SUBORDINATED CONVERTIBLE DEBENTURES DUE 2004
FOUR-YEAR WARRANTS TO PURCHASE COMMON SHARES
UNITS REPRESENTING COMMON SHARES AND WARRANTS
TO PURCHASE COMMON SHARES
GOLDEN STAR RESOURCES LTD.
AGENCY AGREEMENT
August 16, 1999
TD Securities (USA) Inc.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇-6101
U.S.A.
Ladies and Gentlemen:
Golden Star Resources Ltd. (the "Company") proposes to issue and
sell to selected institutional investors (collectively, the "Investors") in a
public offering (the "Offering") up to $10,000,000 aggregate amount of
Securities (as defined below) consisting of 7.50% subordinated convertible
debentures of the Company at par (the "Firm Debentures") or equity units (the
"Firm Units") at $0.50, or both, and, at the election (the "Over-Allotment
Option") of the Agent (as defined below), a total of up to an additional
$2,000,000 aggregate amount of Securities consisting of 7.50% subordinated
convertible debentures of the Company (the "Optional Debentures") or equity
units (the "Optional Units") of the Company, or both (the Firm Debentures and
the Optional Debentures being herein collectively called the "Debentures", and
the Firm Units and the Optional Units being herein collectively called the
"Units"). Each $1,000 principal amount of Debentures entitles the holder to
warrants (the "Four-Year Warrants") exercisable for 200 of the Company's common
shares ("Shares") at a price of $1.50 per Share until August 24, 2001 and $1.75
per Share for the remaining two years until August 24, 2003. Each Unit consists
of one Share and one-half of one Share purchase warrant (the "Warrants"). Each
whole Warrant entitles the holder thereof upon exercise to one Share at a price
of $0.70 per Share until February 24, 2001. The Debentures, the Shares, the
Warrants and the Four-Year Warrants are together referred to herein as the
"Securities". The Company desires to engage you as its placement agent (the
"Agent") in connection with the Offering.
The Debentures are to be issued pursuant to a supplemental indenture
to be dated the Closing Date (as defined below) (the "Indenture") between the
Company and IBJ Whitehall Bank and Trust Company, as Trustee (the "Trustee").
The Company will cause the Trustee to prepare and file with the United States
Securities and Exchange Commission (the "SEC") a Statement of Eligibility under
the Trust Indenture Act of 1939, as amended (the "1939 Act"), on Form T-1 (the
"Form T-1"). The Warrants will be issued directly to Investors through the
Agent. The Broker Warrants (as defined below) will be issued directly to the
Agent.
The closing of the Offering will occur on August 24, 1999 (the
"Closing Date").
The Over-Allotment Option may be exercised by the Agent only by
written notice from the Agent to the Company, given within a period of two (2)
calendar days after the date of this Agreement, setting forth the aggregate
number of Optional Debentures or Optional Units, or both to be issued and sold
on the Closing Date.
The parties agree that no Securities will be offered to any resident
of Ontario or any other province of Canada.
The Agent agrees that it will notify the Investors that the
Securities may not be resold through the facilities of the Toronto Stock
Exchange or elsewhere in Canada for a period of 90 days from the Closing Date.
The Company hereby confirms its agreements with the Agent as
follows:
1. Agreement To Act As Placement Agent.
1.1 Placement Fee. On the basis of the representations,
warranties and agreements of the Company herein contained and subject to
all the terms and conditions of this Agreement, the Agent agrees to act as
the Company's exclusive Agent, on a best efforts basis, in connection with
the issuance and sale by the Company of the Securities. The Company shall
pay to the Agent in the aggregate 2.75% (the "Agent's Fee") of the gross
proceeds received by the Company from the sale of the Securities in the
Offering upon Closing, and an additional 2.75% of the gross proceeds
received by the Company from the sale of the Securities upon completion of
the acquisition of the Bogoso Gold Mine (as described in the Prospectus)
(the "Bogoso Acquisition") by December 10, 1999 (the "Bogoso Acquisition
Date").
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1.2 Broker Warrants. The Company shall issue to the Agent
50,000 broker warrants (the "Broker Warrants") for each $1 million of
gross proceeds received by the Company from the sale of the Securities in
the Offering on the Closing Date, each of which Broker Warrants is
exercisable by the Agent for 12 months from the Closing Date at a price of
$0.70 per Broker Warrant. In addition, upon completion of the Bogoso
Acquisition, the Company shall issue to the Agent a further 50,000 Broker
Warrants for each $1 million of gross proceeds received by the Company
from the sale of the Securities in the Offering each of which Broker
Warrant is exercisable by the Agent for 12 months from the Closing Date at
a price of Cdn.$0.70 per Broker Warrant. Each Broker Warrant entitles the
Agent to obtain one Share upon exercise of the Broker Warrant.
2. Delivery and Payment. On or prior to the Closing Date, the
Company, the Agent and IBJ Whitehall Bank and Trust Company, as escrow agent
(the "Escrow Agent") shall enter into an escrow agreement in customary form
mutually acceptable to the Company, the Agent, and the Escrow Agent (the "Escrow
Agreement"), pursuant to which an escrow account will be established, at the
Company's expense, for the benefit of the Investors (the "Escrow Account"). The
Agent will deposit or cause to be deposited on behalf of the Investors into the
Escrow Account an amount (the "Escrow Amount") at the Closing Date, representing
50% of the gross proceeds of the Offering, and the Company will deposit the
Securities into the Escrow Account. The Escrow Agent shall hold (a) the Escrow
Amount and all interest and other amounts earned thereon (collectively, the
"Escrow Funds") and (b) the Securities, in escrow pursuant to the Escrow
Agreement, in the Escrow Account. The Escrow Agreement will provide that in the
event the Bogoso Acquisition is completed on or before the Bogoso Acquisition
Date, the Escrow Agent, upon prompt notice from the Company and the Agent, will,
immediately before completion of the Acquisition (a) arrange to release the
Escrow Funds from the Escrow Account to the Company by way of wire transfer of
immediately available funds, to an account to be specified by the Company and
(b) arrange to release from the Escrow Account to each of the Investors the
amount of Debentures, Four- Year Warrants and Units purchased by each respective
Investor, and to deliver or cause to be delivered such Debentures, Four-Year
Warrants and Units to each respective Investor.
In the event that the Bogoso Acquisition is not completed on or
before the Bogoso Acquisition Date, each Investor will receive its portion of
funds placed in the Escrow Account attributable to Units, together with interest
from the Closing Date, and the Investor's proportionate interest in 50% of the
Units in the Escrow Account. The portion of the Escrow Amount derived from the
sale of the Debentures will be delivered to the Company and the Company will
deliver to each Investor that Investor's proportionate share of the Debentures
and that Investor's proportionate interest in 50% of the Four-Year Warrants in
the Escrow Account. The Company will then be required to repurchase 50% of the
principal amount of the Debentures (on a pro rata basis) pursuant to a special
mandatory redemption of a purchase price equal to the principal amount being
repurchased, plus accrued and unpaid interest. Each
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Investor's remaining proportionate interest in the remaining Units and Four-Year
Warrants will then be returned to the Company for cancellation.
3. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Agent as follows:
3.1 Registration Statement and Prospectus. The Company has
filed with the SEC a registration statement on Form S-3 (file number
333-33237), which has become effective, for the registration under the
Securities Act of 1933, as amended (the "1933 Act"), of the Securities.
Such registration statement, as amended at the date of this Agreement,
meets the requirements set forth in Rule 415(a)(1) of the SEC under the
1933 Act and complies in all other material respects with Rule 415(a)(1)
of the SEC. The Company proposes to file with the SEC pursuant Rule
424(b)(5) of the SEC under the 1933 Act a supplement to the form of
prospectus included in such registration statement relating to the
Securities and the plan of distribution thereof and has previously advised
the Agent of all further information (financial and other) with respect to
the Company to be set forth therein. The Company will not file any other
amendment of such registration statement or such prospectus or any
supplement to such prospectus on or after the date of this Agreement and
prior to the Closing Date, except with your approval (such registration
statement, including financial statements and exhibits, as amended at the
date of this Agreement, is hereinafter called the "Registration
Statement"; such prospectus in the form in which it appears in the
Registration Statement is hereinafter called the "Basic Prospectus", and
such supplement to the Basic Prospectus, in the form in which it shall be
filed with the SEC pursuant to Rule 424(b)(5) of the SEC under the 1933
Act (including the Basic Prospectus as so supplemented), is hereinafter
called the "Prospectus". Any preliminary form of the Prospectus which has
heretofore been filed pursuant to Rule 424(b)(5) of the SEC under the 1933
Act is hereinafter called a "Preliminary Prospectus". Any reference herein
to the Registration Statement, the Basic Prospectus, any Preliminary
Prospectus or the Prospectus shall be deemed to include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 which
were filed under the 1933 Act or the Securities Exchange Act of 1934 (the
"1934 Act") on or before the date of this Agreement or the issue date of
the Basic Prospectus, any Preliminary Prospectus or the Prospectus, as the
case may be; and any reference herein to the terms "amend", "amendment" or
"supplement" with respect to the Registration Statement, the Basic
Prospectus, any Preliminary Prospectus or the Prospectus shall be deemed
to include the filing or any document under the 1933 Act or the 1934 Act
after the date of this Agreement, or the issue date of the Basic
Prospectus, any Preliminary Prospectus or the Prospectus, as the case may
be, and deemed to be incorporated therein by reference).
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3.2 As at the date hereof, (i) the authorized capital of the
Company consists of an unlimited number of common shares and preferred
shares and (ii) the issued capital of the Company consists solely of
29,638,231 common shares.
3.3 The Company (i) has been duly amalgamated and is validly
existing and in good standing under the laws of Canada; (ii) has all
requisite corporate power and authority to carry on its business as now
conducted and as described in the Registration Statement and the
Prospectus and to own, lease and operate its properties and assets; and
(iii) has all required corporate power and authority to create, issue and
sell the Securities, to enter into this Agreement and to carry out the
provisions of this Agreement.
3.4 Guyanor Ressources S.A. (the "Subsidiary") is a
"significant subsidiary" of the Company (as such term is defined in Rule
1-02 of Regulation S-X), the securities of which Subsidiary the Company
holds free and clear of all mortgages, liens, charges, pledges, security
interests, encumbrances, claims and demands whatsoever.
3.5 The Subsidiary (i) has been duly incorporated and
organized and is validly existing under the laws of its jurisdiction of
incorporation and (ii) has all requisite corporate power and authority to
carry on its business as now conducted (including its exploration and/or
mining activities) and to own, lease and operate its properties and
assets.
3.6 Each of the Company and the Subsidiary is conducting its
business in material compliance with all applicable laws, rules and
regulations of each jurisdiction in which its business is carried on and
is duly licensed, registered or qualified in all jurisdictions in which it
owns, leases or operates its property or carries on business to enable its
business to be carried on as now conducted and its property and assets to
be owned, leased and operated and all such licenses, registrations and
qualifications are and will at the Closing Date be valid, subsisting and
in good standing, except in respect of matters which do not and will not
result in any material adverse change to the business, business prospects
or condition (financial or otherwise) of the Company and its subsidiaries,
on a consolidated basis, and except for the failure to be so qualified or
the absence of any such license, registration or qualification which does
not and will not have a material adverse affect on the assets or
properties, business, results of operations, prospects or condition
(financial or otherwise) of the Company and its subsidiaries, on a
consolidated basis.
3.7 Except as disclosed in the Prospectus and the warrants
issued or issuable to ▇▇▇▇▇▇▇ Associates L.P. ("▇▇▇▇▇▇▇") pursuant to the
credit facility dated May 5, 1999 between the Company and ▇▇▇▇▇▇▇ (the
"▇▇▇▇▇▇▇ Warrants"), no person has any agreement or option or right or
privilege capable of becoming an agreement for the
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purchase, subscription or issuance of any unissued shares, securities or
warrants of the Company or any of the Subsidiaries.
3.8 The financial statements included or incorporated by
reference in the Registration Statement and the Prospectus, together with
the related schedules and notes, present fairly the financial position of
the Company and its consolidated subsidiaries at the dates indicated and
the statement of operations, stockholders' equity and cash flows of the
Company and its consolidated subsidiaries for the periods specified; said
financial statements have been prepared in conformity with Canadian
generally accepted accounting principles ("Canadian GAAP") (or, in the
case of Bogoso Gold Limited, in conformity with accounting principles
generally accepted and in compliance with the Ghana Company Code 1963 (Act
179)) applied on a consistent basis throughout the periods involved. The
reconciliation of such financial statements to United States generally
accepted accounting principles ("U.S. GAAP"), as set forth in Note 15 to
such financial statements (or, in the case of the financial statements of
Bogoso Gold Limited, as set forth in Note 22 to such financial
statements), conforms to the requirements of Item 18 of Form 20-F under
the 1934 Act. The supporting schedules, if any, included or incorporated
by reference in the Registration Statement present fairly in accordance
with Canadian GAAP the information required to be stated therein.
3.9 The pro forma financial statements and the related notes
thereto included or incorporated by reference in the Registration
Statement and the Prospectus present fairly the information shown therein,
have been prepared in accordance with the SEC's rules and guidelines with
respect to pro forma financial statements and have been properly compiled
on the bases described therein, and the assumptions used in the
preparation thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions and circumstances referred
to therein.
3.10 There is no action, proceeding or investigation (whether
or not purportedly by or on behalf of the Company or any of its
subsidiaries) pending or, to the knowledge of the Company and its
respective directors and officers, threatened against or affecting the
Company (including any of its predecessor companies) or any of its
subsidiaries at law or in equity (whether in any court, arbitration or
similar tribunal) or before or by any United States or Canadian federal,
provincial, state, municipal or other governmental department, commission,
board or agency, domestic or foreign, which is required to be disclosed in
the Registration Statement, which in any way materially adversely affects
the Company and its subsidiaries, on a consolidated basis, or the
condition (financial or otherwise) of the Company and its subsidiaries, on
a consolidated basis, or which might reasonably be expected to materially
and adversely affect the properties or assets thereof or the consummation
of the transactions contemplated in this Agreement.
