As filed with the Securities and Exchange Commission on November 6, 1996
REGISTRATION NO. 333-12673
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
GOLDEN STAR RESOURCES LTD.
(Exact name of registrant as specified in its charter)
CANADA 98-0101955
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
ONE NORWEST CENTER
1700 LINCOLN STREET, SUITE 1950
DENVER, COLORADO 80203
(303) 830-9000
(Address, including zip code, and telephone number, including area code, of
registrant's principal
executive offices)
DAVID A. FENNELL
GOLDEN STAR RESOURCES LTD.
ONE NORWEST CENTER
1700 LINCOLN STREET, SUITE 1950
DENVER, COLORADO 80203
(303) 830-9000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
COPIES TO:
<TABLE>
<CAPTION>
Leonard V. Quigley LOUIS O. PELOQUIN PAUL HILTON
Edwin S. Maynard GOLDEN STAR RESOURCES LTD. RONALD R. LEVINE, II
Paul, Weiss, Rifkind, Wharton & Garrison ONE NORWEST CENTER DAVIS, GRAHAM & STUBBS LLP
1285 Avenue of the Americas 1700 LINCOLN STREET, SUITE 1950 370 SEVENTEENTH STREET
New York, New York 10019-6064 DENVER, COLORADO 80203 DENVER, COLORADO 80202
(212) 373-3000 (303) 830-9000 (303) 892-9400
<S> <C> <C>
BERNARD G. POZNANSKI KENNETH G. OTTENBREIT
KOFFMAN BIRNIE & KALEF MARK E. BURTON
885 W. GEORGIA STREET STIKEMAN, ELLIOTT
VANCOUVER, BRITISH COLUMBIA V6C 3H4 COMMERCE COURT WEST
(604) 891-3688 53RD FLOOR, P.O. BOX 85
TORONTO, ONTARIO M5L 1B9
(416) 869-5500
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this Registration Statement, as determined by
the Registrant.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box.[x]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering.[ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
<PAGE>
Page 1
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold
nor offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell
or the solicitation of an offer to buy nor shall there be any sale of
these securiries in any State in which such offer, solicitation or sale
would be unlawful prior to registration or qualification under the securities
laws of any such State.
Subject to Completion, Dated November 5, 1996
GOLDEN STAR RESOURCES LTD.
COMMON SHARES
PREFERRED SHARES
CONVERTIBLE DEBT SECURITIES
WARRANTS
Golden Star Resources Ltd. (the "Company" or "Golden Star") may offer from
time to time (i) common shares without par value (the "Common Shares"), (ii)
first preferred shares (the "Preferred Shares") in one or more series, (iii)
convertible debt securities (the "Convertible Debt Securities"), consisting of
debentures, notes and/or other evidences of indebtedness representing unsecured
obligations of the Company convertible into Common Shares and (iv) warrants
(the "Warrants") to purchase Common Shares, Preferred Shares or Convertible
Debt Securities. The foregoing securities are collectively referred to as the
"Securities." Any Securities may be offered with other Securities or
separately. Securities may be sold for U.S. dollars, foreign currency or
currency units, including the European Currency Unit; amounts payable with
respect to any Convertible Debt Securities may likewise be payable in U.S.
dollars, foreign currency or currency units, including the European Currency
Unit, in each case, as the Company specifically designates. The amounts
payable by the Company in respect of Convertible Debt Securities may be
calculated by reference to the value, rate or price of one or more specified
commodities, currencies or indices as set forth in an accompanying Prospectus
Supplement. The Securities will be offered at an aggregate initial offering
price not to exceed U.S. $75,000,000 or the equivalent (based on the applicable
exchange rate at the time of sale) if Convertible Debt Securities of the
Company are issued in principal amounts denominated in one or more foreign
currencies or currency units as shall be designated by the Company.
SEE "RISK FACTORS" COMMENCING ON PAGE 9 FOR CERTAIN CONSIDERATIONS RELEVANT
TO AN INVESTMENT IN THE SECURITIES.
This Prospectus will be supplemented by one or more accompanying Prospectus
Supplements, which will set forth with regard to the particular Securities in
respect of which this Prospectus is being delivered (i) in the case of Common
Shares, the number of Common Shares and the terms of the offering thereof,
(ii) in the case of Preferred Shares, the designation, aggregate principal
amount and stated value and liquidation preference per share, initial public
offering price, dividend rate (or method of calculation), dates on which
dividends shall be payable, any redemption or sinking fund provisions, any
conversion or exchange rights, whether the Company has elected to offer the
Preferred Shares as depositary shares, any listing of such Preferred Shares on
a securities exchange, and any other terms in connection with the offering and
sale of such Preferred Shares, (iii) in the case of Convertible Debt
Securities, title, aggregate principal amount, currency of denomination,
maturity, interest rate, if any (which may be fixed or variable), or method of
calculation thereof, time of payment of any interest, any terms for redemption
at the option of the Company or the holder, any terms for sinking fund
payments, any index or other method used to determine the amounts payable, the
ranking of such Convertible Debt Securities (whether senior, senior
subordinated or subordinated), any conversion rights, at the option of the
Company or the holder, any listing on a securities exchange, the initial public
offering price and any other terms in connection with the offering and sale of
such Convertible Debt Securities, and (iv) in the case of Warrants, the number
and terms thereof, the number of shares of Common Shares or Preferred Shares or
amount of Convertible Debt Securities issuable upon their exercise, the
exercise price, the periods during which the Warrants are exercisable, any
listing of such Warrants on a securities exchange and any other terms in
connection with the offering, sale and exercise of such Warrants. The
Prospectus Supplement will also contain information, as applicable, about
certain United States and Canadian Federal income tax considerations relating
to the Securities in respect of which this Prospectus is being delivered.
The Company's Common Shares are traded on the American Stock Exchange
under the symbol "GSR" and The Toronto Stock Exchange under the symbol "GSC."
Each Prospectus Supplement will indicate if the Securities offered thereby will
be listed on any securities exchange.
<PAGE>
Page 2
The Company may sell Securities to or through one or more underwriters,
and may also sell Securities directly to other purchasers or through agents.
See "Plan of Distribution." Each Prospectus Supplement will set forth the
names of any underwriters, dealers or agents involved in the sale of the
Securities in respect of which this Prospectus is being delivered, the
principal amount, if any, to be purchased by any such Underwriters, and any
applicable fee, commission or discount arrangements with them.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
This Prospectus may not be used to consummate sales of Securities unless
accompanied by a Prospectus Supplement.
The date of this Prospectus is , 1996.
<PAGE>
Page 3
No dealer, salesman, or other person has been authorized to give any
information or to make any representations other than those contained in or
incorporated by reference in this Prospectus or in the Prospectus Supplement
and, if given or made, such information or representation must not be relied
upon as having been authorized by the Company or any underwriter, agent or
dealer. Neither the delivery of this Prospectus or the accompanying Prospectus
Supplement nor any sale made hereunder shall create, under any circumstances,
an implication that there has been no change in the facts set forth in this
Prospectus or the accompanying Prospectus Supplement, or in the affairs of the
Company since such date. Neither this Prospectus nor the accompanying
Prospectus Supplement constitutes an offer to sell or a solicitation of an
offer to buy any securities other than the securities offered hereby, nor do
they constitute an offer to sell or solicitation of an offer to buy any of the
securities offered hereby in any jurisdiction in which such offer or sale is
unlawful or not authorized or in any jurisdiction in which the person making
such offer or solicitation is not qualified to do so.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and in accordance therewith files,
reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy statements and
other information can be inspected and copied at the public reference
facilities of the Commission at 450 Fifth Street N.W., Washington, D.C. 20549;
and at its regional offices located at Suite 1400, 500 West Madison Street,
Chicago, Illinois 60661-2511; and 13th Floor, 7 World Trade Center, New York,
New York 10048. Copies of such material can be obtained by mail from the
Public Reference Section of the Commission at 450 Fifth Street N.W.,
Washington, D.C. 20549, at prescribed rates. The Company also is subject to
the information and reporting requirements of the securities regulatory
authorities of certain provinces of Canada and files similar reports, proxy
statements and other information with such authorities. Such reports, proxy
statements and other information concerning the Company also can be inspected
and copied at the offices of the American Stock Exchange, 86 Trinity Place, New
York, New York 10006 and the offices of The Toronto Stock Exchange, 2 First
Canadian Place, Toronto Ontario, Canada M5X 1J2. The Commission maintains a
Web site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the Commission.
The address of the Commission's Web site is http://www.sec.gov.
The Company has filed with the Commission a Registration Statement on
Form S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933 (the "Securities
Act") with respect of the Securities covered by this Prospectus. This
Prospectus, which forms part of the Registration Statement, does not contain
all of the information set forth in the Registration Statement, certain parts
of which have been omitted in accordance with the rules and regulations of the
Commission. For further information with respect to the Company and such
securities, reference is hereby made to such Registration Statement, including
the exhibits filed therewith. The Registration Statement and the exhibits
thereto can be obtained by mail from or inspected and copied at the public
reference facilities maintained by the Commission as provided in the prior
paragraph.
<PAGE>
Page 4
ENFORCEMENT OF CERTAIN CIVIL LIABILITIES
Golden Star Resources Ltd. is a corporation subsisting under the laws of
Canada and certain of its directors and officers, as well as certain of the
experts named herein, are neither citizens nor residents of the United States.
A substantial part of the assets of several of such persons and of the Company
are located outside the United States. As a result, it may be difficult for
investors to effect service of process within the United States upon such
persons or to enforce against them or the Company within the United States
judgment of courts of the United States predicated upon the civil liability
provisions of the federal securities laws of the United States. There is doubt
as to the enforceability against such persons and Golden Star Resources Ltd. in
Canada, in original actions or in actions to enforce judgments of United States
courts, of liabilities predicated solely upon the federal securities laws of
the United States.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated by reference in this Prospectus:
(1) Annual Report on Form 10-K for the year ended December 31, 1995,
filed with the Commission on March 29, 1996, as amended by Amendment
to Annual Report on Form 10-K/A, filed with the Commission on
April 30, 1996.
(2) Current Reports on Form 8-K, filed with the Commission on January
10, 1996, February 7, 1996, March 4, 1996, April 2, 1996 and May 8,
1996.
(3) Quarterly Reports on Form 10-Q, filed with the Commission on May 15,
1996 and August 14, 1996.
(4) 1996 Proxy Statement and Information Circular for the 1996 Annual
Meeting of Shareholders, filed with the Commission on May 16, 1996.
(5) The description of the Common Shares contained in the Company's
Articles (incorporated by reference to Exhibit 1.1 to the Company's
Registration Statement on Form 20-F, filed on May 10, 1993).
(6) The Company's Shareholder Rights Plan included in the Company's
Current Report on Form 8-K, filed with the Commission on May 8,
1996.
All documents subsequently filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act prior to the termination of the Offering
of the Securities offered hereby shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing of
such documents. Any statement contained in a document incorporated or deemed
to be incorporated by reference shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, on the oral or written request of such person, a
copy of any or all of the documents incorporated herein by reference (other
than exhibits, unless such exhibits are specifically incorporated by reference
in such documents). Requests for such copies should be directed to the
Secretary, Golden Star Resources Ltd., One Norwest Center, 1700 Lincoln Street,
Suite 1950, Denver, Colorado 80203, (303) 830-9000.
<PAGE>
Page 5
References in this Prospectus to the term "Golden Star" or to the term
"Company" refer to Golden Star Resources Ltd. and its consolidated
subsidiaries, including, without limitation, Guyanor Ressources S.A.
("Guyanor") and Pan African Resources Corporation ("PARC"), unless the context
otherwise requires. Certain terms and measurements used herein are defined in
"Glossary of Terms" included in this Prospectus.
The information in this Prospectus is qualified in its entirety by the
more detailed information and consolidated financial statements and notes
thereto appearing in this Prospectus or incorporated by reference herein.
CANADIAN PROSPECTUSES
The Company is filing with certain Canadian securities regulatory
authorities a shelf prospectus relating to the potential offering in Canada of
up to 5,000,000 common shares (including the Common Shares offered hereunder)
and a shelf prospectus relating to the potential offering in Canada of
convertible debt securities at an aggregate initial offering price of up to
U.S. $75,000,000 (including the Convertible Debt Securities offered hereunder).
Canadian securities laws do not permit the use of an unallocated (as between
common shares and debt securities) shelf prospectus.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this Prospectus and any Prospectus Supplement
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 (the "Reform Act"). Such forward-
looking statements involve known and unknown risks, uncertainties, and other
factors which may cause the actual results, performance, or achievements of the
Company to be materially different from any future results, performance, or
achievements express or implied by such forward-looking statements. Such
factors include, among others, gold and diamond exploration and development
costs and results, fluctuation of gold prices, foreign operations and foreign
government regulation, competition, uninsured risks, recovery of reserves,
capitalization and commercial viability and requirements for obtaining permits
and licenses. See "Risk Factors" and "Business and Properties."
REPORTING CURRENCY AND FINANCIAL INFORMATION
For the periods prior to May 15, 1992, the Company's reporting currency
was the Canadian dollar. In addition, the Company historically has raised most
of its equity capital in Canadian dollars. The Company's current reporting
currency is the United States dollar.
All amounts in this Prospectus and any Prospectus Supplement or
incorporated herein by reference are expressed in United States dollars, unless
otherwise indicated. References to (i) "Cdn" are to Canadian dollars, (ii)
"FF" are to French francs and (iii) "R" are to Brazilian reals.
Financial information is presented in accordance with generally accepted
accounting principles in Canada ("Canadian GAAP"). Differences between
generally accepted accounting principles in the United States ("U.S. GAAP") and
Canadian GAAP as applicable to the Company, are explained in Note 14 to the
Company's Consolidated Financial Statements incorporated by reference herein.
<PAGE>
Page 6
GOLD PRICES
The following table sets forth for the last ten years the high and low
selling prices of gold, as provided by the New York Commodities Exchange
("COMEX"):
YEAR HIGH LOW
1986 $441.10 $327.00
1987 $497.10 $392.10
1988 $487.00 $394.00
1989 $418.90 $358.10
1990 $422.40 $346.80
1991 $403.20 $344.30
1992 $359.30 $329.70
1993 $407.00 $326.30
1994 $398.00 $370.60
1995 $395.40 $371.20
The closing trading price per ounce of gold quoted by COMEX on November 4,
1996 was $379.60.
EXCHANGE RATES
The following table sets forth certain exchange rates based on the noon
buying rate in New York City for cable transfers as certified for customs
purposes by the Federal Reserve Bank of New York (the "Noon Buying Rate").
Such rates are set forth as United States dollars per Cdn. $1.00 and are the
inverse of rates quoted by the Federal Reserve Bank of New York for Canadian
dollars per U.S. $1.00.
<TABLE>
<CAPTION>
Six months YEARS ENDED DECEMBER 31,
ENDED JUNE 30,
---------------- -----------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1996 1995 1995 1994 1993 1992 1991
(U.S. $ per Cdn. $1.00)
High for period .7391 .7396 .7527 .7632 .8046 .8757 .8926
Low for period .7235 .7023 .7023 .7103 .7439 .7761 .8587
End of period .7322 .7279 .7323 .7128 .7544 .7865 .8652
Average for period (1) .7310 .7224 .7305 .7300 .7729 .8235 .8726
</TABLE>
__________________________
(1) The average of the exchange rates on the last day of each month in the
applicable period.
On November 4, 1996, the inverse of the Noon Buying Rate was Cdn. $1.00 =
U.S. $0.7485.
<PAGE>
Page 7
THE COMPANY
Golden Star is an international gold and diamond exploration company with a
diverse portfolio of active exploration and development projects and operating
mines in approximately ten countries on two continents. The Company's core
focus is on the acquisition, discovery and development of gold and diamond
projects. Once it identifies such projects, Golden Star's business strategy
is, if appropriate, to enter into partnership arrangements with major mining
companies to develop and operate mines. The Company currently has properties
in various stages of development in Guyana, French Guiana (through its
approximately 69% owned publicly traded subsidiary, Guyanor), Suriname,
Brazil and Bolivia in South America and Eritrea, Ethiopia, Gabon, Ivory Coast
and Mali in Africa (through its approximately 60% owned publicly traded
subsidiary, PARC).
Golden Star is a substantial mining exploration organization, with over 50
professional geologists on staff and over 600 individuals in the field. The
Company's estimated exploration spending for 1996, including funding provided
by its partners, is approximately $35.4 million. The Company's efforts are
concentrated in a geologic domain known as greenstone belts, which are ancient
volcanic-sedimentary rock assemblages. Greenstone belts are known to be
favorable geologic environments for gold mineralization and account for a
significant proportion of the world's historic gold production. The Company
began its exploration activities in 1985 in the tropical, Proterozoic
greenstone belts of the Guiana Shield and more recently extended its activities
to the geologically related greenstone belts of the Brazilian Shield and the
West African Shield and finally to the greenstone belts of eastern Africa.
Golden Star was one of the first North American gold companies to become
actively involved in the search for gold and diamonds in Guyana, French Guiana
and Suriname in South America and Eritrea, Ethiopia and Ivory Coast in Africa.
As a result, the Company has built a significant portfolio of prospective
exploration acreage on a cost effective basis. In recognition of the Company's
exploration expertise and in competition with some of the world's major mining
companies, Golden Star was one of the first foreign companies to be awarded
exploration rights in Ethiopia and Eritrea and was the first foreign company
awarded the right to earn a 50% interest in a gold project owned by the
Brazilian state mining company, Companhia Vale do Rio Doce ("CVRD").
Exploration requires a different set of skills from those required for mine
operation. Therefore, Golden Star's business strategy is to focus exclusively
on its core skills of gold and diamond exploration and property acquisition,
with the ultimate goal of holding significant ownership interests in large
scale gold and diamond mines. The Company believes that it can achieve the
greatest increase in shareholder value from the discovery and development,
rather than from the exploitation, of mineral resources. By entering into
partnership arrangements with major mining companies that have the technical
skills and financial resources to develop and operate major mines, the Company
also seeks to profit from the exploitation of the mineral resources that it
discovers. To date, the Company has funded its activities through the issuance
of equity securities and partner contributions and expects that these will be
its primary means of funding for the next several years. However, the
Company's long-term objective is to fund additional exploration and the
development of new projects with the cash flow from its mining interests.
Golden Star's initial exploration success in 1986 resulted in the
development of the Omai Gold Mine in Guyana, which commenced commercial
production in January 1993. The Omai Mine, in which the Company holds a 30%
equity interest, is one of South America's largest operating gold mines, with
proven and probable reserves of approximately 3.3 million ounces as of
December 31, 1995, after production of over 630,000 ounces. The Omai's Mine's
anticipated 1997 production is in excess of 300,000 ounces. In early 1997, the
Company expects to complete a final feasibility study on its second major
project, Gross Rosebel, located in Suriname. The Company currently estimates
<PAGE>
Page 8
total proven and probable reserves at Gross Rosebel to be approximately 1.1
million ounces and a substantial drilling program is underway to attempt to
delineate additional reserves. In September 1996, Guyanor and Golden Star
announced probable reserves at the Yaou project in French Guiana of
approximately 10.3 million tonnes grading 2.7 g Au/t, representing
approximately 876,000 ounces of gold IN SITU, which is part of total
mineralization of approximately 13 million tonnes grading 2.5 g Au/t. Cambior
Inc. ("Cambior") is a partner in each of these three projects.
Golden Star's partnership arrangements at Omai and Gross Rosebel are
illustrative of the Company's partnership strategy. Golden Star's partners
currently include ASARCO Incorporated ("ASARCO"), Broken Hill Proprietary Co.
Ltd. ("BHP"), Cambior, CVRD and LaSource Developpement S.A. ("LaSource").
Under a typical partnership arrangement with a major mining company, Golden
Star's partner funds a portion of the exploration to earn an interest in a
given project, prepares a feasibility study and manages the tasks and risks
involved in engineering, building and operating any mine which warrants
development. Certain of the Company's agreements also require its partner to
use its best efforts to provide debt financing for construction capital. This
strategy enables Golden Star to transfer a portion of the financial risks
associated with exploration and development to its partner, provides a means to
meet the majority of the financing requirements for project development and
allows the project to be built and managed by a company experienced in mine
development and operation. The Company's capital and its human resources then
can be focused on obtaining and advancing exploration on new properties,
thereby diversifying the Company's interests among a wide range of properties
at different stages of exploration and development.
Golden Star believes it is poised to rapidly advance a number of projects
by the end of 1997. The Company's objectives during this period include
(i) the completion of a final feasibility study at Gross Rosebel in Suriname
and, if positive, the commencement of mine construction, (ii) the commencement
of intensive exploration at Andorinhas in Brazil, (iii) the continuation of
drilling on the Yaou, Dorlin, St-Elie and Paul-Isnard gold projects in French
Guiana, at Dioulafoundou in Mali and at Dul Mountain in Ethiopia and (iv) the
continuation of bulk sampling at the Dachine diamond project in French Guiana.
The head office of the Company is located at One Norwest Center, 1700
Lincoln Street, Suite 1950, Denver, Colorado 80203; its telephone number is
(303) 830-9000. The Company's registered and records office is located at 19th
Floor, 885 West Georgia Street, Vancouver, British Columbia V6C 3H4; its
telephone number is (604) 891-3688.
<PAGE>
Page 9
RISK FACTORS
PROSPECTIVE PURCHASERS OF SECURITIES SHOULD CAREFULLY READ THIS PROSPECTUS,
ANY PROSPECTUS SUPPLEMENT DELIVERED HEREWITH, AND THE DOCUMENTS INCORPORATED BY
REFERENCE HEREIN AND THEREIN. OWNERSHIP OF SECURITIES INVOLVES CERTAIN RISKS.
IN DETERMINING WHETHER TO PURCHASE SECURITIES, PROSPECTIVE INVESTORS SHOULD
CONSIDER CAREFULLY THE FOLLOWING RISK FACTORS AND THE OTHER INFORMATION
CONTAINED IN THIS PROSPECTUS, AS WELL AS THE OTHER RISK FACTORS AND INFORMATION
SET FORTH IN ANY PROSPECTUS SUPPLEMENT DELIVERED HEREWITH.
RISKS OF EXPLORATION AND DEVELOPMENT
Mineral exploration and development involves a high degree of risk and few
properties which are explored ultimately are developed into commercially
producing mines. The long-term success of the Company's operations will be
substantially and directly related to the cost and success of its exploration
programs. The risks associated with the exploration for new mineralization
include the identification of potential gold mineralization based on surficial
analysis, the attraction and retention of experienced geologists and drilling
personnel, the quality and availability of third party assaying, sampling
errors, geological, geophysical, geochemical and other technical analyses and
other factors. Substantial early stage expenditures are required to outline
mineralized prospects and establish ore reserves through, among other things,
drilling and the preparation of feasibility studies and mine plans, and to
develop and construct the mining and processing facilities at any site chosen
for mining. Although substantial benefits may be derived from the discovery of
a major mineralized deposit, no assurance can be given that (i) minerals will
be discovered in sufficient quantities and/or grades to constitute reserves or
justify commercial operations, (ii) the Company will be successful in
partnering with companies to develop and operate those properties that are
commercially attractive on acceptable or attractive terms or (iii) the funds
required for development can be obtained by the Company or any of its partners
on a timely or commercially reasonable basis. Further, even if reserves are
delineated, it may require a number of years and significant expenditures until
production is possible, during which time the economic feasibility of a
property may change. Additionally, the Company will be reliant on its partners
in each project for technical expertise in the development and operation phases
of the project, and, in certain instances, for financing, until cash flow is
generated from the property for the Company's account. Finally, to the extent
the Company's mineral reserves are produced and sold, the Company must
continually acquire new mineral prospects and explore for and develop new
mineral reserves to replace such reserves.
UNCERTAINTY OF RESERVE AND OTHER MINERALIZATION ESTIMATES
There are numerous uncertainties inherent in estimating proven and probable
reserves and other mineralization, including many factors beyond the control of
the Company. The estimation of reserves and other mineralization is a
subjective process and the accuracy of any such estimate is a function of the
quality of available data and of engineering and geological interpretation and
judgment. Results of drilling, metallurgical testing and production and the
evaluation of mine plans subsequent to the date of any estimate may justify
revision of such estimates. No assurance can be given that the volume and
grade of reserves recovered and rates of production will not be less than
anticipated. Assumptions about prices are subject to great uncertainty and
gold prices have fluctuated widely in the past. Declines in the market price
of gold or other precious metals also may render reserves or other
mineralization containing relatively lower grades of mineralization or
requiring more extensive processing uneconomic to exploit. If the price
realized by the Company for its gold bullion were to decline substantially
below the price at which ore reserves were calculated for a sustained period of
time, the Company potentially could experience reductions in reserves and asset
write-downs. Under
<PAGE>
Page 10
such circumstances, the Company may discontinue the development of a project or
mining at one or more of its properties. Further, changes in operating and
capital costs and other factors, including but not limited to short-term
operating factors such as theneed for sequential development of ore bodies and
the processing of new or different ore grades, may materially and adversely
affect reserves.
FLUCTUATION OF PRICES
To the extent that the Company has any revenues from operations, such
revenues are expected to be in large part derived from the mining and sale of
gold. The price of gold can fluctuate, and in the past has fluctuated, widely
and is affected by numerous factors beyond the Company's control, including
international economic and political trends, inflation expectations, interest
rates, central bank sales and purchases, global or regional consumptive
patterns (such as the development of gold coin programs), speculative
activities and increased production due to new mine developments and improved
mining and production methods. The effect of these factors on the price of
gold cannot be accurately predicted.
The current demand for, and supply of, gold affect gold prices but not
necessarily in the same manner as current demand and supply affect the prices
of other commodities. The potential supply of gold consists of new mine
production plus existing stocks of bullion and fabricated gold held by
governments, financial institutions, industrial organizations and individuals.
Since mine production in any single year constitutes a very small portion of
the total potential supply of gold, normal variations in current production do
not necessarily have a significant effect on the supply of gold or on its
price. If gold prices should decline below the Company's cash costs of
production and remain at such levels for any sustained period, the Company
could determine that it is not economically feasible to continue commercial
production at any or all of its mines.
Moreover, on a given date, the prices used in estimating the Company's ore
reserves are based on the price of gold on such date. If the Company were to
determine that its reserves and future cash flows should be calculated at
significantly lower gold prices than those used on the measurement date, there
would likely be a material reduction in the amount of its gold reserves.
Should such reductions occur, material write-downs of the Company's investment
in mining properties may be required. See "Gold Prices."
CAPITALIZATION AND COMMERCIAL VIABILITY
The Company has limited financial resources. To date, and for the
reasonably foreseeable future, its exploration and development activities have
not generated and are not expected to generate substantial revenues, which has
caused, and is expected to continue for the reasonably foreseeable future to
cause, the Company to incur losses. In addition, the Company historically has
incurred significant expenditures in connection with its exploration activities
and contemplates doing so for the foreseeable future. There can be no
assurance that additional funding will be available to the Company for further
exploration or development of its properties or to fulfill its obligations
under any applicable agreements with its partners or the nations in which the
Company is operating. Although the Company has been successful in the past in
obtaining financing through the sale of equity securities and through
partnership arrangements involving several of the Company's properties, there
can be no assurance that the Company will be able to obtain adequate financing
in the future or that the terms of such financing will be favorable, or that
such partnership arrangements will continue to be available for the Company's
properties on acceptable terms. Failure to obtain such additional financing
could
<PAGE>
Page 11
result in delay or indefinite postponement of further exploration and
development of the Company's properties with the possible loss of the Company's
interest in such properties.
If the Company proceeds to production on a particular property, commercial
viability will be affected by certain factors that are beyond the Company's
control, including the specific attributes of the deposit (such as mineral
grade and stripping ratio), the fluctuation in metal prices, the costs of
constructing and operating a mine in a specific environment, processing and
refining facilities, the availability of economic sources of energy, adequacy
of water supply, adequate access, government regulations including regulations
relating to prices, royalties, duties, taxes, restrictions on production,
quotas on exportation of minerals, as well as the costs of protection of the
environment and agricultural lands. The occurrence of any such factors may
materially and adversely affect the Company's business, financial condition,
results of operations and cash flow.
MARKETABILITY OF DIAMONDS
The marketability of diamonds which may result from projects advanced by the
Company will be affected by numerous factors beyond the control of the Company.
These factors include market fluctuations, government regulations, including
regulations relating to prices, taxes, royalties, land tenure, land use,
importing and exporting of diamonds and environmental protection. The exact
effect of these factors cannot be accurately predicted, but the combination of
these factors may result in the Company not receiving an adequate return on
invested capital. The price for diamonds is, among other things, based on the
size, cut, color and quality of individual diamonds sold and, to a lesser
extent, the market supply and demand for diamonds in general.
RISKS OF FOREIGN OPERATIONS
In certain countries in which the Company has mineral rights (whether held
directly or indirectly), there are certain laws, regulations and statutory
provisions which, as currently written, could have a material negative impact
on the ability of the Company to develop a commercial mine in such countries.
The range and diversity of such laws and regulations are such that the Company
could not adequately summarize them in this document. Through, among other
things, the negotiation of mineral agreements with the governments of these
countries, management of the Company intends to seek variances or otherwise to
be exempted from the provisions of these laws, regulations and/or statutory
provisions. There can be no assurance, however, that the Company will be
successful in obtaining such mineral agreements, that any such variances or
exemptions can be obtained on commercially acceptable terms or that such
agreements will be enforceable in accordance with their terms.
Further, many of the mineral rights and interests of the Company are subject to
government approvals, licenses and permits. Such approvals, licenses and
permits are, as a practical matter, subject to the discretion of the applicable
governments or governmental officials. No assurance can be given that the
Company will be successful in obtaining any or all of such approvals, licenses
and permits, will obtain them in a timely fashion or will be able to maintain
them in full force and effect without modification or revocation.
The Company's assets and operations are subject to various political, economic
and other uncertainties, including, among other things, the risks of war or
civil unrest, expropriation, nationalization, renegotiation or nullification of
existing concessions, licenses, permits, approvals and contracts, taxation
policies, foreign exchange and repatriation restrictions, changing political
conditions, international monetary fluctuations, currency controls and foreign
governmental
<PAGE>
Page 12
regulations that favor or require the awarding of drilling
contracts to local contractors or require foreign contractors to employ
citizens of, or purchase supplies from, a particular jurisdiction. In
addition, in the event of a dispute arising from foreign operations, the
Company may be subject to the exclusive jurisdiction of foreign courts or may
not be successful in subjecting foreign persons to the jurisdiction of courts
in the United States or Canada. The Company also may be hindered or prevented
from enforcing its rights with respect to a governmental instrumentality
because of the doctrine of sovereign immunity. The Company has suspended its
operations in Sierra Leone due to the unstable political situation there and
has invoked the force majeure provisions of the contracts pertaining to its
Sierra Leone operations. Currently, it is not possible for the Company to
accurately predict such developments or changes of law or policy and which, if
any, of such developments or changes may have a material adverse impact on the
Company's operations.
REQUIREMENT FOR PERMITS AND LICENSES
The operations of the Company require licenses and permits from various
governmental authorities. Except as otherwise described in "Business and
Properties" herein or in documents incorporated by reference in this
Prospectus, management believes that the Company presently holds substantially
all necessary licenses and permits to carry on the activities which it
currently is conducting or expects to conduct in the near term under applicable
laws and regulations in respect of its properties, and also believes the
Company is presently complying in all material respects with the terms of such
laws, regulations, licenses and permits, although the Company is in breach of
certain provisions of such laws, regulations, licenses and permits from time to
time. Such licenses and permits are subject to modification or revocation as
discussed above in "Risks of Foreign Operations," as well as changes in
regulations and in various operating circumstances. While the Company does not
believe that any such breaches will have a material adverse effect on its
operations, there can be no assurance that the Company will be able to obtain
or maintain in force all necessary licenses and permits that may be required
for it to conduct further exploration or commence construction or operation of
mining facilities at properties under exploration or to maintain continued
operations at economically justifiable costs.
DEPENDENCE ON KEY PERSONNEL
The Company is dependent on the services of certain key officers and employees,
including its Chief Executive Officer, its Chief Financial Officer, its General
Counsel and certain of its geologists. Competition in the mining exploration
industry for qualified individuals is intense, and the loss of any of these key
officers or employees if not replaced could have a material adverse effect on
the Company's business and its operations. The Company has entered into
agreements with certain of its officers which provide for payments upon
termination without cause or, in certain cases, upon a change in control of the
Company.
OPERATIONAL HAZARDS AND RESPONSIBILITIES
The business of gold mining is generally subject to a number of risks and
hazards, including environmental hazards, the discharge of pollutants or
hazardous chemicals, industrial accidents, labor disputes, encountering unusual
or unexpected geological or operating conditions, slope failures, cave-ins,
failure of pit walls or dams and fire, changes in the regulatory environment
and natural phenomena such as inclement weather conditions, floods and
earthquakes, as well as other hazards. Such occurrences could result in damage
to, or destruction of, mineral properties or production facilities, personal
injury or death, environmental damage, delays in mining, monetary losses and
possible legal liability. The Company or its subsidiaries or partnership
arrangements to which they
<PAGE>
Page 13
are parties also may incur liability as a result of
pollution and other casualties. The Company may not be able to insure fully or
at all against such risks, due to political or other reasons, or the Company
may decide not to insure against such risks as a result of high premiums or for
other reasons. Such occurrences, against which it cannot insure, or may elect
not to insure, may delay production, increase production costs or result in
liability. Paying compensation for obligations resulting from such liability
may entail significant costs for the Company and may have an adverse effect on
the Company's financial position. Furthermore, insurance against certain risks
(including certain liabilities for environmental pollution or other hazards as
result of exploration and production) is not generally available to the Company
or to other companies within the industry.
MINING AND PROCESSING
The Company's business operations are subject to risks and hazards inherent in
the mining industry, including but not limited to unanticipated grade and other
geological problems, water conditions, surface or underground conditions,
metallurgical and other processing problems and mechanical equipment
performance problems, the unavailability of materials and equipment, accidents,
labor force and force majeure factors, unanticipated transportation costs and
weather conditions, and prices and production levels of by-products, any of
which can materially and adversely affect, among other things, the development
of properties, production quantities and rates, costs and expenditures and
production commencement dates. In addition, the Company relies upon its
partners to manage the development and operating stages of the projects in
which it has an interest and, therefore, has less control over such matters
than would be the case if the Company were the operator.
In the case of the Company's exploration properties, there generally is no
operating history upon which to base estimates of future operating costs and
capital requirements. The economic feasibility of any individual project is
based upon, among other things, the interpretation of geological data obtained
from drill holes and other sampling techniques, feasibility studies, which
derive estimates of cash operating costs based upon anticipated tonnage and
grades of ore to be mined and processed, the configuration of the ore body,
expected recovery rates of metals from the ore, comparable facility and
equipment costs, anticipated climatic conditions, estimates of labor
productivity and other factors. Such exploration properties also are subject
to the successful completion of final feasibility studies, issuance of
necessary permits and receipt of adequate financing. Accordingly,
uncertainties related to operations are magnified in the case of exploration
properties.
As a result of the foregoing risks, expenditures on any and all projects,
actual production quantities and rates and cash operating costs, among other
things, may be materially and adversely affected and may differ materially from
anticipated expenditures, production quantities and rates, and costs, just as
estimated production dates may be delayed materially, in each case, especially
to the extent exploration properties are involved. Any such events can
materially and adversely affect the Company's business, financial condition,
results of operations and cash flows.
COMPETITION
The Company competes with major mining companies and other natural resource
companies in the acquisition, exploration, financing and development of new
properties and projects. Many of these companies are more experienced, larger,
and better capitalized than the Company. The Company's competitive position
will depend upon its ability to successfully and economically explore, acquire
and develop new and existing mineral resource properties or projects. Factors
which allow producers to remain competitive in the market over the long term
are the quality and size of the ore
<PAGE>
Page 14
body, cost of production and operation
generally, and proximity to market. The Company also competes with other
mining companies for skilled geologists, geophysicists and other technical
personnel, which may result in higher turnover and greater labor costs for the
Company.
CURRENCY
The Company historically has raised most of its equity capital in Canadian
dollars, primarily maintains its accounts in U.S. dollars and converts such
U.S. dollars into various local currencies on an as needed basis in order to
conduct local operations. The Company currently maintains all or the majority
of its working capital in U.S. dollars or U.S. dollar denominated securities
and converts funds to foreign currencies as payment obligations come due.
Accordingly, the Company is subject to fluctuations in the rates of currency
exchange between the U.S. dollar and these currencies, and such fluctuations
may materially affect the Company's financial position and results of
operations. The Company currently has future obligations which are payable in
French francs and Brazilian reals and receivables payable in French francs.
The Company currently does not actively take steps to hedge against such risks.
GOVERNMENTAL REGULATIONS
Management believes that compliance with existing regulations in the
jurisdictions in which the Company operates which are applicable to the
discharge of materials into the environment, or otherwise relating to
environmental protection, will not have a material adverse effect on the
Company's exploration activities, earnings, expenditures or competitive
position. However, there can be no assurance that this will always be the
case. New or expanded regulations, if adopted, could affect the exploration or
development of the Company's mining projects or otherwise have a material
adverse effect on the operations of the Company.
USE OF PROCEEDS
Unless a Prospectus Supplement indicates otherwise, the net proceeds to be
received by the Company from the issue and sale from time to time of the
Securities will be added to the general funds of the Company to be used to
finance the Company's operations and for other general corporate purposes.
Pending such application, such net proceeds may be invested in short-term
investment grade marketable securities. Each Prospectus Supplement will
contain specific information concerning the use of proceeds from the sale of
Securities to which it relates.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges{(1)} for the Company and its
subsidiaries was as follows for the six months ended June 30, 1995 and 1996,
the years ended December 31, 1995, 1994 and 1993, the periods from May 16, 1992
to December 31, 1992 and July 1, 1991 to May 15, 1992 and the year ended June
30, 1991:
<TABLE>
<CAPTION>
SIX MONTHS YEARS ENDED PERIOD PERIOD FROM
ENDED JUNE 30, DECEMBER 31, FROM JULY 1, 1991
MAY 16, 1992 YEAR ENDED
TO DECEMBER 31, 1992 TO MAY 15, 1992 JUNE 30, 1991
1996 1995 1995 1994 1993
- ---------------- ----------------- - ------------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
N/M N/M N/M N/M N/M N/M N/M N/M
</TABLE>
<PAGE>
Page 15
_______________________________
(1) The Company's projects are in the exploration or development stages. As
a result, the Company has reported net losses for each of the periods
presented, except for the six months ended June 30, 1996 for which it
reported a gain due to the issuance of common shares by PARC. The
Company has not had any material fixed charge obligations for each of
the periods presented. Therefore, the ratio of earnings to fixed
charges for the Company is not meaningful ("N/M") under both U.S. GAAP
and Canadian GAAP.
<PAGE>
Page 16
BUSINESS AND PROPERTIES
CERTAIN STATEMENTS IN "BUSINESS AND PROPERTIES" CONSTITUTE "FORWARD-LOOKING
STATEMENTS" UNDER THE REFORM ACT. ACTUAL RESULTS AND THE TIMING OF CERTAIN
EVENTS COULD DIFFER MATERIALLY FROM THOSE PROJECTED IN THE FORWARD-LOOKING
STATEMENTS DUE TO A NUMBER OF FACTORS, INCLUDING THOSE SET FORTH UNDER "RISK
FACTORS" AND ELSEWHERE IN THIS PROSPECTUS. SEE "SPECIAL NOTE REGARDING
FORWARD-LOOKING STATEMENTS" IN THIS PROSPECTUS. THE INFORMATION CONTAINED IN
THIS PROSPECTUS IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED INFORMATION,
DESCRIPTIONS AND CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO APPEARING
OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS.
GENERAL
Golden Star is an international gold and diamond exploration company with
a diverse portfolio of active exploration and development projects and operating
mines in ten countries on two continents. The Company's core focus is on the
acquisition, discovery and development of gold and diamond projects. Once it
identifies such projects, Golden Star's business strategy is, if appropriate,
to enter into partnership arrangements with major mining companies to develop
and operate mines. The Company currently has properties in various stages of
development in Guyana, French Guiana (through its approximately 69% owned
publicly traded subsidiary, Guyanor), Suriname, Brazil and Bolivia in South
America and Eritrea, Ethiopia, Gabon, Ivory Coast and Mali in Africa (through
its approximately 60% owned publicly traded subsidiary, PARC).
Golden Star is a substantial mining exploration organization, with over 50
professional geologists on staff and over 600 individuals in the field. The
Company's estimated exploration spending for 1996, including funding provided
by its partners, is approximately $35.4 million. The Company's efforts are
concentrated in a geologic domain known as greenstone belts, which are ancient
volcanic-sedimentary rock assemblages. Greenstone belts are known to be
favorable geologic environments for gold mineralization and account for a
significant proportion of the world's historic gold production. The Company
began its exploration activities in 1985 in the tropical, Proterozoic
greenstone belts of the Guiana Shield and more recently extended its
activities to the geologically related greenstone belts of the Brazilian
Shield and the West African Shield and finally to the greenstone belts of
eastern Africa.
Golden Star's initial exploration success in 1986 resulted in the
development of the Omai Gold Mine in Guyana, which commenced commercial
production in January 1993. The Omai Mine, in which the Company holds a 30%
equity interest, is one of South America's largest operating gold mines, with
proven and probable reserves of approximately 3.3 million ounces as of
December 31, 1995, after production of over 630,000 ounces. The Omai Mine's
anticipated 1997 production is in excess of 300,000 ounces. In early 1997, the
Company expects to complete a final feasibility study on its second major
project, Gross Rosebel, located in Suriname. The Company currently estimates
total proven and provable reserves at Gross Rosebel to be approximately 1.1
million ounces and a substantial drilling program is underway to delineate
additional reserves. In September 1996, Guyanor and Golden Star announced
probable reserves at the Yaou project in French Guiana of approximately
10.3 million tonnes grading 2.7 g Au/t, representing approximately 876,000
ounces of gold IN SITU, which is part of total mineralization of approximately
13 million tonnes grading 2.5 g Au/t. Cambior is a partner in each of these
three projects.
Golden Star believes it is poised to rapidly advance a number of projects
by the end of 1997. The Company's objectives during this period include
(i) the completion of a final feasibility study at Gross Rosebel in Suriname
and, if positive, the commencement of mine construction, (ii) the
<PAGE>
Page 17
commencement of intensive exploration in Andorinhas in Brazil, (iii) the
continuation of drilling on the Yaou, Dorlin, St-Elie and Paul Isnard gold
projects in French Guiana, at Dioulafoundou in Mali and at Dul Mountain in
Ethiopia, and (iv) the continuation of bulk sampling at the Dachine diamond
project in French Guiana.
Golden Star also has created two publicly traded subsidiaries. Guyanor
is approximately 69% owned by Golden Star and is incorporated under the laws
of France. Guyanor was established in order to comply with French Guiana law
requiring a mining company to be a French company. Guyanor's Class B common
shares are listed on The Toronto Stock Exchange under the symbol "GRL.B" and
were listed on the Nouveau Marche in France on October 30, 1996. PARC is
approximately 60% owned by Golden Star and was created in recognition of the
unique risk profile of establishing exploration projects across Africa. PARC's
common shares are quoted on the Canadian Dealing Network under the symbol
"PARC."
BUSINESS STRATEGY
Golden Star's business strategy is to focus on its core skills of gold
and diamond exploration and property acquisition with the ultimate goal of
holding significant interests in large scale gold and diamond mines. Golden
Star's business strategy is comprised of the following elements:
FOCUS ON EXPLORATION. Golden Star believes that the greatest increase
in shareholder value in the gold and diamond mining sector comes from the
discovery of mineral deposits. The Company intends to continue to
concentrate its exploration efforts in its areas of expertise, gold and
diamond exploration in the tropical greenstone belts of the Guiana
Shield, the Brazilian Shield, the West African Shield and the greenstone
belts of eastern Africa.
CONCENTRATE ON CURRENT PORTFOLIO OF PROPERTIES. Golden Star intends
to focus its efforts on advancing the most promising projects within its
current portfolio of properties to the feasibility stage. The Company
continues to pursue new opportunities and may make selective additional
acquisitions of promising properties.
PARTNER WITH MAJOR MINING COMPANIES. Golden Star intends to continue
to leverage its exploration capital by entering into partnership
arrangements with major mining companies that have the technical skills
and financial resources to develop and operate large modern mining
operations. This strategy enables the Company to transfer a portion of
the financial risks associated with exploration and development to its
partners and to utilize a greater portion of its funds to explore and
develop additional projects.
MAINTAIN A STRONG LOCAL PRESENCE IN THE COUNTRIES WHERE GOLDEN STAR
OPERATES. Golden Star intends to continue its practice of locating
offices, the majority of its employees and certain of its executives in
the countries where Golden Star has exploration, development and mining
interests. Many of the Company's employees are from the countries in
which Golden Star operates. The Company believes that its local presence
and hiring practices support its exploration efforts by enabling the
Company to establish and maintain relationships with local government
officials and business leaders. In addition, Golden Star believes that
its decentralized local management structure permits it to make better
informed exploration and management decisions.
<PAGE>
Page 18
[MAP OF CERTAIN SOUTH AMERICAN PROJECT
LOCATIONS OF GOLDEN STAR RESOURCES LTD. AND
GUYANOR RESSOURCES S.A.]
[MAP OF CERTAIN AFRICAN PROJECT LOCATIONS OF
PAN AFRICAN RESOURCES CORPORATION]
The following table is a guide to Golden Star's current portfolio of mineral
properties. The nature of the exploration business is such that this
information changes continually as new properties are identified and acquired,
and existing ones mature for development, are sold or are released.
