market of the
London Stock Exchange in order that the Common Shares are
listed on that exchange within 6 months of the Closing Date;
and
(g) to make generally available to its securityholders as soon as
practicable, but in any event, not later than eighteen months
after the effective date of the Registration Statement (as
defined in Rule 158(c) under the U.S. Securities Act), an
earnings statement of the Corporation and its subsidiaries
(which need not be audited) complying with Section 11(a) of
the U.S. Securities Act and the rules and regulations of the
SEC thereunder (including at the option of the Corporation,
Rule 158).
SECTION 9 ADDITIONAL DOCUMENTS UPON FILING OF U.S. PROSPECTUS
(1) The U.S. Agents' obligations under this U.S. Agreement are conditional
upon the receipt by the U.S. Agents concurrently with the filing of the
U.S. Prospectus, of:
(a) a "long form" comfort letter dated the date of U.S. Prospectus
from the auditors of the Corporation, addressed to the U.S.
Agents and Canadian Underwriters, in form and substance
reasonably satisfactory to the U.S. Agents, relating to the
verification of the financial information and accounting data
and other numerical data of a financial nature contained in
the U.S. Prospectus and matters involving changes or
developments since the respective dates as of which specified
financial information is given in the U.S. Prospectus to a
date not more than two business days prior to the date of such
letter. Such letter shall further state that such auditors are
independent public accountants within the meaning of the U.S.
Securities Act and the appropriate rules and regulations
thereof, and that
(i) in their opinion the Corporation's financial
statements examined by them and included or
incorporated by reference in the U.S. Prospectus
comply in all material respects with the applicable
accounting requirements of the U.S. Securities Act
and the U.S. Exchange Act and the related published
rules and regulations;
- 19 -
(ii) In their opinion any unaudited pro forma financial
statements included or incorporated by reference in
the U.S. Registration Statement comply as to form in
all material respects with the requirements of the
U.S. Securities Act and the U.S. Exchange Act and the
related published rules and regulations, and all pro
forma adjustments have been properly applied to the
historical amounts in the compilation of those
statements;
(iii) they have performed the procedures specified by the
American Institute of Certified Accountants for a
review of interim financial information described in
Statement of Auditing Standards No. 71, on the
unaudited financial statements included or
incorporated by reference in the U.S. Registration
Statement;
(iv) on the basis of the review referred to above nothing
came to their attention that caused them to believe
that the unaudited financial statements included or
incorporated by reference in the U.S. Registration
Statement, including any reconciliation of financial
statements prepared in accordance with generally
accepted accounting principles in Canada with
generally accepted accounting principles in the
United States, do not comply as to form in all
material respects with the requirements of the U.S.
Securities Act and the U.S. Exchange Act and the
related published rules and regulations, or that any
material modification should be made to such
unaudited financial statements for them to be in
conformity with generally accepted accounting
principals;
(v) they have compared specified United States and
Canadian dollar amounts (or percentages derived from
such United States and Canadian dollar amounts) and
other financial information contained in the U.S.
Prospectus (in each case to the extent that such
dollar amounts, percentages and other financial
information are derived from the general accounting
records of the Corporation and its subsidiaries
subject to the internal controls of the Corporation's
accounting system or are derived from such records by
analysis or computation) with the results obtained
from inquiries, a reading of such general accounting
records and other procedures specified in such letter
and have found such United States and Canadian dollar
amounts, percentages and other financial information
to be in agreement with such results, except as
otherwise specified in such letter;
(vi) they compared at the date of the latest available
balance sheet read by such auditors, or at a
subsequent specified date not more than two business
days prior to the date of the U.S. Prospectus, there
was any material change in the capital or any
increase in short term indebtedness or long-term debt
of the Corporation and its Material Subsidiaries
consolidated or, at the date of the latest available
balance sheet read by such auditors, there was any
material decrease in consolidated net current assets
or net assets as compared with amounts shown on the
- 20 -
latest balance sheet included or incorporated by
reference in the U.S. Prospectus; and
(vii) they compared for the period from the date of the
latest income statement included in the U.S.
