U.S. AGENCY AGREEMENT
February 10, 2003
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), 17,000,000 units (collectively,
the "UNITS" and individually, a "UNIT") of the Corporation (the "OFFERED
SECURITIES" or the "SECURITIES"), each Unit consisting of one (1) common share
(a "COMMON SHARE") of the Corporation and one-half (1/2) common share purchase
warrant, each whole warrant exercisable for one Common Share at a price per
Common Share of Cdn. $4.60 until February 14, 2007 (each whole warrant, a
"WARRANT") at an offering price of Cdn. $3.00 per Unit for aggregate gross
proceeds of Cdn. $51,000,000. 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 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 17,000,000 Units in Canada, through
arrangements with Canaccord Capital Corporation and BMO Xxxxxxx Xxxxx Inc.
(together, the "CANADIAN UNDERWRITERS"). Anything herein or therein to the
contrary notwithstanding, the closing under this Agreement is expressly
conditional on the closing under the Canadian Underwriting Agreement. Two forms
of prospectus are to be used in connection with the offering and sale of the
Securities contemplated by the foregoing, one relating to the Securities offered
hereunder and the other related to the Securities offered by the Canadian
Underwriters. Both forms of prospectus have been filed with the United States
Securities and Exchange Commission pursuant to Rule 424 of the U.S. Securities
Act (as defined herein).
The Corporation shall pay to the U.S. Lead Manager, on behalf of the
U.S. Agents, a fee (the "AGENTS' FEE") at the Time of Closing equal to Cdn.
$0.165 per Offered Security sold
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pursuant to the terms of this 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, the Canadian Preliminary Prospectus and
Canadian Prospectus (each as hereinafter defined), qualifying the distribution
of, or with respect to, 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 schedules attached to this Agreement, shall for the purposes of
this Agreement, form an integral part of it.
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 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)(h) 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)(h) 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. SECURITIES ACT" means the United States Securities Act of 1933,
as amended; and
"WARRANT INDENTURE" means the warrant indenture to be entered into
between the Corporation and CIBC Mellon Trust Company, as warrant
agent, providing for the creation and issue of the Warrants.
(2) Any references in this Agreement to gender includes all genders and
words importing the singular number shall include the plural and vice
versa.
(3) The division of this Agreement into sections, subsections, paragraphs
and other subdivisions and the insertion of headings are for
convenience of reference only and shall not affect the construction or
interpretation of this Agreement. Unless something in the subject
matter or context is inconsistent therewith, references herein to
sections, subsections, paragraphs and other subdivisions are to
sections, subsections, paragraphs and other subdivisions of this
Agreement.
(4) Except as otherwise indicated, all amounts expressed herein in terms of
money refer to lawful currency of 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 each U.S. Agent that:
(1) The Corporation meets the requirements for the use of Form S-3
under the U.S. Securities Act.
(2) The Corporation has filed with the SEC, pursuant to the U.S.
Securities Act and the rules and regulations adopted by the
SEC thereunder (the "U.S. SECURITIES LAWS"), a registration
statement on Form S-3 (File No. 333-102225), including a
prospectus, and such registration statement has become
effective. The Corporation has filed with the SEC, Canadian
and U.S. versions of preliminary and final prospectus
supplements specifically relating to the Offered Securities
pursuant to Rule 424(b) under the U.S. Securities Act (the
"PRELIMINARY PROSPECTUS SUPPLEMENTS" and "PROSPECTUS
SUPPLEMENTS" respectively). Such Preliminary Prospectus
Supplements and Prospectus Supplements are in a form approved
by the U.S. Lead Manager. The Preliminary Prospectus
Supplements were filed with the SEC on February 3, 2003 and
the Prospectus Supplements
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were filed with the SEC on February 10, 2003. The term "U.S.
REGISTRATION STATEMENT" means the registration statement,
including financial statements, exhibits and Incorporated
Documents (as defined below) as amended to the date of this
Agreement. The term "U.S. SHELF PROSPECTUS" means the form of
prospectus included in the U.S. Registration Statement. The
term "U.S. PROSPECTUS" means the U.S. Shelf Prospectus
together with the U.S. Prospectus Supplement. The term "U.S.
