UNDERWRITING AGREEMENT
February 10, 2003
Golden Star Resources Ltd.
00000 Xxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxx
XXX, 00000-0000
ATTENTION: XX. XXXXX X. XXXXXXXX, PRESIDENT AND CHIEF EXECUTIVE OFFICER
Dear Sir:
Based upon and subject to the terms and conditions set out below,
Canaccord Capital Corporation (the "LEAD MANAGER") and BMO Xxxxxxx Xxxxx Inc.
(collectively, the "UNDERWRITERS") hereby severally, and not jointly, in their
respective percentages set out in Section 15 hereof, offer to purchase from
Golden Star Resources Ltd. (the "CORPORATION"), and by its acceptance of the
offer constituted by this letter, the Corporation agrees to issue and sell to
the Underwriters, at the Time of Closing (as hereinafter defined), an aggregate
of 17,000,000 units (collectively, the "UNITS") of the Corporation (the
"SECURITIES") at an offering price of Cdn$3.00 per Unit for aggregate gross
proceeds of Cdn$51,000,000. Each Unit consists of one (1) common share (a
"COMMON SHARE") and one-half ( 1/2) common share purchase warrant of the
Corporation. Each whole warrant is exercisable for one Common Share at a price
per Common Share of Cdn$4.60 until February 14, 2007 (each whole warrant, a
"WARRANT"). The offering of the Securities by the Corporation pursuant to this
Agreement is hereinafter referred to as the "OFFERING".
The Lead Manager on behalf of the Underwriters has, by notice dated
February 5, 2003, exercised the option granted to them by the Corporation
pursuant to the engagement letter dated January 30, 2003 between the Lead
Manager and the Corporation (the "UNDERWRITERS' OPTION"), to purchase severally,
and not jointly, 3,600,000 Units for Cdn$3.00 per Unit upon the terms and
conditions set forth herein. Such Units form part of the Securities.
This offer is conditional upon, among other things: the Corporation
having prepared and filed and obtained receipts for a preliminary short form
prospectus and a (final) short form prospectus (the "FINAL PROSPECTUS") in
respect of the distribution of the Securities, with and from the securities
regulatory authorities in the provinces of British Columbia, Alberta, Manitoba
and Ontario, (the "QUALIFYING PROVINCES"), pursuant to the Short Form Prospectus
System (the "POP SYSTEM") established under National Instrument 44-101 of the
Canadian Securities Administrators ("NI 44-101"), qualifying the distribution by
the Corporation of the Securities to purchasers resident in such provinces; no
stop order suspending the effectiveness of the registration statement on Form
S-3 (File No. 333-102225), including a prospectus (the
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"U.S. SHELF PROSPECTUS"), filed with the Securities and Exchange Commission (the
"SEC") having been issued and no proceeding for that purpose having been
initiated or threatened by the SEC; the filing of a U.S. preliminary and final
prospectus supplement relating to the Securities pursuant to Rule 424(b) under
the U.S. Securities Act (the "U.S. PROSPECTUS SUPPLEMENT" and, together with the
U.S. Shelf Prospectus, the "U.S. PROSPECTUS"); no order preventing or suspending
the use of the U.S. Prospectus having been issued by the SEC; and the U.S.
Prospectus, at the time of filing thereof, conforming in all material respects
to the requirements of the U.S. Securities Act and the rules and regulations of
the SEC thereunder, and not containing an untrue statement of a material fact or
omitting 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.
The Corporation shall pay to the Lead Manager, on behalf of the
Underwriters, a fee (the "UNDERWRITING FEE") at the Time of Closing equal to
Cdn$0.165 per Security sold pursuant to the terms of this Agreement (being 5.5%
of the issue price per Security) in consideration of the services to be rendered
by the Underwriters 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 Preliminary Prospectus,
the Final Prospectus and the U.S. Prospectus (each as hereinafter defined)
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.
In addition to the Underwriting Fee, in return for the Underwriters'
services, the Corporation will issue to the Underwriters on the Closing Date
that number of warrants (the "UNDERWRITERS' WARRANTS") equal to 5.5% of
Securities sold under the Offering (or up to 935,000 Underwriters' Warrants).
Each Underwriters' Warrant will be exercisable into one Common Share for a
period of fifteen months from Closing at a purchase price of Cdn$3.00.
The schedules attached to this Agreement shall, for all purposes of
this Agreement, form an integral part of it.
The Underwriters and the Corporation acknowledge that an offering of
the Units is also being concurrently conducted in the United States by the
Agents, who are affiliates of the Underwriters, under the terms of the Agency
Agreement and the terms of the Inter-Dealer Agreement, as well as U.S.
Securities Laws.
The following, in addition to the above preamble, are the terms and
conditions of the agreement between the Corporation and the Underwriters:
SECTION 1 DEFINITIONS AND INTERPRETATION
(1) In this Agreement:
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"AGENCY AGREEMENT" means the agency agreement, dated the date hereof,
between the Agents and the Corporation;
"AGENTS" means Canaccord Capital Corporation (USA) Inc. and BMO Xxxxxxx
Xxxxx Corp. together;
"BUSINESS DAY" means any day other than a Saturday, Sunday or statutory
or civic holiday in the City of Xxxxxxx, Xxxxxxx, 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;
"CLOSING DATE" has the meaning ascribed thereto in Section 10(1)
hereof;
"COMMON SHARE" has the meaning ascribed thereto on page 1 hereof;
"EXCHANGES" means the Toronto Stock Exchange ("TSX") and the American
Stock Exchange ("AMEX");
"FINAL PROSPECTUS" means the Canadian (final) short form prospectus
dated the date hereof including any documents or information
incorporated therein by reference, prepared by the Corporation and
relating to the distribution of the Securities and the Offering;
"INCORPORATED DOCUMENTS" means all documents incorporated or deemed to
be incorporated in the Preliminary Prospectus, the Final Prospectus and
any Prospectus Amendment.