Prospectus to the date of the latest available income
statement read by such auditors or at a subsequent
specified date not more than two business days prior
to the date of the U.S. Prospectus, there were any
material decreases as compared with the corresponding
period of the previous year and with the period of
corresponding length ended the date of the latest
income statement included in the U.S. Prospectus, in
the consolidated revenue, net operating income, or
total or per share amounts of net income;
(b) true hand-signed copies of the U.S. Registration Statement and
all amendments thereto as required by U.S. Securities Laws;
and
(c) a copy of any other document required to be filed by the
Corporation with SEC under U.S. Securities Laws.
(2) The comfort letter referred to in Section 9(1)(a) shall be in addition
to any comfort letters required by the terms of the Canadian
Underwriting Agreement to be delivered to the Canadian Underwriters.
(3) Similar documents and comfort letters shall be delivered to the U.S.
Agents with respect to any amendment to the U.S. Prospectus (provided,
in the case of comfort letters, that the amendment to the U.S.
Prospectus contains financial, accounting or other numerical data of a
financial nature), or as required by the terms of the Canadian
Underwriting Agreement to be delivered to Canadian Underwriters.
SECTION 10 CLOSING
(1) The Offering will be completed at the offices of Stikeman Elliott in
Toronto at 8:00 a.m. (Toronto time) on July 24, 2002 (the "TIME OF
CLOSING" and the "CLOSING DATE", respectively) or at such other time
and/or on such other date as the U.S. Agents and the Corporation may
agree upon, but in any event no later than August 7, 2002.
(2) At the Time of Closing, subject to the terms and conditions contained
in this U.S. Agreement, the Corporation shall deliver to the U.S.
Agents a certificate or certificates representing the Offered
Securities against payment of the purchase price by certified cheque,
bank draft or wire transfer, dated the Closing Date, payable to the
Corporation. The Corporation will, at the Time of Closing and upon such
payment of the purchase price to the Corporation, make payment in full
of the Underwriting Fee.
SECTION 11
The U.S. Agents shall have the right to sell Additional Units (as such
term is defined in the Canadian Underwriting Agreement) to the public upon the
terms and conditions for the sale of such securities specified in the Canadian
Underwriting Agreement and the Inter-Dealer Agreement.
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SECTION 12 TERMINATION RIGHTS
(1) All terms and conditions set out herein shall be construed as
conditions and any breach or failure by the Corporation to comply with
any such conditions in favour of the U.S. Agents shall entitle the U.S.
Agents to terminate their obligations under this U.S. Agreement by
written notice to that effect given to the Corporation prior to the
Time of Closing on the Closing Date. The Corporation shall use its
reasonable best efforts to cause all conditions in this U.S. Agreement
to be satisfied. It is understood that the U.S. Agents may waive in
whole or in part, or extend the time for compliance with, any of such
terms and conditions without prejudice to their rights in respect of
any subsequent breach or non-compliance, provided that to be binding on
the U.S. Agents, any such waiver or extension must be in writing.
(2) In addition to any other remedies that may be available to the U.S.
Agents, the U.S. Agents shall each be entitled, at their option, to
terminate and cancel, without any liability on the U.S. Agents' part,
their obligations under this U.S. Agreement, by giving written notice
to the Corporation at any time at or prior to the Time of Closing on
the Closing Date:
(a) if there should occur any suspension or limitation of trading
in securities generally on the TSX or AMEX, or if a general
moratorium on commercial banking activities in Toronto or New
York should be declared by the relevant authorities, or if, in
relation to the Corporation, any inquiry, investigation or
other proceeding (whether formal or informal) is commenced,
threatened or announced or any order or ruling is issued by
any officer of such exchange or market, or by the SEC, or any
other regulatory authority in Canada or the United States, or
if any law or regulation under or pursuant to any statute of
Canada or of any province thereof or of the United States or
any state or territory thereof is promulgated or changed
which, in the reasonable opinion of the U.S. Agents (or any of
them) operates to prevent or materially restrict trading the
Common Shares or the distribution of the Securities or could
reasonably be expected to have a significant adverse effect on
the market price of the Common Shares or the Securities;
(b) if, after the date hereof and prior to the Time of Closing,
the state of financial markets in Canada or the United States
is such that, in the reasonable opinion of the U.S. Agents (or
either of them), the Securities cannot be marketed profitably,
either U.S. Agent shall be entitled, at its option, to
terminate its obligations under this Agreement by notice to
that effect given to the Corporation at or prior to the Time
of Closing;
(c) if any inquiry, investigation or other proceeding is commenced
or any other order is issued under or pursuant to any statute
of the United States or any state thereof (other than an
inquiry, investigation or other proceeding order based solely
upon the activities or alleged activities of any U.S. Agent or
Selling Firm) or Canada or any province thereof or there is
any change of law or the interpretation or administration
thereof by a securities regulator or other public authority,
which in the reasonable opinion of the U.S. Agent, operates to
prevent
- 22 -
or materially restrict the trading of the Common Shares or the
distribution of the Securities;
(d) if there shall occur any material change in the business,
affairs, operations, assets, liabilities or financial
condition of the Corporation on a consolidated basis or other
change in a material fact relating to the Corporation on a
consolidated basis which in the U.S. Agents' reasonable
opinion would be expected to have a significant adverse effect
on the market price or value of any of the Securities or the
Common Shares; or
(e) if there should develop, occur or come into effect or
existence any event, action, state, condition or major
financial occurrence of national or international consequence,
including without limiting the generality of the foregoing,
any military conflict, civil insurrection, or any terrorist
action, including, without limitation, military insurrection
(whether or not in connection with such conflict or
insurrection), or any law or regulation, which, in the U.S.
