Exhibit 1.2
U.S. AGENCY AGREEMENT
July -, 2002
Golden Star Resources Ltd.
00000 Xxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxx
00000-0000
ATTENTION: XX. XXXXX X. XXXXXXXX, PRESIDENT AND CHIEF EXECUTIVE OFFICER
Dear Sir:
Golden Star Resources Ltd. (the "CORPORATION"), proposes to issue, at the
Time of Closing (as hereinafter defined), - units (collectively, the
"UNITS" and individually, a "UNIT") of the Corporation (the "OFFERED SECURITIES"
or the "SECURITIES"), each Unit consisting of one (1) common share (a "COMMON
SHARE") of the Corporation and one-half (1/2) common share purchase warrant,
each whole warrant exercisable at a price per Common Share of Cdn. $- until
-, 2004 (each whole warrant, a "WARRANT") at an offering price of Cdn.
$- per Unit for aggregate gross proceeds of Cdn. $-. Based upon and
subject to the terms and conditions set out below, Canaccord Capital Corporation
(USA) Inc. (the "U.S. LEAD MANAGER") and BMO Xxxxxxx Xxxxx Corp. (collectively
the "U.S. AGENTS" and, individually, a "U.S. AGENT") hereby propose to offer the
Offered Securities for sale, as agents of the Corporation, on a best efforts
basis with no minimum or dollar amount requirement, in the manner contemplated
in this Agreement. The offering of the Offered Securities by the Corporation
pursuant to this U.S. Agreement is hereinafter referred to as the "OFFERING".
It is understood and agreed to by all parties that the Corporation is
concurrently entering into an agreement (the "CANADIAN UNDERWRITING AGREEMENT")
providing for the sale by the Corporation of - Units in Canada, through
arrangements with Canaccord Capital Corporation and BMO Xxxxxxx Xxxxx Inc.
(together, the "CANADIAN UNDERWRITERS"). Anything herein or therein to the
contrary notwithstanding, the closing under this Agreement is expressly
conditional on the closing under the Canadian Underwriting Agreement. Two forms
of prospectus are to be used in connection with the offering and sale of the
Securities contemplated by the foregoing, one relating to the Securities offered
hereunder and the other related to the Securities offered by the Canadian
Underwriters. The latter form of prospectus will be identical to the former
except for the addition of certain pages in respect of Canadian Securities Laws
requirements as included in the U.S. Registration Statement and amendments
thereto.
The Corporation shall pay to the U.S. Lead Manager, on behalf of the U.S.
Agents, a fee (the "AGENTS' FEE") at the Time of Closing equal to Cdn. $-
per Offered Security sold pursuant
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to the terms of this U.S. Agreement (being 5.5% of the issue price per Offered
Security) in consideration of the services to be rendered by the U.S. Agents in
connection with the Offering. Such services shall include, without limitation:
(i) acting as financial advisors to the Corporation in the preparation of
documentation relating to the sale of the Securities; (ii) forming and managing
banking, selling and other groups for the sale of the Securities; (iii)
distributing the Securities to the public both directly and through other
registered dealers and brokers; (iv) assisting the Corporation in connection
with the preparation and finalization of the U.S. Preliminary Prospectus, the
U.S. Prospectus (each as hereinafter defined) and the Canadian forms of such
prospectuses, qualifying the distribution of, or registering, as the case may
be, the Securities; (v) performing administrative work in connection with these
matters; and (vi) all other services arising out of the agreement resulting from
the Corporation's acceptance of this offer.
The U.S. Agents and the Corporation acknowledge that Schedule A, Schedule
B and Schedule C form a part of this U.S. Agreement.
The following in addition to the above preamble are the terms and
conditions of the agreement between the Corporation and the U.S. Agents:
SECTION 1 DEFINITIONS AND INTERPRETATION
(1) In this U.S. Agreement:
"BUSINESS DAY" means any day other than a Saturday, Sunday or statutory or
civic holiday in the City of Toronto, Ontario and the City of New York,
New York;
"CANADIAN SECURITIES LAWS" means, collectively, all applicable securities
laws of each of the Qualifying Provinces and the respective rules and
regulations under such laws, together with applicable published policy
statements, notices and orders of the securities regulatory authorities in
the Qualifying Provinces;
"EXCHANGES" means the Toronto Stock Exchange ("TSX") and the American
Stock Exchange ("AMEX");
"INTER-DEALER AGREEMENT" means that certain inter-dealer agreement, dated
the date hereof, between the Canadian Underwriters and the U.S. Agents;
"MATERIAL SUBSIDIARIES" means the entities set out in Schedule A in which
the Corporation holds the types and percentages of securities or other
ownership interests therein set forth;
"MATERIAL RESOURCE PROPERTIES" has the meaning ascribed thereto in Section
6(1)(j) hereof;
"QUALIFYING PROVINCES" means the provinces of Canada in which the
Corporation has filed a Canadian preliminary short form prospectus and a
(final) short form prospectus in respect to the Securities to be sold by
the Canadian Underwriters in Canada;
"RESOURCE PROPERTIES" has the meaning ascribed thereto in Section 6(1)(j)
hereof;
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"SEC" means the United States Securities and Exchange Commission;
"STOCK OPTION PLANS" means the stock option plans of the Corporation as
approved by the shareholders of the Corporation, as constituted on the
date hereof;
"TIME OF CLOSING" has the meaning ascribed thereto in Section 10(1)
hereof;
"UNITED STATES" means the United States of America, its territories and
possessions, any state of the United States, the District of Columbia, and
the areas subject to the jurisdiction of the United States of America;
"U.S. EXCHANGE ACT" means the United States Securities Exchange Act of
1934, as amended;
"U.S. SECURITIES ACT" means the United States Securities Act of 1933, as
amended;
"U.S. SECURITIES LAWS" means the applicable blue sky or securities
legislation in the United States, together with the U.S. Exchange Act and
the U.S. Securities Act and the rules and regulations of the SEC and the
applicable state securities regulatory authorities thereunder; and
"WARRANT INDENTURE" means the warrant indenture to be entered into between
the Corporation and CIBC Mellon Trust Company, as warrant agent, providing
for the creation and issue of the Warrants.
(2) The division of this Agreement into sections, subsections, paragraphs and
other subdivisions and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation of
this Agreement. Unless something in the subject matter or context is
inconsistent therewith, references herein to sections, subsections,
paragraphs and other subdivisions are to sections, subsections, paragraphs
and other subdivisions of this U.S. Agreement.
(3) Except as otherwise indicated, all amounts expressed herein in terms of
money refer to lawful currency of the United States and all payments to be
made hereunder shall be made in such currency.
SECTION 2 COMPLIANCE WITH SECURITIES LAWS
The Corporation represents and warrants to, and covenants and agrees with,
each of the U.S. Agents that:
(1) A registration statement on Form S-3 (File No. 333-91666) (the "INITIAL
REGISTRATION STATEMENT"), including the exhibits thereto, and including
the Incorporated Documents (as defined below) in respect of the Securities
has been filed with the SEC in compliance with the U.S. Securities Act and
all applicable rules and regulations thereunder.
(2) The Initial Registration Statement and any post-effective amendment
thereto, each in the form heretofore delivered by the Corporation, and,
excluding exhibits thereto but including all documents incorporated by
reference in the form of prospectus, to be used
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in the United States by the U.S. Agents to market the Securities contained
therein, delivered by the Corporation, has been declared effective by the
SEC in such form; and no stop order suspending the effectiveness of the
Initial Registration Statement has been issued and no proceeding for that
purpose has been initiated or threatened by the SEC (any form of
preliminary prospectus, to be used in the United States by the U.S. Agents
to market the Securities included in the Initial Registration Statement is
hereinafter called a "U.S. PRELIMINARY PROSPECTUS" and any form of
preliminary prospectus to be used in Canada by the Canadian Underwriters
to market the Securities is hereafter called a "CANADIAN PRELIMINARY
PROSPECTUS"); the various parts of the Initial Registration Statement,
including all exhibits thereto and including (A) the information contained
in the forms of final prospectuses timely filed with the SEC pursuant to
424(b) under the U.S. Securities Act and deemed by virtue of Rule 430A
under the U.S. Securities Act to be part of the Initial Registration
Statement at the time it was declared effective, and (B) the documents
incorporated by reference in the form of prospectuses contained in the
Initial Registration Statement at the time such part of the Initial
Registration Statement became effective, as amended at the time such part
of the Initial Registration Statement became effective, are hereinafter
collectively referred to as the "U.S. REGISTRATION STATEMENT"; such final
prospectus, to be used in the United States by the U.S. Agents to market
the Securities is hereinafter called the "U.S. PROSPECTUS" and any form of
final prospectus to be used in Canada by the Canadian Underwriters to
market the Securities is hereinafter called a "CANADIAN PROSPECTUS"; any
reference herein to any U.S. Preliminary Prospectus or the U.S. Prospectus
shall be deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the U.S.
Securities Act (the "INCORPORATED DOCUMENTS"), as of the date of such U.S.
Preliminary Prospectus or the U.S. Prospectus shall be deemed to refer to
and include any documents filed after the date of such U.S. Preliminary
Prospectus or U.S. Prospectus, as the case may be, under the U.S. Exchange
Act, and incorporated by reference in such U.S. Preliminary Prospectus or
U.S. Prospectus, as the case may be.
