EXHIBIT 2.1
ARRANGEMENT AGREEMENT
BETWEEN
GOLDEN STAR RESOURCES LTD.
AND
ST. JUDE RESOURCES LTD.
NOVEMBER 11, 2005
TABLE OF CONTENTS
PAGE
ARTICLE 1 INTERPRETATION...................................................................... 1
1.1 Definitions......................................................................... 1
1.2 Currency............................................................................ 8
1.3 Interpretation Not Affected by Headings, etc. ...................................... 8
1.4 Number and Gender................................................................... 8
1.5 Date for Any Action................................................................. 8
1.6 References.......................................................................... 8
1.7 Entire Agreement.................................................................... 8
1.8 Knowledge........................................................................... 9
1.9 Schedules........................................................................... 9
ARTICLE 2 THE BUSINESS COMBINATION............................................................ 9
2.1 The Arrangement..................................................................... 9
2.2 Effective Date...................................................................... 10
2.3 Court Proceedings................................................................... 10
2.4 Closing............................................................................. 11
2.5 Articles of Arrangement............................................................. 11
2.6 Closing Matters..................................................................... 12
ARTICLE 3 REPRESENTATIONS AND WARRANTIES...................................................... 12
3.1 General Representations and Warranties of St. Jude and Golden Star.................. 12
3.2 Representations and Warranties of each of St. Jude and Golden Star.................. 15
3.3 Investigation....................................................................... 26
3.4 Survival of Representations and Warranties.......................................... 26
ARTICLE 4 COVENANTS OF THE PARTIES............................................................ 27
4.1 Consultation........................................................................ 27
4.2 Business Covenants.................................................................. 27
4.3 Covenants Regarding Non-Solicitation................................................ 33
4.4 Notice of Superior Proposal Determination........................................... 34
4.5 Access to Information and Confidentiality........................................... 35
4.6 Covenants in Respect of the Arrangement............................................. 35
4.7 Specific Covenants of St. Jude Regarding the Arrangement............................ 37
4.8 Covenants of Golden Star Regarding the Arrangement.................................. 39
4.9 Merger of Covenants................................................................. 40
ARTICLE 5 CONDITIONS.......................................................................... 40
5.1 Mutual Conditions Precedent......................................................... 40
5.2 Several Conditions.................................................................. 41
5.3 Additional Conditions in Favour of Golden Star...................................... 42
5.4 Merger of Conditions................................................................ 44
ARTICLE 6 BREAK FEES AND EXPENSE REIMBURSEMENT................................................ 44
6.1 Interpretation...................................................................... 44
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6.2 St. Jude Break Fee.................................................................. 45
6.3 Reimbursement of Expenses........................................................... 45
6.4 Liquidated Damages.................................................................. 45
6.5 No Duplication...................................................................... 46
6.6 Survival............................................................................ 46
ARTICLE 7 TERMINATION......................................................................... 46
7.1 Termination......................................................................... 46
ARTICLE 8 AMENDMENT........................................................................... 48
8.1 Amendments and Waivers.............................................................. 48
ARTICLE 9 GENERAL PROVISIONS.................................................................. 48
9.1 Notices............................................................................. 48
9.2 Confidentiality..................................................................... 50
9.3 Governing Law....................................................................... 50
9.4 Attornment.......................................................................... 50
9.5 Binding Effect and Assignment....................................................... 51
9.6 Time of Essence..................................................................... 51
9.7 Third Party Rights.................................................................. 51
9.8 Counterparts........................................................................ 51
9.9 Fees and Expenses................................................................... 51
9.10 No Personal Liability............................................................... 51
9.11 Further Assurances.................................................................. 51
9.12 Remedies............................................................................ 52
SCHEDULE 1 PLAN OF ARRANGEMENT................................................................. 1
SCHEDULE 2 FORM OF ARRANGEMENT RESOLUTION...................................................... 1
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ARRANGEMENT AGREEMENT
THIS AGREEMENT is made as of the 11th day of November, 0000
X X X X X XX:
GOLDEN STAR RESOURCES LTD., a corporation governed by the federal
laws of Canada ("GOLDEN STAR")
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ST. JUDE RESOURCES LTD., a corporation governed by the federal laws
of Canada ("ST. JUDE")
WHEREAS Golden Star and St. Jude propose to combine the business and
assets of St. Jude with those of Golden Star;
AND WHEREAS the Parties intend to effect the business combination by
way of a Plan of Arrangement under the provisions of the CBCA whereby St. Jude
will become a wholly-owned subsidiary of Golden Star and the holders of
outstanding St. Jude Common Shares will become holders of Golden Star Common
Shares, on and subject to the terms and conditions herein contained;
NOW THEREFORE THIS AGREEMENT WITNESSES THAT, in consideration of the
representations, warranties, covenants and agreements herein contained, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by each Party, the Parties hereto hereby covenant and agree
as follows:
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS
In this Agreement (including the recitals set forth above), unless
the subject matter or context is inconsistent therewith, the following terms
have the following meanings:
"ACQUISITION PROPOSAL" has the meaning set out in subsection 4.3.1.
"AGREEMENT" means this arrangement agreement as amended, restated
and/or supplemented and includes the Schedules attached hereto.
"AMEX" means the American Stock Exchange.
"APPLICABLE LAWS" means all laws, statutes, codes, ordinances,
decrees, rules, regulations, by-laws, written policies, judicial or
arbitral or administrative or ministerial or departmental or
regulatory judgements, orders, decisions, rulings or awards,
including general principles of common and civil law, and conditions
of
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any grant of approval, permission, authority or license of any
court, Governmental Entity or statutory body applicable to a Person
or its business, undertaking, property or securities.
"ARRANGEMENT" means the arrangement involving Golden Star and St.
Jude to be effected under the provisions of the CBCA on the terms
and conditions set out in the Plan of Arrangement, subject to any
amendments or variations thereto made in accordance with the Plan of
Arrangement or provisions hereof or made at the direction of the
Court in the Interim Order or the Final Order.
"ARRANGEMENT RESOLUTION" means the special resolution of the St.
Jude Securityholders, voting as a single class at the St. Jude
Meeting, approving the Plan of Arrangement as required by Applicable
Laws, to be substantially in the form and content of Schedule 2
hereto.
"ARTICLES OF ARRANGEMENT" means the articles of arrangement in
respect of the Arrangement in the form required by the CBCA to be
sent to the Director after the Final Order is made.
"BD GOLDFIELDS" means BD Goldfields Limited, a company incorporated
under the laws of Ghana and having its registered office at 0
Xxxxxxx Xxxx, Xxxxxxxx, Xxxxx, Xxxxx.
"BDG POWERS OF ATTORNEY" means the powers of attorney (in form and
substance satisfactory to Golden Star) to be signed by certain
shareholders of BD Goldfields in favour of St. Jude or such other
Person as is acceptable to Golden Star, granting the holders thereof
a power of attorney over an aggregate of at least 51% of the
outstanding shares of BD Goldfields.
"BENEFIT PLANS" means employee benefit, welfare, supplemental
employment benefit, bonus, pension, profit sharing, deferred
compensation, stock compensation, stock option or purchase,
retirement, hospitalization insurance, medical, dental, legal,
disability and similar plans or arrangements or practices applicable
to present or former employees, officers, directors or independent
contractors of a Person which are currently maintained or
participated in by a Person and each loan to an officer or director
of a Person.
"BOARD OF DIRECTORS" means, in respect of a Party, the board of
directors of the Party.
"BUSINESS DAY" means a day, other than Saturday, Sunday, or a
statutory or civic holiday in Toronto, Canada, Vancouver, Canada or
Denver, United States of America.
"CANADIAN SECURITIES ADMINISTRATORS" means the securities regulators
in each of the provinces of Canada.
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"CBCA" means the Canada Business Corporations Act, R.S.C. 1985, c.
C.44, as amended and the regulations thereunder.
"CERTIFICATE" means the certificate of arrangement giving effect to
the Arrangement endorsed by the Director on the Articles of
Arrangement pursuant to section 262 of the CBCA.
"CLOSING" shall have the meaning set forth in Section 2.4.
"CONFIDENTIALITY AGREEMENT" shall have the meaning set forth in
Section 9.2.
"COURT" means the Supreme Court of British Columbia.
"DIRECTOR" means the Director appointed under section 260 of the
CBCA.
"DISCLOSURE LETTER" means the letter of St. Jude or Golden Star, as
the case may be, delivered to the other Party and dated the date
hereof, which sets forth items that qualify, to the extent specified
therein, a correspondingly numbered representation or warranty made
by that Party or covenant given by that Party.
"EFFECTIVE DATE" means the date upon which the Plan of Arrangement
becomes effective as established by the date of issue shown on the
Certificate.
"EFFECTIVE TIME" means 12:01 a.m. (Vancouver time) on the Effective
Date.
"ENCUMBRANCE" (and any grammatical variation thereof) includes any
mortgage, pledge, assignment, charge, lien, claim, hypothec,
security interest, adverse interest, other third Person interest or
encumbrance of any kind, whether contingent or absolute, and any
agreement, option, right or privilege (whether by law, contract or
otherwise) capable of becoming any of the foregoing.
"ENVIRONMENT" means the ambient air, all layers of the atmosphere,
surface water, underground water, all land, all living organisms and
the interacting natural systems that include components of air,
land, water, organic and inorganic matter and living organisms.
"ENVIRONMENTAL LAWS" means all applicable federal, state,
provincial, municipal or local statutes, regulations, by-laws,
orders, rules, policies or guidelines of any Governmental Entity
having the force of law, and any requirements or obligations arising
under the common law, relating to the Environment, the protection of
the Environment, the transportation of dangerous goods or
occupational, employee and public health and safety.
"ENVIRONMENTAL PERMITS" means, collectively, all permits,
certificates, variances, remedial orders, approvals, consents,
authorizations, registrations, directions, instructions and licenses
issued by or provided to, as the case may be, any Governmental
Entity pursuant to any Environmental Law.
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"FINAL ORDER" means the order of the Court sanctioning the
Arrangement, as such order may be amended or modified by the highest
court which hears an appeal in respect of such order at any time
prior to the Effective Date.
"GAAP" means generally accepted accounting principles approved by
the appropriate governing body of the relevant jurisdiction,
consistently applied.
"GOLDEN STAR COMMON SHARES" means the common shares in the capital
of Golden Star.
"GOLDEN STAR OPERATING SUBSIDIARIES" means Caystar Holdings Inc.,
Bogoso Gold Limited, Wexford Goldfields Limited and Euro Ressources
S.A.
"GOLDEN STAR OPTIONS" means options of Golden Star exercisable to
purchase Golden Star Common Shares issued pursuant to the
Arrangement.
"GOLDEN STAR WARRANTS" means warrants of Golden Star exercisable to
purchase Golden Star Common Shares issued pursuant to the
Arrangement.
"GOVERNMENTAL ENTITY" means (a) any multinational, federal,
provincial, state, regional, municipal, local or other government,
governmental or public department, central bank, court, tribunal,
arbitral body, administrative body, commission, board, bureau or
agency, domestic or foreign; (b) any subdivision, agent or agency,
commission, board, or authority of any of the foregoing; (c) any
self-regulatory authority or stock exchange; or (d) any
quasi-governmental or private body exercising any regulatory,
expropriation or taxing authority under or for the account of any of
the foregoing.
"INFORMATION CIRCULAR" means the management information circular of
St. Jude including all schedules and exhibits thereto to be sent to
the St. Jude Securityholders in respect of the St. Jude Meeting.
"INTERIM ORDER" means the interim order of the Court, as such order
may be amended, made in connection with the holding of the St. Jude
Meeting and the approval of the Arrangement.
"MATERIAL ADVERSE EFFECT" means, in respect of a Party, any change
(including a decision to implement a change made by the directors or
senior management of a Party or any of its Subsidiaries), effect,
event or occurrence which has, or is reasonably expected to have, a
material adverse effect on the business, affairs, properties,
assets, liabilities, capitalization, operations, results of
operations, prospects or condition (financial or otherwise) of the
Party and its Subsidiaries taken as a whole, other than any change,
effect, event or occurrence relating to: (a) the global economy or
securities markets in general; (b) the price of gold expressed in
U.S. dollars; (c) the rate at which Canadian dollars or United
States dollars can be changed for any foreign currency; (d) the gold
mining industry in general and not specifically relating to or
affecting such Party; (e) the general political and business climate
related to carrying on business in Ghana; and (f)
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any change in the trading price of the securities of a Party
immediately following and reasonably attributable to the disclosure
of the Arrangement.
"MISREPRESENTATION", "MATERIAL FACT" and "MATERIAL CHANGE" have the
respective meanings ascribed to them in the Securities Act.
"MEETING MATERIALS" means the notice of the St. Jude Meeting and the
Information Circular, including all schedules thereto, together with
the forms of proxy, letter of transmittal and all other materials to
be mailed to St. Jude Securityholders in connection with the St.
Jude Meeting, as any of the foregoing may be amended or supplemented
from time to time.
"PARTIES" means Golden Star and St. Jude and "PARTY" means either
one of them.
"PERSON" means any individual, partnership, limited partnership,
syndicate, sole proprietorship, company or corporation, with or
without share capital, unincorporated association, trust, trustee,
executor, administrator, or other legal personal representative,
regulatory body or agency, government or Governmental Entity,
however designated or constituted.
"PLAN OF ARRANGEMENT" means the plan of arrangement to be proposed
under section 192 of the CBCA, substantially in the form and content
attached as Schedule 1 to this Agreement, as amended, modified or
supplemented from time to time in accordance herewith and any order
of the Court.
"POWER OF ATTORNEY" means the power of attorney dated August 26,
2005 granted by BD Goldfields to Xxx Eduamah, a representative of
St. Jude.
"PRE-MERGER AGREEMENT" means the letter of Golden Star to St. Jude
dated September 27, 2005 as accepted by St. Jude on that date
setting out the agreement of the Parties to proceed with the
Arrangement, as amended.
"PRINCIPAL HOLDER" means Xxxxxxx X. Xxxxxxx.
"PUBLIC DISCLOSURE DOCUMENTS" means, with respect to a Party, all
publicly available forms, reports, schedules, statements (including
financial statements and the notes thereto and any auditors' report
thereon) and other documents filed by such Party with the SEC and/or
the applicable Canadian Securities Administrators and any applicable
stock exchange since December 31, 2001.
"RECOMMENDATION" means the unanimous recommendation of the Board of
Directors of St. Jude recommending that St. Jude Securityholders
approve the Arrangement and vote in favour of approving the
Arrangement Resolution and all matters that could reasonably be
expected to facilitate the Arrangement.
"SEC" means the United States Securities & Exchange Commission.
"SECURITIES ACT" means the Securities Act (Ontario).
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"ST. JUDE BREAK FEE" has the meaning set out in Section 6.1.
"ST. JUDE COMMON SHARES" means the Class A common shares in the
capital of St. Jude.
"ST. JUDE COMPENSATION OPTIONS" means the compensation options to
purchase an aggregate of 668,875 St. Jude Common Shares issued
pursuant to the terms of the compensation option certificates (and
to the Persons and in the amounts set out in the St. Jude Disclosure
letter).