<TABLE>
<CAPTION>
1996 Estimated
Expenditures
Property Area ($ MILLIONS){(3)}
COUNTRY (PERCENT OWNED){(1)} (HECTARES) STATUS{(2)}
- ----------------- --------------------- --------------- ---------------------------- --------------------
<S> <C> <C> <C> <C>
SOUTH AMERICA
Guyana{(4)} Omai (30%) 5,200 Producing mine N/A
Other (100%) 108,000 Exploration - early and $5.2
intermediate stages
Suriname{(4)} Gross Rosebel (40-50%) 17,000 Prefeasibility study completed; $7.5
Other (75-100%) 380,273 final feasibility study in process
Exploration - early stage $3.2
French Yaou (50%) 15,000 Prefeasibility study in process $1.5
Guiana{(5)} Dorlin (50%) 15,000 Exploration - advanced stage $1.5
St-Elie (50%) 9,900 Exploration - advanced stage $1.6
Paul-Isnard (37.5%) 25,100 Exploration - advanced stage $1.4
Dachine (31.5-49%) 2,500 Exploration - intermediate stage $1.1
Other 2,500 Exploration - early and $0.3
intermediate stages
Brazil{(4)} Andorinhas (50%) 25,000 Exploration - advanced stage $3.3
Other 30,000 Exploration - early stage $1.3
Other South Bolivia 14,600 Exploration - early stage $1.1
America{(4)}
AFRICA
Ethiopia{(6)} Dul Mountain (100%) 180,100 Exploration - advanced stage $1.8
Mali{(6)} Dioulafoundou (85%) 3,400 Exploration - advanced stage $0.8
Other 22,000 Exploration - early stage $0.0
<PAGE>
Page 19
Other Other{(7)} 790,000 Exploration - early and $3.8
Africa{(6)} intermediate stages
========
TOTAL $35.4
</TABLE>
_________________________
(1) Percentages identified are the percentages Golden Star would own assuming
either the Company or each of its partners achieves the maximum
percentage ownership permissible under the applicable partnership
arrangement. Percentages currently owned by Golden Star may be higher or
lower. See "-Properties" and the Company's Annual Report on Form 10-K
and other documents incorporated by reference herein for a discussion of
such potential changes and for additional information on the Company's
properties and the ownership interests.
(2) See "Glossary of Terms."
(3) Estimated aggregate expenditures by the Company and its partners.
(4) Properties in this country are owned by Golden Star Resources Ltd. or a
wholly owned subsidiary of Golden Star Resources Ltd.
(5) Properties in this country are owned by Guyanor, which is approximately
69% owned by Golden Star Resources Ltd.
(6) Properties in these countries are owned by Golden Star or by PARC, which
is approximately 60% owned by Golden Star Resources Ltd. Certain
properties have been transferred from Golden Star Resources Ltd. to PARC,
subject to the approval of the applicable government.
(7) Includes properties located in Eritrea (30,000 hectares), Gabon (363,000
hectares), Ivory Coast (375,000 hectares) and Mali (22,000 hectares).
PROPERTIES
The following is a description of the Company's significant gold and
diamond interests. For more information about these properties and the
Company's other mineral property interests, including with respect to the
ownership interests and funding obligations of third parties, see the Company's
1995 Annual Report on Form 10-K and Quarterly Reports on Form 10-Q for the
first and second quarters of 1996 incorporated by reference herein.
PRODUCING PROPERTIES
OMAI MINE, GUYANA
The Company owns a 30% common share equity interest in Omai Gold Mines
Ltd. ("OGML"), a company incorporated under the laws of Guyana which owns and
operates the Omai Mine. The mine is located on a 5,200 hectare mining license
on the Essequibo River approximately 160 kilometers southwest of Georgetown,
Guyana. The mine is operated as an equity joint venture between the Government
of Guyana, the Company and Cambior, the operator.
Cambior and the Government of Guyana own 65% and 5% of the common shares
of OGML, respectively. The Company and Cambior each has granted the Government
of Guyana options to acquire from them up to an additional 13.5% of the common
shares of OGML at capital market values, beginning in 2003.
<PAGE>
Page 20
Golden Star currently receives cash flow from the Omai Mine at the rate of
10% of the after tax cash flow from the Omai Mine through the redemption of
Class I preferred shares in OGML. The Company received $1.2 million in 1995
through the redemption of Class I preferred shares and, as of June 30, 1996,
held approximately $8.4 million of Class I preferred shares. The Company does
not expect to receive dividends from its common share holdings in OGML until
debt owed by OGML and guaranteed by Cambior is repaid and Class II and III
preferred shares held by Cambior are redeemed. As of June 30, 1996, OGML had
$184.2 million in debt outstanding and a total of $53.1 million in Class II and
III preferred shares outstanding.
The Omai Mine was brought into commercial production in January 1993 and
currently is the Company's only significant producing property. Gold
production for 1993, 1994, 1995 and the first six months of 1996 totaled
206,537 ounces, 250,642 ounces, 175,080 ounces and 85,191 ounces, respectively.
Gold production in 1995 was significantly lower than the originally expected
amount of 250,000 ounces due primarily to the August 1995 tailings dam failure
and resulting lack of production for the remainder of 1995. Quarterly gold
production at the Omai Mine for 1995 and the first six months of 1996 was as
follows:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C> <C> <C> <C> <C> <C>
First Second First Quarter Second Quarter Third Fourth Total
Quarter (1) Quarter Quarter (1) Quarter(1) 1995 (1)
- ----------------------------------------------------------------------------------------------------------------------------------
Ore milled (mt) 725,203 1,160,413 1,169,535 1,216,002 655,674 - 3,041,211
Rate (mt/day) 13,185 12,752 12,995 13,363 7,127 - 13,165
Grade (g Au/mt) 1.6 1.8 1.9 2.0 1.9 - 1.9
Recovery (%) 85 89 90 91 91 - 91
Gold production (oz) 27,204 57,987 64,435 70,005 40,640 - 175,080
Cash cost of $294 $281 $234 $220 $215 - $224
production (2) ($/oz)
</TABLE>
________________________
(1) There was no production at the Omai Mine from August 19, 1995 to
February 4, 1996 due to the Omai dam failure.
(2) Cash cost of production includes mining and milling costs, power
generation and general services charges.
Ore reserves at the Omai Mine are derived from four sources: the Fennell
pit, the Wenot Lake pit, the alluvial deposits and from above-ground
stockpiles. In 1995, ore was processed from each of these sources. The
average mined waste to ore ratio for 1995 was 1.98. At December 31, 1995, the
stockpiles held 10,094,000 tonnes grading 0.9 g Au/mt. Cash costs of
production at the Omai Mine for 1994 and 1995 amounted to $244 per ounce and
$224 per ounce, respectively.
The surface infrastructure at the Omai Mine includes a milling facility
equipped with crushing, semi-autogenous grinding, a gravity recovery circuit,
carbon-in-pulp cyanide leaching and electro-winning, together with camp
facilities, administrative offices, a warehouse, a maintenance shop and a
laboratory. Electric power currently is supplied by 15 diesel generators having
a total installed capacity of 47 megawatts. The mine site also includes a
tailings pond allowing the natural degradation of the cyanide and decanting
and recirculation of the water used in milling with discharge of treated
process waters into the Omai River.
<PAGE>
Page 21
The 1996 production target for the Omai Mine is 255,000 ounces. The mill
currently is processing stockpiled ore and lower grade soft rock ore from the
Wenot pit. Mining of hard rock ore resumed in the Fennell pit upon completion
of dewatering during the second quarter. The Omai Mine expanded its rated mill
capacity from 12,000 to 18,000 tonnes per day through incremental additions in
grinding and power generating capacity which were completed in July 1996. As a
result of the $54 million expansion program, annual production rates at the
Omai Mine in excess of 300,000 ounces are expected, beginning in 1997.
The Omai Mine has registered an increase in reserves every year since
operations began, exclusive of the gold that has been mined. Total reserves
have grown from 2.3 million ounces at year end 1992 to 3.3 million ounces at
year end 1995, after production of over 630,000 ounces. The increase in
minable gold reserves for 1995 was the greatest year on year increase to date,
representing a 24% increase over year end 1994, exclusive of production during
1996. Importantly, the overall grade of the reserves at both the Fennell and
Wenot pit registered improvements. Drilling is continuing in 1996 in the East
Wenot pit section on a geochemical anomaly more than 1.2 kilometers long,
with the intention of further increasing reserves during 1996. The
reserves{(1)} at year-end 1995 and 1994 were estimated as follows:
<TABLE>
<CAPTION>
December 31, 1995 December 31, 1994
----------------------------------- -----------------------------------
Proven and Grade Contained Proven and Grade Contained
Probable (g Au/mt) Gold (oz) Probable (g Au/mt) Gold
Reserves Reserves (oz)
(mt) (mt)
<S> <C> <C> <C> <C> <C> <C>
Fennell Pit 43,450,000 1.6 2,217,800 39,977,000 1.5 1,937,000
Wenot Lake 14,127,000 1.6 708,100 6,905,000 1.4 309,300
Pit
Alluvials 1,237,000 0.9 38,100 3,946,000 1.1 138,600
Stockpiles 10,094,000 0.9 296,600 7,805,000 1.0 240,900
TOTAL 68,908,000 1.5 3,260,600 58,633,000 1.4 2,625,800
</TABLE>
________________________
(1) Reserves are calculated using a gold price of
$425 per ounce with a cutoff grade of 0.35 g
Au/t for soft rock reserves and 0.70 g Au/t
for hard rock reserves. Recovery rates range
between 85% and 90%, depending on grade.
On August 19, 1995, a failure occurred in the main
section of the tailings dam at the Omai Mine. The
failure resulted in the discharge of effluent-
contaminated water into the Omai River, which in turn
flowed into the Essequibo River. The discharge began on
August 19, 1995 and continued until the leakage was
controlled by Omai personnel on August 24, 1995. To
minimize environmental damage, a portion of the
discharged water was diverted into the Fennell Pit, the
main source of ore at the Omai Mine. Production at the
Omai Mine was suspended from August 19, 1995 until
February 4, 1996.
In October 1995, the Government of Guyana appointed
a Commission of Inquiry to examine various matters
arising from the dam failure. Its report stated that the
Commission of Inquiry could see no justifiable reason for
OGML not being permitted to resume production at the Omai
Mine. The Commission of Inquiry also made a number of
recommendations in its report relating to, among other
things, the construction of the new tailings pond, the
treatment of water before its release into
<PAGE>
Page 22
receiving waters, the reclamation and closure of the former
tailings pond and the implementation of other
environmental safeguards. Operations at the Omai Mine
resumed on February 4, 1996.
OTHER PRODUCING PROPERTIES
The Company currently has alluvial mining operations
at the Paul-Isnard project in French Guiana. See "-
Development Properties - Paul-Isnard."
DEVELOPMENT PROPERTIES
GROSS ROSEBEL, SURINAME
The Gross Rosebel project covers 17,000 hectares and is
located 80 kilometers south of the capital city of
Paramaribo, Suriname. As of December 31, 1995, a total
of $12.9 million, including capitalized acquisition
costs, had been spent at Gross Rosebel since the
Company's involvement with the project, of which
$6.6 million was funded by Cambior. The Company
anticipates that $7.5 million will be spent on the Gross
Rosebel project in 1996, with Cambior expected to fund
$5.0 million of this amount.
Golden Star and Cambior each owns 50% of the Gross
Rosebel project. Cambior is obligated to use its best
efforts to arrange debt financing for 65% of mine
construction and related costs, with Golden Star and
Cambior each contributing 50% of the remainder of such
costs. In addition, Grassalco, a mining company owned
and operated by the government of Suriname, has the right
to purchase up to a 20% minority interest from Golden
Star and Cambior (on a pro rata basis) in the production
company that will operate the mine, in which case
Grassalco will be obligated to fund its pro rata portion
of mine construction and related costs.
Gross Rosebel is composed of two contiguous areas known
as the Northern and Southern blocks. Geologically, the
area is underlain by Proterozoic metasedimentary and
metavolcanic greenstone rocks which have been intruded by
a large tonalitic stock near the southern boundary of the
project.
As part of a prefeasibility study completed in April
1996, Cambior calculated proven and probable gold
reserves of approximately 24 million tonnes grading 1.4 g
Au/t, representing 1.1 million ounces IN SITU. These
reserves lie in the South block, containing the Royal
Hill, Mayo and Rosebel deposits, and the North block,
containing the Pay Caro and Koolhoven deposits.
The 1996 exploration work is focused on drilling to
better define and expand the reserve and mineralization
base within the five areas where reserves have been
established, as well as to identify potential new zones.
During the first six months of 1996, an additional 16,585
meters of drilling in 113 holes and 13,312 linear meters
of trenching has been completed on the North block of the
project. Mineralization was extended along strike on the
Pay Caro and East Pay Caro zones by approximately 450
meters, allowing existing open pit plans to be widened
and deepened. Results from this core drilling exhibited
average widths of mineralization of 8.1 meters with a
weighted average grade of 2.4 g Au/t at Pay Caro and
average widths of 9.6 meters with a weighted average
grade of 2.2 g Au/t at the East Pay Caro zone. Wide
spaced, step out drilling along the Koolhoven and Bigi
Asanjangmoni trends has been successful, although
additional closer spaced drilling will be required to
bring this mineralization into the reserve category.
Metallurgical test work conducted during the
prefeasibility study has indicated recoveries in excess
of 90% using conventional gravity and cyanide leaching
recovery methods.
<PAGE>
Page 23
An additional 18,691 meters of drilling within the
North block and the South block of the Gross Rosebel
project are budgeted for the remainder of 1996 with the
objective of significantly increasing open pittable
reserves for the final feasibility study. The Company
expects the final feasibility study at Gross Rosebel to
illustrate economics that would justify a development
decision at current gold prices, given the nature of the
bulk of the ore body, simple metallurgy and good
infrastructure for mine development, including nearby
port facilities and road access.
EXPLORATION PROPERTIES
YAOU, FRENCH GUIANA
The Yaou project, owned through Guyanor, covers a total
area of 15,000 hectares and is located approximately
210 kilometers southwest of Cayenne, French Guiana. Yaou
is the most advanced of Guyanor's exploration projects
and a significant amount of exploration work has been
conducted on the property. As of December 31, 1995, a
total of $10.3 million, including capitalized acquisition
costs, had been spent at Yaou since the Company's
involvement with the project, of which $3.3 million was
funded by Cambior. The Company anticipates that
$1.5 million will be spent on the Yaou project in 1996,
all of which is expected to be funded by Cambior.
The Yaou project is underlain by a typical greenstone
sequence of the Paramaca Formation. Within these rocks
are two distinct units that host gold mineralization
generally associated with pyrite and quartz-carbonate
veins and veinlets.
During the first six months of 1996, an evaluation was
completed using all exploration data gathered at Yaou by
both Guyanor and the previous owners, the French Bureau
de Recherches G<e'>ologiques et Mini<e`>res ("BRGM") and
BHP, with the purpose of developing a new geologic model
of the known mineralized area. On September 11, 1996,
Guyanor and Golden Star announced the results of this
work. A reserve estimation was completed on the Yaou
Central and Chaina zones based on results from 130 drill
holes for a total of 24,416 meters, approximately 40,000
meters of augering and approximately 10 kilometers of
trenching. The estimation calculated a probable reserve
of approximately 10.3 million tonnes grading 2.7 g Au/t,
representing approximately 876,000 ounces of gold
IN SITU. The probable reserve is part of total
mineralization of approximately 13 million tonnes grading
2.5 g Au/t.
The exploration program for the remainder of 1996 is
focused on establishing proven mining reserves based upon
the above mentioned probable reserves and mineralized
inventory, as well as establishing new zones of
mineralization. Some 4,300 meters of drilling is
scheduled to be completed during the remainder of 1996 on
both Yaou Central and Chaina for infill drilling and
testing lateral and depth extensions as well on
additional targets to the northeast of Yaou Central
(Zones I, J and K) to identify new mineralization minable
by open pit. Guyanor also plans to conduct additional
exploration over the project area, with an initial focus
on the Bois Blanc target approximately 10 kilometers to
the north of Yaou Central. In addition to the Bois Blanc
target, there are two other known zones of gold
mineralization which warrant follow-up work, Yaou Nord
and Tomantoni. To date, less than 15% of the Yaou
project area has been evaluated.
The Yaou and Dorlin gold projects are being advanced
under an agreement with Cambior, pursuant to which
Cambior must fund in the aggregate $11.0 million on the
two properties by June 30, 1998 in order to earn a 50%
interest in each project. Cambior also is obligated to
use its best efforts to arrange debt financing for 65% of
mine financing costs, with Guyanor and Cambior each
contributing 50% of the remainder of such costs. Guyanor
is to manage the exploration of the
<PAGE>
Page 24
properties and Cambior is to prepare a feasibility study on the
properties and to manage the development and operation of
future mining operations.
DORLIN, FRENCH GUIANA
The Dorlin project, owned through Guyanor, covers a
total area of 15,000 hectares and is located
approximately 180 kilometers southwest of Cayenne, French
Guiana. As of December 31, 1995, a total of
$1.6 million, including capitalized acquisition costs,
had been spent at Dorlin since the Company's involvement
with the project, of which $1.0 million was funded by
Cambior. The Company anticipates that $1.5 million will
be spent on the Dorlin project in 1996, all of which is
expected to be funded by Cambior.
The Dorlin project is underlain by a
volcano-sedimentary sequence of the Paramaca Formation
and is intruded by younger granitic intrusive rocks.
In August 1996, Guyanor announced the results of
approximately 2,000 meters of drilling in 31 holes as
well as the recompilation and integration of results from
19 holes totaling 4,323 meters drilled by the BRGM and
BHP in 1986. Guyanor's drilling focused on the Sud Nivre
zone on a prominent ridge known as Montagne Nivre while
the BRGM-BHP drilling focused on the West Nivre zone to
the north of Sud Nivre and on the west flank of Montagne
Nivre. Guyanor established two zones of mineralization
approximately 40 to 50 meters wide over a strike length
of approximately 750 meters. Mineralization was
encountered in approximately 74% of the core holes
drilled by Guyanor, exhibiting average widths of 9.8
meters at a weighted average grade of 1.9 g Au/t.
Drilling conducted by the BRGM and BHP on the West Nivre
zone and across the northern extension of the zones
drilled by Guyanor encountered mineralization in
approximately 79% of the core holes drilled, exhibiting
average widths of 9.9 meters at a weighted average grade
of 1.9 g Au/t. Current and past drilling results have
indicated mineralization over a strike length of
approximately 1.5 kilometers on the far southern end of a
major hydrothermal breccia system which has been
identified continuously over five kilometers and
discontinuously over an additional 4 kilometers.
During the second half of 1996, Guyanor plans to
mobilize a second, larger drill rig to test the Sud Nivre
zone at greater depth, test the extension of the system
to the north and conduct infill drilling on the zones
drilled by the BRGM and BHP.
ANDORINHAS, BRAZIL
The Andorinhas project covers approximately 25,000
hectares and is located in the state of Par<a'> in the
eastern Amazon area, approximately 670 kilometers south-
southwest of the city of Belem, Brazil. Andorinhas is
the single largest item in Golden Star's 1996 exploration
budget, with planned expenditures of $3.3 million.
In December 1995, CVRD, the largest individual producer
of gold in Latin America, awarded the Company the right
to associate with CVRD for the possible future
development and exploitation of the Andorinhas gold
property in Brazil. The Andorinhas tender represented
CVRD's first effort to secure outside partners to assist
in the development of CVRD's gold resource potential in
Brazil. Under the agreement with CVRD and subject to
final approval of the Brazilian government, the Company
must match CVRD's previous exploration expenditures of
approximately $5.5 million, as well as pay 50% of any
additional costs required to complete a positive
feasibility study, in order to earn a 50% interest in the
Andorinhas project. The Andorinhas project is comprised
of three exploration concessions, each of which has
expired. It has been represented to the Company
<PAGE>
Page 25
that the title
holders in each case (CVRD or its subsidiary) have
timely applied for renewals or successor mineral rights
with respect to each of the concessions, which
applications currently are pending. The Company believes
that the title holders will obtain the renewals or
successor rights as applicable; however, no assurance can
be given that such rights will in fact be granted.
Andorinhas is an advanced stage exploration project.
Gold mineralization was discovered at Andorinhas in the
late 1970s by Rio Doce Geologia e Mineracao S.A., CVRD's
exploration subsidiary. The geologic setting and
mineralization of discoveries in the area share the same
characteristics of many of the notable underground mines
in the Abitibi mineral province in Canada, such as the
Campbell Red Lake mine, with high grade gold-quartz vein
mineralization occurring in multiple zones. Surface work
and approximately 15,000 meters of drilling by CVRD in
the late 1970s identified three primary zones of
interest, Mamao and Babacu along a 14 kilometer shear
zone trending northeast-southwest through the southern
leg of the property and Lagoa Seca on a parallel 8
kilometer shear zone to the north. The results averaged
2.7 meters at 17.1 g Au/t from 11 holes at the Mamao
prospect, 19.8 meters at 4.7 g Au/t from 9 holes at the
Lagoa Seca prospect and 2 meters at 8.1 g Au/t from 6
holes at Babacu.
In the early 1980s, the Andorinhas area experienced a
significant influx of garimpeiros (illegal miners) who
mined multiple surface zones of enriched mineralization
along the shear zones. Garimpeiro mining ceased in the
mid 1980s as the price of gold fell and pits from the
surface mining of gold bearing material began to
encounter the water table. One of the few garimpeiros
who remained developed an underground decline 240 meters
down plunge to exploit the primary structure on the Mamao
zone. Sampling by the Company consisted of a carefully
cut series of 675 samples in 78 channels systematically
distributed throughout the 27 levels of the existing
underground workings. The sampling evaluated a
mineralized zone whose minimum dimensions, as defined by
the mined out workings, extend from surface down plunge
for 270 meters, with a width of up to 150 meters, and a
thickness of 2.5 to 7.0 meters. Encouraging results have
been received from the sampling with an uncut weighted
average grade of all samples of 20.0 g Au/t. The cut
weighted average grade (cut at the 98th percentile of
125.0 g Au/t) is 13.7 g Au/t. Mineralization appears
to remain open on strike and at depth in the Mamao zone.
In October 1996, the Company and CVRD announced the
commencement of core drilling at the Andorinhas project.
The first phase of the core drilling program involves two
drills and is scheduled to consist of 18 holes totaling
approximately 3,000 meters. Drilling will be distributed
to test for the existence of additional ore shoots in the
vicinity of the Mamao zone where garimpeiro workings
and/or outcrop of the mineralized structures are evident.
The Company is the manager of an aggressive 30-month
program at Andorinhas to expand the known mineralized
zones and delineate new ones. The objective of the 30-
month program is to delineate a high grade gold
mineralization of at least one million ounces as rapidly
as possible, while evaluating the potential for similar
targets over the extent of major shears zones which have
not been explored. CVRD has the right to act as the
operator of any mine that may result from the exploration
efforts. Detailed underground and surface geologic
mapping and geochemical sampling have been completed on
the principal prospects, while surface sampling and
mapping continues over the remainder of the property to
identify new targets. An airborne aeromagnetic, EM and
radiometric survey on 100 meter line spacing is in
progress over the entire property.
<PAGE>
Page 26
ST-ELIE, FRENCH GUIANA
The St-Elie project, owned through Guyanor, covers a
rectangular area of 9,900 hectares located in north
central French Guiana, 110 kilometers west of Cayenne,
French Guiana. As of December 31, 1995, a total of
$3.2 million, including capitalized acquisition costs,
had been spent at St. Elie since the Company's
involvement with the project, of which $1.2 million was
funded by ASARCO. The Company anticipates that
$1.6 million will be spent on the St-Elie project in
1996, all of which is expected to be funded by ASARCO.
ASARCO has a 50% equity interest in the St-Elie
project, subject to its spending $10 million for
development of the property, including the completion of
a feasibility study, by February 2000. ASARCO, at
Guyanor's request, is obligated to use its best efforts
to obtain financing on a project finance basis for 80% of
project development costs, with Guyanor and ASARCO each
contributing 50% of the remainder of such costs. ASARCO
may decide at any time to terminate its obligations under
the agreements with Guyanor and stop funding the St-Elie
project, which will result in the forfeiture of its
interest in St-Elie. Guyanor will be the operator of the
exploration effort at St-Elie prior to the completion of
the final feasibility study, at which time ASARCO has the
right to assume the position of operator.
The first gold discoveries in the St-Elie region were
made in 1873, and between 1878 and 1923 more than 600,000
ounces of gold reportedly were mined from alluvial and
eluvial deposits, using mainly hydraulic methods. From
1956 to 1993, mining activities on the project were
intermittent and consisted only of local, small scale
alluvial operations.
To the Company's knowledge, gold extracted to date from
the St-Elie, Michel and Devis sectors of the project was
from both alluvials and weathered bedrock. Other sources
of gold which have been identified include recent and
ancient alluvial deposits, re-worked lateritic deposits,
eluvial and surficial deposits and mining residues.
However, on the basis of present knowledge of the areas,
bedrock sources appear to be the most promising and the
most recommended for exploration.
Extensive exploration work began at St-Elie in late
October 1995. Geological, geochemical and geophysical
work completed in 1995 identified nine primary drill
targets on the property. During the first half of 1996,
34 holes were drilled, totalling 4,982 meters, on the
Devis and Michel zones of the property. In May 1996,
Guyanor completed 23 holes for 3,202 meters in the Devis
zone. Mineralization was encountered in approximately
57% of the core holes drilled, illustrating a mineralized
zone approximately 550 meters in length by 200 meters
wide and exhibiting average intersection widths of 8.5
meters at a weighted average grade of 2.6 g Au/t. In
July 1996, Guyanor completed an initial 11 hole,
1,780 meter drilling campaign in the Michel zone over an
area of mineralization approximately 1.2 kilometers in
length by 200 meters wide. At the Michel zone,
mineralization was encountered in approximately 82% of
the core holes drilled, with average intersection widths
of 4.3 meters at a weighted average grade of 3.9 g Au/t.
For the remainder of 1996, Guyanor expects to focus
<PAGE>
Page 27
work at St-Elie on continued surface mapping, preparation
of 80-90 drill sites for 1997 drilling and improvements
to road access.
PAUL-ISNARD, FRENCH GUIANA
The Paul-Isnard project area, which includes both the
Paul-Isnard and Eau-Blanche projects, is owned through
Guyanor. The Paul-Isnard project area is located in the
western part of French Guiana, approximately 250
kilometers west of Cayenne, and covers 25,000 hectares.
Guyanor's interest in the Paul-Isnard project area is
held by its subsidiary, Soci<e'>t<e'> de Travaux Publics
et de Mines Aurif<e`>res en Guyane ("SOTRAPMAG"), a
soci<e'>t<e'> <a`> responsibilit<e'> limit<e'>e
incorporated under the laws of France and based in French
Guiana. As of December 31, 1995, a total of
$5.5 million, including capitalized acquisition costs of
$4.0 for both the alluvial mining project and the hard
rock mineral projects, had been spent at the Paul-Isnard
project area, of which $1.4 million was funded by ASARCO.
The Company anticipates that $0.7 million will be spent
on the Paul-Isnard project area in 1996, all of which is
expected to be funded by ASARCO and LaSource.
Guyanor has entered into a joint venture agreement to
give LaSource a 25% participating interest in the
exploration and exploitation of primary gold deposits on
the Paul-Isnard and Eau-Blanche projects. Pursuant to
the same joint venture agreement, ASARCO has two separate
options to acquire a 50% interest in Guyanor's remaining
interest in the primary deposits on each of the Paul-
Isnard and Eau-Blanche projects. In order to acquire its
interests in one of these projects, ASARCO is obligated,
by June 2001, to complete a feasibility study on the
project and to spend at least $10 million on such
project, or to combine the Paul-Isnard and Eau-Blanche
projects into a single joint venture and spend a combined
$20 million. ASARCO also is obligated to use its best
efforts to obtain financing on a project finance basis
for 80% of project development costs, with Guyanor and
ASARCO each contributing 37.5% and LaSource contributing
25% of the remainder of such costs. Guyanor will act as
project manager for the exploration phase at the
Paul-Isnard project area, while ASARCO, once vested, has
the right to act as the manager of any resulting
feasibility study and exploitation.
There are two prominent mountain chains bordering the
Paul-Isnard project area which form the edges of a basin
in which alluvial gold deposits have accumulated. The
Company believes that this alluvial gold originated from
gold-bearing rocks from Decou-Decou and Lucifer mountains
and was transported downward by high-energy streams,
concentrating the gold in the gravel beds of streams in
the Paul-Isnard project area. The alluvial gold deposits
of the Paul-Isnard project area have been known for
almost a century and gold panning was reported on a
number of creeks which traverse the property. Mechanized
alluvial mining started in about 1910, with recorded
production of over three tons of gold.
The Company, through SOTRAPMAG, currently has three
plants of various configurations operating on the Paul-
Isnard property, one of which is a fixed plant located at
Barth<e'>l<e'>my and two of which are mobile plants
currently located at Petit L<e'>zard and Reine Creek. In
late 1995, the Company began an aggressive alluvial
exploration program to identify target areas and
commenced prospecting activities to quantify the
potential for alluvial mining reserves. The program is
scheduled to be completed in 1996. Ore reserves are not
stated for the current alluvial operations at the Paul-
Isnard project area as the data for reserve estimation
are not currently considered adequate to support the
calculation of ore reserves.
<PAGE>
Page 28
SOTRAPMAG's alluvial operations have experienced
operating losses in 1996 as a result of a labor strike,
the re-deployment of certain equipment for construction
of a new plant and heavy rainfall. Guyanor has retained
outside consultants to analyze SOTRAPMAG's operations and
make recommendations on how to render the operation
profitable. There can be no assurance, however, that it
will be possible to return SOTRAPMAG's operations to
profitability or that management will not decide to close
the alluvial operations.
To the Company's knowledge, little systematic
exploration has been conducted at the Paul-Isnard project
area in search of primary gold. Management believes that
there are at least two virtually unexplored occurrences
which may constitute possible sources of alluvial gold on
the property. An airborne radiometric and magnetometric
geophysical survey over the property was carried out
recently by Guyanor as part of a survey of all of
Guyanor's French Guiana properties.
Surface sampling from approximately 900 outcrop channel
samples has indicated a zone in excess of two kilometers
in length with widths varying between 100 and 400 meters
and average gold grades of 1.5 to 2.0 g Au/t, and as high
as 13 g Au/t. In June 1996, Guyanor initiated drilling
on the Paul-Isnard project area and has completed 18
holes totaling approximately 3,300 meters on the Montagne
d'Or zone on the north flank of Decou-Decou Mountain,
part of an initial 6,000 meter drilling program. The
objective of the drilling campaign is to test the depth
continuity of mineralization identified through surface
sampling. In October 1996, the Company, Guyanor and
LaSource announced results from the initial phase of core
drilling at Montagne d'Or. Mineralization encountered
within the felsic volcanic unit at depth over the 1.1
kilometer strike length drilled appeared to be consistent
with a massive sulfide (VMS) type of mineralization which
the Company currently believes is similar to deposits
currently being mined along the Cadillac Break in Quebec.
Polymetallic assays on semi-massive to massive sulfide
mineralization intersected in one hole between 82.6 and
99.6 meters yielded weighted average metal grades of
3.7 g Au/t, 17.0 g/t silver, approximately 0.3% copper
and trace zinc values. The Company plans to continue
to compile and interpret the data from the first 18
holes prior to planning the completion of the 6,000
meter campaign, the success of which will determine
further drilling programs.
DACHINE, FRENCH GUIANA
The Dachine project, owned through Guyanor, covers a
2,500 hectare area in southwest French Guiana
approximately 200 kilometers southwest of Cayenne that
was previously known as the Inini diamond occurrence. As
of December 31, 1995, a total of $0.8 million, including
capitalized acquisition costs, has been spent at Dachine
since the Company's involvement with the project, of
which $0.4 million was funded by BHP. The Company
anticipates that $1.1 million will be spent on the
Dachine project in 1996, all of which is expected to be
funded by BHP.
In December 1995, Guyanor entered into an agreement
with BHP pursuant to which BHP would earn a 51% interest
in the Dachine project by spending $3.5 million by
May 31, 1998. Depending upon options available to both
companies, Guyanor's ultimate interest in the property
could vary between 31.5% and 49%. BHP may elect to
terminate the agreement and stop funding the Dachine
project at any time.
<PAGE>
Page 29
On March 1, 1996, the Company and Guyanor reported the
discovery within the Dachine permit area of a
metamorphosed ultramafic structure that can be traced
over a minimum dimension of approximately 3.5 kilometers
in length and 0.5 kilometers in width. Final results
from the initial exploration program, announced on
May 22, 1996, exhibited significant diamond counts from
microdiamond analysis on auger and core drill holes that
intersected the main body with a total of 8,970 stones
recovered from approximately 1,164 kilograms of core and
auger samples. Additionally, a total of 976 stones were
recovered from microdiamond analysis on approximately
387 kilograms of outcrop and soil samples collected
during the initial exploration program.
These results led to the decision to proceed with an
initial small bulk sample at Dachine during second half
of 1996. This program calls for the collection of 200 to
250 tonnes of material from several near surface pits
along the length of the Dachine body. This material will
be processed at the Dachine site to produce a heavy
mineral concentrate which will be shipped to North
America for macrodiamond analysis. Results of this
initial bulk sample will serve as the basis for future
exploration programs at Dachine. To secure its land
position, Guyanor has applied for a 33,700 hectare "A"
Permit around the existing Dachine "B" Permit area.
DUL MOUNTAIN, ETHIOPIA
The Company believes it was the first foreign company
to be awarded exploration licenses in Ethiopia. Golden
Star has acquired an interest in 90 exclusive exploration
licenses to explore for gold at the Dul Mountain project
located in western Ethiopia, approximately 500 kilometers
west-northwest of Addis Ababa, Ethiopia. As of
December 31, 1995, a total of $2.6 million, including
capitalized acquisition costs, had been spent at Dul
Mountain since the Company's involvement with the
project. The Company anticipates that $1.8 million will
be spent on the Dul Mountain project in 1996. The
Company has transferred its interest in the Dul Mountain
project to PARC, subject to governmental approval.
The area covered by the Dul Mountain project lies
within the western Ethiopian Shield which is part of the
north-south trending Pan-African-Mozambique Precambrian
belt that extends along the east coast of Africa. There
are records of small-scale alluvial gold production on
the Dul Mountain property for most of this century, with
unrecorded production by local miners continuing today.
Previous exploration has identified three gold prospects
on the property: Ashashire, Azale-Akendeyu and Dul
Mountain. The Company has ceased activity on the latter
prospect.
Trenching at the Ashashire prospect over an anomaly
1.6 kilometers in length and 200 meters in width provided
encouragement with mineralized sections of 4.1 g Au/t
over 24.6 meters and 3.3 g Au/t over 14.8 meters.
Ashashire and a second target, Belaute, are both
prospects in the western half of the Dul Mountain project
area which warrant follow-up work, although difficult
terrain makes mobilization costly.
In late 1995, the reconnaissance work over the eastern
half of the Dul Mountain project area resulted in the
discovery of the previously unknown Menghi area on the
northern portion of the most eastern of three greenstone
belts on the project. The main zone of interest on the 4
by 5 kilometer Menghi prospect is a north striking quartz
ridge approximately 600 meters long. During the first
half of 1996, PARC moved its primary camp at Dul Mountain
to a location near the Menghi prospect and conducted soil
geochemical and ground geophysical surveys as well as
trenching. Trenching completed to date over a strike
length of approximately 400 meters along the mineralized
zone identified average widths of mineralization within
the trenches of 27 meters with a weighted average grade
of 2.9 g Au/t.
<PAGE>
Page 30
In July 1996, an initial seven hole, 1,100 meter core
drilling campaign was initiated in the south of the zone
identified by trenching to test the depth continuity of
mineralization along strike to the north. Poor drilling
conditions early in the program and heavy rains slowed
the drilling as well as additional trenching to the south
testing for possible extensions of the system. PARC
plans to compile and interpret the results from the
initial drilling campaign and additional trenching data
prior to recommencing drilling at the Menghi prospect.
PARC has not complied with certain of the terms of its
license agreement with the Ethiopian government in which
PARC agreed to a specified work program and a certain
level of expenditures at the Dul Mountain project. PARC
and the government have agreed to a revised work program
and lower required expenditures for the Dul Mountain
project and PARC intends to use its best efforts to
resolve any additional outstanding issues with respect to
the license agreement. Although the Company currently
has no reason to believe that its licenses for the Dul
Mountain project will be revoked, there can be no
assurance that the Ethiopian government will not revoke
the licenses as a result of noncompliance with certain of
the original terms of the license agreement, as discussed
above.
DIOULAFOUNDOU, MALI
The Company's exploration activity in Mali to date has
concentrated on the Dioulafoundou project near the Mali-
Senegal border in the Kenieba district, approximately 400
kilometers west of the capital of Bamako. The project
consists of four authorizations aggregating 2,800
hectares. As of December 31, 1995, a total of $1.9
million, including capitalized acquisition costs, had
been spent at Dioulafoundou since the Company's
involvement with the project. The Company anticipates
that $0.8 million will be spent on the Dioulafoundou
project in 1996.
The Company, through PARC, has an 85% interest on one
authorization, subject to divestment, while the other
three authorizations have been acquired, subject to
divestment, from Mali parties who retain the right to a
5% participating interest and a royalty of 0.3% from any
mine development.
The region in which the Dioulafoundou project lies is
part of the West African Shield. The project area lies
within the exposed early Proterozoic Kenieba inlier that
straddles the Mali-Senegal border and is composed
primarily of thick Birimian volcanic and sedimentary
formations that trend generally north-south and
northeast-southwest. Local miners have long produced
unknown quantities of gold from alluvial deposits in the
Kenieba district.
The main objective of PARC's work completed to date at
the Dioulafoundou project has been to establish the
presence of economically attractive gold mineralization
within the prospect area. During 1995, PARC completed an
initial 1,137 meter core drilling campaign, encountering
significant mineralization in six of eight holes.
Mineralized intersections from the initial core drilling
campaign in 1995 averaged 11 to 15 meters at 2.5 to 3.0 g
Au/t.
During the first half of 1996, PARC completed a
mechanical augering program for geochemical analysis
consisting of 355 holes totaling 4,548 meters over the
whole of the Dioulafoundou project. A 65 hole, 4,200
meter reverse circulation ("RC") drilling program was
completed in July, 1996. This RC program confirmed the
north-south striking mineralization identified by
previous core drilling with near surface mineralized
intersections with an average width of 2.9 meters and a
weighted average grade of 2.4 g Au/t. Gold
mineralization also was encountered on the Bah permit
which comprises the south and southeast border of the
Diaoulafoundou project.
<PAGE>
Page 31
These mineralized zones are
characterized as near surface, narrow zones with gold
grades ranging from 1.3 to 3.2 g Au/t. An early and
intense rainy season caused postponement of RC drilling
near the extensive Kerekou artisanal working on the
Magassa permit.
PARC intends to continue evaluating the entire
Diaoulafoundou project. PARC expects to resume core
drilling during the fourth quarter of 1996 to test
extension of the mineralized zone on the AFC permit, core
drilling the more significant mineralized zones on the
Bah permit and, as previously planned, test targets near
the Kerekou workings on the Magassa permit.
PARC's exploration activities at the Diaoulafoundou
project are partly conducted under an exploitation
authorization issued by the government of Mali which
requires the authorization holder to conduct exploitation
activities within the authorization area. Although PARC
intends to commence exploitation activities within the
perimeter of the authorization if warranted, there can be
no assurance that it will do so or that, even if such
activities are commenced, PARC's exploitation
authorization for the Diaoulafoundou project will not be
revoked because of its failure to comply with the
requirement to conduct exploitation activities. The
Company currently has no reason to believe that its
exploitation authorization for the Diaoulafoundou project
will be revoked.
OTHER PROPERTIES
Golden Star and its subsidiaries also hold a
significant portfolio of other early and intermediate
stage gold and diamond projects in Guyana, French Guiana,
Suriname, Brazil and Bolivia in South America and
Eritrea, Ethiopia, Gabon, Ivory Coast and Mali in Africa
that are in various stages of development. Excluding the
properties specifically mentioned above, the Company
anticipates spending $14.9 million on these other
projects in 1996, of which $1.9 million is anticipated to
be funded by various partners and through the recovery of
performance bonds.
In October 1996, Golden Star commenced a 26 hole, 2,600
meter core drilling program on the Antino project
covering an area of approximately 3,700 hectares located
within the South Benzdorp area in southeastern Suriname
on the French Guiana border. Golden Star has the right
to earn a 100% interest in the Right of Exploration
granted to a local Surinamese company with respect to the
Antino project. The objective of the core drilling
program at Antino is to test the depth potential of high
grade root zones identified through deep augering on the
Upper Antino central and middle zones. To date, less
than half of the anomalous ground, principally the
northwest and northeast zones, on the Upper Antino target
has been covered by deep augering. Mechanized deep
augering is planned on these zones in addition to the
core drilling now underway on the central and middle
zones.
In addition to the exploration projects described
above, Golden Star initiated core drilling on the Fish
Creek project in northwest Guyana during the fourth
quarter of 1996. PARC intends to commence and complete
initial core drilling campaigns at the Adi Rassi and
Torat prospects in Eritrea throughout the remainder of
the year.
In 1994, the Company established a diamond exploration
group based in Georgetown, Guyana to evaluate the
potential for primary diamond sources on exploration
reconnaissance areas in Guyana, as well as to identify
other high priority diamond exploration prospects across
the Guiana Shield. This work has led to the
identification of multiple diamond exploration projects
in Guyana, Suriname and French Guiana. In 1996, the
Company made the decision to proceed with the next level
of evaluation on these targets, as well as on new
potential targets which have been identified on permits
held by
<PAGE>
Page 32
PARC in Ivory Coast. The Company intends to
continue its diamond exploration efforts by committing up
to $2.5 million of its 1997 annual exploration budget to
the advancement of existing and any future diamond
exploration projects.
The Company acquires and disposes of mineral
exploration properties in the ordinary course of its
business and intends to make selective additional
acquisitions of promising properties in South America,
Africa and other parts of the world.
RECENT DEVELOPMENTS
On October 31, 1996, PARC announced that the expiration
date of its Series A warrants issued on February 5, 1996
had been extended to January 31, 1997.
On November 5, 1996, Guyanor completed an offering in
France and certain other countries of 1.0 million of its
Class B common shares for net proceeds of FF 45.5
million or US$ 8.92 million in conjunction with the
listing of its Class B common shares on the Nouveau
Marche in France on October 30, 1996. The Class B
common shares sold in the offering were not offered
for sale in Canada or in the United States. As a result
of the offering, the Company's interest in Guyanor
decreased from approximately 70% to approximately 69%.
DESCRIPTION OF SHARE CAPITAL
The Company's Articles currently authorize the issuance
of an unlimited number of Common Shares and an unlimited
number of Preferred Shares, issuable in series. As of
June 30, 1996, 25,716,303 Common Shares and no Preferred
Shares were outstanding.
COMMON SHARES
The holders of Commons Shares are entitled to receive
dividends as, when and if declared by the Board of
Directors of the Company out of funds legally available
therefor, provided that if any Preferred Shares are at
the time outstanding, the payment of dividends on Common
Shares or other distributions (including purchases of
Common Shares) will be subject to any preferential
rights attaching to any other class or series of shares
of the Company
The holders of Common Shares are entitled to one vote
for each share on all matters voted on by shareholders,
including elections of directors. The holders of Common
Shares do not have any conversion, redemption or
preemptive rights. In the event of the dissolution,
liquidation or winding up of the Company, holders of
Common Shares are entitled to share ratably in any assets
remaining after the satisfaction in full of the prior
rights of creditors, including holders of the Company's
indebtedness, and the aggregate liquidation preference of
any other class or series of shares then outstanding.
On June 11, 1996, the shareholders of the Company
confirmed the adoption of a Shareholder Rights Plan (the
"Rights Plan"). Pursuant to the Rights Plan, the Company
issued one right (a "Right") for each Common Share
outstanding on April 24, 1996 and will issue one Right
for each Common Share issued in the future. The terms of
the Rights Plan are set forth in the Rights Agreement
(the "Rights Agreement") dated as of April 24, 1996
between the Company and The R-M Trust Company as Rights
Agent. For additional information on the Rights Plan and
the Rights Agreement, see the Company's Current Report on
Form 8-K filed with the Commission on May 8, 1996,
incorporated by reference herein.
<PAGE>
Page 33
Any material United States or Canadian federal income
tax consequences with respect to any offered Common
Shares will be described in the Prospectus Supplement
relating to the offering and sale of such Common Shares.
All outstanding Common Shares are, and the Common
Shares offered hereby will be, issued as fully paid and
non-assessable.
The registrar and transfer agent for the Common Shares
is The R-M Trust Company. ChaseMellon Shareholder
Services, L.L.C. acts as co-registrar and co-transfer
agent for the Common Shares in the United States.
PREFERRED SHARES
The following is a description of certain general terms
and provisions of the Preferred Shares. The particular
terms of any series of Preferred Shares will be described
in the applicable Prospectus Supplement. If so indicated
in a Prospectus Supplement, the terms of any such series
may differ from the terms set forth below.
The summary of the terms of the Company's Preferred
Shares contained in this Prospectus does not purport to
be complete and is subject to, and qualified in its
entirety by, the provisions of the Company's Articles
relating to each series of Preferred Shares, which will
be filed as an exhibit to or incorporated by reference in
this Prospectus at or prior to the time of issuance of
any such series of the Preferred Shares.
The Board of Directors of the Company is authorized to
approve the issuance of one or more series of Preferred
Shares without further authorization of the shareholders
of the Company and to fix the number of shares, the
designations, rights, privileges, restrictions and
conditions of any such series.