Agents' reasonable opinion, seriously adversely affects or
involves, or will seriously adversely affect or involve, the
Canadian or United States financial markets or the business,
operations or affairs of the Corporation on a consolidated
basis and/or prevents or materially restricts the trading of
the Common Shares or the distribution of the Securities.
(3) The U.S. Agents shall make reasonable best efforts to give notice to
the Corporation (in writing or by other means) of the occurrence of any
of the events referred to in Section 12(2), provided that neither the
giving nor the failure to give such notice shall in any way affect the
entitlement of the U.S. Agents to exercise this right at any time prior
to or at the Time of Closing.
(4) The rights of termination contained in this Section 12 as may be
exercised by the U.S. Agents are in addition to any other rights or
remedies the U.S. Agents may have in respect of any default, act or
failure to act or non-compliance by the Corporation in respect of any
of the matters contemplated by this U.S. Agreement.
(5) If the obligations of the U.S. Agents are terminated under this U.S.
Agreement pursuant to these termination rights, the Corporation's
liabilities to the U.S. Agents shall be limited to the Corporation's
obligations under Section 13, Section 14 and Section 15.
SECTION 13 INDEMNITY
(1) The Corporation agrees to indemnify and hold harmless each U.S. Agent,
and their respective directors, officers, employees and agents, and
each person, if any, who controls any U.S. Agent within the meaning of
Section 15 of the U.S. Securities Act or Section 20 of the U.S.
Exchange Act against any and all losses, claims, damages and
liabilities, joint or several (including any investigation, legal and
other expenses reasonably incurred in connection with, and any amount
paid in settlement of, any action, suit or proceeding or any claim
asserted), to which they, or any of them, may become subject under the
U.S. Securities Act, at common law or otherwise, insofar as such
losses, claims, damages or liabilities arise out of or are based upon
(i) any breach of
- 23 -
a representation or warranty of the Corporation contained herein or the
failure of the Corporation to comply with any of its obligations
hereunder, or (ii) any untrue statement or alleged untrue statement of
a material fact contained in the U.S. Preliminary Prospectus, the
Canadian Preliminary Prospectus, the U.S. Prospectus, the Canadian
Prospectus or the U.S. Registration Statement, or any amendment or
supplement thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as any such
untrue statement or omission or alleged untrue statement or omission
was made in such U.S. Preliminary Prospectus, the Canadian Preliminary
Prospectus, the U.S. Prospectus, the Canadian Prospectus or U.S.
Registration Statement, or such amendment or supplement, in reliance
upon and in conformity, with information furnished in writing to the
Corporation by or on behalf of any U.S. Agent or Canadian Underwriter
expressly for use in the preparation thereof; provided, however, that
the foregoing indemnity against losses, claims, damages or liabilities
is subject to the condition that, insofar as it relates to any untrue
statement or alleged untrue statement, omission or alleged omission
made in the U.S. Registration Statement, the U.S. Preliminary
Prospectus and the Canadian Preliminary Prospectus but eliminated or
remedied in the U.S. Prospectus and the Canadian Prospectus, such
indemnity shall not inure to the benefit of any U.S. Agent from whom
the person asserting any loss, claim, damage or liability purchased the
Securities which are the subject thereof (or to the benefit of any
person who controls such U.S. Agent) if such U.S. Agent failed to send
or give a copy of the U.S. Prospectus (or any amendment or supplement
thereto) to such person at or prior to the time such action is required
by the U.S. Securities Act.