"ST. JUDE CONVERTIBLE SECURITIES" means the securities of St. Jude
that are convertible or exercisable into or otherwise give the
holder the right to acquire St. Jude Common Shares or other
securities of St. Jude, including without limitation, the St. Jude
Warrants, St. Jude Options and St. Jude Compensation Options, all of
which are listed in the Disclosure Letter of St. Jude.
"ST. JUDE CONVERTIBLE SECURITYHOLDERS" means the holders of St. Jude
Convertible Securities.
"ST. JUDE FEE EVENT" has the meaning set out in Section 6.1.
"ST. JUDE MEETING" means the special meeting of the St. Jude
Securityholders, including any and all adjournments and
postponements thereof, called and held in accordance with the
Interim Order and this Agreement for the purpose of considering and,
if thought fit, approving the Arrangement and the Arrangement
Resolution.
"ST. JUDE OPTIONS" means options to purchase an aggregate of
3,518,300 St. Jude Common Shares issued pursuant to the St. Jude
Stock Option Plan (to the Persons and in the amounts set out in the
St. Jude Disclosure Letter).
"ST. JUDE SECURITYHOLDERS" means collectively St. Jude Shareholders
and St. Jude Convertible Securityholders.
"ST. JUDE SHAREHOLDERS" means the registered holders of St. Jude
Common Shares.
"ST. JUDE STOCK OPTION PLAN" means the Amended Stock Incentive Plan
(2004) of St. Jude dated July 31, 2004.
"ST. JUDE WARRANTS" means the 4,500,000 warrants of St. Jude issued
pursuant to the terms of warrant certificates (to the Persons and in
the amounts set out in the St. Jude Disclosure Letter).
"SUBSEQUENT AGREEMENTS" means, collectively, the deed dated August
26, 2005 between St. Jude and BD Goldfields and the Power of
Attorney.
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"SUBSIDIARY" means, with respect to a specified body corporate, any
body corporate of which the specified body corporate is entitled to
elect a majority of the directors thereof and shall include any body
corporate, partnership, joint venture or other entity over which
such specified body corporate exercises direction or control or
which is in a like relation to such a body corporate, excluding any
body corporate in respect of which such direction or control is not
exercised by the specified body corporate as a result of any
existing contract, agreement or commitment.
"SUPERIOR PROPOSAL" has the meaning set out in subsection 4.3.1.
"SUPPORT AGREEMENTS" means the support agreements entered into on
the date hereof among Golden Star and each of those persons
specified in the Golden Star Disclosure Letter.
"TAX" or "TAXES" means all federal, state, provincial, territorial,
county, municipal, local or foreign taxes, dues, duties, rates,
fees, imposts, levies, assessments, tariffs and other charges
imposed, assessed or collected by a Governmental Entity including,
but not limited to, (i) any gross income, net income, gross
receipts, business, royalty, capital, capital gains, goods and
services, value added, severance, stamp, franchise, license,
occupation, premium, capital stock, sales, use, real property,
personal property, ad valorem, transfer, license, profits, windfall
profits, environmental, payroll, employment, employer health,
pension plan, anti-dumping, countervail, excise, customs, duties,
severance, stamp, occupation, or premium taxes, (ii) all
withholdings on amounts paid to or by a Person, (iii) all employment
insurance premiums, (iv) Canada and any other pension plan
contributions or premiums, (v) any fine, penalty, interest, or
addition to tax, (vi) any tax imposed, assessed, or collected or
payable pursuant to any tax-sharing agreement or any other contract
relating to the sharing or payment of any such tax, levy,
assessment, tariff, duty, deficiency, or fee, and (vii) any
liability for any of the foregoing as a transferee, successor,
guarantor, or by contract or by operation of law.
"TAX RETURNS" includes all returns, elections, reports,
declarations, statements, bills, schedules, forms or written
information of, or in respect of, Taxes which are required to be
filed with, or supplied to, any Governmental Entity with taxing
authority.
"TSX" means the Toronto Stock Exchange.
"TSXV" means the TSX Venture Exchange.
"U.S. TAX CODE" means the United States Internal Revenue Code of
1986, as amended from time to time.
"1933 ACT" means the Securities Act of 1933, as amended, of the
United States of America.
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"1934 ACT" means the Securities Exchange Act of 1934, as amended, of
the United States of America.
"1994 AGREEMENT" means the agreement dated November 15, 1994 between
BD Goldfields and St. Jude.
1.2 CURRENCY
All sums of money which are referred to in this Agreement are
expressed in lawful money of Canada unless otherwise specified.
1.3 INTERPRETATION NOT AFFECTED BY HEADINGS, ETC.
The division of this Agreement into articles, sections and other
portions and the insertion of headings are for convenience of reference only and
shall not affect the construction or interpretation of this Agreement. The terms
"the Agreement", "hereof", "herein", "hereunder", and similar expressions refer
to this Agreement and the Schedules hereto and not to any particular article,
section or other portion hereof and include any agreement, schedule or
instrument supplementary or ancillary hereto.
1.4 NUMBER AND GENDER
Unless the subject matter or context requires the contrary, words
importing the singular number only shall include the plural and vice versa and
words importing the use of any gender shall include all genders.
1.5 DATE FOR ANY ACTION
In the event that any date on which any action is required or
permitted to be taken hereunder by any person is not a Business Day, such action
shall be required to be taken on the next succeeding day which is a Business
Day.
1.6 REFERENCES
Any reference in this Agreement to a statute includes all
regulations made thereunder, all amendments to such statute in force from time
to time and any statute or regulation that supplements or supersedes such
statute or regulation.
1.7 ENTIRE AGREEMENT
This Agreement (including the Schedules hereto, the Disclosure
Letter of each Party and the Confidentiality Agreement) constitutes the entire
agreement between the Parties with respect to the subject matter hereof and
cancels and supersedes all prior agreements, understandings, negotiations and
discussions, whether oral or written, between the parties hereto with respect to
the subject matter hereof. There are no representations, warranties, terms,
conditions, undertakings or collateral agreements, expressed, implied or
statutory, between the Parties other than as expressly set forth in this
Agreement. For greater certainty, the Parties agree that this Agreement
supersedes the Pre-Merger Agreement and that the Pre-Merger Agreement shall have
no further force or effect.
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1.8 KNOWLEDGE
In this Agreement, references to "the knowledge of" and similar
references mean the actual knowledge of any of the senior officers of the
applicable Party, after reasonable inquiry, and such senior officers shall make
such inquiry as is reasonable in the circumstances.
1.9 SCHEDULES
The following are the Schedules attached to and incorporated into
this Agreement by reference and deemed to be a part hereof:
Schedule 1 - Plan of Arrangement
Schedule 2 - Form of Arrangement Resolution
ARTICLE 2
THE BUSINESS COMBINATION
2.1 THE ARRANGEMENT
The business combination of Golden Star and St. Jude shall be
effected by way of Arrangement pursuant to section 192 of the CBCA on the terms
and subject to the conditions contained in this Agreement and the Plan of
Arrangement.
Pursuant to the Arrangement:
(a) each outstanding St. Jude Common Share will be exchanged for Golden
Star Common Shares on the basis of 0.72 Golden Star Common Shares
for each one St. Jude Common Share, provided that no fractional
Golden Star Common Shares will be issued and any St. Jude
Shareholder who would otherwise receive a fractional Golden Star
Common Share on completion of the Arrangement will only receive that
number of Golden Star Common Shares as is rounded down to the
nearest whole Golden Star Common Share;
(b) each outstanding St. Jude Option will be exchanged for one Golden
Star Option with each such Golden Star Option being exercisable for
that number of Golden Star Common Shares that is equal to (w) the
number of St. Jude Common Shares that would otherwise have been
issuable upon the exercise of the St. Jude Option multiplied by (x)
0.72 (rounded down to the nearest whole Golden Star Common Share),
with the exercise price of such Golden Star Option being equal to
(y) the exercise price of the applicable St. Jude Option divided by
(z) 0.72; provided that such Golden Star Option shall not expire
prior to the date on which the respective St. Jude Option was to
expire pursuant to its terms or, in the event of a St. Jude Option
that would otherwise expire on the completion of the Arrangement as
a result of a holder thereof ceasing to be an employee, officer or
director concurrent with the Effective Time of the Arrangement,
subject to receipt of any necessary
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regulatory approvals and provided that no majority of the minority
St. Jude Securityholder approval is required, the expiry date of
such Golden Star Option will be extended to the date that is 90 days
after the Effective Date; and
(c) each outstanding St. Jude Warrant will be exchanged for one Golden
Star Warrant with each such Golden Star Warrant being exercisable
for that number of Golden Star Common Shares that is equal to (w)
the number of St. Jude Common Shares that would otherwise have been
issuable upon the exercise of the St. Jude Warrant multiplied by (x)
0.72 (rounded down to the nearest whole Golden Star Common Share),
with the exercise price of such Golden Star Warrant being equal to
(y) the exercise price of the applicable St. Jude Warrant divided by
(z) 0.72; provided that such Golden Star Warrant shall not expire
prior to the date on which the respective St. Jude Warrant was to
expire pursuant to its terms.
2.2 EFFECTIVE DATE
The Arrangement shall become effective at the Effective Time on the
terms and subject to the conditions contained in this Agreement and the Plan of
Arrangement.
2.3 COURT PROCEEDINGS
As soon as is reasonably practicable after the date of execution of
this Agreement and in any event by November 18, 2005, St. Jude shall apply to
the Court for an order approving the Arrangement and seeking a ruling upon the
fairness of the Arrangement and, in connection with such application, St. Jude
shall:
(a) file, proceed with and diligently prosecute an application to the
Court for the Interim Order providing for, among other things, the
calling and holding of the St. Jude Meeting for the purpose of
considering and, if deemed advisable, approving the Arrangement; and
(b) subject to obtaining the approvals as contemplated by the Interim
Order and as may be directed by the Court in the Interim Order,
file, proceed with and diligently prosecute an application for the
Final Order which application shall be in form and substance
satisfactory to the Parties hereto acting reasonably, and shall
inform the Court that, based on the Court's approval of the Plan of
Arrangement, Golden Star will rely on section 3(a)(10) of the 1933
Act for an exemption from the 1933 Act registration requirements
with respect to the securities to be issued under the Plan of
Arrangement.
The notices of motion and related materials for the applications
referred to in this Section shall be in a form satisfactory to St. Jude and
Golden Star prior to filing, each acting reasonably, and, in the case of the
application to the Court for the Interim Order, shall inform the Court that,
based on the Court's approval of the Plan of Arrangement, Golden Star will rely
on section 3(a)(10) of the 1933 Act for an exemption from the 1933 Act
registration requirements with respect to the securities to be issued under the
Plan of Arrangement, and shall request that the Interim Order provide, among
other things:
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(a) for the Persons to whom notice is to be provided in respect of the
Arrangement for the St. Jude Meeting and for the manner in which
such notice is to be provided;
(b) that the requisite approval of the St. Jude Securityholders for the
Arrangement Resolution shall be two-thirds of the votes cast thereon
by St. Jude Securityholders, voting together as a single class,
present in person or represented by proxy at the St. Jude Meeting,
with St. Jude Convertible Securityholders being entitled to one vote
for each St. Jude Common Share which they would be entitled to have
issued to them if they exercised all their St. Jude Convertible
Securities held by them as of the close of business (Vancouver time)
on the record date of the St. Jude Meeting without reference to any
vesting provisions or option price;
(c) for the grant of the dissent rights as set forth in the Plan of
Arrangement; and
(d) that in all other respects, the terms, restrictions and conditions
of the by-laws and articles of St. Jude, including quorum
requirements, shall apply in respect of the St. Jude Meeting.
2.4 CLOSING
The completion of the Arrangement (the "CLOSING") shall be at the
offices of Fasken Xxxxxxxxx XxXxxxxx XXX, Xxxxx 0000, Xxxxxxx Xxxxxxxx Bank
Tower, Toronto Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx at 9:00 a.m. on December 21,
2005 or at such other time or on such other date (but in any case not later than
March 16, 2006) as the Parties may mutually agree upon and each Party shall
deliver to the other Party:
(a) the documents required or contemplated to be delivered by it
hereunder to complete the Arrangement and the other transactions
contemplated hereby, provided that each such document required to be
dated the Effective Date shall be dated as of, or become effective
on, the Effective Date and shall be held in escrow to be released
upon the Arrangement becoming effective; and
(b) written confirmation as to the satisfaction or waiver of all of the
conditions in its favour contained in this Agreement.
2.5 ARTICLES OF ARRANGEMENT
Subject to the rights of termination contained in Article 7 hereof,
upon the St. Jude Securityholders approving the Arrangement Resolution in
accordance with the Interim Order, St. Jude obtaining the Final Order and the
other conditions contained in Article 5 hereof being complied with or waived,
St. Jude shall on or after the Closing Date and upon the written direction of
Golden Star, file the Articles of Arrangement, in duplicate, with the Director
together with such other documents as may be required in order to effect the
Arrangement.
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2.6 CLOSING MATTERS
2.6.1 In conjunction with the Closing:
(a) the number of directors of Golden Star shall be increased to seven
(7). Golden Star expects that all of the current directors of Golden
Star shall remain directors of Golden Star. St. Jude shall be
entitled to nominate one nominee (who shall be the current Chief
Executive Officer of St. Jude) to the board of directors of Golden
Star. Golden Star will take appropriate steps in order that the
nominee of St. Jude be appointed to the Board of Directors of Golden
Star at Closing, subject to any necessary regulatory approvals.
Subject to any applicable legal requirements, Golden Star shall
propose the current Chief Executive Officer of St. Jude as a
director to its shareholders at its next annual general meeting and
shall solicit proxies in favour of his election to the Board of
Directors at such meeting;
(b) Golden Star shall determine: (i) which personnel of St. Jude will be
appointed or retained upon the completion of the Arrangement; and
(ii) which offices and personnel of St. Jude in West Africa will be
maintained or retained subsequent to the completion of the
Arrangement;
(c) subject to clause (b) above, St. Jude shall use all reasonable
efforts to cause all directors and officers of St. Jude and its
Subsidiaries who will not be retained to resign and sign releases in
favour of St. Jude concurrently with the completion of the
Arrangement; and
(d) the existing office of St. Jude in Vancouver, British Columbia will
be phased out in accordance with the terms of the existing lease.
2.6.2 Following the Closing, Golden Star will cause St. Jude to honour all
severance agreements referenced in Section 3.2.1(z)(i) in accordance with the
terms of the agreements requiring the making of such severance payments.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 GENERAL REPRESENTATIONS AND WARRANTIES OF ST. JUDE AND GOLDEN STAR
Other than as disclosed in writing by one Party to the other
pursuant to its Disclosure Letter, each Party hereby represents and warrants to
the other Party the following and acknowledges that the other Party is relying
upon such representations and warranties in connection with entering into this
Agreement and participating in the Arrangement:
(a) it and each of its Subsidiaries is duly incorporated and organized
and in good standing under the laws of its jurisdiction of
incorporation;
(b) the ownership of the shares of each of its Subsidiaries is
accurately disclosed in the Disclosure Letter of such Party, and all
such shares are validly issued, fully paid and non-assessable and
legally and beneficially owned by such Party, free and clear of all
Encumbrances of any kind whatsoever except for restrictions on
transfer contained in the constating documents of such entities.