The applicable Prospectus Supplement will set forth the
number of shares, particular designation, relative rights
and preferences and the limitations of any series of
Preferred Shares in respect of which this Prospectus is
delivered. The particular terms of any such series will
include the following:
(i) The maximum number of shares to constitute the
series and the designation thereof;
(ii) The annual dividend rate, if any, on shares of
the series, whether such rate is fixed or variable or
both, the date or dates from which dividends will begin
to accrue or accumulate, whether dividends will be
cumulative and whether such dividends shall be paid in
cash, Common Shares or otherwise;
(iii) Whether the shares of the series will be
redeemable and, if so, the price at and the terms and
conditions on which the shares of the series may be
redeemed, including the time during which shares of the
series may be redeemed and any accumulated dividends
thereon that the holders of shares of the series shall be
entitled to receive upon the redemption thereof;
(iv) The liquidation preference, if any, applicable to
shares of the series;
(v) Whether the shares of the series will be subject
to operation of a retirement or sinking fund and, if so,
the extent and manner in which any such fund shall be
applied to the purchase or
<PAGE>
Page 34
redemption of the shares of
the series for retirement or for other corporate
purposes, and the terms and provisions relating to the
operation of such fund;
(vi) The terms and conditions, if any, on which the
shares of the series shall be convertible into, or
exchangeable for, shares of any other class or classes of
capital stock of the Company or any series of any other
class or classes, or of any other series of the same
class, including the price or prices or the rate or rates
of conversion or exchange and the method, if any, of
adjusting the same;
(vii) The voting rights, if any, of the shares of the
series;
(viii) The currency or units based on or relating to
currencies in which such series is denominated and/or in
which payments will or may be payable;
(ix) The methods by which amounts payable in respect
of such series may be calculated and any commodities,
currencies or indices, or price, rate or value, relevant
to such calculation;
(x) Any listing of the shares of the series on a
securities exchange; and
(xi) Any other preferences and relative,
participating, optional or other rights or
qualifications, limitations or restrictions thereof.
Any material United States or Canadian federal income
tax consequences and other special considerations with
respect to any offered Preferred Shares will be described
in the Prospectus Supplement relating to the offering and
sale of such Preferred Shares.
DESCRIPTION OF WARRANTS
The Company may issue Warrants to purchase Common
Shares, Preferred Shares or Convertible Debt Securities.
Warrants may be issued, subject to regulatory approvals,
independently or together with any Common Shares,
Preferred Shares or Convertible Debt Securities, as the
case may be and may be attached to or separate from such
Common Shares, Preferred Shares or Convertible Debt
Securities. Each series of Warrants will be issued under
a separate warrant agreement (each, a "Warrant
Agreement") to be entered into between the Company and a
warrant agent (each, a "Warrant Agent"). The Warrant
Agent will act solely as an agent of the Company in
connection with the Warrants of such series and will not
assume any obligation or relationship of agency or trust
for or with any holders or beneficial owners of Warrants.
The following sets forth certain general terms and
provisions of the Warrants offered hereby. Further terms
of the Warrants and the applicable Warrant Agreement will
be set forth in the applicable Prospectus Supplement.
The applicable Prospectus Supplement will describe the
following terms of any Warrants in respect of which this
Prospectus is being delivered; (1) the title of such
Warrants; (2) the securities (which may include Common
Shares, Preferred Shares or Convertible Debt Securities)
for which such Warrants are exercisable; (3) the price or
prices at which such Warrants will be issued; (4) the
periods during which the Warrants are exercisable; (5)
the number of Common Shares, Preferred Shares or amount
of Convertible Debt Securities for which each Warrant is
exercisable; (6) the exercise price for such Warrants,
including any changes to or adjustments in the exercise
price; (7) the currency or currencies, including
composite currencies, in which the exercise price of such
Warrants may be payable; (8) if applicable, the
designation and terms of the Preferred Shares with which
such Warrants are issued; (9) if applicable, the terms of
the Convertible Debt Securities with which such Warrants
<PAGE>
Page 35
are issued; (10) the number of Warrants issued with each
Common Share or Preferred Share or the Convertible Debt
Securities; (11), if applicable, the date on and after
which such Warrants and the related Common Shares,
Preferred Shares or Convertible Debt Securities will be
separately transferable; (12) any listing of the Warrants
on a securities exchange; (13) if applicable, a
discussion of material United States or Canadian federal
income tax consequences and other special considerations
with respect to any Warrants; and (14) any other terms of
such Warrants, including terms, procedures and
limitations relating to the exchange and exercise of such
Warrants.
DESCRIPTION OF CONVERTIBLE DEBT SECURITIES
The Convertible Debt Securities may be issued from time
to time in one or more series under an indenture among
the Company, as issuer, and the trustee specified in the
applicable Prospectus Supplement. The following
statements with respect to the Convertible Debt
Securities are subject to the detailed provisions of the
indenture, the form of which is filed as an exhibit to
the Registration Statement. Parenthetical references
below are to the indenture (or the form of security
contained therein if so specified) and, whenever any
particular provision of the indenture or any term used
therein is referred to, such provision or term is
incorporated by reference as a part of the statement in
connection with which such reference is made, and the
statement in connection with which such reference is made
is qualified in its entirety by such reference.
The Convertible Debt Securities will constitute either
indebtedness designated as Senior Indebtedness ("Senior
Debt Securities"), indebtedness designated as Senior
Subordinated Indebtedness ("Senior Subordinated Debt
Securities") or indebtedness designated as Subordinated
Indebtedness ("Subordinated Debt Securities"). Senior
Debt Securities, Senior Subordinated Debt Securities and
Subordinated Debt Securities will each be issued under a
separate indenture (individually an "Indenture" and
collectively the "Indentures") to be entered into prior
to the issuance of such Convertible Debt Securities. The
Indentures will be substantially identical, except for
provisions relating to subordination. See "Subordination
of Senior Subordinated Debt Securities and Subordinated
Debt Securities". There will be a separate Trustee
(individually a "Trustee" and collectively the
"Trustees") under each Indenture. Information regarding
the Trustee under an Indenture will be included in any
Prospectus Supplement relating to the Convertible Debt
Securities issued thereunder.
The particular terms of each series of Convertible Debt
Securities, as well as any modification or addition to
the general terms of the Convertible Debt Securities as
herein described, which may be applicable to a particular
series of Convertible Debt Securities, are described in
the Prospectus Supplement relating to such series of
Convertible Debt Securities and will be set forth in a
filing with the Commission. Accordingly, for a
description of the terms of a particular series of
Convertible Debt Securities, reference must be made to
both the Prospectus Supplement relating to such series
and to the description of Convertible Debt Securities set
forth in this Prospectus.
<PAGE>
Page 36
GENERAL
The Convertible Debt Securities offered pursuant to
this Prospectus will be limited to $75,000,000 aggregate
principal amount (or (i) its equivalent (based on the
applicable exchange rate at the time of sale), if
Convertible Debt Securities are issued with principal
amounts denominated in one or more foreign currencies,
composite currencies or currency units as shall be
designated by the Company, or (ii) such greater amount,
if Convertible Debt Securities are issued at an original
issue discount, as shall result in aggregate proceeds of
$75,000,000 to the Company). The Indenture provides that
additional convertible debt securities may be issued
thereunder up to the aggregate principal amount, which is
not limited by the Indenture, authorized from time to
time by the Company's Board of Directors or any duly
authorized committee thereof. So long as a single
Trustee is acting for the benefit of the holders of all
the Convertible Debt Securities offered hereby and any
such additional convertible debt securities issued under
the Indenture, the Convertible Debt Securities and any
such additional convertible debt securities are herein
collectively referred to as the "Indenture Securities."
The Indenture also provides that there may be more than
one Trustee under the Indenture, each with respect to one
or more different series of Indenture Securities. At any
time when two or more Trustees are acting, each with
respect to only certain series, the term "Indenture
Securities" as used herein shall mean the one or more
series with respect to which each respective Trustee is
acting and the powers and the trust obligations of each
such Trustee as described herein shall extend only to the
one or more series of Indenture Securities for which it
is acting as trustee. The effect of the provisions
contemplating that there might be more than one Trustee
acting for different series of Indenture Securities is
that, in that event, those Indenture Securities (whether
of one or more than one series) for which each Trustee is
acting would be treated as if issued under a separate
Indenture.
The applicable Prospectus Supplement will set forth a
description of the particular series of Convertible Debt
Securities being offered thereby, including but not
limited to: (1) the designation or title of such
Convertible Debt Securities; (2) the aggregate principal
amount of such Convertible Debt Securities; (3) the
percentage of their principal amount at which such
Convertible Debt Securities will be offered; (4) the date
or dates on which the principal of such Convertible Debt
Securities will be payable and on which such Convertible
Debt Securities will mature; (5) the rate or rates (which
may be fixed or variable) at which such Convertible Debt
Securities shall bear interest, or the method of
determination of such rate or rates at which such
Convertible Debt Securities shall bear interest, if any;
(6) the date or dates from which interest will accrue or
the method of determination of such date or dates, and
the date or dates on which any such interest shall be
payable; (7) the currencies or currency units in which
such Convertible Debt Securities are issued or payable;
(8) the terms for redemption, extension or early
repayment of such Convertible Debt Securities, if any;
(9) if other than denominations of $1,000 and any
integral multiple thereof, the denominations in which
such Convertible Debt Securities are authorized to be
issued; (10) the terms and conditions upon which
conversion will be effected, including the conversion
price, the conversion period and other conversion
provisions; (11) the provisions for a sinking fund, if
any; (12) whether such Convertible Debt Securities are
issuable as a Global Security or Securities; (13) any
index or formula to be used to determine the amount of
payments of principal, premium, if any, and interest on
such Convertible Debt Securities, and any commodities,
currencies, currency units or indices, or value, rate or
price, relevant to such determination; (14) if the
principal of, premium, if any, or interest on such
Convertible Debt Securities is to be payable, at the
election of the Company or a Holder thereof, in one or
more currencies or currency units other than that or
those in which such Convertible Debt Securities are
stated to be payable, the currencies or currency units in
which payment of the principal of, premium, if any, and
interest on such Convertible Debt Securities as to which
election is made shall be payable, and the periods within
which and the terms and conditions upon which such
election
<PAGE>
Page 37
is to be made; (15) if other than the principal
amount thereof, the portion of the principal amount of
such Convertible Debt Securities of the series which will
be payable upon acceleration of the Maturity thereof;
(16) whether such Convertible Debt Securities are
subordinate in right of payment to any Senior
Indebtedness of the Company and, if so, the terms and
conditions of such subordination and the aggregate
principal amount of such Senior Indebtedness outstanding
as of a recent date; (17) any covenants to which the
Company may be subject with respect to such Convertible
Debt Securities; (18) the applicability of the provisions
described under "Defeasance" below; (19) United States
and Canadian Federal income tax consequences, if any;
(20) the provisions for the payment of additional amounts
with respect to any Canadian withholding taxes in certain
cases; (21) any term or provision relating to such
Convertible Debt Securities which is not inconsistent
with the provisions of the Indenture; (22) the Trustee;
and (23) any other special terms pertaining to such
Convertible Debt Securities. Unless otherwise specified
in the applicable Prospectus Supplement, the Convertible
Debt Securities will not be listed on any securities
exchange.
One or more series of Convertible Debt Securities may
be sold at a substantial discount below their stated
principal amount, bearing no interest or interest at a
rate which at the time of issuance is below market rates.
Any material United States or Canadian federal income tax
consequences and other special considerations with
respect to any series of Convertible Debt Securities will
be described in the Prospectus Supplement relating to any
such series of Convertible Debt Securities.
If the purchase price of any series of Convertible Debt
Securities is denominated in a foreign currency or
currencies or a foreign currency unit or units or if the
principal of, premium, if any, and interest on any series
of Convertible Debt Securities are payable in a foreign
currency or currencies or a foreign currency unit or
units, the restrictions, elections, general tax
considerations, specific terms and other information with
respect to such series of Convertible Debt Securities
will be set forth in the applicable Prospectus
Supplement.
Convertible Debt Securities may be issued from time to
time with payment terms which are calculated by reference
to the value, rate or price of one or more commodities,
currencies, currency units or indices. Holders of such
Convertible Debt Securities may receive a principal
amount (including premium, if any) on any principal
payment date, or a payment of interest on any interest
payment date, that is greater than or less than the
amount of principal (including premium, if any) or
interest otherwise payable on such dates, depending upon
the value, rate or price on the applicable dates of the
applicable currency, currency unit, commodity or index.
Information as to the methods for determining the amount
of principal, premium, if any, or interest payable on any
date, the currencies, currency units, commodities or
indices to which the amount payable on such date is
linked and any additional tax considerations will be set
forth in the applicable Prospectus Supplement.
Except as may be set forth in the applicable Prospectus
Supplement, Holders of Convertible Debt Securities will
not have the benefit of any specific covenants or
provisions in the applicable Indenture or such
Convertible Debt Securities in the event that the Company
engages in or becomes the subject of a highly leveraged
transaction, other than the limitations on mergers,
consolidations and transfers of substantially all of the
Company's properties and assets as an entirety to any
person as described below under "Consolidation, Merger
and Sale of Assets".
The Convertible Debt Securities will be general
unsecured obligations of the Company.
Except as otherwise provided in the applicable
Prospectus Supplement, principal, premium, if any, and
interest, if any, will be payable at an office or agency
to be maintained by the Company
<PAGE>
Page 38
in ________________________, except that at the option of
the Company interest may be paid by check mailed to the
person entitled thereto.
The Convertible Debt Securities will be issued only in
fully registered form without coupons and may be
presented for the registration of transfer or exchange at
the corporate trust office of the Trustee. Not all
Convertible Debt Securities of any one series need be
issued at the same time, and, unless otherwise provided,
a series may be reopened for issuances of additional
Convertible Debt Securities of such series.
SENIOR DEBT SECURITIES
The Senior Debt Securities will rank PARI PASSU with
all other unsecured and unsubordinated debt of the
Company and senior to the Senior Subordinated Debt
Securities and Subordinated Debt Securities.
SUBORDINATION OF SENIOR SUBORDINATED DEBT SECURITIES AND
SUBORDINATED DEBT SECURITIES
The payment of the principal of, premium, if any, and
interest on the Senior Subordinated Debt Securities and
the Subordinated Debt Securities will, to the extent set
forth in the respective Indentures and Indenture
Supplements governing such Senior Subordinated Debt
Securities and Subordinated Debt Securities, be
subordinated in right of payment to the prior payment in
full of all Senior Indebtedness. Upon any payment or
distribution of assets to creditors upon any liquidation,
dissolution, winding up, reorganization, assignment for
the benefit of creditors, marshalling of assets or any
bankruptcy, insolvency or similar proceedings of the
Company, the holders of all Senior Indebtedness will be
entitled to receive payment in full of all amounts due or
to become due thereon before the Holders of the Senior
Subordinated Debt Securities or the Subordinated Debt
Securities will be entitled to receive any payment in
respect of the principal of, premium, if any, or interest
on such Senior Subordinated Debt Securities or
Subordinated Debt Securities, as the case may be. In the
event of the acceleration of the maturity of any Senior
Subordinated Debt Securities or Subordinated Debt
Securities, the holders of all Senior Indebtedness will
be entitled to receive payment in full of all amounts due
or to become due thereon before the Holders of the Senior
Subordinated Debt Securities or Subordinated Debt
Securities, as the case may be, will be entitled to
receive any payment upon the principal of, premium, if
any, or interest on such Senior Subordinated Debt
Securities or Subordinated Debt Securities, as the case
may be. No payments on account of principal, premium, if
any, or interest in respect of the Senior Subordinated
Debt Securities or Subordinated Debt Securities may be
made if there shall have occurred and be continuing in a
default in the payment of principal of (or premium, if
any) or interest on any Senior Indebtedness beyond any
applicable grace period, or a default with respect to any
Senior Indebtedness permitting the holders thereof to
accelerate the maturity thereof, or if any judicial
proceedings shall be pending with respect to any such
default. For purposes of the subordination provisions,
the payment, issuance or delivery of cash, property or
securities (other than stock, and certain subordinated
securities, of the Company) upon conversion or exchange
or a Senior Subordinated Debt Security or Subordinated
Debt Security will be deemed to constitute payment on
account of the principal of such Senior Subordinated Debt
Security or Subordinated Debt Security, as the case may
be.
By reason of such provisions, in the event of
insolvency, holders of Senior Subordinated Debt
Securities and Subordinated Debt Securities may recover
less, ratably, than holders of Senior Indebtedness with
respect thereto.
<PAGE>
Page 39
The term "Senior Indebtedness", when used with respect
to any series of Senior Subordinated Debt Securities or
Subordinated Debt Securities, is defined to include all
amounts due on and obligations in connection with any of
the following, whether outstanding at the date of
execution of the Indenture or thereafter incurred,
assumed, guaranteed or otherwise created (including,
without limitation, interest accruing on or after a
bankruptcy or other similar event, whether or not an
allowed claim therein):
(a) indebtedness, obligations and other liabilities
(contingent or otherwise) of the Company for
money borrowed or evidenced by bonds, debentures,
notes or similar instruments;
(b) reimbursement obligations and other liabilities
(contingent or otherwise) of the Company with
respect to letters of credit or bankers'
acceptances issued for the account of the Company
and interest rate protection agreements and
currency exchange or purchase agreements;
(c) obligations and liabilities (contingent or
otherwise) of the Company related to capitalized
lease obligations;
(d) indebtedness, obligations and other liabilities
(contingent or otherwise) of the Company related
to agreements or arrangements designed to protect
the Company against fluctuations in commodity
prices, including without limitation, commodity
futures contracts or similar hedging instruments;
(e) indebtedness of others of the kinds described in
the preceding clauses (a) through (d) that the
Company has assumed, guaranteed or otherwise
assured the payment of, directly or indirectly;
(f) indebtedness of another Person of the type
described in the preceding clauses (a) through
(e) secured by any mortgage, pledge, lien or
other encumbrance on property owned or held by
the Company; and
(g) deferrals, renewals, extensions and refundings
of, or amendments, modifications or supplements
to, any indebtedness, obligation or liability
described in the preceding clauses (a) through
(f) whether or not there is any notice to or
consent of the Holders of such series of Senior
Subordinated Debt Securities or Subordinated Debt
Securities, as the case may be;
except that, with respect to the Senior Subordinated Debt
Securities, any particular indebtedness, obligation,
liability, guaranty, assumption, deferral, renewal,
extension or refunding shall not constitute "Senior
Indebtedness" if it is expressly stated in the governing
terms, or in the assumption or guarantee, thereof that
the indebtedness involved is not senior in right of
payment to the Senior Subordinated Debt Securities or
that such indebtedness is PARI PASSU with or junior to
the Senior Subordinated Debt Securities and, with respect
to Subordinated Debt Securities, any particular
indebtedness, obligation, liability, guaranty,
assumption, deferral, renewal, extension or refunding
shall not constitute "Senior Indebtedness" if it is
expressly stated in the governing terms, or in the
assumption or guarantee, thereof that the indebtedness
involved is not senior in right of payment to the
Subordinated Debt Securities or that such indebtedness is
PARI PASSU with or junior to the Subordinated Debt
Securities.
<PAGE>
Page 40
In certain circumstances, such as the bankruptcy or
insolvency of the Company, Canadian or U.S. bankruptcy or
insolvency legislation may be applicable and the
application of such legislation may lead to different
results with respect to, for example, payments to be made
to Holders of Convertible Debt Securities, or priorities
between Holders of the Convertible Debt Securities and
holders of Senior Indebtedness, than those provided for
in the applicable Indenture.
If this Prospectus is being delivered in connection
with a series of Senior Subordinated Debt Securities or
Subordinated Debt Securities, the accompanying Prospectus
Supplement or the information incorporated herein by
reference will set forth the approximate amount of Senior
Indebtedness outstanding as of the end of the Company's
most recent fiscal quarter.
FORM, EXCHANGE, REGISTRATION, CONVERSION, TRANSFER AND
PAYMENT
Unless otherwise indicated in the applicable Prospectus
Supplement, the Convertible Debt Securities will be
issued only in fully registered form in denominations of
U.S. $1,000 or integral multiples thereof. Unless
otherwise indicated in the applicable Prospectus
Supplement, payment of principal, premium, if any, and
interest on the Convertible Debt Securities will be
payable, and the exchange, conversion and transfer of
Convertible Debt Securities will be registerable, at the
office or agency of the Company maintained for such
purposes. No service charge will be made for any
registration of a transfer or exchange of the Convertible
Debt Securities, but the Company may require payment of a
sum sufficient to cover any tax or other governmental
charge imposed in connection therewith.
All monies paid by the Company to a Paying Agent for
the payment of principal of, premium, if any, or interest
on any Convertible Debt Security which remain unclaimed
for two years after such principal, premium or interest
has become due and payable may be repaid to the Company
and thereafter the holder of such Convertible Debt
Security may look only to the Company for payment
thereof.
EVENTS OF DEFAULT
The following will be Events of Default under the
Indenture with respect to Convertible Debt Securities of
any series: (a) failure to pay principal (or premium, if
any) on any Convertible Debt Security of that series at
its maturity, whether or not such failure is a result of
the subordination provisions of the Indenture with
respect to such series; (b) failure to pay any interest
on any Convertible Debt Security of that series when due,
continued for 30 days, whether or not such failure is a
result of the subordination provisions of the Indenture
with respect to such series; (c) failure to make any
sinking fund payment, when due, in respect of any
Convertible Debt Security of that series; (d) failure to
perform any other covenant of the Company in the
applicable Indenture or any other covenant to which the
Company may be subject with respect to Convertible Debt
Securities of that series (other than a covenant solely
for the benefit of a series of Convertible Debt
Securities other than that series), continued for 90 days
after written notice as provided in the applicable
Indenture; (e) failure to pay when due on final maturity
(after the expiration of any applicable grace period), or
upon acceleration, any indebtedness for money borrowed by
the Company in excess of U.S. $10 million; (f) certain
events of bankruptcy, insolvency or reorganization; and
(g) any other Event of Default provided with respect to
Convertible Debt Securities of that series.
If an Event of Default with respect to outstanding
Convertible Debt Securities of any series shall occur and
be continuing, either the Trustee or the Holders of at
least 25% in principal amount
<PAGE>
Page 41
of the outstanding Convertible Debt Securities of that series, by notice as
provided in the applicable Indenture, may declare the
principal amount (or, if the Convertible Debt Securities
of that series are original issue discount securities,
such portion of the principal amount as may be specified
in the terms of that series) of all Convertible Debt
Securities of that series to be due and payable
immediately, except that upon the occurrence of an Event
of Default specified in (f) above, the principal amount
(or in the case of original issue discount securities,
such portion) of all Convertible Debt Securities shall be
immediately due and payable without notice. However, at
any time after a declaration of acceleration with respect
to Convertible Debt Securities of any series has been
made, but before judgment or decree based on such
acceleration has been obtained, the Holders of a majority
in principal amount of the outstanding Convertible Debt
Securities of that series may, under certain
circumstances, rescind and annul such acceleration. For
information as to waiver of defaults, see "Modification
and Waiver" below.
The Indentures will provide that, subject to the duty
of the respective Trustees thereunder during an Event of
Default to act with the required standard of care, each
such Trustee will be under no obligation to exercise any
of its rights or powers under the respective Indentures
at the request or direction of any of the Holders, unless
such Holders shall have offered to such Trustee
reasonable security or indemnity. Subject to certain
provisions, including those requiring security or
indemnification of the applicable Trustee, the Holders of
a majority in principal amount of the outstanding
Convertible Debt Securities of any series will have the
right to direct the time, method and place of conducting
any proceeding for any remedy available to such Trustee,
or to exercise any trust or power conferred on such
Trustee, with respect to the Convertible Debt Securities
of that series.
No Holder of a Convertible Debt Security of any series
will have any right to institute any proceeding with
respect to the applicable Indenture or for any remedy
thereunder, unless such Holder shall have previously
given to the applicable Trustee written notice of a
continuing Event of Default and unless also the Holders
of at least 25% in aggregate principal amount of the
outstanding Convertible Debt Securities of the same
series shall have made written requests, and offered
reasonable indemnity, to such Trustee to institute such
proceeding as trustee, and the Trustee shall not have
received from the Holders of a majority in aggregate
principal amount of the outstanding Convertible Debt
Securities of the same series a direction inconsistent
with such request and shall have failed to institute such
proceeding within 60 days. However, such limitations do
not apply to a suit instituted by a Holder of a
Convertible Debt Security for enforcement of payment of
the principal of and interest on such Convertible Debt
Security on or after the respective due dates expressed
in such Convertible Debt Security.
The Company will be required to furnish to the Trustees
annually a statement as to the performance by the Company
of its obligations under the respective Indentures and as
to any default in such performance.
<PAGE>
Page 42
MODIFICATION AND WAIVER
Without the consent of any Holder of outstanding
Convertible Debt Securities, the Company and the Trustees
may amend or supplement the Indentures or the Convertible
Debt Securities to cure any ambiguity, defect or
inconsistency, or to make any change that does not
adversely affect the rights of any Holder of Convertible
Debt Securities. Other modifications and amendments of
the respective Indentures may be made by the Company and
the applicable Trustee with the consent of the Holders of
not less than a majority in aggregate principal amount of
the outstanding Convertible Debt Securities of each
series affected thereby; provided, however, that no such
modification or amendment may, without the consent of the
Holder of each outstanding Convertible Debt Security
affected thereby: (a) change the stated maturity of the
principal of, or any installment of principal of, or
premium, if any, or interest on any Convertible Debt
Security; (b) reduce the principal amount of, the rate of
interest on, or the premium, if any, payable upon the
redemption of, any Convertible Debt Security; (c) reduce
the amount of principal of an original issue discount
security payable upon acceleration of the maturity
thereof; (d) change the place or currency of payment of
principal of, premium, if any, or interest on any
Convertible Debt Security; (e) impair the right to
institute suit for the enforcement of any payment on or
with respect to any Convertible Debt Security on or after
the stated maturity or redemption date thereof; (f)
modify the conversion provisions in a manner adverse to
the holders thereof; (g) modify the subordination
provisions applicable to Senior Subordinated Debt
Securities or Subordinated Debt Securities in a manner
adverse to the Holders thereof; (h) reduce the percentage
in principal amount of outstanding Convertible Debt
Securities of any series, the consent of the Holders of
which is required for modification or amendment of the
applicable Indenture or for waiver of compliance with
certain provisions of the applicable Indenture or for
waiver of certain defaults or (i) modify any of the
provisions of certain sections as specified in the
Indenture including the provisions summarized in this
paragraph, except to increase any such percentage or to
designate additional provisions of the Indenture, which,
with respect to such series, cannot be modified or waived
without the consent of the Holder of each outstanding
Convertible Debt Security affected thereby.
The Holders of at least a majority in principal amount
of the outstanding Convertible Debt Securities of any
series may on behalf of the Holders of all Convertible
Debt Securities of that series waive, insofar as that
series is concerned, compliance by the Company with
certain covenants of the applicable Indenture. The
Holders of not less than a majority in principal amount
of the outstanding Convertible Debt Securities of any
series may, on behalf of the Holders of all Convertible
Debt Securities of that series, waive any past default
under the applicable Indenture with respect to that
series, except a default in the payment of the principal
of, premium, if any, or interest on, any Convertible Debt
Security of that series or in respect of a provision
which under the applicable Indenture cannot be modified
or amended without the consent of the Holder of each
outstanding Convertible Debt Security of that series
affected.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company, without the consent of any Holders of any
series of outstanding Convertible Debt Securities, may
consolidate with or merge into, or transfer or lease its
assets substantially as an entirety (treating the Company
and each of its Subsidiaries as a single consolidated
entity) to, any corporation, and any other corporation
may consolidate with or merge into, or transfer or lease
its assets substantially as an entirety to, the Company,
provided that the corporation (if other than the Company)
formed by such consolidation or into which the Company is
merged or which acquires or leases the assets of the
Company substantially as an entirety is organized and
existing under the laws of the United States of America
or Canada or any political subdivision of either, and
assumes the
<PAGE>
Page 43
Company's obligations under each series of
outstanding Convertible Debt Securities and the
Indentures applicable thereto and that the Trustee is
satisfied that the transaction will not result in the
successor being required to make any deduction or
withholding on account of certain Canadian taxes from any
payments in respect of the Securities, and that, after
giving effect to such transaction, no Event of Default,
and no event which, after notice or lapse of time or
both, would become an Event of Default, shall have
occurred and be continuing, and the delivery of an
officer's certificate and an opinion of counsel with
respect to compliance with the foregoing requirements.
DEFEASANCE
If so indicated in the applicable Prospectus Supplement
with respect to the Convertible Debt Securities of a
series, the Company at its option will be released from
its obligations to comply with certain covenants
specified in the applicable Prospectus Supplement with
respect to the Convertible Debt Securities of such
series, and the occurrence of an event described in
clause (d) under "Events of Default" above with respect
to any defeased covenants, and clauses (e) and (g) under
"Events of Default" above shall no longer be an Event of
Default, if the Company irrevocably deposits with the
applicable Trustee, in trust, money, government
obligations of the government issuing the currency in
which the Convertible Debt Securities of the relevant
series are denominated, or a combination thereof that
through the payment of interest thereon and principal
thereof in accordance with the terms will provide money
in an amount sufficient to pay all the principal of and
premium, if any, and interest on the Securities of such
series on the dates such payments are due (up to the
stated maturity date, or the redemption date, as the case
may be) in accordance with the terms of such Convertible
Debt Securities. Such a trust may only be established
if, among other things, (a) no Event of Default described
under "Events of Default" above or event that, after
notice or lapse of time, or both, would become an Event
of Default under the applicable Indenture, shall have
occurred and be continuing on the date of such deposit,
or, with regard to an Event of Default described under
clause (f) under "Events of Default" above or an event
that, after notice or lapse of time, or both, would
become an Event of Default described under such clause
(f), shall have occurred and be continuing at any time
during the period ending on the 123rd day following such
date of deposit, (b) the Company shall have delivered an
opinion of counsel to the effect that the Holders of the
Convertible Debt Securities will not recognize gain or
loss for United States Federal income tax purposes as a
result of such deposit or defeasance and will be subject
to United States Federal income tax in the same manner as
if such defeasance had not occurred, and (c) such
covenant defeasance will not result in the trust being in
violation of the Investment Company Act of 1940. In the
event the Company omits to comply with its remaining
obligations under the applicable Indenture after a
defeasance of such Indenture with respect to the
Convertible Debt Securities of any series as described
above and the Convertible Debt Securities of such series
are declared due and payable because of the occurrence of
any undefeased Event of Default, the amount of money and
government obligations on deposit with the applicable
Trustee may be insufficient to pay amounts due on the
Convertible Debt Securities of such series at the time of
the acceleration resulting from such Event of Default.
However, the Company will remain liable in respect to
such payments.
Notwithstanding the description set forth under
"Subordination of Senior Subordinated Debt Securities and
Subordinated Debt Securities" above, in the event that
the Company deposits money or government obligations in
compliance with the Indenture that governs any Senior
Subordinated Debt Securities or Subordinated Debt
Securities, as the case may be, in order to defease all
or certain of its obligations with respect to the
applicable series of Convertible Debt Securities, the
money or government obligations so deposited will not be
subject to the subordination provisions of the applicable
Indenture and the indebtedness evidenced by such series
of Convertible Debt Securities will
<PAGE>
Page 44
not be subordinated in right of payment to the holders of applicable Senior
Indebtedness to the extent of the money or government
obligations so deposited.
GOVERNING LAW
The Indentures and the Convertible Debt Securities will
be governed by, and construed in accordance with, the
laws of the State of New York.
REGARDING THE TRUSTEES
The Indenture contains certain limitations on the right
of each Trustee, should it become a creditor of the
Company, to obtain payment of claims in certain cases, or
to realize for its own account on certain property
received in respect of any such claim as security or
otherwise. Each Trustee will be permitted to engage in
certain other transactions with the Company; however, if
it acquires any conflicting interest and there is a
default under the Convertible Debt Securities issued
under the applicable Indenture, it must eliminate such
conflict or resign.
BOOK-ENTRY SYSTEM
The Convertible Debt Securities of a Series may be
issued in the form of one or more global certificates
representing the Convertible Debt Securities (the "Global
Securities") that will be deposited with a depository
(the "Depository") or with a nominee for the Depository
identified in the applicable Prospectus supplement and
will be registered in the name of the Depository or a
nominee thereof. In such a case one or more Global
Securities will be issued in a denomination or aggregate
denominations equal to the portion of the aggregate
principal amount of outstanding Convertible Debt
Securities of the series to be represented by such Global
Security or Securities. Unless and until it is exchanged
in whole or in part for Convertible Debt Securities in
definitive certificated form, a Global Security may be
transferred, in whole but not in part, only to another
nominee of the Depository for such series, or to a
successor Depository for such series selected or approved
by the Company, or to a nominee of such successor
Depository.
The specific depository arrangement with respect to any
series of Convertible Debt Securities to be represented
by a Global Security will be described in the applicable
Prospectus Supplement. The Company expects that the
following provisions will apply to depository
arrangements.
Upon the issuance of any Global Security, and the
deposit of such Global Security with or on behalf of the
Depository for such Global Security, the Depository will
credit, on its book-entry registration and transfer
system, the respective principal amounts of the
Convertible Debt Securities represented by such Global
Security to the accounts of institutions ("participants")
that have accounts with the Depository or its nominee.
The accounts to be credited will be designated by the
underwriters or agents engaging in the distribution of
such Convertible Debt Securities or by the Company, if
such Convertible Debt Securities are offered and sold
directly by the Company. Ownership of beneficial
interests in a Global Security will be limited to
participants or persons that may hold interests through
participants. Ownership of beneficial interests by
participants in such Global Security will be shown on,
and the transfer of such beneficial interests will be
effected only through, records maintained by the
Depository for such Global Security or by its nominee.
Ownership of beneficial interests in such Global Security
by persons that hold through participants will be shown
on, and the transfer of such beneficial interests within
such participants will be effected only through, records
maintained by such participants. The laws of some
jurisdictions may require that certain purchasers of
securities take physical delivery of such securities in
certificated form. The foregoing
<PAGE>
Page 45
limitations and such laws may impair the ability to own, pledge or transfer
beneficial interests in such Global Securities.
So long as the Depository for a Global Security, or its
nominee, is the registered owner of such Global Security,
such Depository or such nominee, as the case may be, will
be considered the sole owner or holder of the Convertible
Debt Securities represented by such Global Security for
all purposes under the Indenture. Unless otherwise
specified in the applicable Prospectus Supplement and
except as specified below, owners of beneficial interests
in such Global Security will not be entitled to have
Convertible Debt Securities of the series represented by
such Global Security registered in their names, will not
receive or be entitled to receive physical delivery of
Convertible Debt Securities of such series in
certificated form and will not be considered the holders
thereof for any purposes under the Indenture.
Accordingly, each person owning a beneficial interest in
such Global Security must rely on the procedures of the
Depository and, if such person is not a participant, on
the procedures of the participant through which such
person owns its interest, to exercise any rights of a
holder under the Indenture. The Company understands that,
under existing industry practices, if the Company
requests any action of holders or an owner of a
beneficial interest in such Global Security desires to
give any notice or take any action a holder is entitled
to give or take under the Indenture, the Depository would
authorize the participants to give such notice or take
such action, and participants would authorize beneficial
owners owning through such participants to give such
notice or take such action or would otherwise act upon
the instructions of beneficial owners owning through
them.
Unless otherwise specified in the applicable Prospectus
Supplement, payments with respect to principal, premium,
if any, and interest, if any, on Convertible Debt
Securities represented by a Global Security registered in
the name of a Depository or its nominee will be made to
such Depository or its nominee, as the case may be, as
the registered owner of such Global Security.
The Company expects that the Depository for any
Convertible Debt Securities represented by a Global
Security, upon receipt of any payment of principal,
premium or interest in respect of such Global Security,
will immediately credit participants' accounts with
payments in amounts proportionate to their respective
beneficial interests in the principal amount of such
Global Security as shown on the records of such
Depository. The Company also expects that payments by
participants to owners of beneficial interests in such
Global Security held through such participants will be
governed by standing instructions and customary
practices, as is now the case with securities held for
the accounts of customers registered in "street names,"
and will be the responsibility of such participants. None
of the Company, the Trustee or any agent of the Company
or the Trustee shall have any responsibility or liability
for any aspect of the records relating to or payments
made on account of beneficial ownership interests of a
Global Security, or for maintaining, supervising or
reviewing any records relating to such beneficial
ownership interests.
If the Depository for any Convertible Debt Securities
represented by a Global Security is at any time unwilling
or unable to continue as Depository or ceases to be
registered or in good standing under the Securities
Exchange Act of 1934, as amended, and a successor
Depository is not appointed by the Company within 90 days
after the Company receives notice or becomes aware of
such condition, the Company will issue such Convertible
Debt Securities in definitive certificated form in
exchange for such Global Security. In addition, the
Company may at any time and in its sole discretion
determine not to have any of the Convertible Debt
Securities of a series represented by one or more Global
Securities and, in such event, will issue Convertible
Debt Securities of such series in definitive
<PAGE>
Page 46
certificated form in exchange for all of the Global Security or
Securities representing such Convertible Debt Securities.
PLAN OF DISTRIBUTION
The Company may offer and sell the Securities to or
through underwriters or dealers, and also may offer and
sell Securities directly to other purchasers or through
agents.
Each Prospectus Supplement will set forth the terms of
the offering of the particular series of Securities to
which the Prospectus Supplement relates, including the
name or names of any underwriters, dealers or agents, the
purchase price or prices of the Securities, the proceeds
to the Company from the sale of such series of
Securities, the use of such proceeds, any initial public
offering price or purchase price of such series of
Securities, any underwriting discount or commission, any
discounts, concessions or commissions allowed or
reallowed or paid by any underwriters to other dealers,
any commissions paid to any agents and the securities
exchanges, if any, on which such Securities will be
listed. Any initial public offering price or purchase
price and any discounts, concessions or commissions
allowed or reallowed or paid by any underwriter to other
dealers may be changed from time to time.
Sales of Common Shares or Preferred Shares offered
pursuant to any Prospectus Supplement may be effected
from time to time in one or more transactions on the
American Stock Exchange or, in appropriate circumstances,
The Toronto Stock Exchange, or in negotiated transactions
or any combination of such methods of sale, at market
prices prevailing at the time of sale, at prices related
to such prevailing market prices, or at other negotiated
prices.
In connection with the sale of Securities, underwriters
or agents may receive compensation from the Company or
from purchasers of Securities for whom they may act as
agents in the form of discounts, concessions or
commissions, Underwriters may sell Securities to or
through dealers, and such dealers may receive
compensation in the form of discounts, concessions or
commissions from the underwriters and/or commissions from
the purchasers for whom they may act as agents.
Underwriters, dealers and agents that participate in the
distribution of Securities may be deemed to be
underwriters, and any discounts or commissions received
by them from the Company and any profit on the resale of
Securities by them may be deemed to be underwriting
discounts and commissions under the Securities Act. Any
such underwriter or agent will be identified, and any
such compensation received from the Company will be
described, in the applicable Prospectus Supplement.
Under agreements which may be entered into by the
Company, underwriters and agents who participate in the
distribution of Securities may be entitled to
indemnification by the Company against certain
liabilities, including liabilities under Canadian and
United States securities legislation.
The Company may grant underwriters who participate in
the distribution of Securities an option to purchase
additional Securities to cover over-allotments, if any.
The place and date of delivery for the Securities in
respect of which this Prospectus is being delivered will
be set forth in the applicable Prospectus Supplement.
Unless otherwise indicated in the applicable Prospectus
Supplement, the Securities in respect of which this
Prospectus is being delivered (other than Common Shares)
will be a new issue of securities, will not have an
established trading market when issued and will not be
listed on any
<PAGE>
Page 47
securities exchange. Any underwriters or
agents to or through whom such Securities are sold by the
Company for public offering and sale may make a market in
such Securities, but such underwriters or agents will not
be obligated to do so and may discontinue any market
making at any time without notice. No assurance can be
given as to the liquidity of the trading market for any
such Securities.
Certain of the underwriters and their affiliates may
from time to time perform various commercial banking and
investment banking services for the Company, for which
customary compensation is received.
EXPERTS
The consolidated financial statements of the Company,
included in its Annual Report on Form 10-K for the year
ended December 31, 1995, have been audited by Coopers &
Lybrand, independent chartered accountants, as set forth
in their report thereon included therein and incorporated
herein by reference. Such consolidated financial
statements are, and audited financial statements to be
included in subsequently filed documents will be,
incorporated herein by reference in reliance upon the
reports of Coopers & Lybrand pertaining to such financial
statements (to the extent covered by consents filed with
the Securities and Exchange Commission) given upon the
authority of such firm as experts in accounting and
auditing.
LEGAL MATTERS
Certain legal matters relating to the validity of the
Securities will be passed upon for the Company by Paul,
Weiss, Rifkind, Wharton & Garrison, New York, New York,
and by Koffman Birnie & Kalef, Vancouver, British
Columbia. Certain legal matters will be passed upon for
the underwriters, if any, by Davis, Graham & Stubbs LLP,
Denver, Colorado, and by Stikeman, Elliott, Toronto,
Ontario, or by the counsel named in the applicable
Prospectus Supplement.
<PAGE>
Page 48
GLOSSARY OF TERMS
GLOSSARY
The definitions of proven and probable reserves (ore) set forth below are
substantially the same as those used in Canada by certain provincial securities
regulatory authorities and are set forth in National Policy No. 2-A (of
Canada).
These definitions are substantially the same as those applied in the United
States by the Commission and those accepted by the United States Bureau of
Mines and the United States Geological Survey.
<TABLE>
<CAPTION>
PROVEN RESERVES that material for which tonnage is computed from dimensions revealed in outcrops or
trenches or underground workings or drill holes and for which the grade is computed
from the results of adequate sampling, and for which the sites for inspection, sampling
and measurement are so spaced and the geological character so well defined that the
size, shape and mineral content are established and for which the computed tonnage and
grade are judged to be accurate within limits which shall be stated and for which it
shall be stated whether the tonnage and grade of proven ore or measured ore are "in
situ" or extractable, with dilution factors shown, and reasons for the use of these
dilution factors clearly explained
<S> <C>
PROBABLE RESERVES that material for which tonnage and grade are computed partly from specific
measurements, samples or production data, and partly from projection for a reasonable
distance on geological evidence, and for which the sites available for inspection,
measurement and sampling are too widely or otherwise inappropriately spaced to outline
the material completely or to establish its grade throughout.
</TABLE>
The following definitions of the stages of the exploration and development
process are used by Golden Star. There can be no assurance that the
terminology used by Golden Star is consistent with the terminology used by
other companies in the mining industry or by industry analysts.
<TABLE>
<CAPTION>
early stage an early stage exploration project typically involves one or more targets within an
area which have been determined to merit further follow-up work based on a combination
of geological, geochemical and geophysical analysis. The objective of an early stage
project typically is to better define targets that have the potential to be advanced to
the next stage of exploration and level of financial commitment.
<S> <C>
INTERMEDIATE STAGE an intermediate stage exploration project typically involves establishing near surface
mineralization through such techniques as deep augering and trenching. Depending on
spacing, drilling (both reverse circulation ("RC") and core) may be an intermediate
stage exploration tool. The objective of the intermediate exploration stage is to
advance a project by identifying a well defined zone of mineralization that suggests
the potential of mineralization continuing to depth.
ADVANCED STAGE an advanced exploration stage project typically involves testing targets at depth and
generating the information necessary to develop a three dimensional geologic model of
the mineralized zone, which may be used to demonstrate mineralized materials and/or
reserves. This typically is accomplished by both core and RC drilling, although
reserves also can be established through trenching.
PREFEASIBILITY STAGE a prefeasibility stage project typically involves a target for which sufficient
geologic information exists about the mineralized zone to determine the reserves.
During the prefeasibility stage, drilling often is done to infill the information set
on the mineralized zone in order to increase the certainty of calculated reserves.
Wider spaced step-out drilling also is conducted to extend upon known mineralized zones
or to test for additional zones. The objective of the prefeasibility stage is to prove
sufficient reserves to allow for a rate of production over a sufficient period of time
to justify the investment of capital to extract the reserves, based on various economic
and financial assumptions.
<PAGE>
Page 49
FEASIBILITY STAGE during the feasibility stage, exploration continues in order to better define known
reserves of a project while attempting to further expand them. During this stage,
management of the project often is transferred to the operating partner which develops
the necessary engineering and costing for mining, processing, power and infrastructure,
as well as the designs for the plant and equipment required to construct and operate a
modern mining operation.
MINE mining is the process of transforming a valuable mineral reserve or deposit into
benefits for its owners (debt, equity and employees), governments and communities.
Exploration continues during the mining process and, in many cases, reserves are
expanded during the early years of mine operations as the exploration potential of the
deposit is realized.