(2) Each U.S. Agent agrees to indemnify and hold harmless the Corporation,
each person, if any, who controls the Corporation within the meaning of
Section 15 of the U.S. Securities Act or Section 20 of the U.S.
Exchange Act, each director of the Corporation and each officer of the
Corporation, against any and all losses, claims, damages and
liabilities, joint or several (including any investigation, legal and
other expenses reasonably incurred in connection with, and any amount
paid in settlement of, any action, suit or proceeding or any claim
asserted), to which they, or any of them, may become subject under the
U.S. Securities Act, at common law or otherwise, insofar as such
losses, claims, damages or liabilities arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact
contained in the U.S. Preliminary Prospectus, the Canadian Preliminary
Prospectus, the U.S. Prospectus, the Canadian Prospectus or the U.S.
Registration Statement, or any amendment or supplement thereto, or the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, but only insofar as such losses, claims, damages or
liabilities arise out of or are based upon any untrue statement or
omission or alleged untrue statement or omission which was made in the
U.S. Preliminary Prospectus, the Canadian Preliminary Prospectus, the
U.S. Prospectus, or the Canadian Prospectus, or any amendment or
supplement thereto, in reliance upon and in conformity with information
furnished in writing to the Corporation by such U.S. Agent with respect
to the U.S. Agents expressly for use in the preparation thereof.
- 24 -
(3) Any party which proposes to assert the right to be indemnified under
this Section 13 will, promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect of
which a claim is to be made against an indemnified party under this
Section 13, notify each such indemnifying party of the commencement of
such action, suit or proceeding, enclosing a copy of all papers served,
but the omission so to notify such indemnifying party of any such
action, suit or proceeding shall not relieve it from any liability
which it may have to any indemnified party otherwise than under this
Section 13. In case any such action, suit or proceeding shall be
brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate in, and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to
assume the defence thereof, with counsel satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defence thereof, the
indemnifying party shall not be liable to such indemnified party for
any legal or other expenses, other than reasonable costs of
investigation subsequently incurred by such indemnified party in
connection with the defence thereof. The indemnified party shall have
the right to employ its counsel in any such action, but the fees and
expenses of such counsel shall be at the expense of such indemnified
party unless (i) the employment of counsel by such indemnified party
has been authorized by the indemnifying parties, (ii) the indemnified
party shall have reasonably concluded that there may be a conflict of
interest between the indemnifying parties and the indemnified party in
the conduct of the defence of such action (in which case the
indemnifying parties shall not have the right to direct the defence of
such action on behalf of the indemnified party) or (iii) the
indemnifying parties shall not in fact have employed counsel to assume
the defence of such action. An indemnifying party shall not be liable
for any settlement of any action or claim effected without its consent.
For the purposes of clause (ii) of the preceding sentence only, any
indemnified party or parties shall be represented by one counsel whom
they may select with the approval, which shall not be unreasonably
withheld, of the indemnifying parties.
SECTION 14 CONTRIBUTION
In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in Section 13 hereof is
applicable but for any reason, other than as specified in Section 13, is held to
be unavailable from the indemnifying party, then each indemnifying party shall,
in lieu of indemnifying such indemnified party, contribute to the aggregate
losses, claims, damages and liabilities (including any investigation, legal and
other expenses reasonably incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claims asserted), in such
proportion as is appropriate to reflect the relative benefits received by the
Corporation on the one hand and the U.S. Agents on the other from the offering
of the Securities. If however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law, then each indemnifying
party shall contribute to such amount paid or payable by such indemnified party
in such proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of the Corporation on the one hand and the U.S.
