-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GY0aIJ59xLGkdy6/q3TZo249Onm0jTf7TopimiQpLpOSSyPsCkLLRZdbgi3+xUbA xDtKIc45Kwr3sAcE0uadsQ== 0000927356-97-000399.txt : 19970416 0000927356-97-000399.hdr.sgml : 19970416 ACCESSION NUMBER: 0000927356-97-000399 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 13 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970415 SROS: AMEX SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ATLAS CORP CENTRAL INDEX KEY: 0000008302 STANDARD INDUSTRIAL CLASSIFICATION: GOLD & SILVER ORES [1040] IRS NUMBER: 135503312 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 001-02714 FILM NUMBER: 97581522 BUSINESS ADDRESS: STREET 1: 370 SEVENTEENTH ST STREET 2: STE 3150 CITY: DENVER STATE: CO ZIP: 80202 BUSINESS PHONE: 3038251200 MAIL ADDRESS: STREET 1: 370 SEVENTEENTH STREET STREET 2: STE 3150 CITY: DENVER STATE: CO ZIP: 80202 10-K405 1 FORM 10-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Year Ended December 31, 1996. COMMISSION FILE NO. 1-2714 ATLAS CORPORATION ------------------------------------- (Exact name of Registrant as specified in its charter) DELAWARE 13-5503312 - -------------------- ---------------------- (State or other jurisdiction of incorporation (I.R.S. Employer or organization) Identification No.) 370 Seventeenth Street, Suite 3050, Denver, CO 80202 303-629-2440 - ---------------------------------------------------- ---------------------- (Address of principal executive offices) (Zip Code) (Registrant's telephone number) (including area code) Securities registered pursuant to Section 12(b) of the Act: - -------------------------------------------------------------------------------- NAME OF EACH EXCHANGE TITLE OF EACH CLASS ON WHICH REGISTERED - -------------------------------------------------------------------------------- Common Stock, par value $1 per share New York Stock Exchange Option Warrants to Purchase Common Stock American Stock Exchange Preferred Stock Purchase Rights New York Stock Exchange - -------------------------------------------------------------------------------- Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of the Form 10-K or any amendment to this Form 10-K. [X] Aggregate market value of the 19,287,431 shares of Common Stock held by non- affiliates of the Registrant as of April 9, 1997 was $12,054,644. 1 As of April 9, 1997 Registrant had outstanding 24,219,963 shares of Common Stock, $1.00 Par Value, its only class of voting stock. DOCUMENTS INCORPORATED BY REFERENCE None 2 PART I Item 1. BUSINESS -------- GENERAL - ------- Atlas Corporation ("Atlas" or "the Company") is a New York Stock Exchange listed mining company (AZ:NYSE) which is principally engaged in the exploration, development and exploitation of mineral resource properties. Atlas was incorporated under the laws of the State of Delaware on October 31, 1936. The principal office of Atlas is located at Republic Plaza, 370 Seventeenth Street, Suite 3050, Denver, Colorado, 80202 USA. Atlas has five subsidiaries: (i) Atlas Precious Metals Inc. ("APMI"), incorporated under the laws of the State of Nevada, which holds the Grassy Mountain property and the exploration portion of the Gold Bar claim block, (ii) Atlas Gold Mining Inc. ("AGMI"), incorporated under the laws of the State of Nevada, which holds the mineral reserves and other assets and infrastructure at the Gold Bar mine, (iii) 50% ownership in Arisur Inc., ("Arisur"), a Grand Cayman corporation, which owns and operates mines in Bolivia, South America through a Bolivian branch (iv) Suramco Metals, Inc. ("Suramco"), a Nevada Corporation which holds the remaining 50% interest in Arisur amd (v) Cornerstone Industrial Minerals Corporation ("Cornerstone") (formerly known as Phoenix Financial Holdings,Inc.). Atlas intends to wind up the businesses of APMI, AGMI, and Suramco, as soon as practicable, as a means to cut its General and Administrative costs. In December 1996 Atlas completed the sale of its wholly-owned subsidiary, Atlas Perlite, Inc., to Cornerstone. See "Item 1 Business - Tucker Hill". As a result of the sale, Atlas will ultimately hold a 65% interest in Cornerstone. In addition the Company holds a 9.6% interest in Vista Gold Corp. (successor of Granges Inc. and Da Capo Resources Ltd. amalgamation in October 1996 "Vista") See "Item. 1 Business - Investments". ---------------------- ARISUR INC. - ----------- On October 8, 1996 the Company acquired Arisur which owns and operates the Andacaba and Don Francisco underground lead, zinc and silver mines located in southern Bolivia. The Company acquired a 50% interest in Arisur from Arimetco International Inc., a Canadian corporation, for $3 million in cash and purchased 100% of Suramco, which owns the remaining 50% interest in Arisur, for four million shares of the Company's common stock. In addition, in November 1996 Arisur acquired the Koyamayu mine and the Comali mill. EMPLOYEES AND OFFICES Arisur's corporate offices are located in La Paz and staffed by seven persons. Operations are conducted out of Arisur's office in Potosi which is staffed by eleven persons. Additionally, there are 160 miners and 38 mill workers who are directly involved in operations at Andacaba, Don Francisco and Koyamayu. 3 ANDACABA MINE - -------------- LOCATION The property is located in the south central altiplano region of Bolivia near the city of Potosi, a historic mining community, at an altitude of approximately 4,500 meters (14,800 feet). The Andacaba property is accessible by traveling south/southeast 37 kilometers (23 miles) via an all weather gravel road from the city of Potosi. PROPERTY The Andacaba mine and facilities are situated on 19 concessions controlled 100% by Arisur comprising 3,000 hectares (7,400 acres). OPERATIONS The Andacaba lead, zinc and silver mine has been in operation since the early 1900s. The mining operations take place year round on the basis of 28 days per month for a total of 330 work days per year. The two operating mills on site are the Don Roy mill which processes Andacaba ore and the Don Max mill which processes other ores and performs custom milling. The concentrates are shipped by truck to Potosi and then by rail to warehouses the Chilean seaports (Antofagasta for the zinc-silver concentrates and Arica for the lead-silver concentrates), prior to shipment to smelters in various markets. CONDITION Service facilities at the mine site are basic and require upgrading as part of the mine and mill expansion underway. Don Roy mill capacity is being upgraded and expanded to 600 tonnes per day (662 short tons). Surplus equipment from the Don Roy mill will be used to upgrade the Don Max mill to a rate of 200 tonnes (221 short tons) per day. Power is currently supplied by a 1,500 kilowatt substation. An electrification program is underway to upgrade power for the mine and mill expansion. Water for the mills is supplied by mine drainage. Ample water and power for the current mill size are available at the site. The city of Potosi provides a source of supplies and labor. GEOLOGY/MINERALOGY The mineralized veins at Andacaba are enclosed in tertiary porphyritic quartz latite or rhyodacite volcanic rocks. The volcanics are part of an igneous complex that includes an elliptical-shaped pluton of biotite granodiorite that crops out south of the mine area. The pluton is believed to be 40 kilometers (25 miles) long and 14 kilometers (9 miles) wide. Volcanic breccias can be observed in the mine area. Clasts in the breccias consist of sediments and volcanics that range from one to 15 centimeters (0.4 to 6 inches) across. The matrix is fine, pulverized material cemented by quartz. Paleozoic sediments outcrop west of 4 the mine and lead, zinc and silver veins are known to occur in the sediments beyond the property boundary. The thickness of the volcanic package is not known and at deeper levels in the mine the host volcanics may change to either Paleozoic sediments or possibly granodiorite. On the surface the veins are oxidized to a depth of about 20 meters (66 feet). Minerals in the oxidized zone include limonite, hematite, goethite, quartz and clay. In the sulfide zone the primary minerals are marmatite, galena, jamesonite, boulangerite, sphalerite, tetrahedrite, stephanite, quartz, pyrite, pyrrhotite, chalcopyrite, arsenopyrite, siderite, and others. Wall rocks show very little alteration. There is possibly some silicification of the rhyodacite. RESERVES The following table delineates reserves as prepared by MINTEC, Mineria Tecnica Consultores Asociados: PROVEN AND PROBABLE RESERVES SEPTEMBER 1996 - -------------------------------------------------------------------------------- TONNES %ZINC %LEAD SILVER GRAMS/TONNE - -------------------------------------------------------------------------------- 547,000 8.26 2.36 284 - -------------------------------------------------------------------------------- SHORT TONS SILVER OUNCES/ SHORT TON - -------------------------------------------------------------------------------- 603,000 8.26 2.36 8.3 - -------------------------------------------------------------------------------- Prospective resources of 7 million tonnes (7.7 million short tons) are inferred based on geological projections. DON FRANCISCO MINE - ------------------ LOCATION The property is accessible via an all weather road 77 kilometers (48 miles) in a southerly direction from Potosi or 64 kilometers (40 miles) from the Andacaba mine. The Don Francisco mine is at an altitude of 3,000 meters (9,800 feet). PROPERTY Arisur owns four concessions covering 350 hectares (approximately 865 acres). OPERATIONS The Don Francisco mine, which is presently undergoing an underground development program, is producing approximately 80 tonnes (88 short tons) per day. Production is scheduled to increase to 100 tonnes (110 short tons) per day in 1997 and 200 tonnes (221 short tons) per day in 1998. There is no mill onsite and ore is trucked to Andacaba for processing at the Don Max mill. Alternatively, the ore may be trucked to the recently acquired Comali 5 mill, as described below, located near the town of Toropalca to the south. The Company intends to use the Comali mill as a regional mill and may utilize it to toll ore for third parties. CONDITIONS Sufficient water is available to conduct the mining operations. Electrical power is presently supplied by generator but the construction of a power line to the project is planned for late 1997 or early 1998. A camp is situated on the property for the mine workers and a radio communication system is in place between the Don Francisco and the Andacaba mines. GEOLOGY The structural setting is similar to Andacaba in that there is one main structure - the Veta Principal south of the river which flows across the property, and the Veta Cumbre north of the river with secondary splits off the footwall of the main vein. Host rocks are Ordovician calcareous shales, siltstones and sandstones. The sequence has been folded into a series of synclines and anticlines. The Veta Principal occupies both flanks and the axial portion (for a short distance) of a major anticline. Igneous dikes are also present in the stratigraphic section. RESERVES The following table delineates reserves as prepared by MINTEC, Mineria Tecnica Consultores Asociados: PROVEN AND PROBABLE RESERVES SEPTEMBER 1996 - -------------------------------------------------------------------------------- TONNES %ZINC %LEAD SILVER GRAMS/TONNE - -------------------------------------------------------------------------------- 33,000* 14.11 0.68 44 - -------------------------------------------------------------------------------- SHORT TONS SILVER OUNCES/SHORT TON - -------------------------------------------------------------------------------- 36,400 14.11 0.68 1.3 - -------------------------------------------------------------------------------- *Geologic projection along the principal vein structure infers a prospective resource of 240,000 tonnes (265,000 short tons). KOYAMAYU MINE In January 1997 the Company acquired the Koyamayu lead, zinc and silver property, located in southern Bolivia, for $100,000. The Company is currently developing a mine plan to confirm mineralization and expects to place the property into production during the second half of 1997. The ore mined at Koyamayu will be processed at the Andacaba mine or alternatively at the Comali mill. 6 COMALI MILL The Comali mill was acquired in late 1996 by Arisur for $140,000. Its current operational capacity is 120 tonnes (130 short tons) per day. Its circuits recover lead, zinc and silver. The Comali mill is situated near the community of Toropalca, 30 kilometers (19 miles) south of Don Francisco. ____________________________________ In Bolivia, the Company's near-term focus will be on expansion of existing operations, the evaluation of additional lead, zinc and silver mining opportunities and evaluation of precious metal opportunities. CORNERSTONE INDUSTRIAL MINERALS CORPORATION - ------------------------------------------- On November 30, 1995, the Company purchased from a group of individual investors 12.2 million shares of Phoenix Financial Holdings Inc., representing approximately 51% of total shares outstanding for an aggregate purchase price of C$1,781,200. On September 3, 1996 the shareholders approved a name change from Phoenix Financial Holdings Inc. to Cornerstone Industrial Minerals Corporation ("Cornerstone"). On December 13, 1996 Cornerstone executed a Stock Purchase Agreement providing for the purchase by Cornerstone of all of the issued and outstanding shares of Atlas Perlite, Inc., owner of the Tucker Hill perlite Project (Tucker Hill) and a wholly-owned subsidiary of Atlas. Subsequently, Cornerstone changed the name of Atlas Perlite, Inc. to Cornerstone Industrial Minerals Corporation, USA. The Stock Purchase Agreement calls for payment to Atlas of $1 million in cash, the issuance of 9,647,986 shares of common stock of Cornerstone, valued at $1 million, the reimbursement of Atlas's Tucker Hill development costs of $2,945,282, and the retention by Atlas of a 2% gross proceeds royalty generated from the sale of perlite from Tucker Hill. The purchase price is payable in three stages as follows: $125,000 and 1,205,998 shares due at closing, $500,000 and 4,823,993 shares of common stock upon obtaining all operating permits and $375,000 and 3,077,994 shares of common stock related to Atlas assisting the Company in meeting three other milestones which include obtaining base load perlite contracts for a specified amount of revenues per year, obtaining permanent project financing and achieving commercial production. The additional shares will result in Atlas's equity position in Cornerstone increasing from approximately 51% to 65%. The transaction was approved by a committtee of independent board members of Cornerstone and also was approved by a majority of the minority shareholders of Cornerstone at its annual general meeting held on September 3, 1996. TUCKER HILL OPERATIONS - ---------------------- Cornerstone will produce and process perlite for sale to end users. Operations are directed through Cornerstone's Lakeview, Oregon office which will be staffed by fifteen persons. Cornerstone's Corporate offices are located in Denver, Colorado. Perlite is a naturally-occurring volcanic glass which is environmentally friendly and chemically inert. Expanded, perlite's heat resistance, extraordinary insulating characteristics and low bulk 7 density suit it ideally for wide application in construction, horticulture and industry. Other uses for expanded perlite include filter media for pharmaceuticals, food products and chemicals. Natural perlite, when subjected to heat, physically expands to up to twenty times its original volume. This expansion is due to the change in the state of water (2% to 5%) entrapped within the glass structure. As this interstitial water turns to vapor, the internal pressures increase and the perlite expands into larger, less dense particles. Cornerstone mines, crushes, sizes, and delivers finished perlite meeting various quality specifications to end users (expansion plants). In 1997 demand for finished perlite in the United States is expected to exceed 700,000 tons. Demand growth averaged 6% per year from 1985 to 1994 and was 9% in 1995. Cornerstone expects to take advantage of its regional location for sales, including sales to customers in Canada and Pacific rim countries. Location The Tucker Hill project is comprised of a quarry, a processing facility and a transloading facility, all located in south-central Oregon. The quarry is accessed by traveling 35 miles northwest of the community of Lakeview, in Lake County, Oregon on US Highway 395 and State Highway 31, and then three and a half miles south on an improved haulroad. The processing facility is located in an industrial park in Lakeview. The transloading facility, comprised of silos for product storage and load-out access to a rail spur, is located 90 miles west of Lakeview in Henley, Oregon. Property The Tucker Hill property encompasses approximately 900 acres and is comprised of 45 unpatented lode mining claims. The millsite property, comprised of 25 acres of fee land, was purchased by Cornerstone from Lake County. Finally, the transloading facility located in Henley is situated upon property held under a long term lease from the Burlington Northern Santa Fe Railway, owner and operator of the rail spur adjacent to this facility. Geology Tucker Hill is a low hill with about 500 feet of relief within the Chewaucan Valley. The perlite deposit occurs in the northeastern portion of the Devils Garden lava field. The lava field is five to ten million years old and is thus classified as late Miocene to early Pliocene and is composed largely of olivine basalt flows, minor andesite flows, and related rhyolitic domes and pyroclastic rocks. Tucker Hill is one of the late miocene composite rhyolitic lava domes within the field. The Tucker Hill rhyolitic dome complex is a package of cooling units that originated from a single eruptive center along a linear vent system. Two major cooling units are recognized: the outer chill margin and inner rhyolitic core. The chill margin consists of an outer glass envelope and contains various sub-units of perlite. Erosion of the Tucker Hill lava dome has removed a significant portion of the outer glass envelope, exposing the rhyolitic core. Extensive areas of perlite remain. 8 History A small portion of the Tucker Hill perlite deposit was discovered by local Oregon prospectors in 1949. Bulk samples taken by these prospectors were collected and crudely expanded by the US Bureau of Mines in Tucson, Arizona. Expansion results were favorable and the property underwent a brief period of surface mining. In 1980, Houston International Minerals Corporation, later acquired by Tenneco Inc. acquired the property through location of mining claims and confirmed the presence of a significant resource of commercial grade perlite. In July 1987 Atlas acquired an option to purchase this property from Tenneco Inc., which was exercised in 1988. Extensive evaluation work was carried out by Tenneco Inc. consisting of geological mapping, rock chip sampling and analysis, diamond core drilling and bulk sampling. Atlas continued this effort and, to date, 42 holes have been drilled and numerous surface bulk samples collected. Testing of the perlite included expansion tests, measurements of expanded and compacted density, sinkers (percentage of non-expandables) and brightness. Full scale testing of bulk samples was performed at the facilities of two end users. The results of this test work indicated that Tucker Hill perlite exceeded established standards for expansion and yield. In 1995, Atlas made the decision to develop Tucker Hill and has subsequently acquired the necessary operating permits. Construction of the processing facility will be completed in 1997, making the facility operational on a commercial basis. A significant contract for over 40,000 tons per year has been executed with Armstrong World Industries, Inc. ("Armstrong") and Cornerstone continues its efforts to contract with other purchasers for finished perlite. Reserves Proven and probable reserves at Tucker Hill of 4.9 million tons of perlite were, reported by Micon International Limited in its "Review of The Tucker Hill Perlite Deposit" completed on April 26, 1996. The report was prepared at the direction of a special independent committee of the Cornerstone Board of Directors, in support of Cornerstone's purchase of Atlas Perlite, Inc. The 4.9 million tons is based on 42 core and reverse circulation drill holes and 13 bulk samples. Samples were analyzed for chemical, physical, an optical characteristics as well as expandability performance. Test results demonstrate that the perlite is a universal variety suitable for a wide array of expanded products. The reserves are restricted to an area delimited by the ten year mining plan as permitted with the Bureau of Land Management. Geologic resources have been estimated in excess of 50 million tons. 9 Operations Mining - ------ Cornerstone conducts mining utilizing conventional quarrying methods. Topsoil and organic matter are stripped from the surface with a dozer to expose the perlite. This material is stockpiled for later use as growth media during reclamation. The perlite is then ripped and cross-ripped with the dozer to a depth of about two feet. This procedure provides the quality control necessary for production of perlite containing minimal contaminants such as obsidian or clay. The perlite loosened by ripping is gathered into a pile with the dozer and loaded into trucks with a loader. A contract trucking company then hauls the perlite to the processing facility in Lakeview where it is dumped onto the run- of-mine stockpile. Internal waste, which is minimal (approximately five percent), will be hauled to a gravel pit at the base of Tucker Hill for disposal. Processing - ---------- Finished perlite is produced from the processing facility, a crushing, drying and sizing operation, in four product streams. Run of mine perlite is reclaimed from the mill stockpile with a loader and is then dumped into a pocket feeding a primary jaw crusher. This jaw crusher reduces the size of the perlite to about two inches. This crushed perlite reports to a crushed ore stockpile for delivery to a secondary impact crusher where it is further reduced in size to 1/2 inch and is then dried in a rotary drier. The purpose of drying is to deliver a product to end users which has less than 0.5 percent free moisture, a requirement for most end users. After drying, the product reports to a primary screen where horticultural grade perlite is separated. Undersize perlite which passes the primary screen reports to the secondary screens, with oversize being crushed by a tertiary impact crusher, in closed circuit with the secondary screens. Filler/insulation grade perlite is obtained from the secondary screen undersize. An extensive dust collection system recovers fines from all transfer points downstream from the dryer. These fines are classified by cyclones thereby creating two additional finished fine perlite grades. Finally, the sized perlite is stored at this facility in silos with the finished product being delivered to customers via rail or by truck. The Lakeview plant site is situated on a rail line which is serviced by the Union Pacific Railroad. Transloading Facility - --------------------- In order to ensure rail access and to gain a competitive advantage for rail transportation rates, Cornerstone has constructed a transloading facility at Henley which is serviced by the Burlington Northern Santa Fe Railway. Finished perlite from the Lakeview plant will be hauled by a trucking contractor to Henley and off-loaded into silos for transloading into rail cars. 10 Environmental Permitting Cornerstone acquired the key regulatory permits for its quarry operations through the Bureau of Land Management and Oregon Department of Geology and Mineral Industries. Operation of the Lakeview plant is permitted under a conditional use permit granted by Lake County and a permit granted from the Oregon Department of Environmental Quality. Project Status Initial mining operations commenced at the quarry in December 1996. As detailed above, Cornerstone mines the quarry and a contractor is used for hauling perlite to the Lakeview plant. The same contractor will haul finished perlite from the Lakeview plant to the transloading facility at Henley. Testing of the processing facility began in February 1997 at the Lakeview plant which is operated by Cornerstone. Initial shipments of finished perlite have been made to Armstrong which has reported that the perlite is satisfactory for its operations. The facility is currently undergoing modifications identified in the testing phase. Contract deliveries to Armstrong are expected to begin in the summer of 1997. Cornerstone has a contract with Armstrong to supply Armstrong's St. Helens, Oregon facility with all of its perlite requirements, currently estimated to be approximately 55,000 tons per year. The initial term of the contract is for three years and provides for a two year extension if rates are agreed. Cornerstone is seeking to put in place additional contracts for the sale of finished perlite. It is expected that sales in 1997 will achieve a rate of 5,000 tons per month. The Lakeview plant has a permitted capacity of 100,000 tons per year. Prices are negotiated with end users and are partially a function of transportation costs. GRASSY MOUNTAIN PROPERTY - ------------------------ LOCATION The Grassy Mountain project is located in northern Malheur County, Oregon, approximately 22 miles southwest of Vale, Oregon. The property is accessed by traveling four miles west from Vale on US Highway 20, then south on the Twin Springs County Road for 23 miles, or by driving south from Nyssa on US Highway 95 to Owyhee and then west to Rock Springs Canyon and by gravel road for 14 miles. The project elevation ranges from 3,300 to 4,300 feet. PROPERTY The Grassy Mountain property encompasses approximately 23 square miles. Atlas owns 611 unpatented lode claims. An additional 119 unpatented lode and placer claims are controlled under five separate mineral lease or lease/option to purchase agreements. Approximately 1,000 acres of fee surface, 240 acres of fee surface and minerals, and 80 acres of fee minerals are held by two lease/option agreements. Atlas holds one state prospecting permit covering 1,280 acres. 11 Geology The rocks exposed at Grassy Mountain are part of a late to middle-Miocene Grassy Mountain Formation, a sequence of volcanic and volcanisclastic rocks made up of primarily olivine-rich basalt and intercalated tufaceous siltstones, sandstones, and conglomerates. The rocks have been dated through mammalian fossils and Potassium Argon chronology to be approximately 10 million years old. The sediments are primarily flat-lying with a slight regional dip to the east. The structural trend of the area is N10W to N30E. These features were probably cut by later post-mineralization east-west faulting. Mineralization is associated with a low grade gold siliceous hot springs system with enrichment along multi-stage quartz-adularia veins and favorable lithologies. Explosive brecciation and overpressuring of the rock, common in these systems, was minimized due to the un-lithified nature of the sediments. The mineralized rock is highly silicified and locally brecciated in the vicinity of the feeder structures. As silicification decreases so does grade. Away from the feeder zones lithology also plays an important role in gold deposition. The finer grained siltstones contain the bulk of the lower grade material. The higher grades are found in the coarser arkosic sandstones. The feeder or vein zones contain grades as high as 20 ounces of gold/ton ("oz. Au/t"). HISTORY There was no significant mining or major mineral occurrence known in the area prior to the Company's acquisition of the Grassy Mountain deposit in 1986. Detailed mapping and sampling were completed in 1986 and several drill targets were defined. Hole 26-9 is considered the discovery hole with 145 feet of mineralization averaging 0.075 oz. Au/t. The claim block was expanded at this time and exploration work continued through 1991. The Company completed 388 drill holes for a total of approximately 221,500 feet on the property. Newmont Grassy Mountain Corporation, a wholly owned subsidiary of Newmont Exploration Company ("Newmont"), acquired the property from the Company in September, 1992 and continued property evaluation through August, 1994 completing an additional 13 core and reverse circulation holes. In September 1996 the Company executed an agreement with Newmont, (the "Agreement"), which provided for the reconveyance of the Grassy Mountain property to the Company. Pursuant to the Agreement, Atlas paid an amount of $206,000 to Newmont, issued a $500,000 unsecured, non-interest bearing promissory note due September 18, 1997 and assumed bonding requirements for exploration reclamation of $146,000. RESERVES As part of a detailed feasibility study conducted by Kilborn SNC-Lavin, Inc. ("Kilborn") in 1990, an open pit mine model was developed by Pincock, Allen & Holt, Inc. The feasibility study resulted in the definition of a mineable reserve of 996,000 ounces at a $350 gold price from 12 16 million tons at grades 0.062 oz. Au/t of mill and heap leach ores. Neither the recovered silver nor low grade leach ores were considered. The contained silver is approximately 2,467,000 ounces. A feasibility study was completed in 1990 by Pincock, Allen & Holt, Inc. The database utilized for this study consisted of 180 drill holes in the main deposit area. The drilling is predominantly vertical and angle reverse circulation rotary drill holes with some core holes. Using a 0.02 oz. Au/t cutoff, Pincock, Allen & Holt, Inc. calculated a geologic resource of 17,217,000 tons at a grade of 0.061 oz. Au/t for a total of 1,051,500 ounces and 2,610,000 ounces of contained silver. UNDERGROUND STUDY Two underground feasibility studies were commissioned to evaluate 200 tons per day ("tpd") and 1,000 tpd production options by Kilborn and Dynatec Mining Corporation, respectively. The 200 tpd study indicated diluted mineable reserves of 131,000 tons at a grade of 1.132 oz. Au/t for 149,000 contained ounces. The second, larger scale underground study at 1,000 tpd used an 0.08 oz. Au/t cutoff and identifies diluted mineable reserves as 1.9 million tons at a grade of 0.262 oz. Au/t for 497,000 contained ounces. EXPLORATION An additional resource was drilled out approximately 1 mile west of the main deposit. The Crabgrass target contains a near surface geologic resource at a 0.02 oz. Au/t cutoff of 24,000 ounces contained in 600,000 tons grading 0.038 oz. Au/t. Several drilled and undrilled areas within the Grassy Mountain claim block have potential for additional resources. PROJECT STATUS Based on pre-feasibility studies completed for underground development, the Company believes that Grassy Mountain has the potential to be a low cost producer. Atlas plans to evaluate permitting and development of Grassy Mountain with a joint venture partner. GOLD BAR MINE - ------------- LOCATION The Gold Bar Resource Area is located in and adjacent to the Roberts Mountains in Eureka County, Nevada, at elevations ranging from 6,400 to 8,800 feet above sea level. The area is reached by traveling 22 miles west of Eureka, Nevada, on US Highway No. 50 and 17 miles northeast along the Three Bars Road. PROPERTY The Gold Bar Project area encompasses approximately 100 square miles. There are 3,204 unpatented lode mining claims of which 3,025 are owned by Atlas and 179 are held through lease and option to purchase agreements. Atlas also owns 182 unpatented millsite claims, 6 13 patented lode claims and 8 patented millsite claims. Additionally, Atlas holds under lease another 2,000 fee acres of surface with varying percentages of the underlying minerals. GEOLOGY All of the mineralization found occurs as sediment-hosted, "Carlin-type" deposits. These deposits are hosted by carbonate-rich sedimentary rocks and are characterized by micron size gold and a distinct hydrothermal alteration suite. Gold mineralization and alteration are characteristically enriched in the trace elements silver, antimony, arsenic, mercury, and thallium. HISTORY Regional reconnaissance exploration led the Company to the Battle Mountain Trend area in the summer of 1983. Focused reconnaissance along the southern Roberts Mountains identified widespread hydrothermal alteration with anomalous gold geochemistry along the western range front. Detailed exploration in the area subsequently led to acquisition of land, target development, and drilling. Since then, the Company has discovered five gold deposits: Gold Bar, Goldstone, Gold Ridge, Gold Pick, and Gold Canyon. From inception through cessation of operations in 1994, 485,200 ounces of gold were recovered from 7,514,600 tons of ore grading .074 oz. Au/t milled. Mill construction occurred during 1986 with the first gold poured in January, 1987. The mill was originally designed and constructed for 1,500 throughput. An expansion in 1989 increased throughput to the current 3,200 tpd rate. RESERVES Following suspension of mining operations at Gold Canyon, which occurred in February of 1994, Atlas delayed plans for further mining of the Gold Pick and Gold Ridge deposits pending additional drilling and further study of cost cutting measures. This confirmatory program included the drilling of 303 surface and 55 underground holes. The mine plan for the Gold Pick and Gold Ridge deposits established proven and probable mineable reserves which were independently audited by Mine Reserve Associates of Denver, Colorado in December 1994. Pincock, Allen & Holt, Inc. of Denver, Colorado as part of its independent review of the Gold Bar Resource Area, dated December 13, 1995, confirmed the following at a gold price of $400: 14 PROVEN AND PROBABLE RESERVES DECEMBER 1996 - -------------------------------------------------------------------------------- GRADE (OUNCES CONTAINED ORE TONS OF GOLD PER TON) OUNCES* - -------------------------------------------------------------------------------- Gold Pick East 1,278,000 0.073 93,939 - -------------------------------------------------------------------------------- Gold Pick West 1,009,000 0.069 69,909 - -------------------------------------------------------------------------------- Gold Ridge 391,000 0.059 23,077 - -------------------------------------------------------------------------------- Total 2,678,000 0.070 186,925 - -------------------------------------------------------------------------------- * Estimated recoverable ounces of 157,000 based upon an overall 84% recovery rate. MEASURED & INDICATED MINERALIZED MATERIAL * - -------------------------------------------------------------------------------- GRADE CONTAINED TONS (OUNCES OF OUNCES (000) GOLD PER TON) (000) - -------------------------------------------------------------------------------- Advanced Prospects** 3,369 0.031 104 - -------------------------------------------------------------------------------- * "Mineralized Material" is precious metal bearing rock that has been physically delineated by one or more of a number of methods including drilling, underground sampling and surface trenching and sampling. This material has been found to contain a sufficient amount of mineralization of an average grade of metals to have economic potential that warrants further exploration and evaluation. Estimates of tonnage and grade are made on the continuity, size and shape of the mineralization and have taken into account effects of waste mining and dilution. ** Advanced Prospects include Cabin Creek, Hunter, Gold Canyon and Pot Canyon. JOINT VENTURES As a result of the strategic decision to accelerate development of the entire Gold Bar claim block, Atlas entered into joint venture arrangements with four separate gold producing companies, Rayrock Yellowknife Resources, Inc., Homestake Mining Company, Hemlo Gold Mines (USA.), Inc. and Vista between July of 1994 and September of 1995. Active exploration programs conducted by these companies on their respective areas of interest during 1994, 1995 and 1996 were comprised of mapping, sampling and geophysical work as well as exploration drilling. Much information was gained concerning the exploration potential of the Gold Bar Resource Area. The four joint venture agreements were terminated in 1996 and 1997. As a result Atlas regained a 100% interest in the entirety of the Gold Bar claim block, which contains the Company's Gold Bar mill. In addition to existing reserves, Atlas has identified and partially defined eleven high quality exploration targets, some with ore grade drill intercepts. The Gold Pick and Gold Ridge deposits are unencumbered by royalties and are controlled by unpatented mining claims for which first-half final certificates have been issued by the Bureau of Land Management. These are believed to exempt the claims from federal royalties on production. Atlas currently holds the 15 requisite environmental permits, licenses and waivers required by state and federal authorities to operate the Gold Bar mine and mill. There are no requirements associated with the current permits that would prohibit the restarting of mining operations. Currently, the Company has decided not to pursue alternatives for self development of the property. However, various scenarios are being considered for continued development including a joint venture for outright sale. DOBY GEORGE PROPERTY - -------------------- On October 25, 1995 Atlas purchased the Doby George property from Independence Mining Company, Inc. ("Independence") for $400,000 in cash plus 1.4 million common shares of Atlas. LOCATION Doby George is situated in northern Elko County, Nevada, approximately 60 air miles north of the community of Elko. The property is accessed by traveling north of Elko on US Highway 225 for approximately 70 miles, then southwest on Maggie Creek Summit Road another 12 miles. PROPERTY The Doby Project area encompasses approximately nine square miles in Elko County, Nevada. Atlas owns 601 acres of fee land plus 240 unpatented lode mining claims. An additional 104 lode claims are held under three separate lease agreements. GEOLOGY Rock types at Doby George are dominated by Mississipian Schoonover Formation siliceous and limy siltstones, sandstones, cherts and quartzites, which host all significant mineralization on the property. Mineralization is generally controlled by structure and stratigraphy. High angle structures appear to be related to the more significant mineralization with mineralization increasing in both grade and thickness toward major structures. Gold is fine grained and commonly occurs within quartz veins and silicified zones. 