PRELIMINARY PROSPECTUS" means the U.S. Shelf Prospectus
together with a preliminary prospectus supplement specifically
relating to the Securities. The term "CANADIAN PROSPECTUS"
means the Canadian (final) short form prospectus filed with
the Qualifying Provinces together with the U.S. Shelf
Prospectus (annexed thereto as Schedule A). The term "CANADIAN
PRELIMINARY PROSPECTUS" means the Canadian preliminary short
form prospectus filed with the Qualifying Provinces together
with the U.S. Shelf Prospectus (annexed thereto as Schedule
A). The term "Prospectuses" means collectively, the U.S.
Prospectus and the Canadian Prospectus. As used herein, the
terms "U.S. Registration Statement", "U.S. Shelf Prospectus",
"U.S. Preliminary Prospectus", "U.S. Prospectus", "Canadian
Preliminary Prospectus" and "Canadian Prospectus" shall
include, in each case, all documents incorporated, or deemed
incorporated, therein by reference pursuant to the
requirements of Item 12 of Form S-3 (the "INCORPORATED
DOCUMENTS"), and any reference herein to the terms "amend",
"amendment" or "supplement" with respect to any of the
foregoing documents shall be deemed to refer to and include
the filing of the Incorporated Documents.
(3) The U.S. Registration Statement, at the time it became
effective, and the U.S. Shelf Prospectus contained therein,
complied, and on the date of the Prospectuses, and at the
Closing Date, the U.S. Registration Statement and the
Prospectuses complied, fully in all material respects with the
requirements of the U.S. Securities Act and the U.S.
Securities Laws; the Incorporated Documents, as of the date
each was filed, comply and will comply fully in all material
respects with the requirements of the Securities Exchange Act
of 1934, as amended (the "U.S. EXCHANGE Act") and the rules
and regulations adopted by the SEC thereunder; and at the date
of the Prospectuses, and at the Closing Date, the U.S.
Registration Statement and the Prospectuses 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, except that this
representation and warranty does not apply to statements or
omissions in the U.S. Registration Statement, U.S. Prospectus
or the Canadian Prospectus made in reliance upon information
furnished in writing to the Corporation by any U.S. Agent or
Canadian Underwriter concerning the U.S. Agents or Canadian
Underwriters expressly for use therein.
(4) The representations and warranties made by the Corporation in
Section 2 of the Canadian Underwriting Agreement are
incorporated herein by reference and shall have the same
effect as if made to the U.S. Agents under this Agreement.
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(5) The certificate delivered pursuant to Section 8(1)(f) hereof
in connection with the issuance and sale of the Offered
Securities will be, on the date on which it is delivered, in
all material respects, true and complete.
SECTION 3 DUE DILIGENCE
Prior to the Time of Closing including on any intervening weekends, the
Corporation shall allow the U.S. Agents to participate fully in the preparation
of the Prospectuses and shall allow the U.S. Agents to conduct all due diligence
that the U.S. Agents may require 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 the conduct of due
diligence 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 Xxxxx Xxxxxx & Xxxxxx 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, as
to those matters set forth in Schedule B hereto, and in form and
substance satisfactory to the U.S. Agents and their counsel;
(2) the U.S. Agents having received the comfort letter from the auditors of
the Corporation referred to in Section 9(1)(a);
(3) the U.S. Agents having received a comfort letter from the auditors of
the Corporation, 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, 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, from
local counsel to the Corporation, stating that each of Caystar
Holdings, Bogoso Holdings, Bogoso Gold Limited, Wasford Holdings and
Wexford Goldfields Limited has been duly created and is validly
existing under the laws
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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;
(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;
(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
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;
(c) no order suspending the effectiveness of the U.S. Registration
Statement shall be in effect and no proceedings for such
purpose shall be pending before or, to the knowledge of such
officers, threatened by the SEC and any additional information
requested on the part of the SEC shall have been complied with
to the reasonable satisfaction of the U.S. Agents; and
(d) all of the representations and warranties made by the
Corporation in this Agreement are true and correct as of the
Time of Closing with the same force and effect as if made at
and as of the Time of Closing after giving effect to the
transactions contemplated hereby; and
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(10) the U.S. Agents having received favourable opinions of Stikeman Elliott
LLP and Xxxxxx & Xxxxxxx LLP, their Canadian and U.S. counsel,
respectively, as to such matters as the U.S. Agents shall reasonably
request; and
(11) the U.S. Agents having received at the Time of Closing such further
certificates, opinions of counsel and other documentation from the
Corporation as are consistent with the transactions contemplated
herein.