(3) No order preventing or suspending the use of any U.S. Preliminary
Prospectus or Canadian Preliminary Prospectus has been issued by the SEC
or an applicable Canadian securities regulatory authority in any of the
Qualifying Provinces, and each U.S. Preliminary Prospectus and Canadian
Preliminary Prospectus, at the time of filing thereof, conformed in all
material respects to the requirements of the U.S. Securities Act and the
rules and regulations of the SEC thereunder, and the Canadian Securities
Laws, respectively, and did not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(4) The documents incorporated by reference in the U.S. Prospectus, when they
became effective or were filed with the SEC, as the case may be, conformed
in all material respects to the requirements of the U.S. Securities Act or
the U.S. Exchange Act, as applicable, and the rules and regulations of the
SEC thereunder, and none of such documents contained an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and any further
documents so filed and incorporated by reference in the U.S. Prospectus or
any further
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amendment or supplement thereto, when such documents became effective or
are filed with the SEC, as the case may be, will conform in all material
respects to the requirements of the U.S. Securities Act or the U.S.
Exchange Act, as applicable, and the rules and regulations of the SEC
thereunder, and will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading.
(5) The U.S. Registration Statement and any U.S. Preliminary Prospectus, at
the time each was filed with the SEC pursuant to Rule 424(b) under the
U.S. Securities Act and when delivered to the U.S. Agents for their use in
marketing the Securities conform, and the U.S. Prospectus at the time it
is filed with the SEC pursuant to Rule 424(b) under the U.S. Securities
Act, when delivered to the U.S. Agents for their use in making
confirmations of sales of the Securities, and at the Closing Date (as
defined herein) do not and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading and any
further amendments or supplements to the U.S. Registration Statement or
the U.S. Prospectus will conform, in all material respects to the
requirements of the U.S. Securities Act and the rules and regulations of
the SEC thereunder and do not and will not, as of the applicable effective
date as to the U.S. Registration Statement and any amendment thereto and
as of the applicable filing date as to the U.S. Prospectus and any
amendment or supplement thereto, contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
(6) The Canadian Preliminary Prospectus, at the time it was filed with the SEC
pursuant to Rule 424(b) under the U.S. Securities Act and when delivered
to the Canadian Underwriters for their use in marketing the Securities
conforms, and the Canadian Prospectus at the time it is filed with the SEC
pursuant to Rule 424(b) under U.S. Securities Act, when delivered to the
Canadian Underwriters for their use in making confirmations of sales of
the Securities, and at the Closing Date (as defined herein) will not and
any further amendments or supplements to the Canadian Prospectus will
conform, in all material respects to the requirements of the U.S.
Securities Act and the rules and regulations of the SEC thereunder and do
not and will not, as of the applicable filing date, contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading.
(7) The U.S. Prospectus and the Canadian Prospectus, and any supplements
thereto, shall each have been filed with the SEC within the time period
prescribed for such filing by Rule 424(b) under the U.S. Securities Act;
and all requests for additional information on the part of the SEC in
connection with the U.S. Registration Statement shall have been complied
with to the reasonable satisfaction of the U.S. Agents.
SECTION 3 DUE DILIGENCE
Prior to the Time of Closing, and, if applicable, prior to the filing of
any amendment to the U.S. Prospectus, including on any intervening weekends, the
Corporation shall allow the U.S. Agents to participate fully in the preparation
of such documents and shall allow the U.S.
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Agents to conduct all due diligence that the U.S. Agents may require to conduct
in order to fulfil their obligations as agents and in order to enable the U.S.
Agents responsibly to execute any certificate required to be executed by them,
provided, however, that this Section 3 is not intended to operate as a condition
of the Offering.
SECTION 4 CONDITIONS OF THE OFFERING
The U.S. Agents' obligations under this Agreement are conditional upon and
subject to:
(1) the U.S. Agents receiving at the Time of Closing favourable legal opinions
to be delivered to the U.S. Agents by Field Xxxxxxxx Perraton LLP,
Canadian counsel to the Corporation and Stoel Rives LLP, the Corporation's
U.S. counsel (who may rely, to the extent appropriate in the
circumstances, on the opinions of local counsel acceptable to counsel to
the Corporation as to the qualification or the registration of the
Securities for sale to the public in Canada and the United States and as
to other matters governed by the laws of the Qualifying Provinces other
than the provinces in which they are qualified to practice and may rely,
to the extent appropriate in the circumstances, as to matters of fact on
certificates of officers, of public officials and Exchange officials or of
the auditors or transfer agent of the Corporation) dated the Closing Date,
addressed to the U.S. Agents and their counsel, as to those matters set
forth in Schedule B hereto, dated the Closing Date, and in form and
substance satisfactory to the U.S. Agents and their counsel;
(2) the U.S. Agents having received the comfort letter referred to in Section
9(1)(a);
(3) the U.S. Agents having received a comfort letter, dated the Closing Date,
in form and substance satisfactory to the U.S. Agents, acting reasonably,
bringing forward to a date not more than two business days prior to the
Closing Date the information contained in the comfort letter referred to
in Section 9(1)(a);
(4) the U.S. Agents receiving at the Time of Closing a legal opinion (or
opinions), dated the Closing Date in form and substance satisfactory to
the U.S. Agents and their counsel, addressed to the U.S. Agents and their
counsel, from local counsel to the Corporation, as to mining title matters
with respect to each of the Material Resource Properties;
(5) the U.S. Agents receiving at the Time of Closing a legal opinion (or
opinions) dated the Closing Date, in form and substance satisfactory to
the U.S. Agents and their counsel, addressed to the U.S. Agents and their
counsel, from local counsel to the Corporation, stating that each of
Caystar Holdings, Bogoso Holdings, Bogoso Gold Limited and Wasford
Holdings has been duly created and is validly existing under the laws of
the jurisdiction in which it was incorporated, amalgamated or continued,
and that the Corporation or a Material Subsidiary owns all of the issued
and outstanding share capital of each such corporation, except as set out
in Schedule A, in each case addressed to the U.S. Agents and their
counsel, dated the Closing Date, and in form and substance satisfactory to
the U.S. Agents and their counsel;
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(6) at the Time of Closing, there having been no material adverse change in
the business, affairs, operations, assets, liabilities or financial
condition of the Corporation on a consolidated basis since the date
hereof;
(7) at the Time of Closing, CIBC Mellon Trust Company, at its principal office
in Vancouver, having been duly appointed as the transfer agent and
registrar for the Common Shares and warrant trustee for the Warrants and
the Warrant Indenture relating to the Warrants having been executed by the
Corporation and CIBC Mellon Trust Company; and
(8) the Canadian Underwriting Agreement having been executed by the
Corporation and the Canadian Underwriters, and none of the Canadian
Underwriters shall have relied upon any rights of termination in the
Canadian Underwriting Agreement to terminate the offering of the
Securities in Canada and all conditions to the Canadian Underwriters
obligations thereunder having been waived or satisfied;
(9) the Corporation delivering a certificate signed on behalf of the
Corporation by the Chief Executive Officer of the Corporation and the
Chief Financial Officer of the Corporation, addressed to the U.S. Agents
and dated the Closing Date, in a form satisfactory to the U.S. Agents and
their counsel, certifying for and on behalf of the Corporation and not in
their personal capacities that, to the actual knowledge of the persons
signing such certificate, after having made due inquiry:
(a) the Corporation has complied in all respects with all covenants and
satisfied all terms and conditions of this U.S. Agreement on its
part to be complied with and satisfied at or prior to the Time of
Closing on the Closing Date;
(b) no order, ruling or determination having the effect of ceasing or
suspending trading in any securities of the Corporation or
prohibiting the sale of the Securities or any of the Corporation's
issued securities has been issued and no proceeding for such purpose
is pending or, to the knowledge of such officers, threatened; and
(c) all of the representations and warranties made by the Corporation in
this U.S. Agreement are true and correct as of the Time of Closing
with the same force and effect as if made at and as of the Time of
Closing after giving effect to the transactions contemplated hereby;
(10) the National Association of Securities Dealers, Inc. ("NASD") has
confirmed that it has not raised any objection with respect to the
fairness and reasonableness of the underwriting terms and arrangements
related to the offering;
(11) the U.S. Agents shall have received favourable opinions of Stikeman
Elliott and Xxxxxx & Xxxxxxx LLP, their Canadian and U.S. counsel,
respectively, as to such matters as the U.S. Agents shall reasonably
request; and
(12) the U.S. Agents receiving at the Time of Closing such further
certificates, opinions of counsel and other documentation from the
Corporation as are consistent with the transactions contemplated herein.
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SECTION 5 COVENANTS OF THE U.S. AGENTS
The U.S. Agents:
(a) shall offer or arrange the offer of the Securities for sale to the
public, directly and through other investment dealers and brokers
(the U.S. Agents, together with such other investment dealers and
brokers, are referred to herein as the "SELLING FIRMS"), only as
permitted by and in compliance with all relevant laws and regulatory
requirements (including under the U.S. Securities Act), upon the
terms and conditions set forth in the U.S. Prospectus and in this
U.S. Agreement and will require each Selling Firm to so agree;
(b) shall not solicit offers to purchase or sell the Securities so as to
require registration thereof or the filing of a prospectus or
similar document with respect thereto under the laws of any
jurisdiction other than the United States, and will require each
Selling Firm to agree with the U.S. Agents not to so solicit or
sell. In this connection, the U.S. Agents agree that they will not
offer or sell any of the Securities constituting a part of their
allotment within Canada except, if applicable, through the Canadian
Underwriters on the terms and conditions set forth in the Canadian
Underwriting Agreement and the Inter-Dealer Agreement and in
compliance with the Canadian Securities Laws;
(c) agree that if they offer to sell or sell any Securities in
jurisdictions other than the United States and Canada (which may
include Europe), such offers and sales shall be effected in
accordance and compliance with the applicable laws of such
jurisdictions and shall be effected in such manner so as not to: (i)
require registration of the Securities, or the filing of a
prospectus or other document with respect thereto; or (ii) subject
the Corporation to any continuous disclosure or similar reporting
requirements under the laws of any jurisdiction outside the
provinces of Canada or the United States;
(d) shall use all reasonable efforts to complete and to cause the other
Selling Firms to complete the distribution of the Securities as soon
as practicable;
(e) shall notify the Corporation when, in their opinion, the U.S. Agents
and the other Selling Firms have ceased distribution of the
Securities; and
(f) shall comply with all U.S. Securities Laws with respect to the use
of "green sheets" and other marketing materials.