16 HISTORY The property was first identified by Felmont Oil Company, an affiliate of Homestake Mining Company, in 1983. Homestake conducted exploration drilling on the property through 1991 when the property was sold to Independence. A total of 727 holes have been drilled at Doby on five separate deposits, and metallurgical testwork has confirmed that the mineralization is generally not refractory and is amenable to heap leach processing. The drilling and mapping to date have confirmed that a significant portion of the mineralization is shallow, varying in thickness from 15 feet to 225 feet, and may be mined by open pit methods. The identified mineralized zones have been estimated by Behre Dolbear & Company of Denver, Colorado, in an independent evaluation concluded in July 1994, to contain 3.6 million tons of mineralized material at a grade of 0.06 oz. Au/t. PROJECT STATUS Atlas completed a $600,000 work program of additional drilling, metallurgical, engineering and environmental studies on the previously identified West Ridge and Red Tail deposits in order to confirm reserves. The Company is currently evaluating either joint venture exploration and development or a sale of the property. MUSGROVE CREEK PROPERTY - ----------------------- The Musgrove Creek property is located in Lemhi County, Idaho, 25 miles southwest of the town of Salmon. In November 22, 1996 the Company signed an option with Meridian Gold Company ("Meridian") for the purchase of the Musgrove Creek property and on February 28, 1997 Meridian exercised its option. The closing occurred on March 21, 1997. For the property, Atlas received total remuneration of $125,000 plus $27,000 as reimbursement of land holding costs. Additionally, Meridian has agreed to assume a reclamation obligation of $55,000, to convey to Atlas a 1% NSR on claims owned by Atlas and in the event Meridian places minerals at Musgrove Creek into production, Atlas will receive an additional $100,000. INVESTMENTS - ----------- VISTA GOLD CORP. - ---------------- On August 15, 1994, the Company completed the purchase of 12,694,200 common shares of Vista which represented 37.2% of the issued and outstanding shares of Vista. The purchase price was C$4.00 per share (US $2.80), or an aggregate purchase price of C$50.8 million (US $35.8 million). Vista is a Canadian-based precious metals mining company with shares traded on The Toronto Stock Exchange and the American Stock Exchange. Effective May 1, 1995, Vista amalgamated with its subsidiary, Hycroft Resources and Development Corporation, reducing Atlas's interest in the amalgamated entity to 27.5%. On May 25, 1995, the Company purchased 20,700 common shares of Vista which increased the Company's interest to a total of 12,714,900. On October 16, 1996 the Company sold 4,240,324 common shares of Vista for $1.32 per share. The Company continues to hold 8,474,576 Vista common shares, which have been 17 pledged as security for the Company's $9.81 million Exchangeable Debentures due October 25, 2000. On October 22, 1996 an amalgamation between Granges Inc. and Da Capo Resources Ltd. was approved by their respective shareholders to form Vista, further reducing the Company's interest in the combined company to 9.6% Operations at Vista's Hycroft mine, located near Winnemucca, Nevada have consistently produced between 80,000 to 100,000 ounces of gold annually since 1989. Given its identified reserves and current level of production, Vista has stated that production is scheduled to continue through the year 2001. The Company reported the results of Vista's operations using the equity method, from August 15, 1994, when its share position in Vista's predecessor was acquired, until the fourth quarter of 1996, during which quarter the Company's equity was reduced to 9.6% as a consequence of the sale of the shares. As a result, beginning with the 4th quarter and in accordance with Generally Accepted Accounting Principles, the Company changed its method of accounting whereby it records marketable securities at fair market value. For the fiscal periods ended December 31, 1996 and 1995 and June 30, 1995, Atlas recorded equity losses of $2.72 million, $1.7 million and $1.36 million, respectively, attributable to the operations of Vista. These amounts include Atlas's proportional share of Vista operating results, and an additional charge of approximately $34 per ounce of Vista production as an amortization of Atlas's excess carrying cost above Vista book value. DISCONTINUED OPERATIONS - ----------------------- Uranium Mill Site, Moab, Utah - ----------------------------- Atlas's Moab mill site (the "Site") is located in Grand County, Utah. The Site is located on the northwest shore of the Colorado River, 3 miles northwest of the center of Moab and can be accessed from US Highway 191 north of Moab. The Site encompasses 437 acres on the outside bend of the Colorado River, at the southern terminus of the Moab Canyon, approximately 4,000 feet above mean sea level. Of the 437 acres owned by Atlas, the plant site and tailings pond combined cover approximately 200 acres. Before decommissioning, the plant site was composed of a main processing plant, a 130-acre tailings pond, storage yards, ore receiving facilities, various process-related structures, and an office complex. The Uranium Reduction Company ("URC") built and began operations at the Moab Mill (the "Mill") in October 1956. Atlas acquired URC in 1962 and operated the Mill until 1984 when it was placed on stand-by status. Atlas holds US Nuclear Regulatory Commission ("NRC") Source Material License SUA-917 for the Mill, which was changed to a possession only status on December 18, 1992. The Mill was authorized to extract uranium oxide by both the acid and alkaline leach processes and was licensed for production at 850 metric tons (1,870,000 pounds) of yellowcake annually. During the life of the Mill, only one tailings pond was used. 18 The majority of the ore for the Mill came from the Big Indian Uranium District approximately 80 miles to the southeast. The ore was primarily a sandstone with minor amounts of carbonate. Ore was trucked to the Mill and ground to a sufficiently fine consistency to allow maximum efficient chemical reactions to occur. It was then processed through either the acid-leach circuit or the alkaline-leach circuit, both of which were used in the Mill. After milling, the combined waste slurry from both circuits was pumped to the tailings impoundment. The approximate wet weight of the tailings contained within the tailings pile was determined to be 10.5 million tons, with a volume of 7.5 million cubic yards. The tailings pile is composed of fine tailings (slimes), coarse tailings (sand), and ore which was placed there at the end of the operation of the Mill as part of an interim cover. A decommissioning plan for the Mill was approved on November 28, 1988. Decommissioning of the Mill began in 1988, and interim cover placement over the tailings disposal area began in 1989 and was completed in 1995. A reclamation plan for the tailings pile was prepared by Atlas in 1981 and approved by the NRC in 1982. The plan was based on the projected life of facility tailings capacity requirements; the disposal pile was designed for an ultimate crest elevation of 4,076 feet. The maximum crest elevation constructed before the Mill ceased operation was 4,058 feet, resulting in the necessity to revise the reclamation plan. Atlas, by letter dated August 2, 1988, submitted a revised reclamation plan for NRC review and approval. In 1990, the NRC changed its technical criteria which resulted in requests for additional information, reevaluation, and redesign. As a result, Atlas submitted a revised reclamation plan in 1992. On July 20, 1993, NRC gave notice in the Federal Register of its intent to approve the reclamation plan and made available for public comment an environmental assessment of the effects of the proposed action, which addressed only the environmental effects of changes to the plan approved in 1982. The comments received prompted NRC to withdraw, by Federal Register notice dated October 8, 1993, its previously noticed intent to approve the revised reclamation plan. On March 30, 1994, NRC announced its intent to prepare an Environmental Impact Statement ("EIS") to evaluate potential impact to the environment of the proposed plan and certain alternative proposals. Atlas's proposed reclamation plan (the "Plan") would allow the Company to (1) reclaim the tailings pile for permanent disposal and long-term custodial care by a government agency in its current location on the Site, (2) prepare the Site for closure, and (3) relinquish responsibility of the Site after having its NRC license terminated. Closing the pile consists of recontouring the tailings pile to allow for the natural drainage of precipitation and covering with earthen material and rock to control radon emanations and prevent erosion. 19 The Company has nearly completed the regulatory process for approval of the Plan. On March 7, 1997 the NRC issued its Technical Evaluation Report ("TER") which acknowledges that the Plan is in compliance with the technical requirements for capping the tailings facility onsite. The TER is used to evaluate compliance with regulatory and safety criteria. While NRC's issuance of the TER is a favorable development, the regulatory approval process is not complete until the NRC issues the final EIS which is anticipated in mid to late 1997. In the draft EIS issued in January, 1996 the NRC staff concluded that Atlas's proposal to reclaim the pile in place is acceptable and less costly than the alternative. The TER concludes that the proposed reclamation plan satisfies the regulatory requirements. Construction is planned to commence in early 1998. For further information on the Moab site reclamation, see "Management's Discussion and Analysis of Financial Position and Operating Results - Environmental Matters". When reclaimed, approximately 250 acres, which encompass the capped tailings and reconfigured Moab Wash, will be deeded to the federal or state government. The remaining acreage, approximately 187 acres, would be released to Atlas for unrestricted use. A substantial portion of the remaining land would be available for commercial use with an estimated value at current market prices in excess of $1.5 million. Asbestos Mine Site, Coalinga, California - ---------------------------------------- Remedial construction activities at the Company's former asbestos mine and mill site located near Coalinga, California, which began in October 1994, are complete. Atlas, which operated the mine for a five year period in the 1960s was notified by the Environmental Protection Agency in fiscal 1988 that the Bureau of Land Management, and several other subsequent owners were potentially responsible parties under the Comprehensive Environmental Response, Compensation and Liability Act for cleanup costs at the mine site. The Environmental Protection Agency issued its "Approval of Construction Completion" November 14, 1996 two years after the remedial action plan was approved. For further information on the Coalinga reclamation, see "Management's Discussion and Analysis of Financial Position and Operating Results - Environmental Matters". RISK FACTORS - ------------ The Company's profitability has been significantly affected by metal prices. These prices may fluctuate widely and are affected by numerous factors beyond the Company's control, including global and regional demand, production costs, transportation and smelting charges, political and economic conditions, strength of the United States dollar and exchange rates. Gold, lead, zinc and silver are products which can be easily sold on numerous markets throughout the world. It is not difficult to ascertain the market price for these metals at any particular time, and these metals can be sold to a large number of refiners or metals dealers on a competitive basis. The Company normally sells its metals production through major dealers, in some cases may use hedging programs, and is free to sell uncommitted metals to others. Sales of finished perlite are individually negotiated with end users. There are no guarantees that the Company will be able to obtain sales commitments in quantities or at prices sufficient to make a profit. 20 The Company is required to comply with various federal, state and local regulations and requirements relating to environmental matters at its mining properties. The Company is required to obtain permits from various governmental agencies in order to mine and mill. The Company has obtained all of the necessary permits relating to its on-going operations. The Company cannot anticipate whether increasing costs of environmental compliance for its mining operations will have a material adverse impact on planned operations or competitive position. The Company competes with substantially larger companies in the production and sale of industrial minerals. The Company does not believe that it or any other competitor is a material factor in these markets, and the price it receives for its production depends almost entirely upon market conditions over which it has no control. The Company believes that it can promptly sell at current market prices all of the metals that it can produce. With respect to the acquisition of mineral interests and exploration activities, the Company competes with numerous persons and companies, many of which are substantially larger and have considerably greater resources than the Company. Item 2. PROPERTIES ---------- The Company's materially important properties consist of the Andacaba, Don Francisco and Koyamayu mines which produce lead, zinc and silver in Bolivia, Tucker Hill which produces perlite, Gold Bar which contains gold resources, and to the Doby George and Grassy Mountain gold properties, described under "Item 1 Business". - -------- Item 3. LEGAL PROCEEDINGS ----------------- The information called for by this Item is set forth in Note 14 to the Financial Statements and is incorporated herein by reference. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS --------------------------------------------------- No matters were submitted to a vote of the security holders during the quarter ended December 31, 1996. 21 Executive Officers of the Company - --------------------------------- Set forth below is the age and certain other information regarding each person currently serving as an executive officer of the Company. Richard E. Blubaugh, age 49, has served as Vice President of Environmental and Governmental Affairs since October 1, 1990, and has been with Atlas for over 15 years. He has been involved in the environmental, health and safety field for over 23 years, has managed environmental and regulatory functions for mining firms in seven western states, and also has experience as a regulator and a consultant. Gregg B. Shafter, age 41, has served as Vice President of Project Development since August 1, 1995. Since joining the Company in August 1991, Mr. Shafter has also served in the capacities of Manager Business Development and Land Manager. Prior thereto Mr. Shafter was the Land Manager for Western Gold Exploration and Mining Company, Limited Partnership. James R. Jensen, age 37, has served as Treasurer and Secretary since February 1997. Mr. Jensen joined the Company in August of 1989, as Accounting Manager and was promoted to Controller in September 1993. Prior to his employment with the Company, Mr. Jensen was a manager with the accounting firm of KPMG Peat Marwick. 22 PART II Item 5. Market for the Company's Common Stock -------------------------------------- and Related Stockholder Matters ------------------------------- Atlas's Common Stock is listed on the New York Stock Exchange under the symbol AZ. The High and Low sales prices for the Common Stock for each quarterly period as reported by the New York Stock Exchange are as follows:
Year Ended Year Ended Year Ended December 31, December 31, June 30, 1996 1995 1995 ------------------------------------------------------------------ Quarter Ended High Low High Low High Low - ----------------------------------------------------------------------------------------------------- March 31 $ 1 7/8 $ 1 3/8 N/A N/A $ 2 1/2 $ 1 1/4 June 30 1 1/2 1 N/A N/A 2 1/8 1 3/8 September 30 1 1/8 11/16 $ 2 $ 1 5/8 6 1/4 4 1/2 December 31 1 1/8 5/8 1 3/4 1 1/8 5 2
No dividends were declared in the year ended December 31, 1996, in the six months ended December 31, 1995, or in the year ended June 30, 1995. At April 9, 1997, there were approximately 16,331 holders of record of the Company's Common Stock. Item 6. Selected Financial Data ----------------------- The following table is derived in part from the audited consolidated financial statements of the Company. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States. In all material respects, they conform with principles generally accepted in Canada (except as described in note 19 to the Company's consolidated financial statements). This information should be read in conjunction with the audited consolidated financial statements and the notes thereto. (Amounts in thousands, except per share data)
Six Months Year Ended Ended Year Ended June 30, Dec. 31, Dec. 31, ------------------------------------------- 1996 1995 1995 1994 1993 1992 ----------------------------------------------------------------------- INCOME STATEMENT DATA: Mining revenue $ 578 $ - $ 2,328 $ 19,478 $ 19,280 $ 29,624 Loss from continuing operations (10,385) (4,266) (20,397) (12,040) (28,066) (7,177) Income (loss) from discontinued operations - - 621 2,175 (875) (76) Net loss (10,385) (4,266) (19,776) (9,865) (29,909) (7,253) PER SHARE OF COMMON STOCK: Loss from continuing operations (0.49) (0.22) (1.23) (1.45) (4.43) (1.17) Income (loss) from discontinued operations - - 0.04 0.26 (0.14) (0.01) Net loss (0.49) (0.22) (1.19) (1.19) (4.72) (1.18) Cash dividends per share - - - - - - BALANCE SHEET DATE: Cash and cash equivalents 1,099 1,607 4,453 3,767 1,734 552 Total assets 41,681 53,040 43,497 19,847 19,549 59,212 Long-term obligations 22,815 23,684 15,160 15,767 14,807 13,726 Working capital (deficit) (2,528) 9,655 5,611 (239) (2,816) (14,344) Total stockholders' equity (deficit) 12,372 22,143 24,833 (2,475) (4,407) 25,502 Book value per share 0.51 1.16 1.34 (0.26) (0.70) 4.02
23 Item 7. Condition and Results of Operations ----------------------------------- The following discussion and analysis should be read in conjunction with the Company's Consolidated Financial Statements and accompanying notes. During 1995, the Board of Directors authorized a change in Atlas's fiscal year- end to December 31. This change was implemented during 1995, and resulted in financial information being reported for the six month period ended December 31, 1995. WORKING CAPITAL, LIQUIDITY AND CAPITAL RESOURCES - ------------------------------------------------ Between the summer of 1994 (briefly before the suspension of milling operations at the Company's Gold Bar mine in September 1994) and early 1996, the Company completed several financings, the proceeds of which were used to complete acquisitions and to raise working capital. During the summer of 1994, the Company raised $50 million through private placement of 9,090,909 Units for a purchase price of $5.50 per Unit, each Unit consisting of one share of Atlas Common Stock and one-half of one warrant (exercisable for five years) to purchase one share of Atlas Common Stock at an exercise price of $7.00 per share. The financing closed in escrow in August 1994. Of $50 million raised, $35.5 million was released from escrow on August 15, 1994, allowing Atlas to complete the acquisition of 12,694,200 common shares (37.2% of the outstanding shares) of Vista (see Item 1. "Investments - Vista Gold Corp."). The remaining $14.5 million was released on December 15, 1994, following shareholder approval of a proposal to increase the number of Atlas Common Shares authorized for issuance. Of this amount, $3.2 million was ultimately used in March 1995 to acquire 2.4 million shares (or 9% of the outstanding shares) of Dakota Mining Corporation ("Dakota"). In November 1995, the Company completed a private placement of $10 million 7% Exchangeable Debentures ("Debentures") due October 25, 2000. The debentures were secured by the pledge of 8,474,576 of the Vista shares. The debentures are exchangeable at the option of the holder into shares of Vista at the rate of 42.5 shares per $100 of debentures held. See Item 8. "Financial Statements and Supplementary Data." In March 1996, the Company sold its 2,419,000 common shares of Dakota for $4.5 million and in October 1996, it sold the 4,240,324 shares of Vista not pledged for net proceeds of $5.5 million. The above transactions, in addition to financing the acquisitions noted above, have allowed the Company to acquire its interest in Arisur (see Item 1. "ARISUR INC.") and to develop its Tucker Hill perlite project (see Item 1. "TUCKER HILL"). These expenditures, combined with a lack of operating revenues during this time period, have resulted in large swings in the Company's working capital position. Working capital decreased by $12.2 million during 1996. This was a result of acquisition costs of Arisur of approximately $3.7 million, construction and development costs at Tucker Hill and Andacaba of $4.1 million, ongoing exploration, standby and administrative costs totaling $7.1 million and net uranium reclamation costs of $1.8 million, partially offset by the sale of Vista shares noted above. During the year ended December 31, 1995, working capital increased by $1.4 million to $9.7 million at December 31, 1995. The increase reflects the $10 million proceeds from the issuance 24 of Exchangeable Debentures, less $2.4 million net asbestos and uranium reclamation costs, $1.7 million in project development expenditures, and $4.4 million in general and administrative costs and other working capital changes. Working capital was $5.6 million at June 30, 1995, which compares to a working capital deficit of $200,000 at June 30, 1994. The positive change in working capital reflects the funds received from the issuance of units of common stock warrants described above, which were partially applied to the purchase of Vista shares. The remaining proceeds were in part used to repay a short term loan, to pay fees related to the private placement of the units, to acquire 2.4 million shares of Dakota Mining Corporation for $3 million and for continuing exploration and administration expenses. During 1997, the Company will focus its efforts on the continuing development of its Bolivian operations, both through expansion of its current mine and mill operations as well as through the identification and acquisition of other promising properties in the area. In addition, Cornerstone will complete construction at Tucker Hill, which will transition from the development stage to commercial during 1997. The Company will also evaluate development options for Grassy Mountain that, in the near term, will be dependent upon the Company's ability to obtain sufficient financing. In February 1997, Arisur signed a financing agreement with the Corporacion Andina de Fomento ("CAF") for US$3 million dollars. CAF is a multilateral financial institution that supports sustainable development and integration efforts within the Andean region of South America. The proceeds of the loan will pay for certain equipment and expansion programs of the Bolivian operations and will reimburse Atlas in excess of $500,000 of funds previously advanced for said purposes. The proceeds of the loan are expected to be released when certain guarantees and property liens have been completed. Pending the commencement of significant cash flows from Cornerstone and the Company's Bolivian properties, the Company is actively considering a number of sources for short-term working capital. In particular, the Company is actively evaluating several possible transactions involving the joint venture, option or sale of its gold properties at Gold Bar, Doby George and Grassy Mountain. The Company also continues aggressively to pursue other sources of funding, including potential mergers with companies holding sufficient cash reserves. The Company is also evaluating the leveraging of its unencumbered properties and of its restricted cash and Title X receivable (See Item 7. "ENVIRONMENTAL MATTERS") in order to secure short or long-term funding as appropriate. Management believes that the above actions, along with the continued cooperation of the Company's creditors and stringent management of cash resources, will enable the Company to meet its short term cash requirements. 25 The Company believes that its mining operations will generate positive cash flows beginning in 1998, and will allow the Company to be less dependent on the debt and equity markets for its working capital needs in the future. In order to meet its estimated long term reclamation obligations the Company will utilize its restricted cash and securities, which supports the bonding of such obligations, and reimbursements due under the Title X reimbursement program. See Item 7. "ENVIRONMENTAL MATTERS." During the year ended December 31, 1996, the Company's capital expenditures were $4.4 million, compared with $1.7 for the comparable 12 month period in 1995. In 1996, development and construction costs incurred at Tucker Hill were approximately $3 million, mine and mill expansion costs at Andacaba were $1.1 million, and acquisition costs of Grassy Mountain were $.2 million. For the year ended December 31, 1995, $500,000 was spent on the development of Tucker Hill, and a total of $1 million was incurred on the Commonwealth and Doby George properties. The remainder of expenditures were primarily related to the Gold Bar property. The Company's capital expenditures in the six months ended December 31, 1995 were $1.4 million, compared to $.3 million for the comparable period in 1994. During the six months ended December 31, 1995, development costs of $365,000, $353,000 and $643,000 were incurred on the Tucker Hill, Commonwealth, and Doby George properties, respectively. Substantially all of the capital expenditures incurred during the six month period ended December 31, 1994 related to Tucker Hill development costs. The Company's capital expenditures incurred during the fiscal year ended June 30, 1995 were $.6 million, compared to $5.2 million during the fiscal year ended June 30, 1994. In fiscal 1995, the majority of the funds were spent on the development of Tucker Hill with the remainder being spent on the Gold Bar property. In fiscal 1994, substantially all of the capital expenditures were for the development of the Gold Bar property. See also "ENVIRONMENTAL MATTERS" below. RESULTS OF OPERATIONS - --------------------- Year Ended December 31, 1996 Compared to the Year Ended December 31, 1995: - ------------------------------------------------------------------------- Revenues As a result of the acquisition of Arisur in October, the Company had mining revenues of $578,000 in 1996 relating to sales of lead, zinc and silver concentrates from the Andacaba mine. This compares with no mining revenues for the year ended December 31, 1995 due to the suspension of milling operations at Gold Bar in 1994. 26 Operating/Production Costs Operating costs in 1996 reflect production costs of $441,000 and depreciation, depletion and amortization costs of $324,000 incurred in Bolivia as a result of the Arisur acquisition and shutdown and standby costs of $1,232,000. During the same period in 1995, the Company incurred shutdown and standby costs of $882,000. The standby and shutdown costs were lower in 1995 due to a $1,275,000 accrual for future costs at September 30, 1994, resulting in a reduction of costs charged in 1995. Exploration The Company had exploration costs of $1,264,000 for the year ended December 31, 1996 as compared to $1,113,000 for the year ended December 31, 1995. Costs incurred in 1996 primarily reflect work performed on the Commonwealth property whereas 1995 costs reflect exploration and holding costs on the Gold Bar claim block. General and Administrative General and administrative expenses incurred in 1996 were $4,658,000, an increase of $1,490,000 from 1995 costs of $3,168,000. This increase is largely attributable to the addition of Cornerstone general and administrative costs of $547,000, severance costs of $830,000 related to the resignations of David J. Birkenshaw as Chairman and CEO of the Company and Gerald E. Davis as President of the Company, and approximately $300,000 reflecting costs associated with unsuccessful merger discussions with MSV Resources Inc. Other In March 1996, the Company sold its interest in Dakota Mining Corporation for approximately $4.5 million, resulting in a gain of $1.3 million. In October 1996, the Company sold 4.2 million shares of Vista for total proceeds of $5.6 million that resulted in a loss of $1.5 million. Six Months Ended December 31, 1995 Compared to Six Months Ended December 31, - ---------------------------------------------------------------------------- 1994: - ---- Revenues Due to the suspension of milling operations at the Gold Bar Project in September 1994, the Company had no mining revenues for the six months ended December 31, 1995. This compares to mining revenue of $2,328,000 and gold production of 6,021 ounces generated from Gold Bar during the six months ended December 31, 1994. Operating/Production Costs The Company had no operating costs in the six months ended December 31, 1995. Operating costs for the six month period ended December 31, 1994, which was marked by the suspension of milling activities at Gold Bar on September 19, 1994, included production costs of $2,683,000, depreciation, depletion and amortization of $348,000 and the accrual of shutdown and standby costs of $1,275,000. Production costs at the Gold Bar property increased to $446 per ounce, or 27 115% of revenue, due to the processing of low grade ore from depleting stockpiles. The $1,275,000 accrual for shutdown and standby costs recorded in September 1994 reflected the projected shutdown and standby costs to be incurred through the remainder of fiscal 1995. Exploration The Company incurred exploration costs of $307,000 during the six months ended December 31, 1995 for continued exploration efforts on the Gold Bar property, as compared to $1,105,000 for the six months ended December 31, 1994. This decrease reflects the cost savings associated with entering into the joint venture agreements covering approximately 80% of the Gold Bar claim block as compared to the underground exploration conducted at Gold Bar during the six months ended December 31, 1994. General and Administrative General and administrative expenses for the six months ended December 31, 1995 were $1,798,000 compared to $1,372,000 for the six months ended December 31, 1994. This increase was primarily a result of an intensified property acquisition program and relocation expenses. Year Ended June 30, 1995 Compared to Year Ended June 30, 1994: - ------------------------------------------------------------- In January 1994, production from the Gold Bar property was halted after a confirmatory drill program indicated that mining to the originally designed Gold Canyon pit bottom would have been uneconomical due to the occurrence of more refractory material than had been previously forecast. Management initiated the processing of low grade stockpiled ores in an effort to avoid the suspension of milling operations. Engineering and metallurgical studies focusing on the development of short-term reserves were accelerated. On September 16, 1994, stockpiled ores were depleted and the Company was forced to suspend milling operations and to temporarily place the Gold Bar property on standby. As a result, the fiscal year ended June 30, 1995 reflects only three months of operations. Revenues Revenues for the years ended June 30, 1995 and 1994 were $2,328,000 and $19,478,000, respectively. Gold production decreased to 6,021 ounces in fiscal 1995 from 51,700 ounces in fiscal 1994. The decreases in revenue and gold production in fiscal 1995 reflect the suspension of operations at the Gold Bar property after only three months of production. The average price per ounce of gold realized in fiscal 1995 was $387 versus $377 in fiscal 1994. Operating/Production Costs Production costs for fiscal 1995 and 1994 were $2,683,000 and $16,526,000, respectively. Production costs per ounce in fiscal 1995 and 1994 were $446 and $319, respectively. The decreases in production costs are a result of the suspension of operations at the Gold Bar property after three months of production in fiscal 1995. The higher production costs per ounce reflect the lower grades of ore run subsequent to the suspension of mining operations. 28 The Company incurred $1,485,000 in shutdown and standby costs during the last three quarters of fiscal 1995. Such costs included severance payments, continuing onsite security and maintenance as well as general and administrative expenditures. During the fourth quarter of fiscal 1994, the Company and an independent consultant began evaluating the Gold Bar mine plan and remaining known ore reserves. As a result, the Company determined that its remaining unamortized costs could not be recovered from undiscounted cash flows over the remaining mine life and the Company recognized an impairment to adjust the carrying value of its assets with the property being written down to estimated salvage value. This adjustment resulted in a charge to operations of $5,355,000 in the fourth quarter of fiscal 1994. Depreciation, depletion and amortization charges of $348,000 in fiscal 1995 represent the flow through of non-cash costs contained in stockpiled ore inventory at the end of fiscal 1994 and the write-off of capital expenditures incurred during the three months of operations in fiscal 1995. Exploration Costs Exploration costs of $1,911,000 were incurred in fiscal 1995, a decrease of approximately $400,000 from fiscal 1994. The decrease is attributable to the reduction of land holding costs, as joint venture partners (see below) were responsible for land royalties and lease payments, and to a reduction of personnel. Exploration costs in fiscal 1994 increased $430,000 from fiscal 1993 as a result of an underground drilling program commenced in the fourth quarter of fiscal 1994 and ended during the first quarter of fiscal 1995. General and Administrative General and administrative expenses decreased by $326,000 from $3,068,000 in fiscal 1994 to $2,742,000 in fiscal 1995, or 11%. The primary reason for the decrease was a $400,000 reduction in salaries and severance costs. Other During the first quarter of the fiscal year ended June 30, 1995, the Company acquired a 37.2% interest in Vista, and recorded an equity loss of $1,361,000 during the remainder of the year. Following the merger of Vista with its 50.5% subsidiary, Hycroft Resources and Development Corporation, Atlas re-evaluated its investment in Vista relative to the fair values implied in the amalgamation and to the known reserves at the Crofoot/Lewis mine. As a result, the Company recorded an $11,419,000 impairment of its investment in Vista as of June 30, 1995. During October 1994, Atlas recorded a $1,144,000 loss related to the forfeiture of a non-refundable deposit on the purchase of securities in Dakota. Atlas's decision to forfeit the deposit was based on its review of the relative market and purchase prices. In March 1995, Atlas entered into an agreement to purchase approximately 2.4 million common shares of Dakota for $3,000,000, whereby each company released the other from any liability arising out of the previous agreement. Notes 13 and 14 to the Financial Statements provide details and a discussion of discontinued operations for the past three fiscal years. 29 ENVIRONMENTAL MATTERS - --------------------- The Company is subject to extensive federal, state and local environmental laws and regulations. These laws, which are constantly changing, regulate the discharge of materials into the environment and may require the Company to mitigate any environmental effects caused by its operations. The Company believes that it is currently in substantial compliance with all federal, state and local environmental regulations applicable to its current and discontinued operations. The Company is obligated to decommission and reclaim its uranium mill site located near Moab, Utah. When the Company discontinued its uranium operations in 1987, estimated shut-down and reclamation expenses of $17,406,000 were accrued. Reclamation and decommissioning costs (net of reimbursements, see below) of $1,808,000, $1,189,000, $1,497,000 and $1,159,000 have been charged against this accrual for the year ended December 31, 1996, six months ended December 31, 1995, and the fiscal years ended June 30, 1995 and 1994. The balance of this accrual at December 31, 1996 was $2,705,000 and the reclamation plan as proposed by the Company extends over the next three to six years. Title X of "The Comprehensive National Energy Policy Act" ("Title X"), which was enacted in October 1992, provides for reimbursement by the federal government of past and future reclamation expenses in proportion to the extent that the site's tailings were generated by Atomic Energy Commission (AEC) contracts. With respect to the Company's discontinued uranium operations, 56% of the tailings were generated by AEC contracts. Requests for reimbursement under Title X must be submitted annually to the Department of Energy ("DOE") and are subject to review and audit. The timing on the repayment of costs approved for reimbursement is a function of Congressional appropriation. In July 1994, the Company submitted the first of three claims under Title X of the 1992 Energy Act for reimbursement of compliance and reclamation costs. The claims cover costs incurred from fiscal 1980 through March 1996. The amount reimbursable under the three claims is $6,817,000. As of March 30, 1997, the Company had received $3,345,000 in reimbursements under Title X. The $3,472,000 not yet reimbursed has been charged against the Company's reclamation accrual. In addition to this amount, $500,000 has not yet been approved pending further review. On January 30, 1996, the Nuclear Regulatory Commission ("NRC") released a draft Environmental Impact Statement ("EIS") and a draft Technical Evaluation Report ("TER") regarding the Company's reclamation proposal. Atlas's proposed reclamation plan consists of contouring the tailings pile to allow for the natural drainage of precipitation and the addition of an earth and rock cover to prevent erosion and minimize radon emanation. The current EIS process is being used by the NRC to evaluate the environmental impact of the Company's proposed plan and an alternative proposal. In the draft EIS, the NRC staff preliminarily concluded that Atlas's proposal to reclaim the pile in place was acceptable and less costly than the proposed alternative. The final TER, dated March 7, 1997, concluded that the Atlas reclamation plan was in compliance with the technical requirements for capping the tailings facility on-site. 30 The Company is confident that the ultimate result of the EIS review process, in conjunction with the supportive conclusion of the TER will be the approval of its reclamation plan, and that its remaining accrual, when combined with anticipated reimbursements of reclamation costs under the Title X program and restricted cash used for surety collateral, is sufficient to cover future reclamation costs. Estimated reclamation costs relating to the Gold Bar Resource Area are recorded based on the units of production method. Total reclamation costs expensed in the twelve month periods ended December 31, 1996, the six month period ended December 31, 1995 and the fiscal years ended June 30, 1995 and 1994 were $0, $0, $0 and $732,000, respectively. As part of the impairment recorded during the fourth quarter of fiscal year 1994 (see results of operations, above), the Company increased its accrued expense by an additional $1,244,000. No charges were recorded in 1996 since analysis indicated the $3,118,000 accrued for reclamation costs at the Gold Bar Resource Area is adequate. The Company believes it can meet the estimated closing and reclamation costs of its uranium and gold mining operations from internally generated funds, from the $6,266,000 in restricted cash which serves as collateral for letters of credit and reclamation bonds relating to these costs, and from reimbursements under Title X, without a significant impact on its working capital position. It is presently anticipated that these obligations will be satisfied over the next three to six years. During fiscal 1988, the United States Environmental Protection Agency notified the Company that it was one of several potentially responsible parties ("PRPs") under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") for cleanup costs at the Company's former asbestos mine and mill site near Coalinga, California and in the City of Coalinga. In fiscal 1993 and 1991, the Company established a reserve of, and recorded as an expense, $600,000 and $3,000,000, respectively, to cover the Company's share of costs to be incurred in connection with this matter. This accrual reflects participation by the BLM, which was also named as a PRP. The Company instituted legal action against 13 insurance carriers which had issued insurance policies over a period of more than 25 years with respect to these sites. During fiscal 1994, the Company reached settlement with a number of these carriers and recorded a gain from discontinued operations of $2,175,000. In October 1994, the Environmental Protection Agency approved a remedial action plan for the sites. Due to unusually heavy rains experienced at the site during the spring and early summer of 1995, the Company experienced delays and cost overruns. As a result, the Company recorded an additional loss from discontinued operations of $225,000 in the fourth quarter of fiscal 1995. The Environmental Protection Agency issued its "Approval of Construction Completion" on November 14, 1996. The Company is required to obtain permits from various governmental agencies in order to mine and mill ores. The Company has obtained all of the necessary permits relating to its planned operations. The Company cannot anticipate whether the increasing costs of environmental compliance for its operations will have a material adverse impact on its future operations or competitive position. 31 Item 8. Financial Statements and Supplementary Data -------------------------------------------
Index to Financial Statements Page Consolidated Statements of Operations for the Year Ended December 31, 1996, the Six Months Ended December 31, 1995 and for the Years Ended June 30, 1995 and 1994 33 Consolidated Balance Sheets as of December 31, 1996 and 1995, and June 30, 1995 34 Consolidated Statement of Stockholders' Equity (Deficit) for the Year Ended December 31, 1996, the Six Months Ended December 31, 1995 and for the Years Ended June 30, 1995 and 1994 35 Consolidated Statements of Cash Flows for the Year Ended December 31, 1996, the Six Months Ended December 31, 1995, and for the Years Ended June 30, 1995 and 1994 36 Notes to Consolidated Financial Statements 37 - 61 Report of Independent Auditors 62