- -------------------------------------------------------------------------------------------------------------
</TABLE>
ALLUVIUM, ALLUVIALS a general
term for clay, silt, sand, gravel
or other material deposited by a
body of water usually during
recent geological time
ANOMALY a deviation from
uniformity or regularity in
geophysical quantities
ASSAY to analyze the proportions
of metals in an ore
BRECCIA a coarse-grained rock
composed of large angular pieces
of broken rock
CARBONATE a mineral compound
characterized by a fundamental
structure of carbon and oxygen
DEGRADATION the wearing down or
away, and the general lowering or
reduction of the Earth's surface
by the natural processes of
weathering and erosion
DIAMOND DRILLING a variety of
rotary drilling in which diamond
bits are used as the rock-cutting
tool to produce a recoverable
core of rock for observation and
assay
DIP the angle that a structural
surface, a bedding or fault
plane, makes with the horizontal,
measured perpendicular to the
strike of the structure
ELUVIAL an incoherent ore
deposit resulting from
decomposition or disintegration
of rock in place
FAULT a surface or zone of rock
fracture along which there has
been displacement
FORMATION the basic rock-
stratigraphic unit in the local
classification of rocks
GEOCHEMISTRY the study of the
distribution and amounts of the
chemical elements in minerals,
ores, rocks, solids, water, and
the atmosphere
GEOPHYSICS the study of the
Earth as a planet with three
areas of study: solid-earth,
atmosphere and hydrosphere, and
magnetosphere
GREENSTONE ancient volcanic-
sedimentary rock assemblages
HORIZON a plane of
stratification assumed to have
been once horizontal and
continuous
HYDROTHERMAL the products of the
actions of heated water, such as
a mineral deposit precipitated
from a hot solution
INTRUSION the process of
replacement of magma (naturally
occurring mobile rock material
generated within the Earth) in
pre-existing rock
MAFIC an igneous rock composed
mostly of one or more
ferromagnesian, dark-colored
minerals in its mode; also, said
of those minerals
MASSIVE said of a mineral
deposit, especially sulfides,
characterized by a great
concentration of ore in one
place, as opposed to a
disseminated or veinlike deposit
METALLURGY the science and art of
separating metals from their ores
by mechanical and chemical
processes
METAMORPHOSED the mineralogical
and structural adjustment of
solid rocks to physical and
chemical conditions which have
been imposed at depth below the
surface zones of weathering and
cementation
METASEDIMENT a sediment or
sedimentary rock which shows
evidence of having been subjected
to metamorphism
METAVOLCANIC a volcanic rock
which shows evidence of having
been subjected to metamorphism
MINERAL a naturally formed
chemical element of compound
having a definite chemical
composition and, usually, a
characteristic crystal form
MINERALIZATION a natural
occurrence in rocks or soil of
one or more metalliferous
minerals
OUTCROP that part of a geologic
formation or structure that
appears at the surface of the
earth; also, bedrock that is
covered only by surficial
deposits such as alluvium
OVERBURDEN barren rock material
overlying a mineral deposit
PAN CONCENTRATE a small
proportion, generally of heavy
minerals, typically of a
weathered rock or stream
sediment, obtained by manual use
of a "gold pan."
PLUNGE the inclination of a fold
axis or other geological
structure, measured by its
departure from the horizontal
PRECAMBRIAN all rocks formed
before Cambrian time, or more
than 600 million years ago
PROTEROZOIC the more recent
division of the Precambrian
PYRITE a common, pale-bronze or
brass-yellow, isometric iron
sulfide mineral
QUARTZ crystalline silica;
silicon dioxide
RADIOMETRIC SURVEY survey using
a radiation-measuring instrument,
usually to detect specific
elements in the ground
REVERSE CIRCULATION DRILLING a
drilling method used in
geological appraisals whereby the
drilling fluid passes inside the
drill stem to a down-the-hole
precision bit and returns to the
surface outside the drill stem
carrying chips of rock
SAPROLITE a soft, earthy, clay-
rich and thoroughly decomposed
rock formed in place by chemical
weathering of igneous,
sedimentary or metamorphic rocks
which retains the original structure of
the unweathered rock
SHEAR a strain resulting from stresses
that cause or tend to cause contiguous
parts of a body of rock to slide
relatively to each other in a direction
parallel to their plane of contact
SHEAR ZONE a tabular zone of rock that
has been crushed and brecciated by many
parallel fractures due to shear strain
SHIELD a large area of exposed basement
rocks in a craton commonly with a very
gently convex surface, surrounded by
sediment-covered platforms
STOCK an igneous intrusion that is less
than 100 square kilometers in surface
exposure
<PAGE>
Page 50
STRIKE the direction or trend that a
structural surface, e.g. a bedding or
fault plane, takes as it intersects the
horizontal
SURFICIAL situated, formed or
occurring on the Earth's surface
ULTRAMAFIC an igneous rock composed
chiefly of mafic minerals
VEIN a thin, sheetlike igneous
intrusion into a crevice
WEATHERING the destructive process
constituting that part of erosion
whereby earthy and rocky materials on
exposure to atmospheric agents at or
near the Earth's surface are changed in
character with little or no transport of
the loosened or altered material
CONVERSION FACTORS AND ABBREVIATIONS
For ease of reference, the following conversion factors are provided:
1 acre = 0.4047 hectare
1 foot = 0.3048 meter
1 gram per tonne = 0.0292 ounce per ton
1 ton (2000 pounds) = 0.9072 tonne
1 metric tonne = 1,000 kg or 2,204.6 pounds
1 kilogram = 2.2 pounds or 32.151 oz
1 mile = 1.6093 kilometers
1 troy ounce = 31.1035 grams
1 square mile = 2.59 square kilometers
1 square kilometer = 100 hectares
1 kilometer = 0.6214 miles
1 meter = 1.0936 yards or 3.2808 feet
1 hectare = 2.4710 acres
The following abbreviations of measurements are used herein:
Au = gold m(2) = square meter
ct = carats m(3) = cubic meter
ct/m(2) = carats per square meter mg = milligrams
gm = grams] mg/m(3) = milligrams per cubic meter
g/t = grams per tonne mt = metric tonne
ha = hectares oz = troy ounces
km = kilometers oz/t = troy ounces per ton
km(2) = square kilometers t = ton (2,000 pounds)
kg = kilogram ppb = parts per billion
m = meter
<PAGE>
Page II-1
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14 - OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following sets forth expenses, other than
underwriting fees and commissions, expected to be borne
by the Registrant in connection with the distribution of
the securities being registered:
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission registration fee U.S. $ 25,863
Blue Sky fees and expenses 15,000
Stock exchange listing fees 17,500
NASD filing fee 8,000
Rating Agency fees 50,000
Transfer Agent fees 25,000
Legal 260,000
Printing 250,000
Accounting 20,000
Miscellaneous 28,637
TOTAL U.S. $700,000
</TABLE>
All amounts listed above, except for the
registration fee and the NASD filing fee, are estimates.
ITEM 15 - INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 124 of the Canada Business Corporations Act
("CBCA") provides for the indemnification of directors
and officers of the Company. Under these provisions, the
Company may indemnify a director or officer, or former
director or officer or a person who acts or acted at the
Company's request as a director or officer of a body
corporate of which the Company is or was a shareholder or
creditor and the heirs and legal representatives of such
a person against all costs, charges and expenses,
including amounts paid to settle an action or satisfy a
judgment, reasonably incurred by such director or officer
in respect to any civil, criminal or administrative
action or proceeding (other than in respect of an action
by or on behalf of the Company to procure a judgment in
its favor) to which such director or officer, former
director or officer or person who acts or acted at the
Company's request as a director or officer is made a
party by reason of his position with the Company, if he
fulfills the following two conditions: (a) he acted
honestly and in good faith with a view to the best
interests of the Company and (b) in the case of a
criminal or administrative action or proceeding that is
enforced by a monetary penalty, he had reasonable grounds
for believing that his conduct was lawful. In respect of
an action by or on behalf of the Company to procure a
judgment in its favor, the Company, with the approval of
a court, may indemnify a director or officer, as a
director or officer, former director or officer or person
who acts or acted at the Company's request as a
<PAGE>
Page II-2
director or officer against all costs, charges and expenses
reasonably incurred by him in connection with such action
if he fulfills the conditions set out in clauses (a) and
(b) of the previous sentence. Notwithstanding the
foregoing, a director or officer, former director or
officer or person who acts or acted at the Company's
request as a director or officer is entitled to
indemnification from the Company in respect of all costs,
charges and expenses reasonably incurred by him in
connection with the defense of any civil, criminal or
administrative action or proceeding to which he is made a
party by reason of his position with the Company if he
was substantially successful on the merits in his defense
of the action or proceeding and he fulfills the
conditions in clause (a) and (b) of the second sentence
of this paragraph.
Subject to the provisions of the CBCA, the By-laws
of the Company provide that the Company shall indemnify a
director or officer, a former director or officer, or a
person who acts or acted at the Company's request as a
director or officer of a corporation in which the Company
is or was a shareholder or creditor against all losses
and expenses, including an amount paid to settle an
action or satisfy a judgment, reasonably incurred by him
in respect of any civil, criminal or administrative
proceeding to which he was made a party by reason of
being or having been a director or officer of the Company
or other corporation if he acted honestly and in good
faith with a view to the best interests of the Company
or, in the case of a criminal or administrative action or
proceeding that is enforced by monetary penalty, he had
reasonable grounds in believing that his conduct was
lawful. In addition, the By-laws provide that the
Company also shall indemnify any such person in such
other circumstance as the CBCA or law permits or
requires. The Company has entered into agreements with
its directors and officers indemnifying such directors
and officers to the extent permitted by the CBCA and the
Company's By-laws.
Reference is made to the form of Underwriting
Agreement filed as an exhibit to this Registration
Statement pursuant to which the underwriters will agree
to indemnify the Company and its directors and officers
against certain liabilities, including liabilities under
the Securities Act.
A directors' and officers' liability insurance
policy is maintained by the Company which insures
directors and officers for losses as a result of claims
based upon the acts or omissions as directors and
officers of the Company, including liabilities arising
under the Securities Act of 1933, and also reimburses the
Company for payments made pursuant to the indemnity
provisions under the CBCA.
ITEM 16 - EXHIBITS
<TABLE>
<CAPTION>
Exhibit
NUMBER DESCRIPTION
<S> <C>
1.1** Form of Underwriting Agreement
3.1*** Articles of the Company (incorporated by reference to
Exhibit 1.1 to the Company's Registration Statement on
Form 20-F, filed on May 10, 1993), Articles of the Company
(incorporated by reference to Exhibit 2.1 to the Company's
Annual Report on Form 10-K for the year ended December 31,
1994) and Certificate of Amendment to the Articles of the
Company, dated July 29, 1996 (incorporated by reference to
Exhibit (a)(3)(i) to the Company's Quarterly Report on Form
10-Q, filed on August 14, 1996)
3.2** Amendment to the Articles of the Company with respect to the
Preferred Shares.
<PAGE>
PageII-3
3.3*** By-laws of the Company (incorporated by reference to
Exhibit 1.2 to the Company's Registration Statement on
Form 20-F, filed on May 10, 1993 and to Exhibit 3 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1995)
4.1 Form of Indenture for the Convertible Debt Securities
4.2 Form of Convertible Debt Security (included in Exhibit 4.1)
4.3** Form of Common Shares Warrant Agreement
4.4** Form of Common Shares Warrant Certificate (included in
Exhibit 4.3)
4.5** Form of Preferred Shares Warrant Agreement
4.6** Form of Preferred Shares Warrant Certificate (included in
Exhibit 4.5)
4.7** Form of Convertible Debt Securities Warrant Agreement
4.8** Form of Convertible Debt Securities Warrant Certificate
(included in Exhibit 4.7)
4.9 Form of Common Share Certificate
4.10** Description of Preferred Shares (included in Exhibit 3.2)
4.11** Form of Preferred Share Certificate
5.1 Opinion of Paul, Weiss, Rifkind, Wharton & Garrison
5.2 Opinion of Koffman Birnie & Kalef
12.1 Statements re Computation of Ratios
23.1 Consent of Coopers & Lybrand
23.2 Consent of Paul, Weiss, Rifkind, Wharton & Garrison
(included in Exhibit 5.1)
23.3 Consent of Koffman Birnie & Kalef (included in Exhibit 5.2)
24.1*** Powers of Attorney (included on signature pages)
25.1** Statement of Eligibility of Trustee on Form T-1
</TABLE>
______________
**Subsequent to the effective date of this
Registration Statement, to be filed by
amendment or incorporated herein by
reference.
***Previously filed or incorporated by reference
herein.
<PAGE>
II-4
ITEM 17 - UNDERTAKINGS
The Registrant hereby undertakes that, for the
purposes of determining any liability under the
Securities Act of 1933, each filing of the Registrant's
annual report pursuant to section 13(a) or section 15(d)
of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference
in this Registration Statement shall be deemed to be a
new Registration Statement relating to the securities
offered herein, and the offering of such securities at
that time shall be deemed to be the initial bona fide
offering thereof.
The undersigned Registrant hereby undertakes:
(a) To file, during any period in which offers or
sales are being made, a post-effective amendment
to this Registration Statement:
(i) to include any prospectus required by
Section 10(a)(3) of the Securities Act of
1933;
(ii) to reflect in the prospectus any facts or
events arising after the effective date of
the Registration Statement (or the most
recent post-effective amendment thereof)
which, individually or in the aggregate,
represent a fundamental change in the
information set forth in the Registration
Statement; notwithstanding the foregoing,
any increase or decrease in volume of
securities offered (if the total dollar of
securities offered would not exceed that
which was registered) and any deviation from
the low or high end of the estimated maximum
offering range may be reflected in the form
of the prospectus filed with the Commission
pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price
represent no more than a 20% change in the
maximum aggregate offering price set forth
in the "Calculation of Registration Fee"
table in the effective registration
statement; and
(iii)to include any material information with
respect to the plan of distribution not
previously disclosed in the Registration
Statement or any material change to such
information in the Registration Statement.
PROVIDED, HOWEVER, that paragraphs (a)(i) and
(a)(ii) do not apply if the information required
to be included in a post-effective amendment by
those paragraphs is contained in periodic reports
filed by the Registrant pursuant to Section 13 or
Section 15(d) of the Securities and Exchange Act
of 1934, that are incorporated by reference in
the Registration Statement.
(b) That for purposes of determining any liability
under the Securities Act of 1933, the information
omitted from the form of prospectus filed as part
of a Registration Statement in reliance upon
Rule 430A and contained in the form of prospectus
filed by the Registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the
Securities Act of 1933 shall be deemed to be part
of this Registration Statement as of the time it
was declared effective.
(c) That for the purpose of determining any liability
under the Securities Act of 1933, each post-
effective amendment that contains a form of
prospectus shall be deemed
<PAGE>
Page II-5
to be a new Registration Statement relating to the securities
offered therein, and the offering of such
securities at that time shall be deemed to be the
initial bona fide offering thereof.
(d) To remove from registration by means of a post-
effective amendment any of the securities being
registered which remain unsold at the termination
of the offering.
Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions or
otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in
the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for
indemnification against such liabilities (other than the
payment by the Registrant of expenses is incurred or paid
by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit
or proceeding) is asserted by such director, officer or
controlling person in connection with the securities
being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by
it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes to file
an application for the purpose of determining the
eligibility of the Trustee to act under subsection (a) of
Section 310 of the Trust Indenture Act in accordance with
the rules and regulations prescribed by the Commission
under Section 305(b)(2) of the Trust Indenture Act.
<PAGE>
Page II-6
SIGNATURES
Pursuant to the requirements of the Securities
Act of 1933, as amended, the Registrant certifies that it
has duly caused this Amendment to the Registration
Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in Denver, Colorado on
November 5, 1996.
GOLDEN STAR RESOURCES
LTD.
By: /S/ DAVID
A. FENNELL David A.
Fennell President and Chief
Executive Officer
Pursuant to the requirements of the Securities
Act of 1933, as amended, this Amendment to the
Registration Statement has been signed below by the
following persons in the capacities and on the dates
indicated.
<PAGE>
Page II-7
<TABLE>
<CAPTION>
NAME TITLE Date
<S> <C> <C>
/S/ DAVID K. FAGIN Chairman of the Board November 5, 1996
David K. Fagin
/S/ DAVID A. FENNELL President, Chief Executive Officer November 5, 1996
David A. Fennell and Director (Principal Executive
Officer)
November 5, 1996
/S/ PIERRE GOUSSELAND Director
Pierre Gousseland
/S/ JEAN-PIERRE LEFEBVRE Director November 5, 1996
Jean-Pierre Lefebvre
/S/ DONALD F. MAZANKOWSKI Director November 5, 1996
Donald F. Mazankowski
/S/ ERNEST C. MERCIER Director November 5, 1996
Ernest C. Mercier
/S/ ROGER D. MORTON Director November 5, 1996
Roger D. Morton
/S/ ROBERT MINTO Director November 5, 1996
Robert Minto
/S/ RICHARD A. STARK Director November 5, 1996
Richard A. Stark
/S/ GORDON J. BELL Vice President and Chief Financial November 5, 1996
Gordon J. Bell Officer (Principal Financial and
Accounting Officer)
</TABLE>
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
NUMBER DESCRIPTION
<S> <C>
1.1** Form of Underwriting Agreement
3.1*** Articles of the Company (incorporated by reference to
Exhibit 1.1 to the Company's Registration Statement on
Form 20-F, filed on May 10, 1993), Articles of the Company
(incorporated by reference to Exhibit 2.1 to the Company's
Annual Report on Form 10-K for the year ended December 31,
1994) and Certificate of Amendment to the Articles of the
Company, dated July 29, 1996 (incorporated by reference to
Exhibit (a)(3)(i) to the Company's Quarterly Report on Form
10-Q, filed on August 14, 1996)
3.2** Amendment to the Articles of the Company with respect to the
Preferred Shares
3.3*** By-laws of the Company (incorporated by reference to
Exhibit 1.2 to the Company's Registration Statement on
Form 20-F, filed on May 10, 1993 and to Exhibit 3 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1995)
4.1 Form of Indenture for the Convertible Debt Securities
4.2 Form of Convertible Debt Security (included in Exhibit 4.1)
4.3** Form of Common Shares Warrant Agreement
4.4** Form of Common Shares Warrant Certificate (included in
Exhibit 4.3)
4.5** Form of Preferred Shares Warrant Agreement
4.6** Form of Preferred Shares Warrant Certificate (included in
Exhibit 4.5)
4.7** Form of Convertible Debt Securities Warrant Agreement
4.8** Form of Convertible Debt Securities Warrant Certificate
(included in Exhibit 4.7)
4.9 Form of Common Share Certificate
4.10** Description of Preferred Shares (included in Exhibit 3.2)
4.11** Form of Preferred Share Certificate
5.1 Opinion of Paul, Weiss, Rifkind, Wharton & Garrison
5.2 Opinion of Koffman Birnie & Kalef
12.1 Statements re Computation of Ratios.
23.1 Consent of Coopers & Lybrand
23.2 Consent of Paul, Weiss, Rifkind, Wharton & Garrison
(included in Exhibit 5.1)
23.3 Consent of Koffman Birnie & Kalef (included in Exhibit 5.2)
24.1*** Powers of Attorney (included on signature pages)
25.1** Statement of Eligibility of Trustee on Form T-1
</TABLE>
______________
**Subsequent to the effective date of this
Registration Statement, to be filed by
amendment or incorporated herein by reference.
***Previously filed or incorporated by reference
herein.
DRAFT
GOLDEN STAR RESOURCES LTD.
ISSUER
TO
_____________________________________
TRUSTEE
INDENTURE
DATED AS OF , 199
Convertible Debt Securities
<PAGE>
TABLE OF CONTENTS
ARTICLE 1 -DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION 1
1.1 Definitions....................................... 1
1.2 Compliance Certificates and Opinions.............. 9
1.3 Form of Documents Delivered to Trustee............ 10
1.4 Acts of Holders; Record Dates..................... 10
1.5 Notices, Etc., to Trustee and Company............. 12
1.6 Notice to Holders: Waiver........................ 13
1.7 Conflict with Applicable Legislation.............. 13
1.8 Effect of Headings and Table of Contents.......... 13
1.9 Successors and Assigns............................ 14
1.10 Separability Clause............................... 14
1.11 Benefits of Indenture............................. 14
1.12 Governing Law..................................... 14
1.13 Legal Holidays.................................... 14
ARTICLE 2 - SECURITY FORMS...................................... 14
2.1 Forms Generally................................... 14
2.2 Form of Face of Security.......................... 15
2.3 Form of Reverse of Security....................... 17
2.4 Form of Legend for Global Securities.............. 23
2.5 Form of Trustee's Certificate of Authentication... 24
ARTICLE 3 - THE SECURITIES...................................... 24
3.1 Amount Unlimited; Issuable in Series............. 24
3.2 Denominations..................................... 28
3.3 Execution, Authentication, Delivery and Dating.... 28
3.4 Temporary Securities.............................. 30
3.5 Registration, Registration of Transfer and Exchange30
3.6 Mutilated, Destroyed, Lost and Stolen Securities.. 32
3.7 Payment of Interest: Interest Rights Preserved.... 33
3.8 Persons Deemed Owners............................. 34
3.9 Cancellation...................................... 35
3.10 Computation of Interest........................... 35
3.11 Payment of Additional Amounts..................... 35
ARTICLE 4 - SATISFACTION AND DISCHARGE.......................... 36
4.1 Satisfaction and Discharge of Indenture........... 36
4.2 Application of Trust Money........................ 38
ARTICLE 5 - REMEDIES............................................ 38
5.1 Events of Default................................. 38
5.2 Acceleration of Maturity; Rescission and Annulment 40
5.3 Suits for Enforcement by Trustee.................. 42
5.4 Trustee May File Proofs of Claim.................. 42
5.5 Trustee May Enforce Claims Without Possession of
Securities........................................ 42
5.6 Application of Money Collected.................... 43
5.7 Limitation on Suits............................... 43
5.8 Unconditional Right of Holders to Receive Principal,
Premium and Interest.............................. 44
5.9 Restoration of Rights and Remedies................ 44
5.10 Rights and Remedies Cumulative.................... 44
5.11 Delay or Omission Not Waiver...................... 44
5.12 Control by Holders................................ 45
5.13 Waiver of Past Defaults........................... 45
5.14 Undertaking for Costs............................. 45
5.15 Waiver of Stay or Extension Laws.................. 46
5.16 Waiver of Certain Covenants....................... 46
ARTICLE 6 - THE TRUSTEE......................................... 46
6.1 Certain Duties and Responsibilities................. 46
6.2 Notice of Defaults................................ 47
6.3 Certain Rights of Trustee......................... 47
6.4 Not Responsible for Recitals or Issuance of Securities
48
6.5 May Hold Securities............................... 48
6.6 Money Held in Trust............................... 48
6.7 Compensation and Reimbursement.................... 49
6.8 Disqualification; Conflicting Interests........... 49
6.9 Corporate Trustee Required; Eligibility........... 50
6.10 Resignation and Removal; Appointment of Successor
50
6.11 Acceptance of Appointment by Successor......... 52
6.12 Merger, Conversion, Consolidation or Succession to
Business....................................... 53
6.13 Preferential Collection of Claims Against Company
53
6.14 Appointment of Authenticating Agent............ 54
ARTICLE 7 - HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY. 55
7.1 Company to Furnish Trustee Names and Addresses of
Holders............................................ 55
7.2 Preservation of Information; Communications to Holders
56
7.3 Reports by Trustee................................ 56
7.4 Reports by Company................................ 56
ARTICLE 8 -CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE. 57
8.1 Company May Consolidate, Etc., Only on Certain
Terms.................................................. 57
8.2 Successor Substituted.............................. 58
ARTICLE 9 - SUPPLEMENTAL INDENTURES.............................. 58
9.1 Supplemental Indentures Without Consent of Holders
58
9.2 Supplemental Indentures with Consent of Holders.... 60
9.3 Execution of Supplemental Indentures............... 61
9.4 Effect of Supplemental Indentures................. 61
9.5 Conformity with Applicable Legislation............ 61
9.6 Reference in Securities to Supplemental Indentures62
ARTICLE 10 - COVENANTS........................................... 62
10.1 Payment of Principal, Premium and Interest........ 62
10.2 Maintenance of Office or Agency................... 62
10.3 Money for Securities Payments to Be Held in Trust63
10.4 Statement by Officers as to Default............... 64
10.5 Existence......................................... 64
10.6 Maintenance of Properties......................... 64
10.7 Payment of Taxes and Other Claims................. 65
10.8 Limitation on Subordinated Indebtedness........... 65
ARTICLE 11 - REDEMPTION OF SECURITIES............................ 65
11.1 Applicability of Article.......................... 65
11.2 Election to Redeem; Notice to Trustee............. 65
11.3 Selection by Trustee of Securities to Be Redeemed66
11.4 Notice of Redemption.............................. 66
11.5 Deposit of Redemption Price....................... 67
11.6 Securities Payable on Redemption Date............. 68
11.7 Securities Redeemed in Part....................... 68
ARTICLE 12 - SINKING FUNDS....................................... 68
12.1 Applicability of Article.......................... 68
12.2 Satisfaction of Sinking Fund Payments with
Securities............................................. 69
12.3 Redemption of Securities for Sinking Fund......... 69
ARTICLE 13 - COVENANT DEFEASANCE................................. 69
13.1 Company's Option to Effect Covenant Defeasance... 69
13.2 Covenant Defeasance.............................. 70
13.3 Conditions to Covenant Defeasance................ 70
13.4 Deposited Money and Government Obligations to be
Held in Trust; Other Miscellaneous Provisions.... 72
13.5 Reinstatement.................................... 73
ARTICLE 14 - CONVERSION OF SECURITIES........................... 73
14.1 Conversion Privilege and Conversion Price........ 73
14.2 Exercise of Conversion Privilege................. 73
14.3 Fractions of Shares.............................. 74
14.4 Adjustment of Conversion Price................... 75
14.5 Notice of Adjustments of Conversion Price........ 80
14.6 Notice of Certain Corporation Action............. 81
14.7 Company to Reserve Common Shares................. 82
14.8 Taxes on Conversion.............................. 82
14.9 Covenant as to Common Shares..................... 82
14.10 Cancellation of Converted Securities............. 82
14.11 Provisions in Case of Consolidation, Merger or Sale
of Assets........................................ 82
14.12 Responsibility of Trustee and Conversion Agent... 83
ARTICLE 15 - SUBORDINATION...................................... 84
15.1 Securities Subordinate to Senior Indebtedness.... 84
15.2 Payment Over of Proceeds Upon Dissolution, Etc... 84
15.3 Prior Payment to Senior Indebtedness upon
Acceleration of Securities....................... 85
15.4 No Payment When Senior Indebtedness in Default... 86
15.5 Payment Permitted If No Default.................. 87
15.6 Subrogation to Rights of Holders of Senior
Indebtedness.......................................... 87
15.7 Provisions Solely to Define Relative Rights and
Subject to Applicable Laws....................... 87
15.8 Trustee to Effectuate Subordination.............. 88
15.9 No Waiver of Subordination Provisions............ 88
15.10 Notice to Trustee................................ 88
15.11 Reliance on Judicial Order or Certificate of
Liquidating Agent................................ 89
15.12 Trustee Not Fiduciary for Holders of Senior
Indebtedness.......................................... 89
15.13 Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights................. 89
15.14 Article Applicable to Paying Agents.............. 90
15.15 Subsidiaries..................................... 90
15.16 Rescission....................................... 90
15.17 Certain Conversions or Exchanges Deemed Payment.. 90
<PAGE>
INDENTURE, dated as of _____ 199___, between GOLDEN STAR RESOURCES
LTD., a corporation duly incorporated and existing under the laws of
Canada, having its registered office at 885 West Georgia Street, 19th
Floor, Vancouver, British Columbia V6C 3H4 (herein called the "Company"),
and ________________________________, a ________________ corporation, as
Trustee hereunder (herein called the "Trustee").
RECITALS
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of convertible
unsecured debentures, notes or other evidences of indebtedness (herein
called the "Securities") to be issued by the Company, unlimited as to
principal amount, to bear such rates of interest, to mature at such time or
times, to be issued in one or more series and to have such other provisions
as shall be fixed as hereinafter provided.
All things necessary to make this Indenture a valid agreement of
the Company in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Securities or of a series
thereof, as follows:
ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
1.1 DEFINITIONS
For all purposes of this Indenture and of any indenture
supplemental hereto, except as otherwise expressly provided or unless the
context otherwise requires:
(a)the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the
singular;
(b)all other terms used herein which are defined in the TRUST
INDENTURE ACT, either directly or by reference herein, have the
meanings assigned to them therein;
(c)all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting
<PAGE> Page
principles in Canada, and, except as otherwise herein
expressly provided, the term "generally accepted accounting
principles" with respect to any computation required or permitted
hereunder shall mean such accounting principles as are generally
accepted in Canada at the date of such computation; and
(d)the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision.
"ACT", when used with respect to any Holder, has the meaning specified in
Section 1.4.
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"APPLICABLE LEGISLATION" means, with respect to any series of Securities
which was required to be registered under the SECURITIES ACT, the TRUST
INDENTURE ACT, and with respect to any series of Securities which was
distributed pursuant to a prospectus filed with the Ontario Securities
Commission, the BUSINESS CORPORATIONS ACT, and with respect to each series
of Securities, the CANADA BUSINESS CORPORATIONS ACT, unless the Company has
received an exemption with respect to a particular series of Securities
pursuant to subsection 82(3) of the CANADA BUSINESS CORPORATIONS ACT.
"AUTHENTICATING AGENT" means any Person authorized by the Trustee pursuant
to Section 6.14 to act on behalf of the Trustee to authenticate Securities
of one or more series.
"BOARD OF DIRECTORS" means, when used with reference to the Company, the
board of directors of the Company or any committee of the board of
directors of the Company empowered to act for the Company with respect to
this Indenture.
"BOARD RESOLUTION" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the
Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"BUSINESS CORPORATIONS ACT" means the BUSINESS CORPORATIONS ACT (ONTARIO)
as in force at the date as of which this instrument was executed;
PROVIDED, HOWEVER, that in the event the Business Corporations Act
(Ontario) is amended after such date, "BUSINESS CORPORATIONS ACT" means, to
the extent required by any such amendments, the Business Corporations Act
(Ontario) as so amended.
<PAGE> Page 3
"BUSINESS DAY" means, when used with respect to any Place of Payment, each
Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in that Place of Payment are authorized or obligated
by law or executive order to close, except as may otherwise be provided in
the form of Securities of any particular series pursuant to the provisions
of this Indenture.
"CANADA BUSINESS CORPORATIONS ACT" means the CANADA BUSINESS CORPORATIONS
ACT as in force at the date as of which this instrument was executed;
PROVIDED, HOWEVER, that in the event the Canada Business Corporations Act
is amended after such date, "CANADA BUSINESS CORPORATIONS ACT" means, to
the extent required by any such amendments, the Canada Business
Corporations Act as so amended.
"COMMISSION" means the Securities and Exchange Commission, as from time to
time constituted, or, if at any time after the execution of this instrument
such Commission is not existing and performing the duties now assigned to
it under the TRUST INDENTURE ACT, then the body performing such duties at
such time.
"COMMON SHARES" or "COMMON SHARES OF THE COMPANY" means the Common Shares
of the Company and the shares of any other class of the Company which has
no preference in respect of dividends or of amounts payable in the event of
any voluntary or involuntary liquidation, dissolution or winding up of the
Company and which is not subject to redemption by the Company. However,
subject to the provisions of 3.1(s) and Section 14.11, shares issuable on
conversion of Securities shall include only shares of the class designated
as Common Shares in the articles of the Company at the date of this
instrument or shares of any class or classes resulting from any
reclassification or reclassifications thereof and which have no preference
in respect of dividends or of amounts payable in the event of any voluntary
or involuntary liquidation, dissolution or winding up of the Company and
which are not subject to redemption by the Company; PROVIDED, HOWEVER,
that if at any time there shall be more than one such resulting class, the
shares of each such class then so issuable shall be substantially in the
proportion which the total number of shares of such class resulting from
all such reclassifications bears to the total number of shares of all such
classes resulting from all such reclassifications.
"COMPANY" means the Person named as the "Company" in the first paragraph of
this instrument until a successor Person shall have become such pursuant to
the applicable provisions of this Indenture and thereafter "Company" shall
mean such successor Person.
"COMPANY REQUEST" or "COMPANY ORDER" means a written request or order
signed in the name of the Company by its Chairman of the Board, President
or a Vice President, and by its Treasurer, Assistant Treasurer, Controller,
Secretary or Assistant Secretary, and delivered to the Trustee.
"CORPORATE TRUST OFFICE" means the principal office of the Trustee in
, at which at any particular time its corporate trust business shall be
conducted.
<PAGE> Page 4
"CORPORATION" means a corporation, association, company, joint-stock
company, business trust or similar organization.
"COVENANT DEFEASANCE" has the meaning specified in Section 13.2.
"DEFAULTED INTEREST" has the meaning specified in Section 3.7.
"DEFEASIBLE SERIES" has the meaning specified in Section 13.1.
"DEPOSITARY" means, with respect to Securities of any series issuable in
whole or in part in the form of one or more Global Securities, a clearing
agency designated to act as Depositary for such Securities as contemplated
by Section 3.1, that is registered under the EXCHANGE ACT if the Securities
of such series were required to be registered under the EXCHANGE ACT, and
that has been designated as a recognized clearing agency under applicable
Canadian securities legislation if the Securities of such series were
distributed by the Company pursuant to a prospectus filed with Canadian
securities regulatory authorities.
"EVENT OF DEFAULT" has the meaning specified in Section 5.1.
"EXCHANGE ACT" means the United States SECURITIES EXCHANGE ACT of 1934, as
amended from time to time, and any statute successor thereto.
"GLOBAL SECURITY" means a Security that evidences all or part of the
Securities of any series and is authenticated and delivered to, and
registered in the name of, the Depositary for such Securities or a nominee
thereof.
"GOVERNMENT OBLIGATIONS" means securities which are (i) direct full faith
and credit obligations of the government which issued the currency in which
the Securities of a particular series are denominated and in which payment
of principal and interest are to be made or (ii) obligations of a Person
controlled or supervised by and acting as an agency or instrumentality of
such government, the payment of which is unconditionally guaranteed as a
full faith and credit obligation by such government, which, in either case,
are not callable or redeemable at the option of the issuer thereof, and
shall also include a depository receipt issued by a bank (as defined in
Section 3(a)(2) of the United States SECURITIES ACT of 1933, as amended) as
custodian with respect to any such Government Obligation or a specific
payment of principal of or interest on account of the holder of such
depository receipt from any amount received by the custodian in respect of
such Government Obligation or the specific payment of principal of or
interest on such Government Obligation evidenced by such depository
receipt.
"HOLDER" means a Person in whose name a Security is registered in the
Security Register.
"INCOME TAX ACT" means the Income Tax Act (Canada) as in force as at the
date as of which this instrument was executed; PROVIDED, HOWEVER, that in
the event the Income Tax Act (Canada) is
<PAGE> Page 5
amended after such date, "INCOME
TAX ACT" means, to the extent required by such amendment, the Income Tax
Act (Canada), as so amended.
"INDENTURE" means this instrument as originally executed, as it may from
time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions
hereof, including, for all purposes of this instrument and any such
supplemental indenture, the provisions of the TRUST INDENTURE ACT that are
deemed to be a part of and govern this instrument and any such supplemental
indenture, respectively. The term "Indenture" shall also include the terms
of any particular series of Securities established as contemplated by
Section 3.1.
"INTEREST PAYMENT DATE" means, when used with respect to any Security, the
Stated Maturity of an instalment of interest on such Security.
"MATURITY" means, when used with respect to any Security, the date on which
the principal of such Security or an instalment of principal becomes due
and payable as therein or herein provided, whether at the Stated Maturity
or by declaration of acceleration, call for redemption or otherwise.
"NOTICE OF DEFAULT" means a written notice of the kind specified in Section
5.1(d).
"OFFICERS' CERTIFICATE" means, when used with reference to the Company, a
certificate signed on behalf of the Company by any one of the Chairman of
the Board, the President or any Vice President of the Company, and by any
one of the Treasurer, the Assistant Treasurer, the Controller, the
Secretary or an Assistant Secretary of the Company, and delivered to the
Trustee. One of the officers signing an Officers' Certificate given
pursuant to Section 10.4 shall be the principal executive, chief financial
or principal accounting officer of the Company.
"OPINION OF COUNSEL" means a written opinion of counsel (who may be counsel
for the Company and who may be an employee of the Company, except as
otherwise expressly provided in this Indenture) and who shall be acceptable
to the Trustee.
"ORIGINAL ISSUE DISCOUNT SECURITY" means any Security which provides for an
amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section
5.2.
"OUTSTANDING", when used with respect to Securities, means, as of the date
of determination, all Securities theretofore authenticated and delivered
under this Indenture, EXCEPT:
(a) Securities theretofore cancelled by the Trustee or delivered
to the Trustee for cancellation;
(b) Securities, or portions thereof, for whose payment or
redemption money in the necessary amount has been
theretofore deposited with the Trustee or any Paying Agent
(other than the Company) in trust or set aside and
<PAGE> Page 6
segregated in trust by the Company (if the Company shall act
as its own Paying Agent) for the Holders of such Securities;
PROVIDED THAT, if such Securities are to be redeemed, notice
of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee
has been made;
(c) Securities as to which Defeasance has been effected pursuant
to Section 13.2; and
(d) Securities which have been replaced pursuant to Section 3.6
or in exchange for or in lieu of which other Securities have
been authenticated and delivered pursuant to this Indenture,
other than any such Securities in respect of which there
shall have been presented to the Trustee proof satisfactory
to it that such Securities are held by a bona fide purchaser
in whose hands such Securities are valid obligations of the
Company;
PROVIDED, HOWEVER, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request,
demand, authorization, direction, notice, consent or waiver hereunder or
are present at a meeting of Holders for quorum purposes, (i) the principal
amount of an Original Issue Discount Security that shall be deemed to be
Outstanding shall be the amount of the principal thereof (excluding premium
or penalty, if any) that would be due and payable as of the date of such
determination upon acceleration of the Maturity thereof pursuant to Section
5.2, (ii) the principal amount of a Security denominated in one or more
foreign currencies or currency units shall be the U.S. dollar equivalent,
determined in the manner provided as contemplated by Section 3.1 on the
date of original issuance of such Security, of the principal amount (or, in
the case of an Original Issue Discount Security, the U.S. dollar equivalent
on the date of original issuance of such Security of the amount determined
as provided in (i) above) of such Security, (iii) if the principal amount
payable at Stated Maturity of any Security is not determinable upon
original issuance, the principal amount of such Security that shall be
deemed to be Outstanding shall be the amount as specified or determined as
contemplated by Section 3.1, and (iv) Securities owned by the Company, or
any other obligor upon the Securities or any Affiliate of the Company, or
of such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be
protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver or upon any such determination as to
the presence of a quorum, only Securities which the Trustee knows to be so
owned shall be so disregarded. Securities so owned which have been pledged
in good faith may be regarded as Outstanding if the pledgee establishes to
the satisfaction of the Trustee the pledgee's right so to act with respect
to such Securities and that the pledgee is not the Company, or any other
obligor upon the Securities or any Affiliate of the Company, or of such
other obligor.
"PAYING AGENT" means any Person authorized by the Company to pay the
principal of or any premium or interest on any Securities on behalf of the
Company.
<PAGE> Page 7
"PERSON" means any individual, corporation, partnership, joint venture,
trust, association, company, joint-stock company, business trust,
unincorporated organization or government or any agency or political
subdivision thereof.
"PLACE OF PAYMENT" means, when used with respect to the Securities of any
series, the place or places where the principal of and any premium and
interest on the Securities of that series are payable as specified as
contemplated by Section 3.1.
"PREDECESSOR SECURITY" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by
such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 3.6 in exchange for or
in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed
to evidence the same debt as the mutilated, destroyed, lost or stolen
Security.
[IF APPLICABLE, INSERT -- "PROCEEDING" has the meaning specified in Section
15.2].
"REDEMPTION DATE" means, when used with respect to any Security to be
redeemed, the date fixed for such redemption by or pursuant to this
Indenture;
"REDEMPTION PRICE" means, when used with respect to any Security to be
redeemed, the price at which it is to be redeemed pursuant to this
Indenture.
"REGULAR RECORD DATE" for the interest payable on any Interest Payment Date
on the Securities of any series means the date specified for that purpose
as contemplated by Section 3.1.
"RESPONSIBLE OFFICER" means, when used with respect to the Trustee, the
chairman, or any vice-chairman of the board of directors, the chairman or
any vice-chairman of the executive committee of the board of directors, the
chairman of the trust committee, the president, any vice president, the
secretary, any assistant secretary, the treasurer, any assistant treasurer,
the cashier, any assistant cashier, any trust officer or assistant trust
officer, the controller or any assistant controller or any other officer of
the Trustee customarily performing functions similar to those performed by
any of the above designated officers and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.
"SECURITIES ACT" means the United States SECURITIES ACT of 1933 as in force
at the date as of which this instrument was executed; PROVIDED, HOWEVER,
that in the event the United States Securities Act of 1933 is amended after
such date, "SECURITIES ACT" means, to the extent required by any such
amendments, the United States Securities Act of 1933, as so amended.
[IF APPLICABLE, INSERT -- "SECURITIES PAYMENT" has the meaning specified in
Section 15.2].
"SECURITY" or "SECURITIES" has the meaning stated in the first recital of
this Indenture and more particularly means any Security or Securities
authenticated and delivered under this Indenture.
<PAGE> Page 8
"SECURITY REGISTER" and "SECURITY REGISTRAR" have the respective meanings
specified in Section 3.5.
[IF APPLICABLE, INSERT -- "SENIOR INDEBTEDNESS" means, unless otherwise
defined in the applicable indenture supplement, all amounts due on and
obligations in connection with any of the following, whether outstanding at
the date of execution of the Indenture, or thereafter incurred, assumed,
guaranteed or otherwise created (including, without limitation, interest
accruing on or after a bankruptcy or other similar event, whether or not an
allowed claim therein): (a) indebtedness, obligations and other liabilities
(contingent or otherwise) of the Company for money borrowed, or evidenced
by bonds, debentures, notes or similar instruments; (b) reimbursement
obligations and other liabilities (contingent or otherwise) of the Company
with respect to letters of credit or banker's acceptances issued for the
account of the Company and interest rate protection agreements and currency
exchange or purchase agreements; (c) obligations and liabilities
(contingent or otherwise) related to capitalized lease obligations; (d)
indebtedness, obligations and other liabilities (contingent or otherwise)
of the Company related to agreements or arrangements designed to protect
the Company or any of its Subsidiaries against fluctuations in commodity
prices, including, without limitation, commodity futures contracts or
similar hedging instruments; (e) indebtedness of others of kinds described
in the preceding clauses (a) through (d) that the Company has assumed,
guaranteed or otherwise assured the payment of directly or indirectly; (f)
any indebtedness of another Person of the type described in the preceding
clauses (a) through (e) secured by any mortgage, pledge, lien or other
encumbrance on property owned or held by the Company; and (g) any and all
deferrals, renewals, extensions and refundings of, or amendments,
modifications or supplements to, any indebtedness, obligation or liability
described in clauses (a) through (f) whether or not there is any notice to
or consent of the Holders of such series of Securities; unless, in any
case, in the instrument creating or evidencing such indebtedness,
obligation, liability, guaranty, assumption, deferral, renewal, extension
or refunding, it is expressly stated that such indebtedness, obligation,
liability, guarantee, assumption, deferral, renewal, extension or refunding
is not senior in right of payment to the Securities or that such
indebtedness is PARI PASSU with or junior to the Securities; [IF
SUBORDINATED INDEBTEDNESS, INSERT -- PROVIDED, HOWEVER, that any series of
Securities designated as Senior Subordinated Indebtedness shall constitute
Senior Indebtedness to any series of Securities designated as Subordinated
Indebtedness].
[IF APPLICABLE, INSERT -- "SENIOR SUBORDINATED INDEBTEDNESS" means the
Securities and any other indebtedness, guarantee or obligation of the
Company that specifically provides that such indebtedness, guarantee or
obligation is to rank PARI PASSU with other Senior Subordinated
Indebtedness of the Company and is not subordinated by its terms to any
indebtedness, guarantee or obligation of the Company which is not Senior
Indebtedness.]
[IF APPLICABLE, INSERT -- "SUBORDINATED INDEBTEDNESS" means the Securities
and any other indebtedness, guarantee or obligation of the Company that
specifically provides that such indebtedness, guarantee or obligation is to
rank PARI PASSU with other Subordinated Indebtedness of the Company and is
not subordinated by its terms to any indebtedness, guarantee or obligation
of the Company which is not Senior Indebtedness or Senior Subordinated
Indebtedness].
<PAGE> Page 9
"SIGNIFICANT SUBSIDIARY" shall mean Southern Star Resources Ltd., Guyanor
Ressources S.A., Pan African Resources Corporation and Societe de Travaux
Publics et de Mines Auriferes en Guyane, or such other or different
Subsidiary as shall be designated a Significant Subsidiary pursuant to the
provisions of Section 3.1(y).
"SPECIAL RECORD DATE" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 3.7.
"STATED MATURITY" means, when used with respect to any Security or any
instalment of principal thereof or interest thereon, the date specified in
such Security as the fixed date on which the principal of such Security or
such instalment of principal or interest is due and payable.
"SUBSIDIARY" means any corporation more than 50% of the outstanding voting
stock of which is owned, directly or indirectly, by the Company or by one
or more other Subsidiaries, or by the Company and one or more other
Subsidiaries. For the purposes of this definition, "voting stock" means
stock which ordinarily has voting power for the election of directors,
whether at all times or only so long as no senior class of stock has such
voting power by reason of any contingency.
"TRUST INDENTURE ACT" means the United States TRUST INDENTURE ACT of 1939
as in force at the date as of which this instrument was executed;
PROVIDED, HOWEVER, that in the event the Trust Indenture Act of 1939 is
amended after such date, "TRUST INDENTURE ACT" means, to the extent
required by any such amendment, the Trust Indenture Act of 1939, as so
amended.
"TRUSTEE" means the Person named as the "Trustee" in the first paragraph of
this instrument until a successor Trustee shall have become such pursuant
to the applicable provisions of this Indenture, and thereafter "Trustee"
shall mean or include each Person who is then a Trustee hereunder, and if
at any time there is more than one such Person, "Trustee" as used with
respect to the Securities of any series shall mean the Trustee with respect
to Securities of that series.
"VICE PRESIDENT" means, when used with respect to the Company or the
Trustee, any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president".
1.2 COMPLIANCE CERTIFICATES AND OPINIONS
Upon any application or request by the Company to the Trustee to
take any action under any provision of this Indenture, the Company shall
furnish to the Trustee an Officers' Certificate stating that all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with and, where required or if requested, an
Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that in the
case of any such application or request as to which the furnishing of such
documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional
certificate or opinion need be furnished.