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3.11 Neither the Company nor any of its subsidiaries is in
violation of its charter or by-laws or in default in the performance or
observance of any obligation, agreement, covenant or condition contained
in any contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, lease or other agreement or instrument to which the
Company or any subsidiaries is a party or by which it or any of them may
be bound, or to which any of the property or assets of the Company or any
subsidiary is subject (collectively, "Agreements and Instruments") except
for such defaults that would not materially adversely affect the Company
and its subsidiaries, on a consolidated basis, or the condition (financial
or otherwise) of the Company and its subsidiaries, on a consolidated
basis; and the execution and delivery of this Agreement by the Company,
the performance and compliance with the terms of this Agreement, the
Indenture and the Securities and the consummation of the transactions
contemplated herein and in the Registration Statement (including the
issuance and sale of the Securities and the use of the proceeds from the
sale of the Securities as described in the Prospectus under the caption
"Use of Proceeds" and the issuance of the Shares to be issued as part of
the Units, the issuance of the Shares issuable upon conversion of the
Debentures, the issuance of the Shares issuable upon the exercise of the
Warrants, the issuance of the Shares issuable upon exercise of the
Four-Year Warrants and the issuance and sale of the Shares issuable upon
the exercise of the Broker Warrants) and compliance by the Company with
its obligations hereunder and under the Debentures, the Warrants, the
Four-Year Warrants, the Broker Warrants and the Indenture and the
Securities have been duly authorized by all necessary corporate action and
do not and will not, whether with or without the giving of notice or
passage of time or both, conflict with or constitute a breach of, or
default or Repayment Event (as defined below) under, or result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company of any subsidiary pursuant to, the
Agreements and Instruments (except for such conflicts, breaches or
defaults or liens, charges or encumbrances that would not materially
adversely affect the Company and its subsidiaries, on a consolidated
basis, or the condition (financial or otherwise) of the Company and its
subsidiaries, on a consolidated basis), nor will such action result in a
violation of the provisions of the charter or by-law of the Company or any
subsidiary or any applicable law, statute, rule, regulation, judgment,
order, writ or decree of any government, government instrumentality or
court, domestic or foreign, having jurisdiction over the Company or any
subsidiary or any of their assets, properties or operations. As used
herein, a "Repayment Event" means any event or condition which gives the
holder of any note, debenture or other evidence of indebtedness (or any
person acting on such person's behalf) the right to require the
repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company or any subsidiary.
3.12 PricewaterhouseCoopers LLP, the auditors of the Company
who audited the financial statements of the Company are independent public
accountants as required by 1933 Act.
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3.13 The Company and the Subsidiaries have filed all United
States federal, state and local, and Canadian federal, provincial, and
local and foreign tax returns that are required to be filed or have
requested extensions thereof (except in any case in which the failure so
to file would not have a material adverse effect on the assets and
properties, business, results of operations, prospects or condition
(financial or otherwise) of the Company and its subsidiaries, on a
consolidated basis, and have paid all taxes required to be paid by them
and any other assessment, fine or penalty levied against them, to the
extent that any of the foregoing is due and payable, except for any such
assessment, fine or penalty that is currently being contested in good
faith.
3.14 Neither the United States Internal Revenue Service,
Revenue Canada, Customs, Taxation and Excise, nor any other taxation
authority has asserted or, to the best of the Company's knowledge,
threatened to assert any reassessment, claim or liability for taxes due or
to become due in connection with any review or examination of the tax
returns of the Company or any of its subsidiaries filed for any year which
would have a material adverse effect on the assets or properties,
business, results of operations, prospects or condition (financial or
otherwise) of the Company and its subsidiaries, on a consolidated basis.
3.15 The Debentures will be in the form contemplated by, and
entitled to the benefits of, the Indenture.
3.16 The attributes of the Shares, the Debentures, the
Four-Year Warrants, the Warrants, the Broker Warrants and the Indenture
will conform in all material respects with their descriptions thereof in
the Prospectus; the Shares to be issued as part of the Units, the Shares
to be issued upon conversion of the Debentures, and the Shares to be
issued upon exercise of each of the Warrants, the Four-Year Warrants and
the Broker Warrants, and all other shares of capital stock of the Company
have been duly authorized for issuance and sale by the Agent pursuant to
this Agreement and (in the case of the Debentures) the Indenture.
3.17 Upon issuance and delivery by the Company pursuant to
this Agreement and (in the case of the Debentures) the Indenture against
payment of the consideration set forth herein, each of the Shares to be
issued as part of the Units, and the Debentures, the Warrants, the
Four-Year Warrants and the Broker Warrants will be validly issued, fully
paid and non-assessable, and will be enforceable against the Company in
accordance with their terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or similar
laws affecting enforcement of creditors' rights generally and except as
enforcement thereof is subject to general principles of equity (regardless
of whether enforcement is considered in a proceeding in equity or at law);
the securityholders of the Company have no pre-emptive rights with respect
to any of the Securities.
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3.18 Upon issuance and delivery of the Debentures in
accordance with this Agreement and the Indenture, the Debentures will be
convertible at the option of the holder thereof for Shares in accordance
with the terms of the Debentures and the Indenture. The Shares issuable
upon conversion of the Debentures have been duly authorized and reserved
for issuance upon such conversion by all necessary corporate action and
such Shares, when issued upon such conversion, will be validly issued and
will be fully paid and non-assessable; no holder of such Shares will be
subject to personal liability by reason of being such a holder; and the
issuance of such Shares upon such conversion will not be subject to the
preemptive or other similar rights of any securityholder of the Company.
3.19 Upon issuance and delivery by the Company of the Warrants
in accordance with this Agreement, the Warrants will, subject to certain
conditions, be exercisable at the option of the holder thereof for Shares
in accordance with the terms of the Warrants. The Shares issuable upon
exercise of the Warrants have been duly authorized and reserved for
issuance upon such issuance by all necessary corporate action and such
Shares, when issued upon such exercise, will be validly issued and will be
fully paid and non-assessable; no holder of such Shares will be subject to
personal liability by reason of being such a holder; and the issuance of
such Shares upon such exercise will not be subject to the preemptive or
other similar rights of any securityholder of the Company.
3.20 Upon issuance and delivery of the Broker Warrants by the
Company in accordance with this Agreement, the Broker Warrants will,
subject to certain conditions, be exercisable at the option of the holder
thereof for Shares in accordance with the terms of the Broker Warrants.
The Shares issuable upon exercise of the Broker Warrants have been duly
authorized and reserved for issuance upon such exercise by all necessary
corporate action and such Shares, when issued upon such exercise, will be
validly issued and will be fully paid and non-assessable; no holder of
such Shares will be subject to personal liability by reason of being such
a holder; and the issuance of such Shares upon such exercise will not be
subject to the preemptive or other similar rights of any securityholder of
the Company.
3.21 Upon issuance and delivery of the Four-Year Warrants by
the Company in accordance with this Agreement, the Four-Year Warrants
will, subject to certain conditions, be exercisable at the option of the
holder thereof for Shares in accordance with the terms of the Four-Year
Warrants. The Shares issuable upon exercise of the Four-Year Warrants have
been duly authorized and reserved for issuance upon such exercise by all
necessary corporate action and such Shares, when issued upon such
exercise, will be validly issued and will be fully paid and
non-assessable; no holder of such Shares will be subject to personal
liability by reason of being such a holder; and the issuance of such
Shares upon such exercise will not be subject to the preemptive or other
similar rights of any securityholder of the Company.