SECTION 5 COVENANTS OF THE 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 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 (which may include Europe) other than the United
States and through the Canadian Underwriters in the Qualifying
Provinces, 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.
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(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:
(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 Prospectuses, and to own,
lease and operate its properties and assets, and the
Corporation has all requisite power and authority to carry out
its obligations under this Agreement;
(b) the only major operating subsidiaries of the Corporation are
listed in Schedule A;
(c) the Corporation or one of its Material Subsidiaries owns the
issued and outstanding shares of each of the Material
Subsidiaries as set out in Schedule A, in each case free and
clear of any pledge, lien, security interest, charge, claim or
encumbrance, other than as is described in the Prospectuses;
(d) 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;
(e) 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;
(f) 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;
(g) as at January 31, 2003, the authorized share capital of the
Corporation consists of an unlimited number of Common Shares
and an unlimited number of First Preferred shares, of which
87,696,002 Common Shares and no First Preferred shares are
issued and outstanding;
(h) 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,
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regulations, or policies or other lawful requirements of any
governmental or regulatory bodies having jurisdiction over the
Corporation and the Material Subsidiaries in each jurisdiction
in which the Corporation or the Material Subsidiaries carries
on their respective businesses, other than those in respect of
which the failure to comply would not individually or in the
aggregate be material. Each of the Corporation and the
Material Subsidiaries holds all certificates, authorities,
permits, licenses, registrations and qualifications
(collectively, the "AUTHORITIES") in all jurisdictions in
which each carries on its business and which are material for
and necessary or desirable to carry on their respective
businesses as now conducted. To the best of the Corporation's
knowledge, information and belief all the Authorities are
valid and existing and in good standing and none of the
Authorities contain any burdensome term, provision, condition
or limitation which has or is likely to have any material
adverse effect on the business of the Corporation and the
Material Subsidiaries (taken as a whole) as now conducted or
as proposed to be conducted. Neither the Corporation nor any
of the Material Subsidiaries has received any notice of
proceedings relating to the revocation or modification of any
of the Authorities which, singly or in the aggregate, if the
subject of an unfavourable decision, ruling or finding, would
materially adversely affect the business, operations,
financial condition, or income of the Corporation or the
Material Subsidiaries (taken as a whole) or any notice of the
revocation or cancellation of, or any intention to revoke or
cancel, any of the mining claims, concessions or leases
comprising:
(i) the Bogoso property;
(ii) the Prestea property;
(iii) the Xxxx Xxxxxx property;
(iv) the Yaou and Dorlin properties; and
(v) the Wassa property;
(each as described in the Form 10-K of the Corporation dated
March 25, 2002, except for the Wassa Property which is
described in the Form 8-K of the Corporation dated September
13, 2002, collectively referred to herein as the "RESOURCE
PROPERTIES", and the Bogoso property, the Prestea property and
the Wassa property collectively being referred to herein as
the "MATERIAL RESOURCE PROPERTIES");
(i) the Corporation and each of its Material Subsidiaries have
good and marketable title to all assets owned by them free and
clear of all liens, charges and encumbrances, other than as
described in the Prospectuses, and other than such liens,
charges and encumbrances that are not individually or in the
aggregate material to the Corporation or the Material
Subsidiaries;
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(j) 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 Prospectuses
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 Prospectuses;
(k) (A) the Corporation and its Material Subsidiaries are in
material compliance with all material terms and provisions of
all contracts, agreements, indentures, leases, instruments and
licences material to the conduct of its business and (B) all
such contracts, agreements, indentures, leases, policies,
instruments and licences are valid and binding in accordance
with their terms and in full force and effect;
(l) to the best of the Corporation's knowledge, information and
belief none of the real property (and the buildings
constructed thereon) in which the Corporation or any of the
Material Subsidiaries has a direct or indirect interest,
whether leasehold or fee simple or otherwise (the "REAL
PROPERTY"), or upon or within which it has operations, is
subject to any judicial or administrative proceeding alleging
the violation of any federal, provincial, state or municipal
environmental, health or safety statute or regulation,
domestic or foreign, or is subject to any investigation
concerning whether any remedial action is needed to respond to
a release of any Hazardous Material (as defined below) into
the environment. Except in material compliance with applicable
environmental laws, neither the Corporation nor any Material
Subsidiary nor, to the Corporation's knowledge, any occupier
of the Real Property, has filed any notice under any federal,
provincial, state or municipal law, domestic or foreign,
indicating past or present treatment, storage or disposal of a
Hazardous Material. Except in material compliance with