<PAGE> Page 10
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (including
certificates provided for in Section 10.4) shall include:
(a)a statement that each individual signing such certificate or
opinion has read and understood such covenant or condition and
the definitions herein related thereto;
(b)a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained
in such certificate or opinion are based;
(c)a statement that, in the opinion of each such individual, he
has made such examination or investigation as is necessary to
enable him to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(d)a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
1.3 FORM OF DOCUMENTS DELIVERED TO TRUSTEE
In any case where several matters are required to be certified by,
or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one
such Person, or that they be so certified or covered by only one document,
but one such Person may certify or give an opinion with respect to some
matters and one or more other such Persons as to other matters, and any
such Person may certify or give an opinion as to such matters in one or
several documents.
Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or
opinion of, or representations by, counsel, unless such officer knows, or
in the exercise of reasonable care should know, that the certificate or
opinion or representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any such certificate or
opinion of counsel may be based, insofar as it relates to factual matters,
upon a certificate or opinion of, or representations by, an officer or
officers of the Company stating that the information with respect to such
factual matters has been provided by the Company, unless such counsel
knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters are
erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be
consolidated and form one instrument.
1.4 ACTS OF HOLDERS; RECORD DATES
<PAGE> Page 11
(a)Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or
taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders
in person or by an agent duly appointed in writing; and, except
as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to
the Trustee and, where it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied
therein and evidenced thereby) are herein sometimes referred to
as the "Act" of the Holders signing such instrument or
instruments. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Section 6.1) conclusive
in favor of the Trustee and the Company, if made in the manner
provided in this Section.
(b)The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness
of such execution or by a certificate of a notary public or other
officer authorized by law to take acknowledgments of deeds,
certifying that the individual signing such instrument or writing
acknowledged to him the execution thereof. Where such execution
is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute
sufficient proof of his authority. The fact and date of the
execution of any such instrument or writing, or the authority of
the Person executing the same, may also be proved in any other
manner which the Trustee deems sufficient.
(c)The ownership of Securities shall be proved by the Security
Register.
(d)Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind
every future Holder of the same Security and the Holder of every
Security issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof in respect of anything done,
omitted or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made
upon such Security.
(e)The Company may, in the circumstances permitted by the TRUST
INDENTURE ACT, where the series of Securities was required to be
registered under the SECURITIES ACT, and in the circumstances
permitted by the securities legislation of the provinces of
Canada and the policies of Canadian securities regulatory
authorities, where the series of Securities was distributed
pursuant to a prospectus filed with Canadian securities
regulatory authorities, fix any day as the record date for the
purpose of determining the Holders of Outstanding Securities of
any series entitled to
<PAGE> Page 12
give or take any request, demand,
authorization, direction, notice, consent, waiver or other
action, or to vote on any action, authorized or permitted to be
given or taken by Holders of Securities of such series. If not
set by the Company prior to the first solicitation of a Holder of
Securities of such series made by any Person in respect of any
such action, or, in the case of any such vote, prior to such
vote, the record date for any such action or vote shall be the
30th day (or, if later, the date of the most recent list of
Holders required to be provided pursuant to Section 7.1) prior to
such first solicitation or vote, as the case may be. With regard
to any record date for action to be taken by the Holders of one
or more series of Securities, only the Holders of Securities of
such series on such date (or their duly designated proxies) shall
be entitled to give or take, or vote on, the relevant action.
With regard to any record date set pursuant to this paragraph,
the Holders of Outstanding Securities of the relevant series on
such record date (or their duly appointed agents), and only such
Persons, shall be entitled to give or take the relevant action,
whether or not such Holders remain Holders after such record
date. With regard to any action that may be given or taken
hereunder by Holders of a requisite principal amount of
Outstanding Securities of any series (or their duly appointed
agents) and for which a record date is set pursuant to this
paragraph, the Company may, at its option, set an expiration date
after which no such action purported to be given or taken by any
Holder shall be effective hereunder unless given or taken on or
prior to such expiration date by Holders of the requisite
principal amount of Outstanding Securities of such series on such
record date (or their duly appointed agents). On or prior to any
expiration date set pursuant to this paragraph, the Company may,
on one or more occasions at its option, extend such date to any
later date. Nothing in this paragraph shall prevent any Holder
(or any duly appointed agent thereof) from giving or taking,
after any expiration date, any action identical to, or, at any
time, contrary to or different from, any action given or taken,
or purported to have been given or taken, hereunder by a Holder
on or prior to such date, in which event the Company may set a
record date in respect thereof pursuant to this paragraph.
Notwithstanding the foregoing, the TRUST INDENTURE ACT or the
securities legislation of the provinces of Canada and the
policies of Canadian securities regulatory authorities, the
Company shall not set a record date for, and the provisions of
this paragraph shall not apply with respect to, any action to be
given or taken by Holders pursuant to Sections 5.1, 5.2 or 5.12.
(f)Without limiting the foregoing, a Holder entitled hereunder to
give or take any action hereunder with regard to any particular
Security may do so with regard to all or any part of the
principal amount of such Security or by one or more duly
appointed agents each of which may do so pursuant to such
<PAGE> Page 13
appointment with regard to all or any different part of such
principal amount.
1.5 NOTICES, ETC., TO TRUSTEE AND COMPANY
Any request, demand, authorization, direction, notice, consent,
waiver or Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with:
(a)the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in
writing to or with the Trustee at its Corporate Trust Office,
Attention: _____________________________; or
(b)the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid,
to the Company, addressed to it at the address of its principal
office specified in the first paragraph of this instrument or at
any other address previously furnished in writing to the Trustee
by the Company.
1.6 NOTICE TO HOLDERS: WAIVER
Where this Indenture provides for notice to Holders of any event,
such notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to each
Holder affected by such event, at his address as it appears in the Security
Register, not later than the latest date (if any), and not earlier than the
earliest date (if any), prescribed for the giving of such notice. In any
case where notice to Holders is given by mail, neither the failure to mail
such notice, nor any defect in any notice so mailed, to any particular
Holder shall affect the sufficiency of such notice with respect to other
Holders. Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such
notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be filed
with the Trustee, but such filing shall not be a condition precedent to the
validity of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made with the approval of the
Trustee shall constitute a sufficient notification for every purpose
hereunder.
<PAGE> Page 14
1.7 CONFLICT WITH APPLICABLE LEGISLATION
If any provision hereof limits, qualifies or conflicts with a
provision of any Applicable Legislation that is required under such
legislation to be a part of and govern this Indenture, the latter provision
shall control. If any provision of this Indenture modifies or excludes any
provision of any Applicable Legislation that may be so modified or
excluded, the latter provision shall be deemed to apply to this Indenture
as so modified or to be excluded, as the case may be.
1.8 EFFECT OF HEADINGS AND TABLE OF CONTENTS
The Article and Section headings herein and the Table of Contents
are for convenience only and shall not affect the construction hereof.
1.9 SUCCESSORS AND ASSIGNS
All covenants and agreements in this Indenture by the Company
shall bind its successors and assigns, whether so expressed or not.
1.10 SEPARABILITY CLAUSE
In case any provision in this Indenture or in the Securities shall
be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
1.11 BENEFITS OF INDENTURE
Nothing in this Indenture or in the Securities, express or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder, any Authenticating Agent, Paying Agent, Security
Registrar and the Holders, any benefit or any legal or equitable right,
remedy or claim under this Indenture.
1.12 GOVERNING LAW
This Indenture and the Securities shall be governed by and
construed in accordance with the laws of the State of New York, but without
regard to principles of conflicts of laws.
1.13 LEGAL HOLIDAYS
In any case where any Interest Payment Date, Redemption Date or
Stated Maturity of any Security shall not be a Business Day at any Place of
Payment, then (notwithstanding any other provision of this Indenture or the
Securities (other than a provision of the Securities of any series which
specifically states that such provision shall apply in lieu of this
Section)) payment of interest or principal (and premium, if any) need not
be made at such Place of Payment on such
<PAGE> Page 15
date, but may be made on the next
succeeding Business Day at such Place of Payment with the same force and
effect as if made on the Interest Payment Date or Redemption Date, or at
the Stated Maturity, PROVIDED THAT no interest shall accrue for the period
from and after such Interest Payment Date, Redemption Date or Stated
Maturity, as the case may be.
ARTICLE 2
SECURITY FORMS
2.1 FORMS GENERALLY
The Securities of each series shall be in substantially the form
set forth in this Article, or in such other form as shall be established by
or pursuant to Board Resolutions of the Board of Directors of the Company
or in one or more indentures supplemental hereto, in each case with such
appropriate insertions, omissions, substitutions and other variations as
are required or permitted by this Indenture, and may have such letters,
numbers or other marks of identification and such legends or endorsements
placed thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be determined by the
officers executing such Securities, as evidenced by their execution of the
Securities. If the form of Securities of any series is established by
action taken pursuant to such Board Resolutions, a copy of an appropriate
record of such action shall be certified by the Secretary or an Assistant
Secretary of the Company and delivered to the Trustee at or prior to the
delivery of the Company Order contemplated by Section 3.3 for the
authentication and delivery of such Securities.
The definitive Securities shall be printed, lithographed or
engraved on steel engraved borders or may be produced in any other manner,
all as determined by the officers executing such Securities, as evidenced
by their execution of such Securities.
2.2 FORM OF FACE OF SECURITY
[INSERT ANY LEGEND REQUIRED BY THE INTERNAL REVENUE CODE AND THE
REGULATIONS THEREUNDER.]
GOLDEN STAR RESOURCES LTD.
__________________________________
No. _______ U.S. $_______________
<PAGE> Page 16
GOLDEN STAR RESOURCES LTD., a corporation duly incorporated and
existing under the laws of Canada (herein called the "Company", which term
includes any successor corporation under the Indenture hereinafter referred
to), for value received, hereby promises to pay to
_________________________________, or registered assigns, the principal sum
of _____________________________________ [United States] Dollars on
________________________ [IF THE SECURITY IS TO BEAR INTEREST PRIOR TO
MATURITY, INSERT -- , and to pay interest thereon from
_________________________ or from the most recent Interest Payment Date to
which interest has been paid or duly provided for, semi-annually on
________________ and _______________ in each year, commencing
_________________, at the rate of ____________% per annum, until the
principal hereof is paid or made available for payment [IF APPLICABLE,
INSERT -- , and (to the extent that the payment of such interest shall be
legally enforceable) at the rate of _____% per annum on any overdue
principal and premium and on any overdue instalment of interest], from the
dates such amounts are due until they are paid or made available for
payment. The interest so payable, and punctually paid or duly provided
for, on any Interest Payment Date will, as provided in such Indenture, be
paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record
Date for such interest, which shall be the _________ or __________ (whether
or not a Business Day), as the case may be, next preceding such Interest
Payment Date. Any such interest not so punctually paid or duly provided
for will forthwith cease to be payable to the Holder on such Regular Record
Date and may either be paid to the Person in whose name this Security (or
one or more Predecessor Securities) is registered at the close of business
on a Special Record Date for the payment of such Defaulted Interest to be
fixed by the Trustee, notice whereof shall be given to Holders of
Securities of this series not less than 10 days prior to such Special
Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Securities of this series may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in said Indenture.]
[IF THE SECURITY IS NOT TO BEAR INTEREST PRIOR TO MATURITY, INSERT
- -- The principal of this Security shall not bear interest except in the
case of a default in payment of principal upon acceleration, upon
redemption or at Stated Maturity and in such case the overdue principal of
this Security shall bear interest at the rate of _________% per annum (to
the extent that the payment of such interest shall be legally enforceable),
which shall accrue from the date of such default in payment to the date
payment of such principal has been made or duly provided for. Interest on
any overdue principal shall be payable on demand. Any such interest on any
overdue principal that is not so paid on demand shall bear interest at the
rate of ___% per annum (to the extent that the payment of such interest
shall be legally enforceable), which shall accrue from the date of such
demand for payment to the date payment of such interest has been made or
duly provided for, and such interest shall also be payable on demand.]
Payment of principal of (and premium, if any) and [IF APPLICABLE,
INSERT -- any such] interest on this Security will be made at the office
or agency of the Company maintained for that purpose in ______________, in
such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts [IF
APPLICABLE, INSERT
<PAGE> Page 17
--]; PROVIDED, HOWEVER, that at the option of the
Company payment of interest may be made by check mailed to the address of
the Person entitled thereto as such address shall appear in the Security
Register.]
Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further provisions shall
for all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereof has been executed
by the Trustee referred to on the reverse hereof by manual signature, this
Security shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed under its corporate seal.
Dated:
GOLDEN STAR RESOURCES LTD.
By:
Attest:
2.3 FORM OF REVERSE OF SECURITY
This Security is one of a duly authorized issue of securities of
the Company (herein called the "Securities"), issued and to be issued in
one or more series under an Indenture, dated as of __________, 199__
(herein called the "Indenture"), among the Company and _____________, as
Trustee (herein called the "Trustee", which term includes any successor
trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder
of the Company, the Trustee and the Holders of the Securities and of the
terms upon which the Securities are, and are to be, authenticated and
delivered. This Security is one of the series designated on the face
hereof [, limited in aggregate amount to U.S. $__________].
Subject to and upon compliance with the provisions of the
Indenture, the Holder of this Security is entitled, at his option, at any
time on or before the close of business on
<PAGE> Page 18
, or in case
this Security or a portion hereof is called for redemption, then in respect
of this Security or such portion hereof until and including, but (unless
the Company defaults in making the payment due upon redemption) not after,
the close of business on the 10th calendar day before the Redemption Date,
to convert this Security (or any portion of the principal amount hereof
which is U.S. $1,000 or an integral multiple thereof), at the principal
amount hereof, or of such portion, into fully paid and non-assessable
Common Shares (calculated as to each conversion to the nearest 1/100 of a
share) at an initial Conversion Price per Common Share equal to U.S.
$_________ per each Common Share (or at the current adjusted Conversion
Price if an adjustment has been made as provided in the Indenture) by
surrender of this Security, duly endorsed or assigned to the Company or in
blank, to the Company at its office or agency in ______________________,
accompanied by written notice to the Company that the Holder hereof elects
to convert this Security, or if less than the entire principal amount
hereof is to be converted, the portion hereof to be converted, and, in such
case such surrender shall be made during the period from the close of
business on any Regular Record Date next preceding any Interest Payment
Date (unless this Security or the portion thereof being converted has been
called for redemption on a Redemption Date within such period), also
accompanied by payment in New York Clearing House or other funds acceptable
to the Company of an amount equal to the interest payable on such Interest
Payment Date on the principal amount of this Security then being converted.
Subject to the aforesaid requirement for payment and, in the case of a
conversion after the Regular Record Date next preceding any Interest
Payment Date and on or before such Interest Payment Date, to the right of
the Holder of this Security (or any Predecessor Security) of record at such
Regular Record Date to receive an instalment of interest (with certain
exceptions provided in the Indenture), no payment or adjustment is to be
made on conversion for interest accrued hereon or for dividends on the
Common Shares issued on conversion. No fractions or shares or scrip
representing fractions of shares will be issued on conversion, but instead
of any fractional interest the Company shall pay a cash adjustment as
provided in the Indenture. The Conversion Price is subject to adjustment
as provided in the Indenture. In addition, the Indenture provides that in
case of certain consolidations or mergers to which the Company is a party
or the transfer of substantially all of the assets of the Company, the
Indenture shall be amended, without the consent of any Holders of
Securities, so that this Security, if then outstanding, will be convertible
thereafter, during the period this Security shall be convertible as
specified above, only into the kind and amount of securities, cash and
other property receivable upon the consolidation, merger or transfer by a
holder of the number of Common Shares into which this Security might have
been converted immediately prior to such consolidation, merger or transfer
(assuming such holder of Common Shares failed to exercise any rights of
election and received per share the kind and amount received per share by a
plurality of non-electing shares). Adjustments in the Conversion Price of
less than one percent of such price will not be required, but any
adjustment that would otherwise be required to be made will be carried
forward and taken into account in the computation of any subsequent
adjustment.
[IF APPLICABLE, INSERT -- The Securities of this series are
subject to redemption upon not less than 30 days' notice by mail, [IF
APPLICABLE, INSERT -- (1) on __________ in any year commencing with the
year _____ and ending with the year _____ through operation of the sinking
fund for this series at a Redemption Price equal to 100% of the principal
amount, and (2)] at any
<PAGE> Page 19
time [IF APPLICABLE, INSERT -- on or after
__________, 199__], as a whole or in part, at the election of the Company,
at the following Redemption Prices (expressed as percentages of the
principal amount): if redeemed [IF APPLICABLE, INSERT -- on or before
________, __%, and if redeemed] during the 12 month period beginning _____
of the years indicated,
<TABLE>
<CAPTION>
Year Redemption Year Redemption
Price Price
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
and thereafter at a Redemption Price equal to ___% of the principal amount,
together in the case of any such redemption [IF APPLICABLE, INSERT --
(whether through operation of the sinking fund or otherwise)] with accrued
interest to the Redemption Date, but interest installments whose Stated
Maturity is on or prior to such Redemption Date will be payable to the
Holders of such Securities, or one or more Predecessor Securities, of
record at the close of business on the relevant record dates referred to on
the face hereof, all as provided in the Indenture.]
[IF APPLICABLE, INSERT -- The Securities of this series are
subject to redemption upon not less than 30 days' notice by mail, (1) on
_____ in any year commencing with the year _____ and ending with the year
_____ through operation of the sinking fund for this series at the
Redemption Prices for redemption through operation of the sinking fund
(expressed as percentages of the principal amount) set forth in the table
below, and (2) at any time [IF APPLICABLE, INSERT -- on or after _____], as
a whole or in part, at the election of the Company, at the Redemption
Prices for redemption otherwise than through operation of the sinking fund
(expressed as percentages of the principal amount) set forth in the table
below: if redeemed during the 12-month period beginning _____ of the years
indicated,
<TABLE>
<CAPTION>
Year Redemption Price for Redemption Price for
Redemption Through Redemption Otherwise
Operation of the Than Through Operation
Sinking Fund of the Sinking Fund
<S> <C> <C> <C> <C>
</TABLE>
and thereafter at a Redemption Price equal to __% of the principal amount,
together in the case of any such redemption (whether through operation of
the sinking fund or otherwise) with accrued interest to the Redemption
Date, but interest installments whose Stated Maturity is on or prior to
such Redemption Date will be payable to the Holders of such securities, or
one or more Predecessor securities, of record at the close of business on
the relevant Record Dates referred to on the face hereof, all as provided
in the Indenture.]
[IF APPLICABLE, INSERT -- The sinking fund for this series
provides for the redemption on _____ in each year beginning with the year
_____ and ending with the year _____ of [IF APPLICABLE, INSERT -- not less
than U.S. $_____ ("mandatory sinking fund") and not more than] U.S. $_____
aggregate principal amount of Securities of this series. Securities of
this series acquired or redeemed by the Company otherwise than through [IF
APPLICABLE, INSERT -- mandatory] sinking fund payments may be credited
against subsequent [IF APPLICABLE, INSERT -- mandatory] sinking fund
payments otherwise required to be made [IF APPLICABLE, INSERT -- in the
inverse order in which they become due].]
[IF THE SECURITY IS SUBJECT TO REDEMPTION OF ANY KIND, INSERT --
In the event of redemption or conversion of this Security in part only, a
new Security or Securities of this series and of like tenor for the
unredeemed or unconverted portion hereof will be issued in the name of the
Holder hereof upon the cancellation hereof.]
[IF SENIOR INDEBTEDNESS, INSERT -- The indebtedness evidenced by
this Security has been designated as Senior Indebtedness, and, to the
extent provided in the Indenture, is PARI PASSU with all other Senior
Indebtedness].
[IF SENIOR SUBORDINATED INDEBTEDNESS, INSERT -- The indebtedness
evidenced by this Security is, to the extent provided in the Indenture,
(i) subordinate and subject in right of payment to the prior payment in
full of all Senior Indebtedness and (ii) PARI PASSU with all other Senior
Subordinated Indebtedness, and this Security is issued subject to the
provisions of the Indenture with respect thereto. Each Holder of this
Security, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his behalf to take
action as may be necessary or appropriate to effectuate the subordination
so provided and (c) appoints the Trustee his attorney-in-fact for any and
all such purposes.]
[IF SUBORDINATED INDEBTEDNESS, INSERT -- The indebtedness
evidenced by this Security is, to the extent provided in the Indenture,
(i) subordinate and subject in right of payment to the prior payment in
full of all Senior Indebtedness and (ii) PARI PASSU with all other
Subordinated
<PAGE> Page 21
Indebtedness, and this Security is issued subject to the
provisions of the Indenture with respect thereto. Each Holder of this
Security, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his behalf to take
action as may be necessary or appropriate to effectuate the subordination
so provided and (c) appoints the Trustee his attorney-in-fact for any and
all such purposes.]
[IF APPLICABLE, INSERT -- The Indenture contains provisions for
defeasance at any time of certain restrictive covenants and Events of
Default with respect to this Security, in each case upon compliance with
certain conditions set forth in the Indenture.]
[IF THE SECURITY IS NOT AN ORIGINAL ISSUE DISCOUNT SECURITY,
INSERT -- If an Event of Default with respect to Securities of this series
shall occur and be continuing, the principal of the Securities of this
series may be declared due and payable in the manner and with the effect
provided in the Indenture.]
[IF THE SECURITY IS AN ORIGINAL ISSUE DISCOUNT SECURITY, INSERT --
If an Event of Default with respect to Securities of this series shall
occur and be continuing, an amount of principal of the Securities of this
series may be declared due and payable in the manner and with the effect
provided in the Indenture. Such amount shall be equal to -- INSERT FORMULA
FOR DETERMINING THE AMOUNT. Upon payment (i) of the amount of principal so
declared due and payable and (ii) of interest on any overdue principal and
overdue interest (in each case to the extent that the payment of such
interest shall be legally enforceable), all of the Company's obligations in
respect of the payment of the principal of and interest, if any, on the
Securities of this series shall terminate.]
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of the Securities
of each series to be affected under the Indenture at any time by the
Company and the Trustee with the consent of the Holders of a majority in
principal amount of the Securities at the time Outstanding of each series
to be affected. The Indenture also contains provisions permitting the
Holders of specified percentages in principal amount of the Securities of
each series at the time Outstanding, on behalf of the Holders of Securities
of such series, to waive compliance by the Company with certain past
provisions of the Indenture and certain defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this
Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this
Security.
As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any
proceeding with respect to the Indenture or for the appointment of a
receiver or trustee or for any other remedy thereunder, unless such Holder
shall have previously given the Trustee written notice of a continuing
Event of Default with respect to the Securities of this series, the Holders
of not less than 25% in principal amount of the Securities of this series
at the time Outstanding shall have made written request to the Trustee to
<PAGE> Page 22
institute proceedings in respect of such Event of Default as Trustee and
offered the Trustee reasonable indemnity and the Trustee shall not have
received from the Holders of a majority in principal amount of Securities
of this series at the time Outstanding a direction inconsistent with such
request, and shall have failed to institute any such proceeding, for 60
days after receipt of such notice, request and offer of indemnity. The
foregoing shall not apply to any suit instituted by the Holder of this
Security for the enforcement of any payment of principal hereof or any
premium or interest hereon on or after the respective due dates expressed
herein.
[IF THE SECURITY IS ISSUED ON A SUBORDINATED OR SENIOR
SUBORDINATED BASIS, INSERT -- Subject to the rights of holders of Senior
Indebtedness, as set forth in the Indenture, no other reference herein to
the Indenture and no other provision of this Security or of the Indenture
shall alter or impair the obligations of the Company, which are
unconditional, to pay the principal of and any premium and interest on this
Security at the times, place and rate, and in the coin and currency, herein
prescribed or to convert this Security as so provided in the Indenture.]
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the
Security Register, upon surrender of this Security for registration of
transfer at the office or agency of the Company in any place where the
principal of and any premium and interest on this Security are payable,
duly endorsed by, or accompanied by a written instrument of transfer in
form satisfactory to the Company and the Security Registrar duly executed
by, the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Securities of this series and of like tenor, of
authorized denominations and for the same aggregate principal amount, will
be issued to the designated transferee or transferees.
The Securities of this series are issuable only in registered form
without coupons in denominations of U.S. $1,000 and any integral multiple
thereof. As provided in the Indenture and subject to certain limitations
therein set forth, Securities of this series are exchangeable for a like
aggregate principal amount of Securities of this series and of like tenor
of a different authorized denomination, as requested by the Holder
surrendering the same.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in
connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company, or the
Trustee may treat the Person in whose name this Security is registered as
the owner hereof for all purposes, whether or not this Security be overdue,
and neither the Company, the Trustee nor any such agent shall be affected
by notice to the contrary.
The terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
[FORM OF CONVERSION NOTICE]
<PAGE> Page 23
To: GOLDEN STAR RESOURCES LTD.
The undersigned owner of this Security hereby irrevocably
exercises the option to convert this Security, or the portion hereof (which
is U.S. $1,000 or an integral multiple thereof) below designated, into
Common Shares of Golden Star Resources Ltd., in accordance with the terms
of the Indenture referred to in this Security, and directs that the shares
issuable and deliverable upon the conversion, together with any check in
payment for fractional shares and any Securities, representing any
unconverted principal amount hereof, be issued and delivered to the
registered holder hereof unless a different name has been indicated below.
If shares are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with
respect thereto. Any amount required to be paid by the undersigned on
account of interest accompanies this Security.
Dated:
<TABLE>
<CAPTION>
Fill in for registration of Common Shares
and Securities if to be issued otherwise than
to the registered holder.
<S> <C>
Principal Amount to be converted (in an integral
Name multiple of U.S. $1,000, if less than all):
U.S. $
Address
(Please print name and address, including Signature
zip/postal code number)
SOCIAL SECURITY OR OTHER TAXPAYER IDENTIFYING [SIGNATURE GUARANTEED -- required only if Common
NUMBER Shares and Securities are to be issued and
delivered to other than the registered holder]
</TABLE>
2.4 FORM OF LEGEND FOR GLOBAL SECURITIES
Unless otherwise specified as contemplated by Section 3.1 for the
Securities evidenced thereby, every Global Security authenticated and
delivered hereunder shall bear a legend in substantially the following
form:
This Security is a Global Security within the meaning of
the Indenture hereinafter referred to and is registered
in the name of a Depositary or a nominee thereof. This
Security may not be transferred to, or
<PAGE> Page 24
registered or
exchanged for Securities registered in the name of, any
Person other than the Depositary or a nominee thereof and
no such transfer may be registered, except in the limited
circumstances described in the Indenture. Every Security
authenticated and delivered upon registration of transfer
of, or in exchange for or in lieu of, this Security shall
be a Global Security subject to the foregoing, except in
such limited circumstances.
2.5 FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION
The Trustee's certificates of authentication shall be in
substantially the following form:
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
As Trustee
By:
Authorized Officer
ARTICLE 3
THE SECURITIES
3.1 AMOUNT UNLIMITED; ISSUABLE IN SERIES
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is unlimited.
The Securities may be issued from time to time in one or more
series. All Securities of each series under this Indenture shall in all
respects be equally and ratably entitled to the benefits hereof with
respect to such series without preference, priority or distinction on
account of the actual time of the authentication and delivery or Stated
Maturity of the Securities of such series. There shall be established in
or pursuant to Board Resolutions of the Company and, subject to
Section 3.3, set forth, or determined in the manner provided, in an
Officers' Certificate of the Company, or established in one or more
indentures supplemental hereto, prior to the issuance of Securities of any
series:
(a)the title of the Securities of the series (which shall
distinguish the Securities of the series from Securities of any
other series);
<PAGE> Page 25
(b)any limit upon the aggregate principal amount of the Securities
of the series which may be authenticated and delivered under this
Indenture (except for Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of,
other Securities of the series pursuant to section 3.4, 3.5, 3.6,
9.6 or 11.7 and except for any Securities which, pursuant to
section 3.3, are deemed never to have been authenticated and
delivered hereunder);
(c)if the Securities will be issuable at a premium over or
discount from their stated principal amount, specification of
such premium or discount, as applicable;
(d)whether any Securities of the series are to be listed for
trading on a securities exchange or otherwise;
(e)the Person to whom any interest on a Security of the series
shall be payable, if other than the Person in whose name that
Security (or one or more Predecessor Securities) is registered at
the close of business on the Regular Record Date for such
interest;
(f)the date or dates on which the principal of the Securities of
the series is payable and on which the Securities will mature;
(g)the rate or rates (which may be fixed or variable) at which the
Securities of the series shall bear interest, if any, or the
method by which such rate or rates are determined, the date or
dates from which such interest shall accrue or the method of
determination of such date or dates, the Interest Payment Dates
on which any such interest shall be payable on any Securities and
the Regular Record Date for any interest payable on any Interest
Payment Date, and the basis upon which interest shall be
calculated if other than that of a 360-day year of twelve 30-day
months;
(h)the place or places where the principal of and any premium and
interest on the Securities of the series shall be payable;
(i)the period or periods within which, the price or prices at
which, and the terms and conditions upon which Securities of the
series may be redeemed, in whole or in part, at the option of the
Company and, if other than by a Board Resolution, the manner in
which any election by the Company to redeem the Securities shall
be evidenced;
(j)the obligation, if any, of the Company to redeem or purchase
Securities of the series pursuant to any sinking fund, purchase
fund or analogous obligation or at the option of a Holder thereof
and the period or periods
<PAGE> Page 26
within which, the price or prices at
which and the terms and conditions upon which Securities of the
series shall be redeemed or purchased, in whole or in part,
pursuant to such obligation;
(k)if other than denominations of U.S. $1,000 and any integral
multiple thereof, the denominations in which Securities of the
series shall be issuable;
(l)the currency, currencies or currency unit or units in which the
Securities of such series shall be denominated and in which
payment of the principal of and any premium and interest on any
Securities of such series shall be payable if other than the
currency of the United States of America and the manner of
determining the equivalent thereof in the currency of the United
States of America for purposes of the definition of "Outstanding"
in Section 1.1;
(m)if the amount of payments of principal of or any premium or
interest on any Securities of the series may be determined by
reference to an index, formula or other method, including,
without limitation, such method based on (i) currency, currencies
or currency units other than that in which the Securities of such
series are payable, (ii) changes in the price of one or more
other securities or groups or indices of securities, or (iii)
changes in the prices of one or more commodities or groups or
indexes of commodities or any combination of the foregoing, the
manner in which such amounts shall be determined and any
commodities, currencies, currency units or indices, value, rate
or price relevant to such determination;
(n)if the principal of or any premium or interest on any
Securities of the series are to be payable, at the election of
the Company or a Holder thereof, in one or more currencies or
currency units other than that or those in which the Securities
are stated to be payable, the currency, currencies or currency
units in which payment of the principal of and any premium and
interest on Securities of such series as to which such election
is made shall be payable, and the period or periods within which,
and the terms and conditions upon which, such election is to be
made and the amount so payable for the manner in which such
amount shall be determined;
(o)if other than the principal amount thereof, the portion of the
principal amount of Securities of the series which shall be
payable upon declaration of acceleration of the Maturity thereof
pursuant to Section 5.2;
(p)if the principal amount payable at the Stated Maturity of any
Securities of the series is not determinable upon original
issuance thereof, the amount which shall be deemed to be the
principal amount of such Securities for any
<PAGE> Page 27
other purpose
hereunder, including the principal amount thereof which shall be
due and payable upon any Maturity other than the Stated Maturity
or which shall be deemed to be Outstanding as of any date (or, in
any such case, the manner in which such principal amount shall be
determined);
(q)if applicable, that the Securities of the series shall be
subject to Covenant Defeasance as provided in Article 13;
(r)if and as applicable, that the Securities of the series shall
be issuable in whole or in part in the form of one or more Global
Securities and, in such case, the respective Depositaries for
such Global Securities, the form of any legend or legends which
shall be borne by any such Global Security in addition to or in
lieu of that set forth in Section 2.4 and any circumstances other
than those set forth in Section 3.5 in which any such Global
Security may be transferred to, and registered and exchanged for
Securities registered in the name of, a Person other than the
Depositary for such Global Security or a nominee thereof and in
which any such transfer may be registered;
(s)the terms and conditions pursuant to which the Securities are
convertible into or exchangeable at the option of the Holders
thereof or the Company, for or into new Securities of a different
series, other Securities of the same series of the same aggregate
principal amount of a different kind or different authorized
denomination or denominations, or other securities or other
property, including shares in the capital of the Company or any
subsidiaries of the Company or securities directly or indirectly
convertible into or exchangeable for such shares;
(t)if applicable, any covenants in addition to those set forth in
Article 10 to which the Company may be subject with respect to
Securities of such series; or any other additions, deletions or
changes to the provisions of Article 10 or any definitions
relating to such Article that shall be applicable to the
Securities of the series (including a provision making any
Section of such Article inapplicable to the Securities of such
series);
(u)any Event of Default with respect to the Securities of such
series, if not set forth herein, and any additions, deletions or
other changes to the Events of Default set forth herein that
shall be applicable to the Securities of such series (including a
provision making any Event of Default set forth herein
inapplicable to the Securities of that series);
(v)provisions, if any, regarding the appointment by the Trustee of
an Authenticating Agent in one or more places other than the
location of the office of the Trustee with power to act on behalf
of the Trustee and subject
<PAGE> Page 28
to its direction in the authentication
and delivery of the Securities of any one or more series in
connection with such transactions as shall be specified in the
provisions of this Indenture or in or pursuant to the Board
Resolution or other supplemental indenture creating such series;
(w)the provisions for the payment of any additional amounts, to
the extent not set forth herein;
(x)designation of the series of Securities as Senior Indebtedness,
Senior Subordinated Indebtedness or Subordinated Indebtedness,
and any additions, deletions or changes to the provisions of
Article 15 or any definition relating to such Article that shall
be applicable to the Securities of the series defining the rights
of holders of Senior Indebtedness in respect of the Securities of
such series;
(y)any addition to or deletion from the definition of Significant
Subsidiary; and
(z)any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture, except as
permitted by Section 9.1).
All Securities of any one series shall be substantially identical
except as to denomination and except as may otherwise be provided in or
pursuant to the Board Resolutions of the Company referred to above and
(subject to Section 3.3) set forth, or determined in the manner provided,
in the Officers' Certificate referred to above or in any such indenture
supplemental hereto. All Securities of any one series need not be issued
at the same time and, unless otherwise provided, a series may be reopened
for issuances of additional Securities of such series.
If any of the terms of the series are established by action taken
pursuant to Board Resolutions of the Company, a copy of an appropriate
record of such action shall be certified by the Secretary or an Assistant
Secretary of the Company and delivered to the Trustee at or prior to the
delivery of the Officers' Certificates setting forth the terms of the
series.
3.2 DENOMINATIONS
The Securities of each series shall be issuable in registered form
without coupons in such denominations and in such currencies as shall be
specified as contemplated by Section 3.1. In the absence of any such
provisions with respect to the Securities of any series, the Securities of
such series shall be issuable in denominations of U.S. $1,000 and any
integral multiple thereof.
3.3 EXECUTION, AUTHENTICATION, DELIVERY AND DATING
<PAGE> Page 29
The Securities shall be executed on behalf of the Company by its
President, one of its Vice Presidents or its Treasurer, under its corporate
seal reproduced thereon attested by its Secretary. The signature of any of
these officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall
bind the Company notwithstanding that such individuals or any of them have
ceased to hold such offices prior to the authentication and delivery of
such Securities or did not hold such offices at the date of such
Securities.
At any time and from time to time after the execution and delivery
of this Indenture, the Company may deliver Securities of any series
executed by the Company to the Trustee for authentication, together with a
Company Order for the authentication and delivery of such Securities, and
the Trustee in accordance with the Company Order (which may provide that
Securities that are the subject thereof will be authenticated and delivered
by the Trustee upon the telephonic or written order of Persons designated
in said Company Order and that such Persons are authorized to determine
such terms and conditions of said Securities as are specified in the
Company Order) shall authenticate and deliver such Securities. If the form
or terms of the Securities of the series have been established in or
pursuant to one or more Board Resolutions of the Company as permitted by
Sections 2.1 and 3.1, in authenticating such Securities, and accepting the
additional responsibilities under this Indenture in relation to such
Securities, the Trustee shall be entitled to receive, and (subject to
Section 6.1) shall be fully protected in relying upon, an Opinion of
Counsel stating:
(a)if the form of such Securities has been established by or
pursuant to Board Resolutions of the Company as permitted by
Section 2.1, that such form has been established in conformity
with the provisions of this Indenture;
(b)if the terms of such Securities have been established by or
pursuant to Board Resolutions of the Company as permitted by
Section 3.1, that such terms have been established in conformity
with the provisions of this Indenture; and
(c)that such Securities, when authenticated and delivered by the
Trustee and issued by the Company in the manner and subject to
any conditions specified in such Opinion of Counsel, will
constitute valid and legally binding obligations of the Company
enforceable in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles
and to such other matters as counsel may specify.
If such form or terms have been so established, the Trustee shall not be
required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's
<PAGE> Page 30
own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee.
Notwithstanding the provisions of Section 3.1 and of the preceding
paragraph, if all Securities of a series are not to be originally issued at
one time, it shall not be necessary to deliver the Officers' Certificate
otherwise required pursuant to Section 3.1 or the Company Order and Opinion
of Counsel otherwise required pursuant to such preceding paragraph at or
prior to the time of authentication of each Security of such series if such
documents are delivered at or prior to the authentication upon original
issuance of the first Security of such series to be issued and contemplate
issuance of all Securities of such series.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture
or be valid or obligatory for any purpose unless there appears on such
Security a certificate of authentication substantially in the form provided
for herein executed by the Trustee by manual signature, and such
certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder. Notwithstanding the foregoing, if any Security shall have been
authenticated and delivered hereunder but never issued and sold by the
Company, and the Company shall deliver such Security to the Trustee for
cancellation as provided in Section 3.9, for all purposes of this Indenture
such Security shall be deemed never to have been authenticated and
delivered hereunder and shall never be entitled to the benefits of this
Indenture.
3.4 TEMPORARY SECURITIES
Pending the preparation of definitive Securities of any series,
the Company may execute, and upon Company Order the Trustee shall
authenticate and deliver, temporary Securities, which are printed,
lithographed, typewritten, mimeographed or otherwise produced, in any
authorized denomination, substantially of the tenor of the definitive
Securities in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Securities may determine, as evidenced by their execution of
such Securities.
If temporary Securities of any series are issued, the Company will
cause definitive Securities of that series to be prepared without
unreasonable delay. After the preparation of definitive Securities of such
series, the temporary Securities of such series shall be exchangeable for
definitive Securities of such series upon surrender of the temporary
Securities of such series at the office or agency of the Company maintained
pursuant to Section 10.2 in a Place of Payment for that series for the
purpose of exchanges of Securities of such series, without charge to the
Holder. Upon surrender for cancellation of any one or more temporary
Securities of any series the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor one or more definitive
Securities of the same series, of any authorized denominations and of a
like aggregate principal amount and tenor. Until so exchanged the
temporary Securities of any series
<PAGE> Page 31
shall in all respects be entitled to the
same benefits under this Indenture as definitive Securities of such series
and tenor.
3.5 REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE
The Company shall cause to be kept at the Corporate Trust Office
of the Trustee a register (the register maintained in such office and in
any other office or agency of the Company in a Place of Payment being
herein sometimes collectively referred to as the "Security Register") in
which, subject to such reasonable regulations as it may prescribe, the
Company shall provide for the registration of Securities and of transfers
of Securities. The Trustee is hereby appointed "Security Registrar" for
the purpose of registering Securities and transfers of Securities as herein
provided.
Upon surrender for registration of transfer of any Security or of
any series at the office or agency in a Place of Payment for that series,
the Company shall execute, and the Trustee shall authenticate and deliver,
in the name of the designated transferee or transferees, one or more new
Securities of the same series, of any authorized denominations and of a
like aggregate principal amount and tenor.
At the option of the Holder, Securities of any series may be
exchanged for other Securities of the same series of any authorized
denominations and of a like aggregate principal amount and tenor, upon
surrender of the Securities to be exchanged at such office or agency.
Whenever any Securities are so surrendered for exchange, the Company shall
execute, and the Trustee shall authenticate and deliver, the Securities
which the Holder making the exchange is entitled to receive.
All Securities issued upon any registration of transfer or
exchange of Securities shall be the valid obligations of the Company,
evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Securities surrendered upon such registration of transfer
or exchange.
Every Security presented or surrendered for registration of
transfer or exchange shall (if so required by the Company or the Trustee)
be duly endorsed, or be accompanied by a written instrument of transfer in
form satisfactory to the Company and the Security Registrar duly executed
by the Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer
or exchange of Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of
Securities, other than exchanges pursuant to Section 3.4, 9.6 or 11.7 not
involving any transfer.
The Company shall not be required to (a) issue or register the
transfer or exchange of Securities of any series during a period beginning
at the opening of business 15 days before the
<PAGE> Page 32
day of the mailing of a
notice of redemption of Securities of that series selected for redemption
under Section 11.3 and ending at the close of business on the day of such
mailing, or (b) register the transfer or exchange of any Security so
selected for redemption in whole or in part, except in the case of any
Security to be redeemed in part, the portion thereof not to be redeemed.
Notwithstanding any other provision in this Indenture, no Global
Security may be transferred to, or registered or exchanged for Securities
registered in the name of, any Person other than the Depositary for such
Global Security or any nominee thereof, and no such transfer may be
registered, unless (a) such Depositary (i) notifies the Company and the
Trustee that it is unwilling or unable to continue as Depositary for such
Global Security or (ii) ceases to be a clearing agency registered under the
Exchange Act and a successor Depositary is not appointed by the Company
within 90 days after the Company receives the notice referred to in
subclause (i) or becomes aware of the condition specified in subclause
(ii), (b) the Company executes and delivers to the Trustee a Company Order
that such Global Security shall be so transferable, registrable and
exchangeable, and such transfers shall be registrable, (c) there shall have
occurred and be continuing an Event of Default with respect to the
Securities evidenced by such Global Security or (d) there shall exist such
other circumstances, if any, as have been specified for this purpose as
contemplated by Section 3.1. Notwithstanding any other provision in this
Indenture, a Global Security to which the restriction set forth in the
preceding sentence shall have ceased to apply may be transferred only to,
and may be registered and exchanged for Securities registered only in the
name or names of, such Person or Persons as the Depositary for such Global
Security shall have directed and no transfer thereof other than such a
transfer may be registered.
Every Security authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a Global Security to which
the restriction set forth in the first sentence of the preceding paragraph
shall apply, whether pursuant to this Section, Sections 3.4, 3.6, 9.6 or
11.7 or otherwise, shall be authenticated and delivered in the form of, and
shall be, a Global Security.
3.6 MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES
If any mutilated Security is surrendered to the Trustee, the
Company shall execute and the Trustee shall authenticate and deliver in
exchange therefor a new Security of the same series and of like tenor and
principal amount and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (a)
evidence to their satisfaction of the destruction, loss or theft of any
Security and (b) such security or indemnity as may be required by them to
save each of them and any agent of either of them harmless, then, in the
absence of notice to the Company or the Trustee that such Security has been
acquired by a bona fide purchaser, the Company shall execute and the
Trustee shall authenticate and deliver in lieu of any such destroyed, lost
or stolen Security, a new Security of the same series and of like tenor and
principal amount and bearing a number not contemporaneously outstanding.
<PAGE> Page 33
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its
discretion, may, instead of issuing a new Security and subject to the above
provisions regarding security or indemnity, pay such Security.
Upon the issuance of any new Security under this Section, the
Company may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any
other expenses (including the fees and expenses of the Trustee) connected
therewith.
Every new Security of any series issued pursuant to this Section
in exchange for any mutilated Security or in lieu of any destroyed, lost or
stolen Security shall constitute an original additional contractual
obligation of the Company, whether or not the mutilated, destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately
with any and all other Securities of that series duly issued hereunder.
The provisions of this Section 3.6 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect
to the replacement or payment of mutilated, destroyed, lost or stolen
Securities.
3.7 PAYMENT OF INTEREST: INTEREST RIGHTS PRESERVED
Except as otherwise provided as contemplated by Section 3.1 with
respect to any series of Securities, interest on any Security which is
payable, and is punctually paid or duly provided for, on any Interest
Payment Date shall be paid to the Person in whose name that Security (or
one or more Predecessor Securities) is registered at the close of business
on the Regular Record Date for such interest.
In the case of Securities represented by a Global Security
registered in the name of or held by a Depositary or its nominee, unless
otherwise specified by Section 3.1, payment of principal, premium, if any,
and interest, if any, will be made to the Depositary or its nominee, as the
case may be, as the registered owner or Holder of such Global Security.
None of the Company, the Trustee, any Paying Agent, any Authenticating
Agent nor the Security Registrar for such Securities will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interest in a Global
Security or for maintaining, supervising or reviewing any records relating
to such beneficial ownership interest.
Any interest on any Security of any series which is payable, but
is not punctually paid or duly provided for, on any Interest Payment Date
(herein called "Defaulted Interest") shall forthwith cease to be payable to
the Holder on the relevant Regular Record Date by virtue of having been
such Holder, on such date, and such Defaulted Interest may be paid by the
Company, at its election in each case, as provided in clause (a) or (b)
below:
<PAGE> Page 34
(a)The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Securities of such series (or
their respective Predecessor Securities) are registered at the
close of business on a Special Record Date for the payment of
such Defaulted Interest, which shall be fixed in the following
manner. The Company shall notify the Trustee in writing of the
amount of Defaulted Interest proposed to be paid on each Security
of such series and the date of the proposed payment, and at the
same time the Company shall deposit with the Trustee an amount of
money equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of
the proposed payment, such money when deposited to be held in
trust for the benefit of the Persons entitled to such Defaulted
Interest as in this clause provided. Thereupon the Trustee shall
fix a Special Record Date for the payment of such Defaulted
Interest which shall be not more than 15 days and not less than
10 days prior to the date of the proposed payment and not less
than 10 days after the receipt by the Trustee of the notice of
the proposed payment. The Trustee shall promptly notify the
Company of such Special
<PAGE> Page 35
Record Date and, in the name and at the expense of the
Company, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to
be mailed, first-class postage prepaid, to each Holder of
Securities of such series at his address as it appears in
the Security Register, not less than 10 days prior to such
Special Record Date. Notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor
having been so mailed, such Defaulted Interest shall be paid
to the Persons in whose names the Securities of such series
(or their respective Predecessor Securities) are registered
at the close of business on such Special Record Date and
shall no longer be payable pursuant to the following clause
(b).