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3.22 Other than the Agent, there is no person acting or
purporting to act at the request of the Company who is entitled to any
brokerage or agency fee payable by the Company in connection with the
transactions contemplated herein.
3.23 No consent, approval, authorization, or order of, or
filing with, any governmental agency or body having jurisdiction over the
Company or any court having jurisdiction over the Company is required to
be obtained or made by the Company for the consummation of the
transactions contemplated by this Agreement in connection with the sale of
the Securities, except such as have been obtained and made, or shall have
been obtained and made by the Closing Date, under the 1933 Act and the
Canada Business Corporations Act and such as may be required under state
or foreign securities laws.
3.24 There are no contracts or documents which are required to
be described in the Registration Statement, the Prospectus or the
documents incorporated by reference therein or to be filed as exhibits
thereto which have not been so described and filed as required.
3.25 The Company is not and, after giving effect to the
Offering, will not be an "investment company" as defined in the Investment
Company Act of 1940 (the "1940 Act").
3.26 As of the date the Registration Statement became
effective, the Company was eligible to register the Securities on Form S-3
under the 1933 Act pursuant to the standards for such Form prior to
October 21, 1992.
3.27 Except as disclosed in the Registration Statement and the
Prospectus, and except as would not, singly or in the aggregate, result in
a material adverse affect for the Company and its subsidiaries, on a
consolidated basis, or the condition (financial or otherwise) of the
Company and its subsidiaries, on a consolidated basis, (i) neither the
Company nor, to the Company's knowledge, information and belief after due
inquiry, Bogoso Gold Limited is in violation of any statute, law, rule,
regulation, ordinance, code, policy or rule of common law or any judicial
or administrative interpretation thereof in any jurisdiction in which the
Company, any of its subsidiaries or, to the Company's knowledge,
information and belief after due inquiry, Bogoso Gold Limited operate,
including any judicial or administrative order, consent, decree or
judgment, relating to pollution or protection of human health, the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including,
without limitation, laws and regulations relating to the release or
threatened release of chemicals, pollutants, contaminants, wastes, toxic
substances, hazardous substances, petroleum or petroleum products
(collectively, "Hazardous Materials") or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or
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handling of Hazardous Materials (collectively, "Environmental Laws"), (ii)
the Company, its subsidiaries and, to the Company's knowledge, information
and belief after due inquiry, Bogoso Gold Limited have all permits,
authorizations and approvals required under any applicable Environmental
Laws and are each in compliance with their requirements, (iii) there are
no pending or, to its knowledge, threatened administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices
of noncompliance or violation, investigations or proceedings relating to
any Environmental Law against the Company, its subsidiaries or to the
Company's knowledge, information and belief after due inquiry, Bogoso Gold
Limited and (iv) there are no events or circumstances that might
reasonably be expected to form the basis of an order for clean-up or
remediation, or an action, suit or proceeding by any private party or
governmental body or agency, against or affecting the Company, its
subsidiaries or to the Company's knowledge, information and belief after
due inquiry, Bogoso Gold Limited relating to Hazardous Materials or any
Environmental Laws.
3.28 To the Company's knowledge, information and belief, after
due inquiry, there are no expropriations or similar proceedings or any
material challenges to title or ownership, actual or threatened, of which
Bogoso Gold Limited has received notice against the mining claims and
mining rights contemplated in the Prospectus.
3.29 Except as has been provided to the Agent, the Company is
not aware of any environmental audit, evaluation, assessment, study or
test relating to any property in which the Company and its subsidiaries
have a direct or indirect interest.
3.30 The Company has filed a report on Form 12b-25 under the
United States Securities Exchange Act of 1934, as amended, (the "1934
Act") with respect to its quarterly report on Form 10-Q for the period
ended June 30, 1999.
4. Covenants of the Company. The Company covenants and agrees as
follows:
4.1 The Company will cause the Prospectus to be filed with, or
mailed for filing by first class certified or registered mail, to the SEC
pursuant to Rule 424(b)(5) of the SEC under the 1933 Act and, if so mailed
for filing, will cause the Prospectus to be filed with the SEC pursuant to
the Rule 424(b)(5) of the SEC. The Company agrees promptly to advise the
Agent in writing (i) when the Prospectus shall have been filed with, or
mailed for filing to, the SEC pursuant to Rule 424(b)(5) of the SEC under
the 1933 Act, (ii) of any request by the SEC for any amendment of the
Registration Statement or amendment of or supplement to the Prospectus or
for additional information and (iii) of any issuance by the SEC of any
stop order suspending the effectiveness of the Registration Statement or
of the initiation of any proceedings for that purpose. The Company will
use every reasonable effort to prevent
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the issuance of a stop order and, if any such order shall, at any time, be
issued, to obtain the withdrawal thereof at the earliest possible moment.
4.2 When the Prospectus is filed with, or mailed for filing
to, the SEC pursuant to Rule 424(b)(5) of the SEC under the 1933 Act, and
at all times subsequent thereto up to and including the Closing Date, the
Registration Statement will comply in all material respects with the
provisions of the 1933 Act and the rules and regulations of the SEC
thereunder and will not contain any untrue statement of a material fact
and will not omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading; and when the
Prospectus is filed with, or mailed for filing to, the SEC pursuant to
Rule 424(b)(5) of the SEC under the 1933 Act, and at all times subsequent
thereto up to and including the Closing Date, the Prospectus (and the
Prospectus as amended or supplemented, if the Company shall have filed
with, or mailed for filing to, the SEC any amendment thereto or supplement
thereto) and any documents incorporated therein by reference at the time
of filing will comply in all material respects with the provisions of the
1933 Act and the rules and regulations of the SEC thereunder and will not
contain any untrue statement of a material fact and will not omit to state
any material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading.
4.3 The Company agrees not to issue or sell any Shares or
financial instruments convertible or exchangeable into Shares, other than
pursuant to this Agreement, previously issued warrants, and incentive
stock options, until 180 days after the Closing Date, without the prior
consent of the Agent, which consent may not be unreasonably withheld or
delayed.
4.4 The Company will use its reasonable best efforts to obtain
the necessary regulatory consents from the American Stock Exchange and the
Toronto Stock Exchange for the listing of the Common Shares on such
conditions as are acceptable to the Agent and the Company, acting
reasonably.
4.5 The Company will use its reasonable best efforts to
arrange for the listing of the Debentures on a stock exchange in Canada
upon their issue or as soon as thereafter practical.
4.6 The Company shall make generally available to its
securityholders and to the Agent as soon as practicable, an earnings
statement (which need not be audited) of the Company, covering the
12-month period beginning at the end of the fiscal quarter of the Company
during which the "effective date" (as defined in Rule 158 under the 1933
Act) occurs, which shall satisfy the provisions of Section 11(a) of the
Securities Act. The Company may satisfy this requirement by complying with
Rule 158 under the 1933 Act.