32 Atlas Corporation Consolidated Statements of Operations (In thousands, except earnings per share)
Six Months Year Ended Ended Year Ended June 30, Dec. 31, Dec. 31, --------------------------- 1996 1995 1995 1994 =================================================================================================================================== Mining revenue $ 578 $ - $ 2,328 $ 19,478 - ----------------------------------------------------------------------------------------------------------------------------------- Costs and expenses: Production costs 441 - 2,683 16,526 Depreciation, depletion and amortization 324 - 348 4,479 Impairment of mineral properties (Note 6) - - - 5,355 Shutdown and standby costs (Note 6) 1,232 671 1,485 - General and administrative expenses 4,658 1,798 2,742 3,068 Exploration and prospecting costs 1,264 307 1,911 2,315 - ----------------------------------------------------------------------------------------------------------------------------------- Gross operating loss (7,341) (2,779) (6,841) (12,265) - ----------------------------------------------------------------------------------------------------------------------------------- Other (income) and expense: Equity in loss of Vista Gold Corp. (Note 9) 2,721 1,703 1,361 - Impairment of investment in Vista Gold Corp. (Note 9) - - 11,419 - Forfeiture of deposit on stock purchase agreement (Note 4) - - 1,144 - Interest (income) expense, net 684 70 (327) 205 Other income, net (Notes 4 and 9) (88) (258) (41) (430) - ----------------------------------------------------------------------------------------------------------------------------------- Loss from continuing operations before income taxes and minority interest (10,658) (4,291) (20,397) (12,040) Provision for income taxes (Note 17) - - - - - ----------------------------------------------------------------------------------------------------------------------------------- Loss from continuing operations before minority interest (10,658) (4,291) (20,397) (12,040) Minority interest in net loss of subsidiary (Note 1) 273 25 - - - ----------------------------------------------------------------------------------------------------------------------------------- Loss from continuing operations (10,385) (4,266) (20,397) (12,040) Income from discontinued operations (Note 13) - - 621 2,175 - ----------------------------------------------------------------------------------------------------------------------------------- Net loss $ (10,385) $ (4,266) $ (19,776) $ (9,865) =================================================================================================================================== Loss per share of common stock: Loss from continuing operations $ (0.49) $ (0.22) $ (1.23) $ (1.45) Income from discontinued operations - - 0.04 0.26 - ----------------------------------------------------------------------------------------------------------------------------------- Net loss $ (0.49) $ (0.22) $ (1.19) $ (1.19) =================================================================================================================================== Weighted average of common shares outstanding 21,015 19,148 16,549 8,264 ===================================================================================================================================
See accompanying notes 33 Atlas Corporation Consolidated Balance Sheets (In thousands)
December 31, -------------------------- June 30, 1996 1995 1995 - ---------------------------------------------------------------------------------------------------------------------------- Assets Current assets: Cash and cash equivalents $ 1,099 $ 1,607 $ 4,453 Cash held in escrow (Note 10) - 10,000 - Accounts receivable - Trade 270 - - Accounts receivable - Other 469 365 131 Inventories (Note 3) 1,248 250 250 Investments in marketable equity securities (Note 4) 3,629 4,083 Prepaid expenses and other current assets 195 199 198 - ---------------------------------------------------------------------------------------------------------------------------- Total current assets 3,281 16,050 9,115 Property, plant and equipment (Note 6) 63,766 50,765 47,686 Less: Accumulated depreciation, depletion and amortization and impairment (44,779) (44,406) (44,661) - ---------------------------------------------------------------------------------------------------------------------------- 18,987 6,359 3,025 Investment in Vista Gold Corp. (Notes 4, 9 and 10) 11,542 23,756 25,452 Restricted cash and securities (Note 11) 6,266 5,367 5,659 Other assets (Note 11) 1,605 1,508 246 - ---------------------------------------------------------------------------------------------------------------------------- $ 41,681 $ 53,040 $ 43,497 ============================================================================================================================ Liabilities Current liabilities: Trade accounts payable $ 1,544 $ 1,597 $ 601 Other accrued liabilities (Note 11) 2,136 1,998 2,103 Short-term debt (Note 10) 2,129 2,000 Current portion of estimated uranium reclamation costs (Note 14) 800 800 - ---------------------------------------------------------------------------------------------------------------------------- Total current liabilities 5,809 6,395 3,504 Long-term debt (Notes 10 and 20) 13,310 13,500 3,500 Other liabilities, long-term (Note 11) 9,505 10,184 11,660 Commitments and contingencies (Note 14) Minority Interest 685 818 - Stockholders' equity (Notes 7, 8 and 20) Common stock, par value $1 per share; authorized 50,000,000, 50,000,000 and 25,000,000; issued and outstanding, 24,180,264, 20,034,743 and 18,577,500 at December 31, 1996 and 1995 and June 30, 1995, respectively 24,180 20,035 18,578 Capital in excess of par value 68,514 69,248 68,678 Deficit (77,867) (67,482) (63,216) Unrealized gain (loss) on investment in equity securities (Note 4) (2,322) 442 896 Currency translation adjustment (133) (100) (103) - ---------------------------------------------------------------------------------------------------------------------------- Total stockholders' equity 12,372 22,143 24,833 - ---------------------------------------------------------------------------------------------------------------------------- $ 41,681 $ 53,040 $ 43,497 ============================================================================================================================
See accompanying notes 34 Atlas Corporation Consolidated Statements of Stockholders' Equity (Deficit) (In thousands)
Capital in Common Common Excess of Shares Stock Par Value Deficit Other Total - ------------------------------------------------------------------------------------------------------------------- Balance at June 30, 1993 6,336 $ 6,336 $22,832 $(33,575) $ - $(4,407) Issuance of Common stock (Note 20) 3,000 3,000 8,362 - - 11,362 Exercise of Warrants 13 13 33 - - 46 Interest on Debenture (Note 10) 61 61 328 - - 389 Current year loss - - - (9,865) - (9,865) - ------------------------------------------------------------------------------------------------------------------- Balance at June 30, 1994 9,410 9,410 31,555 (43,440) - (2,475) Issuance of Common stock (Note 20) 9,091 9,091 36,965 - - 46,056 Exercise of Warrants 15 15 39 - - 54 Interest on Debenture (Note 10) 40 40 50 - - 90 Shares issued to 401(k) plan 22 22 69 - - 91 Unrealized gain on investment (Note 4) - - - - 896 896 Currency translation adjustment - - - - (103) (103) Current year loss - - - (19,776) - (19,776) - ------------------------------------------------------------------------------------------------------------------- Balance at June 30, 1995 18,578 18,578 68,678 (63,216) 793 24,833 Issuance of Common stock for purchase of property (Note 6) 1,400 1,400 525 - - 1,925 Shares issued to 401(k) plan 18 18 16 - - 34 Interest on Debenture (Note 10) 39 39 29 - - 68 Unrealized loss on investment (Note 4) - - - - (454) (454) Currency translation adjustment - - - - 3 3 Current year loss - - - (4,266) - (4,266) - ------------------------------------------------------------------------------------------------------------------- Balance at December 31, 1995 20,035 20,035 69,248 (67,482) 342 22,143 Issuance of Common stock for purchase of Arisur Inc. (Note 9) 4,000 4,000 (750) - - 3,250 Shares issued to 401(k) plan 66 66 3 - - 69 Interest on Debenture (Note 10) 79 79 13 - - 92 Unrealized loss on investment (Note 4) - - - - (2,764) (2,764) Currency translation adjustment - - - - (33) (33) Current year loss - - - (10,385) - (10,385) - ------------------------------------------------------------------------------------------------------------------- Balance at December 31, 1996 24,180 $24,180 $68,514 $(77,867) $(2,455) $12,372 ===================================================================================================================
See accompanying notes 35 Atlas Corporation Consolidated Statements of Cash Flow (In thousands)
Six Months Year Ended Ended Year Ended June 30, Dec. 31, Dec. 31, --------------------- 1996 1995 1995 1994 - ----------------------------------------------------------------------------------------------------------------------- Operating activities: Net loss $ (10,385) $ (4,266) $ (19,776) $ (9,865) Income from discontinued operations - - (621) (2,175) From continuing operations: Adjustments to reconcile loss to net cash used in operations (Note 12) 3,087 1,795 14,198 9,902 Changes in operating assets and liabilities (Note 12) (1,626) 1,099 (62) (2,217) - ----------------------------------------------------------------------------------------------------------------------- (8,924) (1,372) (6,261) (4,355) - ----------------------------------------------------------------------------------------------------------------------- Discontinued operations: Operating income (net of tax) - - 621 2,175 Adjustments to reconcile income to net cash provided by (used in) operations: Decrease (increase) in accounts receivable - - 875 (875) Increase in accrued liabilities - - 123 - Increase (decrease) in other liabilities, long-term - - 102 (101) Net decrease in estimated reclamation costs (1,808) (1,190) (1,497) (1,079) - ----------------------------------------------------------------------------------------------------------------------- (1,808) (1,190) 224 120 - ----------------------------------------------------------------------------------------------------------------------- Net cash used in operations (10,732) (2,562) (6,037) (4,235) - ----------------------------------------------------------------------------------------------------------------------- Investing activities: Net cash acquired (expended) in purchase of subsidiary (3,676) 220 - - Purchase of stock in Vista Gold Corp. - - (36,492) - Investment in equity securities - (180) (3,007) - Cash released from (placed in) escrow 10,000 (10,000) - - Additions to property, plant and equipment (4,428) (1,422) (625) (5,263) Proceeds from sale of Vista Gold Corp. 5,527 - - - Proceeds from sale of Dakota Mining Corporation 4,520 - - - Proceeds from sale of equipment and reduction in other assets 43 - 491 434 - ----------------------------------------------------------------------------------------------------------------------- Net cash provided by (used in) investing activities 11,986 (11,382) (39,633) (4,829) - ----------------------------------------------------------------------------------------------------------------------- Financing activities: Proceeds from borrowings on short-term debt and line of credit 238 - 3,550 - Repayment of short-term debt (2,000) - (3,550) (3,524) Proceeds from the issuance of common stock - - 50,054 12,421 Proceeds from the issuance of long-term debt - 10,000 - 3,500 Proceeds from the issuance of short-term notes - 2,000 - - Cost of issuance of long-term debt and common stock - (902) (3,698) (1,300) - ----------------------------------------------------------------------------------------------------------------------- Net cash provided by (used in) financing activities (1,762) 11,098 46,356 11,097 - ----------------------------------------------------------------------------------------------------------------------- Increase (decrease) in cash and cash equivalents (508) (2,846) 686 2,033 Cash and cash equivalents at beginning of period 1,607 4,453 3,767 1,734 - ----------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at end of period $ 1,099 $ 1,607 $ 4,453 $ 3,767 =======================================================================================================================
Supplemental disclosures of non-cash activities: The Company assumed a $500,000 note payable and a $201,000 reclamation liability in the purchase of the Grassy Mountain Property. See accompanying notes 36 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ 1. ACCOUNTING POLICIES Basis of Presentation -- The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred operating losses of $10,358,000, $4,266,000, $20,397,000 and $12,040,000 for the year ended December 31, 1996, the six months ended December 31, 1995 and the fiscal years ended June 30, 1995 and 1994, respectively and has a working capital deficit of $2,528,000 at December 31, 1996. These considerations raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty. Management's plans to alleviate the substantial doubt include the following: In February 1997, Arisur signed a financing agreement with the Corporacion Andina de Fomento ("CAF") for US$3 million dollars. CAF is a multilateral financial institution that supports sustainable development and integration efforts within the Andean region of South America. The proceeds of the loan will pay for certain equipment and expansion programs of the Bolivian operations and will reimburse Atlas in excess of $500,000 of funds previously advanced for said purposes. The proceeds of the loan are expected to be released when certain guarantees and property liens have been completed. Pending the commencement of significant cash flows from Cornerstone and the Company's Bolivian properties, the Company is actively considering a number of sources for short-term working capital. In particular, the Company is actively evaluating several possible transactions involving the joint venture, option or sale of its gold properties at Gold Bar, Doby George and Grassy Mountain. The Company also continues aggressively to pursue other sources of funding, including potential mergers with companies holding sufficient cash reserves. The Company is also evaluating the leveraging of its unencumbered properties and of its restricted cash and Title X receivable (note 14) in order to secure short or long-term funding as appropriate. Management believes that the above actions, along with the continued cooperation of the Company's creditors and stringent management of cash resources, will enable the Company to meet its short term cash requirements. Principles of Consolidation -- The accompanying consolidated financial statements include the accounts of the Company and all majority-owned subsidiaries. All significant intercompany balances and transactions have been eliminated. Minority interest represents the share of Cornerstone Industrial Minerals Corporation not owned by the Company. 37 Change in Fiscal Year -- The Company changed its fiscal year from June 30 to December 31 effective December 31, 1995. Inventories -- Inventories other than finished gold are recorded at the lower of average cost or net realizable value. Finished gold inventory is carried at realizable value. Mining Costs -- During production periods, costs attributable to waste are charged to operations based on the average ratio of waste tonnage to ore tonnage. Property, Plant and Equipment -- Property, plant and equipment is stated at the lower of cost, or estimated net realizable value. Depreciation of milling facilities and depletion of mining properties is determined by the units of production method. The Company regularly assesses its ability to recover the carrying value of its assets and recognizes an impairment when it is determined that unamortized costs cannot be recovered from undiscounted cash flows over the remaining project life. Leasehold improvements are amortized on a straight-line basis over the terms of related leases or, if shorter, estimated useful life. Expenditures for maintenance and repairs are charged to operations as incurred. Expenditures for additions and major renewals are added to the property, plant and equipment accounts. Interest expense allocable to the acquisition or construction of capital assets and deferred mine development is capitalized until operations commence. Investments -- The Company uses the equity method to account for investments in common stock of companies 20% to 50% owned. Marketable equity securities available for sale are recorded at fair value with unrealized gains and losses reported as a separate component of stockholders' equity. Effective June 30, 1995, the Company changed its method of recognizing the equity in earnings of companies accounted for under the equity method from reporting the results of operations on a three month lag period to reporting the results of operations on a current basis. Excess of Cost over Net Assets Acquired -- The excess cost of acquisition over net assets acquired from Cornerstone Industrial Minerals Corporation is being amortized on a straight-line basis over five years. Amortization expense for the year ended December 31, 1996 and the six month period ended December 31, 1995 was $90,000 and $7,000, respectively. Foreign Currencies -- All assets and liabilities of foreign subsidiaries are translated into U.S. dollars using the exchange rate prevailing at the balance sheet date, while income and expense items are translated at the weighted average exchange rate prevailing during the period. Unrealized exchange gains and losses are deferred and shown as a currency translation adjustment in shareholders' equity. Exploration and Mine Development -- Exploration costs are expensed as incurred. When it is determined that a property has development potential, the subsequent costs of exploration and development are capitalized. Upon commencement of production the capitalized costs are amortized using the units of production method. Mining Revenue -- Gold revenues are recorded when the finished product is available for shipment. Revenues on base metals are recorded at the time of shipment. 38 Reclamation -- Estimated reclamation, site restoration and closure costs for each mine are charged to operations over the expected life of the mine using the units of production method. Income Taxes -- The Company accounts for income taxes under Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109). SFAS 109 is an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company's financial statements or tax returns. In estimating future tax consequences, SFAS 109 generally considers all expected future events other than enactments of changes in the tax law or rates. Income tax accounting information is disclosed in Note 17 to the consolidated financial statements. Cash Equivalents -- The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. Earnings per Share -- Earnings per share have been calculated based on the weighted average number of common shares outstanding during the year. Shares issuable under options and warrants are excluded from the computation when they are not dilutive. Long-Lived Assets -- In March 1995, the FASB issued Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be disposed of", which requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present. The Company adopted Statement No. 121 in the first quarter of 1996. The effect of adoption was not material. Accounting Estimates in the Preparation of Financial Statements -- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Reclassifications -- Certain of the comparative figures have been reclassified to conform with the current year's presentation. 39 2. RESULTS FOR THE YEAR ENDED DECEMBER 31, 1995 AND THE SIX MONTHS ENDED DECEMBER 31, 1994 The following financial information for the year ended December 31, 1995 and the six months ended December 31, 1994 is unaudited and is being presented for comparative purposes:
Year Ended Dec. 31, ----------------------------------- 1995 (In thousands) 1996 (Unaudited) - ------------------------------------------------------------------------------------------- Mining Revenue $ 578 $ - Gross Operating Loss (7,341) (5,165) Loss from continuing operations before income taxes and minority interest (10,658) (18,884) Provision for income taxes - - Minority interest in net loss of subsidiary 273 25 Loss from continuing operations (10,385) (18,859) Loss from discontinued operations - (225) Net loss $ (10,385) $ (19,084) ================================== Net loss per common share $ 0.49 $ (1.01) ================================== Six Months Ended Dec. 31, ----------------------------------- 1994 (In thousands) 1995 (Unaudited) - ------------------------------------------------------------------------------------------ Mining Revenue $ - $ 2,328 Gross Operating Loss (2,776) (4,455) Loss from continuing operations before income taxes and minority interest (4,291) (5,804) Provision for income taxes - - Minority interest in net loss of subsidiary 25 - Loss from continuing operations (4,266) (5,804) Income from discontinued operations - 846 Net loss $ (4,266) $ (4,958) =================================== Net loss per common share $ (0.22) $ (0.34) ===================================
3. INVENTORIES The following is a summary of inventories:
December 31, -------------------------- June 30, (In thousands) 1996 1995 1995 - --------------------------------------------------------------------------------- Zinc and lead concentrates $ 439 $ - $ - Stockpiled ore 278 - - Materials and supplies 531 250 250 ----------------------------------------- $ 1,248 $ 250 $ 250 =========================================
40 4. INVESTMENTS IN MARKETABLE EQUITY SECURITIES On May 31, 1994, the Company, Dakota Mining Corporation ("Dakota") and VenturesTrident, L.P. and VenturesTrident II, L.P. entered into an agreement in principle providing for (i) the purchase of 1,500,000 common shares of Dakota from the VenturesTrident Partnerships, for $4.00 per share, and, subject to the completion of the purchase of the VenturesTrident Shares, (ii) the subscription by Atlas to 3,100,000 newly-to-be issued convertible preferred shares of Dakota. On October 28, 1994, the Company determined that, based upon the prevailing market conditions, it was in the best interests of its shareholders not to proceed with the Dakota acquisition and forfeited $1,000,000 in nonrefundable deposits to the VenturesTrident Partnerships. Costs of $144,000 incurred in conjunction with the Dakota transaction were also expensed. On March 9, 1995 Atlas and Dakota entered into a Subscription Agreement, under which Atlas purchased 2,419,355 Special Warrants of Dakota at a price of $1.24 per Special Warrant which were subsequently converted into 2,419,355 Common Shares of Dakota. As a result of such purchase, the Company owned over 9% of the outstanding Common Shares of Dakota. In connection with the purchase by the Company of Special Warrants, the Company and Dakota executed a mutual limited release, whereby each party released the other from any liability arising out of the May 31, 1994 agreement. On March 9, 1996 the Company sold its 2,419,355 common shares of Dakota Mining Corporation for U.S. $1.87 per share, or U.S. $4,519,000. The Company recognized a gain in 1996 on this sale of $1,332,000. As further described in note 9, the Company's investment in Vista Gold Corp. fell below 20% in the fourth quarter of 1996. Accordingly, the investment is treated as a marketable equity security at December 31, 1996. The following is a summary of investments in equity securities:
December 31, ---------------------- June 30, (In thousands) 1996 1995 1995 - ------------------------------------------------------------------------------------ Dakota Mining Corporation Common Shares Cost $ - $ 3,187 $ 3,187 Gross Unrealized Gains - 442 896 ------------------------------------- Estimated Fair Value $ - $ 3,629 $ 4,083 ===================================== Vista Gold Corp. Common Shares: Cost $ 13,864 $ - $ - Gross Unrealized Gains (2,322) - - ------------------------------------ Estimated Fair Value $ 11,542 $ - $ ====================================
41 5. FINANCIAL INSTRUMENTS Financial instruments consist of the following:
December 31, -------------------------------------- June 30, 1996 1995 1995 --------------------------------------------------------- Carrying Fair Carrying Fair Carrying Fair (In thousands) Value Value Value Value Value Value - -------------------------------------------------------------------------------------------- Assets Short-term assets $1,838 $1,838 $11,972 $11,972 $4,584 $4,584 Long-term equity securities 11,542 11,542 23,756 20,662 25,452 22,251 Liabilities Short-term liabilities 5,809 5,809 5,595 5,595 2,704 2,704 Long-term debt 13,310 11,455 13,500 10,795 3,500 2,531
Short-Term Assets and Liabilities: The fair value of cash and cash equivalents, marketable equity securities, accounts receivable, accounts payable, other accrued liabilities and short-term debt approximates their carrying value due to the short-term nature of these instruments. Marketable equity securities are available for-sale equity securities with a cost of $0 at December 31, 1996 and $3,187,000 at December 31, 1995 and June 30, 1995. The unrealized gain is included as a separate component of shareholders' equity. Long-Term Equity Securities: Equity securities which are classified as long-term are included as Investment in Vista Gold Corp. in the consolidated balance sheets. These equity securities were accounted for on the equity method in the fiscal period ended December 31, 1995 and June 30, 1995 and consequently are carried at cost basis as adjusted for Atlas's share of Vista's gain or loss and amortization of the excess cost over the basis in Vista's net assets in the balance sheets for those years. At December 31, 1996, these securities are available-for-sale equity securities with a basis of $13,864,000 and are stated at fair value based upon quoted market prices. The unrealized gain is included as a separate component of shareholders' equity. Long-Term Debt: The fair value of long-term debt is based primarily on the company's current established refinancing rates of 12%. 6. PROPERTY, PLANT AND EQUIPMENT. The following is a summary of property, plant and equipment:
Accumulated Depreciation, Depletion Acquisition Amortization & Net Book December 31, 1996 (In thousands) Costs Impairment Value - ------------------------------------------------------------------------------------------------- Property and leaseholds $ 6,169 $ 2,262 $ 3,907 Land improvements 5,734 5,734 - Deferred exploration and development costs Producing 5,371 3,358 2,013 Nonproducing 3,930 - 3,930 Buildings and equipment 42,562 33,425 9,137 -------------------------------------------- Total $ 63,766 $ 44,779 $ 18,987 ============================================
42
Accumulated Depreciation, Depletion Acquisition Amortization & Net Book December 31, 1995 (In thousands) Costs Impairment Value - ------------------------------------------------------------------------------------------------- Property and leaseholds $ 5,167 $ 2,262 $ 2,905 Land improvements 5,734 5,734 - Deferred exploration and development costs Producing 3,313 3,313 - Nonproducing 1,070 - 1,070 Buildings and equipment 35,481 33,097 2,384 --------------------------------------------- Total $ 50,765 $ 44,406 $ 6,359 ============================================= Accumulated Depreciation, Depletion Acquisition Amortization & Net Book June 30, 1995 (In thousands) Costs Impairment Value - ------------------------------------------------------------------------------------------------- Property and leaseholds $ 2,256 $ 2,256 $ - Land improvements 5,734 5,734 - Deferred exploration and development costs Producing 3,470 3,470 - Nonproducing 750 - 750 Buildings and equipment 35,476 33,201 2,275 ---------------------------------------------- Total $ 47,686 $ 44,661 $ 3,025 ==============================================
In September 1996 the Company reacquired the Grassy Mountain property from Newmont Grassy Mountain Corporation for $206,000, a $500,000 note due September 1997 (Note 10) and assumption of a reclamation liability estimated at $201,000. On October 25, 1995 Atlas purchased the Doby George property from Independence Mining Company Inc. for the sum of $400,000 in cash plus 1.4 million shares of the Company's common stock. During September 1994 the Company placed the Gold Bar mine on standby and recorded an expense of $1,275,000 for estimated shutdown and standby costs through the end of the fiscal year. During the fourth quarter of the fiscal year ended June 30, 1995 the Company recorded $210,000 of additional shutdown and standby costs. During the year ended December 31, 1996 and the six months ended December 31, 1995 the Company recorded $1,232,000 and $671,000, respectively, of additional shutdown and standby costs. During the fourth quarter of fiscal year 1994, the Company reviewed its mine plan and feasibility studies at certain Gold Bar properties. It was determined that the Company's unamortized investment could not be recovered from undiscounted cash flows over the remaining mine life, accordingly, the Company recorded an impairment of $5,355,000 in carrying value of its producing properties. 43 7. STOCKHOLDERS' EQUITY At a Special Meeting of Stockholders held on December 15, 1994, an amendment was approved to the Company's Certificate of Incorporation increasing the number of authorized shares of common stock from 25 million to 50 million. The Company is also authorized to issue 1,000,000 shares of preferred stock, par value $1 per share. The preferred stock is issuable in series, with designations, rights and preferences to be fixed by the Board of Directors. The Board of Directors has established a series of 200,000 shares of Series Preferred Stock designated Series A Junior Participating Preferred Stock ("Series A Preferred Stock"), no shares of which have been issued. At December 31, 1996 there were 875,000 shares of Common Stock reserved for the conversion of an outstanding convertible Debenture and 2,032,111 shares of Common Stock reserved for Option Warrants traded on the American Stock Exchange which are exercisable at a price of $15.625 per share and have no expiration date ("Perpetual Warrants"). Since June 30, 1993, no Perpetual Warrants have been issued or exercised. Also at December 31, 1996 there were 4,545,455 shares of Common Stock reserved for Option Warrants issued in connection with the private placements discussed in Note 20, with the following terms and activity:
Shares Exercised -------------------------- Year Ended Six Mo. Year June Ended Ended Outstanding Date of Exercise Shares 30, Dec. 31, Dec. 31 Dec. 31, Issuance Price Expiration Date Issued 1995 1995 1996 1996 - -------------------------------------------------------------------------------------------- Aug. 15, 1994 $7.00 Aug. 15, 1999 3,243,405 - - - 3,243,405 Dec. 15, 1994 $7.00 Dec. 15, 1999 1,302,050 - - - 1,302,050
The Company has an Amended and Restated Rights Agreement under which a holder of Preferred Stock Purchase Rights ("Rights") is entitled to purchase from the Company 1/200th of a share of Series A Preferred Stock at a price of $45 per 1/200th of a share. Subject to action by the Board of Directors, the Rights become exercisable upon the occurrence of certain events, including acquisition by a person or group of 15% or more of the outstanding Common Stock of the Company. Upon any such acquisition, the amended Plan provides that upon exercise of Rights and payment of the purchase price, the exercising Rights holder is entitled to receive, in lieu of Series A Preferred Stock, shares of Common Stock having a market value equal to twice the purchase price. The Amended and Restated Rights Agreement was amended as of September 13, 1993 and August 15, 1994 to provide that the transactions with Phoenix Financial Holdings Inc., M.I.M. Holdings Limited and Mackenzie Financial Corporation would not cause the Rights to become exercisable (Note 20). 8. EMPLOYEE INCENTIVE PLANS The Company's Long Term Incentive Plan (the "LTIP") provides that key employees may be granted options to purchase Common Stock at the fair value of the shares on the date of grant. At a February 17, 1995 Meeting of Stockholders, the shareholders approved an amendment to the LTIP (i) to increase by 850,000 to 1,745,000 the number of shares authorized for issuance under the LTIP, (ii) to provide for the automatic grant to non-employee directors of the Company of awards of stock options under the LTIP and (iii) to reduce the minimum period prior to which an option may be exercised for all options granted after January 6, 1995 from one year to six months. Options are exercisable for a maximum of ten years from the date of grant and no options may be granted after July 31, 1999. 44
Date Granted Exercise Price Shares - ----------------------------------------------------------------------------------------------------------- Granted October 1, 1986 $ 6.750 6,000 Granted January 6, 1988 16.125 6,000 Granted August 2, 1989 16.750 10,000 Granted November 13, 1989 17.250 2,000 Granted April 14, 1990 14.625 21,500 Granted July 23, 1990 12.125 8,000 Granted September 12, 1990 13.125 47,000 Granted March 6, 1991 7.375 6,450 Granted January 6, 1993 5.125 43,500 Granted March 11, 1993 2.750 30,000 Granted November 15, 1993 4.250 815,000 Granted December 1, 1993 5.250 10,000 Granted May 2, 1994 8.000 5,000 Exercised (30,000) Canceled (185,950) - ----------------------------------------------------------------------------------------------------------- Balance outstanding as of June 30, 1994 794,500 Granted August 10, 1994 4.750 122,500 Granted January 6, 1995 2.125 80,000 Granted January 6, 1995 4.500 450,000 Granted January 6, 1995 3.000 83,000 Granted January 6, 1995 4.000 83,000 Granted January 6, 1995 5.000 84,000 Granted May 19, 1995 2.000 235,000 Canceled (815,000) - ----------------------------------------------------------------------------------------------------------- Balance outstanding as of June 30, 1995 1,117,000 Granted July 12, 1995 1.875 40,000 Granted August 10, 1995 2.000 225,500 Granted December 13, 1995 1.500 20,000 Granted December 15, 1995 2.000 7,800 Canceled (347,000) - ----------------------------------------------------------------------------------------------------------- Balance outstanding as of December 31, 1995 1,063,300 Granted June 21, 1996 1.500 200,000 Granted November 1, 1996 1.000 601,000 Granted November 5, 1996 1.000 100,000 Canceled (692,500) - ----------------------------------------------------------------------------------------------------------- Balance outstanding as of December 31, 1996 1,271,800 =========
45 Summary of options outstanding as of December 31, 1996:
- -------------------------------------------------------------------------------------- Date Exercise Price Shares - -------------------------------------------------------------------------------------- January 6, 1995 $ 2.125 60,000 May 19, 1995 2.000 60,000 July 12, 1995 1.875 20,000 August 10, 1995 2.000 203,000 December 13, 1995 1.500 20,000 December 15, 1995 2.000 7,800 June 21, 1996 1.500 200,000 November 1, 1996 1.000 601,000 November 5, 1996 1.000 100,000 - -------------------------------------------------------------------------------------- 1,271,800 ==========
The Company has elected to follow Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25) and related Interpretations in accounting for its employee stock options. Under APB 25, because the exercise price of the Company's employee stock options equals the market price of the underlying stock on the date of grant, no compensation expense is recognized. During 1996 the Company authorized the grant of options to key personnel for up to 901,000 shares of the Company's common stock. Of these, 200,000 were granted with a two year term, expiring June 21, 1998 and fully vested and exercisable at time of grant. Also, there were 100,000 options granted with a two year term expiring November 5, 1998 and fully vested and exercisable at time of grant. All remaining options granted have 10 year terms expiring November 1, 2006 and vest and become fully exercisable at the end of six months of continued employment. In 1995 the Company granted a total of 763,300 options to key personnel. Pro forma information regarding net income and earnings per share as required by Statement 123, has been determined as if the Company had accounted for its employee stock options under fair value method of that Statement. The fair value for these options was estimated at the date of grant using the Black- Scholes option pricing model with the following weighted-average assumptions for 1995 and 1996: risk-free interest rate of 5.09%; dividend yields of 0.0%; volatility factors of the expected market price of the Company's common stock of .462; and a weighted-average expected life of the option of 4 years. The Black-Scholes option valuation model was developed for the use in estimating the fair value of traded options which have no vesting restrictions and are fully transferable. In addition, option pricing models require the input of highly subjective assumptions, including expected stock price volatility. Because the Company's employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options. For purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the option's vesting period. The Company's pro forma information for the years ended December 31, is as follows (in thousands except for earnings per share) 46
1995 1996 (unaudited) --------------------------------- Pro forma net loss $(10,533) $(19,299) Pro forma earnings per share Primary $ (.50) $ (1.02) Fully diluted $ (.50) $ (1.02)
A summary of the Company's stock option activity, and related information for the years ended December 31 follows:
1996 1995 -------------------------------------------------------------- Weighted-Average Weighted-Average (in thousands) Options Exercise Price Options Exercise Price -------------------------------------------------------------- Outstanding-beginning of year 1,063 $ 3.45 300 $ 4.25 Granted 901 1.11 763 3.14 Exercised - - - - Forfeited 692 4.23 - - Outstanding-end of year 1,272 1.37 1,063 3.45 Exerciseable at end of year 521 1.62 400 3.69 Weighted-average fair value of options granted during year $ 0.31 $ - $ 0.55 $ -
Exercise prices for options outstanding as of December 31, 1996 ranged from $1.00 to $2.125. The weighted-average remaining contractual life of those options is 8.11 years. 9. INVESTMENTS Investment in Vista Gold Corp. On August 15, 1994, the Company completed the purchase from M.I.M. (Canada) Inc. ("M.I.M.") of 12,694,200 common shares of Granges Inc. (subsequently changed to Vista Gold Corp., hereinafter referred to as "Vista" see below) which represented 37.2% of the issued and outstanding shares of Vista. The purchase price was Cdn. $4.00 per share (U.S. $2.80), or an aggregate purchase price of Cdn. $50.8 million (U.S. $35.8 million). Vista is a Canadian-based precious metals mining company the shares of which are traded on the Toronto Stock Exchange and the American Stock Exchange. Effective May 1, 1995 Vista amalgamated with Hycroft Resources and Development Corporation ("Hycroft"), which operates the Crofoot/Lewis mine located in Nevada. Prior to the amalgamation, Vista had a 50.5% ownership position in Hycroft. The terms of the amalgamation called for each common share of Hycroft to be exchanged for 0.88 of a common share of Vista and for each common share of Vista outstanding prior to the amalgamation, to be exchanged for one common share of Vista. After the amalgamation, Atlas continued to hold 12,694,200 shares of Vista, representing 27.5% of the outstanding common shares. On May 25, 1995 the Company purchased 20,700 common shares of Vista which increased the Company's interest to a total of 12,714,900 common shares. 47 On October 16, 1996 the Company sold 4,240,324 Vista Common shares at $1.32 per share resulting in a net loss of $1.5 million. The Company continues to hold 8,393,826 Vista common shares, which have been pledged as security for the Company's $9.81 million Exchangeable Debentures due October 25, 2000 (Note 10). In October, Vista, known at the time as Granges Inc., amalgamated with Da Capo Resources Ltd. to form Vista, further reducing the Company's ownership interest in Vista to 9.6%. The Company reported the results of Vista's operations on the equity method from the acquisition date of August 15, 1994 until September 30, 1996. On October 1, 1996 as a consequence of the sale of the Vista common shares and the amalgamation with De Capo Resources Ltd., noted above, the Company changed its method of accounting for the Vista investment to the lower of cost or market basis. Summarized Statements of Operations and Balance Sheets of Vista are presented below.