applicable environmental laws, none of the Real Property has
at any time been used by the Corporation or a Material
Subsidiary or, to the best of the Corporation's knowledge,
information and belief by any other occupier, as a waste
storage or waste disposal site. Except as disclosed in the
Prospectuses, the Corporation, on a consolidated basis, has no
contingent liability of which it has knowledge in connection
with any release of any Hazardous Material on or into the
environment from any of the Real Property or operations
thereon. Neither the Corporation nor any Material Subsidiary
nor, to the best of the Corporation's knowledge, any occupier
of the Real Property, generates, transports, treats,
processes, stores or disposes of any waste on any of the Real
Property in material contravention of applicable federal,
provincial, state or municipal laws or regulations enacted for
the protection of the natural environment (including, without
limitation, ambient air, surface water, ground water, land
surface or subsurface strata) or human health or
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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)(l),
"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;
(m) except as disclosed in the Prospectuses, 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;
(n) the consolidated audited financial statements of the
Corporation for its fiscal years ended December 31, 1999,
December 31, 2000 and December 31, 2001 and the unaudited
interim financial statements of the Corporation for the
quarters ended March 31, 2002, June 30, 2002, and September
30, 2002 (collectively the "CORPORATION'S FINANCIAL
STATEMENTS"), copies of which are incorporated by reference in
the Prospectuses, including any reconciliation of financial
statements prepared in accordance with generally accepted
accounting principles in Canada and with generally accepted
accounting principles in the United States, are true and
correct in every material respect and present fairly and
accurately the financial position and results of the
operations of the Corporation on a consolidated basis for the
periods then ended and the Corporation's Financial Statements
have been prepared in accordance with generally accepted
accounting principles in Canada applied on a consistent basis,
and comply as to form in all material respects with the
applicable accounting requirements of the U.S. Securities Act
and the U.S. Exchange Act, as applicable, and the related
published rules and regulations thereunder;
(o) the execution and delivery of and the performance by the
Corporation of this Agreement and the Canadian Underwriting
Agreement and the consummation
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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;
(p) this 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);
(q) except as disclosed in the Prospectuses, since September 30,
2002: (A) there has been no material change in the business,
affairs, operations, assets, liabilities or financial
condition of the Corporation on a consolidated basis; (B) no
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
redemption by the Corporation or any of its Material
Subsidiaries of any class of capital stock;
(r) 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 Prospectuses if required to be so disclosed;
(s) 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 Prospectuses;
(t) all tax returns, reports, elections, remittances and payments
of the Corporation and of its Material Subsidiaries required
by law to have been filed (or are in the process of being
prepared for filing, which delayed filing will not have a
material adverse effect on the Corporation or its Material
Subsidiaries) or made in any applicable jurisdiction, have
been filed or made (as the case may be), other than for taxes
being contested in good faith, or with respect to which the
failure to file or make would not have a material adverse
effect, either individually or in the aggregate, to the
Corporation and the Material Subsidiaries, and, to the
knowledge of the Corporation, are substantially true, complete
and correct and
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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;
(u) 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;
(v) there is no material action, suit, proceeding, investigation
or judgment pending, or to the Corporation's knowledge,
threatened or outstanding against or affecting the Corporation
or any Material Subsidiary (or their respective officers and
directors) at law or in equity or before or by any federal,
provincial, state, municipal or other governmental department,
commission, board or agency, domestic or foreign, which in any
way materially adversely affects or may materially adversely
affect the business, operations or condition of the
Corporation or any Material Subsidiary (financial or
otherwise) or its property or assets or which questions or may
question the validity of the creation, issuance or sale, of
the Securities or any action taken or to be taken by the
Corporation or any Material Subsidiary pursuant to or in
connection with this Agreement or any other material contract
to which the Corporation or any Material Subsidiary is a
party, as the case may be;
(w) except as have been made or obtained prior to Closing, under
the laws of the Qualifying Provinces and the United States, no
consent, approval, authorization, order, filing, registration
or qualification of or with any court, governmental agency or
body or regulatory authority is required for the creation,
issue, sale and delivery (as the case may be) of the
Securities or the Underwriters' Warrants or the consummation
by the Corporation of the transactions contemplated in this
Agreement and the Canadian Underwriting Agreement;
(x) 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;
(y) the attributes of the Securities conform in all material
respects with the description thereof contained in the U.S.