12
4.7 The Company shall furnish to the Agent and counsel for the
Agent, without charge, three signed copies of the Registration Statement
(including all exhibits thereto and amendments thereof) and to the Agent a
copy of the Registration Statement (without exhibits thereto) and so long
as delivery of a prospectus by the Agent or dealer may be required by the
1933 Act or the promulgated under the 1934 Act, as many copies of any
preliminary prospectus and the Prospectus and any amendments thereof and
supplements thereto as the Agent may reasonably request.
4.8 The Company shall file or cause to be filed its quarterly
report on Form 10-Q for the period ended June 30, 1999 within the time
period prescribed by Form 12b-25 under the 1934 Act.
5. Conditions of the Investors' Obligations. The following are
conditions of the Investors' obligations to close the purchase of the Securities
from the Company as contemplated hereby and of the Agent to perform its
obligations hereunder, which conditions the Company covenants to exercise its
best efforts to have fulfilled at or prior to the Closing Date, which conditions
may be waived in writing in whole or in part by the Agent on its own behalf and
on behalf of the Investors:
5.1 The Company shall have made and/or obtained the necessary
filings, approvals, consents and acceptances to or from, as the case may
be, the Toronto Stock Exchange required to be made or obtained by the
Company in connection with the Offering, on terms which are acceptable to
the Company and the Agent, acting reasonably, prior to the Closing Date,
it being understood that the Agent will do all that is reasonably required
to assist the Company to fulfil this condition.
5.2 The Shares shall have been conditionally accepted for
listing by the American Stock Exchange, subject to official notice of
issuance, and the Toronto Stock Exchange, subject to the usual conditions,
and will, as soon as possible following their issue and the satisfaction
of such conditions, be posted for trading on the American Stock Exchange
and the Toronto Stock Exchange.
5.3 No stop order suspending the effectiveness of the
Registration Statement shall have been issued under the 1933 Act or
proceedings therefor initiated or threatened by the SEC, and any request
on the part of the SEC for additional information shall have been complied
with to the reasonable satisfaction of counsel to the Agent.
5.4 The Company's board of directors shall have authorized and
approved this Agreement, the Indenture and other agreements pursuant to
which the Securities are to be issued, the issuance of the Securities and
all matters relating to the foregoing.
13
5.5 The Company shall deliver a certificate of the Company
under its corporate seal and signed on behalf of the Company by such
senior officers and/or directors of the Company as may be acceptable to
the Agent, acting reasonably, addressed to the Agent and dated the date of
the Closing Date, in form and content satisfactory to the Agent's counsel,
acting reasonably, certifying that:
(i) To the knowledge of such officers, no order ceasing or
suspending trading in any securities of the Company or
prohibiting the sale of the Securities or any of the
Company's issued securities has been issued and no
proceedings for such purpose are pending or threatened.
(ii) To the knowledge of such officers, there has been no
adverse material change (actual, proposed or
prospective, whether financial or otherwise) in the
business, affairs, operations, assets, liabilities
(contingent or otherwise) or capital of the Company and
its subsidiaries, on a consolidated basis, which has not
been generally disclosed.
(iii) The representations and warranties of the Company
contained in this Agreement are true and correct at the
Closing Date, with the same force and effect as if made
by the Company as at the Closing Date after giving
effect to the transactions contemplated hereby.
(iv) The Company has complied with all the covenants and
satisfied all the terms and conditions of this Agreement
on its part to be complied with or satisfied at or prior
to the Closing Date.
5.6 The Agent shall have received an opinion, dated the
Closing Date, of ▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, United States
counsel for the Company, to the effect that:
(i) Under any provision of law or regulation of the State of
New York or the United States applicable to the Company (in
each case which are normally applicable to the transactions
that are contemplated by this Agreement), no consent,
approval, authorization or order of, or filing with, any
governmental agency or body or any court is required for the
consummation of the transactions contemplated by this
Agreement in connection with the issuance or sale of the
Securities by the Company, or in connection with the due
authorization, execution and delivery of this Agreement, the
Debentures, the Warrants, the Four-Year Warrants, the Broker
Warrants or the Indenture, except such as have been obtained
14
and made under the 1933 Act and such as may be required under
state securities laws.
(ii) The Registration Statement and any amendments thereof
have become and are effective and the Registration Statement,
the Prospectus, as of their respective effective or issue
dates, appear on their face to be appropriately responsive in
all material respects to the requirements of the 1933 Act, and
the rules and regulations of the SEC thereunder (except that
no opinion need be expressed as to financial statements,
financial statement schedules and other financial and
statistical data).
(iii) The Debentures, the Warrants, the Four-Year Warrants and
the Shares are registered under the 1933 Act. To the knowledge
of such counsel, no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings
for that purpose have been instituted or threatened.
(iv) Assuming that (A) the Company has all requisite corporate
power and authority to execute, deliver and perform its
obligations under the Indenture, (B) the Indenture has been
duly authorized by the Company, (C) the Indenture constitutes
a legal, valid and binding agreement under the laws of Canada,
and (D) the Indenture has been duly authorized, executed and
delivered by the Trustee, to the extent that New York law is
applicable (i) the Indenture has been delivered and executed
by the Company, and (ii) the Indenture constitutes a valid and
binding agreement of the Company, enforceable against the
Company in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar
laws affecting enforcement of creditors' rights generally and
except as enforcement thereof is subject to general principles
of equity (regardless of whether enforcement is considered in
a proceeding in equity or at law).
(v) The Debentures are in the form contemplated by the
Indenture. Assuming that (A) the Company has all requisite
corporate power and authority to execute, deliver and perform
its obligations under the Debentures, (B) the Debentures have
been duly authorized by the Company and would constitute a
legal, valid and binding agreement under the laws of Canada,
and (C) the Debentures have been duly authenticated by the
Trustee in the manner described in its certificate delivered
to the Agent today (which fact such counsel need not determine
and have not determined, by an inspection of the Debentures),
15
(i) to the extent that New York law is applicable the
Debentures have been executed and delivered by the Company and
(ii) the Debentures constitute valid and binding obligations
of the Company, enforceable against the Company in accordance
with their terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and except as
enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a
proceeding in equity or at law).
(vi) Assuming that (A) the Company has all requisite corporate
power and authority to execute, deliver and perform its
obligations under the Warrants and (B) the Warrants have been
duly authorized by the Company and would constitute a legal,
valid and binding agreement under the laws of Canada, to the
extent that New York law is applicable (i) the Warrants have
been duly executed and delivered by the Company and (ii) the
Warrants constitute valid and binding obligations of the
Company, enforceable against the Company in accordance with
their terms, except as the enforcement thereof may be limited
by bankruptcy, insolvency (including, without limitation, all
laws relating to fraudulent transfers), reorganization,
moratorium or similar laws affecting enforcement of creditors'
rights generally and except as enforcement thereof is subject
to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at
law).
(vii) Assuming that (A) the Company has all requisite
corporate power and authority to execute, deliver and perform
its obligations under the Broker Warrants and (B) the Broker
Warrants have been duly authorized by the Company and would
constitute a legal, valid and binding agreement under the laws
of Canada, to the extent that New York law is applicable (i)
the Broker Warrants have been duly executed and delivered by
the Company and (ii) the Broker Warrants constitute valid and
binding obligations of the Company, enforceable against the
Company in accordance with their terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar
laws affecting enforcement of creditors' rights generally and
except as enforcement thereof is subject to general principles
of equity (regardless of whether enforcement is considered in
a proceeding in equity or at law).