Nine Mo. Ended Six Mo. Ended Year Ended September 30, December 31, June 30, STATEMENT OF OPERATIONS 1996 1995 1995 (U.S. GAAP, U.S. Dollars, in thousands) (unaudited) (unaudited) (unaudited) - -------------------------------------------------------------------------------------------------------- Sales $ 26,062 $ 19,459 $ 42,833 Cost of sales 21,851 16,544 34,179 Depreciation, depletion & amortization 8,247 4,446 4,773 ----------------------------------------------------- Income (loss) from mining operations (4,036) (1,531) 3,881 ----------------------------------------------------- Net Loss $ (8,482) $ (1,303) $ (1,405) =====================================================
June 30, BALANCE SHEET December 31, 1995 (U.S. GAAP, U.S. Dollars, in thousands) 1995 (unaudited) - -------------------------------------------------------------------------------------------------------- Current assets $ 27,911 $ 34,109 Non-current assets $ 36,305 $ 53,136 Current liabilities $ 6,239 $ 5,346 Non-current liabilities $ 3,409 $ 3,206 Net equity $ 54,568 $ 78,693
Under the equity method, the Company recorded a loss of $2,721,000, $1,703,000 and $1,361,000 for the nine months ended September 30, 1996 the six months ended December 31, 1995 and for the period from August 15, 1994 (date of acquisition) to June 30, 1995 respectively. In connection with the May 1, 1995 amalgamation of Vista and Hycroft Resources and Development Corporation, the Company re-evaluated its investment in Vista relative to the fair values implied in the amalgamation and to known reserves at the Crofoot/Lewis mine. As a result, the Company recorded an $11,419,000 impairment of its investment in Vista as of June 30, 1995. The impairment reduced the excess cost of the investment over the net assets attributable to Atlas's interest in Vista from approximately $20.5 million on August 15, 1994 (date of acquisition) to approximately $9 million at June 30, 1995. The Company amortized the excess cost of the 48 investment related to producing properties on a unit of production (gold ounces) basis which is included in the reported loss discussed above. Effective September 29, 1995 the Company entered into an exploration joint venture agreement ("the Agreement") with Vista with respect to approximately 34 square miles of the Company's Gold Bar claim block. In order to earn a 50% undivided interest in not more than 15 square miles within the area of interest, the terms of the Agreement required Vista to spend U.S. $2.25 million on exploration and development within three years on approximately 1,190 claims included in the area of interest, at the rate of U.S. $625,000 in each of the first two years and U.S.$1 million in the third year, and to complete an independent reserve report recommending development of a deposit containing a mineable reserve in excess of 300,000 ounces of gold. Upon execution of the Agreement, Vista paid the Company $359,000 for reimbursement of past exploration expenses. On January 8, 1997 the Company entered into an agreement with Vista to terminate the Agreement ("the Termination Agreement") covering the Gold Bar claim for a total cost of $450,000. As a result of the Termination Agreement, Atlas has regained a 100% interest in this portion of the claim block, which contains the identified Mill Site deposit and the Company's Gold Bar mill, a 3,000 ton per day carbon-in-leach facility located centrally in this portion of the block. Investment in Cornerstone Industrial Minerals Corporation. On November 30, 1995 Atlas purchased 12.2 million (51%) of the outstanding common shares of Phoenix Financial Holdings Inc. (Phoenix) for an aggregate purchase price of Cdn. $1,781,200 at which time, Atlas assumed control of the Phoenix Board of Directors. At a meeting of the shareholders on September 3, 1996 the shareholders of Phoenix approved a name change to Cornerstone Industrial Minerals Corporation ("Cornerstone"). On December 13, 1996 Atlas and Cornerstone executed an agreement ("the "Purchase Agreement") providing for the purchase by Cornerstone of all the issued and outstanding shares of Atlas Perlite, Inc., Atlas's wholly owned subsidiary the major asset of which is the Tucker Hill perlite project. The Purchase Agreement calls for payment to Atlas of $1 million in cash, 9,647,986 Cornerstone common shares, the reimbursement of Atlas's Tucker Hill development costs of $2,945,282 and the retention by the Company of a royalty equivalent of 2% of the gross proceeds generated from the sale of minerals from Tucker Hill. The purchase price is payable in three stages as follows: $125,000 and 1,205,998 shares due at closing, $500,000 and 4,823,993 shares of common stock upon obtaining all operating permits and $375,000 and 3,077,994 shares of common stock related to Atlas assisting the Company in meeting three other milestones which include obtaining base load perlite contracts for a specified amount of revenues per year, obtaining permanent project financing and achieving commercial production. As of December 31, 1996, the Company has met the first two of these stages resulting in the Company increasing its ownership percentage to 61%. Upon completion of the transaction, the Company will have a 65% equity position in Cornerstone. Investment in Arisur Inc. On October 8, 1996 the Company acquired Arisur Inc., a Grand Cayman corporation ("Arisur") which owns and operates the Andacaba and the Don Francisco lead, zinc and silver mines located in southern Bolivia, South America. The Company acquired a 50% interest in Arisur from Arimetco International Inc., a Canadian corporation for $3 million in cash and purchased 100% of Suramco for four million shares (valued at $3,250,000) of the Company's common stock. Suramco owns the remaining 50% interest in Arisur. 49 The acquisition was accounted for as a purchase under generally accepted accounting principles. Costs of acquisition in excess of Arisur's book value have been allocated to the mine and mill equipment, the known reserves of Arisur and the future exploration potential. The amortization of these costs will be over the estimated lives of the respective assets, and on the units of production method for the known reserves. Exploration potential will be amortized as reserves are delineated. The functional currency of Arisur is the U.S. dollar. The following are pro forma results of operations as though Arisur had been acquired as of January 1, 1996 and as of January 1, 1995.
1996 1995 (unaudited) (unaudited) --------------------------- Mining Revenue $ 3,469 $ 4,030 Production costs (2,919) (2,983) Depreciation, depletion and amortization (1,259) (1,394) Other costs (10,198) (19,044) --------------------------- Net loss $ (10,907) $ (19,391) --------------------------- Earnings per share $ (0.45) $ (0.85) ===========================
The results of operations of Cornerstone and Arisur (from the respective dates of acquisition to December 31, 1996) are consolidated into the Company's financial statements using the principles of consolidation discussed in Note 1. 10. CURRENT AND LONG-TERM DEBT Long-term debt (in thousands)
December 31, ---------------------------- June 30, 1996 1995 1995 ------------------------------------------ Redeemable Convertible Debenture, Due September 20, 1998, bearing interest at 9% (1) $ 3,500 $ 3,500 $ 3,500 Exchangeable Debentures, due October 25, 2000 bearing interest at 7% (2) 9,810 10,000 - ------------------------------------------ Total long-term debt $ 13,310 $ 13,500 $ 3,500 ==========================================
(1) The Convertible Debenture is convertible as to principal at the option of the holder into shares of the Company's common stock at the rate of $4.00 per share. Interest on the Convertible Debenture is also payable either in cash or in common stock at the rate of $4.00 per share. (2) The Exchangeable Debentures are exchangeable, at the Debentureholder's option, into common shares of Vista Gold Corp. ("Vista Shares") at the rate of 42.5 Vista Shares for each $100 of principal amount of Exchangeable Debentures surrendered. The Company may also redeem the Exchangeable Debentures on or after October 25, 1998 if the average market price of the Vista Shares is at least $2.94 per share at the rate of 42.5 Vista Shares per $100 of Exchangeable Debentures held. The Company may also pay the Exchangeable Debentures at maturity in either cash or Vista shares (at the Company's option) at a price per share equal to 95% of the average market price of the Vista shares on the date of maturity. 50 The proceeds from the Exchangeable Debentures were placed in escrow on November 10, 1995 pending completion of certain registration and qualification requirements. On February 8, 1996 the Company met the registration and qualification requirements, releasing the escrowed funds. Short-term debt (In thousands)
December 31, -------------------------- June 30, 1996 1995 1995 -------------------------------------- Short term note (1) $ - $ 2,000 $ - Bank debt (2) 606 - - Advances on sales of concentrates (3) 523 - - Short term loan (4) 500 - - Note payable - Grassy Mountain (5) 500 - - -------------------------------------- $ 2,129 $ 2,000 $ - ======================================
(1) On November 29, 1995 the Company entered into a $2,000,000 short term loan facility with First Marathon Inc. The Company pledged as security approximately 2.4 million common shares in Dakota Mining Corporation and 4.2 million common shares of Vista. On February 8, 1996 the Company met the registration and qualification requirements related to the Exchangeable Debentures, using the released escrow funds to repay the loan facility. (2) Represents the remaining balance of a note payable by Arisur to BHN Multibanca S.A., a local Bolivian bank. The original note, entered into in June 1995 was for $2.3 million, bears interest at 12% per annum, and is payable in varying monthly installments of principal and interest of approximately $100,000. The balance is due on June 30, 1997. (3) Under the terms of its agreement with Glencore International AG for the sale of zinc/silver and lead/silver concentrates, the Company may take advances of up to 80% of the estimated value of the concentrates available for shipment via rail from the Company's warehouse in Potosi, Bolivia, and an additional 10% of this amount may be advanced once the concentrate is ready for shipment from either Antofagasta, Chile (zinc/silver) or Arica, Chile (lead/silver). Interest is payable on the advances at the "New York" prime rate plus 1.5%. (4) In June 1996 Arisur entered into an additional agreement with Glencore for a prepayment to be applied against 1997 production in the amount of $500,000. Interest is payable on the outstanding balance at the three month LIBOR rate plus 1%. (5) Note payable to Newmont (note 6). The Note is non-interest bearing and is due on September 18, 1997. 11. DETAILS OF CERTAIN BALANCE SHEET CAPTIONS A summary of restricted cash and securities is as follows:
December 31, ------------------------ June 30, (In thousands) 1996 1995 1995 ------------------------------------- Collateral for a $5,461,000 letter of credit (a)(c) $ 5,492 $ 4,602 $ 4,869 Other restricted cash Collateral for a $1,500,000 Reclamation bond (b) 774 765 790 ------------------------------------- $ 6,266 $ 5,367 $ 5,659 =====================================
(a) Securing $6,500,000 performance bonds related to the Company's uranium reclamation obligation. (b) Securing $1,500,000 performance bonds related to the Company's Gold Bar reclamation obligation. (c) Securing $1,901,000 performance bonds related primarily to the Company's Gold Bar reclamation obligation. 51 A summary of other assets is as follows:
December 31, ------------------- June 30, (In thousands) 1996 1995 1995 ----------------------------- Debt issuance costs $ 1,027 $ 902 $ - Excess of cost over net assets of Cornerstone (Note 9) 492 442 - Other 86 164 246 ----------------------------- $ 1,605 $ 1,508 $ 246 =============================
A summary of other accrued liabilities is as follows:
December 31, ------------------- June 30, (In thousands) 1996 1995 1995 ----------------------------- Accrued compensation $ 485 $ 246 $ 230 Mine reclamation accrual 300 300 300 Accrued asbestos reclamation costs (Notes 13 and 14) 126 393 566 Other 1,225 1,059 1,007 ----------------------------- $ 2,136 $ 1,998 $ 2,103 =============================
A summary of other liabilities, long-term is as follows:
December 31, -------------------- June 30, (In thousands) 1996 1995 1995 -------------------------------- Long-term uranium reclamation cost (Notes 13 and 14) $ 2,705 $ 3,713 $ 4,902 Pension and deferred compensation obligations 1,243 1,441 1,405 Mine reclamation accrual 3,018 2,812 3,042 Accrued postretirement benefit obligation (Note 16) 1,200 1,222 1,232 Other 1,339 996 1,079 -------------------------------- $ 9,505 $ 10,184 $ 11,660 ================================
52 12. DETAILS OF CERTAIN STATEMENTS OF CASH FLOW CAPTIONS The components of the adjustment to reconcile loss to net cash used in operations as reflected in the Consolidated Statements of Cash Flows are as follows:
Six Year Months Ended Ended Year Ended June 30, Dec. 31, Dec. 31, ------------------------ (In thousands) 1996 1995 1995 1994 - --------------------------------------------------------------------------------------------------------------------- Depreciation, depletion and amortization $ 372 $ 15 $ 395 $ 4,547 Equity loss in Vista 2,721 1,703 1,361 - Minority interest in net loss of subsidiary (273) (25) - - Forfeiture of deposit on stock purchase agreement - - 525 - Write-down of investment in Vista - - 11,419 - Loss on sale of Vista shares 1,439 - - - Gain on sale of Dakota shares (1,333) - - - Write-down of mineral properties - - - 5,355 Other adjustments 161 102 498 - ---------------------------------------------- $ 3,087 $ 1,795 $ 14,198 $ 9,902 ============================================== The components of net changes in operating assets and liabilities are as follows: Decrease (increase) in trade/other accounts receivable $ 326 $ (114) $ (36) $ - Decrease (increase) in inventories (263) - 843 1,024 Decrease (increase) in prepaid expense and other current assets 8 273 (69) (57) Decrease (increase) in other assets and restricted cash and securities (843) 407 2,419 (2,565) Decrease (increase) in trade accounts receivable (298) 924 (1,500) 860 Decrease in other accrued liabilities (507) (104) (1,784) (182) Increase (decrease) in income taxes payable - - - (477) Increase (decrease) in other liabilities, long-term (49) (287) 65 (820) ---------------------------------------------- $ (1,626) $ 1,099 $ (62) $ (2,217) ==============================================
Net cash required for operating activities reflects cash payments for interest and income taxes as follows:
Six Months Year Ended Ended Year Ended June 30, Dec. 31, Dec. 31, ------------------------ (In thousands) 1996 1995 1995 1994 - --------------------------------------------------------------------------------------------------------------------- Interest (net of amount capitalized) $ 793 $ 20 $ 99 $ 562 Income taxes - - - -
13. DISCONTINUED OPERATIONS During fiscal year 1995 the Company recognized income of $621,000 from discontinued operations, this included a gain of $846,000 recorded upon the receipt of a payment from the Department of Energy under Title X of the Energy Policy Act (Note 14) in connection with the reclamation of the 53 Company's uranium mine and mill site in Moab, Utah. The gain was partially offset by a loss of $225,000 due to cost overruns at the Company's Coalinga, California asbestos mine and mill reclamation project (Note 14). During fiscal year 1994, the Company recognized income of $2,175,000 from discontinued operations primarily due to the recovery from insurance carriers of cleanup costs at the Coalinga reclamation project. The items above are included in the consolidated statements of operations under the heading "Income from discontinued operations". The following table summarizes the operating income (loss) of the discontinued businesses:
Building Asbestos Products & Mining & Ready-Mix Service & Period ended (In thousands) Milling Concrete Other Total - --------------------------------------------------------------------------------------------------- December 31, 1996 $ - $ - $ - $ - December 31, 1995 $ - $ - $ - $ - June 30, 1995 $ (225) $ - $ 846 $ 621 June 30, 1994 $ 1,997 $ 136 $ (42) $ 2,175
14. COMMITMENTS AND CONTINGENCIES The Company is obligated to decommission and reclaim its uranium mill site located near Moab, Utah. The Company discontinued its uranium operations and permanently shut down its uranium mill and mines in 1987, estimated shut-down expenses and reclamation costs of $17,406,000 were accrued. The balance in this accrual at December 31, 1996 was $2,705,000. Title X of "The Comprehensive National Energy Policy Act" ("Title X"), enacted in October 1992, provides for the reimbursement of past and future reclamation expenses related to uranium sites operated under Atomic Energy Commission contracts. The Company's uranium reclamation costs are reduced by this Government cost sharing program since 56% of its tailings were generated under government contracts. The Company believes the accrual, when combined with anticipated reimbursements under the Title X program and the restricted cash used as collateral for the surety, is sufficient to cover future reclamation costs. In July 1994, the Company submitted a claim to the Department of Energy (the "DOE") under Title X for approximately $5 million of reclamation costs incurred from fiscal year 1986 through fiscal year 1994. The DOE has given approval on approximately $4.5 million of the claim and $2.5 million in reimbursement, disallowing $500,000 pending further substantiation of the claim for reimbursement. On December 29, 1994, the Company received $846,000 as a partial payment of the approved reimbursement which was recorded as income from discontinued operations. In June 1995 the Company submitted a second claim to the DOE under Title X for approximately $3.6 million which included reclamation costs incurred from fiscal year 1980 through fiscal year 1985, from June 1994 through May 1995 and reclamation costs previously disallowed. In May 1996 the Company submitted a third claim for approximately $4,000,000 of costs incurred from June 1995 through March 1996. In September 1996 and 1995 the Company received $816,000 and $1,032,000 as partial payments against the three claims. These amounts have been added to the 54 Company's reclamation accrual. Timing of the remaining payments for approved reimbursements is a function of Congressional appropriation of Title X funding. During fiscal year 1988, the United States Environmental Protection Agency notified the Company that it was one of several potentially responsible parties for cleanup costs at the Company's former asbestos mine and mill site near Coalinga, California and in the City of Coalinga. A prolonged period of inquiry and administrative process concerning this matter followed. In fiscal years 1995, 1993 and 1991, the Company established a reserve, and recorded as an expense, $225,000, $600,000 and $3,000,000, respectively, to cover the Company's share of cleanup costs. In fiscal year 1992, the Company began legal action against thirteen insurance carriers which had issued insurance policies with respect to the site. During fiscal year 1994, the Company reached settlement with a number of the carriers and recorded a gain from discontinued operations of $2,175,000. All claims with remaining carriers were settled in fiscal year 1995. The remedial action plan commenced October 1994 and was completed in 1996. The Company received EPA's "Approval of Construction Completion" on November 14, 1996. Minimum future rental commitments under the Company's non-cancelable operating leases having a remaining term in excess of one year at December 31, 1996 are as follows:
Year ended December 31, (In thousands) - -------------------------------------------------------------------------- 1997 $ 205 1998 205 1999 182 2000 109 Later years 64 ------- Total minimum payments required $ 765 =======
Amounts charged to rent expense in the year ended December 31, 1996, the six months ended December 31, 1995 and the fiscal years ended June 30, 1995 and 1994 were $201,000, $81,200, $550,000 and $670,000 respectively. 15. EMPLOYEE RETIREMENT PLANS The Company has a trusteed and insured retirement plan covering substantially all salaried employees. The plan provides pension benefits that are based on final average compensation minus certain adjustments for primary social security benefits. The Company's funding policy for the plan is to make at least the minimum annual contributions required by applicable government regulations. Plan assets are invested primarily in equity securities, corporate and government bonds and money market funds. 55
Six Year Months Ended Ended Year Ended June 30, Dec. 31, Dec. 31, --------------------- (In thousands) 1996 1995 1995 1994 - -------------------------------------------------------------------------------------------------------- Service costs-benefits earned during the year $ 71 $ 27 $ 83 $ 123 Interest cost on projected benefit obligation 451 242 432 441 Actual return on plan assets (700) (290) (218) (90) Net amortization and deferral 318 80 (223) (399) ---------------------------------------------- Net periodic pension cost for the year $ 140 $ 59 $ 74 $ 75 ============================================== Assumed long-term rate of return on plan assets 8.5% 8.5% 8.5% 8.5%
The following table sets forth the funded status of the plan and amounts recognized in the Company's financial statements at December 31, 1996 and 1995, and June 30, 1995:
December 31, ----------------------- June 30, (In thousands) 1996 1995 1995 - ---------------------------------------------------------------------------------------------------------- Accumulated benefit obligation based on salaries to date including vested benefit obligation of $6,296,435, $6,370,000 and $5,449,000, for December 31, 1996, December 31, 1995 and June 30, 1995, respectively $ (6,342) $ (6,381) $ (5,344) Additional benefit obligation based on estimated future salary levels (163) (146) (145) ------------------------------------ Projected benefit obligation (6,505) (6,527) (5,489) Fair value of plan assets 5,122 4,952 4,971 ------------------------------------ Funded status (1,383) (1,575) (518) Unrecognized net obligation at July 1, 1989 and 1988 being recognized over approximately 15.88 years 38 51 58 Unrecognized net loss (gain) 931 963 (42) ------------------------------------ Accured pension cost $ (414) $ (561) $ (502) ==================================== Assumed discount rate 7.25% 7.25% 8.25% Assumed rate of increase in future compensation 5.0% 5.0% 5.0%
Effective March 1, 1997, the Company elected to freeze future benefit accurals under the plan. Past benefits earned will not be effected by this freeze. The Company has an Investment and Savings Plan to assist eligible employees in providing for retirement or other future financial needs. Employee contributions (up to 10% of their earnings) are matched in Company stock by the Company at a rate of 100% up to a maximum of 6% of the employee's earnings. In addition, the Company provides a 4% contribution for all eligible employees compensated on an hourly scale. The Company's contributions to this Plan in the year ended 56 December 31, 1996 the six months ended December 31, 1995 and the fiscal years ended June 30, 1995 and 1994 were $69,000, $34,000, $91,000 and $179,000, respectively. 16. OTHER POSTRETIREMENT BENEFIT PLANS In addition to the Company's defined benefit pension plan the Company has two defined benefit postretirement plans covering most salaried employees. One plan provides medical benefits and the other provides life insurance benefits. The postretirement health care plans are contributory, with retiree contributions adjusted annually, and contain other cost-sharing features such as deductibles and coinsurance. The accounting for the health care plans anticipates future cost-sharing changes to the written plan that are consistent with the Company's expressed intent to increase the retiree contribution rate annually for the expected general inflation rate for that year. The life insurance plan is non- contributory. The Company's policy is to fund the cost of the postretirement health care benefits in amounts determined at the discretion of management and to make annual contributions to the life insurance plan in level amounts over the plan participant's expected service period. The following table shows the plan's combined funded status reconciled with the amounts recognized in the Company's financial statements:
December 31, --------------------------------- June 30, (In thousands) 1996 1995 1995 - ------------------------------------------------------------------------------------------------------------------------- Accumulated postretirement benefit obligations: Retirees $ (690) $ (674) $ (686) Fully eligible active plan participants (45) - - Other active participants (114) (208) (190) ------------------------------------------------- Accrued postretirement benefit cost (849) (882) (876) Unrecognized prior service cost (109) (118) (123) Unrecognized net gain (242) (222) (233) ------------------------------------------------- Accrued postretirement benefit cost $ (1,200) $ (1,222) $ (1,232) ================================================= Six Months Year Ended Ended Year Ended (In thousands) Dec. 31, 1996 Dec. 31, 1995 June 30, 1995 - ------------------------------------------------------------------------------------------------------------------------- Components of net periodic postretirement benefit cost: Service cost $ 22 $ 11 $ 49 Interest cost 61 31 75 Net amortization and deferral (32) (16) (22) ------------------------------------------------- Net periodic postretirement benefit cost $ 51 $ 26 $ 102 =================================================
The weighted-average annual assumed rate of increase in per capita cost of covered benefits (i.e. health care cost trend rate) for the plan is 10% for fiscal year 1997 and is assumed to decrease gradually to 5% in 2002 and remain at that level thereafter. The health care cost trend rate assumption has a significant effect on the amounts reported. For example, increasing the assumed health care cost trend rates by one percentage point in each year would increase the accumulated postretirement benefit obligation for the medical plans as of December 31, 1996, December 31, 1995 and June 30, 1995 by $29,000, $32,000 and $32,000 57 respectively, and the aggregate of the service cost and interest cost components of net periodic postretirement benefit cost for December 31, 1996 by $7,000. The weighted-average discount rate used in determining the accumulated postretirement benefit obligation was 7.25%, 7.25% and 7.5% at December 31, 1996, December 31, 1995 and June 30, 1995 respectively. 17. INCOME TAXES The Company's provision for income tax from continuing operations consists of the following:
Six Months Year Ended Ended Year Ended June 30, Dec. 31, Dec. 31, ------------------- (In thousands) 1996 1995 1995 1994 - ---------------------------------------------------------------------------------- Deferred $ - $ - $ - $ - Current - - - - --------------------------------------------- Income tax expense (benefit) $ - $ - $ - $ - =============================================
Deferred income taxes result from temporary differences in the timing of income and expenses for financial and income tax reporting purposes. The primary components of deferred income taxes result from exploration and development costs; depreciation, depletion, and amortization expenses; impairments; and reclamation accruals. The net deferred tax balances in the accompanying December 31, 1996, December 31, 1995 and June 30, 1995 balance sheets include the following components:
December 31, --------------------- June 30, (In thousands) 1996 1995 1995 - -------------------------------------------------------------------------------------------------------- Deferred tax assets: Net operating loss ("NOL") carryovers $ 5,577 $ 34,892 $ 33,711 Tax credit carryovers - 572 756 Impairment of mineral properties 12,359 12,359 12,359 Depreciation, depletion and amortization - 747 882 Reclamation accruals 1,303 1,472 3,399 Postretirement benefit accrual 477 502 431 Impairment of investment in Vista 2,638 3,997 3,997 Equity in Vista 1,367 1,106 512 ----------------------------------- Total deferred tax assets 23,721 55,647 56,047 Deferred tax asset valuation allowance (20,745) (52,031) (51,664) ----------------------------------- Net deferred tax assets 2,976 3,616 4,383 ----------------------------------- Deferred tax liabilities: Depreciation, depletion, and amortization 3,789 3,461 4,069 Unrealized gain on investment of equity securities (813) 155 314 Total deferred tax liabilities 2,976 3,616 4,383 ----------------------------------- Net deferred tax balances $ - $ - $ - ===================================
58 The change in the Company's valuation allowance is summarized as follows:
Six Months Year Ended Ended Year Ended June 30, Dec. 31, Dec. 31, ------------------------ (In thousands) 1996 1995 1995 1994 - ----------------------------------------------------------------------------------------------------------------- Valuation allowance, beginning of period $ 52,031 $ 51,664 $ 45,020 $ 41,567 Continuing Operations 3,730 1,502 7,139 4,214 Discontinued Operations - - 217 (761) Restriction of carryforwards (34,950) - - - Other (66) (1,135) (278) - ------------------------------------------------------- $ 20,745 $ 52,031 $ 51,664 $ 45,020 =======================================================
A reconciliation of expected federal income taxes on income from continuing operations at statutory rates with the expense/(benefit) for income taxes is as follows:
Six Months Year Ended Ended Year Ended June 30, Dec. 31, Dec. 31, ------------------------- (In thousands) 1996 1995 1995 1994 - ------------------------------------------------------------------------------------------------------------------ Income tax at statutory rates $ (3,730) $ (1,502) $ (7,139) $ (4,214) Increase in deferred tax asset valuation allowance 3,730 1,502 7,139 4,214 -------------------------------------------------------- Income tax expense $ - $ - $ - $ - ========================================================
At December 31, 1996 the Company has unused NOL carryovers of $114,508,000 which commence expiring in 1998 and investment tax credit (ITC) carryovers of $449,000 which commence expiring in 1997. The Company also has alternative minimum tax credit (AMT) carryovers of $127,000 which can be carried forward indefinitely. These carryovers are subject to restriction due to a change of ownership, as defined by U.S. tax laws, occurring on October 8, 1996 when the company issued stock for the acquisition of Arisur (Note 9). Due to the change of ownership, utilization of the Company's NOL, ITC and AMT credit carryovers existing as of October 8, 1996, is limited to offset approximately $930,000 of taxable income per year. 59 18. GEOGRAPHIC SEGMENTS Financial information regarding geographic segments is set out below:
Six Month Year Ended Ended Year Ended June 30, Dec. 31, Dec. 31, ---------------------- 1996 1995 1995 1994 - ---------------------------------------------------------------------------------------------------------------- Revenue United States $ - $ - $ 2,328 $ 19,478 Bolivia 578 - - - Loss before income taxes United States (10,390) (4,291) (20,397) (12,040) Bolivia (268) - - - Provision for income tax - - - - ------------------------------------------------------------ Loss from continuing operations before minority interest (10,658) (4,291) (20,397) (12,040) Minority interest in net loss of subsidiary 273 25 - - ------------------------------------------------------------ Loss from continuing operations (10,385) (4,266) (20,397) (12,040) Income from discontinued operations - - 621 2,175 ------------------------------------------------------------ Net Loss $ (10,385) $ (4,266) $ (19,776) $ (9,865) ============================================================ Balance Sheet Dec. 31, Dec. 31, June 30, 1996 1995 1995 --------------------------------------------- Assets: United States $ 30,969 $ 53,040 $ 43,497 Bolivia 10,713 - -
19. DIFFERENCES BETWEEN U.S. AND CANADIAN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) The Company prepares its consolidated financial statements in accordance with accounting principles generally accepted in the United States. These differ in some respects from those in Canada, as described below. In accordance with U.S. GAAP, equity securities available for sale are recorded at fair value with unrealized gains and losses reported as a separate component of stockholders' equity. Accordingly, unrealized gains and losses in investments in marketable equitable securities at December 31, 1996 and 1995 have been recorded as a component of stockholders' equity. Under Canadian GAAP, such investments would be recorded at the lower of cost or market. Therefore, in conformity with Canadian GAAP, the investments in marketable equity securities and total stockholders' equity would approximate $13,864,000, $14,694,000, $3,187,000 and $21,701,000 at December 31, 1996 and December 31, 1995 respectively. 60 20. PRIVATE PLACEMENTS The Company conducted a private placement of 9,090,909 Units of Atlas securities during the summer of 1994 for a purchase price of $5.50 per Unit, each Unit consisting of one share of the Company's Common Stock and one-half of a warrant (exercisable for five years) to purchase a share of the Company's Common Stock at an exercise price of $7.00 per share in order to finance the acquisition of 12,694,200 common shares of Vista (Note 9) and 1,500,000 Common Shares and 3,100,000 Preferred Shares of Dakota Mining Corporation ("Dakota"). The first portion of such private placement, consisting of the sale of 6,486,809 Units for an aggregate purchase price of $35,677,450, was completed on August 15, 1994, and the proceeds thereof were applied primarily to the cost of the Vista shares. On October 29, 1994, the Company determined not to proceed with acquisition of the Dakota shares (see Note 4). The second portion of the private placement, the sale of an additional 2,604,100 Units for an aggregate purchase price of $14,322,550, was completed on December 15, 1994 following the shareholder approval of an increase in the authorized share capital of the Company. Upon closing the second portion of the private placement, the Company used a portion of the proceeds to repay the balance of $800,000 due on a short-term secured loan. Of the Units sold in the private placement, Mackenzie Financial Corporation ("Mackenzie Financial") acquired 1,820,000 Units, consisting of 1,820,000 shares of Common Stock and 910,000 warrants to purchase shares of Common Stock, and M.I.M. Holdings Limited ("M.I.M.") acquired 2,000,000 Units, consisting of 2,000,000 shares of Common Stock and 1,000,000 warrants to purchase shares of Common Stock. On January 18, 1994, the Company sold for $7,500,000 in gross proceeds, 1,500,000 shares of Common Stock for $5.00 per share in a private placement. The shares were placed outside the United States with a number of gold funds in Canada and European institutional investors. On September 20, 1993, the Company sold to Phoenix Financial Holdings Inc. for an aggregate of $8,375,000 (i) 1,500,000 shares of the Company's Common Stock, (ii) a Redeemable Convertible Debenture due 1998 in the principal amount of $3,500,000, which is convertible as to principal into Common Stock at the rate of $4.00 per share and bears interest at the rate of 9% per annum payable in cash or Common Stock at the rate of $4.00 per share, and (iii) Warrants to purchase for three years 2,000,000 shares of Common Stock at $3.625 per share. Of such securities, the 1,500,000 shares of the Company's Common Stock and 750,000 of the Warrants to Purchase Common Stock were sold to various investors in a private placement. 61 REPORT OF INDEPENDENT AUDITORS THE BOARD OF DIRECTORS AND STOCKHOLDERS OF ATLAS CORPORATION We have audited the accompanying consolidated balance sheets of Atlas Corporation and subsidiaries as of December 31, 1996 and 1995 and June 30, 1995, and the related consolidated statements of operations, stockholders' equity (deficit) and cash flows for the year ended December 31, 1996, the six months ended December 31, 1995 and the years ended June 30, 1995 and 1994. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the financial statements of Arisur Inc., a wholly owned subsidiary, which statements reflect total assets of $7,523,785 as of December 31, 1996 and total revenues of $578,000 for the year then ended. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to data included for Arisur Inc. is based solely on the report of the other auditors. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the report of other auditors provide a reasonable basis for our opinion. In our opinion, based on our audits and the report of other auditors, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Atlas Corporation and subsidiaries at December 31, 1996 and 1995 and June 30, 1995, and the consolidated results of their operations and their cash flows for the year ended December 31, 1996, the six months ended December 31, 1995 and the years ended June 30, 1995 and 1994, in conformity with generally accepted accounting principles. The accompanying consolidated financial statements have been prepared assuming that Atlas Corporation will continue as a going concern. As more fully described in note 1, the Company has incurred recurring operating losses and has a working capital deficiency. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters, which include short-term financing, the sale/joint venture of certain assets and the start up of Tucker Hill operations are also described in note 1. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amount and classification of liabilities that may result from the outcome of this uncertainty. /s/ Ernst & Young LLP Denver, Colorado February 28, 1997 except for Note 1, as to which the date is April 14, 1997 62 Item 9. Changes in and Disagreements with Accountants on Accounting and --------------------------------------------------------------- Financial Disclosure -------------------- Not Applicable 63 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY ----------------------------------------------- DIRECTORS The Company's directors are divided into three classes and hold office for a term of three years ending with the annual meeting of stockholders held in the year ended December 31, 1997 in the case of Class III, in the year ended December 31, 1998 in the case of Class I and in the year ended December 31, 1999 in the case of Class II. There are currently six directors. Information Concerning Directors The following table sets forth certain information concerning each director.