"INTER-DEALER AGREEMENT" means that certain inter-dealer agreement,
dated the date hereof, between the Underwriters and the Agents;
"LEAD MANAGER" has the meaning ascribed thereto on page 1 hereof;
"MATERIAL RESOURCE PROPERTIES" has the meaning ascribed thereto in
Section 6(1)(j);
"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;
"MRRS DECISION DOCUMENT" means a decision document issued by the
applicable Canadian securities regulatory authority pursuant to
National Policy 43-201 and which evidences the receipts by the
applicable Canadian securities regulatory authorities in each of the
Qualifying Provinces for the Preliminary Prospectus or the Final
Prospectus, as the case may be;
"NI 44-101" has the meaning ascribed thereto on page 1 hereof;
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"OFFERING" has the meaning ascribed thereto on page 1 hereof;
"POP SYSTEM" has the meaning ascribed thereto on page 1 hereof;
"PRELIMINARY PROSPECTUS" means the Canadian preliminary short form
prospectus dated February 3, 2003, including any documents or
information incorporated therein by reference, prepared by the
Corporation and relating to the distribution of the Securities and the
Offering;
"PROSPECTUS AMENDMENT" means any amendment to the Preliminary
Prospectus or the Final Prospectus required to be prepared and filed by
the Corporation under applicable Canadian Securities Laws in connection
with the Offering;
"QUALIFYING AUTHORITIES" means each of the securities regulatory
authorities in each of the Qualifying Provinces;
"QUALIFYING PROVINCES" has the meaning ascribed thereto on page 1
hereof;
"RESOURCE PROPERTIES" has the meaning ascribed thereto in Section
6(1)(j) hereof;
"SEC" has the meaning ascribed thereto on page 2 hereof;
"SECURITIES" has the meaning ascribed thereto on page 1 hereof;
"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;
"SUPPLEMENTARY MATERIAL" has the meaning ascribed thereto in Section
12(1)(a);
"TIME OF CLOSING" has the meaning ascribed thereto in Section 10(1)
hereof;
"UNDERWRITER" has the meaning ascribed thereto on page 1 hereof;
"UNDERWRITING FEE" has the meaning ascribed thereto on page 2 hereof;
"UNDERWRITERS' OPTION" has the meaning ascribed thereto on page 1
hereof;
"UNIT" has the meaning ascribed thereto on page 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. PRELIMINARY PROSPECTUS" means the U.S. Shelf Prospectus together
with a preliminary prospectus supplement dated February 3, 2003
specifically relating to the Securities;
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"U.S. PROSPECTUS" has the meaning ascribed thereto on page 2 hereof;
"U.S. PROSPECTUS SUPPLEMENT" has the meaning ascribed thereto on page 2
hereof;
"U.S. REGISTRATION STATEMENT" means the registration statement on Form
S-3 (File No. 333-102225) filed with the SEC, with respect to the
Securities, under the U.S. Securities Act, including the exhibits,
financial statements and schedules thereto, which Registration
Statement has been declared effective by the SEC and includes the U.S.
Prospectus;
"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 regulators thereunder;
"U.S. SHELF PROSPECTUS" has the meaning ascribed thereto on page 2
hereof;
"WARRANT" has the meaning ascribed thereto on page 1 hereof; 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) Any reference in this Agreement to gender includes all genders and
words importing the singular number only shall include the plural and
vice versa.
(3) 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
Agreement.
(4) Except as otherwise indicated, all amounts expressed herein in terms of
money refer to lawful currency of Canada and all payments to be made
hereunder shall be made in such currency.
SECTION 2 COMPLIANCE WITH SECURITIES LAWS
(1) As of the date of this Agreement, the Corporation will have prepared
and filed the Preliminary Prospectus with the Qualifying Authorities
together with the required supporting documents, will have addressed
the comments made by such Qualifying Authorities, in respect of the
Preliminary Prospectus and any amendment thereto, and shall have
received an MRRS Decision Document in respect thereof. The Corporation
covenants and agrees with the Underwriters that as soon as practicable,
it will prepare (subject to review by the Underwriters) and file with
the Qualifying Authorities, the Final Prospectus, together with the
required supporting documents, and use its
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reasonable best efforts to obtain the MRRS Decision Document from such
Qualifying Authorities in order to qualify the distribution of the
Securities.
(2) The representations and warranties made by the Corporation in Section 2
of the Agency Agreement are incorporated herein by reference and shall
have the same effect as if made to the Underwriters under this
Agreement.
SECTION 3 DUE DILIGENCE
Prior to the Time of Closing, and, if applicable, prior to the filing
of any Prospectus Amendment and prior to the filing of any Supplementary
Material, including on any intervening weekends, the Corporation shall allow the
Underwriters to participate fully in the preparation of such documents and shall
allow the Underwriters to conduct all due diligence that the Underwriters may
require in order to fulfil their obligations as Underwriters and in order to
enable the Underwriters responsibly to execute any certificate required to be
executed by them, provided, however, that the conduct of due diligence is not
intended to operate as a condition of the Offering.