There are no options, warrants, conversion privileges, pre-emptive
rights or other rights, agreements or arrangements obligating the
Party or any of its Subsidiaries to
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issue, sell or acquire any securities of any of its Subsidiaries or
securities or obligations of any kind convertible into or
exchangeable for securities or other ownership interests of any of
the Subsidiaries or any other Person. There are no outstanding stock
appreciation rights, equity or similar rights, agreements,
arrangements or commitments based on the book value, income or any
other attribute of the Party or any of its Subsidiaries;
(c) it has filed with the applicable Canadian Securities Administrators
and/or the SEC and all other applicable Governmental Entities all
forms, reports, schedules, statements and other documents required
to be filed by it since December 31, 2001;
(d) since December 31, 2001, its Public Disclosure Documents at the time
filed, except to the extent that any statements contained therein
have been modified or superseded by a later Public Disclosure
Document, (i) did not contain any misrepresentation, (ii) contain no
untrue statement of a material fact nor do they omit to state a
material fact which, at the date thereof, was required to have been
stated or was necessary to prevent a statement from being misleading
in light of the circumstances in which it was made, and (iii)
complied in all material respects with the requirements of
Applicable Laws;
(e) it has not filed any confidential material change report or other
document with any applicable Canadian Securities Administrator or
the SEC since December 31, 2001, which remains confidential;
(f) the Party has the full corporate power, capacity and authority to
enter into this Agreement and to execute, deliver and perform its
obligations under this Agreement (subject to the approval of the St.
Jude Securityholders and the Court as provided in this Agreement
with respect to the Plan of Arrangement) and this Agreement has been
duly authorized, executed and delivered by the Party and constitutes
a legal, valid and binding obligation of the Party enforceable
against the Party in accordance with its terms, subject to
bankruptcy, insolvency and other Applicable Laws affecting the
rights of creditors generally, and subject to the qualifications
that (i) equitable remedies such as specific performance and
injunction may be granted only in the discretion of a court of
competent jurisdiction, and (ii) rights to indemnity and
contribution may be limited by Applicable Laws;
(g) the execution and delivery of this Agreement, the consummation by
the Party of the transactions contemplated in this Agreement and
compliance by the Party with the terms of this Agreement do not and
will not result in any violation of the articles or by-laws or
similar constating documents of the Party or of any of its
Subsidiaries or violate any resolution of the directors or
shareholders of the Party or give rise to a right to terminate or
accelerate the due date of any payment or indebtedness due under or
trigger a payment under, or conflict with, violate or result in the
breach of any term or provision of or constitute a default (or any
event which with notice, or lapse of time, or both, would constitute
a default)
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under, or require consent, approval, permit, authorization, order or
waiver from any third Person under, or result in the execution or
imposition of any right, lien, charge or Encumbrance upon any
properties, businesses or assets of the Party or any of its
Subsidiaries under:
(i) any indenture, mortgage, loan agreement, trust deed, note,
contract or other agreement or instrument to which the Party
or any Subsidiary is a party or by which the Party or any
Subsidiary or any of their respective properties, businesses
or assets is bound or affected;
(ii) any franchise, license or permit held by the Party or any of
its Subsidiaries or of which the Party or any of its
Subsidiaries has an interest;
(iii) any judgment, order or decree of any Governmental Entity
having jurisdiction over the Party or any Subsidiary or any of
their properties, businesses or assets; or
(iv) any Applicable Laws applicable to the Party or any Subsidiary,
other than any such conflicts, violations, defaults, rights, liens,
charges or Encumbrances that individually or in the aggregate have
not had and could not reasonably be expected to have a Material
Adverse Effect on the Party;
(h) the consolidated financial statements of the Party (including the
notes thereto and any auditors' report thereon) included in its
Public Disclosure Documents pursuant to the requirements of
Applicable Laws present fairly in all material respects its
consolidated financial position, its consolidated results of
operations and cash flows and surplus or deficit and the other
information purported to be shown therein at the respective dates
and for the respective periods to which they apply; such financial
statements have been prepared in conformity with Canadian GAAP or
United States GAAP, as applicable, consistently applied throughout
the periods involved (except as may be indicated in the notes
thereto), have been audited in accordance with Canadian or United
States generally accepted auditing standards, as applicable (except,
in the case of unaudited statements, as permitted by Canadian
Securities Administrators and the SEC), contain and reflect adequate
provision or allowance for all reasonably anticipated liabilities,
expenses and losses, and all adjustments necessary for a fair
presentation of the results for such periods have been made
(subject, in the case of unaudited statements, to normal year-end
audit adjustments); and
(i) there are no claims, actions, suits, judgments, investigations or
proceedings of any kind outstanding, pending or to the best
knowledge of the Party, threatened against or affecting the Party or
its Subsidiaries or any of their respective properties and assets or
their respective directors, officers or promoters at law or in
equity or before any Governmental Entity of any kind that if
adversely determined could reasonably be expected to have a Material
Adverse Effect on the Party or prevent or materially delay
consummation of the Arrangement or
- 15 -
prevent the Party from carrying out its obligations hereunder, nor
is the Party aware of any facts or circumstances that could form the
basis for any such claim, action, suit, judgment, investigation or
proceeding.
3.2 REPRESENTATIONS AND WARRANTIES OF EACH OF ST. JUDE AND GOLDEN STAR
3.2.1 As an inducement to Golden Star to enter into this Agreement, St. Jude
hereby represents and warrants to Golden Star the following, in each case except
as modified in its Disclosure Letter, and acknowledges that Golden Star is
relying upon such representations and warranties in connection with entering
into this Agreement and participating in the Arrangement:
(a) St. Jude is a reporting issuer or the equivalent thereof in British
Columbia, Alberta and Ontario, and is not in default in any material
respects of any requirements of applicable securities laws of
Canada;
(b) the St. Jude Common Shares are listed for trading on the TSXV and
St. Jude is not in default of any of the listing or other material
requirements of such exchange;
(c) no order (or the equivalent) ceasing or suspending the trading of
its securities or prohibiting the sale of securities by St. Jude or
any of its Subsidiaries has been issued and is in force as of the
date hereof and, to the knowledge of St. Jude, no proceedings for
this purpose have been instituted or are pending, contemplated or
threatened;
(d) as at November 11, 2005, St. Jude's authorized and issued capital
consists of an unlimited number of St. Jude Common Shares and an
unlimited number of Class B common shares (non-voting) of which
42,911,109 St. Jude Common Shares and no Class B common shares are
issued and outstanding as fully paid and non-assessable;
(e) to the knowledge of St. Jude, no shareholder owns more than 5% of
the outstanding St. Jude Common Shares (on either an undiluted or
fully-diluted basis) and to the best of St. Jude's knowledge, as at
November 11, 2005, the Principal Holder directly or indirectly
beneficially owns or controls 2,633,350 St. Jude Common Shares and
800,000 St. Jude Options to purchase an aggregate of 800,000 St.
Jude Common Shares;
(f) St. Jude has no, nor will there be immediately prior to the
Effective Time, any options, warrants, conversion privileges, calls
or other rights (including pre-emptive rights), agreements,
arrangements, commitments or obligations of it to issue, sell or
acquire any securities of it or securities or obligations of any
kind convertible into or exercisable or exchangeable for any
securities of it or any other Person, nor are there outstanding any
stock appreciation rights, phantom equity or similar rights,
agreements, arrangements or commitments based upon the share price,
book value, income or any other attribute of it or any of its
Subsidiaries other than (i) St. Jude Options to purchase an
aggregate of 3,518,300 St. Jude Common Shares; (ii) St. Jude
Warrants to purchase an aggregate of
- 16 -
4,500,000 St. Jude Common Shares; and (iii) St. Jude Compensation
Options to purchase an aggregate of 668,875 St. Jude Common Shares
which St. Jude Compensation Options will expire on November 20,
2005. All St. Jude Options, St. Jude Warrants and St. Jude
Compensation Options have been duly, validly and legally created and
issued by St. Jude in accordance with Applicable Laws and the terms
of the St. Jude Stock Option Plan (in the case of the St. Jude
Options) or such other instrument as may govern the applicable St.
Jude Convertible Securities. St. Jude does not have, and will not at
the Effective Time have, any St. Jude Options that are held by any
Person who is a resident of the United States or any territory or
possession thereof;
(g) the shareholder rights plan of St. Jude has terminated and is void
and of no further effect and no successor shareholder rights plan is
in force;
(h) no Person has any agreement or option or any right or privilege
capable of becoming an agreement or option for the purchase from St.
Jude or any of its Subsidiaries of any material assets of St. Jude
or any of its Subsidiaries and neither St. Jude nor any of its
Subsidiaries has any agreement or option or any right or privilege
capable of becoming an agreement or option for the purchase from any
Person of any securities or any assets which could reasonably be
expected to be material to St. Jude;
(i) the financial books, records and accounts of St. Jude and its
Subsidiaries (i) have been maintained in all material respects in
accordance with good business practices on a basis consistent with
prior years, (ii) are stated in reasonable detail and accurately and
fairly reflect the material transactions and dispositions of the
assets of St. Jude and its Subsidiaries and (iii) in all material
respects accurately and fairly reflect the basis for the financial
statements of St. Jude. St. Jude has devised and maintains a system
of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with
management's general or specific authorization; and (ii)
transactions are recorded as necessary (a) to permit preparation of
financial statements in conformity with Canadian generally accepted
accounting principles, or any other criteria applicable to such
statements and (b) to maintain accountability for assets. St. Jude's
and its Subsidiaries' corporate records and minute books have been
maintained in compliance with applicable Laws and are complete and
accurate in all material respects, and full access thereto has been
provided to Golden Star;
(j) neither St. Jude nor any of its Subsidiaries nor any of their
respective properties or assets is subject to any outstanding
judgment, order, writ, injunction or decree that involves or may
involve, or restricts or may restrict, or requires or may require,
the expenditure of an amount of money in the aggregate in excess of
$100,000 as a condition to or a necessity for the right or ability
of St. Jude or any of its Subsidiaries to conduct its business in
all material respects as it has been carried on prior to the date
hereof, or that would materially impede the consummation of the
transactions contemplated by this Agreement;
-17-
(k) St. Jude has not entered into any agreement that would entitle any
person to any valid claim against St. Jude for a broker's
commission, finder's fee, expense reimbursement or any like payment
in respect of the Arrangement or any other matter contemplated by
this Agreement;
(l) neither St. Jude nor any of its Subsidiaries has any material
liability or obligation, whether direct, indirect, accrued,
absolute, contingent or otherwise not disclosed or reflected in its
most recent publicly-disclosed consolidated financial statements;
(m) there is no bankruptcy, liquidation, winding-up or other similar
proceeding pending or in progress or, to the knowledge of St. Jude
threatened against St. Jude or any of its Subsidiaries before any
Governmental Entity;
(n) St. Jude and each of its Subsidiaries is registered, licensed or
otherwise qualified as an extra-provincial corporation or a foreign
corporation in each jurisdiction where the nature of the business or
the location or character of the property and assets owned or leased
by it requires it to be so registered, licensed or otherwise
qualified except where the failure to be so registered, licensed or
otherwise qualified does not, nor is reasonably expected to, have a
Material Adverse Effect on St. Jude and they have the corporate
power and capacity to own the assets owned by them and to carry on
the business carried on by them and they are duly qualified to carry
on business in all jurisdictions in which they carry on business;
(o) St. Jude and each of its Subsidiaries has conducted and is
conducting its business in compliance, in all material respects,
with all Applicable Laws of each jurisdiction in which its business
is carried on and possess all material certificates, authority,
permits or licenses issued by the appropriate Governmental Entities
necessary to conduct the business now operated by it and all such
certificates, authorities, permits and licenses are valid and
subsisting and in good standing and, to St. Jude's knowledge,
neither St. Jude nor its Subsidiaries have received any notice of
proceedings relating to the revocation or modification of any such
certificate, authority, permit or license which, if the subject of
an unfavourable decision, ruling or finding could reasonably be
expected to have a Material Adverse Effect on St. Jude;
(p) St. Jude and its Subsidiaries (and their respective businesses and
operations):
(i) are in substantial compliance with all applicable
Environmental Laws and Environmental Permits in Ghana, Burkina
Faso, Niger and Canada and in other applicable foreign
jurisdictions having environmental regulatory jurisdiction
over St. Jude or any of its Subsidiaries or assets; and
(ii) have obtained all Environmental Permits that are required to
carry on their respective businesses and operations under all
applicable Environmental Laws, except where the non-compliance
with such laws or permits or failure to obtain those permits
could not reasonably be expected to have a Material Adverse
Effect;
- 18 -
(q) St. Jude and each of its Subsidiaries have good and marketable title
to their assets and properties free and clear of all Encumbrances of
any kind whatsoever;
(r) the Public Disclosure Documents (including without limitation
technical reports) of St. Jude in relation to the mineral and mining
development projects of St. Jude and/or its Subsidiaries are
accurate in all material respects and all known facts that may
impact on the capital costs, operating costs or operational
parameters (including without limitation throughput, grade and
recovery) of each such project are fully and accurately disclosed in
St. Jude's most recent public technical report related to such
projects, and nothing has come to the attention of St. Jude to
indicate that any of the foregoing statements are or may be
inaccurate;
(s) all interests in natural or mineral resource or exploration
properties of St. Jude and its Subsidiaries are set out in St.