Principal Occupation, Past Five Year's Business Director Experience Name Since and Other Directorships Held Age - --------------------------------------------------------------------------------------------- CLASS III (TERM OF OFFICE EXPIRES AT THE ANNUAL MEETING OF STOCKHOLDERS HELD IN THE YEAR ENDED DECEMBER 31, 1997) Douglas R. Cook 1988 President of Cook Ventures Inc., a geological 71 consulting firm; Director, Pegasus Gold Corporation; Director, Archangel Diamond Corp. Mr. Cook's business address is 2485 Greensboro Drive, Reno, Nevada 89509. Mario Caron 1996 President, Chief Executive Officer and director of 43 Eden Roc Mineral Corp. from February 1997 to the present. Chief Executive Officer of Atlas Corporation from September 1996 to January 1997 From 1993 to 1996, President and Chief Executive Officer of MSV Resources Inc. and from 1987 to 1993 President of Corpomin Management Inc. Mr. Caron is director of three junior Canadian exploration companies. His current business address is 141 Adelaide St. West, Toronto, Ontario, Canada M5H 3L5
(Mr. Caron, pursuant to taking his new position as President and Chief Executive Officer of Eden Roc Mineral Corp., has advised the Company's Board of Director that he does not intend to stand for re-election at the next Annual Meeting of Stockholders.) 64
CLASS I (TERM OF OFFICE EXPIRES AT THE ANNUAL MEETING OF STOCKHOLDERS HELD IN THE YEAR ENDED DECEMBER 31, 1998) David P. Hall 1993 President and Chief Executive Officer of Aurizon Mines Ltd., a mineral exploration and 50 development company and management firm; formerly President of CanGold Resources (to January 1995) and formerly President of Hughes Lang Corporation (to January 1994). Mr. Hall's business address is 1414-700 West Georgia St., Vancouver, BC V7Y 1A3. H.R. Shipes 1996 President, Chairman of the Board and Chief Executive Officer of Arimetco International Inc., 5 a Canadian mining company, from November 1988 to the present. Director, since 1996, of Cornerstone Industrial Minerals Corporation, a 65% subsidiary of the Company. Mr. Shipes' business address is 335 North Wilmot Road, Suite 410, Tucson, AZ 85711 CLASS II (TERM OF OFFICE EXPIRES AT THE ANNUAL MEETING OF STOCKHOLDERS HELD IN THE YEAR ENDED DECEMBER 31, 1999) James H. Dunnett 1995 Principal of Endeavour Financial Corp., a private Canadian company specializing in arranging 47 project financing, mergers and acquisitions for the mining industry. Mr. Dunnett serves as a director of Cornerstone Industrial Minerals Corporation, a majority owned subsidiary of the Company, and serves as a director of Vista Gold Corp., in which the Company holds a 9.6% interest. Mr. Dunnett's business address is 1111 West Georgia St., Suite 404, Vancouver, BC, Canada V6E 4M3. C. Thomas Ogryzlo 1993 Chairman of Kilborn SNC-Lavalin Inc.; formerly a principal of Wright Engineers Limited, an 57 engineering firm; director of Carib Gold Resources Inc., Rio Amarillo Mining Limited, Cornerstone Industrial Minerals Corporation and Vista Gold Corp., in which Atlas holds a 9.6% interest. Mr. Ogryzlo's business address is 2200 Lake Shore Boulevard West, Toronto, Ontario, Canada M8V 1A4.
65 BOARD AND COMMITTEE MEETINGS The Company has an Audit Committee, Compensation Committee, and Executive Committee, of which all members are appointed by the Board of Directors. The Compensation Committee currently consists of Messrs. Ogryzlo, Dunnett and Shipes, and during the fiscal year ended December 31, 1996 consisted of Messrs. Ogryzlo and Cook. Due to his appointment as Chairman, Mr. Cook resigned from the Compensation Committee on December 13, 1996. At this time, Mr. Shipes was appointed to replace Mr. Cook on the Compensation Committee and early in 1997, Mr. Dunnett was also appointed to the Compensation Committee. The Audit Committee currently consists of Messrs. Dunnett, Hall and Ogryzlo, and during the year ended December 31, 1996 consisted of, Messrs. Dunnett, Hall and Cook. Mr. Cook also resigned from the Audit Committee on December 13, 1996, at which time Mr. Ogryzlo was appointed to replace Mr. Cook on the Audit Committee. The Executive Committee currently consists of Messrs. Cook, Dunnett and Ogryzlo. The principal functions of the Audit Committee are to recommend the selection of the Company's auditors, review with the auditors the scope and anticipated cost of their audit and receive and consider a report from the auditors concerning their conduct of the audit. The principal functions of the Compensation Committee are to administer the Company's 1979 Key Employee Stock Incentive Plan, Long Term Incentive Plan, Annual Incentive Plan and Retirement Plan for Outside Directors, to recommend changes in compensation plans and the adoption of new compensation plans and to recommend compensation for senior officers of the Company. The principal functions of the Executive Committee are to oversee the succession of officers and directors, Company finances and the Operating Committee which consists of three executive officers of the Company. During the year ended December 31, 1996, the Audit Committee held three meetings and the Compensation Committee held two meetings. The Executive Committee did not hold any meetings during 1996, since it was formed in January 1997. During the year ended December 31, 1996, the Board met sixteen times. Each director attended 75% or more of the aggregate of the total number of Board meetings and meetings of Board committees on which that director served during the year ended December 31, 1996. OFFICER CONTRACTS Richard E. Blubaugh has served as Vice President of Environmental and Governmental Affairs since October 1, 1990. Mr. Blubaugh has an employment agreement providing for his employment as an officer of the Company, at a minimum annual salary of $91,690, until the termination of his employment by Mr. Blubaugh or the Company or his normal retirement in accordance with the Company's retirement programs in place at the time. Mr. Blubaugh is entitled, upon termination of his employment by the Company without "Cause", by him with "Good Reason" or either within three months prior to a change of control or within two years after a "Change of Control" (as such terms are defined in the employment agreement), to a severance payment equal to one year's salary, amounts accrued but unpaid under his employment agreement and amounts payable under existing employee benefits plans. 66 Gregg B. Shafter has served as Vice President of Project Development since August 1, 1995. Mr. Shafter has an employment agreement providing for his employment as an officer of the Company, at a minimum annual salary of $85,000, until the termination of his employment by Mr. Shafter or the Company or his normal retirement in accordance with the Company retirement programs in place at the time. Mr. Shafter is entitled, upon termination of his employment by the Company without "Cause", by him with "Good Reason" or either within three months prior to a change of control or within two years after a "Change of Control" (as such terms are defined in the employment agreement), to a severance payment equal to one-twelfth of his annual salary multiplied by the number of full years of employment by the Company, provided that in no event shall such amount be less than one-half of his annual salary, amounts accrued but unpaid under this employment contract and amounts payable under existing employee benefit plans. COMPENSATION OF DIRECTORS Prior to November 1, 1996, fees paid to non-employee directors consisted of a $7,500 annual fee, a $1,000 fee for each Board of Directors meeting attended in person, a $500 fee for each Board of Directors meeting attended by telephone and a $500 fee for each committee meeting attended. Effective November 1, 1996, in lieu of the annual fee noted above, all non-employee directors on such date who are directors and those thereafter joining the Board, will be awarded a one time grant of 50,000 options under the Long Term Incentive Plan ("LTIP"), vesting six months from the grant date, at an exercise price equal to the market price on the grant date or $1.00 per share, whichever is higher. Additionally, effective November 1, 1996, the Chairman will be awarded options to purchase 25,000 shares of Atlas Common Stock, as granted under the LTIP, vesting six months from the grant date at an exercise price equal to the closing market price on the grant date or $1.00 per share, whichever is higher. EXECUTIVE OFFICERS The information concerning the Company's executive officers required by this Item is included in Part I, Item 4, under the caption "EXECUTIVE OFFICERS OF THE COMPANY." COMPLIANCE WITH SECTION 16 OF THE EXCHANGE ACT Under Section 16 of the Exchange Act, the Company's directors and executive officers and persons holding more than 10% of the Company's Common Stock are required to report their initial ownership of Common Stock and subsequent changes to that ownership to the Securities and Exchange Commission and the New York Stock Exchange by specified due dates. To the Company's knowledge all of these filing requirements were satisfied with respect to transactions during the year ended December 31, 1996. 67 ITEM 11. EXECUTIVE COMPENSATION The following table sets forth all compensation paid by the Company, for the year ended December 31, 1996, the six months ended December 31, 1995 and for each of the fiscal years ended June 30, 1995 and 1994, to Messrs. Gerald E. Davis, Richard E. Blubaugh and David J. Birkenshaw. Except for such persons, no person who was serving as an executive officer of the Company during the year ended December 31, 1996 had total cash and cash-equivalent remuneration which exceeded $100,000 during the year. Messrs. Birkenshaw and Davis terminated their employment with the Company on, respectively, June 21, 1996 and November 5, 1996. See Notes (5) and (7) under SUMMARY COMPENSATION TABLE. SUMMARY COMPENSATION TABLE
Long Term Compen- Annual Compensation sation ---------------------------------------------- --------- Other Annual All Other Year or Period Compen- Stock Compen- Name and Principal Position Ended Salary Bonus sation Options sation - ------------------------------------------------------------------------------ ------------- ------- --------- Richard E. Blubaubagh, VP Dec. 31, 1996 $ 91,676 $ 13,754 $ 10,214(2) 127,500 $5,750(3) Dec. 31, 1995(1) $ 46,575 - $ 5,956(2) 52,000 $2,794(3) June 30, 1995 $ 86,500 $ 3,500 $ 6,481(2) 10,000 $5,400(3) June 30, 1994 $ 84,852 $ 2,000 $ 18,036(2)(4) 25,000 $5,211(3) David J. Birkenshaw, CEO(5) Dec. 31, 1996 $173,485 $150,000 $406,675(2) 200,000 Dec. 31, 1995(1) $ 87,500 - $ 84,462(2)(6) - June 30, 1995 $154,167 - - 350,000 June 30, 1994 $ 75,000 - - 300,000 June 30, 1993 - - - - Gerald E. Davis, President(7) Dec. 31, 1996 $151,587 $ 35,000 $ 11,870(2) 200,000 $5,750(3) Dec. 31, 1995(1) $ 76,078 - $ 6,312(2) 40,000 $1,875(3) June 30, 1995 $134,561 $ 3,500 $ 6,813(2) 75,000 $7,560(3) June 30, 1994 $120,000 - $ 45,436(2)(4) 25,000 $1,800(3)
(1) Represents the six month period ended December 31, 1995. (2) Includes certain perquisites, such as car allowances and life insurance premiums paid by the Company. (3) Includes contributions by the Company to the Investment Savings Plan for Employees of Atlas. (4) Amount includes payments by the Company to Messrs. Davis and Blubaugh of $35,625 and $11,875, respectively, in respect of options to purchase 15,000 and 5,000 shares of Common Stock by Messrs. Davis and Blubaugh following the change in control of September 20, 1993, representing the difference between the option price and the market price of such shares. (5) Upon the resignation of David J. Birkenshaw on June 21, 1996, the Company agreed to pay the following payments and benefits to Mr. Birkenshaw: 1) a single lump payment of $337,500 and six monthly installments of $18,500 less any amounts due the Company from the employee; 2) an award of an option to purchase an aggregate of 200,000 shares of the Company's Common Stock at an exercise price of $1.50 per share, which option shall become exercisable in whole or in part at any time prior to June 20, 1997; 3) the forgiveness of the $60,000 unsecured housing loan and any accrued interest on such loan; and pursuant to the Amendment to Resignation Agreement and General Release dated October 11, 1996, upon satisfaction of item 1) above, the Company paid to Mr. Birkenshaw an amount of $54,000. (6) Amount includes $75,000 relocation expenses paid by the Company. (7) Upon the resignation of Gerald E. Davis, on November 5, 1996, the Company agreed to pay Mr. Davis the following payments and benefits: 1) a total payment of $325,657; payable as $25,657 68 immediately after execution of the Resignation Agreement and six monthly installments of $50,000 each commencing on January 13, 1997; 2) at any time prior to November 5, 1997, Mr. Davis may exercise the options granted to him on May 19, 1995 and August 10, 1995 under the Long Term Incentive Plan to purchase 100,000 shares of stock at an exercise price of $2.00, which options shall expire by November 5, 1997. At any time prior to November 5, 1998, Mr. Davis may exercise additional options granted to him on November 5, 1996 to purchase 100,000 shares of stock at an exercise price of $1.00 per share, which options shall expire by November 5, 1998. See also, with respect to Messrs. Davis, Blubaugh and Birkenshaw, the section entitled "Options" below. PERFORMANCE GRAPH The following graph shows changes over the past five years in the value of $100 invested in: (1) Atlas Corporation Common Stock, (2) the Dow Jones Equity Market Index and (3) the Dow Jones Precious Metals Index. The year-end values of each investment are based on the share price appreciation plus the monthly reinvestment of dividends, if any. COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG ATLAS CORPORATION, THE DOW JONES EQUITY MARKET INDEX AND THE DOW JONES PRECIOUS METALS INDEX* [GRAPH APPEARS HERE] COMPARISON OF FIVE YEAR CUMULATIVE RETURN AMONG ATLAS CORPORATION, DOW JONES EQUITY MARKET INDEX AND DOW JONES PRECIOUS METALS INDEX.
Dow Jones Dow Jones Measurement period Atlas Equity Market Precious Metals (Fiscal Year Covered) Corporation Index Index - --------------------- ----------- ------------- --------------- Measurement PT - 12/31/91 $ 100.00 $ 100.00 $ 100.00 FYE 12/31/92 $ 85.71 $ 108.61 $ 86.45 FYE 12/31/93 $ 71.43 $ 119.41 $ 139.07 FYE 12/31/94 $ 34.69 $ 120.33 $ 116.28 FYE 12/31/95 $ 22.45 $ 166.31 $ 122.95 FYE 12/31/96 $ 11.27 $ 205.57 $ 125.24
* $100 INVESTED ON 12/31/91 IN STOCK OR INDEX - INCLUDING REINVESTMENT OF DIVIDENDS. 69 INVESTMENT AND SAVINGS PLAN. The Atlas Company Investment and Savings Plan (the "Plan") benefits employees of the Company and its subsidiaries who have completed six months of service. Each participant under the Plan must be at least 21 years of age. Under the Plan, an employee may elect to contribute, pursuant to a salary reduction election, not less than 1 percent and not more than 10 percent of the employee's annual compensation. The Company makes a matching contribution of 100 percent of the amount contributed by the employee, but not more than 6 percent of the employee's annual compensation. In addition, the Company may make special contributions to the Plan, but these special contributions may not exceed the maximum amount deductible under Section 404(a)(3)(A) of the Internal Revenue Code of 1986, as amended (the "Code"). Employee contributions may be invested in a number of investment options, but not Common Stock of the Company. All matching and special contributions to the Plan are invested in shares of Common Stock of the Company. 1978 RETIREMENT PLAN. Eligible employees, including officers, participate in the Atlas Company 1978 Retirement Plan (the "1978 Retirement Plan"), a noncontributory defined benefit pension Plan. Benefits under the 1978 Retirement Plan are based on years of service and the participant's compensation during the participant's three consecutive highest compensated years out of the participant's final five years as a participant. Benefits under the 1978 Retirement Plan are payable upon disability, death or retirement at age 55 or later and may be distributed in the form of a lump sum, a single-life annuity, a joint and survivor annuity covering the participant and a beneficiary or installments over a term of years. Participants retiring before the age of 55 are entitled to a lump sum distribution. Effective March 1, 1997, the Company froze all future accrual of benefits under the 1978 Retirement Plan. The benefits earned by each participant as of February 28, 1997 shall be preserved and no benefit of any participant shall be decreased or reduced. At the Company's option the freeze can be lifted at any time in the future. The following table shows the estimated annual benefits payable upon retirement in the form of a single-life annuity under the 1978 Retirement Plan to persons in the specified compensation and years-of-service classifications: 70
PENSION PLAN TABLE Average Annual Compensation on which Retirement Benefits are Estimated Annual Retirement Benefits at Age Based 65 for Indicated Years of Credited Services - ------------- ------------------------------------------- (10) (15) (20) (25) (30) ------- ------- ------- ------- ------- $50,000....... $ 8,621 $12,932 $17,242 $21,553 $25,864 $100,000...... $18,621 $27,932 $37,242 $46,553 $55,864 $150,000...... $28,621 $42,932 $57,242 $71,553 $85,864 $200,000...... $28,621 $42,932 $57,242 $71,553 $85,864 $250,000...... $28,621 $42,932 $57,242 $71,553 $85,864 $300,000...... $28,621 $42,932 $57,242 $71,553 $85,864
Retirement benefits under the 1978 Retirement Plan are based on salaries and additional compensation such as awards under the Annual Incentive Plan. These benefits are not affected by directors' fees. Benefits listed in the table are net of an offset for part of the participant's Social Security benefits. There is no other offset. Years of service credited through December 31, 1996 under the 1978 Retirement Plan for the officers listed in the SUMMARY COMPENSATION TABLE are 6 years for Mr. Davis and 14 years for Mr. Blubaugh. The Code sets limits on a participant's annual benefits on retirement under the 1978 Retirement Plan. To assure that participants' retirement benefits are not reduced in the future because of the Code limits, the Board of Directors adopted a supplemental Executive Retirement Plan, which provides retirement benefits on an unfunded basis to selected participants whose benefits under the 1978 Retirement Plan would be limited by the Code in an amount equal to the difference between the annual retirement benefit permitted under the 1978 Retirement Plan by the Code and the amount that would have been paid but for the limitation imposed by the Code. ANNUAL INCENTIVE PLAN. Under the Company's Annual Incentive Plan, incentive compensation may be paid to key employees selected by the Compensation Committee based on the achievement by the Company and the selected employees of performance goals established for each fiscal year by the Compensation Committee. In addition to target awards, which recognize achievement of the predetermined goals, the Compensation Committee may establish threshold and maximum awards to recognize performance which has only been minimally acceptable and performance which has been significantly above target. Target, threshold and maximum awards are expressed as a percentage of selected employees' base salary for the pertinent fiscal year. The Compensation Committee may consider the adverse impact of external circumstances on the Company's performance in evaluating the achievement of individual employee goals and in determining whether to exercise its authority in such 71 circumstances to make alternative or supplemental awards. Since July 1, 1993, no awards were made under the Annual Incentive Plan. OPTIONS OPTION GRANTS IN THE LAST FISCAL YEAR. The following table sets forth information relating to stock options granted during the year ended December 31, 1996 to Messrs. Davis, Blublaugh and Birkenshaw.