SECTION 4 CONDITIONS OF THE OFFERING
The Underwriters' obligations under this Agreement are conditional upon
and subject to:
(1) the Underwriters receiving at the Time of Closing favourable legal
opinions dated the Closing Date, addressed to the Underwriters and
their counsel from (i) Field Xxxxxxxx Perraton LLP, Canadian counsel to
the Corporation (who may rely, to the extent appropriate in the
circumstances, on the opinions of local counsel acceptable to counsel
to the Corporation and counsel to the Underwriters as to the
qualification of the Securities for sale to the public 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 of Exchange officials
or of the auditors or transfer agent of the Corporation), to the effect
set forth below:
(a) the Corporation having been amalgamated and existing under the
laws of Canada;
(b) the Corporation having the corporate capacity and power to own
and lease its properties and assets and to conduct its
business as described in the Final Prospectus and to execute
and deliver this Agreement and to carry out the transactions
contemplated hereby;
(c) the authorized share capital of the Corporation being as
described in the Final Prospectus;
(d) all necessary corporate action having been taken by the
Corporation to authorize the execution and delivery of this
Agreement and the Agency Agreement and the performance of its
obligations hereunder and thereunder and this Agreement and
the Agency Agreement have been duly executed and delivered by
the
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Corporation and each agreement constitutes 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, general equitable principles including
the availability of equitable remedies and the qualification
that no opinion need be expressed as to rights to indemnity,
contribution and waiver of contribution) and the execution and
delivery by the Corporation of this Agreement and the Agency
Agreement, the fulfilment of the terms hereof and thereof by
the Corporation, and the issue, sale and delivery on the
Closing Date of the Securities and the Underwriters' Warrants
to the Underwriters and the Agents as contemplated herein and
in the Agency Agreement do not constitute or result in a
breach of or a default under, and do not create a state of
facts which, after notice or lapse of time or both, will
constitute or result in a breach of, and will not conflict
with, any of the terms, conditions or provisions of the
articles or by-laws of the Corporation;
(e) all necessary corporate action having been taken by the
Corporation to authorize the execution and delivery of the
Warrant Indenture and the performance of the its obligations
thereunder and that the Warrant Indenture has been duly
executed and delivered by the Corporation and constitutes 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, general equitable principles including
the availability of equitable remedies and the qualification
that no opinion need be expressed as to rights to indemnity,
contribution and waiver of contribution);
(f) 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 have been authorized by all
necessary action on the part of the Corporation;
(g) all documents required to be filed by the Corporation and all
proceedings required to be taken by the Corporation under
applicable Canadian Securities Laws having been filed and
taken in order to qualify the distribution (or distribution to
the public, as the case may be) of the Securities in each of
the Qualifying Provinces through investment dealers or brokers
registered under the applicable laws thereof who have complied
with the relevant provisions thereof;
(h) all legal requirements will have been fulfilled by the
Corporation under Canadian Securities Laws so that the
issuance of the Common Shares on exercise of Warrants and the
Underwriters' Warrants (the "UNDERLYING COMMON SHARES") will
be exempt from the prospectus requirements of Canadian
Securities Laws, such Underlying Common Shares will not be
subject to any statutory hold period, and no other documents
will be required to be filed, proceedings taken, or approvals,
permits, consents or authorizations obtained under the
Canadian Securities Laws to permit the trading in the
Qualifying Provinces of the Underlying Common Shares, through
registrants registered under Canadian Securities Laws or in
circumstances in which there is an
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exemption from the registration requirements of such
applicable laws, subject to usual exceptions;
(i) the Securities and the Underlying Common Shares having been
conditionally approved for listing on the TSX subject only to
compliance with the documentary filing requirements of such
exchange;
(j) the attributes and characteristics of the Securities being
accurately summarized in all material respects under the
heading "Description of Securities" in the Final Prospectus;
(k) the Common Shares and the Underlying Common Shares, if and
when issued by the Corporation, having been validly issued by
the Corporation and being fully-paid and non-assessable shares
in the capital of the Corporation;
(l) the Securities being, at the Time of Closing, eligible for
investment pursuant to the statutes set forth under the
heading "Eligibility for Investment" in the Final Prospectus;
(m) as to certain Canadian federal income tax matters, as
described in the Final Prospectus under the heading
"Eligibility for Investment"; and
(n) during the course of the Corporation's preparation of the
Final Prospectus and its participation in conferences with
officers and other representatives of the Corporation, the
Corporation's independent public accountants, the Agents and
the Underwriters and their counsel, during which the contents
of the Final Prospectus were discussed, and while it has not
independently verified and is not passing upon the accuracy,
completeness or fairness of the statements made in the Final
Prospectus except as explicitly set forth in paragraphs (l)
and (m) hereof, no facts have come to its attention that lead
it to believe that the Final Prospectus (other than the
financial statements, financial and related statistical data
and supporting schedules as to which it makes no statement),
contained 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 Final Prospectus, as of its date or as
of the Closing Date, contains any untrue statement of a
material fact or omits 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;
and (ii) from Xxxxx Xxxxxx & Xxxxxx LLP, the Corporation's U.S. counsel
as to those matters set forth in Schedule B to the Agency Agreement, in
each case addressed to the Underwriters, dated the Closing Date, and in
form and substance satisfactory to the Underwriters and their counsel;
(2) the Underwriters having received the comfort letter referred to in
Section 9(1)(a);
(3) the Underwriters having received a comfort letter, dated the Closing
Date, in form and substance satisfactory to the Underwriters, acting
reasonably, bringing forward to a date
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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 Underwriters receiving at the Time of Closing a legal opinion (or
opinions) dated the Closing Date, in form and substance satisfactory to
the Underwriters and their counsel, addressed to the Underwriters 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 Underwriters receiving at the Time of Closing a legal opinion (or
opinions) dated the Closing Date, in form and substance satisfactory to
the Underwriters and their counsel, addressed to the Underwriters and
their counsel, from local counsel to the Corporation, stating that each
of Caystar Holdings, Bogoso Holdings, Bogoso Gold Limited, Wasford
Holdings and Wexford Goldfields Limited 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 such corporations, except as set out in Schedule A;
(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 is 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 having been executed by the
Corporation and CIBC Mellon Trust Company;
(8) the Agency Agreement having been executed by the Corporation and the
Agents, and none of the Agents shall have relied upon any rights of
termination in the Agency Agreement to terminate the offering of the
Securities in the United States, and all conditions to the Agents'
obligations thereunder having been satisfied or waived by the Agents;
(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
Underwriters and dated the Closing Date, in a form satisfactory to the
Underwriters and their counsel, certifying for and on behalf of the
Corporation and not in their personal capacities that, to the actual
knowledge 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
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;
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(c) no order suspending the effectiveness of the U.S. Registration
Statement shall be in effect and no proceedings for such
purpose shall be pending before or, to the knowledge of such
officers, threatened by the SEC and any additional information
requested on the part of the SEC shall have been complied with
to the reasonable satisfaction of the Underwriters; and
(d) the Corporation is a "reporting issuer" or its equivalent
under the securities laws of each of the Qualifying Provinces
and eligible to use the POP System and no material change
relating to the Corporation on a consolidated basis has
occurred since the date hereof with respect to which the
requisite material change report has not been filed and no
such disclosure has been made on a confidential basis that
remains subject to confidentiality; and
(e) all of the representations and warranties made by the
Corporation in this 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; and
(10) the Underwriters 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.