Jude's Disclosure Letter and are owned or held by St. Jude or its
Subsidiaries as owner thereof with good and marketable title, are in
good standing, are valid and enforceable, are free and clear of any
title defect or Encumbrances and no royalty or other payment is
payable in respect of any of them and all work required to be
performed in connection therewith has been performed; no other
property rights are necessary for the conduct of St. Jude's or its
Subsidiaries' business; and there are no restrictions on the ability
of St. Jude or its Subsidiaries to use, transfer or otherwise
exploit any such property rights and St. Jude and its Subsidiaries
do not know of any claim or basis for any claim that may adversely
affect such rights;
(t) all real and tangible personal property of St. Jude and each of its
Subsidiaries is in generally good repair and is operational and
usable in the manner in which it is currently being utilized,
subject to normal wear and tear and technical obsolescence, repair
or replacement, except for such property whose failure to be in such
condition does not, and could not be reasonably expected to have, a
Material Adverse Effect on St. Jude;
(u) St. Jude has made available to Golden Star all material information,
including financial, operational and other information, in respect
of the properties listed in St. Jude's Disclosure Letter (except
such information that does not have, and could not reasonably be
expected to have a Material Adverse Effect in respect of St. Jude)
and all such information as made available to Golden Star is true
and correct in all material respects and no material fact or facts
have been omitted therefrom which would make such information
misleading;
(v) all material contracts and agreements of St. Jude and its
Subsidiaries have been disclosed in St. Jude's Public Disclosure
Documents and true and correct copies of each (or in the case of
oral contracts, summaries of the material terms thereof) have been
provided to Golden Star. St. Jude and its Subsidiaries are in
compliance in all material respects with all terms and provisions of
all contracts,
- 19 -
agreements, indentures, leases, policies, instruments and licences
in connection with the conduct of their respective businesses and
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, and no breach or default
by St. Jude or its Subsidiaries or event which, with notice or lapse
of time or both, could constitute a material breach or material
default by St. Jude or its Subsidiaries, exists with respect
thereto;
(w) St. Jude and each of its Subsidiaries maintains insurance against
loss of, or damage to, their material assets against all insurable
risks, and in such amounts, as are customary for companies of a
similar size operating in the mining industry, and all of the
policies in respect of such insurance coverage are in good standing
in all respects and not in default in any material respect;
(x) except as disclosed in its most recently publicly-disclosed
consolidated financial statements:
(i) neither St. Jude nor any of its Subsidiaries is indebted to
any of its directors or officers or any of their associates
(collectively the "PRINCIPALS"), or to any St. Jude
Securityholder;
(ii) none of the Principals or St. Jude Securityholders is indebted
or under obligation to St. Jude or to any of its Subsidiaries
on any account whatsoever; and
(iii) neither St. Jude nor any of its Subsidiaries has guaranteed or
agreed to guarantee any debt, liability or other obligation of
any kind whatsoever of any Person other than of a Subsidiary;
(y) since the date of St. Jude's most recent balance sheet included in
its Public Disclosure Documents, there has not been any Material
Adverse Effect with respect to St. Jude or any of its Subsidiaries
or any damage, loss or other change or circumstance of any kind
whatsoever materially affecting the businesses or assets or the
right or capacity of St. Jude or any of its Subsidiaries to carry on
their respective businesses, such businesses having been carried on
in the ordinary course;
(z) neither St. Jude nor any of its Subsidiaries:
(i) is a party to any written or oral policy, agreement,
obligation or understanding providing for severance,
unemployment compensation, golden parachute, termination
payments, bonus or otherwise or an increase in any benefits
payable under any Benefit Plans or the acceleration of time or
payment or vesting of any such payments to any director or
officer or employee of St. Jude or any of its Subsidiaries,
whether directly or indirectly, upon the execution and
delivery of this Agreement, the consummation of the
transactions contemplated in this Agreement and compliance by
St. Jude with the terms of this Agreement other than those set
out in the St. Jude Disclosure Letter and for which the
aggregate severance payments do not exceed $1 million;
- 20 -
(ii) has any employee or consultant whose employment or contract
with St. Jude or any of its Subsidiaries, respectively, cannot
be terminated without payment upon a maximum of 12 months'
notice; and
(iii) is a party to any collective bargaining agreement or letter of
understanding, letter of intent or other written communication
with any bargaining agent, trade union or association which
may qualify as a trade union, which would apply to any
employees of St. Jude or any of the Subsidiaries, subject to
any application for certification or threatened or apparent
union-organizing campaigns for employees not covered under a
collective bargaining agreement, or subject to any current,
pending or threatened strike or lockout;
(aa) St. Jude is able to pay its liabilities as they become due, the
realizable value of the assets of St. Jude are not less than the
aggregate of the liabilities thereof and the stated capital of all
classes of shares thereof, and no creditor of St. Jude will be
prejudiced by the Arrangement;
(bb) St. Jude and its Subsidiaries have filed or caused to be filed, in a
timely manner all Tax Returns required to be filed by them (all of
which Tax Returns were correct and complete in all material
respects) and have paid, collected, withheld or remitted, or caused
to be paid, collected, withheld or remitted, all Taxes that are due
and payable, collectible and remittable, except, in either case
where such failure to file or to pay, collect, withhold or remit
could not reasonably be expected to have a Material Adverse Effect
on St. Jude. St. Jude has provided adequate accruals in accordance
with Canadian GAAP in its most recently published consolidated
financial statements for any Taxes for the period covered by such
financial statements which have not been paid, whether or not shown
as being due on any Tax Returns. Since such publication date, no
material liability for Taxes not reflected in such consolidated
financial statements or otherwise provided for has been assessed,
proposed to be assessed, incurred or accrued other than in the
ordinary and usual course of business. To the knowledge of St. Jude,
there are no material proposed (but unassessed) additional Taxes and
none have been asserted by the Canada Revenue Agency or any
Governmental Entity having taxing authority, including, without
limitation, any sales tax authority, in connection with any of the
Tax Returns referred to above, and no waiver of any statute of
limitations has been given or requested with respect to St. Jude or
any of its Subsidiaries. There are no audits or proceedings in
progress, pending or threatened against St. Jude or any of its
Subsidiaries in respect of any Taxes. No lien for Taxes has been
filed or exists other than for Taxes not yet due and payable;
(cc) St. Jude has not taken or agreed to take any action or knows of any
fact, agreement, plan or other circumstances that is reasonably
likely to prevent the Arrangement from qualifying for U.S. Federal
income tax purposes as a reorganization within the meaning of
section 368(a)(1)(B) of the U.S. Tax Code;
- 21 -
(dd) St. Jude is not a controlled foreign corporation or "CFC" as that
term is defined in the U.S. Tax Code;
(ee) the auditors of St. Jude are independent public accountants as
required by Applicable Laws and there is not now, and there has
never been, any reportable disagreement with the present or any
former auditors of St. Jude;
(ff) neither St. Jude nor its Subsidiaries own or license any patents,
patent rights, trademarks, trade names, service marks, copyrights,
know how or other proprietary intellectual property rights that are
material to the conduct of the business of St. Jude or any of its
Subsidiaries;
(gg) the St. Jude Disclosure Letter sets forth a complete list of the
employees of St. Jude and each of its Subsidiaries, together with
their titles, service dates and material terms of employment,
including current wages, salaries or hourly rate of pay, benefits,
vacation entitlement, commissions and bonus (whether monetary or
otherwise) or other material compensation paid since the beginning
of the most recently completed fiscal year or payable to each such
employee and the date upon which each such employee was first hired
by St. Jude or any of the Subsidiaries;
(hh) St. Jude and its Subsidiaries have been and are being operated in
material compliance with all Applicable Laws relating to employees
including, but not limited to, employment and labour standards,
labour risk prevention measures, social security and other
contributions, occupational health and safety, employment equity,
pay equity, workers' compensation, equal employment opportunity,
human rights and labour relations and there are no current, pending
or, to St. Jude's knowledge, threatened claims, litigation or
proceedings before any board, tribunal or other Governmental Entity
with respect to any of the foregoing;
(ii) St. Jude and its Subsidiaries have complied, in all material
respects, with all of the terms of their respective Benefit Plans,
including the provisions of any collective agreements, funding and
investment contracts or obligations applicable thereto, arising
under or relating to each Benefit Plan, whether written or oral,
which are maintained by or binding upon St. Jude or its Subsidiaries
and all Benefit Plans of St. Jude maintained by or binding upon St.
Jude or any of its Subsidiaries are fully funded and in good
standing with such Governmental Entities as may be applicable and no
notice of underfunding, non-compliance, failure to be in good
standing or otherwise has been received by St. Jude or any of its
Subsidiaries from any such Governmental Entities. No action has been
taken, no event has occurred and no condition or circumstance exists
that has resulted in, or could reasonably be expected to result in,
any Benefit Plan maintained by or binding upon St. Jude or any of
its Subsidiaries, being ordered or required to be
- 22 -
terminated or wound up in whole or in part or having its
registration under applicable legislation refused or revoked, or
being placed under the administration of any trustee or receiver or
regulatory authority;
(jj) neither St. Jude nor its Subsidiaries is a party to or bound by any
non-competition agreement or any other agreement, obligation,
judgment, injunction, order or decree which purports to (i) limit
the manner or the localities in which all or any material portion of
the business of St. Jude or its Subsidiaries are conducted, (ii)
limit any business practice of St. Jude or any of its Subsidiaries
in any material respect, or (iii) restrict any acquisition or
disposition of any property by St. Jude or any of its Subsidiaries
in any material respect;
(kk) St. Jude, its Subsidiaries, and to the knowledge of St. Jude, their
respective directors, officers and promoters are not in breach of
any Applicable Laws where non-compliance could reasonably be
expected to have a Material Adverse Effect on St. Jude;
(ll) St. Jude is not a "non-Canadian" within the meaning of the
Investment Canada Act;
(mm) the Board of Directors of St. Jude has received written opinions
from its financial advisors (copies of which have been provided to
Golden Star) with each stating that, as of the date of the opinion
(which date is the date hereof), the exchange ratio prescribed
herein at Section 2.1(a) is fair to the St. Jude Shareholders from a
financial point of view;
(nn) the Board of Directors of St. Jude (after receiving advice from its
legal and financial advisors) has unanimously:
(i) approved this Agreement, the Arrangement and the transactions
contemplated hereby;
(ii) determined the Arrangement and the performance by St. Jude of
its obligations under this Agreement and in connection with
the Arrangement are in the best interests of St. Jude and the
St. Jude Shareholders and that the Arrangement is fair to St.
Jude Shareholders;
(iii) determined to authorize the execution and delivery of this
Agreement;
(iv) determined to make the Recommendation to St. Jude
Securityholders that they vote in favour of and approve the
Arrangement and to solicit the proxies of St. Jude
Securityholders to vote in favour of the Arrangement;
(oo) each member of the Board of Directors of St. Jude has advised Golden
Star, that he intends to vote all St. Jude Common Shares and St.
Jude Convertible Securities held by such director in favour of the
Arrangement Resolution in order to approve the Arrangement, and St.
Jude will, accordingly, so represent in the Information Circular;
- 23 -
(pp) St. Jude is not required to prepare French language translations of
the Meeting Materials under Applicable Laws;
(qq) St. Jude owns a 90% interest in the Hwini-Butre property and
associated mineral licence in Ghana and the Government of Ghana owns
the remaining 10% interest therein. The 90% interest of St. Jude in
the Hwini-Butre property and the associated mineral licence has been
duly, validly and legally acquired by St. Jude from the prior legal
owner thereof in accordance with all Applicable Laws, and the prior
legal owner of the Hwini-Butre property has duly, validly, legally
and irrevocably transferred to St. Jude all of its interest in the
Hwini-Butre Property in accordance with all Applicable Laws. St.
Jude is not aware of any person who has any claim or potential claim
to St. Jude's 90% interest in the Hwini-Butre property and/or
associated mineral licence which St. Jude believes, acting
reasonably and based on advice from appropriate legal counsel, is
reasonably capable of being resolved in a manner adverse to St. Jude
or which could reasonably be expected to have a Material Adverse
Effect on St. Jude or reduce St. Jude's interest in the Hwini-Butre
property and/or associated mineral licence; and
(rr) any BDG Powers of Attorney (copies of each of which shall be
promptly provided by St. Jude to Golden Star) will constitute legal,
valid, binding and enforceable obligations of each Person granting
such BDG Power of Attorney under Applicable Laws and will be in full
force and effect, and at the time of delivery to Golden Star and at
the Effective Time, to the best knowledge of St. Jude, the legality,
validity, binding nature and enforceability of each BDG Power of
Attorney will not have been challenged or claimed to be invalid.
3.2.2 As an inducement to St. Jude to enter into this Agreement, Golden Star
hereby represents and warrants to St. Jude the following, in each case except as
set forth in its Disclosure Letter, and acknowledges that St. Jude is relying
upon such representations and warranties in connection with entering into this
Agreement and participating in the Arrangement:
(a) Golden Star is a reporting issuer or the equivalent thereof in each
of the provinces of Canada and reports under Section 12(b) of the
1934 Act, and is not in default in any material respects of any
requirements of the applicable securities laws of Canada or the
United States;
(b) the Golden Star Common Shares are listed for trading on the TSX and
AMEX and Golden Star is not in default in any material respect of
any of the listing requirements of such exchanges;
(c) no order (or the equivalent) ceasing or suspending the trading of
its securities or prohibiting the sale of securities by Golden Star
or any of its Subsidiaries has been issued and is in force as of the
date hereof and, to the knowledge of Golden Star, no proceedings for
this purpose have been instituted or are pending, contemplated or
threatened;
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(d) as at November 11, 2005, its authorized and issued capital consists
of an unlimited number of Golden Star Common Shares and an unlimited
number of first preferred shares, of which 142,887,394 Golden Star
Common Shares and nil first preferred shares are issued and
outstanding as fully paid and non-assessable;
(e) as at the date hereof, Golden Star has no options, warrants,
conversion privileges, calls or other rights (including pre-emptive
rights), agreements, arrangements, commitments or obligations of it
to issue, sell or acquire any securities of it or securities or
obligations of any kind convertible into or exercisable or
exchangeable for any securities of it, nor are there outstanding any
stock appreciation rights, phantom equity or similar rights,
agreements, arrangements or commitments based upon the share price,
book value, income or any other attribute of it other than (i)
Golden Star Options to purchase 5,057,451 Golden Star Common Shares;
(ii) warrants to acquire 8,448,334 Golden Star Common Shares; and
(iii) notes which are convertible into an aggregate of 11,111,111
Golden Star Common Shares;
(f) as at the date hereof, no Person has any agreement or option or any
right or privilege capable of becoming an agreement or option for
the purchase from Golden Star or any of its Subsidiaries of any
material assets of Golden Star or any of its Subsidiaries and
neither Golden Star nor any of its Subsidiaries has any agreement or
option or any right or privilege capable of becoming an agreement or
option for the purchase from any Person of any assets which could
reasonably be expected to be material to Golden Star;
(g) the financial books, records and accounts of Golden Star and the
Golden Star Operating Subsidiaries in all material respects (i) have
been maintained in accordance with good business practices on a
basis consistent with prior years, (ii) are stated in reasonable
detail and accurately and fairly reflect the material transactions
and dispositions of the assets of Golden Star and the Golden Star
Operating Subsidiaries and (iii) accurately and fairly reflect the
basis for the financial statements of Golden Star. Golden Star has
devised and maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions
are executed in accordance with management's general or specific
authorization; and (ii) transactions are recorded as necessary (a)
to permit preparation of financial statements in conformity with
Canadian generally accepted accounting principles, or any other
criteria applicable to such statements and (b) to maintain
accountability for assets. The corporate records and minute books of
Golden Star and the Golden Star Operating Subsidiaries have been
maintained in compliance with applicable Laws and are complete and
accurate in all material respects, and full access thereto has been
made available to St. Jude;
(h) Golden Star and each of its Subsidiaries has conducted and is
conducting its business in compliance, in all material respects,
with all Applicable Laws of each jurisdiction in which its business
is carried on and possess all material certificates, authority,
permits or licenses issued by the appropriate Governmental Entities
necessary to conduct the business now operated by it and all such
certificates,
- 25 -
authorities, permits and licenses are valid and subsisting and in
good standing and, to Golden Star's knowledge, neither Golden Star
nor its Subsidiaries have received any notice of proceedings
relating to the revocation or modification of any such certificate,
authority, permit or license which, if the subject of an
unfavourable decision, ruling or finding could reasonably be
expected to have a Material Adverse Effect on Golden Star;
(i) all interests in natural or mineral resource properties of Golden
Star or its Subsidiaries are set out in Golden Star's Public
Disclosure Documents and are owned or held by Golden Star or its
Subsidiaries as owner thereof with good and marketable title, are in
good standing, are valid and enforceable, are free and clear of any
Encumbrances and no royalty is payable in respect of any of them
except as set out in Golden Star's Public Disclosure Documents; no
other property rights are necessary for the conduct of Golden Star's
or its Subsidiaries' business; and there are no restrictions on the
ability of Golden Star or its Subsidiaries to use, transfer or
otherwise exploit any such property rights except as set out in
Golden Star's Public Disclosure Documents and Golden Star and its
Subsidiaries do not know of any claim or basis for any claim that
may adversely affect such rights except as set out in Golden Star's
Public Disclosure Documents;
(j) there is no bankruptcy, liquidation, winding-up or other similar
proceeding pending or in progress or, to the knowledge of Golden
Star threatened against Golden Star or any of its Subsidiaries
before any Governmental Entity;
(k) Golden Star and the Golden Star Operating Subsidiaries (and their
respective businesses and operations):
(i) are in substantial compliance with all applicable
Environmental Laws and Environmental Permits in Ghana and
Canada and in other applicable foreign jurisdictions having
environmental regulatory jurisdiction over Golden Star or any
of the Golden Star Operating Subsidiaries or assets; and
(ii) have obtained all Environmental Permits that are required to
carry on their respective businesses and operations as
currently carried out under all applicable Environmental Laws,
except where the non-compliance with such laws or permits or failure
to obtain those permits could not reasonably be expected to have a
Material Adverse Effect;
(l) the Public Disclosure Documents (including without limitation
technical reports as the information therein may have been
superseded, modified or supplemented by subsequent information
contained in Golden Star's Public Disclosure Documents) of Golden
Star in relation to the mineral and mining development projects of
Golden Star and/or the Golden Star Operating Subsidiaries are
accurate in all material respects;
- 26 -
(m) Golden Star and its Operating Subsidiaries have title to their
respective material assets used in their mining operations as
disclosed in Golden Star's Public Disclosure Documents;
(n) all material contracts and agreements of Golden Star and the Golden
Star Operating Subsidiaries have been disclosed in Golden Star's
Public Disclosure Documents. Golden Star and the Golden Star
Operating Subsidiaries are in compliance in all material respects
with all terms and provisions of all material contracts, agreements,
indentures, leases, policies and instruments in connection with the
conduct of their respective businesses and, to the knowledge of
Golden Star, all such contracts, agreements, indentures, leases,
policies and instruments are valid and binding in accordance with
their terms and in full force and effect, and no breach or default
by Golden Star or the Golden Star Operating Subsidiaries or event
which, with notice or lapse of time or both, could result in a
Material Adverse Effect on Golden Star, exists with respect thereto,
in any case, other than as disclosed in the Golden Star Public
Disclosure Documents;
(o) since the date of Golden Star's most recent balance sheet included
in its Public Disclosure Documents, other than as disclosed in the
Golden Star Public Disclosure Documents, there has not been any
Material Adverse Effect with respect to Golden Star or any of its
Subsidiaries or any damage, loss or other change or circumstance of
any kind whatsoever materially affecting the businesses or assets or
the right or capacity of Golden Star or any of its Subsidiaries to
carry on their respective businesses, such businesses having been
carried on in the ordinary course; and
(p) the Board of Directors of Golden Star has approved this Agreement,
the Arrangement and the transactions contemplated hereby and have
authorized the execution and delivery of this Agreement.