16
(viii)Assuming that (A) the Company has all requisite
corporate power and authority to execute, deliver and perform
its obligations under the Four-Year Warrants and (B) the
Four-Year Warrants have been duly authorized by the Company
and would constitute a legal, valid and binding agreement
under the laws of Canada, to the extent that New York law is
applicable (i) the Four-Year Warrants have been duly executed
and delivered by the Company and (ii) the Four-Year Warrants
constitute valid and binding obligations of the Company,
enforceable against the Company in accordance with their
terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency (including, without limitation, all
laws relating to fraudulent transfers), reorganization,
moratorium or similar laws affecting enforcement of creditors'
rights generally and except as enforcement thereof is subject
to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at
law).
(ix) The Warrants, the Four-Year Warrants, the Broker Warrants
and the Indenture conform in all material respects to the
descriptions thereof contained in the Prospectus, and the
Debentures comply with the provisions of the Indenture.
(x) The description in the Prospectus (A) under the captions
"Use of Proceeds--Escrow Arrangements", "Certain United States
Federal Income Tax Considerations," and "Description of
Securities" and (B) in the Registration Statement in Item 14
and Item 15, in each case insofar as such statements
constitute summaries of the legal matters, documents or
proceedings governed by New York law and referred to therein,
fairly present the information called for with respect to such
legal matters, documents and proceedings and fairly summarize
the matters referred to therein.
(xi) (A) the Company has all requisite power and authority to
execute, deliver and perform its obligations under this
Agreement and (B) assuming authorization under Canadian law,
to the extent that New York law is applicable this Agreement
has been duly executed and delivered by the Company.
(xii) The Company is not, and upon the issuance and sale of
the Securities and the Broker Warrants as herein contemplated
and the application of the net proceeds therefrom as described
under "Use of Proceeds" in the Prospectus will not be, an
"investment company" or an entity "controlled" by an
"investment company", as such terms are defined in the 1940
Act.
17
(xiii)The Indenture has been duly qualified under the 1939
Act.
(xiv) Assuming that (A) the Company has all requisite
corporate power and authority to execute, deliver and perform
its obligations under the Escrow Agreement and (B) the Escrow
Agreement has been duly authorized by the Company and would
constitute a legal, valid and binding agreement under the laws
of Canada, to the extent that New York law is applicable (i)
the Escrow Agreement has been duly executed and delivered by
the Company and (ii) the Escrow Agreement constitutes a valid
and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar
laws affecting enforcement of creditors' rights generally and
except as enforcement thereof is subject to general principles
of equity (regardless of whether enforcement is considered in
a proceeding in equity or at law).
(xv) The Shares to be issued as part of the Units, the Shares
to be issued upon conversion of the Debentures, the Shares to
be issued upon exercise of the Warrants, the Shares to be
issued upon the exercise of the Four-Year Warrants and the
Shares to be issued upon exercise of the Broker Warrants have
been duly approved for listing on the American Stock Exchange,
subject to satisfaction of such conditions required by such
stock exchange.
In rendering such opinion, in the event that no written order has
been issued by the SEC, such counsel may state that they relied
solely on the oral advice of the Staff of the SEC to the effect that
there are no stop orders suspending the effectiveness of the
Registration Statement. For purposes of paragraph (ii) hereof, such
counsel may assume that the statements made in the Registration
Statement and the Prospectus are complete and correct. Such counsel
may state that their opinion is limited to matters governed by the
laws of the State of New York and the federal law of the United
States.
5.7 The Agent shall have received an opinion, dated the
Closing Date, of ▇▇▇▇▇▇▇ ▇▇▇▇▇, Canadian counsel for the Company, to the
effect that:
(i) The Company has been duly amalgamated and is a valid and
subsisting corporation under the laws of Canada.
(ii) The Company has all requisite corporate power and
corporate capacity to own, lease and operate its properties
and to conduct its
18
business as described in the Registration Statement and the
Prospectus and to enter into and perform its obligations under
this Agreement.
(iii) The authorized, issued and outstanding share capital of
the Company is as set forth in the Registration Statement and
the Prospectus; the shares of issued and outstanding capital
of the Company have been duly authorized and validly issued as
fully paid and non-assessable; and none of the outstanding
shares in the capital of the Company was issued in violation
of the preemptive or other similar rights of any
securityholder of the Company.
(iv) To the extent governed by Canadian law, this Agreement
has been duly authorized, executed and delivered by the
Company.
(v) The Company has all requisite corporate power and
corporate capacity to execute, deliver and perform its
obligations under the Indenture and, to the extent governed by
Canadian law, the Indenture has been duly authorized, executed
and delivered by the Company.
(vi) The Company has all requisite corporate power and
corporate capacity to execute, deliver and perform its
obligations under the Debentures; to the extent governed by
Canadian law, the Debentures have been duly authorized,
executed and delivered by the Company.
(vii) The form and terms of the Debentures have been duly
authorized, approved and adopted by the Company and comply
with any applicable requirements of the constating documents
and by-laws of the Company and with the requirements of the
Canada Business Corporations Act.
(viii)Upon issuance and delivery of the Debentures in
accordance with this Agreement and the Indenture, the
Debentures will be convertible at the option of the holder
thereof for Shares in accordance with the terms of the
Debentures and the Indenture; the Shares issuable upon
conversion of the Debentures have been duly authorized and
reserved for issuance upon such conversion by all necessary
corporate action; such Shares, when issued upon such
conversion, will be validly issued as fully paid and
non-assessable and no holder of such Shares is or will be
subject to personal liability by reason of being such a
holder.
(ix) The Company has all requisite corporate power and
corporate capacity to execute, deliver and perform its
obligations under the Warrants; to the extent governed by
Canadian law, the Warrants have been duly authorized, executed
and delivered by the Company.
19
(x) The Company has all requisite corporate power and
corporate capacity to execute, deliver and perform its
obligations under the Four- Year Warrants; to the extent
governed by Canadian law, the Four-Year Warrants have been
duly authorized, executed and delivered by the Company.
(xi) The form and terms of the Warrants have been duly
authorized, approved and adopted by the Company and comply
with any applicable requirements of the constating documents
and by-laws of the Company and with the requirements of the
Canada Business Corporations Act;
(xii) The form and terms of the Four-Year Warrants have been
duly authorized, approved and adopted by the Company and
comply with any applicable requirements of the constating
documents and by-laws of the Company and with the requirements
of the Canada Business Corporations Act;
(xiii)Upon issuance and delivery of the Warrants in accordance
with this Agreement and the terms of the Warrants, the
Warrants may be exercised at the option of the holder thereof
for Shares in accordance with the terms of the Warrants; the
Shares issuable upon exercise of the Warrants have been duly
authorized and reserved for issuance upon such exercise by all
necessary corporate action; such Shares, when issued upon such
exercise, will be validly issued as fully paid and
non-assessable and no holder of such Shares is or will be
subject to personal liability by reason of being such a
holder.