SECTION 5 COVENANTS OF THE UNDERWRITERS
(1) The Underwriters:
(a) shall offer or arrange the offer of the Securities for sale to
the public, directly and through other investment dealers and
brokers (the Underwriters, 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 of Canadian
Securities Laws, upon the terms and conditions set forth in
the Final Prospectus and in this 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 Qualifying Provinces,
and will require each Selling Firm to agree with the
Underwriters not to so solicit or sell. In this connection,
the Underwriters agree that they will not offer or sell any of
the Securities constituting a part of their allotment within
the United States except, if applicable, through the Agents on
the terms and conditions set forth in the Agency Agreement and
the Inter-Dealer Agreement and in compliance with U.S.
Securities Law. For the purposes of this Section 5(1)(b), the
Underwriters shall be entitled to assume that the Securities
are qualified for distribution in any Qualifying Province
where a receipt or similar document for the Final Prospectus
shall have been obtained from the applicable Canadian
securities regulatory authority following the filing of the
Final Prospectus;
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(c) agree that if they offer to sell or sell any Securities in
jurisdictions (which may include Europe) other than the
Qualifying Provinces and through the Agents in the United
States, 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
Underwriters and the other Selling Firms have ceased
distribution of the Securities and shall provide a breakdown
of the number of Securities distributed in each of the
Qualifying Provinces; and
(f) shall comply with any applicable laws with respect to the use
of "green sheets" and other marketing materials during the
"waiting period" (as defined under Canadian Securities Laws).
(2) Notwithstanding the foregoing, no Underwriter shall be liable to the
Corporation with respect to any other Underwriter under this Section 5.
SECTION 6 REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
(1) The Corporation hereby represents and warrants to the Underwriters,
intending that the same may be relied upon by the Underwriters, that:
(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 Final 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 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 other than as described in the Final Prospectus or
the Incorporated Documents;
(d) the Corporation is a reporting issuer or the equivalent in
each of the provinces of Canada and the Corporation is not in
default of any of the requirements of the securities laws of
such jurisdictions;
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(e) the Corporation was and is eligible to use the POP System and
at the respective times of filing, each of the Preliminary
Prospectus and the Final Prospectus together with any
Prospectus Amendment and any Supplementary Material have and
will comply with the requirements of the Canadian Securities
Laws pursuant to which they have been filed, have and will
provide full, true and plain disclosure of all material facts
(as defined in the Securities Act (Ontario)) relating to the
Corporation on a consolidated basis and to the Securities and
will not contain any misrepresentation (as defined in the
Securities Act (Ontario)), provided that the foregoing shall
not apply with respect to statements contained in such
documents relating solely to the Underwriters;
(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 B;
(i) as at January 31, 2003, 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
87,696,002 Common Shares and no First Preferred shares are
issued and outstanding;
(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. 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. To the best of the Corporation's
knowledge, information and belief all the Authorities are
valid and existing and
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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. 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) theYaou and Dorlin properties; and
(v) the Wassa 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, the Prestea
property and the Wassa property, collectively being referred
to herein as the "MATERIAL RESOURCE PROPERTIES");
(k) 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
described in the Incorporated Documents and other than such
liens, charges and encumbrances that are not individually or
in the aggregate material to the Corporation or the Material
Subsidiaries;
(l) 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 Final
Prospectus or the Incorporated Documents or as are not
individually or in the aggregate material to the Corporation
or 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 Final Prospectus or the Incorporated
Documents;
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(m) (A) the Corporation and its Material Subsidiaries are in
material 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;
(n) 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 respond to
a release of any Hazardous Material (as defined below) into
the environment. Except in material compliance with applicable
environmental laws, 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 material 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. Except as disclosed in the
Final Prospectus, 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 material 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)(n), "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
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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;
(o) except as disclosed in the Final 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;
(p) 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
quarters ended March 31, 2002, June 30, 2002 and September 30,
2002 (collectively the "CORPORATION'S FINANCIAL STATEMENTS"),
copies of which are incorporated by reference in the
Preliminary Prospectus and the Final Prospectus, including any
reconciliation of financial statements prepared in accordance
with generally accepted accounting principles in Canada and
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;
(q) the execution and delivery of and the performance by the
Corporation of this Agreement and the Agency 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 have been
authorized by all necessary action on the part of the
Corporation;
(r) this Agreement and the Agency 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);
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(s) the Final Prospectus complies fully, in all respects, with the
requirements of Canadian Securities Laws; for greater
certainty, the documents incorporated by reference therein, at
the time they were filed, complied in all respects of Canadian
Securities Laws;
(t) except as included or incorporated by reference therein, there
are no financial statements or other documents required to be
included in the Preliminary Prospectus or Final Prospectus as
a result of a "significant acquisition" or "significant
disposition", each as described in NI 44-101;
(u) except as disclosed in the Final Prospectus or the
Incorporated Documents, since September 30, 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 material change
reports or other documents have been filed on a confidential
basis with the Qualifying Authorities; (C) there has been no
transaction entered into by the Corporation and not disclosed
in the Incorporated Documents 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
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 Final Prospectus and 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 are in the process of being
prepared for filing, which delayed filing will not have a
material adverse effect on the Corporation or its Material
Subsidiaries) or made in any applicable jurisdiction, have
been filed 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
-17-
contested in good faith, have been so paid or accrued in the
Corporation's Financial Statements;
(y) the Common Shares and Warrants comprised in the Securities are
not "foreign property" for purposes of the Income Tax Act
(Canada);
(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 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 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 Agency 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 Underwriters and to validly create, issue and
sell the Warrants comprised in the Securities to the
Underwriters 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 Final
Prospectus;
(dd) there are no material business relationships or related party
transactions within the meaning of Ontario Securities
Commission Rule 61-501 involving the Corporation or any of its
Material Subsidiaries or any other person except as described
in the Final Prospectus or the Incorporated Documents;
(ee) neither the Corporation nor any of its Material Subsidiaries
nor any employee or agent of the Corporation or any Material
Subsidiary, has (i) made any unlawful contribution or other
payment to any official of, or candidate for, any federal,
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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;
(ff) 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;
(gg) neither the Corporation nor any of the Corporation'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;
(hh) since December 31, 2001, 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, (ii) with the AMEX all reports and documents
required to have been filed by it pursuant to the rules and
regulations of the AMEX, and (iii) 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 TSX or any other applicable Canadian
governmental authorities. True and complete copies of all such
reports and other documents have been delivered or made
available to the Underwriters;
(ii) neither the Corporation nor any Material Subsidiary (i) 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, 1996 or for any
previous taxable year, or (ii) expects that it will constitute
a PHC, a FPHC or a CFC for its current taxable year ending
December 31, 2002;
(jj) the Corporation (i) 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 (ii) expects that it will not
constitute a PFIC for its current taxable year ending December
31, 2002;
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(kk) 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;
(ll) the form of the certificate representing the Warrants has been
duly approved by the Corporation and complies with the
provisions of the Canada Business Corporations Act and of the
TSX;
(mm) the Preliminary Prospectus and Final Prospectus, including any
and all amendments thereto, contain and will contain no untrue
statement of a material fact and do not and will not omit to
state 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 are made; and
(nn) the Corporation has secured from its officers and directors
their agreement not to sell any securities of the Corporation
until after the Closing Date without the prior written consent
of the Underwriters.