3.3 INVESTIGATION
Any investigation made by or on behalf of a Party and its advisors
shall not have the effect of waiving, diminishing the scope of, mitigating or
otherwise affecting any representation, warranty or covenant made by the other
Party herein or pursuant hereto.
3.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The representations and warranties of each of the Parties contained
in this Agreement shall not survive the completion of the Arrangement and shall
expire and be terminated and extinguished at the Effective Time.
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ARTICLE 4
COVENANTS OF THE PARTIES
4.1 CONSULTATION
Each Party agrees to consult with each other before issuing, and
shall provide the other Party with a reasonable prior opportunity to review and
comment on, any press release or public statement with respect to this Agreement
or the Arrangement and in making any filings with any Governmental Entity,
including any filing with any securities administrator or stock exchange with
respect thereto. Each Party shall use reasonable commercial efforts to provide
the other Party with a reasonable opportunity to review and comment on all such
press releases and filings prior to the release or submission thereof provided
that if a Party is required by Applicable Laws to make a public announcement
with respect to this Agreement and/or the Arrangement, such Party will provide
as much prior notice (including the proposed text of the announcement) to the
other Party as is reasonably possible. St. Jude will consult with Golden Star
prior to issuing any press release or making any announcement regarding its
mineral reserves or resources and, subject to Applicable Laws, St. Jude agrees
that it will not issue any press release or make any announcement regarding its
mineral reserves or resources without the prior written consent of Golden Star,
such consent not to be unreasonably withheld.
4.2 BUSINESS COVENANTS
4.2.1 St. Jude covenants and agrees with Golden Star that, except as
contemplated in this Agreement or the Plan of Arrangement, until the Effective
Date or the day upon which this Agreement is terminated pursuant to Article 7,
whichever is earlier:
(a) it shall, and shall cause each of its Subsidiaries to, conduct its
and their respective businesses only in, and not take any action
other than in, the usual, ordinary and regular course of business
and consistent with past practice and in accordance with Applicable
Laws and for greater certainty shall not and shall not allow any
Subsidiary to, without the prior written consent of Golden Star
(such consent not to be unreasonably withheld):
(i) make any commitments in excess of, or enter into any contracts
or group of related contracts with a value or aggregate value
(as the case may be) in excess of US$50,000;
(ii) make any changes to the senior management or senior personnel
of St. Jude or any Subsidiary; and
(iii) undertake or make any decision or action which could be
material to the business of St. Jude and/or any Subsidiary or
which could reasonably be expected to have a Material Adverse
Effect;
(b) it shall not and shall not permit any Subsidiary to, directly or
indirectly do or permit to occur any of the following:
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(i) issue, sell, pledge, lease, dispose of, redeem, purchase or
Encumber or agree to or enter into a commitment to issue,
sell, pledge, lease, dispose of, redeem, purchase or Encumber:
(A) any shares of, or any options, warrants, calls,
conversion privileges or rights of any kind to acquire
any shares, debt securities, derivative securities or
other securities of it or any of its Subsidiaries, other
than pursuant to the exercise of St. Jude Options, St.
Jude Warrants and St. Jude Compensation Options which
are outstanding on the date hereof; or
(B) any material assets, rights, properties of it or any of
its Subsidiaries;
(ii) amend or propose to amend its articles or by-laws (or the
equivalent charter or constating documents) or those of any of
its Subsidiaries or amend or propose to amend any of the terms
of the St. Jude Convertible Securities as they exist on the
date hereof;
(iii) split, combine or reclassify any of its outstanding shares or
the shares of any of its Subsidiaries, or declare, set aside
or pay any dividend or other distribution payable in cash,
stock, property or otherwise with respect to its shares or the
shares of its Subsidiaries;
(iv) redeem, purchase or offer to purchase, or permit any of its
Subsidiaries to redeem, purchase or offer to purchase, any
shares or other securities of it or any of its Subsidiaries,
unless otherwise required by the terms of such securities as
in effect on the date hereof;
(v) reorganize, amalgamate or merge it or any of its Subsidiaries
with any other Person or enter into an agreement, arrangement
or understanding regarding any of the foregoing or solicit,
initiate, facilitate, engage in or respond to or encourage any
enquiries or proposals with respect to any of the foregoing;
(vi) other than as disclosed in the St. Jude Disclosure Letter,
acquire or agree to acquire any Person (or material interest
therein or securities thereof), or acquire or dispose of or
agree to acquire or dispose of any assets which in each case
are individually or in the aggregate material (including but
not limited to mining properties or interests therein), or
enter into or commit to enter into any joint venture, earn-in
or similar arrangements or agreements or enter into an
agreement, arrangement or understanding regarding any of the
foregoing or solicit, initiate, facilitate, engage in or
respond to or encourage any inquiries or proposals with
respect to any of the foregoing or permit any of its
Subsidiaries to do any of the foregoing;
- 29 -
(vii) (A) satisfy or settle any claims or liabilities which
individually or in the aggregate are material to St. Jude; (B)
relinquish or modify any contractual rights which individually
or in the aggregate are material to St. Jude; or (C) enter
into any interest rate, currency or commodity swaps, xxxxxx or
other similar financial instruments; or
(viii) incur, authorize, agree or commit to provide guarantees,
incur, authorize or agree or become committed for any
indebtedness for borrowed money or issue any amount of debt
securities or permit any of its Subsidiaries to do any of the
foregoing;
(c) it shall not, and shall cause each of its Subsidiaries not to, make
any material decisions or take any material actions with respect to
the development of, or commitments to develop, any mining and
mineral project without keeping Golden Star fully informed thereof
on a timely basis and without having in good faith attempted to
achieve a mutual understanding and agreement with Golden Star prior
to making any such material decision or taking any such material
action;
(d) it shall not, and shall cause each of its Subsidiaries not to enter
into or modify any remuneration terms or Benefit Plans, or grant any
bonuses, salary increases, stock options, pension or supplemental
pension benefits, profit sharing, retirement allowances, severance
agreements, deferred or other compensation, incentive compensation,
severance, change of control or termination pay to, or make any loan
to, any of its or its Subsidiaries directors, officers, employees,
consultants, contractors or agents;
(e) it shall not, and shall cause each of its Subsidiaries not to, enter
into, amend or modify any employment or consulting agreements or
arrangements with any officers or directors of it or any of its
Subsidiaries;
(f) it shall use its reasonable commercial efforts, and shall cause its
Subsidiaries to use its reasonable commercial efforts, to cause its
current insurance policies and those of its Subsidiaries, including
directors' and officers' insurance or reinsurance policies not to be
cancelled or terminated or any of the coverage thereunder to lapse,
unless simultaneously with such termination, cancellation or lapse,
replacement policies underwritten by insurance and re-insurance
companies of internationally recognized standing providing coverage
equal to or greater than the coverage under the cancelled,
terminated or lapsed policies for substantially similar premiums or
premiums consistent with then current industry premium experience
are in full force and effect;
(g) it shall:
(i) use its reasonable commercial efforts, and cause each of its
Subsidiaries to use its reasonable commercial efforts, to
preserve intact its business organizations and goodwill, to
keep available the services of its officers and employees as a
group and to maintain existing relationships with suppliers,
consultants, joint venture participants, partners,
professional advisors, agents, distributors, customers,
Governmental Entities and others having business relationships
with it and its Subsidiaries;
- 30 -
(ii) not take any action, or permit any of its Subsidiaries to take
any action, that would or reasonably may be expected to render
(A) any representation or warranty made by it in this
Agreement that is qualified as to materiality untrue or (B)
any of such representations and warranties that are not so
qualified untrue in any material respect; and
(iii) promptly notify Golden Star of (A) any Material Adverse
Effect, or any change, circumstance, occurrence, event, effect
or state of facts which could reasonably be expected to result
in a Material Adverse Effect or impede the completion of the
Arrangement, (B) any Governmental Entity or third party
complaints, investigations or hearings (or communications
indicating that the same may be contemplated) which are
material, (C) any breach by it of any provision of this
Agreement (including any breach by it of a representation or
warranty), and (D) any event occurring subsequent to the date
hereof that would render any representation or warranty of it
contained in this Agreement, if made on or as of the date of
such event or the Effective Date, to be untrue or inaccurate
in any material respect;
(h) it shall not, and shall cause each of its Subsidiaries not to,
settle or compromise any claim brought by any present, former or
purported holder of any of its securities in connection with the
transactions contemplated by this Agreement or the Plan of
Arrangement prior to the Effective Date;
(i) it shall not, and shall not permit any of its Subsidiaries to, take
any action, or permit any action to be taken on its behalf, and it
shall, and shall cause its Subsidiaries to, refrain from taking any
action which, in either case, if taken, could be inconsistent with
this Agreement or which could interfere with or be inconsistent with
or could reasonably be expected to significantly impede the
completion of the Arrangement or any of the transactions
contemplated hereby;
(j) to the extent it has knowledge thereof, it shall, in all material
respects, conduct itself so as to keep Golden Star fully informed as
to the material decisions or actions made or required to be made
with respect to the operation of its business and that of its
Subsidiaries;
(k) it shall not make any change to existing accounting practices,
except as the regular, independent auditors of St. Jude advise in
writing are required by Applicable Laws, Canadian GAAP, or write up,
down or off the book value of any assets in an amount that in the
aggregate would be material to St. Jude, except where required for
compliance with Applicable Laws or Canadian GAAP;
(l) it shall not, and it shall cause its Subsidiaries not to, make any
material Tax election or settle or compromise any material Tax
liability;
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(m) it shall not, and shall cause its Subsidiaries not to, resolve that
it or any of its Subsidiaries be wound up, appoint or permit the
appointment of a liquidator, receiver or trustee in bankruptcy for
it or any of its Subsidiaries or in respect of the assets or
properties of it or any of its Subsidiaries, or permit the making of
an order by a court for the winding-up or dissolution of it or any
of its Subsidiaries;
(n) it shall not, and shall cause any Person with the power under the
Power of Attorney to not, exercise any power under the Power of
Attorney without the prior written consent of Golden Star;
(o) it shall not, and shall cause any Person with power under any BDG
Power of Attorney to not, exercise any power under any such BDG
Power of Attorney without the prior written consent of Golden Star,
and it shall, and shall cause any Person with power under any BDG
Power of Attorney to, exercise any power (including voting at any
and all meetings of shareholders or members of BD Goldfields) under
any such BDG Power of Attorney only as directed in writing in
advance by Golden Star;
(p) it shall notify Golden Star in advance of the details of any and all
meetings of shareholders or members of BD Goldfields of which it is
aware and shall forthwith provide to Golden Star copies of all
materials it has received or obtained in connection therewith, and
shall its use best efforts to ensure that a representative or
counsel of Golden Star can attend any and all such meetings;
(q) it shall obtain BDG Powers of Attorney in favour of St. Jude or such
other Person as is acceptable to Golden Star, which shall be in form
and substance satisfactory to Golden Star, from holders of shares of
BD Goldfields in order that, prior to November 29, 2005, at least
51% of the outstanding shares of BD Goldfields are subject to powers
of attorney which will entitle St. Jude to vote at meetings of
members and/or shareholders BD Goldfields (including without
limitation the November 29, 2005 meeting) in relation to any and all
matters related to, in respect of, or associated with the
Hwini-Butre property, related prospecting license and the related
litigation; and
(r) it shall use its best efforts to cause a memorandum (in the form and
substance satisfactory to Golden Star) regarding the business to be
conducted at the meeting of shareholders or members of BD Goldfields
to be provided to the shareholders of BD Goldfields in advance of
the November 29, 2005 meeting thereof.
4.2.2 Golden Star covenants and agrees with St. Jude that, except as
contemplated in this Agreement or the Plan of Arrangement or as otherwise
disclosed by Golden Star in its Disclosure Letter or Public Disclosure
Documents, until the Effective Date or the day upon which this Agreement is
terminated pursuant to Article 7, whichever is earlier:
(a) it shall, and shall cause its Subsidiaries to, conduct its and their
respective businesses only in, and not take any action other than
in, the usual, ordinary and regular course of business and
consistent with past practice and in accordance
- 32 -
with Applicable Laws and for greater certainty, until the Effective
Date, it shall not and shall not allow any Subsidiary to, without
the prior written consent of St. Jude (such consent not to be
unreasonably withheld), undertake or make any decision or action
which could be material to the business of Golden Star and/or any
Subsidiary or which could reasonably be expected to have a Material
Adverse Effect on Golden Star;
(b) it shall not, and shall not permit any of its Subsidiaries to, take
any action or permit any action to be taken or refrain from taking
any action which would be inconsistent with this Agreement or which
could interfere with or be inconsistent with or could reasonably be
expected to impede the completion of the Arrangement;
(c) it shall promptly notify St. Jude of any breach by it of any
provision hereof, any Material Adverse Effect on Golden Star or any
change, circumstance, effect, event or occurrence which could
reasonably be expected to result in a Material Adverse Effect on
Golden Star or impede the completion of the Arrangement;
(d) it shall not directly or indirectly without the prior consent of St.