(b)The Company may make payment of any Defaulted Interest on the
Securities of any series in any other lawful manner not
inconsistent with the requirements of any securities exchange on
which such Securities may be listed, and upon such notice as may
be required by such exchange, if, after notice is given by the
Company to the Trustee of the proposed payment pursuant to this
clause, such manner of payment shall be deemed practicable by the
Trustee.
At the option of the Company, interest on Securities of any series
that bear interest may be paid by mailing a check to the address of the
Person entitled thereto as such address shall appear in the Security
Register.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Security shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such
other Security.
3.8 PERSONS DEEMED OWNERS
Prior to due presentment of a Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the
Trustee shall treat the Person in whose name such Security is registered as
the owner of such Security for the purpose of receiving payment of
principal of and any premium and (except as otherwise specified as
contemplated by Section 3.1(e) and subject to Section 3.7) any interest on
such Security and for all other purposes whatsoever, whether or not such
Security be overdue, and neither the Company, the Trustee nor any agent of
the Company or the Trustee shall be affected by notice to the contrary.
In the case of a Global Security, so long as the Depositary for
such Global Security, or its nominee, is the registered owner of such
Global Security, such Depositary or such nominee, as the case may be, will
be considered the sole owner or Holder of the Securities represented by
such Global Security for all purposes under this Indenture. Except as
provided in Section 3.5, owners of beneficial interests in a Global
Security will not be entitled to have Securities that are
<PAGE> Page 36
represented by
such Global Security registered in their names, will not receive or be
entitled to receive physical delivery of such Securities in definitive form
and will not be considered the owners or Holders thereof under this
Indenture.
Notwithstanding the foregoing, with respect to any Global
Security, nothing herein shall (a) prevent the Company, the Trustee, or any
agent of the Company or the Trustee, from giving effect to any written
certification, proxy or other authorization furnished by a Depositary or
(b) impair, as between a Depositary and holders of beneficial interests in
any Global Security, the operation of customary practices governing the
exercise of the rights of the Depositary as Holder of such Global Security.
3.9 CANCELLATION
All Securities surrendered for payment, redemption, registration
of transfer or exchange or for credit against any sinking fund payment
shall, if surrendered to any Person other than the Trustee, be delivered to
the Trustee and shall be promptly cancelled by it. The Company may at any
time deliver to the Trustee for cancellation any Securities previously
authenticated and delivered hereunder which the Company may have acquired
in any manner whatsoever, and may deliver to the Trustee (or to any other
Person for delivery to the Trustee) for cancellation any Securities
previously authenticated hereunder which the Company has not issued and
sold, and all Securities so delivered shall be promptly cancelled by the
Trustee. No Securities shall be authenticated in lieu of or in exchange
for any Securities cancelled as provided in this Section, except as
expressly permitted by this Indenture. All cancelled Securities held by
the Trustee shall be disposed of as directed by a Company Order.
3.10 COMPUTATION OF INTEREST
Except as otherwise specified as contemplated by Section 3.1 for
Securities of any series, interest on the Securities of each series shall
be computed on the basis of a 360-day year of twelve 30-day months.
3.11 PAYMENT OF ADDITIONAL AMOUNTS
All payments made by the Company under or with respect to the
Securities will be made free and clear of and without withholding or
deduction for or on account of any present or future tax, duty, levy,
impost, assessment or other governmental charge imposed or levied by or on
behalf of the Government of Canada or of any province or territory thereof
or by any authority or agency therein or thereof having power to tax
(hereinafter "Taxes"), unless the Company is required to withhold or deduct
Taxes by law or by the interpretation or administration thereof. If the
Company is so required to withhold or deduct any amount for or on account
of Taxes from any payment made under or with respect to the Securities, the
Company will pay such additional amounts ("Additional Amounts") as may be
necessary so that the net amount received by each Holder (including
Additional Amounts) after such withholding or deduction will not be less
than the amount the Holder would have received if such Taxes had not been
withheld or deducted;
<PAGE> Page 37
PROVIDED THAT no Additional Amounts will be payable
with respect to a payment made to a Holder (an "Excluded Holder") (i) with
which the Company does not deal at arm's length (within the meaning of the
INCOME TAX ACT) at the time of making such payment or (ii) which is subject
to such Taxes by reason of its being connected with Canada or any province
or territory thereof otherwise than by the mere holding of Securities or
the receipt of payments thereunder. The Company will also (i) make such
withholding or deduction and (ii) remit the full amount deducted or
withheld to the relevant authority in accordance with applicable law. The
Company will furnish to the Holders of the Securities, within 30 days after
the date the payment of any Taxes is due pursuant to applicable law,
certified copies of tax receipts evidencing such payment by the Company.
The Company will indemnify and hold harmless each Holder (other than an
Excluded Holder) and upon written request reimburse each such Holder for
the amount of (i) any Taxes so levied or imposed and paid by such Holder as
a result of payments made under or with respect to the Securities, (ii) any
liability (including penalties, interest and expenses) arising therefrom or
with respect thereto, and (iii) any Taxes imposed with respect to any
reimbursement under (i) or (ii), but excluding any such Taxes on such
Holders' net income.
At least 30 days prior to each date on which any payment under or
with respect to the Securities is due and payable, if the Company will be
obligated to pay Additional Amounts with respect to such payment, the
Company will deliver to the Trustee an Officers' Certificate stating the
fact that such Additional Amounts will be payable, stating the amounts so
payable and setting forth such other information as is necessary to enable
the Trustee to pay such Additional Amounts to Holders on the payment date.
Whenever in this Indenture there is mentioned, in any context, the payment
of principal (and premium, if any), Redemption Price, interest or any other
amount payable under or with respect to any Security, such mention shall be
deemed to include mention of the payment of Additional Amounts provided for
in this Section to the extent that, in such context, Additional Amounts
are, were or would be payable in respect thereof pursuant to the provisions
of this Section and express mention of the payment of Additional Amounts
(if applicable) in any provisions hereof shall not be construed as
excluding Additional Amounts in those provisions hereof where such express
mention is not made (if applicable).
The obligations of the Company under this Section 3.11 survive the
termination of the Indenture and the payment of all amounts under or with
respect to the Securities.
ARTICLE 4
SATISFACTION AND DISCHARGE
4.1 SATISFACTION AND DISCHARGE OF INDENTURE
This Indenture shall, upon Company Request, cease to be of further
effect (except as to any surviving rights or registration of transfer or
exchange of Securities herein expressly provided for) and the Trustee, at
the expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when:
<PAGE> Page 38
(a)either,
(i) all Securities theretofore authenticated and delivered
(other than (i) Securities which have been destroyed, lost
or stolen and which have been replaced or paid as provided
in Section 3.6 and (ii) Securities for whose payment money
has theretofore been deposited in trust or segregated and
held in trust by the Company and thereafter repaid to the
Company or discharged from such trust, as provided in
Section 10.3) have been delivered to the Trustee for
cancellation, or
(ii) all such Securities not theretofore delivered to the Trustee
for cancellation
(A) have become due and payable, or
(B) will become due and payable at their Stated Maturity
within one year, or
(C) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving
of notice of redemption by the Trustee in the name, and
at the expense, of the Company,
and the Company, in the case of (A), (B) or (C) above, has
deposited or caused to be deposited with the Trustee, as trust
funds in trust for the purpose, money in the currency in which
the Securities of such series are denominated or Government
Obligations of the government issuing the currency in which the
Securities of such series are denominated which through the
payment of interest and principal in respect thereof in
accordance with their terms will provide lawful money not later
than one day before the due dates of principal (and premium, if
any) or interest, or any combination thereof, in an amount
sufficient to pay and discharge the entire indebtedness on such
Securities not theretofore delivered to the Trustee for
cancellation, for principal and any premium and interest to the
date of such deposit (in the case of Securities which have become
due and payable) or to the Stated Maturity or Redemption Date, as
the case may be;
(b)the Company has paid or caused to be paid all other sums
payable hereunder by the Company; and
(c)the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to the
satisfaction and discharge of this Indenture have been complied
with.
<PAGE> Page 39
In the event there are Securities of two or more series hereunder,
the Trustee shall be required to execute an instrument acknowledging
satisfaction and discharge of this Indenture only if requested to do so
with respect to the Securities of all series to which it is Trustee and if
the other conditions thereto are met. In the event there are two or more
Trustees hereunder, then the effectiveness of any such instrument shall be
conditioned upon receipt of such instruments from all Trustees hereunder.
Notwithstanding the satisfaction and discharge of this Indenture,
the obligations of the Company to the Trustee under Section 6.7, the
obligations of the Trustee to any Authenticating Agent under Section 6.14
and, if money shall have been deposited with the Trustee pursuant to
subclause (ii) of clause (a) of this Section, and the obligations of the
Trustee under Section 4.2 and the last paragraph of Section 10.3 shall
survive.
4.2 APPLICATION OF TRUST MONEY
Subject to the provisions of the penultimate paragraph of Section
10.3, all money deposited with the Trustee pursuant to Section 4.1 shall be
held in trust and applied by it, in accordance with the provisions of the
Securities and this Indenture, to the payment, either directly or through
any Paying Agent (including the Company acting as its own Paying Agent) as
the Trustee may determine, to the Persons entitled thereto, of the
principal and any premium and interest for whose payment such money has
been deposited with the Trustee. [IF APPLICABLE, INSERT -- any shall not
be subject to the claims of the holders of Senior Indebtedness].
ARTICLE 5
REMEDIES
5.1 EVENTS OF DEFAULT
"Event of Default", wherever used herein with respect to
Securities of any series, means any one of the following events (whatever
the reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body), unless such event is either
inapplicable to a particular series or it is specifically deleted or
modified in the Board Resolutions or supplemental indenture creating such
series of Securities or in the form of Security for such series:
(a)default in the payment of any interest upon any Security of
that series when it becomes due and payable, and continuance of
such default for a period of 30 days (whether or not such failure
is a result of the subordination provisions relating to such
series); or
<PAGE> Page 40
(b)default in the payment of the principal of (or premium, if any,
on) any Security of that series at its Maturity (whether or not
such failure is a result of the subordination provisions relating
to such series); or
(c)default in the deposit of any sinking fund payment, when and as
due by the terms of a Security of that series; or
(d)default in the performance, or breach of any covenant or
warranty of the Company in this Indenture or of any other
covenant to which the Company or any Significant Subsidiary is
subject with respect to such series of Securities by virtue of
Section 3.1(t) (other than a covenant or warranty a default in
whose performance or whose breach is specifically dealt with
elsewhere in this Section or which has expressly been included in
this Indenture or in the applicable Board Resolutions or
supplemental indenture with respect to such series of Securities
solely for the benefit of a series of Securities other than that
series or which has been included in this Indenture or in the
applicable Board Resolutions or supplemental indenture with
respect to such series of Securities but not made applicable to
the Securities of such series) and continuance of such default or
breach for a period of 90 days after there has been given, by
registered or certified mail, to the Company by the Trustee or to
the Company and the Trustee by the Holders of at least 25% in
principal amount of the Outstanding Securities of that series, a
written notice specifying such default or breach and requiring it
to be remedied and stating that such notice is a "Notice of
Default" hereunder; or
(e)a default under any bond, debenture, note or other evidence of
indebtedness for money borrowed by the Company or any Significant
Subsidiary (including a default with respect to Securities of any
series other than that series) having an aggregate principal
amount outstanding of at least U.S. $10,000,000 or under any
mortgage, indenture or instrument (including this Indenture)
under which there may be issued or by which there may be secured
or evidenced any indebtedness for money borrowed by the Company
or any Significant Subsidiary having an aggregate principal
amount outstanding of at least U.S. $10,000,000, whether such
indebtedness now exists or shall hereafter be created, after the
expiration of any applicable grace period with respect thereto;
or
(f)the entry by a court having jurisdiction in the premises of (i)
a decree or order for relief in respect of the Company or any
Significant Subsidiary in an involuntary case or proceeding under
the COMPANIES' CREDITORS ARRANGEMENT ACT (Canada), the BANKRUPTCY
AND INSOLVENCY ACT (Canada) or the WINDING-UP ACT (Canada) or any
other bankruptcy, insolvency, reorganization or similar law, or
(ii) a decree or order adjudging the
<PAGE> Page 41
Company or any Significant
Subsidiary bankrupt or insolvent, or approving as properly filed
a petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Company or any Significant
Subsidiary under any applicable Canadian or provincial law, or
appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or any
Significant Subsidiary or of any substantial part of its
respective property, or ordering the winding up or liquidation of
its affairs, and the continuance of any such decree or order for
relief specified in this clause (ii) unstayed and in effect for a
period of 60 consecutive days; or
(g)the commencement by the Company or any Significant Subsidiary
of a voluntary case or proceeding under the COMPANIES' CREDITORS
ARRANGEMENT ACT (Canada), the BANKRUPTCY AND INSOLVENCY ACT
(Canada) or the WINDING-UP ACT (Canada) or any other bankruptcy,
insolvency, reorganization or similar law, or of any other case
or proceeding to be adjudicated a bankrupt or insolvent, or the
consent by the Company or any Significant Subsidiary to the entry
of a decree or order for relief in respect of the Company or any
Significant Subsidiary in an involuntary case or proceeding under
the COMPANIES' CREDITORS ARRANGEMENT ACT (Canada), the BANKRUPTCY
AND INSOLVENCY ACT (Canada) or the WINDING-UP ACT (Canada) or any
other bankruptcy, insolvency, reorganization or similar law, or
to the commencement of any bankruptcy or insolvency case or
proceeding against the Company or any Significant Subsidiary or
the filing by the Company or any Significant Subsidiary of a
petition or answer or consent seeking reorganization or relief
under any applicable Canadian or provincial law, or the consent
by it to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator,
assignees, trustee, sequestrator or other similar official of the
Company or any Significant Subsidiary or of any substantial part
of its property, or the making by the Company or any Significant
Subsidiary of an assignment for the benefit of creditors, or the
admission by the Company or any Significant Subsidiary in writing
its inability to pay its debts generally as they become due, or
the taking of corporate action by the Company or any Significant
Subsidiary in furtherance of any such action; or
(h)any other Event of Default provided in the supplemental
indenture or Board Resolution of the Company under which such
series of Securities is issued or in the form of Security for
such series.
5.2 ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT
(a)If an Event of Default with respect to Securities of any series
at the time Outstanding occurs and is continuing, then in every
such case, the Trustee
<PAGE> Page 42
or the Holders of not less than 25% in
principal amount of the Outstanding Securities of that series may
declare the principal amount (or, if any of the Securities of
that series are Original Issue Discount Securities, such portion
of the principal amount of such Securities as may be specified in
the terms thereof) of all of the Securities of that series to be
due and payable immediately, by a notice in writing to the
Company (and to the Trustee if given by Holders) and upon any
such declaration such principal amount (or specified amount)
shall become immediately due and payable, except that if the
Event of Default is an event described in clause 5.1(f) or 5.1(g)
above, the principal amount (or in the case of Original Issue
Discount Securities, such portion thereof) of all Securities
shall become due and payable immediately, without notice of
further action of any kind whatsoever.
(b)At any time after such a declaration of acceleration with
respect to Securities of any series has been made, but before a
judgment or decree for payment of the money due has been obtained
by the Trustee as hereinafter in this Article provided, the
Holders of a majority in principal amount of the Outstanding
Securities of that series, by written notice to the Company and
the Trustee, may rescind and annul such declaration and its
consequences if:
(i) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest on all Securities of that series,
(B) the principal of (and premium, if any, on) any
Securities of that series which have become due
otherwise than by such declaration of acceleration and
any interest thereon at the rate or rates prescribed
therefore in such Securities, to the extent that
payment of such interest is lawful,
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate or rates
prescribed therefor in such Securities, and
(D) all sums paid or advanced by the Trustee hereunder and
the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel;
and
(ii) all Events of Default with respect to Securities of that
series, other than the non-payment of the principal of
Securities of that series which have become due solely by
such declaration of acceleration, have been cured or waived
as provided in Section 5.13.
<PAGE> Page 43
No such rescission shall affect any subsequent default or impair
any right consequent thereon.
5.3 SUITS FOR ENFORCEMENT BY TRUSTEE
The Trustee, in its own name and as trustee of an express trust,
may institute a judicial proceeding for the collection of any sums due and
unpaid as a consequence of the action set froth in Section 5.2(a), and may
prosecute such proceedings to judgment or final decrees, and may enforce
the same against the Company or any other obligor upon the Securities of
such series and collect the money adjudged or decreed to be payable in the
manner provided by law out of the property of the Company or any other
obligor upon such Securities, wherever situated.
If an Event of Default with respect to Securities of any series
occurs and is continuing, the Trustee may in its discretion proceed to
protect and enforce its rights and the rights of the Holders of Securities
of such series by such appropriate judicial proceedings as the Trustee
shall deem most effectual to protect and enforce any such rights, whether
for the specific enforcement of any covenant or agreement in this Indenture
or in aid of the exercise of any power granted herein, or to enforce any
other proper remedy.
5.4 TRUSTEE MAY FILE PROOFS OF CLAIM
In case of any judicial proceeding relative to the Company or any
other obligor upon the Securities, its property or its creditors, the
Trustee shall be entitled and empowered, by intervention in such proceeding
or otherwise, to take any and all actions authorized under Applicable
Legislation in order to have claims of the Holders and the Trustee allowed
in any such proceeding. In particular, the Trustee shall be authorized to
collect and receive any moneys or other property payable or deliverable on
any such claims and to distribute the same; and any custodian, receiver,
assignee, trustee, liquidator, sequestrator or other similar official in
any such judicial proceeding is hereby authorized by each Holder to make
such payments to the Trustee and, in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to pay to
the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee under Section 6.7.
No provision of this Indenture shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Securities or the rights of any Holder thereof or to
authorize the Trustee to vote in respect of the claim of any Holder in any
such proceeding.
5.5 TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES
All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the
possession of any of the Securities or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the
<PAGE> Page 44
Trustee shall be brought in its own name as trustee of an express trust,
and any recovery of judgment shall, after provision for the payment of the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, be for the ratable benefit of the Holders
of the Securities in respect of which such judgment has been recovered.
5.6 APPLICATION OF MONEY COLLECTED
Any money collected by the Trustee pursuant to this Article shall
be applied in the following order, at the date or dates fixed by the
Trustee and, in case of the distribution of such money on account of
principal or any premium or interest, upon presentation of the Securities
and the notation thereon of the payment if only partially paid and upon
surrender thereof if fully paid:
(a)first, to the payment of all amounts due the Trustee under
Section 6.7;
(b)second, to the payment of the amounts then due and unpaid for
principal of and any premium and interest on the Securities in
respect of which or for the benefit of which such money has been
collected, ratably, without preference or priority of any kind,
according to the amounts due and payable on such Securities for
principal and any premium and interest, respectively; and
(c)third, the balance, if any, to the Company or any other Person
or Persons entitled thereto.
5.7 LIMITATION ON SUITS
No Holder of any Security of any series shall have any right to
institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless:
(a)such Holder has previously given written notice to the Trustee
of a continuing Event of Default with respect to the Securities
of that series;
(b)the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series shall have made written
request to the Trustee to institute proceedings in respect of
such Event of Default in its own name as Trustee hereunder;
(c)such Holder or Holders have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities
which might be incurred by it in compliance with such request;
(d)the Trustee for 60 days after receipt of such notice, request
and offer of indemnity has failed to institute any such
proceeding; and
<PAGE> Page 45
(e)no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of
a majority in principal amount of the Outstanding Securities of
that series;
it being understood and intended that no one or more of such Holders shall
have any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of
any other of such Holders, or to obtain or to seek to obtain priority or
preference over any other of such Holders or to enforce any right under
this Indenture, except in the manner herein provided and for the equal and
ratable benefit of all of such Holders.
5.8 UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM AND
INTEREST
Notwithstanding any other provision of this Indenture, the Holder
of any Security shall have the right, which is absolute and unconditional,
to receive payment of the principal of, any premium and (except as
specified as contemplated by Section 3.1(e) and subject to Section 3.7) any
interest on such Security on the Stated Maturity or Maturities expressed in
such Security (or, in the case of redemption, on the Redemption Date) and
to institute suit for the enforcement of any such payment and such rights
shall not be impaired without the consent of such Holder.
5.9 RESTORATION OF RIGHTS AND REMEDIES
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has
been discontinued or abandoned for any reason, or has been determined
adversely to the Trustee or to such Holder, then and in every such case,
subject to any determination in such proceeding, the Company, the Trustee
and the Holders shall be restored severally and respectively to their
former positions hereunder and thereafter all rights and remedies of the
Trustee and the Holders shall continue as though no such proceeding had
been instituted.
5.10 RIGHTS AND REMEDIES CUMULATIVE
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in the last
paragraph of Section 3.6, no right or remedy herein conferred upon or
reserved to the Trustee or to the Holders is intended to be exclusive of
any other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder,
or otherwise, shall not prevent the concurrent assertion or employment of
any other appropriate right or remedy.
5.11 DELAY OR OMISSION NOT WAIVER
No delay or omission of the Trustee or of any Holder of any
Securities to exercise any right or remedy accruing upon any Event of
Default shall impair any such right or remedy
<PAGE> Page 46
or constitute a waiver of any
such Event of Default or an acquiescence therein. Every right and remedy
given by this Article or by law to the Trustee or to the Holders may be
exercised from time to time, and as often as may be deemed expedient, by
the Trustee or by the Holders, as the case may be.
5.12 CONTROL BY HOLDERS
The Holders of a majority in principal amount of the Outstanding
Securities of any series shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the
Trustee, or to exercise any trust or power conferred on the Trustee, with
respect to the Securities of such series, PROVIDED THAT:
(a)such direction shall not be in conflict with any rule of law or
with this Indenture;
(b)the Trustee shall not determine that the action so directed
would be unjustly prejudicial to Holders of Securities of that
series, or any other series not taking part in such direction;
and
(c)the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
5.13 WAIVER OF PAST DEFAULTS
The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series may on behalf of the Holders of all
the Securities of such series waive any past default hereunder with respect
to such series and its consequences, except a default:
(a)in the payment of the principal of or any premium or interest
on any Security of such series; or
(b)in respect of a covenant or provision hereof which under
Article 9 cannot be modified or amended without the consent of
the Holder of each Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
5.14 UNDERTAKING FOR COSTS
All parties to this Indenture agree, and each Holder of any
Security by his acceptance thereof shall be deemed to have agreed, that any
court may in its discretion require, in any suit
<PAGE> Page 47
for the enforcement of any
right or remedy under this Indenture, or in any suit against the Trustee
for any action taken, suffered or omitted by it as Trustee, the filing by
any party litigant in such suit of an undertaking to pay the costs of such
suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorney's fees, against any party litigant in such
suit, having due regard to the merits and good faith of the claims or
defenses made by such party litigant; PROVIDED THAT this Section shall not
be deemed to authorize any court to require such an undertaking or to make
such an assessment in any suit instituted by the Company, or to any suit
instituted by any Holder, or group of Holders, holding in the aggregate
more than 10% in principal amount of the Outstanding Securities of any
series.
5.15 WAIVER OF STAY OR EXTENSION LAWS
The Company covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension
law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of this Indenture; and the Company
hereby expressly waives (to the extent that it may lawfully do so) all
benefit or advantage of any such law and each covenants that it will not
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
5.16 WAIVER OF CERTAIN COVENANTS
The Company may omit in any particular instance to comply with any
term, provision or condition to which the Company is subject with respect
to the Securities of any series by virtue of Section 3.1(t), or any
covenant provided pursuant to Section 9.1(b) for the benefit of Holders of
such series, if before the time for such compliance the Holders of at least
a majority in principal amount of the Outstanding Securities of such series
shall, by Act of such Holders, either waive such compliance in such
instance or generally waive compliance with such term, provision or
condition, but no such waiver shall extend to or affect such term,
provision or condition except to the extent so expressly waived, and, until
such waiver shall become effective, the obligations of the Company and the
duties of the Trustee in respect of any such term, provision or condition
shall remain in full force and effect.
ARTICLE 6
THE TRUSTEE
6.1 CERTAIN DUTIES AND RESPONSIBILITIES
The duties and responsibilities of the Trustee shall be as
provided by Applicable Legislation. Notwithstanding the foregoing (but
subject to Section 1.7), no provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any financial
<PAGE> Page 48
liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it. Whether or
not therein expressly so provided, every provision of this Indenture
relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this
Section.
6.2 NOTICE OF DEFAULTS
If a default occurs hereunder with respect to Securities of any
series, the Trustee shall give the Holders of Securities of such series
notice of such default as and to the extent provided by Applicable
Legislation and in the manner provided in Section 1.6. For the purpose of
this Section, the term "default" means any event which is, or after notice
or lapse of time or both would become, an Event of Default with respect to
Securities of such series.
6.3 CERTAIN RIGHTS OF TRUSTEE
Subject to the provisions of Section 6.1:
(a)the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence
of indebtedness or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party
or parties;
(b)any request or direction of the Company mentioned herein shall
be sufficiently evidenced by a Company Request or Company Order
(unless other evidence in respect thereof be herein specifically
prescribed) and any resolution of the Board of Directors of the
Company may be sufficiently evidenced by a Board Resolution;
(c)whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed)
may, in the absence of bad faith on its part, rely upon an
Officers' Certificate;
(d)the Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance
thereon;
<PAGE> Page 49
(e)the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or
direction of any of the Holders pursuant to this Indenture,
unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities
which might be incurred by it in compliance with such request or
direction;
(f)the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence
of indebtedness or other paper or document, but the Trustee, in
its discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit, and, if the Trustee
shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of
the Company, personally or by agent or attorney; and
(g)the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through
agents or attorneys and the Trustee shall not be responsible for
any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder.
6.4 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements
of the Company, and the Trustee or any Authenticating Agent assumes no
responsibility for their correctness. The Trustee makes no representations
as to the validity or sufficiency of this Indenture or of the Securities,
except that the Trustee represents that it is duly authorized to execute
and deliver this Indenture, authenticate the Securities and perform its
obligations hereunder and, if the series of Securities was required to be
registered under the SECURITIES ACT, that the statements made by it in a
Statement of Eligibility on Form T-1 supplied to the Company are true and
accurate, subject to the qualifications set forth therein. The Trustee or
any Authenticating Agent shall not be accountable for the use or
application by the Company of Securities or the proceeds thereof.
6.5 MAY HOLD SECURITIES
The Trustee, any Authenticating Agent, any Paying Agent, any
Security Registrar or any other agent of the Company, or the Trustee, in
its individual or any other capacity, may become the owner or pledgee of
Securities and, subject to Sections 6.8 and 6.13, may otherwise deal with
the Company with the same rights it would have if it were not Trustee,
Authenticating Agent, Paying Agent, Security Registrar or such other agent.
<PAGE> Page 50
6.6 MONEY HELD IN TRUST
Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law. The
Trustee shall be under no liability for interest on any money received by
it hereunder except as otherwise agreed with the Company in writing.
6.7 COMPENSATION AND REIMBURSEMENT
The Company covenants and agrees:
(a)to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (which compensation
shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust);
(b)except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the
reasonable compensation and the expenses and disbursements of its
agents and counsel), except to the extent any such expense,
disbursement or advance may be attributable to its negligence or
bad faith; and
(c)to indemnify the Trustee for, and to hold it harmless against,
any loss, liability or expense, arising out of or in connection
with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses of defending itself
against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder, except to
the extent any such expense, disbursement or advance may be
attributable to its negligence or bad faith.
"Trustee", for purposes of this Section 6.7, includes any
predecessor Trustee, PROVIDED THAT the negligence or bad faith of any
Trustee shall not affect the rights under this Section 6.7 of any other
Trustee.
6.8 DISQUALIFICATION; CONFLICTING INTERESTS
If the Trustee has or shall acquire a conflicting interest within
the meaning of Applicable Legislation, the Trustee shall either eliminate
such interest or resign, to the extent and in the manner provided by, and
subject to the provisions of, Applicable Legislation and this Indenture,
and the Company shall take prompt action to have a successor Trustee
appointed in the manner provided herein. To the extent permitted by such
legislation, the Trustee shall not be deemed to have a conflicting interest
by virtue of being a trustee under [LIST ANY PRIOR INDENTURES
<PAGE> Page 50
BETWEEN THE
COMPANY AND THE TRUSTEE THAT HAVE NOT BEEN SATISFIED AND DISCHARGED AND
THAT MAY BE EXCLUDED BY THE PROVISO TO SECTION 310(B)(1) OF THE TRUST
INDENTURE ACT.]
6.9 CORPORATE TRUSTEE REQUIRED; ELIGIBILITY
There shall at all times be a Trustee hereunder with respect to
the Securities of each series and the Trustee shall be a Person that is
eligible pursuant to the CANADA BUSINESS CORPORATIONS ACT to act as such,
unless the Company has obtained an exemption with respect to any particular
series of Securities pursuant to subsection 82(3) of the CANADA BUSINESS
CORPORATIONS ACT. Where the Securities of such series was required to be
registered under the SECURITIES ACT, the Trustee shall be a Person that is
eligible pursuant to the TRUST INDENTURE ACT to act as such, has a combined
capital and surplus of at least U.S. $50,000,000 and is subject to
supervision or examination by United States Federal, Territorial, District
of Columbia or State authority. If such Person publishes reports of
condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then, for the purposes of this Section
and to the extent permitted by the TRUST INDENTURE ACT, the combined
capital and surplus of such Person shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. Where the Securities of such series are distributed pursuant to
a prospectus filed with the Ontario Securities Commission, the Trustee
shall be a person that is eligible pursuant to the BUSINESS CORPORATIONS
ACT. If at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section, it shall resign immediately in the
manner and with the effect hereinafter specified in this Article.
6.10 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR
(a)No resignation or removal of the Trustee and no appointment of
a successor Trustee pursuant to this Article shall become
effective until the acceptance of appointment by the successor
Trustee in accordance with the applicable requirements of Section
6.11.
(b)The Trustee may resign at any time with respect to the
Securities of one or more series by giving written notice thereof
to the Company. If the instrument of acceptance by a successor
Trustee required by Section 6.11 shall not have been delivered to
the Trustee within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee
with respect to the Securities of such series.
(c)The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in
principal amount of the Outstanding Securities of such series,
delivered to the Trustee and the Company.
(d)If at any time:
<PAGE> Page 52
(i) the Trustee shall fail to comply with Section 6.8 after
written request therefor by the Company or by any Holder who
has been a bona fide Holder of a Security for at least six
months; or
(ii) the Trustee shall cease to be eligible under Section 6.9 and
shall fail to resign after written request therefor by the
Company or by any such Holder; or
(iii)the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the
Trustee or of its property shall be appointed or any public
officer shall take charge or control of the Trustee or of
its property or affairs for the purpose of rehabilitation,
conservation of liquidation,
then, in any such case, (A) the Company by a Board Resolution,
may remove the Trustee with respect to all Securities, or (B)
subject to Section 5.14, any Holder who has been a bona fide
Holder of a Security for at least six months may, on behalf of
himself and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Trustee with
respect to all Securities and the appointment of a successor
Trustee or Trustees.
(e)If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for
any cause, with respect to the Securities of one or more series,
the Company, by a Board Resolution, shall promptly appoint a
successor Trustee or Trustees with respect to the Securities of
that or those series (it being understood that any such successor
Trustee may be appointed with respect to the Securities of one or
more or all of such series and that at any time there shall be
only one Trustee with respect to the Securities of any particular
series) and shall comply with the applicable requirements of
Section 6.11. If, within one year after such resignation,
removal or incapability, or the occurrence of such vacancy, a
successor Trustee with respect to the Securities of any series
shall be appointed by Act of the Holders of a majority in
principal amount of the Outstanding Securities of such series
delivered to the Company and the retiring Trustee, the successor
Trustee so appointed shall, forthwith upon its acceptance of such
appointment in accordance with the applicable requirements of
Section 6.11, become the successor Trustee with respect to the
Securities of such series and to that extent supersede the
successor Trustee appointed by the Company. If no successor
Trustee with respect to the Securities of any series shall have
been so appointed by the Company or the Holders and accepted
appointment in the manner required by Section 6.11, any Holder
who has been a bona fide Holder of a Security of such series for
at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction
for the
<PAGE> Page 53
appointment of a successor Trustee with respect to the
Securities of such series.
(f)The Company shall give notice of each resignation and each
removal of the Trustee with respect to the Securities of any
series and each
<PAGE> Page 54
appointment of a successor Trustee with respect to the
Securities of any series to all Holders of Securities of
such series in the manner provided in Section 1.6. Each
notice shall include the name of the successor Trustee with
respect to the Securities of such series and the address of
its Corporate Trust Office.
6.11 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR
(a)In case of the appointment hereunder of a successor Trustee
with respect to all Securities, every such successor Trustee so
appointed shall execute, acknowledge and deliver to the Company
and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts and duties of
the retiring Trustee; but, on the request of the Company or the
successor Trustee, such retiring Trustee shall, upon payment of
its charges, execute and deliver an instrument transferring to
such successor Trustee all the rights, powers and trusts of the
retiring Trustee and shall duly assign, transfer and deliver to
such successor Trustee all property and money held by such
retiring Trustee hereunder.
(b)In case of the appointment hereunder of a successor Trustee
with respect to the Securities of one or more (but not all)
series, the Company, the retiring Trustee and each successor
Trustee with respect to the Securities of one or more series
shall execute and deliver an indenture supplemental hereto
wherein each successor Trustee shall accept such appointment and
which (i) shall contain such provisions as shall be necessary or
desirable to transfer and confirm to, and to vest in, each
successor Trustee all the rights, powers, trusts and duties of
the retiring Trustee with respect to the Securities of that or
those series to which the appointment of such successor Trustee
relates, (ii) if the retiring Trustee is not retiring with
respect to all Securities, shall contain such provisions as shall
be deemed necessary or desirable to confirm that all the rights,
powers, trusts and duties of the retiring Trustee with respect to
the Securities of that or those series as to which the retiring
Trustee is not retiring shall continue to be vested in the
retiring Trustee, and (iii) shall add to or change any of the
provisions of this Indenture as shall be necessary to provide for
or facilitate the administration of the trusts hereunder by more
than one Trustee, it being understood that nothing herein or in
such supplemental indenture shall constitute such Trustees co-
trustees of the same trust and that each such Trustee shall be
trustee of a trust or trusts hereunder separate and apart from
any trust or trusts hereunder administered by any other such
Trustee; and upon the execution and delivery of such supplemental
indenture the
<PAGE> Page 55
resignation or removal of the retiring Trustee
shall become effective to the extent provided therein and each
such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers,
trusts and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of
such successor Trustee relates; but, on request of the Company or
any successor Trustee, such retiring Trustee shall duly assign,
transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee hereunder with respect to the
Securities of that or those series to which the appointment of
such successor Trustee relates.
(c)Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Trustee all such
rights, powers and trusts referred to in paragraph (a) or (b) of
this Section, as the case may be.
(d)No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified
and eligible under this Article.
6.12 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS
Any corporation into which the Trustee may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party,
or any corporation succeeding to all or substantially all the corporate
trust business of the Trustee, shall be the successor of the Trustee
hereunder, provided such corporation shall be otherwise qualified and
eligible under this Article, without the execution or filing of any paper
or any further act on the part of any of the parties hereto. In case any
Securities shall have been authenticated, but not delivered, by the Trustee
then in office, any successor by merger, conversion or consolidation to
such authenticating Trustee may adopt such authentication and deliver the
Securities so authenticated with the same effect as if such successor
Trustee had itself authenticated such Securities. In the event any
Securities shall not have been authenticated by such predecessor Trustee,
any such successor Trustee may authenticate and deliver such Securities, in
either its own name or that of its predecessor Trustee, with the full force
and effect which this Indenture provides for the certificate of
authentication of the Trustee.
6.13 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY
If and when the Trustee with respect to any series of Securities
which was required to be registered under the EXCHANGE ACT shall be or
become a creditor of the Company (or any other obligor upon the
Securities), the Trustee shall be subject to the provisions of the TRUST
INDENTURE ACT regarding the collection of claims against the Company (or
any such other obligor).
<PAGE> Page 56
6.14 APPOINTMENT OF AUTHENTICATING AGENT
The Trustee may appoint an Authenticating Agent or Agents with
respect to one or more series of Securities which shall be authorized to
act on behalf of the Trustee to authenticate Securities of such series
issued upon original issue and upon exchange, registration of transfer or
partial redemption thereof or pursuant to Section 3.6, and Securities so
authenticated shall be entitled to the benefits of this Indenture and shall
be valid and obligatory for all purposes as if authenticated by the Trustee
hereunder. Wherever reference is made in this Indenture to the
authentication and delivery of Securities by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating
Agent and a certificate of authentication executed on behalf of the Trustee
by an Authenticating Agent. Each Authenticating Agent shall be acceptable
to the Company and, if such Authenticating Agent is appointed with respect
to any series of Securities which was required to be registered under the
EXCHANGE ACT, shall at all times be a corporation organized and doing
business under the laws of the United States of America, any State thereof
or the District of Columbia, authorized under such laws to act as an
Authenticating Agent, having a combined capital and surplus of not less
than U.S. $50,000,000 and subject to supervision or examination by Federal
or State authority. If such Authenticating Agent publishes reports of
condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then, for the purposes of this Section,
the combined capital and surplus of such Authenticating Agent shall be
deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time an Authenticating
Agent shall cease to be eligible in accordance with the provisions of this
Section, such Authenticating Agent shall resign immediately in the manner
and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged
or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which such
Authenticating Agent shall be a party, or any corporation succeeding to the
corporate agency or corporate trust business of an Authenticating Agent,
shall continue to be an Authenticating Agent, provided such corporation
shall be otherwise eligible under this Section, without the execution or
filing of any paper or any further act on the part of the Trustee or the
Authenticating Agent.
An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice
thereof to such Authenticating Agent and to the Company. Upon receiving
such a notice of resignation or upon such a termination, or in case at any
time such Authenticating Agent shall cease to be eligible in accordance
with the provisions of this Section, the Trustee may appoint a successor
Authenticating Agent which shall be acceptable to the Company and shall
mail written notice of such appointment by first-class mail, postage
prepaid, to all Holders of Securities of the series with respect to which
such Authenticating Agent will serve, as their names and addresses appear
in the Security Register. Any successor Authenticating Agent upon
acceptance of its appointment hereunder shall become vested with all the
rights, powers and duties of its predecessor hereunder, with like effect as
if
<PAGE> Page 57
originally named as an Authenticating Agent. No successor Authenticating
Agent shall be appointed unless eligible under the provisions of this
Section.
The Trustee agrees to pay to each Authenticating Agent from time
to time reasonable compensation for its services under this Section, and
the Trustee shall be entitled to be reimbursed for such payments, subject
to the provisions of Section 6.7.
If an appointment with respect to one or more series is made
pursuant to this Section, the Securities of such series may have endorsed
thereon, in addition to the Trustee's certificate of authentication, an
alternative certificate of authentication in the following form:
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
As Trustee
By:
As Authenticating Agent
By:
Authorized Officer
ARTICLE 7
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
7.1 COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS
The Company will furnish or cause to be furnished to the Trustee:
(a)semi-annually, not later than 15 days after the Regular Record
Date for each series of Securities, a list, in such form as the
Trustee may reasonably require, of the names and addresses of the
Holders of Securities as of such Regular Record Date, or if there
is no Regular Record Date for interest for such series of
Securities, semi-annually, upon such dates as are set forth in
the Board Resolution or indenture supplemental hereto authorizing
such series; and
(b)at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such
request, a list of similar form and content as of a date not more
than 15 days prior to the time such list is furnished;
<PAGE> Page 58
PROVIDED, HOWEVER, that so long as the Trustee is the Security Registrar,
no such list shall be required to be furnished.
7.2 PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS
(a)The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders of
Securities (i) contained in the most recent list furnished to the
Trustee for each series as provided in Section 7.1 and (ii)
received by the Trustee for each series in the capacity as
Security Registrar if the Trustee is acting in such capacity.
The Trustee may destroy any list furnished to it as provided in
Section 7.1 upon receipt of a new list so furnished.
(b)The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the
Securities, and the corresponding rights and privileges of the
Trustee, shall be as provided by Applicable Legislation and any
other relevant provisions of United States and Canadian
securities laws.
(c)Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company
nor the Trustee nor any agent of either of them shall be held
accountable by reason of any disclosure of information as to
names and addresses of Holders made pursuant to Applicable
Legislation.
7.3 REPORTS BY TRUSTEE
(a)The Trustee shall transmit to Holders of Securities, as their
names and addresses appear in the Security Register, such reports
concerning the Trustee and its actions under this Indenture as
may be required pursuant to Applicable Legislation at the times
and in the manner provided pursuant thereto.
(b)A copy of such report shall, at the time of such transmission
to Holders, be filed by the Trustee with each stock exchange upon
which any Securities are listed, with the Commission and with the
Company. The Company will notify the Trustee when any Securities
are listed on any stock exchange.
7.4 REPORTS BY COMPANY
The Company shall file with the Trustee and the Commission, and
transmit to Holders, such information, documents and other reports, and
such summaries thereof, as may be required pursuant to the TRUST INDENTURE
ACT at the times and in the manner provided pursuant to such Act; PROVIDED
THAT any such information, documents or reports required to be filed with
the
<PAGE> Page 59
Commission pursuant to Section 13 or 15(d) of the Exchange Act shall be
filed with the Trustee within 15 days after the same is so required to be
filed with the Commission. The provisions of this section shall not
require the Company to make any filing with the Commission with respect to
any series of Securities to which the EXCHANGE ACT and the TRUST INDENTURE
ACT are not applicable.
ARTICLE 8
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
8.1 COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS
The Company shall not consolidate with or merge into any other
corporation (other than a wholly-owned Subsidiary of the Company) or
convey, transfer, sell or lease its properties and assets substantially as
an entirety (treating the Company and each Subsidiary of the Company as a
single consolidated entity and treating any sale by a Subsidiary or of a
Subsidiary (including by merger) as a sale by the Company for such purpose)
to any corporation (other than a wholly-owned Subsidiary of the Company),
and the Company shall not permit any corporation (other than a wholly owned
Subsidiary of the Company) to consolidate with or merge into the Company or
convey, transfer or lease its properties and assets substantially as an
entirety to the Company, unless:
(a)the Company shall consolidate with or merge into another
corporation or convey, transfer or lease its properties and
assets substantially as an entirety (treating the Company and
each Subsidiary or of a Subsidiary (including by merger)) of the
Company as a single consolidated entity and treating any sale by
a Subsidiary or of a Subsidiary (including by merger) as a sale
by the Company for such purpose) to any corporation, where the
corporation formed by such consolidation or into which the
Company is merged or the corporation which acquires by conveyance
or transfer, or which leases, the properties and assets of the
Company substantially as an entirety (treating the Company and
each Subsidiary of the Company as a single consolidated entity
and treating any sale by a Subsidiary or of a Subsidairy
(including by merger) as a sale by the Company for such purpose),
shall be organized and existing under the laws of the United
States of America or a state thereof or the District of Columbia,
or the laws of Canada or a province thereof, and such corporation
shall expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form satisfactory to
the Trustee, the due and punctual payment of the principal of and
any premium and interest on all the Securities and the
performance or observance of every covenant of this Indenture on
the part of the Company to be performed or observed;
<PAGE> Page 60
(b)the Trustee shall have received an Opinion of Counsel to the
effect that the transaction will not result in the successor
being required to make any deduction or withholding on account of
any present or future tax, duty, levy, impost, assessment or
other governmental charge imposed or levied by or on behalf of
the Government of Canada or of any province or territory thereof
or by any authority or agency therein or thereof having power to
tax from any payments in respect of the Securities, which
deduction or withholding is greater than any deduction or
withholding to which the Company was subject prior to the
transaction;
(c)immediately after giving effect to such transaction and
treating any indebtedness which becomes an obligation of the
Company, or any Subsidiary, as a result of such transaction as
having been incurred by the Company, or such Subsidiary, at the
time of such transaction, no Event of Default, and no event
which, after notice or lapse of time or both, would become an
Event of Default, shall have happened and be continuing; and
(d)the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and, if a
supplemental indenture is required in connection with such
transaction, such supplemental indenture, comply with this
Article and that all conditions precedent herein provided for
relating to such transaction have been complied with.
8.2 SUCCESSOR SUBSTITUTED
Upon any consolidation of the Company with, or merger of the
Company into, any other corporation or any conveyance, transfer or lease of
the properties and assets of the Company substantially as an entirety in
accordance with Section 8.1, the successor corporation formed by such
consolidation or into which the Company is merged or to which such
conveyance, transfer or lease is made shall succeed to, and be substituted
for, and may exercise every right and power of, the Company under this
Indenture with the same effect as if such successor corporation had been
named as the Company herein, and thereafter the predecessor corporation
shall be relieved of all obligations and covenants under this Indenture and
the Securities.