(2) The representations and warranties made by the Corporation to the
Agents in the Agency Agreement are hereby incorporated by reference,
and shall have the same effect as though they were made to the
Underwriters under this Agreement.
SECTION 7 REPRESENTATIONS AND WARRANTIES OF THE UNDERWRITERS
(1) Each Underwriter 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 Canadian Securities
Laws so as to permit it to lawfully fulfil its obligations
hereunder; and
(b) it has good and sufficient right and authority to enter into
this Agreement and complete its transactions contemplated
under this Agreement on the terms and conditions set forth
herein.
SECTION 8 COVENANTS OF THE CORPORATION
(1) The Corporation covenants with the Underwriters that:
(a) the Corporation will comply with Section 57 of the Securities
Act (Ontario) and with the comparable provisions of the other
relevant Canadian Securities Laws, and, after the date hereof
and prior to the completion of the distribution of the
Securities, the Corporation will promptly advise the
Underwriters in writing of the full particulars of any
material change, (as defined in the Securities Act (Ontario)),
in the business, affairs, operations, assets, liabilities or
financial condition of the Corporation, on a consolidated
basis, or of any change in any material fact (as defined in
the Securities Act (Ontario)) contained or referred to in the
Preliminary Prospectus, the Final Prospectus, the U.S.
Prospectus, or any Prospectus Amendment or Supplementary
Material (collectively, the "FILINGS") which is, or may be, of
such a nature as to render any statement contained in the
Filings untrue, false or misleading, result in a
misrepresentation (as defined in
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the Securities Act (Ontario)), or result in any of such
documents not complying with the laws of any Qualifying
Province or the United States. The Corporation will promptly
prepare and file with the securities authorities in the
Qualifying Provinces or the United States any amendment or
supplement to the Preliminary Prospectus or the Final
Prospectus or the U.S. Prospectus, which in the opinion of the
Underwriters and the Corporation, each 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 Underwriters 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 Underwriters under
the provisions of this Section 8(1)(a);
(b) the Corporation will deliver without charge to the
Underwriters, as soon as practicable, and in any event no
later than February 11, 2003 in the case of the Final
Prospectus and the U.S. Prospectus, and thereafter from time
to time during the distribution of the Securities, in such
cities as the Underwriters shall notify the Corporation, as
many commercial copies of each of the Preliminary Prospectus,
the Final Prospectus and the U.S. Prospectus, respectively,
(and in the event of any Prospectus Amendment, such Prospectus
Amendment) as the Underwriters may reasonably request for the
purposes contemplated by Canadian Securities Laws and U.S.
Securities Laws and such delivery shall constitute consent by
the Corporation to the use by the Underwriters, the Agents and
the Selling Firms of such documents in connection with the
Offering in all Qualifying Provinces and the United States,
subject to the provisions of Canadian Securities Laws and U.S.
Securities Laws. The Corporation shall similarly cause to be
delivered commercial copies of the Supplementary Material in
such quantities as the Underwriters may reasonably request;
(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
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, the exercise of
warrants issued prior to the date
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hereof, 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 Lead Manager, such consent not to be unreasonably
withheld; and
(e) it will apply the net proceeds from the sale of the Securities
as set forth under "Use of Proceeds" in the Final Prospectus
subject to reallocation as contemplated thereby.
SECTION 9 ADDITIONAL DOCUMENTS UPON FILING OF FINAL PROSPECTUS
(1) The Underwriters' obligations under this Agreement are conditional upon
the receipt by the Underwriters, concurrently with the filing of the
Final Prospectus, of:
(a) a "long-form" comfort letter dated the date of the Final
Prospectus from the auditors of the Corporation, addressed to
the Underwriters, in form and substance reasonably
satisfactory to the Underwriters, relating to the verification
of the financial information and accounting data and other
numerical data of a financial nature contained in the Final
Prospectus and matters involving changes or developments since
the respective dates as of which specified financial
information is given in the Final 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 with respect to the Corporation within the meaning
of Canadian Securities Laws, and that in their opinion the
audited financial statements of the Corporation included in
the Final Prospectus comply as to form in all material
respects with the applicable accounting requirements of
Canadian Securities Laws;
(b) a copy of the Final Prospectus signed and certified as
required by Canadian Securities Laws; and
(c) a copy of any other document required to be filed by the
Corporation with the Qualifying Authorities under Canadian
Securities Laws of each of the Qualifying Provinces.