(2) Notwithstanding the foregoing, no U.S. Agent shall be liable to the
Corporation with respect to any other U.S. Agent under this Section 5.
SECTION 6 REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
(1) The Corporation hereby represents and warrants to the U.S. Agents,
intending that the same may be relied upon by the U.S. Agents, that:
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(a) each of the Corporation and the Material Subsidiaries has been duly
incorporated, continued or amalgamated and organized and is validly
existing under the laws of its jurisdiction of incorporation,
continuance or amalgamation, has all requisite corporate power and
authority to carry on its business as now conducted and as
contemplated by the U.S. Prospectus, and to own, lease and operate
its properties and assets, and the Corporation has all requisite
power and authority to carry out its obligations under this U.S.
Agreement;
(b) the only major operating subsidiaries of the Corporation are listed
in Schedule A;
(c) the Corporation or one of its Material Subsidiaries owns the issued
and outstanding shares of each of the Material Subsidiaries as set
out in Schedule A, in each case free and clear of any pledge, lien,
security interest, charge, claim or encumbrance;
(d) upon completion of the acquisition of the Wassa Transactions (as
defined below) as described in the U.S. Preliminary Prospectus and
the U.S. Prospectus, Wasford Holdings will own 90% of the issued and
outstanding shares of Wexford Goldfields Limited, free and clear of
any pledge, lien, security interest, charge, claim or encumbrance,
other than as is held for the benefit of Bayerische Hypo-und
Vereinsbank AG, Dresdner Bank AG, Fortis Bank (Nederland) N.V. and
Standard Bank London Limited (the "SECURED BANKS"), which banks are
providing funding in respect of the acquisition;
(e) the Corporation meets the requirements for the use of Form S-3 under
the U.S. Securities Act;
(f) no order, ruling or determination having the effect of ceasing,
suspending or restricting trading in any securities of the
Corporation or the sale of the Common Shares or Warrants comprised
in the Securities has been issued and no proceedings, investigations
or inquiries for such purpose are pending or, to the Corporation's
knowledge, threatened;
(g) the Corporation's Common Shares are posted and listed for trading on
the Exchanges and the Corporation is not in default in any material
respect of any of the listing requirements of the Exchanges;
(h) other than options under the Corporation's Stock Option Plans, the
Corporation is not a party to and has not entered into any
agreement, warrant, option, right or privilege reasonably capable of
becoming an agreement, for the purchase, subscription or issuance of
any Common Shares or securities convertible into or exchangeable for
Common Shares other than as set out in Schedule C;
(i) as at the date hereof, the authorized share capital of the
Corporation consists of an unlimited number of Common Shares and an
unlimited number of First Preferred shares, of which - Common Shares
and no First Preferred shares are issued and outstanding;
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(j) the Corporation and each of the Material Subsidiaries have conducted
and are conducting their respective businesses in compliance with
all applicable laws, rules, regulations, tariffs, orders and
directives, including without limitation, all laws, regulations and
statutes relating to mining and to mining claims, concessions or
leases, and environmental, health and safety laws, rules,
regulations, or policies or other lawful requirements of any
governmental or regulatory bodies having jurisdiction over the
Corporation and the Material Subsidiaries in each jurisdiction in
which the Corporation or the Material Subsidiaries carries on their
respective businesses, other than those in respect of which the
failure to comply would not individually or in the aggregate be
material, and each of the Corporation and the Material Subsidiaries
holds all certificates, authorities, permits, licenses,
registrations and qualifications (collectively, the "AUTHORITIES")
in all jurisdictions in which each carries on its business and which
are material for and necessary or desirable to carry on their
respective businesses as now conducted and to the best of the
Corporation's knowledge, information and belief all the Authorities
are valid and existing and in good standing and none of the
Authorities contain any burdensome term, provision, condition or
limitation which has or is likely to have any material adverse
effect on the business of the Corporation and the Material
Subsidiaries (taken as a whole) as now conducted or as proposed to
be conducted, and neither the Corporation nor any of the Material
Subsidiaries has received any notice of proceedings relating to the
revocation or modification of any of the Authorities which, singly
or in the aggregate, if the subject of an unfavourable decision,
ruling or finding, would materially adversely affect the business,
operations, financial condition, or income of the Corporation or the
Material Subsidiaries (taken as a whole) or any notice of the
revocation or cancellation of, or any intention to revoke or cancel,
any of the mining claims, concessions or leases comprising:
(i) the Bogoso property;
(ii) the Prestea property;
(iii) the Xxxx Xxxxxx property;
(iv) the Yaou and Dorlin properties; and
(v) the St. Elie property;
(each as described in the Form 10-K of the Corporation dated March
25, 2002, collectively referred to herein as the "RESOURCE
PROPERTIES", and the Bogoso property and the Prestea property
collectively being referred to herein as the "MATERIAL RESOURCE
PROPERTIES");
(k) neither the Corporation nor any of the Material Subsidiaries has
received any notice of the revocation or cancellation of, or any
intention to revoke or cancel, any of the material mining claims,
concessions or leases comprising the Wassa property;
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(l) the Corporation and each of its Material Subsidiaries have good and
marketable title to all assets owned by them free and clear of all
liens, charges and encumbrances, other than as will be held for the
benefit of the Secured Banks, which banks are providing funding in
respect of the acquisition of Wexford Goldfields Limited, upon
completion of such acquisition, and other than such liens, charges
and encumbrances that are not individually or in the aggregate
material to the Corporation or the Material Subsidiaries;
(m) all interests in the Resource Properties are owned, leased or held
by the Corporation or its Material Subsidiaries as owner or lessee
thereof, are so owned with good and marketable title or are so
leased with good and valid title, are in good standing, are valid
and enforceable, are free and clear of any liens, charges or
encumbrances and no royalty is payable in respect of any of them,
except as set out in the U.S. Prospectus or the Incorporated
Documents or as are not individually or in the aggregate material to
the Corporation or the Material Subsidiaries, or other than as would
not have a material effect on the value of such interests; no other
material property rights are necessary for the conduct or intended
conduct of the Corporation's or the Material Subsidiaries' business
and there are no restrictions on the ability of the Corporation or
the Material Subsidiaries to use, transfer or otherwise exploit any
such property rights, except as set out in the U.S. Prospectus or
the Incorporated Documents;
(n) the Corporation is in the process of acquiring, through its
wholly-owned subsidiary Wasford Holdings, 90% of the equity of
Wexford Goldfields Limited, which is in the process of acquiring all
interests in the Wassa gold property in Ghana' (the "Wassa
Transactions"). The Wassa property and the current terms of the
Wassa Transactions are as described in the U.S. Preliminary
Prospectus and the U.S. Prospectus. The Corporation expects that the
Wassa Transactions will close by September 1, 2002. The Corporation
knows of no fact, event, occurrence, announcement or any other thing
that would, or might reasonably be expected to, materially increase
the costs of the closing of the Wassa Transactions, or materially
delay the closing of the Wassa Transactions;
(o) (A) the Corporation and its Material Subsidiaries are in compliance
with all material terms and provisions of all contracts, agreements,
indentures, leases, instruments and licences material to the conduct
of its business and (B) all such contracts, agreements, indentures,
leases, policies, instruments and licences are valid and binding in
accordance with their terms and in full force and effect;
(p) to the best of the Corporation's knowledge, information and belief
none of the real property (and the buildings constructed thereon) in
which the Corporation or any of the Material Subsidiaries has a
direct or indirect interest, whether leasehold or fee simple or
otherwise (the "REAL PROPERTY"), or upon or within which it has
operations, is subject to any judicial or administrative proceeding
alleging the violation of any federal, provincial, state or
municipal environmental, health or safety statute or regulation,
domestic or foreign, or is subject to any investigation concerning
whether any remedial action is needed to
-12-
respond to a release of any Hazardous Material (as defined below)
into the environment. Neither the Corporation nor any Material
Subsidiary nor, to the Corporation's knowledge, any occupier of the
Real Property, has filed any notice under any federal, provincial,
state or municipal law, domestic or foreign, indicating past or
present treatment, storage or disposal of a Hazardous Material.