Registration Statement and the Prospectuses;
(z) neither the Corporation nor any of its Material Subsidiaries
nor, any employee or agent of the Corporation or any Material
Subsidiary, has (i) made any unlawful contribution or other
payment to any official of, or candidate for, any federal,
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state, provincial or foreign office, or failed to disclose
fully any contribution, in violation of any law, or (ii) made
any payment to any foreign, United States or state
governmental officer or official, or other person charged with
similar public or quasi-public duties, other than payments
required or permitted by the laws of the United States;
(aa) 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;
(bb) neither the Corporation nor any of the Corporation's officers,
directors or affiliates has taken, and at the Closing Date
will have taken, directly or indirectly, any action which has
constituted, or might reasonably be expected to constitute,
the stabilization or manipulation of the price of sale or
resale of the Securities;
(cc) since December 31, 2001, the Corporation has timely and
properly filed (i) with the SEC all reports and other
documents required to have been filed by it with the SEC
pursuant to the U.S. Securities Act and the rules and
regulations, (ii) with the AMEX all reports and documents
required to have been filed by it pursuant to the rules and
regulations of the AMEX, and (iii) all reports or other
documents required to have been filed by it with the
securities commission or similar regulatory body of each
province in Canada, the TSX or any other applicable Canadian
governmental authorities. True and complete copies of all such
reports and other documents have been delivered or made
available to the U.S. Agents;
(dd) neither the Corporation nor any Material Subsidiary (i) was a
personal holding company within the meaning of Section 542 of
the Internal Revenue Code of 1986, as amended (the "CODE") (a
"PHC"), a foreign personal holding company with the meaning of
Section 542 of the Code (an "FPHC"), or a controlled foreign
corporation with the meaning of Section 957 of the Code (a
"CFC") for its taxable year ended December 31, 1995 or for any
previous taxable year, or (ii) expects that it will constitute
a PHC, a FPHC or a CFC for its current taxable year ending
December 31, 2003;
(ee) the Corporation (i) was not a passive foreign investment
company (a "PFIC") within the meaning of section 1296 of the
Code for its taxable year ended December 31, 2002 or for any
previous taxable year and (ii) expects that it will not
constitute a PFIC for its current taxable year ending December
31, 2003;
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(ff) 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 Warrants;
(gg) the forms of the certificate representing the Warrants has
been duly approved by the Corporation and complies with the
provisions of the Canada Business Corporations Act and of the
TSX; and
(hh) the Corporation has secured from its officers and directors
their agreement not to sell any securities of the Corporation
until after the Closing Date without the prior written consent
of the U.S. Agents.
(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 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 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 Agreement and complete its transactions contemplated
under this Agreement on the terms and conditions set forth
herein.
SECTION 8 COVENANTS OF THE CORPORATION
(1) The Corporation covenants with the 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, 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
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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
February 11, 2003 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. 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 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
any such transaction described in clause (i) or (ii) above is
to be settled by delivery of Common Shares or such other
securities, in cash or otherwise (other than the Securities
and other than in connection with the grant or exercise of
options, issuances under the Corporation's existing Stock
Option Plans or employee share purchase plan, the exercise of
warrants issued prior to the date hereof, or any other
existing rights of conversion or securities issued as
consideration for an acquisition of assets or shares), for a
period ending 90 days after the closing of the Offering
without the prior written consent of the U.S. Lead Manager,
such consent not to be unreasonably withheld; and
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(e) it will apply the net proceeds from the sale of the Securities
as set forth under the caption "Use of Proceeds" in the
Prospectuses subject to reallocation as contemplated thereby;
(f) 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 U.S. 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 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
Supplement from the auditors of the Corporation, addressed to
the U.S. Agents, 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 Canadian Prospectus and matters involving changes or
developments since the respective dates as of which specified
financial information is given in the U.S. Prospectus and the
Canadian 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 in the U.S.