(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 Agency Agreement to
be delivered to the Agents.
(3) Similar documents and comfort letters shall be delivered to the
Underwriters with respect to any Prospectus Amendment (provided, in the
case of comfort letters, that the Prospectus Amendment contains
financial, accounting or other numerical data of a financial nature),
or as required by the terms of the Agency Agreement to be delivered to
the Agents.
SECTION 10 CLOSING
(1) The Offering will be completed at the offices of Stikeman Elliott LLP
in Toronto at 8:00 a.m. (Toronto time) on February 14, 2003 (the "TIME
OF CLOSING" and the "CLOSING
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DATE", respectively) or at such other time and/or on such other date as
the Underwriters and the Corporation may agree upon, but in any event
no later than February 28, 2003.
(2) At the Time of Closing, subject to the terms and conditions contained
in this Agreement, the Corporation shall deliver to the Underwriters a
certificate or certificates representing the 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 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 Underwriters shall entitle the
Underwriters to terminate their obligation to purchase the Securities
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 Agreement to be
satisfied. It is understood that the Underwriters 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
Underwriters, any such waiver or extension must be in writing.
(2) In addition to any other remedies that may be available to the
Underwriters, the Underwriters shall each be entitled, at their option,
to terminate and cancel, without any liability on the Underwriters'
part, their obligations under this Agreement to purchase the
Securities, 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 is
promulgated or changed which, in the reasonable opinion of the
Underwriters (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 material adverse effect on the market price of the
Common Shares;
(b) if any inquiry, investigation or other proceeding is commenced
or any other order is issued under or pursuant to any statute
of Canada or any province thereof or the United States (other
than an inquiry, investigation or other proceeding based
solely upon the activities or alleged activities of any
Underwriter or Agent) or there is any change of law or the
interpretation or
-23-
administration thereof by a securities regulator or other
public authority, which in the reasonable opinion of the
Underwriters, operates to prevent or materially restrict the
trading of the Common Shares or the distribution of the
Securities;
(c) if there shall occur any actual material adverse change in the
business, affairs, operations, assets, liabilities or
financial condition of the Corporation and its subsidiaries
considered as one enterprise, and which in the Underwriters'
opinion would reasonably be expected to have a material
adverse effect on the market price or value of any of the
Securities or the Common Shares generally;
(d) if the Underwriters determine that any material adverse fact
or information with respect to the Corporation or the
Securities that existed on or prior to January 30, 2003 had
not been publicly disclosed in accordance with applicable
securities laws by February 10, 2003; 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 (whether or not in connection with such conflict or
insurrection) which, in the Underwriters' opinion, materially
adversely affects or involves, or will materially adversely
affect or involve, the Canadian or United States financial
markets and/or prevents or materially restricts the trading of
the Common Shares or the distribution of the Securities.
(3) The Underwriters 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 11(2) provided that neither the
giving nor the failure to give such notice shall in any way affect the
entitlement of the Underwriters to exercise this right at any time
prior to or at the Time of Closing.
(4) The rights of termination contained in this Section 11 as may be
exercised by the Underwriters are in addition to any other rights or
remedies the Underwriters 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 Agreement.
(5) If the obligations of the Underwriters are terminated under this
Agreement pursuant to these termination rights, the Corporation's
liabilities to the Underwriters shall be limited to the Corporation's
obligations under Section 11, Section 12 and Section 13.
SECTION 12 INDEMNITY.
(1) The Corporation covenants and agrees to protect, indemnify, and save
harmless, each of the Underwriters, and their respective directors,
officers, employees and agents (individually, an "INDEMNIFIED PARTY"
and collectively, the "INDEMNIFIED PARTIES"), from and against all
losses, claims, damages, liabilities, reasonable costs or expenses (but
not including loss of profit related to the sale of the Securities in
the Offering) caused or incurred by reason of:
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(a) any information or statement (except any information or
statement relating solely to the Underwriters or Agents),
contained in the Preliminary Prospectus, the Final Prospectus,
or in any Prospectus Amendment, or in any supplemental or
additional or ancillary material, information, evidence,
return, report, application, statement or document
(collectively, the "SUPPLEMENTARY MATERIAL") that has been
filed by or on behalf of the Corporation in connection with
the Offering under the relevant securities laws of any of the
Qualifying Provinces, which at the time and in light of the
circumstances under which it was made contains or is alleged
to contain a misrepresentation (as such term is defined in the
Securities Act (Ontario)) or any omission or any alleged
omission to state therein any fact or information (except for
facts or information relating solely to the Underwriters or
Agents) required to be stated therein or necessary to make any
of the statements therein not misleading in light of the
circumstances under which they were made;
(b) any order made or inquiry, investigation or proceeding
commenced or threatened by any securities regulatory
authority, stock exchange or by any other competent authority,
based upon any untrue statement, omission or misrepresentation
(as such term is defined in the Securities Act (Ontario)) or
alleged untrue statement, omission or misrepresentation
(except a statement, omission or misrepresentation relating
solely to the Underwriters or Agents) in the Preliminary
Prospectus, the Final Prospectus, or Prospectus Amendment, or
any Supplementary Material based upon any failure or alleged
failure to comply with Canadian Securities Laws (other than
any failure or alleged failure to comply by the Underwriters
or Agents) preventing and restricting the trading in or the
sale of the Common Shares or any of them or the distribution
or distribution to the public, as the case may be, of any of
the Securities in any of the Qualifying Provinces;
(c) the non-compliance or alleged non-compliance by the
Corporation with any requirement of Canadian Securities Laws,
including the Corporation's non-compliance with any statutory
requirement to make any document available for inspection; or
(d) any breach of a representation or warranty of the Corporation
contained herein or the failure of the Corporation to comply
with any of its obligations hereunder.
(2) To the extent that any Indemnified Party is not a party to this
Agreement, the Underwriters shall obtain and hold the right and benefit
of the above-noted indemnity in trust for and on behalf of such
Indemnified Party.