% of Total Number of Options Exercise Grant Date Options Granted to Price (1) Present Name Granted Employees per share Expiration Date Value (2) - --------------------------------------------------------------------------------------------------------- Gerald E. Davis 100,000(3) 11% $ 1.00 Nov. 05, 1998 $ 27,000 Richard E. Blubaugh 75,000(3) 8.32% $ 1.00 Oct. 31, 2006 $ 23,250 David J. Birkenshaw 200,000(4) 2.22% $ 1.50 Jun. 29, 1999 $ 68,000 650,000(5) 72.1%
(1) Exercise price is equal to or greater than the market value at date of grant. (2) Calculated as of the end of the applicable fiscal year using the Black- Scholes option pricing model, with reference to the most recent 24-month period for determining price volatility. The actual value, if any, that an executive may realize from the options will be the excess of the market price of the Common Stock on the day of exercising the options over the exercise price of the options. (3) Options granted on November 1, 1996 which vest in six months from the date of grant. (4) Pursuant to the terms of Mr. Birkenshaw's resignation agreement dated June 21, 1996, he was provided the option to purchase 200,000 shares of the Corporation's Common Stock at an exercise price of $1.50 per share, which option shall be exercisable at any time prior to June 20, 1999. (5) Options subsequently canceled on June 21, 1996. AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR AND FISCAL YEAR-END OPTION. The following table provides information relating to the number and value of stock options exercised in the year ended December 31, 1996 and the number of exercisable and unexercisable stock options held by executive officers at December 31, 1996:
Number of Unexercised Options at December 31, 1996 Shares Acquired ----------------------------- Name on Exercise Value Realized Exercisable Unexercisable - ------------------------------------------------------------------------------- Gerald E. Davis - - 200,000 - Richard E. Blubaugh - - 25,250 101,250 David J. Birkenshaw - - 200,000 -
There were no unexercised, in-the-money options at December 31, 1996. 72 COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The members of the Compensation Committee during 1996 are identified above under the heading BOARD AND COMMITTEE MEETINGS. No member of the Compensation Committee is or has been at any time an officer of the Company or any of its subsidiaries (except for Mr. Cook who served as a non-executive Chairman of the Company during 1996). During 1996, no executive officer of the Company served as a director or as member of the Compensation Committee of another entity whose executive officers served as a director or as a member of the Compensation Committee of the Company. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth certain information as of April 9, 1997 regarding the beneficial ownership, including shares of Atlas Common Stock which may be acquired upon the exercise of stock options or warrants, or the conversion of any securities, within 60 days of April 9, 1997, of the Company's Common Stock by (i) persons known to the Company to own more than 5 percent of the Company's Common Stock, (ii) each director of the Company, (iii) each executive officer named in the Summary Compensation Table set forth above, and (iv) all directors and executive officers as a group: 73
SECURITY OWNERSHIP TABLE Name Number of Shares Percent of Class and Nature of Beneficial Ownership (1) M.I.M. Holdings Limited 3,000,000(2) 11.90%(2) M.I.M. Plaza, 410 Anne St. Brisbane, Queensland, 4000 Australia H. R. Shipes 2,167,646(3) 8.93%(3) 335 North Wilmot Road, Suite 400 Tucson, AZ 85711 Independence Mining Company 1,400,000(4) 5.78%(4) 5251 DTC Parkway, Suite 700 Englewood, CO 80111 Douglas R. Cook 90,334(5) * Mario Caron -- * James H. Dunnett 208,334(6) * David P. Hall 63,334(7) * C. Thomas Ogryzlo 63,334(7) * Richard E. Blubaugh 116,860(8) * Gerald E. Davis 200,000 * David Birkenshaw 200,000 * All current executive officers and directors 3,282,714(9) 13.0%(9) as a group (11 persons)
(1) Does not include shares issuable on the exercise of options which have not vested and will not vest within sixty days of this report. (2) M.I.M. Holdings Limited, to the best of the Company's knowledge, is the direct beneficial owner of (i) 2,000,000 shares of Common Stock and (ii) warrants issued by the Company which are exercisable into 1,000,000 shares of Common Stock at an exercise price of $7.00 per share. (3) On October 28, 1996, a Schedule 13D was filed with the Securities and Exchange Commission by H.R. Shipes reflecting beneficial ownership of 2,117,646 shares of Common Stock of which 156,863 are held by Mr. Shipes for the benefit of his minor child under the 74 Uniform Gift to Minor's Act. Also included are 50,000 options granted to Mr. Shipes as a director of Atlas which are exercisable on May 1, 1997. (4) On November 3, 1995, Atlas received a copy of Schedule 13D filed by Independence Mining Company Inc. reflecting direct ownership of 1,400,000 shares of Common Stock. (5) Includes 2,000 shares of Common Stock directly owned and 88,334 shares obtainable upon exercise of options granted to Mr. Cook under the Long Term Incentive Plan. (6) James H. Dunnett may be deemed, by virtue of his 25 percent interest in Acorn Capital Financial Corporation which is the direct beneficial owner of (i) 100,000 shares of Common Stock and (ii) warrants issued by the Company which are exercisable into 45,000 shares of Common Stock at an exercise price of $7.00 per share, to be the indirect beneficial owner of securities owned by Acorn Capital Financial Corporation. Mr. Dunnett's holdings also include 63,334 shares obtainable upon exercise of options granted to him under the Long Term Incentive Plan. (7) Includes 63,334 shares obtainable upon exercise of options granted under the Long Term Incentive Plan. (8) Includes (i) 101,250 shares obtainable upon the exercise of options granted under the Long Term Incentive Plan, (ii) 14,610 shares held in Mr. Blubaugh's account under the Company's 401(k) Plan and (iii) 1,000 shares held directly. (9) Includes (i) 982,086 shares obtainable upon exercise of options granted under the Long Term Incentive Plan, (ii) warrants issued by the Company which are exercisable into 45,000 shares of Common Stock at an exercise of $7.00 per share (iii) 33,982 shares of Common Stock held beneficially under the Company's 401(k) Plan, and (iv) direct ownership of 2,221,646 shares of Common Stock. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Mr. Dunnett is a principal of the investment banking firm of Endeavour Financial Corporation, ("Endeavour") which acts as a financial advisor to the Company. Mr. Dunnett served, from April 1, 1995 until September 30, 1995 as an Atlas nominee on the Board of Directors of Vista Gold Corp. and also serves on the Board of Directors of Cornerstone Industrial Minerals Corporation ("Cornerstone"), a majority owned subsidiary of the Company. During the year ended December 31, 1996, the Company paid Endeavour $170,000 in advisory fees. Mr. Birkenshaw, Chairman and Chief Executive Officer of the Company until his resignation on June 21, 1996, served as the Vice Chairman of Vista Gold Corp., in which the Company currently retains a 9.6% interest and served until February 16, 1996 as a director of Dakota Mining Corporation ("Dakota"). The Company, which acquired an approximate 9% interest in Dakota in March 1995, sold its holdings in Dakota on March 9, 1996. 75 Mr. Birkenshaw served as Chairman of Cornerstone from June 1991 through March 1995, and was reappointed Chairman of Cornerstone upon Atlas's acquisition of 51% of Cornerstone on November 29, 1995, serving until June 21,1996. Prior to Atlas's acquisition of the 51% interest in Cornerstone, Mr. Birkenshaw purchased 1,150,000 warrants to purchase Common Shares of the Company from Cornerstone, which were exercisable at $3.625 per share and expired on September 20, 1996. Mr. Birkenshaw received a non-interest bearing unsecured loan from Cornerstone in the amount of C$25,000 payable upon demand, the proceeds of which were used to purchase the Atlas warrants. Mr. Birkenshaw repaid the Cornerstone loan in March 1996. Mr. Birkenshaw serves as Chairman of Birkenshaw & Company, Ltd., a merchant bank. During the year ended December 31, 1996, the six months ended December 31, 1995 and the year ended June 30, 1995, the Company paid Birkenshaw & Company $0, $43,000 and $174,000, respectively, for reimbursement of expenses incurred on behalf of the Company. Mr. Birkenshaw received from Atlas a $60,000 unsecured housing loan, bearing an 8% interest rate, in connection with his relocation to Denver, Colorado. This loan was forgiven as part of his resignation agreement. Mr. Birkenshaw received from the Company and its subsidiaries unsecured noninterest bearing employee advances of approximately $99,000. Such advances have subsequently been repaid. Mr. Shipes is the President, Chief Executive Officer and Chairman of Arimetco International Inc. ("Arimetco"), a Canadian mining company. The Company purchased 50% of Arisur Inc., a Grand Cayman corporation, which owns and operates mining operations in Bolivia, from Arimetco for $3.3 million in cash. The Company acquired the remaining 50% of Arisur Inc. from Suramco Metals, Inc., a Nevada corporation, of which Mr. Shipes is a major shareholder, for four million shares of the Company's common stock. As part of the transaction, Mr. Shipes became a member of the Company's Board of Directors. 76 PART IV Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K --------------------------------------------------------------- (a) (1) Financial Statements: See Index to Financial Statements and Schedules on page 80. (2) Financial Statement Schedules: See Index to Financial Statements and Schedules on page 80. (3) Exhibits: Exhibit Number Exhibits ---------------------------------------------------------------------- 2.1 Agreement and Plan of Reorganization between the Company and the shareholders of Suramco Metals, Inc. dated October 7, 1996. 2.2 Stock Purchase Agreement between the Company and Arimetco International Inc. dated October 7, 1996. 2.3 Stock Purchase Agreement between the Company and Cornerstone Industrial Minerals Corporation dated December 13, 1996. 3.1 Restated Certificate of Incorporation of the Company, dated January 3, 1990 (filed as Exhibit 3.2 to the Company's quarterly report on Form 10-Q for the quarter ended December 31, 1989, and incorporated herein by reference). 3.2 By-Laws of the Company, as amended on July 12, 1995. (filed as an Exhibit 3.3 to the Company's annual report on Form 10- K for the year ended June 30, 1995 and incorporated herein by reference). 4.1 Term Loan Agreement dated August 15, 1994 between the Company and Gerald Metals, Inc.(filed as an Exhibit 10.22 to the Company's annual report on Form 10-K for the year ended June 30, 1994 and incorporated herein by reference). 4.2 Security Agreement dated August 15, 1994 between the Company and Gerald Metals, Inc.(filed as an Exhibit 10.23 to the Company's 77 annual report on Form 10-K for the year ended June 30, 1994 and incorporated herein by reference). 4.3 Pledge Agreement dated August 15, 1995 between the Company and Gerald Metals, Inc. (filed as an Exhibit 10.24 to the Company's annual report on Form 10-K for the year ended June 30, 1994 and incorporated herein by reference). 4.4 Indenture dated as of November 10, 1995 between the Company and Chemical Bank as Trustee (filed as Exhibit 4.1 to the Company's Registration Statement on Form S-3 (33-65165) as filed with the Commission on December 19, 1995 under the Securities Act of 1933 and incorporated herein by reference). 4.5 Escrow and Pledge Agreement dated as of November 10, 1995 between the Company and Chemical Bank as Trustee and Chemical Bank as Escrow Agent (filed as Exhibit 4.2 to the Company's Registration Statement on Form S-3 (33-65165) as filed with the Commission on December 19, 1995 and incorporated herein by reference). 4.6 Special Warrant Indenture dated November 9, 1995 between the Company and The Montreal Trust Company of Canada containing terms and conditions governing the issue and exercise of special Debenture warrants exercisable for 7% Exchangeable Debentures due October 25, 2000 of the Company (filed as Exhibit 99.2 to the Company's Registration Statement on Form S-3 (33-65165) as filed with the Commission on December 19, 1995 and incorporated herein by reference). 10.1 Atlas Corporation Management Incentive Compensation Plan (filed as Exhibit 10.2 to the Company's annual report on Form 10-K (file no. 1- 2714) for the fiscal year ended June 30, 1981 and incorporated herein by reference). 10.2 Form of Indemnity Agreement entered into between the Company and certain of its directors (filed as Exhibit 10.14 to the Company's annual report on Form 10-K for the fiscal year ended June 30, 1987 and incorporated herein by reference). 10.3 Amended and Restated Rights Agreement dated as of August 2, 1989 between the Company and Manufacturers Hanover Trust Company (filed as Exhibit 1 to the Company's current report on Form 8-K dated August 2, 1989 and incorporated herein by reference). 10.4 Long Term Incentive Plan of the Company dated November 1, 1989 (filed as Exhibit 10.28 to the Company's annual report on 78 Form 10-K for the fiscal year ended June 30, 1989 and incorporated herein by reference). 10.5 Atlas Corporation Supplemental Executive Retirement Plan dated as of January 3, 1990 (filed as Exhibit 10.2 to the Company's quarterly report on Form 10-Q for the quarter ended March 31, 1990 and incorporated herein by reference). 10.6 Atlas Corporation Retirement Plan for Outside Directors dated April 4, 1990 (filed as Exhibit 10.3 to the Company's quarterly report on Form 10-Q for the quarter ended March 31, 1990 and incorporated herein by reference). 10.7 Restated Employment Agreement dated as of September 12, 1990 between the Company and Richard R. Weaver (filed as Exhibit 10.22 to the annual report on Form 10-K for the fiscal year ended June 30, 1990 and incorporated herein by reference). 10.8 Amendment No. 1, dated as of March 6, 1991, to the Amended and Restated Employment Agreement, dated as of September 12, 1990, between the Company and Richard R. Weaver (filed as Exhibit 10.1 to the Company's quarterly report on Form 10-Q for the quarter ended March 31, 1991 and incorporated herein by reference). 10.9 Atlas Corporation Annual Incentive Plan adopted by the Board of Directors of the Company on March 6, 1991 (filed as Exhibit 10.20 to the Company's annual report on Form 10-K for the year ended June 30, 1991 and incorporated herein by reference). 10.10 Securities Purchase Agreement dated September 3, 1993 between the Company and Phoenix Financial Holdings Inc. (filed as Exhibit 2 to the Company's Report on Form 8-K filed on September 9, 1993 and incorporated herein by reference). 10.11 Amendment dated as of September 15, 1993 to the Amended and Restated Rights Agreement dated as of August 2, 1989 between the Company and Chemical Bank, as successor by merger with Manufacturers Trust Company (filed as Exhibit 10.25 to the Company's annual report on Form 10-K for the year ended June 30, 1993 and incorporated herein by reference). 10.12 Employment agreement made as of September 22, 1993, between the Company and David J. Birkenshaw (filed as Exhibit 10.1 to the Company's quarterly report on Form 10-Q for the quarter ended March 31, 1994 and incorporated herein by reference). 79 10.13 Amendment dated as of August 28, 1995 to the employment agreement made as of September 22, 1993, between the Company and David J. Birkenshaw (filed as exhibit 10.15 to the Company's annual report on Form 10-K for the year ended June 30, 1995 and incorporated herein by reference). 10.14 Share Purchase Agreement dated April 28, 1994 between the Company and M.I.M. (Canada) Inc. (filed as an Exhibit 10.18 to the Company's annual report on Form 10-K for the year ended June 30, 1994 and incorporated herein by reference). 10.15 Agreement dated May 10, 1994 between the Company and Granges Inc. (filed as an Exhibit 10.19 to the Company's annual report on Form 10-K for the year ended June 30, 1994 and incorporated herein by reference) 10.16 Registration Rights Agreement dated August 15, 1994, between the Company and First Marathon Securities Limited (filed as Exhibit 10.20 to the Company's annual report on Form 10-K for the year ended June 30, 1994 and incorporated herein by reference). 10.17 Indemnity Agreement dated August 15, 1995 between the Company and M.I.M. Holdings Limited (filed as an Exhibit 10.21 to the Company's annual report on Form 10-K for the year ended June 30, 1994 and incorporated herein by reference). 10.18 Second Amendment dated as of August 15, 1994 to the Amended and Restated Rights Agreement dated August 2, 1989 between the Company and Chemical Bank, as successor by merger with Manufacturers Hanover Trust Company (filed as Exhibit 10.1 to the Company's quarterly report on Form 10-Q for the quarter ended March 31, 1995 and incorporated herein by reference). 10.19 The Company's Long Term Incentive Plan, as amended dated February 17, 1995 (filed as Exhibit 10.2 to the Company's quarterly report on Form 10-Q for the quarter ended March 31, 1995 and incorporated herein by reference). 10.20 Employment Agreement made as of January 16, 1995 between the Company and Michael B. Richings (filed as Exhibit 10.3 to the Company's quarterly report on Form 10-Q for the quarter ended March 31, 1995 and incorporated herein by reference). 80 10.23 Atlas Subscription Agreement dated March 9, 1995 between the Company and Dakota Mining Corporation. (filed as exhibit 10.26 to the Company's annual report on Form 10-K for the year ended June 30, 1995 and incorporated herein by reference). 10.24 Amendment dated September 15, 1995 to the employment agreement made as of February 17, 1995 between the Company and Richard E. Blubaugh. (filed as exhibit 10.27 to the Company's annual report on Form 10-K for the year ended June 30, 1995 and incorporated herein by reference). 10.25 Employment Agreement dated June 1, 1995 between the Company and Gerald E. Davis (filed as exhibit 10.28 to the Company's annual report on Form 10-K for the year ended June 30, 1995 and incorporated herein by reference). 10.26 Amendment dated September 20, 1995 to the employment agreement dated June 1, 1995 between the Company and Gerald E. Davis (filed as exhibit 10.29 to the Company's annual report on Form 10-K for the year ended June 30, 1995 and incorporated herein by reference). 10.27 Underwriting Agreement dated as of October 25, 1995 by and among the Company, Yorkton Securities Inc. and First Marathon Securities Ltd. regarding the distribution of special Debenture warrants exercisable for 7% Exchangeable Debentures due October 25, 2000 of the Company (filed as Exhibit 99.1 to the Company's Registration Statement on Form S-3 (33-65165) as filed with the Commission on December 19, 1995 and incorporated herein by reference). 10.28 Granges Registration Agreement dated as of November 10, 1995 between the Company and Granges Inc. (filed as Exhibit 99.3 to the Company's Registration Statement on Form S-3 (33-65165) as filed with the Commission on December 19, 1995 and incorporated herein by reference). 10.29 Indemnification Agreement dated as of November 15, 1995 between the Company and Granges Inc. (filed as Exhibit 99.4 to the Company's Registration Statement on Form S-3 (33-65165) as 81 filed with the Commission on December 19, 1995 and incorporated herein by reference). 10.30 Option Agreement between the Company and Harvest Gold Corporation signed September 13, 1995 (filed as Exhibit 99.7 to the Company's Registration Statement on Form S-3 (33-65165) as filed with the Commission on December 19, 1995 and incorporated herein by reference). 10.31 Purchase and Sale Agreement dated October 25, 1995 between the Company and Independence Mining Company Inc. (filed as Exhibit 99.8 to the Company's Registration Statement on Form S-3 (33-65165) as filed with the Commission on December 19, 1995 and incorporated herein by reference). 10.32 Registration Rights Agreement dated October 25, 1995 between the Company and Independence Mining Company Inc. (filed as Exhibit 99.9 to the Company's Registration Statement on Form S-3 (33-65165) as filed with the Commission on December 19, 1995 and incorporated herein by reference). 10.33 Agreement between the Company and Brown & Root, Inc. dated October 23, 1995 (filed as Exhibit 99.10 to the Company's Registration Statement on Form S-3 (33-65165) as filed with the Commission on December 19, 1995 and incorporated herein by reference). 10.34 Mining Venture Agreement with Granges (US), Inc. dated September 29, 1995 (filed as Exhibit 10.37 to the Company's annual report on Form 10-K for the year ended December 31, 1995 and incorporated herein by reference). 10.35 Business combination agreement with MSV Resources Inc. dated March 5, 1996 (filed as Exhibit 10.38 to the Company's annual report on Form 10-K for the year ended December 31, 1995 and incorporated herein by reference). 10.36 Resignation Agreement and General Release dated June 21, 1996 between the Company and David J. Birkenshaw. 10.37 Support Letter dated August 16, 1996 to the Company from Granges Inc. and Da Capo Resources Ltd. 10.38 Amendment to Resignation Agreement and General Release dated October 1996 between the Company and David J. Birkenshaw. 10.39 Resignation Agreement and General Release dated November 5, 1996 between the Company and Gerald E. Davis. 10.40 Amendment to Resignation Agreement and General Release dated January 14, 1997 between the Company and Gerald E. Davis. 82 10.41 Employment Agreement dated December 1, 1996 between the Company and Gregg B. Shafter. 10.42 Letter Agreement dated January 6, 1997 regarding the withdrawal from the Gold Bar mining venture agreement between the Company and Granges (US), Inc. 21 Subsidiaries of the Company 23 Consent of Independent Auditors (b) The Registrant filed or amended reports on Form 8-K during the fourth quarter of 1996 as follows: (i) Report on Form 8-K dated October 12, 1996 containing the Company's news release with respect to completing the acquisition of Arisur and operating mines in Bolivia. (ii) Report on Form 8-K dated October 18, 1996 containing the Company's press release with respect to electing a Chairman and funding expansion programs of the Company's Bolivia operations. For purposes of complying with the amendments to the rules governing Form S-8 (effective July 13, 1990) under the Securities Act of 1933, the undersigned hereby undertakes as follows, which undertaking shall be incorporated by reference into the Company's Registration Statement on Form S-8 No. 33-18316 (filed on November 3, 1987, as amended by Post Effective Amendment No. 1 filed on December 15, 1987): 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 incurred or paid by the director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such 83 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 Act and will be governed by the final adjudication of such issue. _____________________________ Note concerning Exhibits: The Company will furnish copies of Exhibits to security holders of the Company upon request. The Company may charge a fee in connection with such a request, which will be limited to the Company's reasonable expenses in furnishing any such Exhibit. 84 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ATLAS CORPORATION By: /s/ Richard E. Blubaugh Name: Richard B. Blubaugh Title: Vice President Date: April 15, 1997 -------------- Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated. /s/ James R. Jensen Treasurer, Controller and Sec. - ------------------- (Principal Accounting Officer April 15, 1997 James R. Jensen and Principal Financial Officer) - -------------- /s/ Douglas R. Cook Director April 15, 1997 - ------------------- -------------- Douglas R. Cook /s/ James H. Dunnett Director April 15, 1997 - -------------------- -------------- James H. Dunnett /s/ David P. Hall Director April 15, 1997 - ----------------- -------------- David P. Hall /s/ C. Thomas Ogryzlo Director April 15, 1997 - --------------------- -------------- C. Thomas Ogryzlo /s/ H.R. Shipes Director April 15, 1997 - ---------------- -------------- H.R. Shipes /s/ Mario Caron Director April 15, 1997 - --------------- -------------- Mario Caron 85 ATLAS CORPORATION AND ITS SUBSIDIARIES INDEX TO FINANCIAL STATEMENTS AND SCHEDULE DECEMBER 31, 1996, DECEMBER 31, 1995, JUNE 30, 1995 AND 1994 Page ---- FINANCIAL STATEMENTS OF ATLAS CORPORATION Consolidated Statements of Operations for the Year Ended December 31, 1996, the Six Months Ended December 31, 1995 and for the Years Ended June 30, 1995 and 1994. 33 Consolidated Balance Sheets as of December 31, 1996 and 1995, and June 34 30, 1995. Consolidated Statements of Stockholder's Equity (Deficit) for the Year Ended December 31, 1996, the Six Months Ended December 31, 1995 and for the Years Ended June 30, 1995 and 1994. 35 Consolidated Statements of Cash Flow for the Year Ended December 31, 1996, the Six Months Ended December 31, 1995 and for the Years Ended June 30, 1995 and 1994. 36 Notes to Consolidated Financial Statements 37 - 61 Report of the Independent Auditors 62 SCHEDULES FOR THE YEAR ENDED DECEMBER 31, 1996, THE SIX MONTHS ENDED DECEMBER 31, 1995 AND FOR THE YEARS ENDED JUNE 30, 1995 AND 1994: VIII Valuation and Qualifying Accounts and Reserves 87
86 ATLAS CORPORATION AND SUBSIDIARIES SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES For the Year Ended December 31, 1996, the Six Months Ended December 31, 1995 and the Years Ended June 30, 1995, and 1994 (In thousands)
Column A Column B Column C Column D Column E Column F Additions -------------------------- Balance at Charged to Charge to Balance of Beginning Costs and Other (2) End of Classification Period Expenses Accounts Deductions Period - ------------------------------------------------------------------------------------------------------ YEAR ENDED DECEMBER 31, 1996 Provisions for loss from disposal of discontinued operations $ 5,608 $ -- $ 816(3) $ 2,913 $ 3,511 SIX MONTHS ENDED DECEMBER 31, 1995 Provisions for loss from disposal of discontinued operations 7,050 -- 1,032(3) (2,474) 5,608 YEAR ENDED JUNE 30, 1995 Provision for loss from disposal of discontinued operations 9,327 225 -- (2,502) 7,050 YEAR ENDED JUNE 30, 1994 Provision for loss from disposal of discontinued operations 11,689 -- 102(1) (2,464) 9,327
- --------------------- (1) Represents net proceeds from the disposition of assets. (2) Represents costs incurred. (3) Represents reimbursement of costs from the US Department of Energy under Title X. 87 SCHEDULE OF EXHIBITS Exhibit Number Exhibits ---------------------------------------------------------------------- 2.1 Agreement and Plan of Reorganization between the Company and the shareholders of Suramco Metals, Inc. dated October 7, 1996. 2.2 Stock Purchase Agreement between the Company and Arimetco International Inc. dated October 7, 1996. 2.3 Stock Purchase Agreement between the Company and Cornerstone Industrial Minerals Corporation dated December 13, 1996. 3.1 Restated Certificate of Incorporation of the Company, dated January 3, 1990 (filed as Exhibit 3.2 to the Company's quarterly report on Form 10-Q for the quarter ended December 31, 1989, and incorporated herein by reference). 3.2 By-Laws of the Company, as amended on July 12, 1995. (filed as an Exhibit 3.3 to the Company's annual report on Form 10-K for the year ended June 30, 1995 and incorporated herein by reference). 4.1 Term Loan Agreement dated August 15, 1994 between the Company and Gerald Metals, Inc.(filed as an Exhibit 10.22 to the Company's annual report on Form 10-K for the year ended June 30, 1994 and incorporated herein by reference). 4.2 Security Agreement dated August 15, 1994 between the Company and Gerald Metals, Inc.(filed as an Exhibit 10.23 to the Company's annual report on Form 10-K for the year ended June 30, 1994 and incorporated herein by reference). 4.3 Pledge Agreement dated August 15, 1995 between the Company and Gerald Metals, Inc. (filed as an Exhibit 10.24 to the Company's annual report on Form 10-K for the year ended June 30, 1994 and incorporated herein by reference). 4.4 Indenture dated as of November 10, 1995 between the Company and Chemical Bank as Trustee (filed as Exhibit 4.1 to the Company's Registration Statement on Form S-3 (33-65165) as filed with the Commission on December 19, 1995 under the Securities Act of 1933 and incorporated herein by reference). 88 4.5 Escrow and Pledge Agreement dated as of November 10, 1995 between the Company and Chemical Bank as Trustee and Chemical Bank as Escrow Agent (filed as Exhibit 4.2 to the Company's Registration Statement on Form S-3 (33-65165) as filed with the Commission on December 19, 1995 and incorporated herein by reference). 4.6 Special Warrant Indenture dated November 9, 1995 between the Company and The Montreal Trust Company of Canada containing terms and conditions governing the issue and exercise of special Debenture warrants exercisable for 7% Exchangeable Debentures due October 25, 2000 of the Company (filed as Exhibit 99.2 to the Company's Registration Statement on Form S-3 (33-65165) as filed with the Commission on December 19, 1995 and incorporated herein by reference). 10.1 Atlas Corporation Management Incentive Compensation Plan (filed as Exhibit 10.2 to the Company's annual report on Form 10-K (file no. 1-2714) for the fiscal year ended June 30, 1981 and incorporated herein by reference). 10.2 Form of Indemnity Agreement entered into between the Company and certain of its directors (filed as Exhibit 10.14 to the Company's annual report on Form 10-K for the fiscal year ended June 30, 1987 and incorporated herein by reference). 10.3 Amended and Restated Rights Agreement dated as of August 2, 1989 between the Company and Manufacturers Hanover Trust Company (filed as Exhibit 1 to the Company's current report on Form 8-K dated August 2, 1989 and incorporated herein by reference). 10.4 Long Term Incentive Plan of the Company dated November 1, 1989 (filed as Exhibit 10.28 to the Company's annual report on Form 10-K for the fiscal year ended June 30, 1989 and incorporated herein by reference). 10.5 Atlas Corporation Supplemental Executive Retirement Plan dated as of January 3, 1990 (filed as Exhibit 10.2 to the Company's quarterly report on Form 10-Q for the quarter ended March 31, 1990 and incorporated herein by reference). 10.6 Atlas Corporation Retirement Plan for Outside Directors dated April 4, 1990 (filed as Exhibit 10.3 to the Company's quarterly report on Form 10-Q for the quarter ended March 31, 1990 and incorporated herein by reference). 89 10.7 Restated Employment Agreement dated as of September 12, 1990 between the Company and Richard R. Weaver (filed as Exhibit 10.22 to the annual report on Form 10-K for the fiscal year ended June 30, 1990 and incorporated herein by reference). 10.8 Amendment No. 1, dated as of March 6, 1991, to the Amended and Restated Employment Agreement, dated as of September 12, 1990, between the Company and Richard R. Weaver (filed as Exhibit 10.1 to the Company's quarterly report on Form 10-Q for the quarter ended March 31, 1991 and incorporated herein by reference). 10.9 Atlas Corporation Annual Incentive Plan adopted by the Board of Directors of the Company on March 6, 1991(filed as Exhibit 10.20 to the Company's annual report on Form 10-K for the year ended June 30, 1991 and incorporated herein by reference). 10.10 Securities Purchase Agreement dated September 3, 1993 between the Company and Phoenix Financial Holdings Inc. (filed as Exhibit 2 to the Company's Report on Form 8-K filed on September 9, 1993 and incorporated herein by reference). 10.11 Amendment dated as of September 15, 1993 to the Amended and Restated Rights Agreement dated as of August 2, 1989 between the Company and Chemical Bank, as successor by merger with Manufacturers Trust Company (filed as Exhibit 10.25 to the Company's annual report on Form 10-K for the year ended June 30, 1993 and incorporated herein by reference). 10.12 Employment agreement made as of September 22, 1993, between the Company and David J. Birkenshaw (filed as Exhibit 10.1 to the Company's quarterly report on Form 10-Q for the quarter ended March 31, 1994 and incorporated herein by reference). 10.13 Amendment dated as of August 28, 1995 to the employment agreement made as of September 22, 1993, between the Company and David J. Birkenshaw (filed as exhibit 10.15 to the Company's annual report on Form 10-K for the year ended June 30, 1995 and incorporated herein by reference). 10.14 Share Purchase Agreement dated April 28, 1994 between the Company and M.I.M. (Canada) Inc. (filed as an Exhibit 10.18 to the Company's annual report on Form 10-K for the year ended June 30, 1994 and incorporated herein by reference). 90 10.15 Agreement dated May 10, 1994 between the Company and Granges Inc. (filed as an Exhibit 10.19 to the Company's annual report on Form 10-K for the year ended June 30, 1994 and incorporated herein by reference) 10.16 Registration Rights Agreement dated August 15, 1994, between the Company and First Marathon Securities Limited (filed as Exhibit 10.20 to the Company's annual report on Form 10-K for the year ended June 30, 1994 and incorporated herein by reference). 10.17 Indemnity Agreement dated August 15, 1995 between the Company and M.I.M. Holdings Limited (filed as an Exhibit 10.21 to the Company's annual report on Form 10-K for the year ended June 30, 1994 and incorporated herein by reference). 10.18 Second Amendment dated as of August 15, 1994 to the Amended and Restated Rights Agreement dated August 2, 1989 between the Company and Chemical Bank, as successor by merger with Manufacturers Hanover Trust Company (filed as Exhibit 10.1 to the Company's quarterly report on Form 10-Q for the quarter ended March 31, 1995 and incorporated herein by reference). 10.19 The Company's Long Term Incentive Plan, as amended dated February 17, 1995 (filed as Exhibit 10.2 to the Company's quarterly report on Form 10-Q for the quarter ended March 31, 1995 and incorporated herein by reference). 10.20 Employment Agreement made as of January 16, 1995 between the Company and Michael B. Richings (filed as Exhibit 10.3 to the Company's quarterly report on Form 10-Q for the quarter ended March 31, 1995 and incorporated herein by reference). 10.23 Atlas Subscription Agreement dated March 9, 1995 between the Company and Dakota Mining Corporation. (filed as exhibit 10.26 to 91 the Company's annual report on Form 10-K for the year ended June 30, 1995 and incorporated herein by reference). 10.24 Amendment dated September 15, 1995 to the employment agreement made as of February 17, 1995 between the Company and Richard E. Blubaugh. (filed as exhibit 10.27 to the Company's annual report on Form 10-K for the year ended June 30, 1995 and incorporated herein by reference). 10.25 Employment Agreement dated June 1, 1995 between the Company and Gerald E. Davis (filed as exhibit 10.28 to the Company's annual report on Form 10-K for the year ended June 30, 1995 and incorporated herein by reference). 10.26 Amendment dated September 20, 1995 to the employment agreement dated June 1, 1995 between the Company and Gerald E. Davis (filed as exhibit 10.29 to the Company's annual report on Form 10-K for the year ended June 30, 1995 and incorporated herein by reference). 10.27 Underwriting Agreement dated as of October 25, 1995 by and among the Company, Yorkton Securities Inc. and First Marathon Securities Ltd. regarding the distribution of special Debenture warrants exercisable for 7% Exchangeable Debentures due October 25, 2000 of the Company (filed as Exhibit 99.1 to the Company's Registration Statement on Form S-3 (33-65165) as filed with the Commission on December 19, 1995 and incorporated herein by reference). 10.28 Granges Registration Agreement dated as of November 10, 1995 between the Company and Granges Inc. (filed as Exhibit 99.3 to the Company's Registration Statement on Form S-3 (33- 65165) as filed with the Commission on December 19, 1995 and incorporated herein by reference). 10.29 Indemnification Agreement dated as of November 15, 1995 between the Company and Granges Inc. (filed as Exhibit 99.4 to the Company's Registration Statement on Form S-3 (33- 65165) as filed with the Commission on December 19, 1995 and incorporated herein by reference). 10.30 Option Agreement between the Company and Harvest Gold Corporation signed September 13, 1995 (filed as Exhibit 99.7 to the Company's Registration Statement on Form S-3 (33- 65165) as filed with the Commission on December 19, 1995 and incorporated 92 herein by reference). 10.31 Purchase and Sale Agreement dated October 25, 1995 between the Company and Independence Mining Company Inc. (filed as Exhibit 99.8 to the Company's Registration Statement on Form S-3 (33-65165) as filed with the Commission on December 19, 1995 and incorporated herein by reference). 10.32 Registration Rights Agreement dated October 25, 1995 between the Company and Independence Mining Company Inc. (filed as Exhibit 99.9 to the Company's Registration Statement on Form S-3 (33-65165) as filed with the Commission on December 19, 1995 and incorporated herein by reference). 10.33 Agreement between the Company and Brown & Root, Inc. dated October 23, 1995 (filed as Exhibit 99.10 to the Company's Registration Statement on Form S-3 (33-65165) as filed with the Commission on December 19, 1995 and incorporated herein by reference). 10.34 Mining Venture Agreement with Granges (US), Inc. dated September 29, 1995 (filed as Exhibit 10.37 to the Company's annual report on Form 10-K for the year ended December 31, 1995 and incorporated herein by reference). 10.35 Business combination agreement with MSV Resources Inc. dated March 5, 1996 (filed as Exhibit 10.38 to the Company's annual report on Form 10-K for the year ended December 31, 1995 and incorporated herein by reference). 10.36 Resignation Agreement and General Release dated June 21, 1996 between the Company and David J. Birkenshaw. 10.37 Support Letter dated August 16, 1996 to the Company from Granges Inc. and Da Capo Resources Ltd. 10.38 Amendment to Resignation Agreement and General Release dated October 1996 between the Company and David J. Birkenshaw. 10.39 Resignation Agreement and General Release dated November 5, 1996 between the Company and Gerald E. Davis. 10.40 Amendment to Resignation Agreement and General Release dated January 14, 1997 between the Company and Gerald E. Davis. 10.41 Employment Agreement dated December 1, 1996 between the Company and Gregg B. Shafter. 93 10.42 Letter Agreement dated January 6, 1997 regarding the withdrawal from the Gold Bar mining venture agreement between the Company and Granges (US), Inc. 21 Subsidiaries of the Company 23 Consent of Independent Auditors 94 EX-2.1 2 AGREEMENT & REORGANIZATION PLAN - 10-7-96 Exhibit 2.1 ATLAS EXECUTED COPY CORP AGREEMENT AND PLAN OF REORGANIZATION BY AND AMONG ATLAS CORPORATION AND THE SELLERS NAMED HEREIN DATED AS OF OCTOBER 7, 1996 TABLE OF CONTENTS -----------------
ARTICLE I Plan of Reorganization................................ 3 Section 1.1 Adoption of Plan...................................... 3 Section 1.2 Purchase and Sale..................................... 3 Section 1.3 Purchase Consideration................................ 3 Section 1.4 Other Deliveries...................................... 3 Section 1.5 Forgiveness of Indebtedness........................... 5 ARTICLE II Representations and Warranties of Sellers............. 5 Section 2.1 Execution of the Agreement; Binding Obligations....... 5 Section 2.2 Ownership of the Suramco Shares....................... 6 Section 2.3 Consents and Approvals; No Violations................. 6 Section 2.4 Ownership of the Arisur Shares and the Minera Andacaba Shares....................................... 7 Section 2.5 Accredited Investor Status............................ 8 Section 2.6 Arisur and Minera Andacaba Organization............... 9 Section 2.7 Financial Information................................. 9 Section 2.8 Absence of Undisclosed Liabilities.................... 10 Section 2.9 Absence of Adverse Changes............................ 10 Section 2.10 Taxes................................................. 11 Section 2.11 Title to Properties................................... 12 Section 2.12 Personal and Real Properties.......................... 12 Section 2.13 Environmental Matters................................. 13 Section 2.14 Notes, Accounts Receivable............................ 14 Section 2.15 Contracts, Etc........................................ 14 Section 2.16 Employees and Organizational Chart.................... 15 Section 2.17 Litigation............................................ 15 Section 2.18 Business Permits...................................... 16 Section 2.19 Insurance............................................. 16 Section 2.20 Compliance with Applicable Law........................ 17 Section 2.21 Bank Accounts; Powers of Attorney..................... 17 Section 2.22 Minute Books, etc..................................... 17 Section 2.23 Disclosure............................................ 18 Section 2.24 Brokers............................................... 18 ARTICLE III Representations and Warranties of Buyer............... 19 Section 3.1 Authorization; Binding Obligation..................... 19 Section 3.2 Ownership of the Atlas Shares......................... 19 Section 3.3 No Conflicts.......................................... 20 Section 3.4 SEC Reports and Financial Statements.................. 21 Section 3.5 Absence of Adverse Changes............................ 22 Section 3.6 Litigation............................................ 22