(xiv) Upon issuance and delivery of the Four-Year Warrants in
accordance with this Agreement and the terms of the Four-Year
Warrants, the Four-Year Warrants may be exercised at the
option of the holder thereof for Shares in accordance with the
terms of the Four-Year Warrants; the Shares issuable upon
exercise of the Four-Year Warrants have been duly authorized
and reserved for issuance upon such exercise by all necessary
corporate action; such Shares, when issued upon such exercise,
will be validly issued as fully paid and non-assessable and no
holder of such Shares is or will be subject to personal
liability by reason of being such a holder.
(xv) The Company has all requisite corporate power and
corporate capacity to execute, deliver and perform its
obligations under the Broker Warrants; to the extent governed
by Canadian law, the Broker Warrants have been duly
authorized, executed and delivered by the Company.
20
(xvi) The form and terms of the Broker Warrants have been duly
authorized, approved and adopted by the Company and comply
with any applicable requirements of the constating documents
and by-laws of the Company and with the requirements of the
Canada Business Corporations Act.
(xvii)Upon issuance and delivery of the Broker Warrants in
accordance with this Agreement and the terms of the Broker
Warrants, the Broker Warrants may be exercised at the option
of the holder thereof for Shares in accordance with the terms
of the Broker Warrants; the Shares issuable upon exercise of
the Broker Warrants have been duly authorized and reserved for
issuance upon such exercise by all necessary corporate action;
such Shares, when issued upon such exercise, will be validly
issued as fully paid and non-assessable and no holder of such
Shares is or will be subject to personal liability by reason
of being such a holder.
(xviii)The Shares to be issued as part of the Units have been
duly authorized and, when issued and delivered pursuant to
this Agreement, will be duly and validly issued as fully paid.
(xix) The Shares to be issued as part of the Units, the Shares
to be issued upon conversion of the Debentures, the Shares to
be issued upon exercise of the Warrants, the Shares to be
issued upon the exercise of the Four-Year Warrants and the
Shares to be issued upon exercise of the Broker Warrants have
been duly approved for listing on the Toronto Stock Exchange,
subject to satisfaction of such conditions required by such
stock exchange.
(xx) None of the issuance of the Shares to be issued as part
of the Units, the issuance of Shares issuable upon conversion
of the Debentures, the issuance of Shares issuable upon
exercise of the Warrants, the issuance of Shares issuable upon
exercise of the Four-Year Warrants or the issuance of Shares
issuable upon exercise of the Broker Warrants is subject to
the preemptive or other similar rights of any securityholder
of the Company; except as such rights are granted pursuant to
the ▇▇▇▇▇▇▇ Warrants and except as disclosed in the
Registration Statement and the Prospectus, there is no
outstanding subscription, option, warrant or other right
calling for the issuance of any share in the capital of the
Company or any security convertible into, exercisable for or
exchangeable for any Shares, of which counsel is aware.
21
(xxi) The statements (A) in the Prospectus under the caption
"Certain Canadian Federal Income Tax Considerations" and (B)
in the Registration Statement in Item 15, in each case insofar
as such statements constitute summaries of the legal matters,
documents or proceedings referred to therein, are accurate in
all material respects and fairly summarize the matters
referred to therein.
(xxii)The Indenture has been exempted by the Director,
Industry Canada from the application of Part VIII of the
Canada Business Corporations Act and no registration, filing
or recording of the Indenture under the laws of Canada or the
Province of British Columbia is necessary in order to preserve
or protect the validity or enforceability of the Indenture or
the Debentures issued thereunder.
(xxiii)To the best of such counsel's knowledge, no order
having the effect of ceasing or suspending the distribution of
the Securities has been issued by any securities commission or
securities regulatory authority in Canada and no proceedings
for that purpose have been instituted or are pending or
contemplated.
(xxiv)The Company has all requisite corporate power to
execute, deliver and perform its obligations under the Escrow
Agreement and, to the extent governed by Canadian law, the
Escrow Agreement has been duly authorized, executed and
delivered by the Company.
5.8 At the time of the execution of this Agreement and on the
Closing Date, the Agent shall have received from PricewaterhouseCoopers
LLP one or more letters dated such date, in form and substance
satisfactory to the Agent containing statements and information of the
type ordinarily included in accountant's "comfort letters" to underwriters
with respect to the financial statements and certain financial information
contained in the Registration Statement and the Prospectus.
6. Indemnification.
6.1 Indemnification of Agent. The Company agrees to indemnify
and hold harmless the Agent and each person, if any, who controls the
Agent within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any
untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement
(or any amendment thereto) or the omission or alleged
omission therefrom of a material fact
22
required to be stated therein or necessary to make the
statements therein not misleading or arising out of any
untrue statement or alleged untrue statement of a
material fact included in the Preliminary Prospectus
(and not corrected in the Prospectus) or the Prospectus
(or any amendment or supplement thereto), or the
omission or alleged omission therefrom of a material
fact necessary in order to make the statements therein,
in the light of the circumstances under which they were
made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the
aggregate amount paid in settlement of any litigation,
or any investigation or proceeding by any governmental
agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or
omission; provided that (subject to Section 7.4 below)
any such settlement is effected with the written consent
of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen
by the Agent), reasonably incurred in investigating,
preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency
or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not
paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any
loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made
in reliance upon and in conformity with written information furnished to
the Company by the Agent expressly for use in the Registration Statement
(or any amendment thereto) or the Preliminary Prospectus or the Prospectus
(or any amendment or supplement thereto).
6.2. Indemnification of Company, Directors and Officers. The
Agent agrees to indemnify and hold harmless the Company, its directors,
each of its officers who signed the Registration Statement or the
Prospectus, and each person, if any, who controls the Company within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
against any and all loss, liability, claim, damage and expense described
in the indemnity contained in Section 7.1 above, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue
statements or
23
omissions, made in the Registration Statement (or any amendment thereto)
or the Preliminary Prospectus or the Prospectus (or any amendment or
supplement thereto) in reliance upon and in conformity with written
information furnished to the Company by the Agent expressly for use in the
Registration Statement (or any amendment thereto) or such Preliminary
Prospectus or Prospectus (or any amendment or supplement thereto).
6.3. Actions against Parties; Notification. Each indemnified
party shall give notice as promptly as reasonably practicable to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any
liability hereunder to the extent it is not materially prejudiced as a
result thereof and in any event shall not relieve it from any liability
which it may have otherwise than on account of this indemnity agreement.
In the case of parties indemnified pursuant to Section 7.1 above, counsel
to the indemnified parties shall be selected by the Agent, and, in the
case of parties indemnified pursuant to Section 7.2 above, counsel to the
indemnified parties shall be selected by the Company. An indemnifying
party may participate at its own expense in the defense of any such
action; provided, however, that counsel to the indemnifying party shall
not (except with the consent of the indemnified party) also be counsel to
the indemnified party. In no event shall the indemnifying parties be
liable for fees and expenses of more than one counsel (in addition to any
local counsel) separate from their own counsel for all indemnified parties
in connection with any one action or separate but similar or related
actions in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party shall, without the
prior written consent of the indemnified parties, settle or compromise or
consent to the entry of any judgment with respect to any litigation, or
any investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 7 or
Section 8 hereof (whether or not the indemnified parties are actual or
potential parties thereto), unless such settlement, compromise or consent
(i) includes an unconditional release of each indemnified party from all
liability arising out of such litigation, investigation, proceeding or
claim and (ii) does not include a statement as to or an admission of
fault, culpability or a failure to act by or on behalf of any indemnified
party.