(3) If any matter or thing contemplated by this Section 12 shall be
asserted against any Indemnified Party in respect of which
indemnification is or might reasonably be considered to be provided,
such Indemnified Party will notify the Corporation as soon as possible
of the nature of such claim (provided that omission to so notify the
Corporation will not relieve the Corporation of any liability which it
may otherwise have to the Indemnified Party hereunder, except to the
extent the Corporation is materially prejudiced by such omission) and
the Corporation shall be entitled (but not
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required) to assume the defence of any suit brought to enforce such
claim; provided, however, that the defence shall be through legal
counsel reasonably acceptable to such Indemnified Party and that no
settlement may be made by the Corporation or such Indemnified Party
without the prior written consent of the other, such consent not to be
unreasonably withheld.
(4) In any such claim, such Indemnified Party shall have the right to
retain other legal counsel to act on such Indemnified Party's behalf,
provided that the fees and disbursements of such other legal counsel
shall be paid by such Indemnified Party, unless: (i) the Corporation
and such Indemnified Party mutually agree to retain other legal
counsel; or (ii) the representation of the Corporation and such
Indemnified Party by the same legal counsel would be inappropriate due
to actual or potential differing interests, in which event such fees
and disbursements shall be paid by the Corporation to the extent that
they have been reasonably incurred, provided that in no circumstances
will the Corporation be required to pay the fees and expenses of more
than one set of legal counsel for all Indemnified Parties.
(5) The rights of indemnity contained in this Section 12 shall not enure to
the benefit of any Indemnified Party if the Underwriters were provided
with a copy of any amendment or supplement to the Final Prospectus
which corrects any untrue statement or omission or alleged omission
which is the basis of a claim by a party against such Indemnified Party
and which is required, under Canadian Securities Laws, to be delivered
to such party by the Underwriters or the Selling Firms.
SECTION 13 CONTRIBUTION
In the event that the indemnity provided for in Section 12 hereof is
declared by a court of competent jurisdiction to be illegal or unenforceable as
being contrary to public policy or for any other reason, the Underwriters and
the Corporation shall contribute to the aggregate of all losses, claims, costs,
damages, expenses or liabilities of the nature provided for above such that each
Underwriter shall be responsible for that portion represented by the percentage
that the portion of the Underwriting Fee payable by the Corporation to such
Underwriter bears to the gross proceeds realized by the Corporation from the
Offering, whether or not the Underwriters have been sued together or separately,
and the Corporation shall be responsible for the balance, provided that, in no
event, shall an Underwriter be responsible for any amount in excess of the
portion of the Underwriting Fee actually received by such Underwriter. In the
event that the Corporation may be held to be entitled to contribution from the
Underwriters under the provisions of any statute or law, the Corporation shall
be limited to contribution in an amount not exceeding the lesser of: (a) the
portion of the full amount of losses, claims, costs, damages, expenses,
liabilities, giving rise to such contribution for which such Underwriter is
responsible; and (b) the amount of the Underwriting Fee actually received by any
Underwriter. Notwithstanding the foregoing, a person guilty of fraud, fraudulent
misrepresentation or gross negligence shall not be entitled to contribution from
any other party. Any party entitled to contribution will, promptly after
receiving notice of commencement of any claim, 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, notify such party or
parties from whom contribution may be sought, but the omission to so notify such
party shall not relieve the party from whom contribution may be sought from any
obligation it may have otherwise under this section,
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except to the extent that the party from whom contribution may be sought is
materially prejudiced by such omission. The right to contribution provided
herein shall be in addition and not in derogation of any other right to
contribution which the Underwriters may have by statute or otherwise by law.
SECTION 14 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 Agreement
including, without limitation: (i) the costs of the Corporation's professional
advisors (including, without limitation, the Corporation's auditors, counsel and
local counsel, including U.S. counsel) and (ii) the cost of printing the
Preliminary Prospectus, the Final Prospectus, any Prospectus Amendment, the U.S.
Prospectus and any amendments thereto, Supplementary Material and certificates
for the Securities. The fees and disbursements of any counsel (whether Canadian
or U.S.) to the Underwriters and the Agents and out-of-pocket expenses of the
Underwriters shall be borne by the Corporation; provided that, 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 Underwriters of any of their obligations hereunder), the
Corporation shall assume and pay, in addition to the out-of pocket expenses of
the Underwriters and any other expenses required to be paid by it hereunder, all
fees and disbursements of counsel (whether Canadian or U.S.) to the Underwriters
or the Agents.
SECTION 15 LIABILITY OF UNDERWRITERS
(1) The obligation of the Underwriters to purchase the Securities in
connection with the Offering at the Time of Closing on the Closing Date
shall be several and not joint or joint and several and shall be as to
the following percentages of the Securities to be purchased at that
time:
Canaccord Capital Corporation 70%
BMO Xxxxxxx Xxxxx Inc. 30%
----
100%
(2) Neither Underwriter shall be obligated to take up and pay for any of
the Securities unless the other Underwriter simultaneously takes up and
pays for the percentage of the Securities set out above opposite its
name.
(3) If one of the Underwriters fails to purchase its applicable percentage
of the aggregate amount of the Securities at the Closing Time, for any
reason, the other Underwriter shall be relieved of its obligations
hereunder provided that such other Underwriter shall have the right,
but shall not be obligated, to purchase, all but not less than all, of
the Securities which would otherwise have been purchased by the
Underwriters which failed to purchase. If, with respect to the
Securities, the non-defaulting Underwriter elects not to exercise such
right so as to assume the entire obligation of the defaulting
Underwriter (the Securities in respect of which the defaulting
Underwriter fails to purchase and the non-defaulting Underwriter does
not elect to purchase, being hereinafter called the "DEFAULT SHARES"),
then the Corporation shall have the right to either (i) proceed with
the sale of the Securities (less the Default Shares) to the
non-defaulting Underwriter in
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which case the Closing Date may be postponed for 72 hours by notice to
the Corporation or (ii) terminate its obligations hereunder without
liability to the non-defaulting Underwriter except under Section 11,
Section 12 and Section 13 hereof. Nothing in this Section 15 shall
oblige the Corporation to sell to any of the Underwriters less than all
of the Securities or shall relieve any of the Underwriters in default
hereunder from liability to the Corporation.