Jude (such consent not to be unreasonably withheld) make any
amendment to its constating documents which would have a material
adverse impact on the ability of Golden Star to consummate the
transactions contemplated hereby or to change its share capital;
(e) it shall not split, combine, subdivide or reclassify any of its
capital stock; and
(f) it shall not permit any of its Subsidiaries to, reorganize,
recapitalize, consolidate, dissolve, liquidate, amalgamate or merge
with any other Person where such action would have a material
adverse impact on the ability of Golden Star to consummate the
transactions contemplated hereby.
4.2.3 Each of Golden Star and St. Jude covenant to advise the other in writing
of any:
(a) event, condition or circumstance that might be reasonably expected
to cause any representation or warranty of it contained in this
Agreement to be untrue or inaccurate on the Effective Date (or, in
the case of any representation or warranty made as of a specified
date, as of such specified date);
(b) Material Adverse Effect on it or any event, occurrence or
development which would reasonably be expected to have a Material
Adverse Effect on it; and
(c) of any material breach by it of any covenants, obligations or
agreements contained in this Agreement.
- 33 -
4.3 COVENANTS REGARDING NON-SOLICITATION
4.3.1 St. Jude shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, through any officer, director, employee, advisor,
representative or agent, or otherwise (a) solicit, initiate, facilitate, engage
in or respond to or encourage (including by way of furnishing information or
entering into any form of agreement, arrangement or understanding) any
inquiries, proposals or transactions involving St. Jude and/or its Subsidiaries
regarding any merger, amalgamation, arrangement, restructuring, take-over bid,
tender offer, exchange offer, sale or purchase of substantial assets, sale or
purchase of treasury shares, any equity interest or rights or any other
interests therein or thereto, business combination, liquidation, reorganization
or recapitalization or any similar transaction or series of related or similar
transactions which would have the effect of any of the foregoing (any of the
foregoing inquiries, proposals or transactions being referred to herein as an
"ACQUISITION PROPOSAL"); (b) encourage or participate in any discussions or
negotiations regarding any Acquisition Proposal or potential Acquisition
Proposal; (c) accept or approve or recommend, or agree to accept, approve or
recommend, any Acquisition Proposal or potential Acquisition Proposal; or (d)
cause St. Jude or any Subsidiary to enter into any agreement, arrangement or
understanding related to any Acquisition Proposal or potential Acquisition
Proposal; provided, however, that nothing contained in this Agreement shall
prevent the Board of Directors of St. Jude which receives an unsolicited and
bona fide Acquisition Proposal after the date hereof in respect of it from
considering, negotiating, approving or recommending to its shareholders an
Acquisition Proposal which the Board of Directors of St. Jude determines in good
faith, after consultation with its financial and legal advisors and after
receiving written advice from counsel (copies of which shall forthwith be
provided to Golden Star) that such action would be a proper exercise of its
fiduciary duties under Applicable Laws, and that such Acquisition Proposal
would, if consummated in accordance with its terms, result in a transaction: (i)
more favourable to its shareholders than the Arrangement; (ii) having
consideration with a value per St. Jude Common Share greater than the value per
St. Jude Common Share provided by the Arrangement (as it may be amended pursuant
to Section 4.4); (iii) that is reasonably capable of being completed within a
reasonable period of time; and (iv) which is not contingent upon financing (any
such Acquisition Proposal being referred to herein as a "SUPERIOR PROPOSAL").
4.3.2 From and after the date hereof, St. Jude shall immediately cease and cause
to be terminated in writing any existing discussions or negotiations with any
Person (other than Golden Star) with respect to any potential Acquisition
Proposal and shall, subject to Section 4.4, immediately cease to provide any
other Person with access to information concerning St. Jude and its Subsidiaries
and exercise all rights it has to require the return of all confidential
information from each such Person. St. Jude agrees not to release or permit the
release of any Person from, or waive, any confidentiality, non-solicitation or
standstill agreement to which such Person is a party, unless the Board of
Directors of St. Jude has determined that such Person has made a Superior
Proposal.
4.3.3 St. Jude shall promptly notify Golden Star orally and in writing within 24
hours of any Acquisition Proposal or any amendment to an Acquisition Proposal
being received directly or indirectly by St. Jude, or any request for non-public
information relating to St. Jude or any of its Subsidiaries, as the case may be,
in connection with such an Acquisition Proposal or for access to the properties,
books and/or records of St. Jude or any Subsidiary, by any Person that informs
St. Jude or such Subsidiary that it is considering making, or has made, an
Acquisition Proposal. Such written notice shall include a copy of any such
written Acquisition Proposal and all amendments thereto or, in the absence of a
written Acquisition Proposal, a description of the material terms and conditions
thereof, in either case including the identity of the Person making the
Acquisition Proposal, inquiry or contact.
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4.3.4 If St. Jude receives a request for non-public information from a Person
who has made or intends to make an Acquisition Proposal and the Board of
Directors of St. Jude determines in good faith after consultation with financial
and legal advisors that such Acquisition Proposal is, or if made would be, a
Superior Proposal, then, and only in such case, St. Jude may, subject to the
execution by such Person of a confidentiality agreement containing standstill
and other provisions substantially the same as those contained in the
Confidentiality Agreement, provide such Person with access to non-public
confidential information regarding St. Jude; provided that St. Jude shall send a
copy of any such confidentiality agreement (including the identity of the Person
who has entered into such agreement if not contained therein) to Golden Star as
soon as practicable and in any event within 24 hours of its execution and shall
as soon as practicable, and in any event within 24 hours, provide Golden Star
with a list of, and copies of, all information provided to such Person that was
not previously provided to Golden Star and immediately provide Golden Star with
all other information that was provided to such Person.
4.3.5 St. Jude shall ensure that its officers, directors and employees and those
of its Subsidiaries and any financial, legal and other advisors, agents and
representatives retained by St. Jude are aware of the provisions of this Section
4.3, and St. Jude shall be responsible for any breach of this Section by any
such Person.
4.3.6 For greater certainty, any amendment to an Acquisition Proposal shall
constitute a new Acquisition Proposal for the purposes of this Section 4.3.
4.4 NOTICE OF SUPERIOR PROPOSAL DETERMINATION
4.4.1 If St. Jude has fully complied with Section 4.3 and this Section 4.4, St.
Jude may accept, approve, recommend or enter into any agreement, understanding
or arrangement in respect of an Acquisition Proposal and withdraw or modify in a
manner adverse to Golden Star its recommendation of the approval of the
Arrangement, if and only if it:
(a) provides to Golden Star (i) written notice that the Board of
Directors of St. Jude has determined that it has received and is
prepared to accept a Superior Proposal; (ii) a copy of any agreement
or other document in respect of such Superior Proposal as executed
by the Person making the Superior Proposal, in each case as soon as
possible but in any event not less than five full Business Days
prior to acceptance of the Superior Proposal by the Board of
Directors of St. Jude; and (iii) in the case of an Acquisition
Proposal that includes non-cash consideration, the value or range of
values attributed by the Board of Directors of St. Jude, in good
faith, for such non-cash consideration after consultation with its
financial advisors;
(b) provides Golden Star with an opportunity (but not the obligation),
before the expiration of such five Business Day period referred to
in subsection 4.4.1(a), to propose to amend this Agreement to
provide for consideration having a value equivalent to or more
favourable to the St. Jude Shareholders than that of the Superior
Proposal with the result that the Superior Proposal would cease to
be a Superior Proposal; and
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(c) subject to subsection 4.4.2, terminates this Agreement pursuant to
subsection 7.1(d) and pays to Golden Star the St. Jude Break Fee as
contemplated by Section 6.2.
4.4.2 In the event that Golden Star agrees to amend this Agreement in the manner
described in subsection 4.4.1, the Board of Directors of St. Jude shall consider
the terms of the proposed amendment, and (i) if the Board of Directors of St.
Jude in good faith concludes that the Superior Proposal is no longer a Superior
Proposal given the terms of the proposed amendment, St. Jude shall not implement
the proposed Superior Proposal and shall not terminate this Agreement pursuant
to subsection 7.1(d), and shall agree to the proposed amendments to this
Agreement; or (ii) if the Board of Directors of St. Jude concludes in good faith
and after consultation with, and receiving advice (which may include written
opinions or advice, copies of which shall have been provided to Golden Star)
from its financial, legal and other advisors (as appropriate), that the
Acquisition Proposal would nonetheless remain a Superior Proposal, St. Jude
shall terminate this Agreement in accordance with subsection 7.1(d) and
concurrently pay to Golden Star the St. Jude Break Fee in accordance with
Section 6.2, and only thereafter St. Jude may enter into an agreement in order
to implement the Superior Proposal.
4.5 ACCESS TO INFORMATION AND CONFIDENTIALITY
Until the Effective Time, (i) St. Jude shall provide to Golden Star
reports of its activities including, but not limited to, monthly operating
reports and monthly financial reports, as well as full and open access on a real
time basis to its office, properties, books and records, and (ii) Golden Star
will provide to St. Jude a copy of the monthly operating report that it provides
to its Board of Directors.
4.6 COVENANTS IN RESPECT OF THE ARRANGEMENT
Each Party covenants and agrees that, except as otherwise
contemplated in this Agreement, until the earlier of the Effective Date and the
date upon which this Agreement is terminated, it will:
(a) in a timely and expeditious manner, take all necessary actions in
order to enable it to participate in and effect the Arrangement and
use all commercially reasonable efforts to satisfy (or cause the
satisfaction of) the conditions precedent to the obligations of the
other Party hereunder to the extent the same are within its control
and shall take, do or cause to be taken or done, all other actions
and all other things necessary, proper or advisable under all
Applicable Laws to complete the Arrangement, including to:
(i) apply for and use commercially reasonable efforts to obtain
all necessary waivers, consents, orders and approvals required
to be obtained by it or its Subsidiaries from other parties to
loan agreements, joint venture agreements, partnership
agreements, leases, licences, permits and other contracts and
documents;
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(ii) make or co-operate as necessary in the making of all necessary
filings and applications under all Applicable Laws and with
all applicable Governmental Entities (including in West
Africa) required by it or its Subsidiaries in connection with
the transactions contemplated hereby and use commercially
reasonable efforts to obtain all necessary consents, approvals
and authorizations as are required to be obtained by it or its
Subsidiaries under any Applicable Laws, all of which filings,
applications, consents, approvals and authorizations are set
forth in the Party's Disclosure Letter;
(iii) effect all necessary registrations, filings and applications
to, and submissions of information requested by, Governmental
Entities required to be effected by it or its Subsidiaries in
connection with the Arrangement and, if necessary, participate
and appear in any proceedings of any Party before or by any
Governmental Entity;
(iv) use commercially reasonable efforts to have lifted or
rescinded any injunction or restraining order or other order
or action seeking to stop, or otherwise adversely affecting
the ability of the Parties to consummate, the Arrangement or
the transactions contemplated hereby;
(v) co-operate with the other Party in connection with the
performance by it of its obligations hereunder; and
(vi) prepare, in consultation with the other Party, all
communications to its shareholders required by Applicable Laws
in connection with the Arrangement, including the Meeting
Materials in respect of the St. Jude Meeting and ensure that
such communications comply with all Applicable Laws and do not
contain any misrepresentation or untrue statement of a
material fact or omit to state a material fact required to be
stated therein in order to make the statements contained
therein not misleading in light of the circumstances in which
they are made;
(b) assist and co-operate in the preparation and filing with all
applicable securities commissions or similar securities regulatory
authorities of Canada and the United States of all necessary
applications to seek exemptions, if required, from the prospectus,
registration and other requirements of the Applicable Laws of Canada
and the United States;
(c) forthwith carry out such terms of the Interim Order as are required
to be carried out by it; and
(d) except for non-substantive communications, furnish promptly to the
other Party a copy of each notice, report, schedule or other
document or communication delivered, filed or received by, to, with
or from (as applicable) the Party under Applicable Laws or
otherwise, and any reports or dealings with Governmental Entities,
in connection with the Arrangement, the Interim Order, the Final
Order, the St. Jude Meeting or any of the transactions contemplated
hereby.
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4.7 SPECIFIC COVENANTS OF ST. JUDE REGARDING THE ARRANGEMENT
St. Jude covenants and agrees that, except as otherwise contemplated
in this Agreement, until the earlier of the Effective Date and the date
upon which this Agreement is terminated, it will:
(a) in a timely and expeditious manner:
(i) prepare, in consultation with Golden Star, acting reasonably,
and file the Meeting Materials (which shall be in form and
substance satisfactory to Golden Star, acting reasonably),
together with any other documents required by Applicable Laws
(which shall be in form and substance satisfactory to Golden
Star, acting reasonably), in all jurisdictions where the
Meeting Materials are required to be filed and mail the
Meeting Materials, as ordered by the Interim Order and in
accordance with all Applicable Laws, in and to all
jurisdictions where the Meeting Materials are required to be
mailed, complying in all material respects with all Applicable
Laws on the date of the mailing thereof and in the form and
containing the information required by all Applicable Laws,
including all applicable corporate and securities laws and
requirements, and not containing any misrepresentation (as
defined under applicable securities laws and requirements)
with respect thereto;
(ii) include within the Information Circular the notice of motion
for the application for the Final Order and set forth the
procedures that the St. Jude Securityholders must follow in
order to attend and be heard at the hearing for the Final
Order;
(iii) convene the St. Jude Meeting as soon as practicable, and use
its best efforts to convene the St. Jude Meeting no later than
December 15, 2005 or such later date that may be mutually
agreed upon with Golden Star (but in any case, not later than
March 16, 2006), as provided in the Interim Order and solicit
proxies to be voted at the St. Jude Meeting in favour of the
Arrangement and use its commercially reasonable efforts to
take all other action that is necessary or desirable to secure
the requisite approval of the Arrangement Resolution by the
St. Jude Securityholders;
(iv) not adjourn, postpone or cancel (or propose for adjournment,
postponement or cancellation), or fail to call, the St. Jude
Meeting without Golden Star's prior written consent, except as
required by Applicable Laws;
(v) provide notice to Golden Star of the St. Jude Meeting and
allow representatives of Golden Star to attend the St. Jude
Meeting;
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(vi) hold and conduct the St. Jude Meeting in accordance with the
Interim Order, the CBCA, the by-laws of St. Jude and as
otherwise required by Applicable Laws; and
(vii) take all such actions as may be required under the CBCA in
connection with the transactions contemplated by this
Agreement and the Plan of Arrangement;
(b) in a timely and expeditious manner, prepare (in consultation with
Golden Star acting reasonably) and file any mutually agreed (or as
otherwise required by Applicable Laws) amendments or supplements to
the Meeting Materials (which amendments or supplements shall be in a
form satisfactory to Golden Star, acting reasonably) with respect to
the St. Jude Meeting and mail such amendments or supplements, as
required by the Interim Order and in accordance with all Applicable
Laws, in and to all jurisdictions where such amendments or
supplements are required to be mailed, complying in all material
respects with all Applicable Laws on the date of the mailing
thereof;
(c) subject only to Section 4.4 and the fiduciary duties of the Board of
Directors of St. Jude, recommend to the St. Jude Securityholders
that they approve the Arrangement and not take any steps to change
or withdraw the Recommendation in a manner adverse to Golden Star or
which would impede the completion of the Arrangement and shall not
make a recommendation to St. Jude Securityholders not to accept the
Arrangement;
(d) use its reasonable best efforts to cause all directors, officers and
senior management of St. Jude who will not be retained to resign at
the Effective Time and to provide a release in favour of St. Jude in
the form requested by Golden Star in accordance with subsection
2.6.1(c);
(e) advise Golden Star, as reasonably requested, and on a daily basis in
each of the last seven Business Days prior to the St. Jude Meeting,
as to the aggregate tally of the proxies and votes received and
dissent notices (if any) in respect of the Arrangement Resolution
and all other matters to be considered at the St. Jude Meeting;
(f) execute and deliver, or cause to be executed and delivered, at the
Closing such customary agreements, certificates, resolutions and
other closing documents as may be required by Golden Star, all in
form satisfactory to Golden Star, acting reasonably;
(g) not acquire or dispose of, or permit any of its affiliates or
associates to acquire or dispose of, securities of Golden Star
during the period commencing on the date hereof and ending on the
earlier of the Effective Date or the date this Agreement is
terminated pursuant to Section 7.1;
(h) in consultation with Golden Star, prepare for filing with applicable
regulatory authorities and as may be required by Applicable Laws,
and certify, financial
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statements (consistent with the financial statements of St. Jude
contained in its Public Disclosure Documents and compliant with
Applicable Laws and local generally accepted accounting principles)
and Tax Returns in respect of each of the Subsidiaries of St. Jude;
and
(i) three Business Days prior to the Effective Date establish an escrow
account with the depositary for the Arrangement or such other Person
as the Parties may agree upon (acting reasonably), as escrow agent,
in such amount as is set forth in each of Golden Star's and St.