ARTICLE 9
SUPPLEMENTAL INDENTURES
9.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS
Without the consent of any Holders, the Company, when authorized
by a Board Resolution, and the Trustee, at any time and from time to time,
may enter into one or more
<PAGE> Page 61
indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:
(a)to evidence the succession of another corporation to the
Company and the assumption by any such successor of the covenants
of the Company herein and in the Securities; or
(b)to add to the covenants of the Company or to surrender any
right or power herein conferred upon the Company for the benefit
of the Holders of all or any series of Securities (and if such
covenants or the surrender of such right or power are to be for
the benefit of less than all series of Securities, stating that
such covenants are expressly being included solely for the
benefit of such series); or
(c)to add any additional Events of Default with respect to the
Securities of any or all series (and if such additional Events of
Default are to be for the benefit of less than all series of
Securities, stating that such additional Events of Default are
expressly being included solely for the benefit of one or more
specified series); or
(d)to add or change any of the provisions of this Indenture to
such extent as shall be necessary to permit or facilitate the
issuance of Securities in bearer form, registrable or not
registrable as to principal, and with or without interest
coupons, or to permit or facilitate the issuance of Securities in
uncertificated form; or
(e)to add, change or eliminate any of the provisions of this
Indenture in respect of one or more series of Securities,
PROVIDED THAT any such addition, change or elimination (i) shall
neither (A) apply to any Security of any series created prior to
the execution of such supplemental indenture and entitled to the
benefit of such provision nor (B) modify the rights of the Holder
of any such Security with respect to such provision or (ii) shall
become effective only when there is no such Security Outstanding
of such series; or
(f)to secure the Securities; or
(g)to establish the form or terms of Securities of any series as
permitted by Sections 2.1 and 3.1; or
(h)to evidence and provide for the acceptance of appointment
hereunder by another corporation as a successor Trustee with
respect to the Securities of one or more series and to add to or
change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration
<PAGE> Page 62
of the
trusts hereunder by more than one Trustee, pursuant to the
requirements of Section 6.11(b); or
(i)to comply with the requirements of the Commission in connection
with the qualification of this Indenture under the TRUST
INDENTURE ACT; or
(j)to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein,
or to make any other provisions with respect to matters or
questions arising under this Indenture, PROVIDED THAT such action
pursuant to this clause 9.1(j) shall not adversely affect the
interests of the Holders of Outstanding Securities of any series.
9.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS
With the consent of the Holders of not less than a majority in
principal amount of the Outstanding Securities of each series affected by
such supplemental indenture or indentures, by Act of said Holders delivered
to the Company and the Trustee, the Company, when authorized by a Board
Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders of Securities of each
such series under this Indenture; PROVIDED, HOWEVER, that no such
supplemental indenture shall, without the consent of the Holder of each
Outstanding Security affected thereby,
(a)change the Maturity or the Stated Maturity of the principal of,
or any instalment of principal of or interest on, any Security,
or reduce the principal amount thereof or the rate of interest
thereon or any premium payable upon the redemption thereof, or
reduce the amount of the principal of an Original Issue Discount
Security that would be due and payable upon a declaration of
acceleration of the Maturity thereof pursuant to Section 5.2, or
change the method of computing the amount of principal thereof or
interest thereon on any date, or change any Place of Payment
where, or the coin or currency in which, any Security or any
premium or interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment on or
after the Maturity or the Stated Maturity, as the case may be,
thereof (or, in the case of redemption, on or after the
Redemption Date); or
(b)reduce the percentage in principal amount of the Outstanding
Securities of any series, the consent of whose Holders is
required for any such supplemental indenture, or the consent of
whose Holders is required for any waiver of compliance with
certain provisions of this Indenture or certain defaults
hereunder and their consequences, provided for in this Indenture;
or
<PAGE> Page 63
(c)modify any of the provisions of this Section, Section 5.13 or
Section 5.16, except to increase any such percentage, or to
designate, in any supplemental indenture, additional provisions
of this Indenture which, with respect to such series, cannot be
modified or waived without the consent of the Holder of each
Outstanding Security affected thereby; PROVIDED, HOWEVER, that
this clause shall not be deemed to require the consent of any
Holder with respect to changes in the references to "the Trustee"
and concomitant changes in this Section and Section 5.16, or the
deletion of this proviso, in accordance with the requirements of
Sections 6.11(b) and 9.1(h); or
(d)modify the provisions of Article 14 hereof relating to
conversion of Securities of a series in a manner adverse to the
Holders of Securities of such series; or
(e)[IF APPLICABLE, INSERT -- modify the provisions of Article 15
hereof as it relates to Outstanding Securities of a series in a
manner adverse to the Holders of Securities of such series;]
A supplemental indenture which changes or eliminates any covenants or other
provision of this Indenture which has expressly been included solely for
the benefit of one or more particular series of Securities, or which
modifies the rights of the Holders of Securities of such series with
respect to such covenant or other provision, shall be deemed not to affect
the rights under this Indenture of the Holders of Securities of any other
series.
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the
substance thereof.
9.3 EXECUTION OF SUPPLEMENTAL INDENTURES
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications
thereby of the trusts created by this Indenture, the Trustee shall be
entitled to receive, and (subject to Section 6.1) shall be fully protected
in relying upon, an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture. The
Trustee may, but shall not be obligated to, enter into any such
supplemental indenture which affects the Trustees's own rights, duties or
immunities under this Indenture or otherwise.
9.4 EFFECT OF SUPPLEMENTAL INDENTURES
Upon the execution of any supplemental indenture under this
Article, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of
<PAGE> Page 64
this Indenture for all
purposes; and every Holder of Securities theretofore or thereafter
authenticated and delivered hereunder shall be bound thereby to the extent
provided therein.
9.5 CONFORMITY WITH APPLICABLE LEGISLATION
Every supplemental indenture executed pursuant to this Article
shall conform to the requirements of Applicable Legislation.
9.6 REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES
Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article may, and
shall if required by the Trustee, bear a notation in form approved by the
Trustee as to any matter provided for in such supplemental indenture. If
the Company shall so determine, new Securities of any series so modified as
to conform, in the opinion of the Company and the Trustee, to any such
supplemental indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for Outstanding
Securities of such series.
ARTICLE 10
COVENANTS
10.1 PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST
The Company covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay the principal of and any
premium and interest on the Securities of such series in accordance with
the terms of the Securities and this Indenture and will duly comply with
all the other terms, agreements and conditions contained in, or made in
this Indenture for the benefit of, the Securities of such series.
10.2 MAINTENANCE OF OFFICE OR AGENCY
The Company will maintain in each Place of Payment for any series
of Securities an office or agency where Securities of such series may be
presented or surrendered for payment, where Securities of such series may
be surrendered for registration of transfer or exchange and where notices
and demands to or upon the Company in respect of the Securities of such
series and this Indenture may be served. The Company will give prompt
written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail
to maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices
and demands may be made or served at the Corporate Trust Office of the
Trustee, Attention: Corporate Trust Department, and the Company hereby
appoints the Trustee as its agent to receive all such presentations,
surrenders, notices and demands.
<PAGE> Page 65
The Company may also from time to time designate one or more other
offices or agencies where the Securities of one or more series may be
presented or surrendered for any or all such purposes and may from time to
time rescind such designations; PROVIDED, HOWEVER, that no such designation
or rescission shall in any manner relieve the Company of its obligation to
maintain an office or agency in each Place of Payment for Securities of any
series for such purposes. The Company will give prompt written notice to
the Trustee of any such designation or rescission and of any change in the
location of any such other office or agency.
10.3 MONEY FOR SECURITIES PAYMENTS TO BE HELD IN TRUST
If the Company shall at any time act as its own Paying Agent with
respect to any series of Securities, it will, on or before each due date of
the principal of, or any premium or interest on, any of the Securities of
such series, segregate and hold in trust for the benefit of the Persons
entitled thereto a sum sufficient to pay the principal and any premium and
interest so becoming due until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and the Company will promptly
notify the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for any
series of Securities, it will, prior to each due date of the principal of,
or any premium or interest on, any Securities of such series, deposit with
any such Paying Agent a sum sufficient to pay such principal, premium (if
any) or interest so becoming due, such sum to be held in trust for the
benefit of the Persons entitled to such principal, premium (if any) or
interest thereon and (unless such Paying Agent is the Trustee) the Company
will promptly notify the Trustee of its action or failure so to act.
The Company will cause each Paying Agent for any series of
Securities, other than the Trustee, to execute and deliver to the Trustee
an instrument in which such Paying Agent shall agree with the Trustee,
subject to the provisions of this Section, that such Paying Agent will:
(a) hold all sums held by it for the payment of the principal of (and
premium, if any) or interest on Securities in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided; (b) give the Trustee notice of
any default by the Company (or any other obligor upon the Securities) in
the making of any payment of principal (and premium, if any) or interest on
the Securities of such series; and (c) at any time during the continuance
of any such default, upon the written request of the Trustee, forthwith pay
to the Trustee all sums so held in trust by such Paying Agent for payment
in respect of such series.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture with respect to any series of
Securities or for any other purpose, pay, or the Company may by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust
by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company
or such Paying Agent; and, upon such payment by any Paying Agent to the
Trustee, such Paying Agent shall be released from all further liability
with respect to such money.
<PAGE> Page 66
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of, or any
premium or interest on, any Security of any series and remaining unclaimed
for two years after such principal, premium or interest has become due and
payable shall be paid to the Company on Company Request (including interest
income accrued on such funds, if any), or (if then held by the Company)
shall be discharged from such trust; and the Holder of such Security shall
thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; PROVIDED, HOWEVER, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once in the WALL STREET
JOURNAL and once in the national edition of THE GLOBE AND MAIL or other
daily newspapers of national circulation in each of the United States and
Canada or mail to each Holder of the Securities for which the money to be
repaid is held in trust, as their names and addresses appear in the
Security Register, a notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from
the date of such publication or mailing, any unclaimed balance of such
money then remaining will be repaid to the Company.
The Company initially authorizes the Trustee to act as Paying
Agent for the Securities on its behalf. The Company may at any time and
from time to time authorize one or more Persons to act as Paying Agent in
addition to or in place of the Trustee with respect to any series of
Securities issued under this Indenture.
10.4 STATEMENT BY OFFICERS AS TO DEFAULT
The Company will deliver to the Trustee, within 120 days after the
end of each fiscal year of the Company ending after the date hereof, an
Officers' Certificate, stating whether or not to the best knowledge of the
signers thereof the Company, is in default in the performance and
observance of any of the terms, provisions and conditions of this Indenture
(without regard to any period of grace or requirement of notice provided
hereunder) and, if the Company shall so be in default, specifying all such
defaults and the nature and status thereof of which they may have
knowledge. Such statement need not include reference to any default which
has been fully cured prior to the date as of which such statement speaks.
10.5 EXISTENCE
Subject to Article 8, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its
corporate existence, rights (charter and statutory) and franchises;
PROVIDED, HOWEVER, that the Company shall not be required to preserve any
such right or franchise if the Board of Directors of the Company shall
determine that the preservation thereof is no longer desirable in the
conduct of the business of the Company and that the loss thereof is not
disadvantageous in any material respect to the Holders.
<PAGE> Page 67
10.6 MAINTENANCE OF PROPERTIES
The Company will cause all material properties used or useful in
the conduct of its business or the business of any Subsidiary to be
maintained and kept in good condition, repair and working order and
supplied with all necessary equipment and will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements
thereof, all as (and to the extent) in the judgment of the Company may be
necessary or appropriate in connection with its business; PROVIDED,
HOWEVER, that nothing in this Section shall prevent the Company from
discontinuing the operation or maintenance of any such properties if such
discontinuance is, in the judgment of the Company, desirable in the conduct
of its business or the business of any Subsidiary and not disadvantageous
in any material respect to the Holders.
10.7 PAYMENT OF TAXES AND OTHER CLAIMS
The Company will pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (a) all material
taxes, assessments and governmental charges levied or imposed upon the
Company or any Subsidiary or upon the income, profits or property of the
Company or any Subsidiary, and (b) all lawful claims for labour, materials
and supplies which, if unpaid, might by law become a material lien upon the
property of the Company or any Subsidiary; PROVIDED, HOWEVER, that the
Company shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings.
[IF, PURSUANT TO A BOARD RESOLUTION, THE SECURITIES ARE DESIGNATED
AS SENIOR SUBORDINATED INDEBTEDNESS, THE FOLLOWING COVENANT SHOULD BE
INSERTED.]
10.8 LIMITATION ON SUBORDINATED INDEBTEDNESS
The Company shall not issue, assume, guarantee, incur or otherwise
become liable, directly or indirectly, for any indebtedness which is
subordinate or junior in right of payment to any Senior Indebtedness unless
such indebtedness constitutes Securities or is PARI PASSU or expressly
subordinated in right of payment to any Securities.
ARTICLE 11
REDEMPTION OF SECURITIES
11.1 APPLICABILITY OF ARTICLE
Securities of any series which are redeemable before their Stated
Maturity shall be redeemable in accordance with their terms and (except as
otherwise specified as contemplated by Section 3.1 for Securities of any
series) in accordance with this Article.
<PAGE> Page 68
11.2 ELECTION TO REDEEM; NOTICE TO TRUSTEE
The election of the Company to redeem any Securities shall be
evidenced by a Board Resolution or in another manner specified as
contemplated by Section 3.1 for such Securities. In case of any redemption
at the election of the Company of less than all the Securities of any
series of the same tenor, the Company shall, at least 60 days prior to the
Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date
and of the principal amount of Securities of such series to be redeemed
and, if applicable, of the tenor of the Securities to be redeemed, which
notice shall be irrevocable. In the case of any redemption of Securities
prior to the expiration of any restriction on such redemption provided in
the terms of such Securities or elsewhere in this Indenture, the Company
shall furnish the Trustee with an Officers' Certificate evidencing
compliance with such restriction.
11.3 SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED
If less than all the Securities of any series are to be redeemed
(unless all of the Securities of such series and of a specified tenor are
to be redeemed), the particular Securities to be redeemed shall be selected
not more than 60 days prior to the Redemption Date by the Trustee, from the
Outstanding Securities of such series not previously called for redemption,
by such method as the Trustee shall deem fair and appropriate and which may
provide for the selection for redemption of portions (equal to the minimum
authorized denomination for Securities of that series or any integral
multiple thereof) of the principal amount of Securities of such series of a
denomination larger than the minimum authorized denomination for Securities
of that series. Unless otherwise provided in the terms of a particular
series of Securities, the portions of the principal of Securities so
selected for partial redemption shall be equal to the minimum authorized
denomination of the Securities of such series, or an integral multiple
thereof, and the principal amount which remains outstanding shall not be
less than the minimum authorized denomination for Securities of such
series.
If any convertible or exchangeable Security selected for partial
redemption is converted in part before the termination of the conversion or
exchange right with respect to the portion of the Security so selected, the
converted or exchanged portion of such Security shall be deemed (so far as
may be) to be the portion selected for redemption.
Upon any redemption of fewer than all of the Securities of any
given series, the Company and the Trustee may treat as Outstanding any
Securities surrendered for conversion or exchange during the period of 15
days next preceding the mailing of a notice of redemption, and need not
treat as Outstanding any Security authenticated and delivered during such
period in exchange for the unconverted portion of any Security converted in
part during such period.
The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption and, in the case of any Securities
selected for partial redemption, the principal amount thereof to be
redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall
relate, in the case of any Securities redeemed or to be redeemed only in
part to the portion of the principal amount of such Securities which has
been or is to be redeemed.
<PAGE> Page 69
11.4 NOTICE OF REDEMPTION
Notice of redemption shall be given by first-class mail, postage
prepared, mailed not less than 30 nor more than 60 days prior to the
Redemption Date, unless a shorter period is specified in the Securities to
be redeemed, to each Holder of Securities to be redeemed, at his address
appearing in the Security Register.
Any notice that is mailed to the Holder of any Securities in the
manner herein provided shall be conclusively presumed to have been duly
given, whether or not such Holder receives the notice.
All notices of redemption shall state:
(a)the Redemption Date;
(b)the Redemption Price and the amount of accrued interest, if
any, to be paid;
(c)if less than all the Outstanding Securities of any series are
to be redeemed, the identification (and, in the case of partial
redemption of any Securities, the principal amounts) of the
particular Securities to be redeemed;
(d)in case any Security is to be redeemed in part only, the notice
which relates to such Security shall state that on and after the
Redemption Date, upon surrender of such Security, the Holder of
such Security will receive, without charge, a new Security or
Securities of authorized denominations for the principal amount
thereof remaining unredeemed;
(e)that on the Redemption Date, the Redemption Price will become
due and payable upon each such Security to be redeemed and, if
applicable, that interest thereon will cease to accrue on and
after said date;
(f)in the case of any Securities that are convertible pursuant to
Article 14, the Conversion Price, the date on which the right to
convert the principal of the Securities to be redeemed will
terminate and the place or places where such Securities may be
surrendered for conversion;
(g)the place or places where such Securities are to be surrendered
for payment of the Redemption Price; and
<PAGE> Page 70
(h)that the redemption is for a sinking or purchase fund or other
analogous obligation, if such is the case.
Notice of redemption of Securities to be redeemed at the election
of the Company shall be given by the Company or, at the Company's request,
by the Trustee in the name and at the expense of the Company and shall be
irrevocable.
11.5 DEPOSIT OF REDEMPTION PRICE
On or prior to any Redemption Date, the Company shall deposit with
the Trustee or with a Paying Agent (or, if the Company is acting as its own
Paying Agent, segregate and hold in trust as provided in Section 10.3) an
amount of money in same day funds (or New York Clearing House funds if such
deposit is made prior to the applicable Redemption Date) sufficient to pay
the Redemption Price of, and (except if the Redemption Date shall be an
Interest Payment Date) accrued interest on, all the Securities which are to
be redeemed on that date.
11.6 SECURITIES PAYABLE ON REDEMPTION DATE
Notice of redemption having been given as aforesaid, the
Securities so to be redeemed shall, on the Redemption Date, become due and
payable at the Redemption Price therein specified, and from and after such
date (unless the Company shall default in the payment of the Redemption
Price and accrued interest) such Securities shall cease to bear interest.
Upon surrender of any such Security for redemption in accordance with said
notice, such Security shall be paid by the Company at the Redemption Price,
together with accrued interest to the Redemption Date; PROVIDED, HOWEVER,
that, unless otherwise specified as contemplated by Section 3.1,
installments of interest whose Stated Maturity is on or prior to the
Redemption Date will be payable to the Holders of such Securities, or one
or more Predecessor Securities, registered as such at the close of business
on the relevant record dates according to their terms and the provisions of
Section 3.7.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal and any premium shall,
until paid, bear interest from the Redemption Date at the rate prescribed
therefor in the Security and each Security shall remain convertible into
Common Shares until the principal of such Security shall have been paid or
fully provided for.
11.7 SECURITIES REDEEMED IN PART
Any Security which is to be redeemed only in part shall be
surrendered at a Place of Payment therefor (with, if the Company or the
Trustee so requires, due endorsement by, or a written instrument of
transfer in form satisfactory to the Company and the Trustee duly executed
by, the Holder thereof or his attorney duly authorized in writing), and the
Company shall execute, and the Trustee shall authenticate and deliver to
the Holder of such Security without service charge, a new Security or
Securities of the same series and of like tenor, of any authorized
denomination as requested by such Holder, in aggregate principal amount
equal to and in exchange for the unredeemed portion of the principal of the
Security so surrendered.
<PAGE> Page 71
ARTICLE 12
SINKING FUNDS
12.1 APPLICABILITY OF ARTICLE
The provisions of this Article shall be applicable to any sinking
fund for the retirement of Securities of a series except as otherwise
specified as contemplated by Section 3.1 for Securities of such series.
The minimum amount of any sinking fund payment provided for by the
terms of Securities of any series is herein referred to as a "mandatory
sinking fund payment", and any payment in excess of such minimum amount
provided for by the terms of Securities of any series is herein referred to
as an "optional sinking fund payment". If provided for by the terms of
Securities of any series, the cash amount of any sinking fund payment may
be subject to reduction as provided in Section 12.2. Each sinking fund
payment shall be applied to the redemption of Securities of any series as
provided for by the terms of Securities of such series.
12.2 SATISFACTION OF SINKING FUND PAYMENTS WITH SECURITIES
The Company (a) may deliver Outstanding Securities of a series
(other than any previously called for redemption) and (b) may apply as a
credit Securities of a series which have been redeemed either at the
election of the Company pursuant to the terms of such Securities or through
the application of permitted optional sinking fund payments pursuant to the
terms of such Securities, in each case in satisfaction of all or any part
of any sinking fund payment with respect to the Securities of such series
required to be made pursuant to the terms of such Securities as provided
for by the terms of such Series; PROVIDED THAT such Securities have not
been previously so credited. Such Securities shall be received and
credited for such purpose by the Trustee at the Redemption Price specified
in such Securities for redemption through operation of the sinking fund and
the amount of such sinking fund payment shall be reduced accordingly.
12.3 REDEMPTION OF SECURITIES FOR SINKING FUND
Not less than 60 days prior to each sinking fund payment date for
any series of Securities, the Company will deliver to the Trustee an
Officers' Certificate specifying the amount of the next ensuing sinking
fund payment for that series pursuant to the terms of that series, the
portion thereof, if any, which is to be satisfied by payment of cash and
the portion thereof, if any, which is to be satisfied by delivering the
crediting Securities of that series pursuant to Section 12.2 and will also
deliver to the Trustee any Securities to be so delivered. Not less than 30
days before each such sinking fund payment date the Trustee shall select
the Securities to be redeemed upon such sinking fund payment date in the
manner specified in Section 11.3 and cause notice of the redemption thereof
to be given in the name of and at the expense of the Company in the
<PAGE> Page 72
manner
provided in Section 11.4. Such notice having been duly given, the
redemption of such Securities shall be made upon the terms and in the
manner stated in Sections 11.6 and 11.7.
ARTICLE 13
COVENANT DEFEASANCE
13.1 COMPANY'S OPTION TO EFFECT COVENANT DEFEASANCE
The Company may elect, at its option by Board Resolution, at any
time, to have Section 13.2 applied to the Outstanding Securities of any
series designated pursuant to Section 3.1 as being defeasible pursuant to
this Article 13 (hereinafter called a "Defeasible Series"), upon compliance
with the conditions set forth below in this Article 13.
13.2 COVENANT DEFEASANCE
Upon the exercise by the Company of the option provided in Section
13.1 to have this Section 13.2 applied to the Outstanding Securities of any
Defeasible Series, (a) the Company shall be released from its obligations
under Sections 10.5 through 10.8, inclusive, and under any other covenant
to which the Company is subject with respect to such series of Securities
by virtue of Section 3.1(t) and Article 8 and (b) the occurrence of any
event specified in Sections 5.1(d) (with respect to any of Section 10.5
through 10.8 inclusive and any other covenant to which the Company is
subject with respect to such series of Securities by virtue of Section
3.1(t) and Article 8), 5.1(e) and 5.1(h) shall be deemed not to be or
result in an Event of Default, in each case with respect to the Outstanding
Securities of such series as provided in this Section on and after the date
the conditions set forth in Section 13.3 are satisfied (hereinafter called
"Covenant Defeasance"). For this purpose, such Covenant Defeasance means
that the Company may omit to comply with and shall have no liability in
respect of any term, condition or limitation set forth in any such
specified Section (to the extent so specified in the case of
Section 5.1(d)), whether directly or indirectly by reason of any reference
elsewhere herein to any such Section or by reason of any reference in any
such Section to any other provision herein or in any other document, but
the remainder of this Indenture and the Securities of such series shall be
unaffected thereby. [IF APPLICABLE, INSERT -- ; provided, however, that
notwithstanding the provisions of Article 15, in the event that the Company
deposits money or government obligations in compliance with this Article
13, the money or government obligations so deposited will not be subject to
the subordination provisions of Article 15 and the indebtedness evidenced
by such Outstanding Securities of any Defeasible Series will not be
subordinated in right of payment to the holders of applicable Senior
Indebtedness to the extent of the money or government obligations so
deposited.]
13.3 CONDITIONS TO COVENANT DEFEASANCE
The following shall be the conditions to application of
Section 13.2 to the Outstanding Securities of any Defeasible Series:
<PAGE> Page 73
(a)The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee that satisfies the
requirements contemplated by Section 6.9 and agrees to comply
with the provisions of this Article 13 applicable to it) and
conveyed all right, title and interest to the Trustee for the
benefit of the Holders of the Securities of such series, under
the terms of an irrevocable trust agreement in form and substance
satisfactory to the Trustee, as trust funds in trust for the
purpose of making the following payments, specifically pledged to
the Trustee as security for, and dedicated solely to, the benefit
of the Holders of Outstanding Securities of such series, (i) an
amount in the currency in which the Securities of such series are
denominated and in which payments of principal, premium (if any)
and interest are to be made, or (ii) the equivalent in Government
Obligations denominated in the currency in which the Securities
of such series are denominated and in which payments of
principal, premium (if any), or interest are to be made, issued
by the government that issued such currency, through the
scheduled payment of principal and interest in respect thereof in
accordance with their terms, not later than one day before the
due date of any payment, money in an amount, or (iii) a
combination thereof, in each case sufficient, in the opinion of a
nationally recognized firm of independent public accountants or
chartered accountants expressed in a written certification
thereof delivered to the Trustee, to pay and discharge, without
consideration of the reinvestment of such interest and after
payment of all federal, state, provincial and local taxes or
other charges and assessments in respect thereof payable by the
Trustee and which shall be applied by the Trustee (or any such
other qualifying trustee) to pay and discharge each instalment of
principal (including mandatory sinking fund payments) of, and
premium (not relating to optional redemption), if any, and
interest on, the Outstanding Securities of such series on the
dates such installments of principal of, and premium (not
relating to optional redemption), if any, or interest are due up
to the Stated Maturity Date, or the Redemption Date, as the case
may be (PROVIDED THAT in the case of redemption, before such
deposit, the Company must give to the Trustee, in accordance with
Section 11.2 hereof, a notice of its election to redeem the
Outstanding Securities at a future date in accordance with
Article 11 hereof, which notice shall be irrevocable).
(b)In the case of an election under Section 13.2 with respect to
any series of Securities required to be registered under the
SECURITIES ACT, the Company shall have delivered to the Trustee
an Opinion of Counsel to the effect that the Holders of the
Outstanding Securities of such series will not recognize income,
gain or loss for United States Federal income tax purposes as a
result of the deposit and Covenant Defeasance to be effected with
respect to the Securities of such series and will be subject to
United States Federal income tax on the same amount, in the same
manner and at the same times
<PAGE> Page 74
as would be the case if such deposit
and Covenant Defeasance were not to occur.
(c)The Company shall have delivered to the Trustee an Officers'
Certificate to the effect that the Securities of such series, if
then listed on any securities exchange, will not be delisted as a
result of such deposit.
(d)No Event of Default or event that (after notice of lapse of
time or both) would become an Event of Default shall have
occurred and be continuing at the time of such deposit or, with
regard to any Event of Default or any such event specified in
Sections 5.1(f) and 5.1(g), at any time on or prior to the 123rd
day after the date of such deposit (it being understood that this
condition shall not be deemed satisfied until after such 123rd
day).
(e)Such Covenant Defeasance shall not cause the Trustee to have a
conflicting interest within the meaning of Applicable Legislation
(assuming, in the case of the TRUST INDENTURE ACT, that all
Securities are in default within the meaning of such Act).
(f)Such Covenant Defeasance shall not result in a breach or
violation of, or constitute a default under, any other agreement
or instrument to which the Company is a party or by which it is
bound.
(g)The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent with respect to such Covenant Defeasance
have been complied with.
(h)With respect to any series of Securities required to be
registered under the SECURITIES ACT, such Covenant Defeasance
shall not result in the trust arising from such deposit
constituting an investment company within the meaning of the
United States INVESTMENT COMPANY ACT of 1940, as amended, unless
such trust shall be qualified under such Act or exempt from
regulation thereunder.
13.4 DEPOSITED MONEY AND GOVERNMENT OBLIGATIONS TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS
Subject to the provisions of the last paragraph of Section 10.3,
all money and Government Obligations (including the proceeds thereof)
deposited with the Trustee or other qualifying trustee (solely for purposes
of this Section and Section 13.5, the Trustee and any such other trustee
are referred to collectively as the "Trustee") pursuant to Section 13.3 in
respect of the Securities of any Defeasible Series shall be held in trust
and applied by the Trustee, in accordance with the provisions of the
Securities of such series and this Indenture, to the payment, either
directly or through any such Paying Agent (including the Company acting as
its own Paying
<PAGE> Page 75
Agent) as the Trustee may determine, to the Holders of
Securities of such series, of all sums due and to become due thereon in
respect of principal and any premium and interest, but money so held in
trust need not be segregated from other funds except to the extent required
by law [IF APPLICABLE, INSERT -- and shall not be subject to the claims
of the holders of Senior Indebtedness.]
The Company shall pay and indemnify the Trustee against any tax,
fee or other charge imposed on or assessed against the Government
Obligations deposited pursuant to Section 13.3 or the principal and
interest received in respect thereof other than any such tax, fee or other
charge that by law is for the account of the Holders of Outstanding
Securities.
Notwithstanding anything in this Article 13 to the contrary, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or Government Obligations held by it as provided in
Section 13.3 with respect to Securities of any Defeasible Series that, in
the opinion of a nationally recognized firm of independent public
accountants or chartered accountants expressed in a written certification
thereof delivered to the Trustee, are in excess of the amount thereof that
would then be required to be deposited to effect an equivalent Covenant
Defeasance with respect to the Securities of such series.
13.5 REINSTATEMENT
If the Trustee or the Paying Agent is unable to apply any money in
accordance with this Article 13 with respect to the Securities of any
series by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application,
then the Company's obligations under this Indenture and the Securities of
such series shall be revived and reinstated as though no deposit had
occurred pursuant to this Article 13 with respect to Securities of such
series and monies so deposited shall be returned to the Company.
ARTICLE 14
CONVERSION OF SECURITIES
14.1 CONVERSION PRIVILEGE AND CONVERSION PRICE
The conversion of Securities of any series into Common Shares of
the Company shall be in accordance with the terms of such Securities and
(except as otherwise specified as contemplated by Section 3.1 for
Securities of any series) in accordance with this Article.
Subject to and upon compliance with the provisions of this
Article, at the option of the Holder thereof, any Security or any portion
of the principal amount thereof which is U.S. $1,000 or an integral
multiple of U.S. $1,000 (unless otherwise specified in a Board Resolution
or supplemental indenture with respect to the Securities of the relevant
series), may be converted at the principal amount thereof, or of such
portion thereof, into fully paid and non-assessable Common Shares
(calculated as to each conversion to the nearest 1/100 of a share) of the
<PAGE> Page 76
Company, at the Conversion Price, determined as hereinafter provided, in
effect at the time of conversion. Such conversion right shall expire at
the close of business on the date specified for Securities of such series.
In case a Security or portion thereof is called for redemption, such
conversion right in respect of the Security or portion so called shall
expire at the close of business on the Redemption Date, unless the Company
defaults in making the payment due upon redemption.
The price at which Common Shares shall be delivered upon
conversion (the "Conversion Price") shall initially be the price per Common
Share at which the Securities of the relevant series are convertible as set
forth in any Board Resolution with respect to such series (or any
supplemental indenture with respect thereto). The Conversion Price shall
be adjusted in certain instances as provided in Section 14.4.
14.2 EXERCISE OF CONVERSION PRIVILEGE
In order to exercise the conversion privilege, the Holder of any
Security to be converted shall surrender such Security, duly endorsed or
assigned to the Company or in blank, at any office or agency of the Company
maintained for that purpose pursuant to Section 10.2, accompanied by
written notice to the Company (which shall be substantially in the form set
forth in Section 2.3) at such office or agency or, if applicable, by notice
in accordance with the procedures of the Depositary, that the Holder elects
to convert such Security or, if less than the entire principal amount
thereof is to be converted, the portion thereof to be converted.
Securities surrendered for conversion during the period from the close of
business on any Regular Record Date next preceding any Interest Payment
Date to the opening of business on such Interest Payment Date shall (except
in the case of Securities or portions thereof which have been called for
redemption on a Redemption Date within such period) be accompanied by
payment in New York Clearing House funds or other funds acceptable to the
Company of an amount equal to the interest payable on such Interest Payment
Date on the principal amount of Securities being surrendered for
conversion; PROVIDED, HOWEVER, that a Security surrendered for conversion
on an Interest Payment Date need not be accompanied by a payment and
interest on the principal amount of the Securities being converted will be
paid on such Interest Payment Date to the Holder of such Security on the
immediately preceding Record Date. Except as provided in the Securities
and subject to the last paragraph of Section 3.7, no payment or adjustment
shall be made upon any conversion on account of any interest accrued on the
Securities surrendered for conversion or on account of any dividends on the
Common Shares issued upon conversion.
Securities shall be deemed to have been converted immediately
prior to the close of business on the day of surrender of such Securities
for conversion in accordance with the foregoing provisions, and at such
time the rights of the Holders of such Securities as Holders shall cease,
and the Person or Persons entitled to receive the Common Shares issuable
upon conversion shall be treated for all purposes as the record holder or
holders of such Common Shares at such time. As promptly as practicable on
or after the date of conversion, the Company shall issue and shall deliver
at such office or agency a certificate or certificates for the number of
full Common
<PAGE> Page 77
Shares issuable upon conversion, together with payment in lieu
of any fraction of a share, as provided in Section 14.3.
All Securities converted in accordance with the provisions of this
Article 14 are, and shall be deemed to have been, transferred to or for the
account of the Company.
In the case of any Security which is converted in part only, upon
such conversion, the Company shall execute and the Trustee shall
authenticate and deliver to the Holder thereof, at the expense of the
Company, a new Security or Securities of authorized denominations in
aggregate principal amount equal to the unconverted portion of the
principal amount of such Security.
14.3 FRACTIONS OF SHARES
No fractional Common Shares or other such securities shall be
issued upon conversion of Securities. If more than one Security shall be
surrendered for conversion at one time by the same Holder, the number of
full shares which shall be issuable upon conversion thereof shall be
computed on the basis of the aggregate principal amount of the Securities
(or specified portions thereof) so surrendered. Instead of any fractional
Common Share which would otherwise be issuable upon conversion of any
Security or Securities (or specified portions thereof), the Company shall
pay a cash adjustment in respect of such fraction in an amount equal to the
same fraction of the closing price per Common Share at the close of
business on the day prior to the day of conversion on the American Stock
Exchange or, if the Common Shares are not listed or admitted to trading on
such exchange, on the principal (as determined by the Company's Board of
Directors) U.S. national or Canadian securities exchange on which the
Common Shares are listed or admitted to trading or, if not listed or
admitted to trading on any U.S. national or Canadian securities exchange,
on the National Association of Securities Dealers Automated Quotations
National Market System or, if the Common Shares are not listed or admitted
to trading on any U.S. national or Canadian securities exchange or quoted
on such National Market System, the average of the closing bid and asked
prices in the over-the-counter market as furnished by any New York Stock
Exchange member firm selected from time to time by the Company for that
purpose.
14.4 ADJUSTMENT OF CONVERSION PRICE
The Conversion Price with respect to any Security which is
convertible into for Common Shares shall be subject to adjustment from time
to time as follows:
(a)If the Company shall pay or make a dividend or other
distribution on any class of equity capital of the Company which
is payable in Common Shares, the Conversion Price in effect at
the opening of business on the day following the date fixed for
the determination of shareholders entitled to receive such
dividend or other distribution shall be reduced by multiplying
such Conversion Price by a fraction of which (i) the numerator
shall be the
<PAGE> Page 78
number of Common Shares outstanding at the close of
business on the date fixed for such determination and (ii) the
denominator shall be the sum of such number of shares referred to
in the preceding clause and the total number of shares
constituting such dividend or other distribution, such reduction
to become effective immediately after the opening of business on
the day following the date fixed for such determination.
(b)If the Company shall issue rights or warrants to all holders of
its Common Shares entitling them to subscribe for or purchase
Common Shares at a price per share less than the current market
price per Common Share (determined as provided in paragraph
14.4(h)) on the date fixed for the determination of shareholders
entitled to receive such rights or warrants, the Conversion Price
in effect at the opening of business on the day following the
date fixed for such determination shall be reduced by multiplying
such Conversion Price by a fraction of which (i) the numerator
shall be the number of Common Shares outstanding at the close of
business on the date fixed for such determination plus the number
of Common Shares which the aggregate of the offering price of the
total number of Common Shares so offered for subscription or
purchase would purchase at such current market price and (ii) the
denominator shall be the number of Common Shares outstanding at
the close of business on the date fixed for such determination
plus the number of Common Shares so offered for subscription or
purchase, such reduction to become effective immediately after
the opening of business on the day following the date fixed for
such determination.
(c)If outstanding Common Shares shall be subdivided into a greater
number of Common Shares, the Conversion Price in effect at the
opening of business on the day following the day upon which
subdivision becomes effective shall be proportionately reduced,
and, conversely, in case outstanding Common Shares shall be
consolidated into a smaller number of Common Shares, the
Conversion Price in effect at the opening of business on the day
following the day upon which such combination becomes effective
shall be proportionately increased, such reduction or increase,
as the case may be, to become effectively immediately after the
opening of business on the day following the day upon which such
subdivision or consolidation becomes effective.
(d)If the Company shall, by dividend or otherwise, at any time
distribute (other than periodic dividends declared or paid in
accordance with the Company's practice as established from time
to time) to all holders of its Common Shares cash (excluding any
cash that is distributed as part of a distribution referred to in
paragraph 14.4(f)) in an aggregate amount that, together with (i)
the aggregate amount of any other distribution (other than
<PAGE> Page 79
periodic dividends declared or paid in accordance with the
Company's practice as established from time to time) to all
holders of its Common Shares made exclusively in cash within the
12 months preceding the date of payment of such distribution and
in respect of which no Conversion Price adjustment pursuant to
this paragraph 14.4(d) has been made and (ii) the aggregate of
any cash plus the fair market value (as determined by the Board
of Directors of the Company, whose determination shall be
conclusive and described in a Board Resolution) of consideration
payable in respect of any tender offer or other offer to purchase
by the Company or any Subsidiary for all or any portion of the
Company's Common Shares concluded within the 12 months preceding
the date of payment of such distribution and in respect of which
no Conversion Price adjustment pursuant to paragraph 14.4(e) has
been made, exceeds <circle>% of the Company's Aggregate Market
Capitalization (determined as provided in paragraph 14.4(i)), the
Conversion Price shall be reduced so that the same shall equal
the price determined by multiplying the Conversion Price in
effect immediately prior to the effectiveness of the Conversion
Price reduction contemplated by this paragraph 14.4(d) by a
fraction of which (i) the numerator shall be the current market
price per Common Share (determined as provided in paragraph
14.4(h)) on such date less the amount of cash so distributed
applicable to one Common Share and (ii) the denominator shall be
such current market price per Common Share, such reduction to
become effective immediately prior to the opening of business on
the day following the date fixed for the determination of
shareholders entitled to receive such cash dividend; PROVIDED,
HOWEVER, that no adjustment shall be made with respect to any
distribution of rights to purchase securities of the Company if a
Holder of Securities would otherwise be entitled to receive such
rights upon conversion or exchange at any time of such Securities
into Common Shares or other such securities unless such rights
are subsequently redeemed by the Company, in which case such
redemption shall be treated for purposes of this Section as a
dividend on the Common Shares or other such securities. Such
adjustment shall become effective retroactively immediately after
the record date for the determination of shareholders or holders
of other such securities entitled to receive such distribution;
and in the event that such distribution is not so made, the
Conversion Price shall again be adjusted to the Conversion Price
which would then be in effect if such record date had not been
fixed.
(e)If an issuer bid, tender offer or other offer to purchase made
by the Company or any Subsidiary for all or any portion of the
Common Shares of the Company shall be consummated and such issuer
bid, tender offer or other offer to purchase shall involve an
aggregate consideration having a fair market value (as determined
by the Board of Directors of the Company, whose determination
shall be conclusive and described in a
<PAGE> Page 80
Board Resolution) on the
last time (the "Expiration Time") tenders may be made pursuant to
such bid or offer (as it may be amended) or Common Shares may be
deposited pursuant to such other offer to purchase that, together
with (i) the aggregate of the cash plus the fair market value (as
determined by the Board of Directors of the Company, whose
determination shall be conclusive and described in a Board
Resolution), as of the Expiration Time, of consideration payable
in respect of any issuer bid, tender offer or other offer to
purchase by the Company or any Subsidiary for all or any portion
of the Common Shares of the Company consummated within the 12
months preceding the Expiration Time and in respect of which no
Conversion Price adjustment pursuant to paragraph 14.4(d) or this
paragraph 14.4(e) has been made and (ii) the aggregate amount of
any distributions (other than periodic dividends declared or paid
in accordance with the Company's practice as established from
time to time) to all holders of the Common Shares of the Company
made exclusively in cash within the 12 months preceding the
Expiration Time and in respect of which no Conversion Price
adjustment pursuant to paragraph 14.4(d) or this paragraph
14.4(e) has been made, exceeds <circle>% of the product of the
current market price per Common Share (determined as provided in
paragraph 14.4(h)) on the Expiration Time times the number of
Common Shares outstanding (including any tendered or deposited
shares) on the Expiration Time, the Conversion Price shall be
reduced so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to
the Expiration Time by a fraction of which the numerator shall be
(i) the product of the current market price per Common Share
(determined as provided in paragraph 14.4(h)) on the Expiration
Time times the number of Common Shares outstanding (including any
tendered or deposited shares) on the Expiration Time minus (ii)
the fair market value (determined as aforesaid) of the aggregate
consideration payable to shareholders based on the acceptance (up
to any maximum specified in the terms of the tender offer or
other offer to purchase) of all shares validly tendered or
deposited and not withdrawn as of the Expiration Time (the shares
deemed so accepted, up to any such maximum, being referred to as
the "Purchased Shares") and the denominator shall be the product
of (i) such current market price per share on the Expiration Time
times (ii) such number of outstanding shares on the Expiration
Time minus the number of Purchased Shares, such reduction to
become effective immediately prior to the opening of business on
the day following the Expiration Time.
(f)If the Company shall, by dividend or otherwise, distribute to
all holders of its Common Shares evidences of its indebtedness or
assets (including securities, but excluding any rights or
warrants referred to in paragraph 14.4(b), any cash dividends
referred to in paragraph 14.4(d) and any
<PAGE> Page 81
dividends or
distributions referred to in paragraph 14.4(a)), the Conversion
Price shall be adjusted so that the same shall equal the price
determined by multiplying the Conversion Price in effect
immediately prior to the close of business on the date fixed for
the determination of shareholders entitled to receive such
distribution by a fraction of which the numerator shall be the
current market price per Common Share (determined as provided in
paragraph 14.4(h)) on the date fixed for such determination less
the then fair market value (as determined by the Board of
Directors of the Company, whose determination shall be conclusive
and described in a Board Resolution) of the portion of the assets
or evidences of indebtedness so distributed applicable to one
Common Share and the denominator shall be such current market
price per Common Share, such adjustment to become effective
immediately prior to the opening of business on the day following
the date fixed for the determination of shareholders entitled to
receive such distribution. For the purposes of this paragraph
14.4(f), the distribution of a security which is distributed not
only to the holders of the Common Shares on the date fixed for
the distribution of such security, but also is distributed with
each Common Share delivered to a Holder exercising the conversion
privilege subsequent to such distribution date, shall not require
an adjustment of the Conversion Price pursuant to this paragraph
14.4(f); PROVIDED THAT on the date, if any, on which a Holder
exercising the conversion or exchange privilege would no longer
be entitled to receive such security with a Common Share (other
than as a result of the termination of all such securities), a
distribution of such securities shall be deemed to have occurred
and the Conversion Price shall be adjusted as provided in this
paragraph 14.4(f) (and such day shall be deemed to be "the date
fixed for the determination of the shareholders entitled to
receive such distribution" and "the date fixed for such
determination" within the meaning of the immediately preceding
sentence).
(g)The reclassification of Common Shares into securities including
securities other than Common Shares (other than any
reclassification upon a consolidation or merger to which Section
14.11 applies) shall be deemed to involve (i) a distribution of
such securities other than Common Shares to all holders of Common
Shares (and the effective date of such reclassification shall be
deemed to be "the date fixed for the determination of
shareholders entitled to receive such distribution" and "the date
fixed for such determination" within the meaning of paragraph
14.4(f)), and (ii) a subdivision or consolidation, as the case
may be, of the number of Common Shares outstanding immediately
prior to such reclassification into the number of Common Shares
outstanding immediately thereafter (and the effective date of
such reclassification shall be deemed to be "the day upon which
such subdivision becomes effective" or "the day upon which such
combination becomes effective", as the case may be, and "the day
upon
<PAGE> Page 82
which such subdivision or combination becomes effective"
within the meaning of paragraph 14.4(c)).
(h)For the purpose of any computation under paragraphs 14.4(b),
14.4(d), 14.4(e) and 14.4(f), the current market price per Common
Share on any date shall be deemed to be the average of the daily
closing prices for the 20 trading days before, and ending not
later than, the earlier of the day in question and the day before
the "ex" date with respect to the issuance or distribution
requiring such computation. The closing price for each day shall
be the last reported sales price regular way or, in case no such
reported sale takes place on such day, the average of the
reported closing bid and asked prices regular way, in either case
on the American Stock Exchange or, if the Common Shares are not
listed or admitted to trading on such exchange, on the principal
(as determined by the Company's Board of Directors) U.S. national
or Canadian securities exchange on which the Common Shares are
listed or admitted to trading or, if not listed or admitted to
trading on any U.S. national or Canadian securities exchange, on
the National Association of Securities Dealers Automated
Quotations National Market System or, if the Common Shares are
not listed or admitted to trading on any U.S. national or
Canadian securities exchange or quoted on such National Market
System, the average of the closing bid and asked prices in the
over-the-counter market as furnished by any New York Stock
Exchange member firm selected from time to time by the Company
for that purpose. For purposes of this paragraph, the term "ex
date", when used with respect to any issuance or distribution,
means the first date on which the Common Shares trade regular way
on such exchange or in such market without the right to receive
such issuance or distribution.
(i)For purposes of any computation under paragraph 14.4(d), the
Aggregate Market Capitalization shall be deemed to be the product
of (i) the current market price (as determined in paragraph
14.4(h) above) on the most recent date practically obtainable
prior to the record date for determining the shareholders
entitled to the distribution and (ii) the number of Common Shares
outstanding on such date.