Except in compliance with applicable environmental laws, none of the
Real Property has at any time been used by the Corporation or a
Material Subsidiary or, to the best of the Corporation's knowledge,
information and belief by any other occupier, as a waste storage or
waste disposal site. The Corporation, on a consolidated basis, has
no contingent liability of which it has knowledge in connection with
any release of any Hazardous Material on or into the environment
from any of the Real Property or operations thereon. Neither the
Corporation nor any Material Subsidiary nor, to the best of the
Corporation's knowledge, any occupier of the Real Property,
generates, transports, treats, processes, stores or disposes of any
waste on any of the Real Property in contravention of applicable
federal, provincial, state or municipal laws or regulations enacted
for the protection of the natural environment (including, without
limitation, ambient air, surface water, ground water, land surface
or subsurface strata) or human health or wildlife. To the
Corporation's knowledge, no underground storage tanks or surface
impoundments containing a petroleum product or Hazardous Material
are located on any of the Real Property in contravention of
applicable federal, provincial, state or municipal laws or
regulations, domestic or foreign, enacted for the protection of the
natural environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata),
human health or wildlife. For the purposes of this Section 6(1)(p),
"HAZARDOUS MATERIAL" means any contaminant, chemical, pollutant,
subject waste, hazardous waste, deleterious substance, industrial
waste, toxic matter or any other substance that when released into
the natural environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata) is
likely to cause, at some immediate or future time, harm or
degradation to the natural environment (including, without
limitation, ambient air, surface water, ground water, land surface
or subsurface strata) or risk to human health and, without
restricting the generality of the foregoing, includes any
contaminant, chemical, pollutant, subject waste, deleterious
substance, industrial waste, toxic matter or hazardous waste as
defined by applicable federal, provincial, state or municipal laws
or regulations enacted for the protection of the natural environment
(including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata), or human health or
wildlife;
(q) except as disclosed in the U.S. Prospectus or the Incorporated
Documents, the Corporation and each of its Material Subsidiaries
maintain appropriate insurance against loss of, or damage to, their
assets for all insurable risks on a repair, reinstatement or
replacement cost basis, and all of the policies in respect of such
insurance coverage are in good standing in all respects and not in
default;
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(r) the consolidated audited financial statements of the Corporation for
its fiscal years ended December 31, 1999, December 31, 2000 and
December 31, 2001 and the unaudited interim financial statements of
the Corporation for the quarter ended March 31, 2002 (collectively
the "CORPORATION'S FINANCIAL STATEMENTS"), copies of which are
incorporated by reference in the U.S. Preliminary Prospectus and the
U.S. Prospectus, including any reconciliation of financial
statements prepared in accordance with generally accepted accounting
principles in Canada with generally accepted accounting principles
in the United States, are true and correct in every material respect
and present fairly and accurately the financial position and results
of the operations of the Corporation on a consolidated basis for the
periods then ended and the Corporation's Financial Statements have
been prepared in accordance with generally accepted accounting
principles in Canada applied on a consistent basis, and comply as to
form in all material respects with the applicable accounting
requirements of the U.S. Securities Act and the U.S. Exchange Act,
as applicable, and the related published rules and regulations
thereunder;
(s) the execution and delivery of and the performance by the Corporation
of this U.S. Agreement and the Canadian Underwriting Agreement and
the consummation of the transactions contemplated hereby and
thereby, including the issuance and sale of the Common Shares
comprised in the Securities, the creation, issuance and sale of the
Warrants comprised in the Securities and the creation and issuance
of the Underwriters' Warrants (as defined in the Canadian
Underwriting Agreement) have been authorized by all necessary action
on the part of the Corporation;
(t) this U.S. Agreement and the Canadian Underwriting Agreement have
been duly executed and delivered by the Corporation and each such
agreement is a legal, valid and binding obligation of, and is
enforceable against, the Corporation in accordance with its terms
(subject to bankruptcy, insolvency or other laws affecting the
rights of creditors generally, the availability of equitable
remedies and the qualification that rights to indemnity and waiver
of contribution may be contrary to public policy);
(u) except as disclosed in the U.S. Prospectus or the Incorporated
Documents, since March 31, 2002: (A) there has been no material
change in the business, affairs, operations, assets, liabilities or
financial condition of the Corporation on a consolidated basis; (B)
no current reports or other documents have been filed on a
confidential basis with the SEC; (C) there has been no transaction
entered into by the Corporation and not disclosed which is material
to the Corporation; (D) the Corporation and its Material
Subsidiaries, on a consolidated basis, have not incurred any
material liability or obligation, indirect, direct or contingent,
not in the ordinary course of business, nor entered into any
material transaction or agreement not in the ordinary course of
business; and (E) there has been no dividend or distribution of any
kind declared, paid or made by the Corporation or, except for
dividends paid to the Corporation or its Material Subsidiaries, any
of its Material Subsidiaries, on any class of capital stock or
repurchase or
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redemption by the Corporation or any of its Material Subsidiaries of
any class of capital stock;
(v) the directors and officers of the Corporation and their compensation
arrangements with the Corporation, whether as directors, officers or
employees of the Corporation, are as disclosed in the U.S.
Prospectus or in the Incorporated Documents if required to be so
disclosed;
(w) all of the material contracts and agreements of the Corporation and
of its Material Subsidiaries not made in the ordinary course of
business (collectively the "MATERIAL CONTRACTS") have been disclosed
in the Incorporated Documents;
(x) all tax returns, reports, elections, remittances and payments of the
Corporation and of its Material Subsidiaries required by law to have
been filed or made in any applicable jurisdiction, have been filed
(or are in the process of being prepared for filing, which delayed
filing will not have an adverse effect on the Corporation or any of
its Material Subsidiaries) or made (as the case may be), other than
for taxes being contested in good faith, or with respect to which
the failure to file or make would not have a material adverse
effect, either individually or in the aggregate, to the Corporation
and the Material Subsidiaries, and, to the knowledge of the
Corporation, are substantially true, complete and correct and all
taxes of the Corporation and of its Material Subsidiaries, in
respect of which payment or accrual is required under applicable
law, other than taxes being contested in good faith, have been so
paid or accrued in the Corporation's Financial Statements;
(y) the Corporation is not and, after giving effect to the offering and
sale of the Securities, will not be an "investment company" or an
entity "controlled" by an "investment company" within the meaning of
the United States Investment Company Act of 1940, as amended;
(z) there is no material action, suit, proceeding, investigation or
judgment pending, or to the Corporation's knowledge, threatened or
outstanding against or affecting the Corporation or any Material
Subsidiary (or their respective officers and directors) at law or in
equity or before or by any federal, provincial, state, municipal or
other governmental department, commission, board or agency, domestic
or foreign, which in any way materially adversely affects or may
materially adversely affect the business, operations or condition of
the Corporation or any Material Subsidiary (financial or otherwise)
or its property or assets or which questions or may question the
validity of the creation, issuance or sale, of the Securities or any
action taken or to be taken by the Corporation or any Material
Subsidiary pursuant to or in connection with this U.S. Agreement or
any other material contract to which the Corporation or any Material
Subsidiary is a party, as the case may be;
(aa) except as have been made or obtained prior to Closing, under the
laws of the Qualifying Provinces and the United States, no consent,
approval, authorization, order, filing, registration or
qualification of or with any court, governmental
-15-
agency or body or regulatory authority is required for the creation,
issue, sale and delivery (as the case may be) of the Securities or
the Underwriters' Warrants or the consummation by the Corporation of
the transactions contemplated in this Agreement and the Canadian
Underwriting Agreement;
(bb) all necessary corporate action has been taken or will have been
taken prior to the Time of Closing by the Corporation so as to
validly issue and sell the Common Shares comprised in the
Securities, to validly create and issue the Underwriters' Warrants
to the Canadian Underwriters and to validly create, issue and sell
the Warrants comprised in the Securities and upon receipt by the
Corporation of the purchase price as consideration for the issue of
the Securities, the Common Shares comprised in the Securities will
be validly issued and outstanding as fully paid and non-assessable
shares of the Corporation;
(cc) the attributes of the Securities conform in all material respects
with the description thereof contained in the U.S. Registration
Statement;
(dd) (i) neither the Corporation nor any of its Material Subsidiaries
nor, any employee or agent of the Corporation or any Material
Subsidiary, has made any unlawful contribution or other payment to
any official of, or candidate for, any federal, state, provincial or
foreign office, or failed to disclose fully any contribution, in
violation of any law, or (ii) made any payment to any foreign,
United States or state governmental officer or official, or other
person charged with similar public or quasi-public duties, other
than payments required or permitted by the laws of the United
States;
(ee) the Corporation and each of its Material Subsidiaries maintains a
system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorizations;
(ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted
accounting principles in Canada and to maintain asset
accountability; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and
(iv) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is
taken with respect to any differences;
(ff) neither the Corporation nor any of the Company's officers, directors
or affiliates has taken, and at the Closing Date will have taken,
directly or indirectly, any action which has constituted, or might
reasonably be expected to constitute, the stabilization or
manipulation of the price of sale or resale of the Securities;
(gg) the Corporation has timely and properly filed (i) with the SEC all
reports and other documents required to have been filed by it with
the SEC pursuant to the U.S. Securities Act and the rules and
regulations, and (b) all reports or other documents required to have
been filed by it with the securities commission or similar
regulatory body of each province in Canada, the Toronto Stock
Exchange or any other applicable Canadian governmental authorities.
True and complete
-16-
copies of all such reports and other documents have been delivered
to the U.S. Agents;
(hh) neither the Corporation nor any Material Subsidiary (x) was a
personal holding company within the meaning of Section 542 of the
Internal Revenue Code of 1986, as amended (the "CODE") (a "PHC"), a
foreign personal holding company with the meaning of Section 542 of
the Code (an "FPHC"), or a controlled foreign corporation with the
meaning of Section 957 of the Code (a "CFC") for its taxable year
ended December 31, 1995 or for any previous taxable year, or (y)
expects that it will constitute a PHC, a FPHC or a CFC for its
current taxable year ending December 31, 2001;
(ii) the Corporation (x) was not a passive foreign investment company (a
"PFIC") within the meaning of section 1296 of the Code for its
taxable year ended December 31, 2001 or for any previous taxable
year and (y) expects that it will not constitute a PFIC for its
current taxable year ending December 31, 2002;
(jj) CIBC Mellon Trust Company, at its principal office in Vancouver, has
been duly appointed as the transfer agent and registrar for the
Common Shares; and
(kk) the forms of the certificate representing the Warrants have been
duly approved by the Corporation and comply with the provisions of
the Canada Business Corporations Act and of the TSX.