6.4. Settlement without Consent if Failure to Reimburse. If at
any time an indemnified party shall have requested an indemnifying party
to reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of
the nature contemplated by Section 7.1(ii) effected without its written
consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such
settlement at least 30 days prior to such settlement being entered into
and (iii) such indemnifying party shall
24
not have reimbursed such indemnified party in accordance with such request
prior to the date of such settlement.
7. Contribution. If the indemnification provided for in Section 7
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Agent on the other hand from the offering of the Securities
pursuant to this Agreement or (ii) if the allocation provided by clause (i) is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company on the one hand and of the Agent on the other hand
in connection with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Company on the one hand
and the Agent on the other hand in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the total fees received by the Agent bear to the aggregate
initial public offering price of the Securities as set forth on such cover.
The relative fault of the Company on the one hand and the
Agent on the other hand shall be determined by reference to, among other things,
whether any such untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Agent and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Agent agree that it would not be just and
equitable if contribution pursuant to this Section were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to above in this Section. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section, the Agent
shall not be required to contribute any amount in excess of the amount by which
the total price at which
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the Securities placed by it and distributed to the public were offered to the
public exceeds the amount of any damages which the Agent would have otherwise
been required to pay by reason of any such untrue or alleged untrue statement or
omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section, each person, if any, who
controls the Agent within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act shall have the same rights to contribution as the Agent, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as the Company.
8. Termination of Agreement.
8.1 The Agent may terminate this Agreement, by notice to the
Company, at any time at or prior to Closing Date (i) if there has been,
since the time of execution of this Agreement or since the respective
dates as of which information is given in the Prospectus, any material
adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there has occurred any material
adverse change in the financial markets in the United States or the
international financial markets, any outbreak of hostilities or escalation
thereof or other calamity or crisis or any change or development involving
a prospective change in national or international political, financial or
economic conditions, in each case the effect of which is such as to make
it, in the judgment of the Agent, impracticable to market the Securities
or to enforce contracts for the sale of the Securities, or (iii) if
trading in any securities of the Company has been suspended or materially
limited by the SEC, the American Stock Exchange or the Toronto Stock
Exchange, or if trading generally on the American Stock Exchange, the New
York Stock Exchange or in the Nasdaq National Market has been suspended or
materially limited, or minimum or maximum prices for trading have been
fixed, or maximum ranges for prices have been required, by any of said
exchanges or by such system or by order of the SEC, the NASD or any other
governmental authority, or (iv) if a banking moratorium has been declared
by either Federal or New York authorities.
8.2 If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other
party except as provided in Section 11 hereof, and provided further that
Sections 4, 7 and 8 shall survive such termination and remain in full
force and effect.
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9. Closing. The Offering will be completed on the Closing Date at
the offices of the Company's counsel in the City of New York or such other
place, date or time as may be mutually agreed to; provided that if the Company
has not been able to comply with any of the covenants or conditions set out
herein required to be complied with by the Closing Date or such other date and
time as may be mutually agreed to, the respective obligations of the parties
will terminate without further liability or obligation except for payment of
expenses, indemnity and contribution provided for in this Agreement.
9.1 At the Closing Date, the Company shall deliver to the
Agent:
(i) the requisite legal opinions, certificates and
undertakings as contemplated above;
(ii) the Broker Warrants; and
(iii) such further documentation as may be contemplated herein
or as counsel to the Agent or the applicable regulatory
authorities may reasonably require.
9.2 At the Closing Date, the Company shall deliver to the
Escrow Agent certificates duly registered as the Investors may direct
representing the Securities being purchased at the closing.
9.3 At the Closing Date, the Agent shall deliver the Escrow
Amount to the Escrow Agent.
9.4 At the Closing Date, the Agent shall deliver to the
Company a certified check in an amount equal to the amount by which 50% of
the gross proceeds of the Offering exceeds the sum of (x) the Agent's Fee
and (y) the Agent's reasonable estimate of the expenses payable by the
Company to the Agent pursuant to Section 11 below.
9.5 All terms and conditions of this Agreement shall be
construed as conditions and any breach or failure to comply with any such
terms and conditions shall entitle the Agent to terminate its obligations
under this Agreement by written notice to that effect given to the Company
prior to the Closing Date. It is understood that the Agent may waive in
whole or in part, or extend the time for compliance with, any of such
terms and conditions on behalf of itself and the Investors without
prejudice to its rights in respect of any such terms and conditions or any
other subsequent breach or non-compliance, provided that to be binding on
the Agent and the Investors, any such waiver or extension must be in
writing.
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10. Expenses. All expenses reasonably incurred from time to time in
connection with the Offering (including 50% of the reasonable fees and
disbursements of the Agent's counsel, and all of the Agent's reasonable
out-of-pocket expenses) of or incidental to the sale, issue or distribution of
the Securities, the qualification for distribution of the Securities and to all
matters in connection with the transactions herein set forth shall be borne by
the Company (whether or not the Offering is completed). The Company covenants
and agrees to fully reimburse the Agent from time to time for all such expenses
immediately upon the receipt of one or more invoices.
11. General Contract Provisions. Any notice or other communication
to be given hereunder shall be in writing and shall be given by delivery or by
telecopier, as follows:
if to the Company:
Suite ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇, ▇▇▇▇▇, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇, ▇▇▇▇▇
Barristers and Solicitors
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
or if to the Agent:
28
TD Securities (USA) Inc.
c/o TD Securities Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ Dominion Bank Tower
Toronto-Dominion Centre
Toronto, Ontario M5K 1A2
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Shearman & Sterling
Commerce Court West
Suite ▇▇▇▇, ▇▇▇ ▇▇▇ ▇▇▇▇▇▇
P.O. Box 247
Toronto, Ontario M5L 1E8
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
and, if so given, shall be deemed to have been given and received upon receipt
by the addressee or a responsible officer of the addressee if delivered, or four
hours after being telecopied and receipt confirmed during normal business hours
at the location of the recipient, as the case may be. Any party may, at any
time, give notice in writing to the others in the manner provided for above of
any change of address or telecopier number.
This Agreement and the other documents herein referred to constitute
the entire Agreement between the Agent and the Company relating to the subject
matter hereof and supersede all prior agreements between the Agent and the
Company with respect to their respective rights and obligations in respect of
the Offering.
This Agreement may be executed by telecopier and in one or more
counterparts which, together, shall constitute an original copy hereof as of the
date first noted above.
12. Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York without regard
to principles of conflicts of laws.
13. Currency. Unless otherwise stated, all sums of money referred to
in this Agreement are expressed in United States dollars.
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The Company hereby submits to the nonexclusive jurisdiction of the
Federal and State courts in the Borough of Manhattan in the City of New York in
any suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.
30
This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
Please confirm that the foregoing correctly sets forth the agreement
among us.
Yours very truly,
GOLDEN STAR RESOURCES LTD.
Per: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------
Authorized Signing Officer
TD SECURITIES (USA) INC.
Per: /s/ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇
------------------
Authorized Signing Officer
31