(j)The Company may make such reductions in the Conversion Price,
in addition to those required by paragraphs 14.4(a) through
14.4(g), as it considers to be advisable in order that any event
treated for United States or Canadian federal income tax purposes
as a dividend of stock or stock rights shall not be taxable to
the recipients. The Company shall have the power to resolve any
ambiguity or correct any error in this paragraph 14.4(j) and its
actions in so doing shall be final and conclusive.
<PAGE> Page 83
(k)No adjustment in the Conversion Price shall be required unless
such adjustment would require an increase or decrease of at least
one percent in such price; PROVIDED, HOWEVER, that any
adjustments which by reason of this paragraph 14.4(k) are not
required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this
Article shall be made to the nearest cent or to the nearest
one-hundredth of a share, as the case may be.
(l)For the purpose of this Section, each Holder of Securities
shall be deemed to have failed to exercise any right to elect the
kind or amount of securities receivable upon the payment of any
such dividend, subdivision, consolidation or reclassification
(PROVIDED THAT if the kind or amount of securities receivable
upon such dividend, subdivision, consolidation or
reclassification is not the same for each non-electing share,
then the kind and amount of securities or other property
receivable upon such dividend, subdivision, combination or
reclassification for each non-electing share shall be deemed to
be the kind and amount so receivable per share by a plurality of
the non-electing shares).
14.5 NOTICE OF ADJUSTMENTS OF CONVERSION PRICE
Whenever the Conversion Price is adjusted as herein provided:
(a)the Company shall compute the adjusted Conversion Price in
accordance with Section 14.4 and shall prepare a certificate
signed by a responsible officer of the Company setting forth the
adjusted Conversion Price and showing in reasonable detail the
facts upon which such adjustment is based, and such certificate
shall forthwith be filed at the Corporate Trust Office of the
Trustee and at each office or agency maintained for the purpose
of conversion of Securities pursuant to Section 10.2; and
(b)a notice stating the Conversion Price has been adjusted and
setting forth the adjusted Conversion Price shall forthwith be
required, and as soon as practicable after it is required, such
notice shall be mailed by the Company to all holders at their
last addresses as they shall appear in the Security Register.
14.6 NOTICE OF CERTAIN CORPORATION ACTION
In case:
(a)the Company shall declare a dividend (or any other
distribution) on its Common Shares; or
<PAGE> Page 84
(b)the Company shall authorize the granting to the holders of its
Common Shares of rights or warrants to subscribe for or purchase
any shares of equity capital of any class or of any other rights;
or
(c)the Company or any Subsidiary shall commence an issuer bid
(other than an issuer bid which is an exempt issuer bid within
the meaning of the SECURITIES ACT (Alberta), as amended), tender
offer or other offer to purchase any of its Common Shares; or
(d)of any reclassification of the Common Shares of the Company
(other than a subdivision or consolidation of its outstanding
Common Shares), or of any consolidation or merger to which the
Company is a party and for which approval of any shareholders of
the Company is required, or of the sale or transfer of all or
substantially all of the assets of the Company; or
(e)of the voluntary or involuntary dissolution, liquidation or
winding up of the Company,
then the Company shall cause to be filed at the Corporate Trust Office of
the Trustee and at each office or agency maintained for the purpose of
conversion of Securities pursuant to Section 10.2, and shall cause to be
mailed to all Holders at their last addresses as they shall appear in the
Security Register, at least 20 days (or 10 days in any case specified in
clause (a) or (b) above) prior to the applicable record, effective or
expiration date hereinafter specified, a notice stating (i) the date on
which a record is to be taken for the purpose of such dividend,
distribution, rights or warrants, or, if a record is not to be taken, the
date as of which the holders of Common Shares of record to be entitled to
such dividend, distribution, rights or warrants are to be determined, (ii)
the date on which such reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that holders of Common
Shares of record shall be entitled to exchange their Common Shares for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding
up, or (iii) the date on which such tender offer or other offer to purchase
commenced, the date on which such tender offer or other offer to purchase
is scheduled to expire unless extended, the consideration offered and the
other material terms thereof (or the material terms of any amendment
thereto). Neither the failure to give any such notice nor any defect
therein shall affect the legality or validity of any action described in
clauses (a) through (e) of this Section 14.6.
14.7 COMPANY TO RESERVE COMMON SHARES
The Company shall at all times reserve and keep available, free
from preemptive rights, out of its authorized but unissued Common Shares,
for the purpose of effecting the conversion of Securities, such number of
its duly authorized Common Shares then issuable upon the conversion of all
Outstanding Securities; PROVIDED THAT this Section shall not require the
<PAGE> Page 85
Company to make any reservation of authorized but unissued Common Shares
for so long as the Company's authorized share capital includes an unlimited
number of Common Shares.
14.8 TAXES ON CONVERSION
The Company will pay any and all taxes that may be payable in
respect of the issue or delivery of Common Shares on conversion of
Securities pursuant hereto. The Company shall not, however, be required to
pay any tax which may be payable in respect of any transfer involved in the
issue and delivery of Common Shares in a name other than that of the Holder
of the Security or Securities to be converted, and no such issue or
delivery shall be made unless and until the Person requesting such issue
has paid to the Company the amount of any such tax, or has established to
the satisfaction of the Company that such tax has been paid.
14.9 COVENANT AS TO COMMON SHARES
The Company covenants that all Common Shares which may be issued
upon conversion of Securities will upon issue be fully paid and non-
assessable and, except as provided in Section 14.8, the Company will pay
all taxes, liens and charges with respect to the issue thereof.
14.10 CANCELLATION OF CONVERTED SECURITIES
All Securities surrendered for conversion pursuant to Section 14.2
shall be delivered to the Company and shall be cancelled concurrently with
such conversion.
14.11 PROVISIONS IN CASE OF CONSOLIDATION, MERGER OR SALE OF ASSETS
In case of any consolidation of the Company with, or merger of the
Company into, any other corporation (other than a wholly-owned Subsidiary
of the Company), any merger of another corporation (other than a wholly-
owned Subsidiary of the Company) into the Company (other than a merger
which does not result in any reclassification, conversion, exchange or
cancellation of outstanding Common Shares of the Company) or any sale or
transfer of all or substantially all of the assets of the Company to any
other corporation (other than a wholly-owned Subsidiary of the Company)
(treating the Company and each of its Subsidiaries as a single consolidated
entity and treating any sale by a Subsidiary as a sale by the Company for
such purpose), the corporation formed by such consolidation or resulting
from such merger or which acquires such assets, as the case may be, shall
execute and deliver to the Trustee a supplemental indenture providing that
the Holder of each Security then outstanding shall have the right
thereafter, during the period such Security shall be convertible as
specified in Section 14.1, to convert such Security only into the kind and
amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer by a holder of the number of Common
Shares of the Company into which such Security might have been converted
immediately prior to such consolidation, merger, sale or transfer, assuming
such holder of Common Shares of the Company (i) is not a Person with which
the Company consolidated or into which the Company
<PAGE> Page 86
merged or which merged
into the Company or to which such sale or transfer was made, as the case
may be ("constituent Person"), or an Affiliate of a constituent Person and
(ii) failed to exercise his rights of election, if any, as to the kind or
amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer (PROVIDED THAT if the kind or
amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer is not the same for each Common
Share of the Company held immediately prior to such consolidation, merger,
sale or transfer by others than a constituent Person or an Affiliate
thereof and in respect of which such rights of election shall not have been
exercised ("non-electing share"), then for the purpose of this Section the
kind and amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer by each non-electing share shall be
deemed to be the kind and amount so receivable per share by a plurality of
the non-electing shares). Such supplemental indenture shall provide for
adjustments which, for events subsequent to the effective date of such
supplemental indenture, shall be as nearly equivalent as may be practicable
to the adjustments provided for in this Article. The Trustee shall not be
under any responsibility to determine the correctness of any provision
contained in such supplemental indenture relating to either the kind or
amount of shares, other securities, cash or property receivable by Holders
upon the conversion of their Securities after any such consolidation,
merger, sale or transfer. The above provisions of this Section shall
similarly apply to successive consolidations, mergers, sales or transfers.
14.12 RESPONSIBILITY OF TRUSTEE AND CONVERSION AGENT
Neither the Trustee nor any agent appointed to effect conversions
shall at any time be under any duty or responsibility to any Holder of
Securities to determine whether any facts exist which may require any
adjustment of the Conversion Price, or with respect to the nature or extent
of any such adjustment when made, or with respect to the method employed,
or herein or in any supplemental indenture provided to be employed, in
making the same. Neither the Trustee nor any such conversion agent shall
be accountable with respect to the validity or value (or the kind or
amount) of any Common Shares or of any securities or property which may at
any time be issued or delivered upon the conversion of any Security; and
neither the Trustee nor any such conversion agent makes any representation
with respect thereto. Neither the Trustee nor any such conversion agent
shall be responsible for any failure of the Company to issue, transfer or
deliver any Common Shares or stock certificates or other securities or
property or to make any cash payment upon the delivery of any Security for
the purpose of conversion or to comply with any of the covenants contained
in this Article.
ARTICLE 15
SUBORDINATION
[THIS ARTICLE SHALL BE RESERVED, UNLESS PURSUANT TO A BOARD RESOLUTION WITH
RESPECT TO THE SECURITIES OF ANY SERIES, THE SECURITIES OF SUCH SERIES ARE
DESIGNATED AS SENIOR SUBORDINATED INDEBTEDNESS OR SUBORDINATED
INDEBTEDNESS, IN WHICH CASE THE FOLLOWING PROVISIONS SHOULD BE INSERTED].
15.1 SECURITIES SUBORDINATE TO SENIOR INDEBTEDNESS
The Company covenants and agrees, and each Holder of Securities of
each series, by his acceptance thereof, likewise covenants and agrees, that
the indebtedness represented by the Securities of such series, including
the principal of (and premium, if any) and interest thereon, shall be
subordinate and subject in right of payment, to the extent and in the
manner hereinafter set forth, to the prior payment in full of all Senior
Indebtedness of the Company with respect thereto, whether outstanding on
the date of original issuance of Securities of such series or thereafter
incurred; PROVIDED, HOWEVER, that each series of Securities designated as
Senior Indebtedness shall in all respects rank PARI PASSU with all other
series of Securities designated as Senior Indebtedness; that each series of
Securities designated as Senior Subordinated Indebtedness shall in all
respects rank PARI PASSU with all other series of Securities designated as
Senior Subordinated Indebtedness; and that each series of Securities
designated as Subordinated Indebtedness shall in all respects rank PARI
PASSU will all other series of Securities designated as Subordinated
Indebtedness.
15.2 PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC.
In the event of (a) any insolvency or bankruptcy case or
proceeding, or any receivership, liquidation, reorganization or other
similar case or proceeding in connection therewith, relative to the Company
or to its assets, or (b) any liquidation, dissolution or other winding up
of the Company, whether voluntary or involuntary and whether or not
involving insolvency or bankruptcy, or (c) any assignment for the benefit
of creditors or any other marshalling of the assets and liabilities of the
Company, then and in any such event specified in (a), (b) or (c) above
(each such event, if any, herein sometimes referred to as a "Proceeding"),
the holders of Senior Indebtedness shall be entitled to receive payment in
full of all amounts due or to become due on or in respect of all Senior
Indebtedness, or provision shall be made in money or money's worth before
the Holders of the Securities are entitled to receive any payment or
distribution of assets of the Company, of any kind or character, whether in
cash, property or securities, on account of principal of (or premium, if
any) or interest on the Securities or on account of any purchase or other
acquisition of Securities by the Company or any Subsidiary of the Company
(all such payments, distributions, purchases and acquisitions by the
Company herein referred to, individually and collectively, as a "Securities
Payment"), and to that end the holders of Senior Indebtedness shall be
entitled to receive, for application to the payment thereof, any
<PAGE> Page 88
Securities
Payment which may be payable or deliverable in respect of the Securities in
any such Proceeding.
In the event that, notwithstanding the foregoing provisions of
this Section, the Trustee or the Holder of any Security shall have received
any Securities Payment before all Senior Indebtedness is paid in full or
payment thereof provided for, and if such fact shall, at or prior to the
time of such Securities Payment, have been made known to a Responsible
Officer of the Trustee or, as the case may be, such Holder, then and in
such event such Securities Payment shall be paid over or delivered
forthwith to the trustee in bankruptcy, receiver, liquidating trustee,
custodian, assignee, agent or other Person making payment or distribution
of assets of the Company, for application to the payment of all Senior
Indebtedness remaining unpaid, to the extent necessary to pay all Senior
Indebtedness in full, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Indebtedness.
For purposes of this Article only, the words "cash, property or
securities" shall not be deemed to include shares or other securities of
the Company provided for by a plan or reorganization or readjustment as
reorganized or readjusted, or securities of the Company or any other
corporation which are subordinated in right of payment to all then
outstanding Senior Indebtedness to substantially the same extent as, or to
a greater extent than, the Securities are so subordinated as provided in
this Article. The consolidation of the Company with, or the merger of the
Company into, another corporation or the liquidation or dissolution of the
Company following the conveyance, transfer, sale or lease of its properties
and assets substantially as an entirety to another corporation upon the
terms and conditions set forth in Article 8 shall not be deemed a
Proceeding for the purposes of this Section if the corporation formed by
such consolidation or into which the Company is merged or the corporation
which acquires by conveyance, transfer, sale or lease such properties and
assets substantially as an entirety, as the case may be, shall, as a part
of such consolidation, merger, conveyance, transfer, sale or lease, comply
with the conditions set forth in Article 8.
15.3 PRIOR PAYMENT TO SENIOR INDEBTEDNESS UPON ACCELERATION OF
SECURITIES
In the event that any Securities are declared due and payable
before their Stated Maturity (an "Acceleration of Securities"), the holders
of the Senior Indebtedness outstanding at the time of such Acceleration of
Securities shall be entitled to receive payment in full of all amounts due
or which become due as a result of such Acceleration of Securities on or in
respect of all such Senior Indebtedness, or provision shall be made for
such payment in money or money's worth, before the Holders of the
Securities are entitled to receive any Securities Payment.
In the event that, notwithstanding the foregoing, the Company
shall make any Securities Payment to the Trustee or any Holder prohibited
by the foregoing provisions of this Section, and if such fact shall, at or
prior to the time of such Securities Payment, have been made known to a
Responsible Officer of the Trustee or such Holder, as the case may be, then
and in such event such Securities Payment shall be paid over and delivered
forthwith to the Company, for application to the payment of all Senior
Indebtedness remaining unpaid, to the extent necessary
<PAGE> Page 89
to pay all Senior
Indebtedness in full, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Indebtedness.
The provisions of this Section shall not apply to any Securities
Payment with respect to which Section 15.2 would be applicable.
15.4 NO PAYMENT WHEN SENIOR INDEBTEDNESS IN DEFAULT
(a) In the event and during the continuation of any default in
the payment of principal of (or premium, if any) or interest on or other
monetary obligation with respect to any Senior Indebtedness beyond any
applicable grace period with respect thereto or, with respect to any series
of Securities designated as Subordinated Indebtedness, in the event that
any event of default with respect to any Senior Indebtedness shall have
occurred and be continuing permitting the holders of such Senior
Indebtedness (or a trustee or other representative on behalf of the holders
thereof) to declare such Senior Indebtedness due and payable prior to the
date on which it would otherwise have become due and payable, unless and
until such event of default shall have been cured or waived or shall have
ceased to exist and, if any such Senior Indebtedness shall have been
accelerated, such acceleration shall have been rescinded or annulled, or
(b) in the event any judicial proceeding shall be pending with respect to
any such default, then no Securities Payment shall be made to the Trustee
or any Holder in respect of the Securities.
(b) In addition and notwithstanding the foregoing, with respect
to any series of Securities designated as Senior Subordinated Indebtedness
or Subordinated Indebtedness, during the continuance of any event of
default other than the payment of principal of (or premium, if any) or
interest on or other monetary obligation with respect to any Senior
Indebtedness, no payment may be made by the Company upon or in respect of
any series of Securities designated as Senior Subordinated Indebtedness or
Subordinated Indebtedness for a payment blockage period ("Payment Blockage
Period") commencing on the date the Company shall have received a notice
from a holder of Senior Indebtedness or a trustee or other representative
thereof and ending 179 days thereafter (unless such event of default shall
have been cured or waived or such Payment Blockage Period shall have been
terminated by written notice to the Company from such holder, trustee or
representative thereof). Notwithstanding anything to the contrary herein,
in no event shall any one Payment Blockage Period extend beyond 179 days.
Notwithstanding anything to the contrary herein, Payment Blockage Periods
aggregating more than 179 days may not be commenced with respect to any
series of Securities designated as Senior Subordinated Indebtedness or
Subordinated Indebtedness during any period of 360 consecutive days.
(c) In the event that, notwithstanding the foregoing, the Company
shall make any Securities Payment to the Trustee or any Holder prohibited
by the foregoing provisions of this Section, and if such fact shall, at or
prior to the time of such Securities Payment, have been made known to a
Responsible Officer of the Trustee or, as the case may be, such Holder then
and in such event such Securities Payment shall be paid over and delivered
forthwith to the Company for application to the payment of all Senior
Indebtedness remaining unpaid, to the extent necessary
<PAGE> Page 90
to pay all Senior
Indebtedness in full, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Indebtedness.
(d) The provisions of this Section 15.4 shall not apply to any
Securities Payment with respect to which Section 15.2 would be applicable.
15.5 PAYMENT PERMITTED IF NO DEFAULT
Nothing contained in this Article or elsewhere in this Indenture
or in any of the Securities shall prevent (a) the Company at any time
except during the pendency of any Proceeding referred to in Section 15.2 or
under the conditions described in Section 15.3 or 15.4, from making at any
time Securities Payments, or (b) the application by the Trustee of any
money deposited with it hereunder to Securities Payments or the retention
of such Securities Payment by the Holders, if, at the time of such
application by the Trustee, it did not have actual knowledge that such
Securities Payment would have been prohibited by the provisions of this
Article.
15.6 SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS
Subject to the payment in full of all Senior Indebtedness, the
Holders of the Securities shall be subrogated to the rights of the holders
of such Senior Indebtedness to receive payments and distributions of cash,
property and securities applicable to the Senior Indebtedness until the
principal of (and premium, if any) and interest on the Securities shall be
paid in full. For purposes of such subrogation, no payments or
distributions to the holder of the Senior Indebtedness of any cash,
property or securities to which the Holders of the Securities or the
Trustee would be entitled except for the provisions of this Article, and no
payments over pursuant to the provisions of this Article to the holders of
Senior Indebtedness by Holders of the Securities or the Trustee, shall, as
among the Company, creditors other than holders of Senior Indebtedness and
the Holders of the Securities, be deemed to be a payment or distribution by
the Company to or on account of the Senior Indebtedness.
15.7 PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS AND SUBJECT TO
APPLICABLE LAWS
The provisions of this Article are and are intended solely for the
purpose of defining the relative rights of the Holders of the Securities on
the one hand and the holders of Senior Indebtedness on the other hand and
are subject to all applicable laws, including, in the case of the
bankruptcy or insolvency of the Company, the potential application of
Canadian legislation. Nothing contained in this Article or elsewhere in
this Indenture or in the Securities is intended to or shall (a) impair, as
among the Company, the creditors of the Company, other than holders of
Senior Indebtedness and the Holders of the Securities, the obligation of
the Company, which is absolute and unconditional, to pay to the Holders of
the Securities the principal of and interest on the Securities as and when
the same shall become due and payable in accordance with their terms; or
(b) affect the relative rights against the Company of the Holders of the
Securities and creditors of the Company, other than the holders of Senior
Indebtedness; or (c) prevent the Trustee or the Holder of any Security from
exercising all remedies otherwise permitted by applicable law upon
<PAGE> Page 91
default
under this Indenture, subject to the rights, if any, under this Article of
the holders of Senior Indebtedness to receive cash, property and
securities otherwise payable or deliverable to the Trustee or such Holder.
15.8 TRUSTEE TO EFFECTUATE SUBORDINATION
Each Holder of a Security, by his acceptance thereof, authorizes
and directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article and appoints the Trustee his attorney-in-fact for any and all such
purposes.
15.9 NO WAIVER OF SUBORDINATION PROVISIONS
No right of any present or future holder of any Senior
Indebtedness to enforce subordination as herein provided shall at any time
in any way be prejudiced or impaired by any act or failure to act on the
part of the Company, or by any act or failure to act, in good faith, by any
such holder, or by any non-compliance by the Company with the terms,
provisions and covenants of this Indenture, regardless of any knowledge
thereof any such holder may have or be otherwise charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness may, at any time and from
time to time, without the consent of or notice to the Trustee or the
Holders of the Securities, without incurring responsibility to the Holders
of the Securities and without impairing or releasing the subordination
provided in this Article or the obligations hereunder of the Holders of the
Securities to the holders of Senior Indebtedness, do any one or more of the
following: (i) change the manner, place or terms of payment or the time of
payment of, or renew or alter Senior Indebtedness, or otherwise amend or
supplement in any manner Senior Indebtedness or any instrument evidencing
the same or any agreement under which Senior Indebtedness is outstanding;
(ii) sell, exchange, release or otherwise deal with any property pledged,
mortgaged or otherwise securing Senior Indebtedness; (iii) release any
Person liable in any manner for the collection of Senior Indebtedness; and
(iv) exercise or refrain from exercising any rights against the Company or
any other Person.
15.10 NOTICE TO TRUSTEE
The Company shall give prompt written notice to the Trustee of any
fact known to the Company which would prohibit the making of any payment to
or by the Trustee in respect of the Securities. Notwithstanding the
provisions of this Article or any other provision of this Indenture, the
Trustee shall not be charged with knowledge of the existence of any facts
which would prohibit the making of any payment to or by the Trustee in
respect of the Securities, unless and until the Trustee shall have received
written notice thereof from the Company or a holder of Senior Indebtedness
or from any trustee therefor or representative thereof, and prior to the
receipt of any such written notice, the Trustee, subject to the provisions
of Section 6.1, shall be entitled in all respects to assume that no such
facts exist; PROVIDED, HOWEVER, that if the Trustee shall not
<PAGE> Page 92
have
received the notice provided for in this Section at least two Business Days
prior to the date upon which by the terms hereof any money may become
payable for any purpose (including, without limitation, the payment of the
principal of (and premium, if any) or interest on any Security), then,
anything herein contained to the contrary notwithstanding, the Trustee
shall have full power and authority to receive such money and to apply the
same to the purpose for which such money was received and shall not be
affected by any notice to the contrary which may be received by it within
two Business Days prior to the date such amounts may be payable.
Subject to the provisions of Section 6.1, the Trustee shall be
entitled to rely on the delivery to it of a written notice, and proof of
ownership acceptable to the Trustee, by a Person representing himself to be
a holder of Senior Indebtedness (or a trustee therefor or representative
thereof) to establish that such notice has been given by a holder of Senior
Indebtedness (or a trustee therefor or representative thereof). In the
event that the Trustee determines in good faith that further evidence is
required with respect to the right of any Person as a holder of Senior
Indebtedness to participate in any payment or distribution pursuant to this
Article, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior
Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article, and if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive
such payment.
15.11 RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING AGENT
Upon any payment or distribution of assets of the Company referred
to in this Article, the Trustee, subject to the provisions of Section 6.1,
and the Holders of the Securities shall be entitled to rely upon any order
or decree entered by any court of competent jurisdiction in which such
Proceeding is pending, or a certificate of the trustee in bankruptcy,
receiver, liquidating trustee, custodian, assignee for the benefit of
creditors, agent or other Person making such payment or distribution,
delivered to the Trustee or to the Holders of Securities for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of the Senior Indebtedness and other indebtedness
of the Company, the amount thereof or payable thereon, the amount or
amounts paid or distributed thereon and all other facts pertinent thereto
or to this Article.
15.12 TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR INDEBTEDNESS
The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness and shall not be liable to any such holders
if it shall in good faith and absent gross negligence or willful
misconduct, mistakenly pays over or distributes to Holders of Securities or
to the Company or to any other Person cash, property or securities to which
any holders of Senior Indebtedness shall be entitled by virtue of this
Article or otherwise.
<PAGE> Page 93
15.13 RIGHTS OF TRUSTEE AS HOLDER OF SENIOR INDEBTEDNESS; PRESERVATION
OF TRUSTEE'S RIGHTS
The Trustee in its individual capacity shall be entitled to all
the rights set forth in this Article with respect to any Senior
Indebtedness which may at any time be held by it, to the same extent as any
other holder of Senior Indebtedness, and nothing in this Indenture shall
deprive the Trustee of any of its rights as such holder.
Nothing in this Article shall apply to claims of, or payments to,
the Trustee under or pursuant to Section 6.7.
15.14 ARTICLE APPLICABLE TO PAYING AGENTS
In case at any time any Paying Agent other than the Trustee shall
have been appointed by the Company and be then acting hereunder, the term
"Trustee" as used in this Article shall in such case (unless the context
otherwise requires) be construed as extending to and including such Paying
Agent within its meaning as fully for all intents and purposes as if such
Paying Agent were named in this Article in addition to or in place of the
Trustee; PROVIDED, HOWEVER, that Sections 15.10 and 15.13 shall not apply
to the Company or any Affiliate of the Company if it or such Affiliate acts
as Paying Agent.
15.15 SUBSIDIARIES
No payment, distribution of assets or other action may be taken by
any Subsidiary of the Company with respect to the Securities if the Company
would be prohibited by this Article 15 from taking such action.
15.16 RESCISSION
The provisions of this Article 15 shall continue to be effective
or be reinstated, as the case may be, if at any time any payment in respect
of any of the Senior Indebtedness is rescinded or must otherwise be
returned by the holder thereof upon the insolvency, bankruptcy or
reorganization of the Company or otherwise, all as though such payment had
not been made.
15.17 CERTAIN CONVERSIONS OR EXCHANGES DEEMED PAYMENT
For purposes of this Article only, (a) the issuance and delivery
of junior securities upon conversion or exchange of Securities in
accordance with their terms shall not be deemed to constitute a Securities
Payment, and (b) the payment, issuance or delivery of cash, property or
securities (other than junior securities) upon conversion or exchange of a
Security shall be deemed to constitute a Securities Payment. For the
purposes of this Section, the term "junior securities" means (i) shares of
any class of the Company and (ii) other securities of the Company which are
subordinated in right of payment to all Senior Indebtedness which may be
outstanding at the time of issuance or delivery of such securities to
substantially the same extent as, or to a greater extent
<PAGE> Page 94
than, the
Securities are so subordinated as provided in this Article. Nothing
contained in this Article or elsewhere in this Indenture or in the
Securities is intended to or shall impair, as among the Company, its
creditors other than holders of Senior Indebtedness and the Holders of the
Securities, the right which is absolute and unconditional, of the Holder of
any Security to convert or exchange such Security in accordance with its
terms.
This instrument may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture
to be duly executed, and their respective corporate seals to be hereunto
affixed and attested, all as of the day and year first above written.
GOLDEN STAR RESOURCES LTD.
By:
Name:
SEAL Title:
ATTEST:
Name:
Title:
, as Trustee
By:
Name:
Title:
SEAL
ATTEST:
Name:
Title:
Number AMALGAMATED (BY ARRANGEMENT) UNDER THE SHARES
AC CANADA BUSINESS CORPORATIONS ACT
GOLDEN STAR RESOURCES LTD.
THIS CERTIFIES THAT CUSIP 381191 10 4
is the registered holder of
FULLY PAID AND NON-ASSESSABLE COMMON SHARES
WITHOUT PAR VALUE IN THE CAPITAL OF
GOLDEN STAR RESOURCES LTD.
Registration of the transfer of the shares represented by this
certificate may be made only in a securities register of the Corporation
upon presentation of this certificate properly endorsed, subject to
compliance with the requirements of the laws governing the Corporation
and the by-laws of the Corporation.
This certificate shall not be valid until countersigned by the Transfer
Agent and Registrar or the Co-Transfer Agent and Co-Registrar of the
Corporation.
In Witness Whereof the said Corporation has caused this certificate to be
signed by its duly authorized officer.
DATED:
COUNTERSIGNED AND REGISTERED
THE R-M TRUST COMPANYORMELLON SECURITIES COMPANY
TRANSFER AGENT AND REGISTRARCO-TRANSFER AGENT AND CO-REGISTRAR
/s/David K. Fagin By: _____________________________________
Chairman Authorized Officer
The Shares represented by this Certificate are transferable at the
offices of
The R-M Trust Company in Montreal, Toronto or Vancouver and at the office
of Mellon Securities Trust Company in New York.
<PAGE>
[REVERSE]
Until the Separation Time (defined in the Rights Agreement referred to below),
this certificate evidences rights of the holder described in a Rights
Agreement, dated April 24, 1996, as supplemented and amended (the "Rights
Agreement"), between Golden Star Resources Ltd. (the "Corporation") and The R-M
Trust Company, the terms of which are incorporated herein by reference and a
copy of which is on file at the head office of the Corporation. Under certain
circumstances set out in the Rights Agreement, the rights may expire, may
become null and void or may be evidenced by separate certificates and no longer
be evidenced by this certificate. The Corporation will mail or arrange for the
mailing of a copy of the Rights Agreement to the holder of this certificate
without charge as soon as practicable after the receipt of a written request
therefor.
FOR VALUE RECEIVED the undersigned hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL INSURANCE NUMBER OF TRANSFEREE
<square><square><square> <square><square><square> <square><square><square>
(Name and address of transferee)
______________________________________________________________ shares
registered in the name of the undersigned on the books of the Corporation named
on the face of this certificate and represented hereby, and irrevocably
constitutes and appoints.
_______________________________________________________ the attorney of the
undersigned to transfer the said shares on the register of transfers and books
of the Corporation with full power of substitution hereunder.
DATED:
_______________________________________________________________________________
(Signature of Witness) (Signature of Shareholder)
NOTICE:The signature of this assignment must correspond with the name as
written upon the face of the certificate in every particular, without
alteration or enlargement, or any change whatsoever, and must be
guaranteed by a bank, trust company or a member of a recognized stock
exchange.
Signature Guaranteed By:
[Letterhead of PWRW&G]
(212) 373-3000
(212) 757-3990
Golden Star Resources Ltd.
Registration Statement on Form S-3
REGISTRATION NO. 333-12673
November 5, 1996
Golden Star Resources Ltd.
One Norwest Center
1700 Lincoln Street, Suite 1950
Denver, Colorado 80203
Ladies and Gentlemen:
In connection with the filing by Golden Star Resources Ltd., a
Canadian corporation, of the above-captioned Registration Statement on
Form S-3 (the "Registration Statement") with the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended (the
"Act"), and the rules and regulations promulgated thereunder (the
"Rules"), we have been requested to furnish our opinion as to the
legality of the securities being registered thereunder. The Registration
Statement relates to the registration under the Act of the Company's (i)
common shares without par value (the "Common Shares"), (ii) first
preferred shares in one or more series (the "Preferred Shares"), (iii)
convertible debt securities, consisting of
<PAGE>
Page 2
debentures, notes and/or other evidences of indebtedness representing unsecured
obligations of the Company convertible into Common Shares (the "Convertible
Debt Securities") and (iv) warrants to purchase Common Shares, Preferred
Shares or Convertible Debt Securities (the "Warrants and, together with
the Common Shares, Preferred Shares and Convertible Debt Securities, the
"Securities"). The Securities are being registered for offering and sale
from time to time pursuant to Rule 415 under the Act. The aggregate
initial public offering price of the Securities will not exceed
$75,000,000 or the equivalent (based on the applicable exchange rate of
the time of sale) if Convertible Debt Securities are issued in principal
amounts denominated in one or more foreign currencies or currency units
as shall be designated by the Company.
The Convertible Debt Securities are to be issued under an
indenture (the "Indenture") between the Company, as issuer, and a
trustee. The Warrants are to be issued pursuant to one or more warrant
agreements (each, a "Warrant Agreement" and collectively, the "Warrant
Agreements"), each between the Company, as issuer, and a warrant agent.
In this regard, we have examined originals, or copies certified
or otherwise identified to our satisfaction, of the following documents:
1. the Registration Statement
<PAGE>
Page 3
2. the form of Indenture included as Exhibit 4.1 to the
Registration Statement, pursuant to which the Convertible
Debt Securities are to be issued (the "Indenture");
3. the form of the Convertible Debt Securities which is
included as Exhibit 4.2 to the Registration Statement.
In addition, we have examined (i) such corporate records of the
Company as we have considered appropriate, including copies of the
Company's Articles of Incorporation and By-laws as in effect on the date
hereof; and (ii) such other certificates, agreements and documents as we
deemed relevant and necessary as a basis for the opinion hereinafter
expressed.
In our examination of the aforesaid documents, we have assumed,
without independent investigation, the genuineness of all signatures, the
authenticity of all documents submitted to us as originals and the
conformity of original documents to all documents submitted to us as
certified, photostatic, reproduced or conformed copies, the authenticity
of all such latter documents and the legal capacity of all individuals
who have executed any of the documents. We also have assumed that (i)
the Convertible Debt Securities and the Warrants have been duly and
validly authorized by the Company for issuance, (ii) the Convertible
Debt Securities to be executed and delivered by the Company and the
Indenture will be substantially in the respective forms filed as Exhibits
to the Registration Statement, (iii) the Warrants to
<PAGE>
Page 4
be executed and delivered by the Company and each Warrant Agreement will be
substantially as described in and contemplated by the Registration Statement
and (iv) the enforceability of the Indenture and each Warrant Agreement against
each party thereto other than the Company.
Based upon the foregoing, and subject to the assumptions,
exceptions and qualifications set forth herein, we are of the opinion
that:
1. The Convertible Debt Securities, when issued, authenticated
and delivered in accordance with the terms of the Indenture and as
contemplated by the Registration Statement and upon payment therefore,
will be legal, valid and binding obligations of the Company enforceable
against the Company in accordance with their terms.
2. The Warrants, when issued, authenticated and delivered in
accordance with the terms of a Warrant Agreement and as contemplated by
the Registration Statement and upon payment therefore, will legal, valid
and binding obligations of the Company enforceable against the Company in
accordance with their terms.
The foregoing opinions are subject to the qualification that
the enforceability of the Convertible Debt Securities and the Warrants
may be (i) subject to bankruptcy, insolvency, reorganization, fraudulent
conveyance or transfer, moratorium or similar laws affecting creditors'
rights generally and (ii) subject to
<PAGE>
Page 5
general principles of equity (regardless of whether such enforceability is
considered in a proceeding at law or in equity).
The opinions expressed above are limited to the laws of the
State of New York and the federal laws of the United States. Our
opinions are rendered only with respect to the laws, and the rules,
regulations and orders thereunder, that are currently in effect, and are
strictly limited to the matters stated herein and factual conditions as
of the date hereof. For purposes of our opinions, we have assumed that
the Convertible Debt Securities, the Warrants, the Indenture and the
Warrant Agreements will constitute valid and legally binding obligations
of the Company under the federal laws of Canada.
With respect to certain matters of Canadian law, we understand
that you are being provided the opinion, dated the date hereof, of
Koffman Bernie & Kalef, Canadian counsel to the Company.
<PAGE>
Page 6
We hereby consent to use of this opinion as an exhibit to the
Registration Statement and to the use of our name under the caption
"Legal Matters" contained in the prospectus included in the Registration
Statement. In giving this consent, we do not thereby admit that we come
within the category of persons whose consent is required by the Act or
the Rules.
Very truly yours,
/s/ PAUL, WEISS, RIFKIND, WHARTON & GARRISON
PAUL, WEISS, RIFKIND, WHARTON & GARRISON
[LETTERHEAD OF KOFFMAN BIRNIE & KALEF]
November 5, 1996
Golden Star Resources Ltd.
One Norwest Center
1700 Lincoln Street, Suite 1950
Denver, Colorado 80203
Dear Sirs:
RE: GOLDEN STAR RESOURCES LTD.
REGISTRATION STATEMENT ON FORM S-3
REGISTRATION NO. 333-12673
We have acted as Canadian counsel for Golden Star Resources Ltd., a
Canadian corporation (the "Company"), in connection with the
above-captioned Registration Statement on Form S-3, as amended (the
"Registration Statement"), filed by the Company with the United States
Securities and Exchange Commission under the United States Securities Act
of 1933 (the "1933 Act") and have been requested to furnish our opinion
as to certain matters relating to the legality of the securities being
registered thereunder. The Registration Statement relates to the
registration under the 1933 Act of the Company's (i) common shares
without par value (the "Common Shares"), (ii) first preferred shares in
one or more series (the "Preferred Shares"), (iii) convertible debt
securities, consisting of debentures, notes and/or other evidences of
indebtedness representing unsecured obligations of the Company
convertible into Common Shares ("Convertible Debt Securities"), and (iv)
warrants to purchase Common Shares, Preferred Shares or Convertible Debt
Securities (the "Warrants") which may be issued by the Company. The
Common Shares, Preferred Shares, Convertible Debt Securities and Warrants
are collectively referred to herein as the "Securities". We understand
that the Securities are being registered for offering and sale from time
to time pursuant to Rule 415 under the 1933 Act. The aggregate initial
public offering price of the Securities will not exceed U.S.$75,000,000
or the equivalent (based on the applicable exchange rate at the time of
sale) if the Convertible Debt Securities are issued in principal amounts
denominated in one or more foreign currencies or currency units as shall
be designated by the Company.
<PAGE>
Page 2
The Convertible Debt Securities are to be issued under an indenture
(the "Indenture") between the Company, as issuer, and a trustee (the
"Trustee"). The Warrants are to be issued pursuant to one or more
warrant agreements (each, a "Warrant Agreement" and collectively, the
"Warrant Agreements"), each between the Company, as issuer, and a warrant
agent (the "Warrant Agent").
We have examined copies of the Registration Statement and the form
of the Indenture, filed by the Company as an exhibit to the Registration
Statement, pursuant to which the Convertible Debt Securities are to be
issued. In addition, we have examined and relied on originals or copies,
certified or otherwise identified to our satisfaction, of such documents,
corporate records and other instruments, have made such inquiries as to
questions of fact of officers and representatives of the Company and have
made such examinations of law as we have deemed necessary or appropriate
for purposes of giving the opinion expressed below. In such examination,
we have assumed, without independent investigation, the genuineness of
all signatures, the authenticity of all documents submitted to us as
originals and the conformity with the originals of all documents
submitted to us as certified, photostatic, reproduced or conformed
copies, the authenticity of all such copies, and the legal capacity of
all individuals who have executed any of the documents.
We have assumed the following for purposes of this opinion:
(a) that, prior to the issuance of any series of Preferred Shares
as contemplated by the Registration Statement, (i) the Company,
through its Board of Directors, will have made all necessary
amendments to its Articles to fix the number of shares, the
designations, rights, privileges, restrictions and conditions
of such series of Preferred Shares, and (ii) all necessary
Articles of Amendment and other necessary filings with the
Director under the Canada Business Corporations Act with
respect to the Preferred Shares and any series thereof to be
issued have been filed or made or will have been filed or made
at the time of issuance of that series of Preferred Shares;
(b)(i) that the Indenture will be substantially in the form filed as
an exhibit to the Registration Statement, (ii) that the
Indenture will have been duly executed and delivered by the
Company at the time of issuance of Convertible Debt Securities,
and (iii) that the Indenture will have been duly authorized,
executed and delivered by the Trustee at the time of issuance
of the Convertible Debt Securities, (iv) the corporate power,
authority and legal right of the Trustee under the Indenture to
so act as trustee under the Indenture and to execute, deliver
and perform its obligations under the Indenture, (v) that the
performance of such obligations by the Trustee will not violate
its charter or by-laws, (vi) that the Trustee will have the
legal ability to exercise its trust powers in all
<PAGE>
Page 3
applicable jurisdictions, and (vii) the form of the Convertible
Debt Securities will be substantially in the form provided for in
the Indenture;
(c)(i) the Warrants to be executed and delivered by the Company and
each Warrant Agreement will be substantially as described in
and contemplated by the Registration Statement, (ii) that,
prior to the time of issuance of each issue of Warrants as
contemplated by the Registration Statement, a Warrant Agreement
will have been duly authorized, executed and delivered by the
Company and the Warrant Agent, (iii) the corporate power,
authority and legal right of the Warrant Agent to so act as
warrant agent under each Warrant Agreement and to execute,
deliver and perform its obligations under each Warrant
Agreement, (iv) that the performance of such obligations by the
Warrant Agent will not violate its charter or by-laws, and
(v) that the Warrant Agent has the legal ability to exercise
its powers in connection with each Warrant Agreement in all
applicable jurisdictions;
(d) that the Board of Directors of the Company has authorized the
issuance and sale of the particular security to be sold or will
have given such authorization by the time of the issuance of
the particular security; and
(e) that the Indenture, the Convertible Debt Securities, each
Warrant Agreement and the Warrants will constitute valid and
legally binding obligations of the Company under the laws of
the State of New York governing such instruments and
securities.
The opinion set forth herein applies only insofar as the laws of the
Province of British Columbia and the federal laws of Canada may be
concerned and insofar as the laws of any other jurisdiction may be
relevant to the opinion herein expressed, we express no opinion thereon.
With respect to certain matters of New York law which are applicable to
the Indenture and the Convertible Debt Securities and to the Warrant
Agreements and the Warrants, we understand that you are being provided
with the opinion, dated the date hereof, of Paul, Weiss, Rifkind, Wharton
& Garrison, of New York, New York.
Based upon and subject to the foregoing, we are of the opinion that:
1. The issuance and sale by the Company of up to U.S.$75,000,000 (or
its equivalent as aforesaid) of Securities, as provided in the
Registration Statement, have been duly and validly authorized by all
necessary corporate action of the Company.
2. The Common Shares, when issued and sold as provided in the
Registration Statement, will be legally issued as fully paid and
non-assessable.
<PAGE>
Page 4
3. The Preferred Shares, when issued and sold as provided in the
Registration Statement, will be legally issued as fully paid and
non-assessable.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement and to the use of our name under the caption
"Legal Matters" contained in the prospectus included in the Registration
Statement. In giving this consent, we do not thereby admit that we come
within the category of persons whose consent is required by the 1933 Act
of the Rules made thereunder.
Yours truly,
/s/ KOFFMAN BIRNIE & KALEF
KOFFMAN BIRNIE & KALEF
Exhibit 12.1
<TABLE>
<CAPTION>
GOLDEN STAR RESOURCES
LTD.
Ratio of Earnings to Fixed Charges
Canadian Generally Accepted Accounting
Principles
(in thousands of United States Dollars)
<S> <C> <C> <C> <C> <C>
Six Months Twelve Months Ended December 31, For the Period
Ended June 30, From May 16, 1992
to December 31,
1996 1995 1994 1993 1992
--------------- ------------ ------------- --------- -----------------
EARNINGS
Pre-tax Income (Loss) - $121 ($12,181) ($8,785) ($1,650) ($14,170)
Canadian GAAP
Fixed Changes $18 $21 $8 $38 $78
Less adjustments:
Minority interest in
the losses of
subsidiaries ($1,102) ($4,916) ($7) $0 $0
------- ------ ------ ----- ------
Adjusted Income (Loss) ($963) ($17,076) ($8,784) ($1,612) ($14,092)
======= ======= ======= ======= =========
FIXED CHARGES
Interest portion of
rental expense (b) $8 $13 $8 $7 $2
interest expense $10 $8 $0 $31 $76
------- ------- ----- ----- --------
Total Fixed Charges $18 $21 $8 $38 $78
======= ======== ===== ===== ========
Ratio of earnings to (53.5) (813.1) (1,098.0) (42.4) (180.7)
fixed charges (a)
Calculated Deficiency ($18) ($21) ($8) ($38) ($78)
</TABLE>
(a)Earnings for the six months ended June 30, 1996, for the twelve months
ended December 31, 1995, 1994 and 1993 and for the period from May 16,
1992 to December 31, 1992 were inadequate to cover fixed charges.
(b)Represents the portion of rental expense which management believes is
a reasonable approximation of an interest factor.
<PAGE>
<TABLE>
<CAPTION>
GOLDEN STAR RESOURCES LTD.
Ratio of Earnings to Fixed Charges
United States Generally Accepted Accounting Principles
(in thousands of United States Dollars)
Six Months Twelve Months Ended December 31, For the Period
Ended June 30, from May 16, 1992
to December 31,
1996 1995 1994 1993 1992
------------- ----------- ---------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
EARNINGS
Pre-tax income (Loss) - ($10,724) ($28,330) ($16,081) ($8,435) ($13,299)
U.S. GAAP
Fixed Charges $18 $21 $8 $38 $78
Less adjustments:
Minority interest in
the losses of
subsidiaries ($1,898) ($4,660) ($1,498) $0 $0
-------- --------- ------- -------- --------
Adjusted Income (Loss) ($12,604) ($32,969) ($17,571) ($8,397) ($13,221)
========= ======== ======== ======= =========
FIXED CHARGES
Interest portion of
rental expense (b) $8 $13 $8 $7 $2
interest expense $10 $8 $0 $31 $76
--- --- --- --- ---
Total Fixed Changes $18 $21 $8 $38 $78
===== ======= ======= ====== ======
Ratio of earnings to (700.2) (1,570.0) (2,196.4) (221.0) (169.5)
fixed charges (a)
Calculated Deficiency ($18) ($21) ($8) ($38) ($78)
</TABLE>
(a)Earnings for the six months ended June 30, 1996, for the twelve months
ended December 31, 1995, 1994 and 1993 and for the period from May 16,
1992 to December 31, 1992 were inadequate to cover fixed charges.
(b)Represents the portion of rental expense which management believes is
a reasonable approximation of an interest factor.
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in
the Registration Statement of Golden Star Resources Ltd.
on Form S-3 of our report, dated March 22, 1996, on our
audits of the consolidated financial statements of Golden
Star Resources Ltd., as of December 31, 1995 and 1994,
and for the years ended December 31, 1995, 1994 and 1993.
We also consent to the reference to our firm under the
caption "Experts."
/s/ Coopers & Lybrand
Coopers & Lybrand
Chartered Accountants
Calgary, Canada
November 5, 1996