Section 3.7 Investment; Experience................................ 23 Section 3.8 Brokers............................................... 23 ARTICLE IV Covenants............................................. 24 Section 4.1 Directorship.......................................... 24 Section 4.2 Covenant Not to Compete............................... 24 Section 4.3 Transfer Taxes........................................ 25 Section 4.4 Best Efforts.......................................... 25 Section 4.5 Further Assurances.................................... 26 ARTICLE V Indemnification and Related Matters................... 26 Section 5.1 Indemnification by Sellers............................ 26 Section 5.2 Indemnification by Buyer.............................. 27 Section 5.3 Procedure............................................. 28 Section 5.4 Related Matters....................................... 30 ARTICLE VI Miscellaneous......................................... 30 Section 6.1 Headings.............................................. 30 Section 6.2 Amendment............................................. 30 Section 6.3 Notices............................................... 30 Section 6.4 Successors............................................ 32 Section 6.5 Entire Agreement...................................... 32 Section 6.6 Severability.......................................... 32 Section 6.7 Third Parties......................................... 32 Section 6.8 Counterparts.......................................... 33 Section 6.9 Governing Law......................................... 33
SCHEDULES Schedule A Shareholders of Suramco Metals, Inc. Schedule 2.8 Disclosed Liabilities Schedule 2.9 Certain Adverse Changes Schedule 2.10 Taxes Schedule 2.11 Title to Properties Schedule 2.12(i) Personal Property Schedule 2.12(ii) Real Property Schedule 2.15 Contracts, Etc. Schedule 2.16 Employees and Organizational Chart Schedule 2.18 Business Permits Schedule 2.19 Insurance Schedule 2.21 Bank Accounts; Powers of Attorney Schedule 3.5 Certain Adverse Changes Schedule 3.6 Litigation Schedule 4.2 Permitted Competition EXHIBITS Exhibit A Registration Rights Agreement Exhibit B Executive Consulting Agreement Exhibit C Report of Verna & Associates AGREEMENT AND PLAN OF REORGANIZATION ------------------------------------ This AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is made as of the seventh day of October, 1996, by and among Atlas Corporation, a Delaware corporation ("Buyer"), and the individuals listed in Schedule A hereto (each, a "Seller" and collectively, the "Sellers"). W I T N E S S E T H: ------------------- WHEREAS, Sellers are the record and beneficial owners of 5,100,000 common shares of Suramco Metals, Inc., a Nevada corporation ("Suramco"), constituting one hundred percent (100%) of the issued and outstanding shares of capital stock of Suramco (the "Suramco Shares"); and WHEREAS, Suramco is the record and beneficial owner of 500 ordinary shares, nominal value US$1.00 per share of Arisur, Inc., a Cayman Islands company registered and qualified to do business in the Republic of Bolivia ("Arisur"), constituting fifty percent (50%) of the issued and outstanding shares of Arisur (the "Arisur Shares"); and WHEREAS, Suramco is also the record and beneficial owner of 4,224 ordinary shares, nominal value 1 Boliviano per share, of Compania Minera Andacaba S.A., a Bolivian corporation ("Minera Andacaba"), constituting forty-eight (48%) percent of the issued and outstanding shares of Minera Andacaba (the "Minera Andacaba Shares"); and WHEREAS, Arisur and Arimetco International Inc., a Canadian corporation ("Arimetco"), respectively, are the record and beneficial owners of 4,488 and 88 ordinary shares, nominal value 1 Boliviano per share, of Minera Andacaba, constituting, respectively, fifty-one percent (51%) and one percent (1%) of the issued and outstanding shares of Minera Andacaba; and WHEREAS, pursuant to an agreement of even date herewith, Buyer is purchasing, and Arimetco is selling, (i) the remaining fifty percent (50%) of the issued and outstanding shares of Arisur, which are owned by Arimetco and (ii) the one percent (1%) of the issued and outstanding shares of Minera Andacaba; and WHEREAS, the parties hereto desire to enter into a plan qualifying as a tax-deferred reorganization under Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended (the "Code"), pursuant to which Sellers shall sell and transfer the Suramco Shares to Buyer and Buyer, solely in exchange for voting common stock of Buyer, shall purchase and acquire the Suramco Shares from Sellers, all upon the terms hereinafter set forth. NOW, THEREFORE, it is agreed as follows: 2 ARTICLE I Plan of Reorganization ---------------------- Section 1.1 Adoption of Plan. Buyer and Sellers hereby adopt a plan of reorganization in accordance with the provisions of Section 368(a)(1)(B) of the Code. The terms and conditions governing this Agreement are set forth below . Section 1.2 Purchase and Sale. On the terms and conditions set forth herein, Buyer hereby purchases from Sellers, and Sellers hereby sell, transfer and deliver to Buyer, all right, title and interest in, free of all Liens (as hereinafter defined), the Suramco Shares, for the purchase consideration set forth in Section 1.3 hereof. Section 1.3 Purchase Consideration. In consideration for the sale and transfer of the Suramco Shares, Buyer hereby issues to each Seller the number of shares of common stock listed opposite such Seller's name on Schedule A hereto, the aggregate amount of such shares being issued to Sellers being 4,000,000 common voting shares of Buyer (the "Atlas Shares"), receipt of which shares by Sellers is hereby acknowledged. Section 1.4 Other Deliveries. Simultaneously with the transfer of the Suramco Shares, the parties acknowledge that the following actions have been taken : (a) Registration Rights Agreement. Sellers and Buyer have entered into a Registration Rights Agreement substantially in the form of Exhibit A hereto; (b) Executive Consulting Agreement. Suramco Holdings, Inc. and Buyer have executed and delivered an Executive Consulting Agreement, substantially in the form set forth in Exhibit B hereto, pursuant to which Suramco Holdings, Inc. 3 shall provide certain consultancy services to Buyer and its subsidiaries and affiliates; (c) Resignations. All members of the Board of Directors of Suramco, all members of the Boards of Directors of Arisur and Minera Andacaba and all officers of Suramco, Arisur and Minera Andacaba have delivered their resignations dated the date hereof; (d) Good Standing. (i) Sellers have delivered to Buyer certificates of good standing (or, in the case of Minera Andacaba, a copy of its certificate of incorporation and by-laws, together with all amendments thereto, registered with the appropriate Registry of Commerce) in respect of Suramco and Arisur, including copies of their respective articles of incorporation certified by a notary public in Nevada and the Cayman Islands (as the case may be) as being a true and correct copy thereof and (ii) Buyer has delivered to Seller a certificate of good standing in respect of Buyer, including a copy of the certificate of incorporation of Buyer certified by the Secretary of State of Delaware; (e) Share Certificates and Stock Transfers. Each Seller has delivered to Buyer its respective certificate or certificates representing the Suramco Shares owned by such Seller, in each case together with stock transfers duly and validly endorsed for transfer on behalf of such Seller; and (f) Title and Geological Data. Sellers have delivered (or caused to be delivered) to Buyer originals of all title, geological, geochemical, geophysical and engineering data in the possession of Sellers, Suramco, Arisur or Minera Andacaba or under 4 their control, in respect of all properties owned, controlled or evaluated by Suramco, Arisur (including any branch thereof) and Minera Andacaba. Section 1.5 Forgiveness of Indebtedness. Pursuant to the purchase by Buyer of the Suramco Shares hereunder, that certain loan dated August 26, 1996 extended by Buyer to Suramco in the principal amount of US$200,000 shall hereby be deemed to constitute a capital contribution by Buyer to Suramco, and the pledge by Suramco to Buyer of the Arisur Shares as security for such loan is hereby deemed released and discharged. ARTICLE II Representations and Warranties of Sellers ----------------------------------------- Sellers jointly and severally make each of the representations and warranties set forth in this Article II below. For purposes of this Article II, all representations and warranties with respect to Arisur shall be deemed to apply with equal force to each branch of Arisur wherever established. Section 2.1 Execution of the Agreement; Binding Obligations. The execution and delivery by Sellers of this Agreement and any agreements related thereto and performance by Sellers of their obligations hereunder and thereunder have been duly and validly authorized. This Agreement and all such related agreements are the valid and binding obligations of, enforceable in accordance with their respective terms against, Sellers, except as enforcement thereof may be limited by bankruptcy, insolvency, conservatorship, receivership, liquidation, reorganization, moratorium or similar laws or general equitable principles. 5 Section 2.2 Ownership of the Suramco Shares. The Suramco Shares constitute one hundred percent (100%) of the issued and outstanding share capital of Suramco. Each Seller is the record and beneficial owner of the number of Suramco Shares listed opposite such Seller's name listed on Schedule A hereto, and each Seller owns such shares free and clear of all liens, mortgages, charges, security interests, defects in title, adverse claims, encumbrances, conflicting claims to ownership, any options, rights of first refusal or similar rights, or any restrictions or limitations on, or conflicting claims with respect to, the use, voting, transfer, receipt of income or other exercise of any attributes of ownership (collectively, "Liens"); as a result of the transfer of the Suramco Shares pursuant to this Agreement, Buyer has acquired good and marketable title to the Suramco Shares free and clear of all Liens; other than this Agreement, there are no agreements, arrangements or understandings relating to issuance, ownership, transfer or other rights with respect to the Suramco Shares; the Suramco Shares are duly and validly issued and outstanding, fully paid and non- assessable and have not been issued in violation of any preemptive or similar rights of stockholders; and there is no option, warrant, subscription, or other agreement to issue any security or other instrument convertible into or exchangeable for, or any other right, commitment, understanding or arrangement calling for the issuance of any additional shares of capital stock by Suramco. Suramco does not own any shares or other equity in any other corporation or entity other than the Arisur Shares and the Minera Andacaba Shares. Section 2.3 Consents and Approvals; No Violations. The execution and delivery of this Agreement and any agreement contemplated herein and the consummation of the transactions contemplated hereby and thereby will not: violate or conflict with any provision of the respective certificates of incorporation, by-laws or other constitutional documents of Suramco, 6 Arisur or Minera Andacaba; breach, violate or constitute an event of default (or an event which with the lapse of time or the giving of notice or both would constitute an event of default) under, give rise to any right of termination, cancellation, modification or acceleration under, or require any consent or the giving of any notice under, any note, bond, indenture, mortgage, security agreement, lease, license, franchise, permit, agreement or other instrument or obligation to which any Seller, Suramco, Arisur or Minera Andacaba is a party, or by which any Seller, Suramco, Arisur, Minera Andacaba or any of their respective properties or assets may be bound, or result in the creation of any Lien or other right of any third party of any kind whatsoever upon such properties or assets pursuant to the terms of any such instrument or obligation; violate or conflict with any law, statute, ordinance, code, rule, regulation, judgment, order, writ, injunction, decree or other instrument applicable to any Seller, Suramco, Arisur or Minera Andacaba or by which their respective properties or assets may be bound or require, on the part of said persons and entities, any filing with, or permit, license, exemption, consent, authorization or approval of, or the giving of any notice to, any governmental or regulatory agency other than such as has been obtained. Section 2.4 Ownership of the Arisur Shares and the Minera Andacaba Shares. The Arisur Shares constitute fifty percent (50%) the issued and outstanding share capital of Arisur and the Minera Andacaba Shares constitute forty-eight (48%) of the issued and outstanding share capital of Minera Andacaba; Suramco is the sole record and beneficial owner of the Arisur Shares and the Minera Andacaba Shares, in each case free and clear of all Liens; as a result of the transfer of the Arisur Shares and the Minera Andacaba Shares pursuant to this Agreement, Buyer has acquired good and marketable title to the Arisur Shares and the Minera Andacaba 7 Shares, in each case free and clear of all Liens; other than this Agreement, there are no agreements arrangements or understandings relating to issuance, ownership, transfer or other rights with respect to the Arisur Shares and the Minera Andacaba Shares; the Arisur Shares and the Minera Andacaba Shares are duly and validly issued and outstanding, fully paid and non-assessable and have not been issued in violation of any preemptive or similar rights of stock- holders; and there is no option, warrant, subscription or other agreement to issue, or any security or other instrument convertible into or exchangeable for, or any other right, commitment, understanding or arrangement calling for the issuance of, any additional shares of capital stock by Arisur or Minera Andacaba. Except for Arisur's 51% ownership interest in Minera Andacaba, neither Arisur nor Minera Andacaba owns any shares or other equity interest in any other corporation or entity. Section 2.5 Accredited Investor. Status. Each Seller hereby represents and warrants as of the date hereof that (i) it is an "Accredited Investor" or it is represented by a "Purchaser Representative" (as such terms are defined in Regulation D promulgated under the Securities Act of 1933, as amended (the "Securities Act")), and either alone or together with its Purchaser Representative, has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of an investment in the Atlas Shares being acquired by such Seller hereunder; (ii) it understands that the Atlas Shares being acquired by Sellers hereunder have not been registered under the Securities Act or the securities laws of any state, that therefore such Shares cannot be resold unless registered under the Securities Act or exempt from such registration, and that (other than as expressly contemplated by the Registration Rights Agreement) Buyer has not made any representations, warranties or covenants to it regarding the 8 registration of said shares or compliance with any exemption under the Securities Act or the securities laws of any state and that said shares have not been approved or disapproved by the Securities and Exchange Commission ("SEC") or any other federal or state agency; and (iii) it is acquiring the Atlas Shares for its own account, for investment purposes only and not with a view to the sale or distribution thereof. Section 2.6 Arisur and Minera Andacaba Organization. Arisur and Minera Andacaba are companies duly organized, validly existing and in good standing under the laws of the Cayman Islands and Bolivia, respectively, have all requisite power and authority to own, lease and operate the properties currently (or contemplated to be) owned, leased or operated by Arisur and Minera Andacaba (as the case may be) and to conduct their respective businesses as presently (or as contemplated to be) conducted. Section 2.7 Financial Information. Sellers have delivered to Buyer on or prior to the date of this Agreement (i) the audited consolidated balance sheets of each of Arisur and Minera Andacaba as at September 30, 1995, 1994 and 1993 and their respective audited statements of income and cash flow for the fiscal years then ended, including the notes thereto (collectively, the "Financial Statements"), in each case accompanied by the qualified reports of Verna & Associates in the form attached as Exhibit C hereto, and (ii) the unaudited balance sheet of Suramco as at August 30, 1996 and unaudited statements of income for the period then ended, and the unaudited balance sheets of Arisur and Minera Andacaba as at June 30, 1996 and the related unaudited statements of operations for the nine months then ended (the "Interim Financial Statements"). The Financial Statements and the Interim Financial Statements (x) have been prepared from the books and records of Suramco, Arisur and Minera Andacaba, (y) have been 9 prepared in accordance with generally accepted accounting principles consistently applied during such periods and (z) present fairly the respective financial conditions, results of operations and cash flows of said entities as at the dates, and for the periods, stated therein, subject, in the case of the Interim Financial Statements, to normal and customary year-end adjustments. Section 2.8 Absence of Undisclosed Liabilities. None of Suramco, Arisur or Minera Andacaba has liabilities or obligations of any nature, whether accrued, absolute, contingent or otherwise, except (i) as set forth in Schedule 2.8 and as set forth or reserved against in the Interim Financial Statements, (ii) liabilities or obligations incurred since June 30, 1996 in the ordinary course of business and consistent with past practice and which individually and in the aggregate are not material to Suramco, Arisur or Minera Andacaba. Section 2.9 Absence of Adverse Changes. Since September 30, 1995 Suramco, Arisur and Minera Andacaba each have carried on their respective businesses in the ordinary course and consistent with past practice. Except as set forth in Schedule 2.9 hereto, since September 30, 1995 there has not been: (i) any material adverse change in the respective conditions (financial or otherwise), assets, liabilities, operations, businesses or prospects of Suramco, Arisur or Minera Andacaba; (ii) any material damage, destruction or loss, whether or not covered by insurance, adversely affecting the respective assets or operations of Suramco, Arisur or Minera Andacaba; (iii) any sale, transfer, lease or other disposition of any of the respective material properties or assets of Suramco, Arisur or Minera Andacaba, other than sales from inventory in the ordinary course of business; (iv) any increase in the compensation payable or to become payable by Suramco, Arisur or Minera Andacaba to any of their respective officers, or any material increase in such compensation payable or to become payable to employees or agents, 10 or any bonus payment or arrangement made to, or to be made to or with, any thereof; (v) any labor trouble or any event or condition of any character materially and adversely affecting the respective operations, prospects or businesses of Suramco, Arisur or Minera Andacaba; (vi) any discharge or satisfaction of any Lien, or payment of any obligation or liability, absolute, accrued, contingent or otherwise, whether due or to become due, other than current liabilities shown on the Interim Financial Statements; (vii) any Lien on any of the respective properties or assets, tangible or intangible, of Suramco, Arisur or Minera Andacaba; or (viii) paid or declared any dividend or distribution in respect of shares of the respective capital stocks of Suramco, Arisur and Minera Andacaba or any repurchase or agreement to repurchase any such shares. Section 2.10 Taxes. Except as set forth in Schedule 2.10 hereto, Suramco, Arisur and Minera Andacaba have duly filed all tax returns required to be filed and have paid in full all taxes, interest, penalties, assessments and deficiencies due or claimed to be due from all taxing authorities having jurisdiction over such entities (including taxes on properties, income, franchises, licenses, sales, payrolls and social security). The provisions for income and other taxes payable reflected in the respective consolidated balance sheets of said entities as of the respective Financial Statements and in their respective Interim Financial Statements make adequate provision for all accrued and unpaid taxes of Suramco, Arisur and Minera Andacaba as at said dates, whether or not disputed, and said entities have made adequate provision for such taxes on their respective books and records. There are no tax liens (other than liens for taxes which are not yet due and payable) on any of the respective properties of Suramco, Arisur or Minera Andacaba, no tax claims asserted, no basis for any such claim and no agreements with 11 or received from any governmental or regulatory agency pertaining to the tax treatment of Suramco, Arisur or Minera Andacaba or any of their interests in any of their respective properties. Section 2.11 Title to Properties. All of the properties and assets of every kind and description which are reflected on the consolidated balance sheets of Suramco at August 30, 1996 and, in respect of Arisur and Minera Andacaba, as at June 30, 1996 (other than inventory transferred by Suramco, Arisur or Minera Andacaba in the ordinary course of business), is either (i) owned absolutely by Suramco, Arisur or Minera Andacaba, as the case may be, free and clear of Liens, except as set forth in Schedule 2.11 hereto, or (ii) leased or otherwise used or exploited under concessions or similar rights by Suramco, Arisur or Minera Andacaba, pursuant to leases, concessions or similar rights listed in Schedule 2.11 hereto. All leases, concessions or rights set forth in Schedule 2.11 are valid, binding and in full force and effect. None of Suramco, Arisur or Minera Andacaba nor, to the best knowledge of Sellers, any other party thereto, is in default thereunder, and no event has occurred which, with notice and/or lapse of time, would constitute a default by Suramco, Arisur or Minera Andacaba, or to the best knowledge of Sellers, any other party thereto. Suramco, Arisur and Minera Andacaba have all easements and rights, including easements for power lines, water lines, roadways and other access, necessary to conduct their respective businesses as currently conducted. Section 2.12 Personal and Real Properties. (i) Schedule 2.12(i) hereto correctly sets forth an accurate list of all tangible personal property which was owned of record or beneficially by each of Suramco, Arisur and Minera Andacaba as at September 30, 1996, together with any material changes since such date, including, without limitation, all vehicles (motor or other) and 12 all machinery and equipment; all such vehicles, machinery and equipment and other personal property are in good operating condition and repair, reasonable wear and tear excepted, and, to the best of Sellers' knowledge after reasonable inquiry, the operation thereof conforms with all applicable regulations and other laws. All such personal property is owned by Suramco, Arisur or Minera Andacaba, as the case may be, free and clear of any Lien, except as set forth in Schedule 2.12(i) hereto. (ii) Schedule 2.12(ii) hereto correctly sets forth an accurate list and summary description of all real property which was owned of record or beneficially by each of Suramco, Arisur and Minera Andacaba as of the date hereof, all installations, sites and places of business located thereon are, in all material respects, in good operating condition and repair, reasonable wear and tear excepted, and, to the knowledge of Sellers' after reasonable inquiry, conform with all applicable ordinances and existing and proposed regulations and building, zoning and other laws. Section 2.13 Environmental Matters. There are no conditions, occurrences or activities at or on any of the properties described in Schedule 2.12(ii) hereto, or any other real property in which Suramco, Arisur or Minera Andacaba holds any interest, which constitute a violation of, or give rise to liability under, any applicable laws, regulations, ordinances or orders providing for health and safety or protection of the environment, or that may give rise to an obligation to contribute to the remediation of any contamination of air, water or land (collectively, "Environmental Laws"). Such properties have not in the past, and to the knowledge of Sellers, are not now subject to any investigation, assessment, or study by any person or governmental or regulatory agency related to potential or actual violations or 13 enforcement of any Environmental Law. Suramco, Arisur and Minera Andacaba are in compliance with all notification and reporting requirements of any Environmental Laws applicable to their respective properties and operations. Section 2.14 Notes, Accounts Receivable. All receivables of Suramco, Arisur and Minera Andacaba (including accounts receivable, loans receivable, notes and advances) have arisen from bona fide transactions in the ordinary course of business and consistent with past practice; are owned by said entities free and clear of any Lien and are accurately reflected on the Interim Financial Statements or with respect to receivables created after June 30, 1996, are accurately and fairly reflected in the respective books and records of Suramco, Arisur and Minera Andacaba and, except for any reserve set forth in the Interim Financial Statements (or with respect to receivables created after June 30, 1996 in the books and records of Arisur and Minera Andacaba), are fully collectible. Section 2.15 Contracts, Etc. Schedule 2.15 hereto correctly sets forth all requirements, arrangements or understandings, whether written or oral, in respect of any indebtedness between Suramco, Arisur or Minera Andacaba and any of their respective Affiliates (as such term is defined in Rule 405 of the Securities Act) and all such indebtedness has been paid in full or otherwise cancelled and all such arrangements, understandings or agreements have been terminated as of the date hereof. All material contracts and commitments of Suramco, Arisur and Minera Andacaba as of the date hereof are valid and in full force and effect. None of said parties nor, to the best knowledge of Sellers, any other party thereto, is in default thereunder, and no event has occurred which, with notice and/or lapse of time, would constitute a default by Suramco, Arisur or Minera Andacaba, or to the best knowledge of Sellers, any other party 14 thereto. Schedule 2.15 hereto lists (except to the extent listed in other schedules to this Agreement) all such contracts and commitments as of June 30, 1996, and there have been no material changes thereto since such date. Section 2.16 Employees and Organizational Chart. Schedule 2.16 hereto contains a true and complete list as of June 30, 1996 of (i) all of the employees of each of Suramco, Arisur and Minera Andacaba, whether full-time or part-time and consultants engaged by such entities and the compensation or other benefits payable to each, together with an organizational chart, as of such date, indicating names, titles and responsibilities of their respective management and supervisory personnel, and (ii) all employment or collective bargaining or consulting agreements in respect of employees of Suramco, Arisur and Minera Andacaba, and there has been no material change in the information set forth in such Schedule through the date of this Agreement. There are no disputes currently subject to any grievance procedure, arbitration or litigation, and none of Suramco, Arisur or Minera Andacaba, nor, to the best knowledge of Sellers, any other party thereto, is in default thereunder, and no event has occurred which with notice and/or lapse of time, would constitute a default by Sellers, or, to the best knowledge of Sellers, any other party thereto. There are no strikes, lockouts, work stoppage, slowdowns, jurisdictional disputes occurring or, to Sellers' knowledge after due inquiry, threatened in connection with the properties or operations of Suramco, Arisur or Minera Andacaba. Section 2.17 Litigation. There is no Litigation (as hereinafter defined) (i) by or before any court, governmental body or other regulatory or administrative agency or commission, domestic or foreign, or any arbitration pending, or, to the knowledge of Sellers after due inquiry, threatened, to which Sellers, Suramco, Arisur or Minera Andacaba is a party or by 15 which any of their respective assets or properties may be bound or affected, which, if adversely decided would have a material adverse effect on Suramco, Arisur or Minera Andacaba; and (ii) by or before any court, governmental or regulatory agency, or arbitrator, in each case pending or, to the knowledge of Sellers, threatened, which seeks to restrain, enjoin, prevent the consummation of, or otherwise challenge this Agreement or any of the transactions contemplated hereby. For purposes of this Agreement, "Litigation" shall mean any action, suit, claim, proceeding, investigation or written governmental inquiry. Section 2.18 Business Permits. Suramco, Arisur and Minera Andacaba have, to the best of Sellers' knowledge after due inquiry, secured all permits, licenses or other authorizations necessary from all relevant governmental or regulatory agencies to operate their respective businesses as presently conducted or as presently proposed to be conducted. All such permits, licenses or other authorizations are listed in Schedule 2.18 hereto. Sellers shall cooperate with Buyer (at no cost to Buyer) to obtain any additional, or to modify any existing, permits or authorizations necessary in connection with the transactions contemplated hereby. Section 2.19 Insurance. Suramco, Arisur and Minera Andacaba each are adequately insured with reputable insurers in respect of their respective businesses, operations and the properties and assets related thereto, against risk normally insured against by companies in similar lines of business. Schedule 2.19 hereto lists all fire, theft, casualty, liability, business disruption, products liability and other insurance policies insuring such businesses, operations and the properties and assets related thereto, specifying with respect to each such policy the name of the insurer, the risk insured against, the limits of coverage, the deductible amount (if 16 any), the premium rate and the date through which coverage will continue by virtue of premiums already paid. Section 2.20 Compliance with Applicable Law. Suramco, Arisur and Minera Andacaba have, to the best of Sellers' knowledge after due inquiry, complied with all applicable laws and regulations of domestic and foreign governments and all agencies thereof which affect the respective businesses of Suramco, Arisur and Minera Andacaba or any owned, used or leased properties employed in such businesses and to which Suramco, Arisur or Minera Andacaba may be subject, including, without limitation, safety, health and environmental laws and regulations, and no claims have been filed against any of said entities alleging a violation of any such laws or regulations. Section 2.21 Bank Accounts; Powers of Attorney. Schedule 2.21 hereto sets forth a complete and correct list of showing (i) all bank accounts of each of Suramco, Arisur and Minera Andacaba, together with, in respect of each such account, the account number, the names of all signatories thereof and the authorized powers of each such signatory; and (ii) the names of all persons holding powers of attorney from Suramco, Arisur and Minera Andacaba and a summary statement of the terms thereof. Section 2.22 Minute Books, etc. The respective minute books, stock certificates and stock ledgers of Suramco, Arisur and Minera Andacaba are complete and correct in all material respects and fairly reflect the conduct of said entities' respective businesses. The minute books of Suramco, Arisur and Minera Andacaba contain accurate and complete records of all meetings or written consents to action of the respective Boards of Directors and stockholders of Suramco, 17 Arisur and Minera Andacaba and accurately reflect all corporate actions of said entities which are required by law to be passed upon by said Boards of Directors or stockholders. Section 2.23 Disclosure. No representation or warranty by Sellers (or any of them severally) contained in this Agreement and no statement contained in any Schedule, certificate or other document or instrument delivered by Sellers or to be delivered pursuant to this Agreement contains or will contain any untrue statement of a material fact or omits or will omit to state any material fact necessary to make the statements contained therein not misleading. The foregoing representations and warranties are made by Sellers with the knowledge and expectation that Buyer is placing complete reliance thereon in entering into, and performing its obligations under, this Agreement, and the same shall not be affected in any respect whatsoever by any investigation heretofore or hereafter conducted by or on behalf of Buyer, whether in contemplation of or pursuant to this Agreement or otherwise. For the avoidance of confusion, it is hereby stipulated that with respect to any oral agreement or commitment disclosed in any Schedule, only those terms of such oral agreement expressly set forth in such Schedule shall be deemed to have been disclosed. Section 2.24 Brokers. No broker or finder has acted on behalf of Seller in connection with this Agreement or any transactions provided for hereby and Sellers agree to indemnify Buyer for any broker's or finder's fees that may be payable in connection with any action taken by any or all Sellers. 18 ARTICLE III Representations and Warranties of Buyer --------------------------------------- Buyer represents and warrants to Sellers as follows: Section 3.1 Authorization; Binding Obligation. Buyer is a company duly organized, validly existing and in good standing under the laws of the State of Delaware; it has all requisite corporate power and authority to own, operate and lease the properties and assets it now owns, operates and leases and to carry on its business as presently (or as contemplated to be) conducted; it has the requisite power to execute, deliver and perform this Agreement and any documents contemplated herein to which it is or will be a party and to consummate the transactions contemplated hereby and thereby; all action on its part necessary to approve or to authorize the execution, delivery and performance of this Agreement and any such documents to which it is party and the consummation of the transactions contemplated hereby and thereby has been duly taken; this Agreement is the valid and binding obligation of, enforceable in accordance with its terms against, Buyer, except as enforcement thereof may be limited by bankruptcy, insolvency, conservatorship, receivership, liquidation, reorganization, moratorium or similar laws or general equitable principles; and any related document thereto is, or upon execution and delivery thereof will be, a valid and binding obligation of, enforceable in accordance with its terms against, it, except as enforcement thereof may be limited by bankruptcy, insolvency, conservatorship, receivership, liquidation, reorganization, moratorium or similar laws or general equitable principles. Section 3.2 Ownership of the Atlas Shares. The authorized capital stock of Buyer consists of 50,000,000 shares of common stock, of which 20,092,270 are issued and outstanding 19 on the date hereof, and 1,000,000 shares of preferred stock, par value US$1.00 per share, of which no shares are outstanding on the date hereof. The Atlas Shares are duly authorized, validly issued, fully paid and non-assessable. There are no agreements or commitments to which Buyer is a party or by which it is bound for the redemption or repurchase of any shares of its capital stock. Except as identified in the Exchange Act Filings (as hereinafter defined) or in Schedule 3.2, there are no outstanding options, warrants, subscription or other rights to purchase, or securities convertible into or exchangeable for, shares of capital stock of Buyer and (except as otherwise contemplated by this Agreement, the parties hereto or as set forth in the Exchange Act Filings) there are no agreements or commitments to which Buyer is a party or by which it is bound pursuant to which Buyer is or may be bound to issue additional shares of its capital stock. Section 3.3 No Conflicts. Neither the execution, delivery or performance by Buyer of this Agreement and any related agreement, nor the consummation by it of the transactions contemplated hereby or thereby, will: (a) constitute an event of default under, permit the termination of, give rise to a right to accelerate any indebtedness under, any contract, lease, or governmental permit to which Buyer is a party, is maker or guarantor, or by which it is bound; (b) violate any order, writ, injunction, decree, judgment, ruling or law applicable to Buyer or by which Buyer or any of its properties is bound; or (c) require any consent, approval or authorization of any governmental or regulatory agency; other than for such of the foregoing matters which, or the absence of which, would not, individually or when taken together with all other such related matters, have a material adverse effect on Buyer. 20 Section 3.4 SEC Reports and Financial Statements. Buyer has heretofore delivered to Sellers complete and correct copies of all reports and other filings filed by Buyer with the SEC pursuant to the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (the "Exchange Act") since January 1, 1995 (such reports and other filings collectively referred to herein as the "Exchange Act Filings"). As of their respective dates, the Exchange Act Filings did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The audited consolidated financial statements of Buyer included in the Exchange Act Filings (i) were prepared from the books and records of Buyer and its consolidated subsidiaries, (ii) were prepared in accordance with generally accepted accounting principles applied on a consistent basis (except as may be indicated therein or in the notes or schedules thereto) and (iii) present fairly the financial position of Buyer and its consolidated subsidiaries as at the dates thereof and the results of their operations and cash flows (or changes in financial positions, for the fiscal year ended December 31, 1995 and earlier years) for the periods then ended. The unaudited financial statements included in the Exchange Act Filings (the "Buyer Interim Financial Statements") comply in all material respects with the published rules and regulations of the SEC with respect thereto; and such unaudited financial statements (i) were prepared from the books and records of Buyer and its consolidated subsidiaries, (ii) were prepared in accordance with generally accepted accounting principles, except as otherwise permitted under the Exchange Act and the rules and regulations thereunder, on a consistent basis (except as may be indicated therein or in the notes or schedules thereto) and (iii) present fairly the financial position of Buyer and its 21 consolidated subsidiaries as at the dates thereof and the results of their operations and cash flows (or changes in financial condition) for the periods then ended, subject to normal year-end adjustments and any other adjustments described therein or in the notes or schedules thereto. Section 3.5 Absence of Adverse Changes. Since December 31, 1995 Buyer has carried on its business in the ordinary course and consistent with past practice. Except as set forth in Schedule 3.5 hereto, since December 31, 1995 there has not been: (i) any material adverse change in the condition (financial or otherwise), assets, liabilities, operations, business or prospects of Buyer; (ii) any material damage, destruction or loss, whether or not covered by insurance, adversely affecting the assets or operations of Buyer; (iii) any sale, transfer, lease or other disposition of any of the properties or assets of Buyer, other than sales from inventory in the ordinary course of business; (iv) any increase in the compensation payable or to become payable by Buyer to any of its officers or any material increase in such compensation payable or to become payable to employees or agents, or any bonus payment or arrangement made to, or to be made to or with, any thereof; (v) any labor trouble or any event or condition of any character materially and adversely affecting the operations, prospects or business of Buyer; (vi) any discharge or satisfaction of any Lien, or payment of any obligation or liability, absolute, accrued, contingent or otherwise, whether due or to become due, other than current liabilities shown on the Buyer Interim Financial Statements; (vii) any Lien on any of its properties or assets, tangible or intangible; or (viii) paid or declared any dividend or distribution in respect of shares of its capital stock or any repurchase or agreement to repurchase any such shares. Section 3.6 Litigation. Except as set forth in Schedule 3.6 hereto and in the Exchange Act Filings, there is no Litigation (as hereinafter defined) (i) by or before any court, 22 governmental body or other regulatory or administrative agency or commission, domestic or foreign, or any arbitration pending, or, to the knowledge of Buyer after due inquiry, threatened, to which Buyer is a party or by which any of its assets or properties may be bound or affected, which, if adversely decided would have a material adverse effect on Buyer; and (ii) by or before any court, governmental or regulatory agency, or arbitrator, in each case pending or, to the knowledge of Buyer, threatened, which seeks to restrain, enjoin, prevent the consummation of, or otherwise challenge this Agreement or any of the transactions contemplated hereby. For purposes of this Agreement, "Litigation" shall mean any action, suit, claim, proceeding, investigation or written governmental inquiry. Section 3.7 Investment; Experience. Buyer is purchasing the Suramco Shares for investment only and not with a view to resale or distribution thereof. Buyer is experienced in the acquisition and management of businesses similar to those of Suramco, Arisur and Minera Andacaba. Section 3.8 Brokers. No broker or finder has been employed which is entitled to a fee by reason of the transactions contemplated hereby other than Endeavour Financial Inc., whose fees shall be borne in their entity by Buyer. 