Agents on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Corporation on the one hand and the U.S. Agents on the
other shall be deemed
- 25 -
to be in the same proportion as the total net proceeds from the offering of the
Securities (before deducting expenses) received by the Corporation bear to the
total Underwriting Fees received by the U.S. Agents, in each case as set forth
in the U.S. Prospectus. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Corporation on the one hand or the U.S. Agents on
the other and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Corporation
and the U.S. Agents agree that it would not be just and equitable if
contributions pursuant to this Section 14 were determined by pro rata allocation
(even if the U.S. Agents were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the equitable
considerations referred to above in this Section 14. Notwithstanding the
provisions of this Section 14, (i) in no case shall any U.S. Agent be
responsible for any amount in excess of the sum of the Underwriting Fee
applicable to the Securities purchased by such U.S. Agent hereunder, and (ii) no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of this
Section 14, each person, if any, who controls a U.S. Agent within the meaning of
the U.S. Securities Act and the U.S. Exchange Act, and each director, officer,
employee and agent of a U.S. Agent shall have the same rights to contribution as
such U.S. Agent, and each person, if any, who controls the Corporation within
the meaning of the U.S. Securities Act and the U.S. Exchange Act, and each
director of the Corporation shall have the same rights to contribution as the
Corporation, subject in each case to clauses (i) and (ii) of this Section 14.
Any party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim for contribution may be made against another party or parties
under this Section 14, notify such party or parties from whom contribution may
be sought, but the omission so to notify such party or parties from whom
contribution may he sought shall not relieve the party or parties from whom
contribution may be sought from any other obligation it or they may have
hereunder or otherwise than under this Section 14. No party shall be liable for
contribution with respect to any action or claim settled without its written
consent. The U.S. Agents' obligations in this section to contribute are several
in proportion to their respective obligations and not joint.
SECTION 15 EXPENSES
Whether or not the transactions provided for herein (including the
Offering) are completed, the Corporation shall pay all costs, fees and expenses
of or incidental to the performance of its obligations under this U.S. Agreement
including, without limitation: (i) the costs of the Corporation's professional
advisors (including, without limitation, the Corporation's auditors, counsel and
any local counsel), (ii) the cost of printing the U.S. Preliminary Prospectus,
the U.S. Prospectus, the Canadian forms of such prospectuses, and any amendments
and supplements thereto, and certificates for the Securities, (iii) the
preparation of any Blue Sky survey regarding the offers and sales of the
Securities in the various states, and (iv) all applicable costs related to the
review by the NASD of the terms of the sale of the Offered Securities (which
NASD-related costs are to include, in addition to any filing fees, legal fees
and related G.S.T.). The fees and disbursements of any counsel (whether Canadian
or U.S.) to the U.S. Agents and the Canadian Underwriters up to an aggregate
amount of Cdn $[170,000] and out-of-pocket expenses of the U.S. Agents shall be
borne by the Corporation; provided that,
- 26 -
notwithstanding the foregoing, in the event that the sale and purchase of the
Securities is not completed in accordance with the terms hereof (other than as a
result of a breach by the U.S. Agents of any of its obligations hereunder), the
Corporation shall assume and pay, in addition to the out-of-pocket expenses of
the U.S. Agents and any other expenses required to be paid by it hereunder, all
fees and disbursements of counsel (whether Canadian or U.S.) to the U.S. Agents
or the Canadian Underwriters.
SECTION 16 ACTION BY U.S. AGENTS
All steps which must or may be taken by the U.S. Agents in connection
with this Agreement, with the exception of the matters relating to termination
contemplated by Section 12 hereof, may be taken by the U.S. Lead Manager on
behalf of itself and the other U.S. Agent and the acceptance of this offer by
the Corporation shall constitute the Corporation's authority for accepting
notification of any such steps from, and for delivering the definitive documents
constituting the Securities to or to the order of the U.S. Lead Manager.
SECTION 17 GOVERNING LAW; TIME OF ESSENCE
This U.S. Agreement shall be governed by and construed in accordance
with the laws of the State of New York and the federal laws of the United States
of America applicable therein and time shall be of the essence hereof.
SECTION 18 SURVIVAL OF WARRANTIES, REPRESENTATIONS, COVENANTS AND AGREEMENTS
All warranties, representations, covenants and agreements of the
Corporation and the U.S. Agents herein contained or contained in documents
submitted or required to be submitted pursuant to this U.S. Agreement shall
survive the purchase by the U.S. Agents of the Securities and shall continue in
full force and effect, regardless of the closing of the sale of the Securities
and regardless of any investigation which may be carried on by the U.S. Agents,
or on their behalf, for a period of four years following the Closing Date.