Jude's Disclosure Letter, which escrowed funds will be used to
satisfy any payments to be made to Dissenting Shareholders (as such
term is defined in the Plan of Arrangement) that are entitled to be
paid fair value in accordance with the terms of the CBCA;
(j) St. Jude will use its best efforts to deliver to Golden Star on or
before the Effective Time each of the documents contemplated in
Section 5.3(g) (other than the documents contemplated in Subsections
5.3(g)(v), 5.3(g)(vi) and 5.3(g)(iii) (as it relates to the 1994
Agreement) which St. Jude will deliver in compliance with subsection
4.7(k) below), as well as to cause all actions and steps to be taken
in order to facilitate the provision of or otherwise obtain each of
such documents; and
(k) St. Jude will deliver to Golden Star on or before the Effective Time
the documents contemplated in Subsections 5.3(g)(v), 5.3(g)(vi) and
5.3(g)(iii) (as it relates to the 1994 Agreement).
4.8 COVENANTS OF GOLDEN STAR REGARDING THE ARRANGEMENT
4.8.1 Golden Star covenants and agrees that, except as otherwise contemplated in
this Agreement, until the earlier of the Effective Date and the date upon which
this Agreement is terminated, it will,
(a) use its commercially reasonable efforts to obtain the listing on the
TSX and on AMEX of the Golden Star Common Shares to be issued to the
St. Jude Shareholders pursuant to the Arrangement and to ensure that
such Golden Star Common Shares are not subject to any statutory hold
period (subject only to restrictions on control block distributions)
under applicable securities laws in Canada; and
(b) execute and deliver, or cause to be executed and delivered, at the
Closing such customary agreements, certificates, resolutions and
other closing documents as may be required by St. Jude, all in form
satisfactory to St. Jude, acting reasonably.
4.8.2 Following the Closing, Golden Star shall make the severance payments to
the directors, officers and employees of St. Jude as required by Section 2.6.2
in accordance with the terms of the agreements requiring the making of such
severance payments.
4.8.3 Golden Star shall (i) within 60 days following the
Effective Time, file one or more registration statements under the provisions of
the 1933 Act and thereafter use its best
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efforts to cause the effectiveness of such registration(s) in order to permit
the St. Jude Convertible Securityholders, upon their receipt of Golden Star
Common Shares resulting from the exercise or conversion of such securities of
Golden Star as received pursuant to the terms of the Arrangement in replacement
for St. Jude Convertible Securities, to publicly resell such Golden Star Common
Shares in compliance with the 1933 Act and (ii) thereafter maintain the
effectiveness of such registration(s) for a period of 24 months.
4.9 MERGER OF COVENANTS
Except as to the contrary expressly required by the terms hereof,
the covenants set out in this Agreement shall not survive the completion of the
Arrangement, and shall expire and be terminated without recourse between the
Parties upon such completion.
ARTICLE 5
CONDITIONS
5.1 MUTUAL CONDITIONS PRECEDENT
The respective obligations of the Parties to complete the
transactions contemplated hereby are subject to the fulfillment or waiver of the
following mutual conditions on or before the Effective Time or such other time
as is specified below:
(a) the Interim Order shall have been granted in form and substance
satisfactory to St. Jude and Golden Star, each acting reasonably,
and shall not have been set aside or modified in a manner which is
not acceptable to such Parties, acting reasonably, on appeal or
otherwise;
(b) any conditions in addition to those set out in this Section 5.1
which may be imposed by the Interim Order shall have been satisfied;
(c) the St. Jude Securityholders, voting as a single class, shall have
approved at the St. Jude Meeting, in accordance with Applicable Laws
and the Interim Order, the Arrangement and approved or consented to
such other matters as either Golden Star or St. Jude, acting
reasonably, shall consider necessary or desirable in connection with
the Arrangement in the manner required thereby;
(d) the Final Order shall have been granted in form and substance
satisfactory to St. Jude and Golden Star, each acting reasonably,
and shall not have been set aside or modified in a manner which is
not acceptable to such Parties, acting reasonably, on appeal or
otherwise;
(e) there shall be no proceeding of a judicial or administrative nature
or otherwise, brought by or before a Governmental Entity, or any
Applicable Laws proposed, enacted, promulgated or applied, that
directly or indirectly relates to the transaction contemplated
hereby which could reasonably be expected to result in a Material
Adverse Effect on the Party to which it applies or which could
impede or interfere with the completion of the Arrangement;
- 41 -
(f) all regulatory approvals and approvals of any other Person
(including any Governmental Entity, including those necessary in
West Africa), and the expiry of any waiting periods in connection
with, or required to permit, the completion of the Arrangement, the
failure to obtain which or the non-expiry of which could reasonably
be expected to cause a Material Adverse Effect on either Party or
materially impede the completion of the Arrangement, shall have been
obtained or received on terms which will not cause a Material
Adverse Effect on either Party, and reasonably satisfactory evidence
thereof shall have been delivered to each Party;
(g) the Golden Star Common Shares to be issued to the St. Jude
Shareholders pursuant to the Arrangement shall have been approved
for listing on the TSX and the AMEX and such Golden Star Common
Shares shall not be subject to any statutory hold period (subject
only to restrictions on control block distributions) under
applicable securities laws in Canada;
(h) the Effective Date shall have occurred on or before December 21,
2005 or such later date (but in any case not later than March 16,
2006) as the Parties, acting reasonably, may agree to in writing;
and
(i) this Agreement shall not have been terminated pursuant to Article 7.
The foregoing conditions are for the mutual benefit of each of the
Parties and may be waived, in whole or in part, by any Party at any time,
provided that no Party may waive any mutual condition on behalf of any other
Party.
5.2 SEVERAL CONDITIONS
The obligation of each Party to complete the transactions
contemplated hereby is subject to the fulfilment or waiver by the other Party of
the following conditions on or before the Effective Time or such other time as
specified below:
(a) the representations and warranties made to such Party by the other
Party in this Agreement shall be true and correct in all material
respects (unless such representations and warranties are qualified
by reference to materiality or Material Adverse Effect in which case
such representations and warranties shall be true and correct) as of
the Effective Date as if made on and as of such date (except to the
extent such representations and warranties speak as of an earlier
date, in which event such representations and warranties shall be
true and correct as of such earlier date, or except as affected by
transactions contemplated or permitted by this Agreement);
(b) each of the Parties shall have complied in all material respects
with its covenants herein;
(c) each Party shall have delivered to the other Party a certificate of
one senior officer of the Party dated the Effective Date certifying
the fulfillment of the conditions in subsections 5.2(a) and 5.2(b);
- 42 -
(d) from the date hereof up to and including the Effective Time, there
shall have been no change, condition, effect, event or occurrence
which, in the reasonable judgment of such Party, has or is
reasonably likely or expected to have a Material Adverse Effect on
the other Party and/or its Subsidiaries, on the Arrangement or on
the combined business that will result from the completion of the
Arrangement; and
(e) the Party shall not have become aware of any misrepresentation,
untrue statement of a material fact, or an omission to state a
material fact that is required to be stated or that is necessary to
make a statement not misleading in light of the circumstances in
which it was made and at the date it was made (after giving effect
to all subsequent filings in relation to all matters covered in
earlier filings), in any document (including the Meeting Materials)
filed by or on behalf of the other Party with any regulatory
authority, stock exchange or other Governmental Entity in Canada or
elsewhere or provided by that Party to the other Party.
The foregoing conditions precedent are for the benefit of each Party
and may be waived, in whole or in part, by such Party in writing at any time.
5.3 ADDITIONAL CONDITIONS IN FAVOUR OF GOLDEN STAR
The obligation of Golden Star to complete the transactions
contemplated hereby is subject to the fulfilment or waiver of the following
conditions on or before the Effective Time or such other time as specified
below:
(a) Golden Star shall have entered into one or more Support Agreements
(in form and substance satisfactory to Golden Star, acting
reasonably) with the Principal Holder and the directors, senior
officers and other holders of St. Jude Securities, which in the
aggregate shall represent not less than 10% of the issued and
outstanding St. Jude Common Shares, St. Jude Options and St. Jude
Warrants and the Parties thereto (other than Golden Star) shall not
have breached any of the representations, warranties or covenants of
the Support Agreement or Support Agreements;
(b) the Board of Directors of St. Jude shall have unanimously made the
Recommendation to St. Jude Securityholders and shall not have
withdrawn or changed the Recommendation in a manner adverse to
Golden Star or which could impede the completion of the Arrangement,
and shall not have made a recommendation to St. Jude Securityholders
not to accept the Arrangement;
(c) Golden Star shall have received resignations and releases in forms
acceptable to it, acting reasonably, from the St. Jude directors and
officers identified in the Golden Star Disclosure Letter and from
such other officers, employees and senior management of St. Jude as
Golden Star shall determine and advise St. Jude of in writing at
least two Business Days prior to the Closing;
(d) holders of no greater than 5% of the outstanding St. Jude Common
Shares shall have dissented to the Arrangement and St. Jude shall
provide Golden Star with a certificate of two senior officers of St.
Jude dated the day immediately prior to the Effective Date to such
effect;
- 43 -
(e) on or prior to the Effective Date, Golden Star shall be satisfied,
acting reasonably, that all applications (as disclosed in the St.
Jude Disclosure LETTER) made by St. Jude or its directors, officers,
agents and representatives on its behalf, for the acquisition or
renewal of mineral properties or licenses or permits related to
mineral properties, are for the benefit of and will be held by St.
Jude upon completion of the Arrangement;
(f) on or prior to the Effective Time, St. Jude shall have taken such
actions as may be necessary or reasonably required by Golden Star to
cause the shares of Yatenga Holdings Limited that are registered in
the name of Xxxxxxx X. Xxxxxxx and held by him in trust for St.
Jude, to be transferred to and registered in the name of such Person
or Persons as Golden Star may direct;
(g) on or prior to the Effective Time, Golden Star shall have received
from St. Jude:
(i) a corporate and title legal opinion (in form and substance
satisfactory to Golden Star) in respect of the Hwini-Butre
property and related prospecting licence and related matters
from St. Jude's Ghanaian legal counsel, and which opinion
shall refer to current searches made of appropriate
Governmental Entities;
(ii) a certified copy of the duly passed resolution (in form and
substance satisfactory to Golden Star) of each of the
directors and shareholders of BD Goldfields unconditionally
and irrevocably authorizing, approving, consenting to and
ratifying, in accordance with and as required by Applicable
Laws and other applicable requirements, the Subsequent
Agreements;
(iii) a certified copy of the unconditional approval, if required by
Applicable Laws, of the Minister Responsible for Mines of
Ghana for each of the 1994 Agreement and related agreements
and the Subsequent Agreements;
(iv) a certified copy of a signed deed of settlement in respect of
the litigation and appeal involving the Hwini-Butre property
and related prospecting license, which will be signed by,
among others, BD Goldfields, Hwini-Butre Minerals Ltd., the
Minerals Commission of Ghana, the Minister Responsible for
Mines in Ghana, and the Attorney General of Ghana on behalf of
the Republic of Ghana and which shall include the
retrospective approval of the Minister Responsible for Mines
in Ghana of the 1994 Agreement and the Subsequent Agreements,
as well as a certified copy of the resolution of the directors
of BD Goldfields authorizing, approving and consenting (in
accordance with and as required by Applicable Laws and other
applicable requirements) to such deed of settlement;
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(v) a certified copy of the Bank of Ghana consent in respect of
the transfer of the shares of Hwini-Butre Minerals Ltd. from
Crew Gold Corporation to St. Jude Resources (Ghana) Ltd.;
(vi) a transfer of the Power of Attorney (in form and substance
acceptable to Golden Star) from Xxx Eduamah to St. Jude or its
nominee (who shall be acceptable to Golden Star); and
(vii) a certified copy of the renewal or extension of the
prospecting license for the Hwini-Butre property and evidence
that it is in good standing, or evidence satisfactory to
Golden Star (in its sole discretion) that progress has been
made with the appropriate Governmental Entities in respect of
obtaining such renewal or extension;
(h) on or prior to the Effective Time, Golden Star shall have received
from its legal counsel in Ghana a corporate and title opinion (in
form and substance satisfactory to Golden Star) in respect of the
Hwini-Butre property, related prospecting license and related
matters; and
(i) the shareholders and/or members and the directors of BD Goldfields
shall have duly passed a resolution (in form and substance
satisfactory to Golden Star) unconditionally and irrevocably
authorizing, approving, consenting to and ratifying the Subsequent
Agreements, in accordance with and as required by Applicable Laws
and other applicable requirements, by no later than November 29,
2005 (or if the meeting of shareholders or members of BD Goldfields
is adjourned or postponed, then by no later than December 12, 2005),
and evidence thereof (in form and substance satisfactory to Golden
Star) shall be provided to Golden Star no later than November 29,
2005 (or if the meeting of shareholders or members of BD Goldfields
is adjourned or postponed, then by no later than December 12, 2005).
The foregoing conditions are for the exclusive benefit of Golden
Star and may be waived, in whole or in part, by Golden Star in writing at any
time.