Prospectus and the Canadian Prospectus comply in all
material respects with the applicable accounting
requirements of the U.S. Securities Act and the
related published rules and regulations;
(ii) in their opinion any unaudited pro forma financial
statements included or incorporated by reference in
the U.S. Registration Statement, U.S. Prospectus or
Canadian Prospectus 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;
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(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, U.S. Prospectus or Canadian 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,
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 principles;
(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
Prospectuses (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 for the period from the date of the
latest balance sheet included in the Prospectuses to
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 Prospectuses, 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 latest balance
sheet included or incorporated by reference in the
Prospectuses; and
(vii) they compared for the period from the date of the
latest income statement included in the Prospectuses
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 Prospectuses, 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 Prospectuses, in
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the consolidated revenue, net operating income, or
total or per share amounts of net income.
(2) Such comfort letter shall be in addition to any comfort letters
required by the terms of the Canadian Underwriting Agreement to be
addressed 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 Prospectuses (provided, in
the case of comfort letters, that the amendment to the Prospectuses
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 LLP
in Toronto at 8:00 a.m. (Toronto time) on February 14, 2003 (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 February 28, 2003.
(2) At the Time of Closing, subject to the terms and conditions contained
in this Agreement, the Corporation shall deliver to the 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 Agents'
Fee.
SECTION 11
[Reserved.]
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 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 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 Agreement, by giving written notice to the
Corporation at any time at or prior to the Time of Closing on the
Closing Date:
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(a) if there should occur any suspension or limitation of trading
in securities generally on the TSX or AMEX, or if a general
moratorium on commercial banking activities in Toronto or New
York should be declared by the relevant authorities, or if, in
relation to the Corporation, any inquiry, investigation or
other proceeding (whether formal or informal) is commenced,
threatened or announced or any order or ruling is issued by
any officer of such exchange or market, or by the SEC, or any
other regulatory authority in Canada or the United States, or
if any law or regulation under or pursuant to any statute of
Canada or of any province thereof or of the United States is
promulgated or changed which, in the reasonable opinion of the
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 material
adverse effect on the market price of the Common Shares;
(b) if any inquiry, investigation or other proceeding is commenced
or any other order is issued under or pursuant to any statute
of the United States or any state thereof or Canada or any
province thereof(other than an inquiry, investigation or other
proceeding order based solely upon the activities or alleged
activities of any U.S. Agent or Canadian Underwriter) 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 or
materially restrict the trading of the Common Shares or the
distribution of the Securities;
(c) if there shall occur any actual material adverse change in the
business, affairs, operations, assets, liabilities or
financial condition of the Corporation and its subsidiaries
considered as one enterprise, and which in the U.S. Agents'
opinion would reasonably be expected to have a material
adverse effect on the market price or value of any of the
Securities or the Common Shares generally;
(d) if the U.S. Agents determine that any material adverse fact or
information with respect to the Corporation or the Securities
that existed on or prior to January 30, 2003 that had not been
publicly disclosed in accordance with applicable securities
laws by February 10, 2003; or
(e) if there should develop, occur or come into effect or
existence any event, action, state, condition or major
financial occurrence of national or international consequence,
including without limiting the generality of the foregoing,
any military conflict, civil insurrection, or any terrorist
action (whether or not in connection with such conflict or
insurrection), which, in the U.S. Agents' opinion, materially
adversely affects or involves, or will materially adversely
affect or involve, the Canadian or United States financial
markets and/or prevents or materially restricts the trading of
the Common Shares or the distribution of the Securities.
(3) The 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
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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 Agreement.
(5) If the obligations of the U.S. Agents are terminated under this
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 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.
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(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.
(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
-23-
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 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 Agents' Fee 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
-24-
party or parties from whom contribution may be sought, but the omission so to
notify such party or parties from whom contribution may be 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 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 Preliminary Prospectus and the Canadian
Prospectus, 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) any Goods and
Services Tax relating to the foregoing. The fees and disbursements of any
counsel (whether Canadian or U.S.) to the U.S. Agents and the Canadian
Underwriters and out-of-pocket expenses of the U.S. Agents shall be borne by the
Corporation; provided that, notwithstanding the foregoing, in the event that the
sale and purchase of the Securities is not completed in accordance with the
terms hereof (other than as a result of a breach by the 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 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 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,
-25-
for a period of four years following the Closing Date. Without limitation of the
foregoing, the provisions contained in this Agreement in any way related to the
indemnification or the contribution obligations herein shall survive and
continue in full force and effect, indefinitely.