(4) Subject to the foregoing, the Underwriters shall have the right, but
not the obligation, to sell to the Agents, any Securities pursuant to
the Inter-Dealer Agreement, and subject to the terms and conditions set
out therein.
(5) Any Securities that are sold by the Agents pursuant to the Agency
Agreement will reduce the obligation of the Underwriters to purchase
the Securities hereunder by an equal amount.
SECTION 16 ACTION BY UNDERWRITERS
All steps which must or may be taken by the Underwriters in connection
with this Agreement, with the exception of the matters relating to termination
contemplated by Section 11 hereof, may be taken by the Lead Manager on behalf of
itself and the other Underwriter 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 Lead Manager.
SECTION 17 COMPLIANCE WITH U.S. SECURITIES LAWS; CONCURRENT OFFERING
(1) The Corporation and the Underwriters agree that each will comply with
U.S. Securities Laws in connection with this Agreement and the
Offering. Each acknowledges that the Securities will be registered
under the U.S. Securities Act and that the Preliminary Prospectus and
the Final Prospectus must be, or have been, filed with SEC.
(2) It is understood and agreed to by all parties that the Corporation is
concurrently entering into the Agency Agreement providing for the sale
by the Corporation of the Units in the United States, through
arrangements with the Agents. Anything herein or therein to the
contrary notwithstanding, the respective closings under this Agreement
and the Agency Agreement are hereby expressly made conditional on one
another. 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 hereunder and the other related to the
Securities sold through the Agents. The latter form of prospectus will
be the same in all material respects except that certain additional
disclosures and certificates will be included in the Preliminary
Prospectus and the Final Prospectus, and amendments thereto, that
relate to Canadian Securities Laws or Canadian market conventions.
SECTION 18 GOVERNING LAW; TIME OF ESSENCE
This Agreement shall be governed by and construed in accordance with
the laws of the Province of Ontario and the federal laws of Canada applicable
therein and time shall be of the essence hereof.
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SECTION 19 SURVIVAL OF WARRANTIES, REPRESENTATIONS, COVENANTS AND AGREEMENTS
All warranties, representations, covenants and agreements of the
Corporation and the Underwriters herein contained or contained in documents
submitted or required to be submitted pursuant to this Agreement shall survive
the purchase by the Underwriters 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 Underwriters, or
on their behalf, for a period of two years following the Closing Date. Without
limitation of the foregoing, the provisions contained in this Agreement in any
way related to the indemnification or the contribution obligations herein shall
survive and continue in full force and effect, indefinitely.
SECTION 20 PRESS RELEASES
The Corporation shall provide the Underwriters 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
Underwriters and their counsel a reasonable opportunity to provide comments on
any press release.
SECTION 21 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:
(a) to the Corporation at:
Golden Star Resources Ltd.
00000 Xxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxx
XXX, 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:
-00-
Xxxxx Xxxxxx & Xxxxxx LLP
0000 Xxxxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx
X.X.X. 00000
Attention: Xxxxxxx Xxxxxxxx
Facsimile No.: (000) 000-0000
(b) to the Underwriters at:
Canaccord Capital Corporation
000 Xxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx
Attention: Xxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
and
(c) BMO Xxxxxxx Xxxxx Inc.
0 Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxx Xxxxxxxx
Facsimile No.: (000) 000-0000
with a copy to:
Stikeman Elliott LLP
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
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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 22 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
Canadian dollars, the Corporation shall indemnify each Underwriter against any
loss incurred by such Underwriter as a result of any variation as between (i)
the rate of exchange at which the Canadian dollar amount is converted into the
judgment currency for the purpose of such judgment or order and (ii) the rate of
exchange at which an Underwriter is able to purchase Canadian dollars with the
amount of the judgment currency actually received by such Underwriter. The term
"rate of exchange" shall include any premiums and costs of exchange payable in
connection with the purchase of or conversion into Canadian dollars.
SECTION 23 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.
SECTION 24 ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the
Underwriters and the Corporation relating to the subject matter hereof and
supersedes all prior agreements between the Underwriters and the Corporation.
SECTION 25 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 (Attention: Xxxxx Xxxxxxx).
Yours very truly,
CANACCORD CAPITAL CORPORATION
By: /s/ XXXXX XXXXXXX
-----------------------------------
Authorized Signing Officer
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BMO XXXXXXX XXXXX INC.
By: /s/ XXXXX XXXXXXXX
-----------------------------------
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 10th day of February, 2003.
GOLDEN STAR RESOURCES LTD.
By: /s/ XXXXX XXXXXXXX
-----------------------------------
Authorized Signing Officer
SCHEDULE A
MATERIAL SUBSIDIARIES
NAME TYPE OF OWNERSHIP PERCENTAGE
---- ----------------- ----------
Caystar Holdings (Cayman Islands) Shares 100%
Bogoso Holdings (Cayman Islands) Shares 100%
Bogoso Gold Limited (Ghana) Shares 90%
Guyanor Ressources S.A. (France) Shares 73%
Societe de Traveux Publics et de Shares 100%
Mines Auriferes en Guyane S.A.R.L.
(France)
Societe des Mines de Yaou & Dorlin Shares 100%
[S.A.R.L.] (France)
Wasford Holdings (Cayman Islands) Shares 100%
Wexford Goldfields Limited (Ghana) Shares 90%
SCHEDULE B
CONVERTIBLE SECURITIES AS OF JANUARY 31, 2003
NUMBER OF COMMON SHARES
SECURITY EXERCISABLE INTO EXERCISE OR CONVERSION PRICE
------------------------ ------------------------------- -----------------------------------
Options 5,562,744 Cdn$1.02 to Cdn$ 3.14
Warrants 15,823,367 U.S.$ 0.70 to U.S.$ 1.75
TOTAL 21,386,111