(2) The representations and warranties made by the Corporation to the Canadian
Underwriters in the Canadian Underwriting Agreement are hereby
incorporated by reference, and shall have the same effect as though they
were made to the U.S. Agents under this U.S. Agreement.
SECTION 7 REPRESENTATIONS AND WARRANTIES OF THE U.S. AGENTS
Each U.S. Agent hereby severally, and not jointly, represents and warrants that:
(a) it is, and will remain so, until the completion of the Offering,
appropriately registered under applicable U.S. Securities Laws so as
to permit it to lawfully fulfil its obligations hereunder and it is,
and will remain so, until the completion of the Offering, a member
in good standing of the National Association of Securities Dealers,
Inc.; and
(b) it has good and sufficient right and authority to enter into this
U.S. Agreement and complete its transactions contemplated under this
U.S. Agreement on the terms and conditions set forth herein.
SECTION 8 COVENANTS OF THE CORPORATION
(1) The Corporation covenants with the U.S. Agents that:
(a) during the period from the date hereof to the completion of the
distribution of the Securities, the Corporation will promptly advise
the U.S. Agents in writing of the full particulars of any material
change in the business, affairs, operations,
-17-
assets, liabilities or financial condition of the Corporation, on a
consolidated basis, or any material change in any statement
contained in the U.S. Prospectus or the Canadian Prospectus, as such
documents exist immediately prior to such change, which change is,
or may be, of such nature as would result in any of such documents,
as they exist immediately prior to such change, containing an untrue
statement of a material fact or an omission to state therein a
material fact that is required to be stated or that is necessary to
make the statements therein not misleading in light of the
circumstances in which they were made or which would result in any
of such documents, as they exist immediately prior to such change
not complying with the U.S. Securities Act. The Corporation will
promptly prepare and file with the SEC an amendment to the U.S.
Registration Statement or supplement to the U.S. Prospectus and/or
the Canadian Prospectus which in the opinion of the U.S. Agents,
acting reasonably, may be necessary or advisable to correct such
untrue or misleading statement or omission. The Corporation shall in
good faith discuss with the U.S. Agents any change in circumstances
(actual, anticipated, contemplated or threatened) which is of such a
nature that there may be a reasonable doubt as to whether written
notice need be given to the U.S. Agents under the provisions of this
Section 8(1)(a);
(b) the Corporation will deliver without charge to the U.S. Agents, as
soon as practicable, and in any event no later than -, 2002 in the
case of the U.S. Prospectus and the Canadian Prospectus, and
thereafter from time to time during the distribution of the
Securities, in such cities as the U.S. Agents shall notify the
Corporation, as many commercial copies of each of the U.S.
Preliminary Prospectus, the Canadian Preliminary Prospectus, the
U.S. Prospectus and the Canadian Prospectus, respectively (and in
the case of an amendment or supplement, such amendment or
supplement), as the U.S. Agents may reasonably request for the
purposes contemplated by the U.S. Securities Laws and the Canadian
Securities Laws and such delivery shall constitute consent by the
Corporation to the use by the U.S. Agents, the Canadian Underwriters
and the Selling Firms of such documents in connection with the
Offering in the United States and Canada, subject to the provisions
of applicable U.S. Securities Laws and Canadian Securities Laws;
(c) the Corporation shall use its best efforts to arrange that the
Common Shares comprised in the Securities are listed and posted for
trading on the TSX and the AMEX on the Closing Date, and that the
Warrants comprised in the Securities are listed and posted for
trading on the TSX on the Closing Date subject only to the
documentary filing requirements of each such exchange;
(d) it will not: (i) offer, pledge, sell, contract to sell any option or
contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase, or otherwise lend,
transfer or dispose of, directly or indirectly, any Common Shares or
securities convertible into or exercisable or exchangeable for
Common Shares; or (ii) enter into any swap or other arrangement that
transfers, in whole or in part, any of the economic consequences of
ownership of Common Shares or such other securities, whether
-18-
any such transaction described in clause (i) or (ii) above is to be
settled by delivery of Common Shares or such other securities, in
cash or otherwise (other than the Securities and other than in
connection with the grant or exercise of options, issuances under
the Corporation's existing Stock Option Plans or employee share
purchase plan or any other existing rights of conversion or
securities issued as consideration for an acquisition of assets or
shares), for a period ending 90 days after the closing of the
Offering without the prior written consent of the U.S. Lead Manager,
such consent not to be unreasonably withheld;
(e) it will apply the net proceeds from the sale of the Securities as
set forth under "Use of Proceeds" in the U.S. Prospectus;
(f) it will use its reasonable best efforts to make all necessary
arrangements with the Alternative Investment Market of the London
Stock Exchange in order that the Common Shares are listed on that
exchange within 6 months of the Closing Date; and
(g) to make generally available to its securityholders as soon as
practicable, but in any event, not later than eighteen months after
the effective date of the Registration Statement (as defined in Rule
158(c) under the U.S. Securities Act), an earnings statement of the
Corporation and its subsidiaries (which need not be audited)
complying with Section 11(a) of the U.S. Securities Act and the
rules and regulations of the SEC thereunder (including at the option
of the Corporation, Rule 158).
SECTION 9 ADDITIONAL DOCUMENTS UPON FILING OF U.S. PROSPECTUS
(1) The U.S. Agents' obligations under this U.S. Agreement are conditional
upon the receipt by the U.S. Agents concurrently with the filing of the
U.S. Prospectus, of:
(a) a "long form" comfort letter dated the date of U.S. Prospectus from
the auditors of the Corporation, addressed to the U.S. Agents and
Canadian Underwriters, in form and substance reasonably satisfactory
to the U.S. Agents, relating to the verification of the financial
information and accounting data and other numerical data of a
financial nature contained in the U.S. Prospectus and matters
involving changes or developments since the respective dates as of
which specified financial information is given in the U.S.
Prospectus to a date not more than two business days prior to the
date of such letter. Such letter shall further state that such
auditors are independent public accountants within the meaning of
the U.S. Securities Act and the appropriate rules and regulations
thereof, and that
(i) in their opinion the Corporation's financial statements
examined by them and included or incorporated by reference in
the U.S. Prospectus comply in all material respects with the
applicable accounting requirements of the U.S. Securities Act
and the U.S. Exchange Act and the related published rules and
regulations;
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(ii) In their opinion any unaudited pro forma financial statements
included or incorporated by reference in the U.S. Registration
Statement comply as to form in all material respects with the
requirements of the U.S. Securities Act and the U.S. Exchange
Act and the related published rules and regulations, and all
pro forma adjustments have been properly applied to the
historical amounts in the compilation of those statements;
(iii) they have performed the procedures specified by the American
Institute of Certified Accountants for a review of interim
financial information described in Statement of Auditing
Standards No. 71, on the unaudited financial statements
included or incorporated by reference in the U.S. Registration
Statement;
(iv) on the basis of the review referred to above nothing came to
their attention that caused them to believe that the unaudited
financial statements included or incorporated by reference in
the U.S. Registration Statement, including any reconciliation
of financial statements prepared in accordance with generally
accepted accounting principles in Canada with generally
accepted accounting principles in the United States, do not
comply as to form in all material respects with the
requirements of the U.S. Securities Act and the U.S. Exchange
Act and the related published rules and regulations, or that
any material modification should be made to such unaudited
financial statements for them to be in conformity with
generally accepted accounting principals;
(v) they have compared specified United States and Canadian dollar
amounts (or percentages derived from such United States and
Canadian dollar amounts) and other financial information
contained in the U.S. Prospectus (in each case to the extent
that such dollar amounts, percentages and other financial
information are derived from the general accounting records of
the Corporation and its subsidiaries subject to the internal
controls of the Corporation's accounting system or are derived
from such records by analysis or computation) with the results
obtained from inquiries, a reading of such general accounting
records and other procedures specified in such letter and have
found such United States and Canadian dollar amounts,
percentages and other financial information to be in agreement
with such results, except as otherwise specified in such
letter;
(vi) they compared at the date of the latest available balance
sheet read by such auditors, or at a subsequent specified date
not more than two business days prior to the date of the U.S.
Prospectus, there was any material change in the capital or
any increase in short term indebtedness or long-term debt of
the Corporation and its Material Subsidiaries consolidated or,
at the date of the latest available balance sheet read by such
auditors, there was any material decrease in consolidated net
current assets or net assets as compared with amounts shown on
the
-20-
latest balance sheet included or incorporated by reference in
the U.S. Prospectus; and
(vii) they compared for the period from the date of the latest
income statement included in the U.S. Prospectus to the date
of the latest available income statement read by such auditors
or at a subsequent specified date not more than two business
days prior to the date of the U.S. Prospectus, there were any
material decreases as compared with the corresponding period
of the previous year and with the period of corresponding
length ended the date of the latest income statement included
in the U.S. Prospectus, in the consolidated revenue, net
operating income, or total or per share amounts of net income;
(b) true hand-signed copies of the U.S. Registration Statement and all
amendments thereto as required by U.S. Securities Laws; and
(c) a copy of any other document required to be filed by the Corporation
with SEC under U.S. Securities Laws.
(2) The comfort letter referred to in Section 9(1)(a) shall be in addition to
any comfort letters required by the terms of the Canadian Underwriting
Agreement to be delivered to the Canadian Underwriters.