SECTION 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:
(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:
Xxxxx Xxxxxx & Xxxxxx LLP
0000 Xxxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx
X.X.X. 00000
Attention: Xxxxxxx Xxxxxxxx
Facsimile No.: (000) 000-0000
-26-
(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
with a copy to:
Stikeman Elliott LLP
0000 Xxxxxxxx Xxxxx Xxxx
000 Xxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxx X. Xxxxxxxxx
Facsimile No.: (000) 000-0000
and to:
Xxxxxx & Whitney LLP
BCE Place
000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx
Xxxxxx X0X 0X0
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).
-27-
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.
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.
-28-
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: /s/ XXXXXX XXXXXXX
---------------------------------
Authorized Signing Officer
BMO XXXXXXX XXXXX CORP.
By: /s/ XXXXXX XXXXXXX
---------------------------------
Authorized Signing Officer
The foregoing accurately reflects the terms of the transaction that we
are to enter into and such terms are agreed to.
ACCEPTED at Littleton, Colorado as of this 10th day of February, 2003.
GOLDEN STAR RESOURCES LTD.
By: /s/ XXXXX XXXXXXXX
---------------------------------
Authorized Signing Officer
SCHEDULE A
MATERIAL SUBSIDIARIES
NAME TYPE OF OWNERSHIP PERCENTAGE
---- ----------------- ----------
Caystar Holdings (Cayman Islands) Shares 100%
Bogoso Holdings (Cayman Islands) Shares 100%
Bogoso Gold Limited (Ghana) Shares 90%
Guyanor Ressources S.A. (France) Shares 73%
Societe de Traveux Publics et de Shares 100%
Mines Auriferes en Guyane S.A.R.L. (France)
Societe des Mines de Yaou & Dorlin Shares 100%
[S.A.R.L.] (France)
Wasford Holdings (Cayman Islands) Shares 100%
Wexford Goldfields Limited Shares 90%
(Ghana)
-2-
SCHEDULE B
Unless the context otherwise dictates, all capitalized terms herein have the
meaning ascribed to thereto in the U.S.
Agency Agreement to which this Schedule
B is attached
Canadian counsel's opinions:
As set out in Section 4(1) of the Canadian Underwriting Agreement.
U.S. counsel's opinions:
1. No authorization, approval or other action by, and no notice to,
consent of, order of, or filing with, any United States Federal or state
governmental authority or regulatory body is required for the consummation of
the transactions contemplated by the U.S.
Agency Agreement, the Canadian
Underwriting Agreement, the Warrant Indenture and the Underwriters' Warrants (as
such term is defined in the Canadian Underwriting Agreement), 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
Prospectuses, there are no legal or governmental proceedings pending to which
the Corporation or any of its subsidiaries is a party or of which any property
of the Corporation or any of its subsidiaries is bound that would, individually
or in the aggregate have a material adverse effect on the current consolidated
financial position, shareholders' equity or results of operation of the
Corporation and its subsidiaries; and to such counsel's knowledge, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others;
3. Neither the issue and 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, (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
Prospectuses 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 Colorado 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 Prospectuses 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 statements
made in the U.S.
-3-
Prospectus 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 and the filings of the Preliminary Prospectuses and the
Prospectuses have been made in the manner and within the time required by Rule
424 of the U.S. Securities Act 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 U.S. Registration Statement as of its effective date and each of
the Prospectuses 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
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.
8. 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 and the Corporation's independent
public accountants, and during the course of the Corporation's preparation of
the Prospectuses, such counsel participated in conferences with officers and
other representatives of the Corporation and 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 or the
Prospectuses, as the case may be, were discussed, and while such counsel has not
independently verified and is 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 11 hereof, such counsel has no reason to believe that the U.S.
Registration Statement (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), 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 (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).
-4-
9. 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.
10. 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 the Canadian
Prospectus which has not been described, filed or incorporated by reference as
required.
11. The statements included or incorporated by reference in the U.S.
Registration Statement and the Prospectuses 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 Colorado state law
are accurate in all material respects and fairly summarize such matters
-5-
SCHEDULE C
OUTSTANDING CONVERTIBLE SECURITIES
AS OF JANUARY 31, 2002
NUMBER OF
COMMON SHARES
SECURITY EXERCISABLE INTO EXERCISE OR CONVERSION PRICE
----------------------------- ------------------------ --------------------------------------
Options 5,562,744 Cdn.$ 1.02 to Cdn.$ 3.14
Warrants 15,823,367 U.S.$0.70 to U.S.$ 1.75
TOTAL 21,386,111
