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Agency Agreement

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Title:

Agency Agreement

Entities:

BMO Nesbitt Burns Corp.; Golden Star Resources Ltd.; RBC Dain Rauscher Inc.

Date:

2003

Size:

Preview shows 21KB of 91KB total

Price:

$50

ID:

#379800

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AGENCY AGREEMENT

August 6, 2003

Golden Star Resources Ltd.
10579 Bradford Road
Suite 103
Littleton, Colorado
80127-4247

Attention: Mr. Peter J. Bradford, President and Chief Executive Officer

Dear Sir:

Golden Star Resources Ltd. (the "Corporation"), proposes to issue, at the Time of Closing (as hereinafter defined), 8,200,000 common shares (collectively, the "Common Shares" and individually, a "Common Share") of the Corporation at an offering price of Cdn. $3.90 per Common Share for aggregate gross proceeds of Cdn. $31,980,000. Based upon and subject to the terms and conditions set out below, Orion Securities (USA) Inc. and Harris Nesbitt Corp. (formerly BMO Nesbitt Burns Corp.) (the "Lead Managers") and Canaccord Capital Corporation (USA) Inc., NBC International (USA) Inc. and RBC Dain Rauscher Inc. (collectively the "Agents" and, individually, an "Agent") hereby propose to offer the Common Shares 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 Common Shares 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 "Underwriting Agreement") providing for the sale by the Corporation of 8,200,000 Common Shares in Canada, through arrangements with Orion Securities Inc., BMO Nesbitt Burns Inc., Canaccord Capital Corporation, National Bank Financial Inc., RBC Dominion Securities Inc. and Westwind Partners Inc. (together, the "Underwriters"). Anything herein or therein to the contrary notwithstanding, the closing under this Agreement is expressly conditional on the closing under the Underwriting Agreement. Two forms of prospectus are to be used in connection with the offering and sale of the Common Shares contemplated by the foregoing, one relating to the Common Shares offered hereunder and the other related to the Common Shares offered by the Underwriters. Both forms of prospectus have been filed with the United States Securities and Exchange Commission pursuant to Rule 424 of the Securities Act (as defined herein).

The Corporation shall pay to the Lead Managers, on behalf of the Agents, a fee (the "Agents' Fee") at the Time of Closing equal to Cdn. $0.2145 per Common Share sold pursuant to the terms of this Agreement (being 5.5% of the issue price per Common Share) in consideration of the services to be rendered by the 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 Common Shares; (ii) forming and managing banking, selling and other groups for the sale of the Common Shares; (iii) distributing the Common Shares 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 Common Shares; (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 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;

"Closing Date" has the meaning ascribed thereto in Section 10(1) hereof;

"Exchange Act" means the United States Securities Exchange Act of 1934, as amended;

"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 Underwriters and the Agents;

"Material Resource Properties" has the meaning ascribed thereto in Section 6(1)(h) hereof;

"Material Subsidiaries" means the entities set out in Schedule A in which the Corporation holds the types and percentages of Common Shares or other ownership interests therein set forth;

"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 Common Shares to be sold by the Underwriters in Canada;

"Resource Properties" has the meaning ascribed thereto in Section 6(1)(h) hereof;

"SEC" means the United States Common Shares and Exchange Commission;

"Securities Act" means the United States Securities Act of 1933, as amended;

"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; and

"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.

(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 Agent that:

(1): The Corporation meets the requirements for the use of Form S-3 under the Securities Act.
(2): The Corporation has filed with the SEC, pursuant to the 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. 333-33237), 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 Common Shares pursuant to Rule 424(b) under the Securities Act (the "Preliminary Prospectus Supplements" and "Prospectus Supplements" respectively). Such Preliminary Prospectus Supplements and Prospectus Supplements are in a form approved by the Lead Managers. The Preliminary Prospectus Supplements were filed with the SEC on July 29, 2003 and the Prospectus Supplements were filed with the SEC on August 6, 2003. The term "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 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 Common Shares. 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 "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 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 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 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 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 Registration Statement, U.S. Prospectus or the Canadian Prospectus made in reliance upon information furnished in writing to the Corporation by any Agent or Underwriter concerning the Agents or Underwriters expressly for use therein.
(4): The representations and warranties made by the Corporation in Section 2 of the Underwriting Agreement are incorporated herein by reference and shall have the same effect as if made to the Agents under this Agreement.

Section 3 Due Diligence

Prior to the Time of Closing including on any intervening weekends, the Corporation shall allow the Agents to participate fully in the preparation of the Prospectuses and shall allow the Agents to conduct all due diligence that the Agents may require in order to fulfil their obligations as agents and in order to enable the 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 Agents' obligations under this Agreement are conditional upon and subject to:

(1)

the Agents receiving at the Time of Closing favourable legal opinions to be delivered to the Agents by Field LLP, Canadian counsel to the Corporation and Davis Graham & Stubbs 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 Common Shares 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 Agents, as to those matters set forth in Schedule B hereto, and in form and substance satisfactory to the Agents and their counsel;

(2)

the Agents having received the comfort letter from the auditors of the Corporation referred to in Section 9(1)(a);

(3)

the Agents having received a comfort letter from the auditors of the Corporation, dated the Closing Date, in form and substance satisfactory to the 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 Agents receiving at the Time of Closing a legal opinion (or opinions), dated the Closing Date in form and substance satisfactory to the Agents and their counsel, addressed to the Agents, from local counsel to the Corporation, as to mining title matters with respect to each of the Material Resource Properties;

(5)

the Agents receiving at the Time of Closing a legal opinion (or opinions) dated the Closing Date, in form and substance satisfactory to the Agents and their counsel, addressed to the Agents, from local counsel to the Corporation, stating that each of Caystar Holdings, Bogoso Holdings, Bogoso Gold Limited, Wasford Holdings, JCI (Ghana) Limited and Wexford Goldfields Limited has been duly created and is validly existing under the laws of the jurisdiction in which it was incorporated, amalgamated or continued, and that the Corporation or a Material Subsidiary owns all of the issued and outstanding share capital of 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;

(8)

the Underwriting Agreement having been executed by the Corporation and the Underwriters, and none of the Underwriters shall have relied upon any rights of termination in the Underwriting Agreement to terminate the offering of the Common Shares in Canada and all conditions to the 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 Agents and dated the Closing Date, in a form satisfactory to the 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:

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