(3) Similar documents and comfort letters shall be delivered to the U.S.
Agents with respect to any amendment to the U.S. Prospectus (provided, in
the case of comfort letters, that the amendment to the U.S. Prospectus
contains financial, accounting or other numerical data of a financial
nature), or as required by the terms of the Canadian Underwriting
Agreement to be delivered to Canadian Underwriters.
SECTION 10 CLOSING
(1) The Offering will be completed at the offices of Stikeman Elliott in
Toronto at 8:00 a.m. (Toronto time) on -, 2002 (the "TIME OF CLOSING"
and the "CLOSING DATE", respectively) or at such other time and/or on such
other date as the U.S. Agents and the Corporation may agree upon, but in
any event no later than -, 2002.
(2) At the Time of Closing, subject to the terms and conditions contained in
this U.S. Agreement, the Corporation shall deliver to the U.S. Agents a
certificate or certificates representing the Offered Securities against
payment of the purchase price by certified cheque, bank draft or wire
transfer, dated the Closing Date, payable to the Corporation. The
Corporation will, at the Time of Closing and upon such payment of the
purchase price to the Corporation, make payment in full of the
Underwriting Fee.
SECTION 11
The U.S. Agents shall have the right to sell Additional Units (as such
term is defined in the Canadian Underwriting Agreement) to the public upon the
terms and conditions for the sale of such securities specified in the Canadian
Underwriting Agreement and the Inter-Dealer Agreement.
-21-
SECTION 12 TERMINATION RIGHTS
(1) All terms and conditions set out herein shall be construed as conditions
and any breach or failure by the Corporation to comply with any such
conditions in favour of the U.S. Agents shall entitle the U.S. Agents to
terminate their obligations under this U.S. Agreement by written notice to
that effect given to the Corporation prior to the Time of Closing on the
Closing Date. The Corporation shall use its reasonable best efforts to
cause all conditions in this U.S. Agreement to be satisfied. It is
understood that the U.S. Agents may waive in whole or in part, or extend
the time for compliance with, any of such terms and conditions without
prejudice to their rights in respect of any subsequent breach or
non-compliance, provided that to be binding on the U.S. Agents, any such
waiver or extension must be in writing.
(2) In addition to any other remedies that may be available to the U.S.
Agents, the U.S. Agents shall each be entitled, at their option, to
terminate and cancel, without any liability on the U.S. Agents' part,
their obligations under this U.S. Agreement, by giving written notice to
the Corporation at any time at or prior to the Time of Closing on the
Closing Date:
(a) if there should occur any suspension or limitation of trading in
securities generally on the TSX or AMEX, or if a general moratorium
on commercial banking activities in Toronto or New York should be
declared by the relevant authorities, or if, in relation to the
Corporation, any inquiry, investigation or other proceeding (whether
formal or informal) is commenced, threatened or announced or any
order or ruling is issued by any officer of such exchange or market,
or by the SEC, or any other regulatory authority in Canada or the
United States, or if any law or regulation under or pursuant to any
statute of Canada or of any province thereof or of the United States
or any state or territory thereof is promulgated or changed which,
in the reasonable opinion of the U.S. Agents (or any of them)
operates to prevent or materially restrict trading the Common Shares
or the distribution of the Securities or could reasonably be
expected to have a significant adverse effect on the market price of
the Common Shares or the Securities;
(b) if, after the date hereof and prior to the Time of Closing, the
state of financial markets in Canada or the United States is such
that, in the reasonable opinion of the U.S. Agents (or either of
them), the Securities cannot be marketed profitably, either U.S.
Agent shall be entitled, at its option, to terminate its obligations
under this Agreement by notice to that effect given to the
Corporation at or prior to the Time of Closing;
(c) if any inquiry, investigation or other proceeding is commenced or
any other order is issued under or pursuant to any statute of the
United States or any state thereof (other than an inquiry,
investigation or other proceeding order based solely upon the
activities or alleged activities of any U.S. Agent or Selling Firm)
or Canada or any province thereof or there is any change of law or
the interpretation or administration thereof by a securities
regulator or other public authority, which in the reasonable opinion
of the U.S. Agent, operates to prevent
-22-
or materially restrict the trading of the Common Shares or the
distribution of the Securities;
(d) if there shall occur any material change in the business, affairs,
operations, assets, liabilities or financial condition of the
Corporation on a consolidated basis or other change in a material
fact relating to the Corporation on a consolidated basis which in
the U.S. Agents' reasonable opinion would be expected to have a
significant adverse effect on the market price or value of any of
the Securities or the Common Shares; or
(e) if there should develop, occur or come into effect or existence any
event, action, state, condition or major financial occurrence of
national or international consequence, including without limiting
the generality of the foregoing, any military conflict, civil
insurrection, or any terrorist action, including, without
limitation, military insurrection (whether or not in connection with
such conflict or insurrection), or any law or regulation, which, in
the U.S. Agents' reasonable opinion, seriously adversely affects or
involves, or will seriously adversely affect or involve, the
Canadian or United States financial markets or the business,
operations or affairs of the Corporation on a consolidated basis
and/or prevents or materially restricts the trading of the Common
Shares or the distribution of the Securities.
(3) The U.S. Agents shall make reasonable best efforts to give notice to the
Corporation (in writing or by other means) of the occurrence of any of the
events referred to in Section 12(2), provided that neither the giving nor
the failure to give such notice shall in any way affect the entitlement of
the U.S. Agents to exercise this right at any time prior to or at the Time
of Closing.
(4) The rights of termination contained in this Section 12 as may be exercised
by the U.S. Agents are in addition to any other rights or remedies the
U.S. Agents may have in respect of any default, act or failure to act or
non-compliance by the Corporation in respect of any of the matters
contemplated by this U.S. Agreement.
(5) If the obligations of the U.S. Agents are terminated under this U.S.
Agreement pursuant to these termination rights, the Corporation's
liabilities to the U.S. Agents shall be limited to the Corporation's
obligations under Section 13, Section 14 and Section 15.
SECTION 13 INDEMNITY
(1) The Corporation agrees to indemnify and hold harmless each U.S. Agent, and
their respective directors, officers, employees and agents, and each
person, if any, who controls any U.S. Agent within the meaning of Section
15 of the U.S. Securities Act or Section 20 of the U.S. Exchange Act
against any and all losses, claims, damages and liabilities, joint or
several (including any investigation, legal and other expenses reasonably
incurred in connection with, and any amount paid in settlement of, any
action, suit or proceeding or any claim asserted), to which they, or any
of them, may become subject under the U.S. Securities Act, at common law
or otherwise, insofar as such losses, claims, damages or liabilities arise
out of or are based upon (i) any breach of
-23-
a representation or warranty of the Corporation contained herein or the
failure of the Corporation to comply with any of its obligations
hereunder, or (ii) any untrue statement or alleged untrue statement of a
material fact contained in the U.S. Preliminary Prospectus, the Canadian
Preliminary Prospectus, the U.S. Prospectus, the Canadian Prospectus or
the U.S. Registration Statement, or any amendment or supplement thereto,
or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading, except insofar as any such untrue statement or omission or
alleged untrue statement or omission was made in such U.S. Preliminary
Prospectus, the Canadian Preliminary Prospectus, the U.S. Prospectus, the
Canadian Prospectus or U.S. Registration Statement, or such amendment or
supplement, in reliance upon and in conformity, with information furnished
in writing to the Corporation by or on behalf of any U.S. Agent or
Canadian Underwriter expressly for use in the preparation thereof;
provided, however, that the foregoing indemnity against losses, claims,
damages or liabilities is subject to the condition that, insofar as it
relates to any untrue statement or alleged untrue statement, omission or
alleged omission made in the U.S. Registration Statement, the U.S.
Preliminary Prospectus and the Canadian Preliminary Prospectus but
eliminated or remedied in the U.S. Prospectus and the Canadian Prospectus,
such indemnity shall not inure to the benefit of any U.S. Agent from whom
the person asserting any loss, claim, damage or liability purchased the
Securities which are the subject thereof (or to the benefit of any person
who controls such U.S. Agent) if such U.S. Agent failed to send or give a
copy of the U.S. Prospectus (or any amendment or supplement thereto) to
such person at or prior to the time such action is required by the U.S.
Securities Act.
(2) Each U.S. Agent agrees to indemnify and hold harmless the Corporation,
each person, if any, who controls the Corporation within the meaning of
Section 15 of the U.S. Securities Act or Section 20 of the U.S. Exchange
Act, each director of the Corporation and each officer of the Corporation,
against any and all losses, claims, damages and liabilities, joint or
several (including any investigation, legal and other expenses reasonably
incurred in connection with, and any amount paid in settlement of, any
action, suit or proceeding or any claim asserted), to which they, or any
of them, may become subject under the U.S. Securities Act, at common law
or otherwise, insofar as such losses, claims, damages or liabilities arise
out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in the U.S. Preliminary Prospectus, the
Canadian Preliminary Prospectus, the U.S. Prospectus, the Canadian
Prospectus or the U.S. Registration Statement, or any amendment or
supplement thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, but only insofar as such losses,
claims, damages or liabilities arise out of or are based upon any untrue
statement or omission or alleged untrue statement or omission which was
made in the U.S. Preliminary Prospectus, the Canadian Preliminary
Prospectus, the U.S. Prospectus, or the Canadian Prospectus, or any
amendment or supplement thereto, in reliance upon and in conformity with
information furnished in writing to the Corporation by such U.S. Agent
with respect to the U.S. Agents expressly for use in the preparation
thereof.