Without limitation of the foregoing, the provisions contained in this U.S.
Agreement in any way related to the indemnification or the contribution
obligations herein shall survive and continue in full force and effect,
indefinitely.
SECTION 19 PRESS RELEASES
The Corporation shall provide the U.S. Agents and their counsel with a
copy of all press releases to be issued by the Corporation concerning the
Offering contemplated hereby prior to the issuance thereof, and shall give the
U.S. Agents and their counsel a reasonable opportunity to provide comments on
any press release.
SECTION 20 NOTICES
All notices or other communications by the terms hereof required or
permitted to be given by one party to another shall be given in writing by
personal delivery or by facsimile delivered or facsimile to such other party as
follows:
- 27 -
(a) to the Corporation at:
Golden Star Resources Ltd.
00000 Xxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxx
X.X.X. 00000-0000
Attention: Xxxxx Xxxxxxxx
Facsimile No.: (000) 000-0000
with a copy to:
Field Xxxxxxxx Perraton LLP
0000, 000-0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxx Xxxx
Facsimile No.: (000) 000-0000
and to:
Stoel Rives LLP
000 X.X. 0xx Xxxxxx
Xxxxxxxx, Xxxxxx
X.X.X. 00000-0000
Attention: Xxxx Xxxxx
Facsimile No.: (000) 000-0000
(b) to the U.S. Agents at:
Canaccord Capital Corporation (USA) Inc.
c/o Canaccord Capital Corporation
000 Xxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx
Attention: Xxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
and
BMO Xxxxxxx Xxxxx Corp.
c/o BMO Xxxxxxx Xxxxx Inc.
0 Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxx Xxxxxxxxx
Facsimile No.: (000) 000-0000
- 28 -
with a copy to:
Stikeman Elliott
0000 Xxxxxxxx Xxxxx Xxxx
000 Xxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxx X. Xxxxxxxxx
Facsimile No.: (000) 000-0000
and to:
Xxxxxx & Whitney LLP
BCE Place
000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx
Xxxxxx X0X 0X0
Attention: Xxxxxxxxxxx Xxxxx
Facsimile No.: (000) 000-0000
or at such other address or facsimile number as may be given by either of them
to the other in writing from time to time and such notices or other
communications shall be deemed to have been received when delivered or, if
facsimile, on the next business day after such notice or other communication has
been facsimile (with receipt confirmed).
SECTION 21 JUDGMENT CURRENCY
In respect of any judgment or order given or made for any amount due
hereunder that is expressed and paid in a currency (the "JUDGMENT CURRENCY")
other than United States dollars, the Corporation shall indemnify each U.S.
Agent against any loss incurred by such U.S. Agent as a result of any variation
as between (i) the rate of exchange at which the United States dollar amount is
converted into the judgment currency for the purpose of such judgment or order
and (ii) the rate of exchange at which a U.S. Agent is able to purchase United
States dollars with the amount of the judgment currency actually received by
such U.S. Agent. The term "rate of exchange" shall include any premiums and
costs of exchange payable in connection with the purchase of or conversion into
United States dollars.
SECTION 22 COUNTERPART SIGNATURE
This Agreement may be executed in one or more counterparts (including
counterparts by facsimile) which, together, shall constitute an original copy
hereof as of the date first noted above.
- 29 -
SECTION 23 ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the U.S. Agents
and the Corporation relating to the subject matter hereof and supersedes all
prior agreements between the U.S. Agents and the Corporation.
(THE REMAINDER OF THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY)
- 30 -
SECTION 24 ACCEPTANCE
If this offer accurately reflects the terms of the transaction which we
are to enter into and if such terms are agreed to by the Corporation, please
communicate your acceptance by executing where indicated below and returning by
facsimile one copy and returning by courier one originally executed copy to
Canaccord Capital Corporation (USA) Inc. (Attention: Xxxxx Xxxxxxx).
Yours very truly,
CANACCORD CAPITAL
CORPORATION (USA) INC.
By: "Xxxxx Xxxxx"
-------------------------------
Authorized Signing Officer
BMO XXXXXXX XXXXX CORP.