5.4 MERGER OF CONDITIONS
The conditions set out in Sections 5.1, 5.2 and 5.3 shall be
conclusively deemed to have been satisfied, waived or released upon the filing
of Articles of Arrangement as contemplated by this Agreement with the agreement
of St. Jude and Golden Star and the issuance of the Certificate in respect
thereof under the CBCA.
ARTICLE 6
BREAK FEES AND EXPENSE REIMBURSEMENT
6.1 INTERPRETATION
For the purposes of this Article 6:
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"ST. JUDE BREAK FEE" shall mean a fee of $4 million.
"ST. JUDE FEE EVENT" shall mean the occurrence of any of the
following:
(a) the termination of this Agreement by Golden Star pursuant to
subsection 7.1(b)(i) (only in the case of a breach by St. Jude of
any provision of Sections 4.2.1(b)(i), 4.2.1.(b)(ii), 4.2.1(b)(vi),
4.2.1(b)(vii), 4.2.1(b)(viii), 4.3, or 4.4 but excluding any
immaterial breach of a provision of Section 4.3 which would not have
a material impact on the timing or likelihood of completing the
Arrangement) or subsection 7.1(e);
(b) the termination of this Agreement pursuant to subsection 7.1(d); or
(c) if all of the following occur: (i) an Acquisition Proposal shall
have been made to St. Jude or made known to the St. Jude
Shareholders generally or shall have been made directly to St. Jude
Shareholders or any person shall have publicly announced an
intention to make an Acquisition Proposal in respect of St. Jude;
(ii) this Agreement is terminated; and (iii) St. Jude completes any
Acquisition Proposal during the term of this Agreement or within 12
months following the termination of this Agreement.
6.2 ST. JUDE BREAK FEE
St. Jude shall pay to Golden Star the St. Jude Break Fee in
immediately available funds no later than one Business Day after the first to
occur of any St. Jude Fee Event or, in the event of the St. Jude Fee Event set
out in subparagraph (c) of the definition of St. Jude Fee Event, no later than
one Business Day following completion of the Acquisition Proposal.
6.3 REIMBURSEMENT OF EXPENSES
(a) If the Agreement is terminated by Golden Star pursuant to subsection
7.1(b)(i) (other than in the case of a termination pursuant to
subsection 7.1(b)(i) which would constitute a St. Jude Fee Event, in
which case St. Jude shall pay Golden Star the St. Jude Break Fee in
accordance with Section 6.2), St. Jude shall forthwith pay to Golden
Star within one (1) Business Day of such termination the amount of
$500,000 in immediately available funds.
(b) If this Agreement is terminated by St. Jude pursuant to subsection
7.1(b)(i), Golden Star shall forthwith pay to St. Jude within one
(1) business day of such termination the amount of $500,000 in
immediately available funds.
6.4 LIQUIDATED DAMAGES
(a) St. Jude acknowledges that the payment amount set out in Section 6.2
is a payment of liquidated damages which is a genuine pre-estimate
of the damages which Golden Star will suffer or incur as a result of
the event giving rise to such damages and the resultant termination
of this Agreement and is not a penalty. St. Jude hereby irrevocably
and unconditionally waives any right it may have to raise as a
defence that any such liquidated damages are excessive or punitive.
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(b) Each Party acknowledges that the payment amounts set out in Section
6.3 are payments of liquidated damages which are a genuine
pre-estimate of the damages which the Party entitled to such amount
will suffer or incur as a result of the event giving rise to such
damages and the resultant termination of this Agreement and are not
penalties. Each Party hereby irrevocably and unconditionally waives
any right it may have to raise as a defence that any such liquidated
damages are excessive or punitive. Notwithstanding any provision of
this subsection 6.4(b) to the contrary, payment by one Party to the
other Party pursuant to Section 6.3 shall not be in lieu of any
damages or any other payment or remedy available at law or in equity
in the event of any wilful or intentional breach by the Party making
the payment of any of its obligations or covenants under this
Agreement.
6.5 NO DUPLICATION
For the avoidance of doubt, in no case shall Golden Star be entitled
to receive a payment under both of Section 6.2 and Section 6.3.
6.6 SURVIVAL
The provisions of this Article 6, Section 4.4.1(c), Section 4.8.2,
Section 9.2, Section 9.9 and Section 9.10 shall survive the termination of this
Agreement.
ARTICLE 7
TERMINATION
7.1 TERMINATION
This Agreement may be terminated immediately:
(a) by mutual written consent of Golden Star and St. Jude;
(b) by either Party, upon providing written notice to the other:
(i) at any time if the other Party is in breach of any of its
representations, warranties, covenants or other agreements
contained in this Agreement in any material respect and such
breach is not capable of being cured or is not cured by the
breaching Party within three Business Days of the giving of
notice of such breach by the other Party to the breaching
Party;
(ii) if any of the conditions for the benefit of the terminating
Party contained in this Agreement is not satisfied or waived
on or before December 21, 2005 (or such later date (but in any
case, not later than March 16, 2006) as the Parties, acting
reasonably, may agree to in writing) or such other time prior
thereto as is specified in this Agreement, provided that the
terminating Party is not then in breach of any
representations, warranties and covenants herein contained in
any material respect;
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(c) by Golden Star or St. Jude if any of the following have occurred:
(i) if the approval of the Arrangement by the St. Jude
Securityholders has not been obtained by December 15, 2005 or
such later date (but in any case, not later than March 16,
2006) as the Parties acting reasonably may agree to in
writing; or
(ii) if upon a vote at a duly held St. Jude Meeting or any
adjournment or postponement thereof to obtain the approval of
St. Jude Securityholders (voting as a single class) of the
Arrangement Resolution or any matter that could reasonably be
expected to facilitate the Arrangement, the approval of the
St. Jude Securityholders (voting as a single class) is not
obtained in accordance with Applicable Laws;
(d) by either Party upon the determination by St. Jude, after conclusion
of the process set out in Section 4.3 that an Acquisition Proposal
constitutes a Superior Proposal, the provision of notice to Golden
Star of a Superior Proposal as required by Section 4.4 and the time
period for Golden Star to propose an amendment to the Agreement as
contemplated by Section 4.4 has elapsed;
(e) by Golden Star, if the Board of Directors of St. Jude has withdrawn
or changed any of its recommendations to the St. Jude
Securityholders in a manner adverse to Golden Star or which would
impede the completion of the Arrangement or has made a
recommendation to the St. Jude Securityholders not to accept or
approve the Arrangement; or (i) has not submitted the Arrangement
for approval to St. Jude Securityholders on or prior to December 15,
2005 (or such later date (but in any case, not later than March 16,
2006) as the Parties, acting reasonably, may agree to in writing),
provided that Golden Star has provided, on a timely basis,
information regarding Golden Star required by applicable securities
laws for inclusion in the Information Circular; or (ii) has failed
to solicit proxies in favour of approving the Arrangement; or (iii)
has resolved to do any of the foregoing; or
(f) by Golden Star if the condition set forth in subsection 5.3(i) has
not been satisfied or waived on or before November 29, 2005 (or if
the meeting of shareholders or members of BD Goldfields is adjourned
or postponed, then on or before December 12, 2005) or is not
reasonably capable of being satisfied by no later than November 29,
2005 (or if the meeting of shareholders or members of BD Goldfields
is adjourned or postponed, then no later than December 12, 2005).
In the event of termination of this Agreement by either Party as
provided in this Article 7, this Agreement shall forthwith become void and there
shall be no liability or obligation on the part of either Party, except with
respect to Sections 4.4.1(c), 6.2, 6.3, 6.4, 9.2 and 9.9 which provisions shall
survive the termination; provided that notwithstanding anything to the contrary
contained in this Agreement, neither Party shall be (i) relieved or released
from any liability or damages arising out of any breach of this Agreement prior
to such termination or (ii) precluded from seeking injunctive relief to restrain
any breach or threatened breach of this Agreement or otherwise to obtain
specific performance of any provision of this Agreement.
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ARTICLE 8
AMENDMENT
8.1 AMENDMENTS AND WAIVERS
This Agreement may, at any time and from time to time, before and
after the holding of the St. Jude Meeting but not later than the Effective Date,
be amended, modified and/or supplemented by written agreement of the Parties
hereto (or in the case of a waiver, by written instrument of the Party giving
the waiver) without, subject to Applicable Laws, further notice to or
authorization on the part of St. Jude Securityholders. Without limiting the
generality of the foregoing, any such amendment, modification or supplement may:
(a) change the time for performance of any of the obligations or acts of
the Parties hereto;
(b) waive any inaccuracies or modify any representation or warranty
contained herein or in any document to be delivered pursuant hereto;
(c) waive compliance with or modify any of the covenants contained
herein or in any document to be delivered pursuant hereto; or
(d) waive or modify performance of any of the obligations or conditions
precedent of the Parties hereto.
ARTICLE 9
GENERAL PROVISIONS
9.1 NOTICES
Any demand, notice or other communication to be given in connection
with this Agreement must be communicated confidentially and in writing to the
addresses, facsimile numbers or e-mail addresses set out below and will be
sufficiently given if: (i) delivered personally upon the Party for whom it is
intended; (ii) delivered by registered or certified mail where receipt has been
acknowledged; (iii) by electronic facsimile upon receipt of confirmation of
transmission; or (iv) delivered by e-mail transmission, upon receipt of
confirmation of delivery:
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If to Golden Star:
Golden Star Resources Ltd.
00000 X. Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx
00000-0000, X.X.X.
Attention: Mr. Xxxxx Xxxxxxxx and Xx. Xxxxx Xxxxxx
Facsimile: (000) 000-0000
E-mail: xxxxxxxxx@xxx.xxx
with a copy (which shall not constitute notice) to:
Fasken Xxxxxxxxx XxXxxxxx XXX
Xxxxx 0000
Xxxxxxx Xxxxxxxx Xxxx Xxxxx
Xxxxxxx-Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Mr. John X.X. Xxxxxx
Facsimile: (000) 000-0000
E-mail: xxxxxxx@xxx.xxxxxx.xxx
If to St. Jude:
St. Jude Resources Ltd.
Xxxxx 000, 0000 - 00xx Xxxxxx
Xxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
Attention: Xx. Xxxxxxx X. Xxxxxxx
Facsimile: (000) 000 0000
E-mail: xxxxxxxx@xxxxxxxxxx.xxx
with a copy (which shall not constitute notice) to:
Xxxxx Xxxxxxx & Xxxxxxx LLP
000 Xxxxxxx Xxxxxx
P.O. Box 49314
Xxxxx 0000, Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
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Attention: Xx. Xxxxxx Xxxxxx
Facsimile: (000) 000-0000
E-mail: xxx.xxxxxx@xxxxxx.xxx
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Xxxxxx Xxxxxxx LLP
Suite 1000
000 Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
Attention: Xx. Xxxxxx Xxxxx
Facsimile: (000) 000-0000
E-mail: xxxxxx@xxxxxxxxxxxxx.xxx
or to such other address as the relevant person may from time to time advise by
notice in writing given pursuant to this Section.
9.2 CONFIDENTIALITY
The Parties agree that the confidentiality agreement dated October
27, 2003 entered into between Golden Star and St. Jude (the "CONFIDENTIALITY
AGREEMENT") shall be extended by replacing the reference to "twenty-four (24)
months" as set forth in section 8 of the Confidentiality Agreement, with a
reference to "thirty six (36) months" so that the Confidentiality Agreement
expires October 27, 2006. The Parties acknowledge that this Agreement and the
Arrangement is subject to the Confidentiality Agreement. For greater certainty,
this Agreement and any discussions in connection therewith shall be treated by
the Parties hereto as strictly confidential and shall not (without the prior
consent of the other Party hereto or as contemplated or provided herein) be
disclosed by a Party to any Person other than a director, officer, employee,
agent or professional advisor of or to that Party with a need to know for
purposes connected with the Arrangement or other matters contemplated by this
Agreement and then only on a confidential basis and also on the basis that the
Party concerned will be liable for any breach of confidentiality by a Person to
whom it makes disclosure. For greater certainty, each Party agrees to comply
with applicable privacy legislation.
9.3 GOVERNING LAW
This Agreement is governed by, and will be construed in accordance
with, the laws of the Province of Ontario and the federal laws of Canada
applicable therein.
9.4 ATTORNMENT
For the purpose of all legal proceedings other than those matters
relating to the Interim Order and the Final Order, this Agreement will be deemed
to have been performed in the Province of Ontario and the courts of the Province
of Ontario will have jurisdiction to entertain any action arising under this
Agreement. Each of the Parties hereby attorns to the jurisdiction of the courts
of the Province of Ontario.
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9.5 BINDING EFFECT AND ASSIGNMENT
This Agreement and all the provisions hereof shall be binding upon
and enure to the benefit of the Parties hereto and their respective successors
and permitted assigns. This Agreement is not assignable by a Party without the
prior written consent of the other Party, provided that Golden Star may assign
all or any part of its rights or obligations under this Agreement to a direct or
indirect subsidiary of Golden Star.
9.6 TIME OF ESSENCE
Time shall be of the essence of this Agreement.
9.7 THIRD PARTY RIGHTS
This Agreement shall not confer to any rights or remedies upon any
person other than the parties hereto except that the provisions of Section 9.10
are intended for the benefit of the individuals specified therein.
9.8 COUNTERPARTS
This Agreement may be executed in any number of counterparts,
manually or by facsimile, each of which will be deemed to be an original and all
of which taken together will be deemed to constitute one and the same
instrument.
9.9 FEES AND EXPENSES
Except as provided in Article 6, each Party will pay its own
expenses incurred in connection with this Agreement or the transactions
contemplated herein.
9.10 NO PERSONAL LIABILITY
No director or officer of Golden Star of any of its Subsidiaries shall
have any personal liability whatsoever to St. Jude under this Agreement, or any
other document delivered in connection with the Arrangement on behalf of Golden
Star. No director or officer of St. Jude or any of its Subsidiaries shall have
any personal liability whatsoever to Golden Star under this Agreement, or any
other document delivered in connection with the Arrangement on behalf of St.
Jude, excluding, for greater certainty, any support or lock-up agreement
executed by any such director or officer.
9.11 FURTHER ASSURANCES
Notwithstanding that the transactions or events set out herein shall
occur and shall be deemed to occur in the order set out in this Plan of
Arrangement without any further act or formality, St. Jude and Golden Star agree
to make, do and execute, or cause to be made, done and executed, all such
further acts, deeds, agreements, transfers, assurances, instruments or documents
as may be reasonably required by any of them in order to document or evidence
any of the transactions or events set out herein.
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9.12 REMEDIES
The Parties hereto agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the Parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the Province of Ontario having
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity. The rights and remedies of the Parties hereunder
are cumulative and are in addition to, and not in substitution for, any other
rights and remedies available at law or in equity or otherwise.
[remainder of page intentionally left blank]
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IN WITNESS WHEREOF each of the parties hereto has executed this
Agreement as of the date first written above.
GOLDEN STAR RESOURCES LTD.
By: /s/ Xxxxx Xxxxxxxx
---------------------------------
Name: Xxxxx Xxxxxxxx
Title: Chief Executive Officer
ST. JUDE RESOURCES LTD.
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President and Chief
Executive Officer