-24-
(3) Any party which proposes to assert the right to be indemnified under this
Section 13 will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim
is to be made against an indemnified party under this Section 13, notify
each such indemnifying party of the commencement of such action, suit or
proceeding, enclosing a copy of all papers served, but the omission so to
notify such indemnifying party of any such action, suit or proceeding
shall not relieve it from any liability which it may have to any
indemnified party otherwise than under this Section 13. In case any such
action, suit or proceeding shall be brought against any indemnified party
and it shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate in, and, to the
extent that it shall wish, jointly with any other indemnifying party
similarly notified, to assume the defence thereof, with counsel
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to assume
the defence thereof, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses, other than reasonable
costs of investigation subsequently incurred by such indemnified party in
connection with the defence thereof. The indemnified party shall have the
right to employ its counsel in any such action, but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless
(i) the employment of counsel by such indemnified party has been
authorized by the indemnifying parties, (ii) the indemnified party shall
have reasonably concluded that there may be a conflict of interest between
the indemnifying parties and the indemnified party in the conduct of the
defence of such action (in which case the indemnifying parties shall not
have the right to direct the defence of such action on behalf of the
indemnified party) or (iii) the indemnifying parties shall not in fact
have employed counsel to assume the defence of such action. An
indemnifying party shall not be liable for any settlement of any action or
claim effected without its consent. For the purposes of clause (ii) of the
preceding sentence only, any indemnified party or parties shall be
represented by one counsel whom they may select with the approval, which
shall not be unreasonably withheld, of the indemnifying parties.
SECTION 14 CONTRIBUTION
In order to provide for just and equitable contribution in circumstances
in which the indemnification provided for in Section 13 hereof is applicable but
for any reason, other than as specified in Section 13, is held to be unavailable
from the indemnifying party, then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the aggregate losses, claims,
damages and liabilities (including any investigation, legal and other expenses
reasonably incurred in connection with, and any amount paid in settlement of,
any action, suit or proceeding or any claims asserted), in such proportion as is
appropriate to reflect the relative benefits received by the Corporation on the
one hand and the U.S. Agents on the other from the offering of the Securities.
If however, the allocation provided by the immediately preceding sentence is not
permitted by applicable law, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Corporation on the one hand and the U.S. Agents on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well as any
other relevant equitable considerations. The relative benefits received by the
Corporation on the one hand and the U.S. Agents on the other shall be deemed
-25-
to be in the same proportion as the total net proceeds from the offering of the
Securities (before deducting expenses) received by the Corporation bear to the
total Underwriting Fees received by the U.S. Agents, in each case as set forth
in the U.S. Prospectus. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Corporation on the one hand or the U.S. Agents on
the other and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Corporation
and the U.S. Agents agree that it would not be just and equitable if
contributions pursuant to this Section 14 were determined by pro rata allocation
(even if the U.S. Agents were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the equitable
considerations referred to above in this Section 14. Notwithstanding the
provisions of this Section 14, (i) in no case shall any U.S. Agent be
responsible for any amount in excess of the sum of the Underwriting Fee
applicable to the Securities purchased by such U.S. Agent hereunder, and (ii) no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of this
Section 14, each person, if any, who controls a U.S. Agent within the meaning of
the U.S. Securities Act and the U.S. Exchange Act, and each director, officer,
employee and agent of a U.S. Agent shall have the same rights to contribution as
such U.S. Agent, and each person, if any, who controls the Corporation within
the meaning of the U.S. Securities Act and the U.S. Exchange Act, and each
director of the Corporation shall have the same rights to contribution as the
Corporation, subject in each case to clauses (i) and (ii) of this Section 14.
Any party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim for contribution may be made against another party or parties
under this Section 14, notify such party or parties from whom contribution may
be sought, but the omission so to notify such party or parties from whom
contribution may he sought shall not relieve the party or parties from whom
contribution may be sought from any other obligation it or they may have
hereunder or otherwise than under this Section 14. No party shall be liable for
contribution with respect to any action or claim settled without its written
consent. The U.S. Agents' obligations in this section to contribute are several
in proportion to their respective obligations and not joint.
SECTION 15 EXPENSES
Whether or not the transactions provided for herein (including the
Offering) are completed, the Corporation shall pay all costs, fees and expenses
of or incidental to the performance of its obligations under this U.S. Agreement
including, without limitation: (i) the costs of the Corporation's professional
advisors (including, without limitation, the Corporation's auditors, counsel and
any local counsel), (ii) the cost of printing the U.S. Preliminary Prospectus,
the U.S. Prospectus, the Canadian forms of such prospectuses, and any amendments
and supplements thereto, and certificates for the Securities, (iii) the
preparation of any Blue Sky survey regarding the offers and sales of the
Securities in the various states, and (iv) all applicable costs related to the
review by the NASD of the terms of the sale of the Offered Securities (which
NASD-related costs are to include, in addition to any filing fees, legal fees
and related G.S.T.). The fees and disbursements of any counsel (whether Canadian
or U.S.) to the U.S. Agents and the Canadian Underwriters up to an aggregate
amount of Cdn $235,000 and out-of-pocket expenses of the U.S. Agents shall be
borne by the Corporation; provided that,
-26-
notwithstanding the foregoing, in the event that the sale and purchase of the
Securities is not completed in accordance with the terms hereof (other than as a
result of a breach by the U.S. Agents of any of its obligations hereunder), the
Corporation shall assume and pay, in addition to the out-of-pocket expenses of
the U.S. Agents and any other expenses required to be paid by it hereunder, all
fees and disbursements of counsel (whether Canadian or U.S.) to the U.S. Agents
or the Canadian Underwriters.
SECTION 16 ACTION BY U.S. AGENTS
All steps which must or may be taken by the U.S. Agents in connection with
this Agreement, with the exception of the matters relating to termination
contemplated by Section 12 hereof, may be taken by the U.S. Lead Manager on
behalf of itself and the other U.S. Agent and the acceptance of this offer by
the Corporation shall constitute the Corporation's authority for accepting
notification of any such steps from, and for delivering the definitive documents
constituting the Securities to or to the order of the U.S. Lead Manager.
SECTION 17 GOVERNING LAW; TIME OF ESSENCE
This U.S. Agreement shall be governed by and construed in accordance with
the laws of the State of New York and the federal laws of the United States of
America applicable therein and time shall be of the essence hereof.
SECTION 18 SURVIVAL OF WARRANTIES, REPRESENTATIONS, COVENANTS AND AGREEMENTS
All warranties, representations, covenants and agreements of the
Corporation and the U.S. Agents herein contained or contained in documents
submitted or required to be submitted pursuant to this U.S. Agreement shall
survive the purchase by the U.S. Agents of the Securities and shall continue in
full force and effect, regardless of the closing of the sale of the Securities
and regardless of any investigation which may be carried on by the U.S. Agents,
or on their behalf, for a period of two years following the Closing Date.
Without limitation of the foregoing, the provisions contained in this U.S.
Agreement in any way related to the indemnification or the contribution
obligations herein shall survive and continue in full force and effect,
indefinitely.
SECTION 19 PRESS RELEASES
The Corporation shall provide the U.S. Agents and their counsel with a
copy of all press releases to be issued by the Corporation concerning the
Offering contemplated hereby prior to the issuance thereof, and shall give the
U.S. Agents and their counsel a reasonable opportunity to provide comments on
any press release.
SECTION 20 NOTICES
All notices or other communications by the terms hereof required or
permitted to be given by one party to another shall be given in writing by
personal delivery or by facsimile delivered or facsimile to such other party as
follows:
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(a) to the Corporation at:
Golden Star Resources Ltd.
00000 Xxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxx
X.X.X. 00000-0000
Attention: Xxxxx Xxxxxxxx
Facsimile No.: (000) 000-0000
with a copy to:
Field Xxxxxxxx Perraton LLP
0000, 000-0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxx Xxxx
Facsimile No.: (000) 000-0000
and to:
Stoel Rives LLP
000 X.X. 0xx Xxxxxx
Xxxxxxxx, Xxxxxx
X.X.X. 00000-0000
Attention: Xxxx Xxxxx
Facsimile No.: (000) 000-0000
(b) to the U.S. Agents at:
Canaccord Capital Corporation (USA) Inc.
c/o Canaccord Capital Corporation
000 Xxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx
Attention: Xxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
and
BMO Xxxxxxx Xxxxx Corp.
c/o BMO Xxxxxxx Xxxxx Inc.
0 Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxx Xxxxxxxxx
Facsimile No.: (000) 000-0000
-28-
with a copy to:
Stikeman Elliott
0000 Xxxxxxxx Xxxxx Xxxx
000 Xxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxx X. Xxxxxxxxx
Facsimile No.: (000) 000-0000
and to:
Xxxxxx & Whitney LLP
BCE Place
000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx
Xxxxxx X0X 0X0
Attention: Xxxxxxxxxxx Xxxxx
Facsimile No.: (000) 000-0000
or at such other address or facsimile number as may be given by either of them
to the other in writing from time to time and such notices or other
communications shall be deemed to have been received when delivered or, if
facsimile, on the next business day after such notice or other communication has
been facsimile (with receipt confirmed).
SECTION 21 JUDGMENT CURRENCY
In respect of any judgment or order given or made for any amount due
hereunder that is expressed and paid in a currency (the "JUDGMENT CURRENCY")
other than United States dollars, the Corporation shall indemnify each U.S.