By: "Xxxxxx X. Skaffer"
-------------------------------
Authorized Signing Officer
The foregoing accurately reflects the terms of the transaction that we
are to enter into and such terms are agreed to.
ACCEPTED at Littleton, Colorado as of this 17th day of July, 2002.
GOLDEN STAR RESOURCES LTD.
By: "Xxxxx X. Xxxxxx"
------------------------------
Authorized Signing Officer
SCHEDULE A
MATERIAL SUBSIDIARIES
NAME TYPE OF OWNERSHIP PERCENTAGE
---- ----------------- ----------
Caystar Holdings (Cayman Shares 100%
Islands)
Bogoso Holdings (Cayman Shares 100%
Islands)
Bogoso Gold Limited Shares 90%
(Ghana)
Guyanor Ressources S.A. Shares 73%
(France)
Societe de Traveux Publics et Shares 100%
de Mines Auriferes en
Guyane S.A.R.L. (France)
Societe des Mines de Yaou & Shares 100%
Dorlin (France)
Societe de Mines de Saint- Shares 100%
Elie S.A.R.L. (France)
Pan African Resources Shares 99.9%
Corporation (Yukon
Territory)
Pan African Resources Shares 100%
Corporation (Barbados)
PARC Cote d'Ivoire S.A. Shares 100%
(Ivory Coast)
Wasford Holdings (Cayman Shares 100%
Islands)
- 2 -
SCHEDULE B
Unless the context otherwise dictates, all capitalized terms herein have the
meaning ascribed to thereto in the
U.S. Agency Agreement to which this Schedule
B is attached
Canadian counsel's opinions:
As set out in Section 4(1) of the Canadian Underwriting Agreement.
U.S. counsel's opinions:
1. No authorization, approval or other action by, and no notice to,
consent of, order of, or filing with, any United States Federal or state
governmental authority or regulatory body is required for the consummation of
the transactions contemplated by the
U.S. Agency Agreement, the Canadian
Underwriting Agreement or the Warrant Indenture, except such as have been
obtained under the U.S. Securities Act and such as may be required under the
blue sky laws of any jurisdiction in connection with the purchase and
distribution of the Securities by the U.S. Agents.
2. To such counsel's knowledge and other than as set forth in the U.S.
Prospectus, there are no legal or governmental proceedings pending to which the
Corporation or any of its subsidiaries is a party or of which any property of
the Corporation or any of its subsidiaries is bound that would, individually or
in the aggregate have a material adverse effect on the current consolidated
financial position, shareholders' equity or results of operation of the
Corporation and its subsidiaries; and to such counsel's knowledge, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others;
3. Neither the issue and sa le of the Securities as described in the
U.S. Prospectus and Canadian Prospectus, nor the consummation of the
transactions contemplated by the
U.S. Agency Agreement and the Canadian
Underwriting Agreement and the performance of the terms of the
U.S. Agency
Agreement and the Canadian Underwriting Agreement, including the issuance of the
Underwriters' Warrants (as such term is defined in the Canadian Underwriting
Agreement), (i) will result in a breach of or constitute a default under any
agreement or instrument that is listed as an exhibit to the U.S. Registration
Statement or any document incorporated by reference to the U.S. Prospectus and
to which the Corporation or any of its Material Subsidiaries is a party or
bound, (ii) will contravene any law, rule or regulation of the United States of
America or the State of Oregon or any law, rule or regulation of any other state
known by such counsel to be applicable to the Corporation or (iii) based solely
on a certificate signed by an officer of the Corporation, on the date hereof,
will contravene any order or decree of any court or government agency or
instrumentality any state or the Federal government of the United States of
America known to such counsel.
4. The statements made in the U.S. Prospectus and the Canadian
Prospectus under the caption "Plan of Distribution", insofar as they purport to
summarize the material terms of the
U.S. Agency Agreement and the Canadian
Underwriting Agreement, and
- 3 -
under the caption "U.S. Federal Income Tax Considerations", insofar as they
purport to describe the material tax consequences under U.S. Federal Income Tax
laws of an investment in the Securities, fairly summarize the matters therein
described.
5. The Corporation is not an "investment company" or an entity
"controlled" by an "investment company", as such terms are defined in the
Investment Company Act of 1940, as amended.
6. The U.S. Registration Statement has become effective under the U.S.
Securities Act, any required filing of a preliminary prospectus or prospectus,
and any supplement thereto pursuant to Rule 424 under the U.S. Securities Act
has been made in the manner and within the time required by Rule 424 and to such
counsel's knowledge, no stop order suspending the effectiveness of the U.S.
Registration Statement has been issued and no proceeding for that purpose has
been instituted, threatened or contemplated by the SEC.
7. The documents incorporated by reference in the U.S. Prospectus or
any further amendment or supplement thereto made by the Corporation prior to the
date of this opinion (other than the financial statements and related schedules
therein or other financial data derived from accounting records, as to which
counsel is not expressing an opinion), when they became effective or were filed
with the SEC, as the case may be, complied as to form in all material respects
with the requirements of the U.S. Securities Act or the U.S. Exchange Act, as
applicable, and the rules and regulations of the SEC thereunder; and such
counsel has no reason to believe that any of such documents (other than the
financial statements and related schedules therein or other financial data
derived from accounting records, as to which such counsel is not expressing an
opinion), when such documents became effective or were so filed, as the case may
be, contained, in the case of a registration statement which became effective
under the U.S. Securities Act, an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading, or in the case of documents which were filed
under the U.S. Exchange Act with the SEC (other than the financial statements
and related schedules therein or other financial data derived from accounting
records, as to which such counsel is not expressing an opinion), an untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made when such documents were filed, not misleading.
8. The U.S. Registration Statement as of its effective date and each of
the U.S. Prospectus and the Canadian Prospectus at the time each such prospectus
was filed with the SEC pursuant to Rule 424(b) under the U.S. Securities Act and
any further amendments and supplements thereto made by the Corporation prior to
the date hereof (other than the financial statements and related schedules
therein or other financial data derived from accounting records, as to which
such counsel is not expressing an opinion) comply as to form in all material
respects with the requirements of the U.S. Securities Act and the rules and
regulations thereunder.
9. During the course of the Corporation's preparation of the U.S.
Registration Statement, such counsel participated in conferences with officers
and other representatives of the Corporation, the Corporation's independent
public accountants, the U.S. Agents and
- 4 -
the Canadian Underwriters and their counsel, at which the contents of the U.S.
Registration Statement and the U.S. Prospectus and the Canadian Prospectus were
discussed, and while they have not independently verified and are not passing
upon the accuracy, completeness or fairness of the statements made in the U.S.
Registration Statement, the U.S. Prospectus or the Canadian Prospectus except as
explicitly set forth in paragraphs 4 and 12 hereof, no facts have come to such
counsel's attention that lead such counsel to believe that the U.S. Registration
Statement (other than the financial statements, financial and related
statistical data and supporting schedules as to which we make no statement), as
of its effective date or as of the date hereof, contained or contains any untrue
statement of a material fact or omitted or omits to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading; or that the U.S. Prospectus or the Canadian Prospectus, as of their
issue date or as of the date hereof, contained or contain any untrue statement
of a material fact or omitted to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
10. Such counsel does not know of any amendment to the U.S.
Registration Statement required to be filed at or prior to the date hereof which
has not been filed as required.
11. Such counsel does not know of any legal or governmental proceeding
or any franchise, contract or other document required to be described in, or
filed as an exhibit to, the U.S. Registration Statement or required to be
described or incorporated by reference in the U.S. Prospectus or required to be
described in the Canadian Prospectus which has not been described, filed or
incorporated by reference as required.
12. The statements included or incorporated by reference in the U.S.
Registration Statement and the U.S. Prospectus and the statements included in
the Canadian Prospectus describing contracts or other agreements to which the
Corporation or any of its Material Subsidiaries is a party or is bound or any
United States federal statutes or legal or other governmental proceedings under
United States federal law or Oregon state law are accurate in all material
respects and fairly summarize such matters
- 5 -
SCHEDULE C
OUTSTANDING CONVERTIBLE SECURITIES
NUMBER OF
COMMON SHARES
SECURITY EXERCISABLE INTO EXERCISE OR CONVERSION PRICE
-------- ---------------- ----------------------------
Options 4,550,944 (Cdn$0.60 to Cdn$1.80)
Warrants 6,602,333 ($0.70 to $1.75)
Debentures 1,804,286 ($0.70)
TOTAL 12,957,563