Agent against any loss incurred by such U.S. Agent as a result of any variation
as between (i) the rate of exchange at which the United States dollar amount is
converted into the judgment currency for the purpose of such judgment or order
and (ii) the rate of exchange at which a U.S. Agent is able to purchase United
States dollars with the amount of the judgment currency actually received by
such U.S. Agent. The term "rate of exchange" shall include any premiums and
costs of exchange payable in connection with the purchase of or conversion into
United States dollars.
SECTION 22 COUNTERPART SIGNATURE
This Agreement may be executed in one or more counterparts (including
counterparts by facsimile) which, together, shall constitute an original copy
hereof as of the date first noted above.
-29-
SECTION 23 ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the U.S. Agents
and the Corporation relating to the subject matter hereof and supersedes all
prior agreements between the U.S. Agents and the Corporation.
(THE REMAINDER OF THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY)
-30-
SECTION 24 ACCEPTANCE
If this offer accurately reflects the terms of the transaction which we
are to enter into and if such terms are agreed to by the Corporation, please
communicate your acceptance by executing where indicated below and returning by
facsimile one copy and returning by courier one originally executed copy to
Canaccord Capital Corporation (USA) Inc. (Attention: Xxxxx Xxxxxxx).
Yours very truly,
CANACCORD CAPITAL CORPORATION (USA)
INC.
By: _________________________________
Authorized Signing Officer
BMO XXXXXXX XXXXX CORP.
By: _________________________________
Authorized Signing Officer
The foregoing accurately reflects the terms of the transaction that we are
to enter into and such terms are agreed to.
ACCEPTED at ______________ as of this ______ day of
___________________, 2002.
GOLDEN STAR RESOURCES LTD.
By: _________________________________
Authorized Signing Officer
SCHEDULE A
MATERIAL SUBSIDIARIES
NAME TYPE OF OWNERSHIP PERCENTAGE
---- ----------------- ----------
Caystar Holdings (Cayman Shares 100%
Islands)
Bogoso Holdings (Cayman Shares 100%
Islands)
Bogoso Gold Limited Shares 90%
(Ghana)
Guyanor Ressources S.A. Shares 73%
(France)
Societe de Traveux Shares 100%
Publics et de Mines
Auriferes en Guyane
S.A.R.L. (France)
Societe des Mines de Yaou Shares 100%
& Dorlin (France)
Societe de Mines de Shares 100%
Saint-Elie S.A.R.L.
(France)
Pan African Resources Shares 99.9%
Corporation (Yukon
Territory)
Pan African Resources Shares 100%
Corporation (Barbados)
PARC Cote d'Ivoire S.A. Shares 100%
(Ivory Coast)
Wasford Holdings (Cayman Shares 100%
Islands)
SCHEDULE B
Unless the context otherwise dictates, all capitalized terms herein have the
meaning ascribed to thereto in the U.S. Agency Agreement to which this Schedule
B is attached
Canadian counsel's opinions:
As set out in Section 4(1) of the Canadian Underwriting Agreement.
U.S. counsel's opinions:
1. No authorization, approval or other action by, and no notice to,
consent of, order of, or filing with, any United States Federal or state
governmental authority or regulatory body is required for the consummation of
the transactions contemplated by the U.S. Agency Agreement, the Canadian
Underwriting Agreement or the Warrant Indenture, except such as have been
obtained under the U.S. Securities Act and such as may be required under the
blue sky laws of any jurisdiction in connection with the purchase and
distribution of the Securities by the U.S. Agents.
2. To such counsel's knowledge and other than as set forth in the U.S.
Prospectus, there are no legal or governmental proceedings pending to which the
Corporation or any of its subsidiaries is a party or of which any property of
the Corporation or any of its subsidiaries would, individually or in the
aggregate have a material adverse effect on the current consolidated financial
position, shareholders' equity or results of operation of the Corporation and
its subsidiaries; and to such counsel's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or threatened by others;
3. Neither the issue and sale of the Securities as described in the U.S.
Prospectus and Canadian Prospectus, nor the consummation of the transactions
contemplated by the U.S. Agency Agreement and the Canadian Underwriting
Agreement and the performance of the terms of the U.S. Agency Agreement and the
Canadian Underwriting Agreement, including the issuance of the Underwriters'
Warrants (as such term is defined in the Canadian Underwriting Agreement), (i)
will result in a breach of or constitute a default under any agreement or
instrument that is listed as an exhibit to the U.S. Registration Statement or
any document incorporated by reference to the U.S. Prospectus and to which the
Corporation or any of its Material Subsidiaries is a party or bound, (ii) will
contravene any law, rule or regulation of the United States of America or the
State of Oregon or any law, rule or regulation of any other state known by such
counsel to be applicable to the Corporation or (iii) based solely on a
certificate signed by an officer of the Corporation, on the date hereof, will
contravene any order or decree of any court or government agency or
instrumentality any state or the Federal government of the United States of
America known to such counsel.
4. The statements made in the U.S. Prospectus and the Canadian Prospectus
under the caption "Plan of Distribution", insofar as they purport to summarize
the material terms of the U.S. Agency Agreement and the Canadian Underwriting
Agreement, and
under the caption "U.S. Federal Income Tax Considerations",
insofar as they purport to describe the material tax consequences under U.S.
Federal Income Tax laws of an investment in the Securities, fairly summarize the
matters therein described.
5. The Corporation is not an "investment company" or an entity
"controlled" by an "investment company", as such terms are defined in the
Investment Company Act of 1940, as amended.
6. The U.S. Registration Statement has become effective under the U.S.
Securities Act, any required filing of a preliminary prospectus or prospectus,
and any supplement thereto pursuant to Rule 424 under the U.S. Securities Act
has been made in the manner and within the time required by Rule 424 and to such
counsel's knowledge, no stop order suspending the effectiveness of the U.S.
Registration Statement has been issued and no proceeding for that purpose has
been instituted, threatened or contemplated by the SEC.
7. The documents incorporated by reference in the U.S. Prospectus or any
further amendment or supplement thereto made by the Corporation prior to the
date of this opinion (other than the financial statements and related schedules
therein or other financial data derived from accounting records, as to which
counsel is not expressing an opinion), when they became effective or were filed
with the SEC, as the case may be, complied as to form in all material respects
with the requirements of the U.S. Securities Act or the U.S. Exchange Act, as
applicable, and the rules and regulations of the SEC thereunder; and such
counsel has no reason to believe that any of such documents (other than the
financial statements and related schedules therein or other financial data
derived from accounting records, as to which such counsel is not expressing an
opinion), when such documents became effective or were so filed, as the case may
be, contained, in the case of a registration statement which became effective
under the U.S. Securities Act, an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading, or in the case of documents which were filed
under the U.S. Exchange Act with the SEC (other than the financial statements
and related schedules therein or other financial data derived from accounting
records, as to which such counsel is not expressing an opinion), an untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made when such documents were filed, not misleading.
8. The U.S. Registration Statement as of its effective date and each of
the U.S. Prospectus and the Canadian Prospectus at the time each such prospectus
was filed with the SEC pursuant to Rule 424(b) under the U.S. Securities Act and
any further amendments and supplements thereto made by the Corporation prior to
the date hereof (other than the financial statements and related schedules
therein or other financial data derived from accounting records, as to which
such counsel is not expressing an opinion) comply as to form in all material
respects with the requirements of the U.S. Securities Act and the rules and
regulations thereunder.
9. During the course of the Corporation's preparation of the U.S.
Registration Statement, such counsel participated in conferences with officers
and other representatives of the Corporation, the Corporation's independent
public accountants, the U.S. Agents and
the Canadian Underwriters and their counsel, at which the contents of the U.S.
Registration Statement and the U.S. Prospectus and the Canadian Prospectus were
discussed, and while they have not independently verified and are not passing
upon the accuracy, completeness or fairness of the statements made in the U.S.
Registration Statement, the U.S. Prospectus or the Canadian Prospectus except as
explicitly set forth in paragraphs 4 and 12 hereof, no facts have come to such
counsel's attention that lead such counsel to believe that the U.S. Registration
Statement (other than the financial statements, financial and related
statistical data and supporting schedules as to which we make no statement), as
of its effective date or as of the date hereof, contained or contains any untrue
statement of a material fact or omitted or omits to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading; or that the U.S. Prospectus or the Canadian Prospectus, as of their
issue date or as of the date hereof, contained or contain any untrue statement
of a material fact or omitted to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
10. Such counsel does not know of any amendment to the U.S. Registration
Statement required to be filed at or prior to the date hereof which has not been
filed as required.
11. Such counsel does not know of any legal or governmental proceeding or
any franchise, contract or other document required to be described in, or filed
as an exhibit to, the U.S. Registration Statement or required to be described or
incorporated by reference in the U.S. Prospectus or required to be described in
the Canadian Prospectus which has not been described, filed or incorporated by
reference as required.
12. The statements included or incorporated by reference in the U.S.
Registration Statement and the U.S. Prospectus and the statements included in
the Canadian Prospectus describing contracts or other agreements to which the
Corporation or any of its Material Subsidiaries is a party or is bound or any
United States federal statutes or legal or other governmental proceedings under
United States federal law or Oregon state law are accurate in all material
respects and fairly summarize such matters.
SCHEDULE C
OUTSTANDING CONVERTIBLE SECURITIES
NUMBER OF
COMMON SHARES
SECURITY EXERCISABLE INTO EXERCISE OR CONVERSION PRICE
-------- ---------------- ----------------------------
Options 4,550,944 (Cdn$0.60 to Cdn$1.80)
Warrants 6,602,333 ($0.70 to $1.75)
Debentures 1,804,286 ($0.70)
TOTAL 12,957,563