23 ARTICLE IV Covenants ---------- Section 4.1 Directorship. Buyer agrees to use its best efforts to cause its Board of Directors, promptly following and effective as of the date of this Agreement, to increase the Board of Directors from seven to eight members and, to fill the vacancy created by such increase, to elect H.R. Shipes as a Class I Director. Through the date of Buyer's next Annual Meeting of Stockholders at which Class I Directors are elected, in the event that Mr. Shipes is unable to attend any meeting or meetings of Buyer's Board of Directors, the Board of Directors agrees to invite J.A. McKinney to attend such meeting on Mr. Shipes' behalf. Section 4.2 Covenant Not to Compete. Except as specifically contemplated and referred to in Schedule 4.2 hereto or the consulting agreement referred to in Section 1.4(b) hereof, each Seller and each affiliate of said Seller (as such term is defined in Rule 405 of the Securities Act) agrees that, for a period of three (3) years after the date of this Agreement, Sellers and each such affiliate of Sellers shall not, directly or indirectly, own (other than not more than 2% of the issued and outstanding capital stock of any company whose shares are traded on a national stock exchange or quoted on NASDAQ in the United States or which are traded on the facilities of a Designated Offshore Securities Market (as defined in Rule 902 under the Securities Act)), manage, operate, work for, consult with or otherwise provide services to, or otherwise be affiliated with, any corporation, person or entity engaged in the mining and/or milling or other processing of base or precious metals in Bolivia. Buyer acknowledges and agrees that this prohibition shall not apply to any direct or indirect ownership, operation or other 24 affiliation that Sellers may now or hereafter have with the San Jose mine located in the Province of Cercado, Department of Oruro, Bolivia. Section 4.3 Transfer Taxes. Sellers shall be responsible for, and agree to pay promptly when and if due, all transfer, stamp, use or any other similar taxes payable in any jurisdiction in connection with or arising from the sale and transfer of the Suramco Shares to Buyer hereunder. Section 4.4 Best Efforts. ------------ (a) Upon the terms hereof, each of the parties hereto agrees to take or cause to be taken, all action and to do, or cause to be done, all things necessary, proper or advisable to consummate and make effective the transactions contemplated by this Agreement and any related documents thereto. (b) Except as otherwise expressly provided for in this Agreement, Buyer and Sellers shall use their best efforts to obtain at the earliest practicable date all consents required for the consummation of the transactions contemplated by this Agreement and any related documents thereto, including without limitation all consents, permissions and approvals required by the relevant authorities in the State of Nevada, the Cayman Islands and Bolivia. (c) Buyer and Sellers shall provide such information and cooperate fully with each other hereto in making such applications, filings and other submissions which may be required or reasonably necessary in order to obtain all approvals, consents, authorizations and waivers as may be required from any governmental or regulatory agency and others in connection with the transactions contemplated by this Agreement and any related documents thereto. 25 (d) Except as otherwise expressly provided for in this Agreement, Buyer and Sellers shall promptly take all actions necessary to make each filing, including, without limitation, any supplemental filing, which any of them may be required to make with any governmental or regulatory agency as a condition to or consequence of the consummation of the transactions contemplated by this Agreement or any related document thereto. Section 4.5 Further Assurances. Subject to the terms and conditions of this Agreement, each of the parties hereto agrees to use all reasonable efforts to take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective the transactions contemplated by this Agreement. In case at any time after the date of this Agreement any further action is necessary or desirable to carry out the purposes hereof, Sellers and the proper officers of Buyer, Suramco, Arisur and Minera Andacaba shall take all such action. ARTICLE V Indemnification and Related Matters ----------------------------------- Section 5.1 Indemnification by Sellers. Sellers jointly and severally agree to indemnify and hold harmless Buyer and its directors, officers and employees against and in respect of any and all loss, liability, obligation, damage, deficiency or expense resulting from (a) any misrepresentation, breach of any warranty or non-fulfillment of any agreement of Sellers under the terms of this Agreement or in any agreement or certification furnished pursuant hereto; (b) any claim that Suramco has not fully paid all consideration payable in connection with its acquisition of the Arisur Shares and the Minera Andacaba Shares, or that further consideration 26 is payable by Suramco in respect of such Shares; or that Suramco is not the sole record and beneficial owner of such Shares, in each case free and clear of all Liens, or that as a result of the transfer of the Arisur Shares and the Minera Andacaba Shares pursuant to this Agreement, Buyer has not acquired good and marketable title to such Shares free and clear of all Liens; and (c) any actions, suits, proceedings, demands, judgments, costs and reasonable legal, investigatory and other expenses incident to any of the foregoing (regardless of whether, in the case of third party actions, suits or proceedings, Sellers may have a meritorious defense). For the avoidance of confusion, it is hereby stipulated that any information provided by Sellers to Buyer in connection with the circumstances surrounding the acquisition of the Arisur Shares from Curt and Ana Maria Goldschmidt shall not relieve Sellers of their obligation under this Section 5 to indemnify Buyer in full in respect of any and all loss, liability, obligation, damage, deficiency or expense in respect of any claim that Suramco has not fully paid all consideration payable in connection with its acquisition of the Arisur Shares, or that further consideration is payable by Suramco in respect of such Shares. Section 5.2 Indemnification by Buyer. Buyer agrees to indemnify and hold harmless Sellers against and in respect of any and all loss, liability, obligation, damage, deficiency or expense resulting from (a) any misrepresentation, breach of any warranty or non-fulfillment of any agreement of Buyer under the terms of this Agreement or in any statement or certification furnished pursuant hereto; and (b) any actions, suits, proceedings, demands, judgments, costs and reasonable legal, investigatory and other expenses incident to any of the foregoing (regardless of whether, in the case of third party actions, suits or proceedings, Buyer may have a meritorious defense). 27 Section 5.3 Procedure. Promptly after receipt by any person or persons (as the case may be) that is or are entitled to indemnification under this Section 5 (each, an "Indemnified Party") of notice of the commencement of any action in respect of which the Indemnified Party will seek indemnification hereunder, the Indemnified Party shall notify the person obligated to provide such indemnification (the "Indemnifying Party") thereof in writing, but any failure to so notify the Indemnifying Party shall not relieve the Indemnifying Party from any liability that it may have to the Indemnified Party under this Section 5, except to the extent that the Indemnifying Party is prejudiced by the failure to give such notice. The Indemnifying Party shall be entitled to participate in the defense of such action and to assume control of such defense with counsel reasonably satisfactory to such Indemnified Party; provided, however, that: (a) the Indemnified Party shall be entitled to participate in the defense of such claim and to employ counsel at its own expense to assist in the handling of such claim; (b) the Indemnifying Party shall obtain the prior written approval of the Indemnified Party before entering into any settlement of such claim or ceasing to defend against such claim, if pursuant to or as a result of such settlement or cessation, injunctive or other equitable relief would be imposed against the Indemnified Party or the Indemnified Party would be adversely affected thereby; (c) the Indemnifying Party shall not consent to the entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by each claimant or plaintiff to the Indemnified Party of a release from all liability in respect of such claim; and 28 (d) the Indemnifying Party shall not be entitled to control the defense of any claim unless within 15 days after receipt of such written notice from the Indemnified Party the Indemnifying Party confirms in writing its responsibility for such defense and reasonably demonstrates that it will be able to pay the full amount of the reasonably expected liability in connection with any such claim. After written notice by the Indemnifying Party to the Indemnified Party of its election to assume control of the defense of any such action in accordance with the foregoing, (i) the Indemnifying Party shall not be liable to such Indemnified Party hereunder for any expenses subsequently incurred by such Indemnified Party in connection with the defense thereof, and (ii) as long as the Indemnifying Party is reasonably contesting such action in good faith, the Indemnified Party shall not admit any liability with respect to, or settle, compromise or discharge the claim underlying such action without the Indemnifying Party's prior written consent. If the Indemnifying Party elects to so participate in or assume the defense of any such action, the Indemnified Party shall cooperate with the Indemnifying Party in connection with the defense. If the Indemnifying Party does not assume control of the defense of such claim as provided in this Section 5, the Indemnified Party shall have the right to defend and/or settle such claim in such manner as it may deem appropriate at the cost and expense of the Indemnifying Party, and the Indemnifying Party will promptly reimburse the Indemnified Party therefor in accordance with this Section 5. The reimbursement of fees, costs and expenses required by this Section 5 shall be made by periodic payments during the course of the investigation or defense, as and when bills are received or expenses incurred. 29 Section 5.4 Related Matters. (a) Without prejudice to any remedies available to it by law or otherwise, Buyer shall have the right to offset against any payments or other consideration payable by it to any Seller or Sellers after the date of this Agreement pursuant to the terms hereof any claims that Buyer may have against such Seller or Sellers, for any breach of any representations, warranties or undertakings. (b) In the event that an Indemnifying Party shall be obligated to indemnify the Indemnified Party pursuant to this Section 5, an Indemnifying Party shall, upon payment of such indemnity in full, be subrogated to all rights of the Indemnified Party with respect to the claims to which such indemnification relates. In the event that an Indemnified Party becomes entitled to any indemnification from an Indemnifying Party, such indemnification shall be made in cash upon demand. Sellers shall not be entitled to any contribution or reimbursement from Suramco, Arisur or Minera Andacaba with respect to payments made by Sellers under this Section 5. ARTICLE VI Miscellaneous ------------- Section 6.1 Headings. The descriptive headings of the several Articles and Sections of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. Section 6.2 Amendment. No modification or amendment of this Agreement shall be effective for any purpose unless in writing and signed by the parties hereto. Section 6.3 Notices. Any notices other communications required or permitted hereunder shall be given in writing and shall be delivered or sent by facsimile, next day delivery 30 service, personal delivery or certified or registered mail, postage prepaid, addressed as follows: If to Buyer, to: Atlas Corporation 370 17th Street Suite 3050 Denver, Colorado 80202 Attn: President Fax: (303) 629-2445 Copy to: Coudert Brothers 1114 Avenue of the Americas New York, New York 10036 Attn: Jeffrey E. Cohen, Esq. Fax: (212) 626-4120 If to Sellers to: c/o Mr. H.R. Shipes 335 North Wilmot Road, Suite 400 Tucson, AZ 85711 Fax: (520) 748-2494 Copy to: Hecker, Phillips & Zeeb 405 West Franklin Street Tucson, AZ 85701 Attn: Steven W. Phillips, Esq. Fax: (520) 620-0405 or to such other address or telefax number as shall be furnished in writing by such party, and any such notice or communication shall be effective and be deemed to have been given as of the date so dispatched, delivered or mailed; provided, that, any notice or communications changing any of the addresses set forth above shall be effective and deemed giving only upon its receipt. 31 Section 6.4 Successors. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns, but neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto without the prior written consent of the other party. Section 6.5 Entire Agreement. Exhibits and Schedules referred to herein, whether or not attached hereto, are hereby incorporated in and made a part of this Agreement as if set forth in full herein. This Agreement constitutes the sole and entire agreement among the parties hereto with respect to the subject matter hereof and supersedes all prior arrangements or understandings with respect thereto; and there are no express or implied restrictions, agreements, promises, representations, warranties, covenants or undertakings other than those expressly set forth herein. Section 6.6 Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Section 6.7 Third Parties. Except as specifically set forth or referred to herein, nothing herein expressed or implied is intended or shall be construed to confer upon or give any entity, other than the parties hereto and their successors and permitted assigns, any rights or remedies under or by reason of this Agreement. 32 Section 6.8 Counterparts. This Agreement may be executed in two or more counterparts all of which shall be considered one and the same agreement and each of which shall be deemed an original. Section 6.9 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to principles of conflicts of law thereunder. IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be duly executed as of the day and year first above written. H.R AND EILEEN A. SHIPES ATLAS CORPORATION /s/ H.R. Shipes By: /s/ Gerald E. Davis - ----------------------------------- --------------------------------- H.R. Shipes Name: Gerald E. Davis Title: President /s/ Eileen A. Shipes - ----------------------------------- Eileen A. Shipes JOHN A. AND LYNETTE R. McKINNEY /s/ John A. McKinney - ----------------------------------- John A. McKinney /s/ Lynette R. McKinney - ----------------------------------- Lynette R. McKinney 33 RAYMOND S. AND ROCHELLE M. BIRCH /s/ Raymond S. Birch - -------------------------------------------- Raymond S. Birch /s/ Rochelle M. Birch - -------------------------------------------- Rochelle M. Birch HERBERT E. DUNHAM AND ANA M. DUNHAM /s/ Herbert E. Dunham - -------------------------------------------- Herbert E. Dunham /s/ Ana M. Dunham - -------------------------------------------- Ana M. Dunham H.R. SHIPES AS CUSTODIAN FOR DANIELLE N. SHIPES UNDER THE ARIZONA UNIFORM TRANSFERS TO MINORS ACT /s/ H.R. Shipes - -------------------------------------------- Danielle N. Shipes JOHN A. McKINNEY AS CUSTODIAN FOR ALEXANDRIA MCKINNEY UNDER THE ARIZONA UNIFORM TRANSFERS TO MINORS ACT /s/ John A. McKinney - -------------------------------------------- Alexandria McKinney 34 RAYMOND S. BIRCH AS CUSTODIAN FOR JUSTIN S. BIRCH UNDER THE ARIZONA UNIFORM TRANSFERS TO MINORS ACT /s/ Raymond S. Birch - -------------------------------------------- JOHN A. McKINNEY AS CUSTODIAN FOR ASHLEY McKINNEY UNDER THE ARIZONA UNIFORM TRANSFERS TO MINORS ACT /s/ John A. McKinney - -------------------------------------------- Ashley McKinney RAYMOND S. BIRCH AS CUSTODIAN FOR TYLER BIRCH UNDER THE ARIZONA UNIFORM TRANSFERS TO MINORS ACT /s/ Raymond S. Birch - -------------------------------------------- H. EDWARD DUNHAM /s/ H. Edward Dunham - -------------------------------------------- P. BRIAN DUNHAM /s/ P. Brian Dunham - -------------------------------------------- RACHEL A. DUNHAM /s/ Rachel A. Dunham - -------------------------------------------- ELIZABETH M. DUNHAM /s/ Elizabeth M. Dunham - -------------------------------------------- 35 EX-2.2 3 STOCK PURCHASE AGREEMENT DATED 10-7-96 Exhibit 2.2 ATLAS EXECUTION COPY CORP STOCK PURCHASE AGREEMENT BY AND BETWEEN ATLAS CORPORATION AND ARIMETCO INTERNATIONAL INC. DATED AS OF OCTOBER 7, 1996 TABLE OF CONTENTS -----------------
ARTICLE I Purchase and Sale of Shares............................. 2 Section 1.1 Purchase and Sale.................................. 2 Section 1.2 Purchase Consideration............................. 2 Section 1.3 Other Deliveries................................... 3 ARTICLE II Representations and Warranties of Seller................ 5 Section 2.1 Authorization; Binding Obligation.................. 5 Section 2.2 Ownership of the Arisur Shares..................... 5 Section 2.3 Ownership of the Minera Andacaba Shares............ 6 Section 2.4 Consents and Approvals; No Violations.............. 7 Section 2.5 Arisur and Minera Andacaba Organization............ 8 Section 2.6 Financial Information.............................. 8 Section 2.7 Absence of Undisclosed Liabilities................. 9 Section 2.8 Absence of Adverse Changes......................... 9 Section 2.9 Taxes.............................................. 10 Section 2.10 Title to Properties................................ 10 Section 2.11 Personal and Real Properties....................... 11 Section 2.12 Environmental Matters.............................. 12 Section 2.13 Notes, Accounts Receivable......................... 12 Section 2.14 Contracts, Etc..................................... 13 Section 2.15 Employees and Organizational Chart................. 13 Section 2.16 Litigation......................................... 14 Section 2.17 Business Permits................................... 14 Section 2.18 Insurance.......................................... 15 Section 2.20 Bank Accounts; Powers of Attorney.................. 15 Section 2.21 Minute Books, etc.................................. 16 Section 2.22 Disclosure......................................... 16 Section 2.23 Brokers............................................ 16 ARTICLE III Representations and Warranties of Buyer................. 17 Section 3.1 Authorization; Binding Obligation.................. 17 Section 3.2 No Conflicts....................................... 18 Section 3.3 Investment; Experience............................. 18 Section 3.4 Brokers............................................ 18 ARTICLE IV Covenants.......................................... 19 Section 4.1 Covenant Not to Compete............................ 19 Section 4.2 Transfer Taxes..................................... 19 Section 4.3 Best Efforts....................................... 19 Section 4.4 Further Assurances................................. 20
ARTICLE V Indemnification and Related Matters...................... 21 Section 5.1 Indemnification by Seller......................... 21 Section 5.2 Indemnification by Buyer.......................... 21 Section 5.3 Procedure......................................... 21 Section 5.4 Related Matters................................... 23 ARTICLE VI Miscellaneous..................................... 24 Section 6.1 Headings.......................................... 24 Section 6.2 Amendment......................................... 24 Section 6.3 Notices........................................... 24 Section 6.4 Successors........................................ 25 Section 6.5 Entire Agreement.................................. 26 Section 6.6 Severability...................................... 26 Section 6.7 Third Parties..................................... 26 Section 6.8 Counterparts...................................... 26 Section 6.9 Governing Law..................................... 26
SCHEDULES Schedule 2.7 Disclosed Liabilities Schedule 2.8 Certain Adverse Changes Schedule 2.9 Taxes Schedule 2.10 Title to Properties Schedule 2.11(i) Personal Properties Schedule 2.11(ii) Real Properties Schedule 2.14 Contracts, Etc. Schedule 2.15 Employees and Organizational Chart Schedule 2.17 Business Permits Schedule 2.18 Insurance Schedule 2.20 Bank Accounts; Powers of Attorney Schedule 4.1 Permitted Competition EXHIBITS Exhibit A Note Exhibit B Report of Verna & Associates STOCK PURCHASE AGREEMENT ------------------------ This STOCK PURCHASE AGREEMENT ("Agreement") is made as of the seventh day of October, 1996, by and between Atlas Corporation, a Delaware corporation ("Buyer") and Arimetco International Inc., Canadian corporation ("Seller"). W I T N E S S E T H: ------------------- WHEREAS, Seller is the record and beneficial owner of 500 ordinary shares, nominal value US$1.00 per share of Arisur, Inc. a Cayman Islands company ("Arisur"), constituting fifty percent (50%) of the issued and outstanding shares of Arisur (the "Arisur Shares"); and WHEREAS, Seller is also the record and beneficial owner of 88 ordinary shares, nominal value 1 Boliviano per share, of Compania Minera Andacaba S.A., a Bolivian corporation ("Minera Andacaba"), constituting one percent (1%) of the issued and outstanding shares of Minera Andacaba (the "Minera Andacaba Shares"); and WHEREAS, pursuant to an agreement of even date herewith, Buyer is purchasing all of the issued and outstanding shares of Suramco Metals, Inc., a Nevada corporation ("Suramco"), which is the record and beneficial owner of the remaining fifty percent (50%) of the issued and outstanding shares of Arisur; and WHEREAS, Arisur and Suramco, respectively, are the record and beneficial owners of 4,488 and 4,224 ordinary shares, nominal value 1 Boliviano per share, of Minera Andacaba, constituting, respectively, fifty-one percent (51%) and forty-eight percent (48%) of the issued and outstanding shares of Minera Andacaba; and WHEREAS, pursuant to this Agreement, Seller desires to sell and transfer the Arisur Shares and the Minera Andacaba Shares to Buyer and Buyer desires to purchase and acquire the Arisur Shares and the Minera Andacaba Shares from Seller, all upon the terms hereinafter set forth. NOW, THEREFORE, it is agreed as follows: ARTICLE I Purchase and Sale of Shares --------------------------- Section 1.1 Purchase and Sale. On the terms set forth herein, Buyer hereby purchases from Seller, and Seller hereby sells, transfers and delivers to Buyer, all right, title and interest in, free of all Liens (as hereinafter defined), (i) the Arisur Shares (which are hereby deemed released from the pledge dated August 1, 1996 in favor of Buyer) and (ii) the Minera Andacaba Shares, for the purchase consideration set forth in Section 1.2 hereof. Section 1.2 Purchase Consideration. The purchase consideration (the "Purchase Consideration") for the Arisur Shares and the Minera Andacaba Shares shall consist of the sum of the following: (a) Buyer hereby confirms receipt of all accrued and unpaid interest due and payable under that certain Loan Agreement, dated as of August 1, 1996, by and between Buyer and Seller, and hereby releases and discharges Seller from its obligation to repay Buyer the aggregate principal amount of US$1,800,000 under such Loan 2 Agreement, and further releases all security and guaranties supporting such principal amount; (b) Buyer has hereby paid to Seller US$300,000, receipt of which by Seller is hereby acknowledged; and (c) On October 31, 1996, (i) Seller shall cancel and return to Buyer the note referred to in Section 1.3(f) below and (ii) Buyer shall pay to Seller the US$900,000 principal amount of such note in immediately available funds by wire transfer to a bank account specified by Seller. Section 1.3 Other Deliveries. Simultaneously with the transfer of the Arisur Shares and the Minera Andacaba Shares, the parties acknowledge that the following actions have been taken: (a) Resignations. All members of the Board of Directors of Arisur and all officers of Arisur have delivered their resignations dated the date hereof; (b) Board Resolutions. Seller has delivered to Buyer a certificate of the Secretary of Seller certifying the resolutions of the Board of Directors of Seller approving the execution and performance of this Agreement and the transactions contemplated hereby; (c) Good Standing. Seller has delivered to Buyer a certificate of good standing (or, in the case of Minera Andacaba, a copy of its certificate of incorporation and by-laws, together with all amendments thereto, registered with the appropriate Registry of Commerce) in respect of Arisur, including a copy of its articles of 3 incorporation certified by a notary public in the Cayman Islands as being a true and correct copy thereof; (d) Title and Geological Data. Seller has delivered, or caused to be delivered, to Buyer copies of all title, geological, geochemical, geophysical and engineering data in the possession of Seller, Arisur or Minera Andacaba or under their control, in respect of all properties owned, controlled or evaluated by Arisur (including any branch thereof) and Minera Andacaba; (e) Share Certificates and Stock Transfers. Seller has delivered to Buyer the certificates representing the Arisur Shares and the Minera Andacaba Shares, in each case together with stock transfers duly and validly endorsed for transfer on behalf of Seller; and (f) Note. Buyer has delivered to Seller a note, in the form annexed as Exhibit A hereto, representing the obligation of Buyer to pay on October 31, 1996 Seller (without interest thereon other than in the case of default, in which case the rate shall be the rate stipulated for defaults under that certain Loan Agreement, dated as of August 1, 1996, by and between Buyer and Seller), the amount referred to in Section 1.2(c) above. 4 ARTICLE II Representations and Warranties of Seller ---------------------------------------- Seller represents and warrants to Buyer as follows (all representations and warranties with respect to Arisur being deemed to apply with equal force to each branch of Arisur established in Bolivia or elsewhere): Section 2.1 Authorization; Binding Obligation. Seller is a company duly organized, validly existing and in good standing under the laws of Canada; it has all requisite corporate power and authority to own, operate and lease the properties and assets it now owns, operates and leases and to carry on its businesses as presently (or as contemplated to be) conducted; it has the requisite power and authority to execute, deliver and perform this Agreement and any agreements contemplated herein to which it is or will be party and to consummate the transactions contemplated hereby and thereby; all action on its part necessary to approve or to authorize the execution, delivery and performance of this Agreement and any such documents to which it is party and the consummation of the transactions contemplated hereby and thereby has been duly taken; and this Agreement is the valid and binding obligation of, enforceable in accordance with its terms against, it, except as enforcement thereof may be limited by bankruptcy, insolvency, conservatorship, receivership, liquidation, reorganization, moratorium or similar laws or general equitable principles. Section 2.2 Ownership of the Arisur Shares. The Arisur Shares constitute fifty percent (50%) the issued and outstanding share capital of Arisur; Seller is the sole record and beneficial owner of the Arisur Shares, free and clear of all liens, mortgages, charges, security interests, defects in title, adverse claims, encumbrances, conflicting claims to ownership, any options, 5 rights of first refusal or similar rights, or any restrictions or limitations on, or conflicting claims with respect to, the use, voting, transfer, receipt of income or other exercise of any attributes of ownership (collectively, "Liens"); as a result of the transfer of the Arisur Shares pursuant to this Agreement, Buyer has acquired good and marketable title to the Arisur Shares free and clear of all Liens; other than this Agreement, there are no agreements arrangements or understandings relating to issuance, ownership, transfer or other rights with respect to the Arisur Shares; the Arisur Shares are duly and validly issued and outstanding, fully paid and non-assessable and have not been issued in violation of any preemptive or similar rights of stockholders; and there is no option, warrant, subscription, or other agreement to issue any security or other instrument convertible into or exchangeable for, or any other right, commitment, understanding or arrangement calling for the issuance of any additional shares of capital stock by Arisur. Arisur does not own any shares or other equity in any other corporation or entity other than Minera Andacaba. Section 2.3 Ownership of the Minera Andacaba Shares. The Minera Andacaba Shares constitute one percent (1%) the issued and outstanding share capital of Minera Andacaba; Seller is the sole record and beneficial owner of the Minera Andacaba Shares, free and clear of all Liens; as a result of the transfer of the Minera Andacaba Shares pursuant to this Agreement, Buyer has acquired good and marketable title to the Minera Andacaba Shares free and clear of all Liens; other than this Agreement, there are no agreements arrangements or understandings relating to issuance, ownership, transfer or other rights with respect to the Minera Andacaba Shares; the Minera Andacaba Shares are duly and validly issued and outstanding, fully paid and non-assessable and have not been issued in violation of any preemptive or similar rights of 6 stockholders; and there is no option, warrant, subscription, or other agreement to issue, or any security or other instrument convertible into or exchangeable for, or any other right, commitment, understanding or arrangement calling for the issuance of, any additional shares of capital stock by Minera Andacaba. Minera Andacaba does not own any shares or other equity in any other corporation or entity. Section 2.4 Consents and Approvals; No Violations. The execution and delivery of this Agreement and any agreement contemplated herein and the consummation of the transactions contemplated hereby and thereby will not: violate or conflict with any provision of the respective certificates of incorporation, by-laws or other constitutional documents of Seller, Arisur or Minera Andacaba; breach, violate or constitute an event of default (or an event which with the lapse of time or the giving of notice or both would constitute an event of default) under, give rise to any right of termination, cancellation, modification or acceleration under, or require any consent or the giving of any notice under, any note, bond, indenture, mortgage, security agreement, lease, license, franchise, permit, agreement or other instrument or obligation to which Seller, Arisur or Minera Andacaba is a party, or by which Seller, Arisur or Minera Andacaba or any of their respective properties or assets may be bound, or result in the creation of any Lien or other right of any third party of any kind whatsoever upon such properties or assets pursuant to the terms of any such instrument or obligation; violate or conflict with any law, statute, ordinance, code, rule, regulation, judgment, order, writ, injunction, decree or other instrument applicable to Seller, Arisur or Minera Andacaba or by which their respective properties or assets may be bound or require, on the part of said entities, any filing with, or 7 permit, license, exemption, consent, authorization or approval of, or the giving of any notice to, any governmental or regulatory agency other than such as has been obtained. Section 2.5 Arisur and Minera Andacaba Organization. Arisur and Minera Andacaba are companies duly organized, validly existing and in good standing under the laws of the Cayman Islands and Bolivia, respectively, have all requisite power and authority to own, lease and operate the properties currently (or contemplated to be) owned, leased or operated by Arisur and Minera Andacaba (as the case may be) and to conduct their respective businesses as presently (or contemplated to be) conducted. Section 2.6 Financial Information. Seller has delivered to Buyer on or prior to the date of this Agreement (i) the audited consolidated balance sheets of each of Arisur and Minera Andacaba as at September 30, 1995, 1994 and 1993 and their respective audited statements of income and cash flow for the fiscal years then ended, including the notes thereto (collectively, the "Financial Statements"), in each case accompanied by the qualified report of Verna & Associates in the form attached as Exhibit B hereto, and (ii) the unaudited balance sheets of Arisur and Minera Andacaba as at June 30, 1996 and the related unaudited statements of operations for the nine months then ended (the "Interim Financial Statements"). The Financial Statements and the Interim Financial Statements (x) have been prepared from the books and records of Arisur and Minera Andacaba, (y) have been prepared in accordance with generally accepted accounting principles consistently applied during such periods and (z) present fairly the respective financial conditions, results of operations and cash flows of Arisur and Minera Andacaba as at the dates, and for the periods, stated therein, subject, in the case of the Interim Financial Statements, to normal and customary year-end adjustments. 8 Section 2.7 Absence of Undisclosed Liabilities. Neither Arisur nor Minera Andacaba has any liabilities or obligations of any nature, whether accrued, absolute, contingent or otherwise, except (i) as set forth in Schedule 2.7 and as set forth or reserved against in the Interim Financial Statements, (ii) liabilities or obligations incurred since June 30, 1996 in the ordinary course of business and consistent with past practice and which individually and in the aggregate are not material to Arisur or Minera Andacaba. Section 2.8 Absence of Adverse Changes. Since September 30, 1995, Arisur and Minera Andacaba have carried on their respective businesses in the ordinary course and consistent with past practice. Except as set forth in Schedule 2.8 hereto, since September 30, 1995 there has not been: (i) any material adverse change in the respective conditions (financial or otherwise), assets, liabilities, operations, businesses or prospects of Arisur or Minera Andacaba; (ii) any material damage, destruction or loss, whether or not covered by insurance, adversely affecting the respective assets or operations of Arisur or Minera Andacaba; (iii) any sale, transfer, lease or other disposition of any of the respective material properties or assets of Arisur or Minera Andacaba, other than sales from inventory in the ordinary course of business; (iv) any increase in the compensation payable or to become payable by Arisur or Minera Andacaba to any of their respective officers, or any increase in such compensation payable or to become payable to employees or agents, or any bonus payment or arrangement made to, or to be made to or with, any thereof; (v) any labor trouble or any event or condition of any character materially and adversely affecting the operations, prospects or businesses of Arisur or Minera Andacaba; (vi) any discharge or satisfaction of any Lien, or payment of any obligation or liability, absolute, accrued, contingent or otherwise, whether due or to become due, other 9 than current liabilities shown on the Interim Financial Statements; (vii) any Lien imposed on any of the respective properties or assets, tangible or intangible, of Arisur or Minera Andacaba; or (viii) paid or declared any dividend or distribution in respect of shares of the respective capital stocks of Arisur and Minera Andacaba or any repurchase or agreement to repurchase any such shares. Section 2.9 Taxes. Except as set forth in Schedule 2.9 hereto, Arisur and Minera Andacaba have duly filed all tax returns required to be filed and have paid in full all taxes, interest, penalties, assessments and deficiencies due or claimed to be due from all taxing authorities having jurisdiction over Arisur and Minera Andacaba (including taxes on properties, income, franchises, licenses, sales, payrolls and social security). The provisions for income and other taxes payable reflected in the respective consolidated balance sheets of Arisur and Minera Andacaba as of the respective Financial Statements and in the Interim Financial Statements make adequate provision for all accrued and unpaid taxes of Arisur and Minera Andacaba as at said dates, whether or not disputed, and Arisur and Minera Andacaba have made adequate provision for such taxes on their respective books and records. There are no tax liens (other than liens for taxes which are not yet due and payable) on any of the respective properties of Arisur or Minera Andacaba, no tax claims asserted, no basis for any such claim and no agreements with or received from any governmental or regulatory agency pertaining to the tax treatment of Arisur or Minera Andacaba or any of their interests in any of their respective properties. Section 2.10 Title to Properties. All of the property and assets of every kind and description which are reflected on the consolidated balance sheets of Arisur and Minera Andacaba as at June 30, 1996 (other than inventory transferred by Arisur or Minera Andacaba 10 in the ordinary course of business), is either (i) owned absolutely by Arisur or Minera Andacaba, as the case may be, free and clear of Liens, except as set forth in Schedule 2.10 hereto, or (ii) leased or otherwise used or exploited under concessions or similar rights by Arisur or Minera Andacaba, pursuant to leases, concessions or similar rights listed in Schedule 2.10 hereto. All leases, concessions or rights set forth in Schedule 2.10 are valid, binding and in full force and effect. Neither Arisur or Minera Andacaba nor, to the best knowledge of Seller, any other party thereto, is in default thereunder, and no event has occurred which, with notice and/or lapse of time, would constitute a default by Arisur or Minera Andacaba, or to the best knowledge of Seller, any other party thereto. Arisur and Minera Andacaba have all easements and rights, including easements for power lines, water lines, roadways and other access, necessary to conduct their respective businesses as currently conducted. Section 2.11 Personal and Real Properties. (i) Schedule 2.11(i) hereto correctly sets forth an accurate list of all tangible personal property which was owned of record or beneficially by Arisur and Minera Andacaba as at September 30, 1996, together with any material changes since such date, including, without limitation, all vehicles (motor or other) and all machinery and equipment; all such vehicles, machinery and equipment and other personal property are in good operating condition and repair, reasonable wear and tear excepted, and, to the best of Seller's knowledge after reasonable inquiry, the operation thereof conforms with all applicable regulations and other laws. All such personal property is owned by Arisur or Minera Andacaba, as the case may be, free and clear of any Lien, except as set forth in Schedule 2.11(i) hereto. (ii) Schedule 2.11(ii) hereto correctly sets forth an accurate list and summary description of all real property which was owned of record or beneficially by Arisur and Minera 11 Andacaba as of the date hereof; all installations, sites and places of business located thereon are, in all material respects, in good operating condition and repair, reasonable wear and tear excepted, and, to the knowledge of Seller after reasonable inquiry, conform with all applicable ordinances and existing and proposed regulations and building, zoning and other laws. Section 2.12 Environmental Matters: There are no conditions, occurrences or activities at or on any of the properties described in Schedule 2.11(ii) hereto, or any other real property in which either Arisur or Minera Andacaba holds any interest, which constitute a violation of, or give rise to liability under, any applicable laws, regulations, ordinances or orders providing for health and safety or protection of the environment, or that may give rise to an obligation to contribute to the remediation of any contamination of air, water or land (collectively, "Environmental Laws"). Such properties have not in the past, and to the knowledge of Seller after due inquiry as of the date hereof, are not now subject to any investigation, assessment, or study by any person or governmental or regulatory agency related to potential or actual violation or enforcement of any Environmental Law. Arisur and Minera Andacaba are in compliance with all notification and reporting requirements of any Environmental Laws applicable to their respective operations and properties. Section 2.13 Notes, Accounts Receivable. All receivables of Arisur and Minera Andacaba (including accounts receivable, loans receivable, notes and advances) have arisen from bona fide transactions in the ordinary course of business and consistent with past practice; are owned by Arisur and Minera Andacaba free and clear of any Liens and are accurately reflected on the Interim Financial Statements or with respect to receivables created after June 30, 1996, are accurately and fairly reflected in the books and records of Arisur and Minera Andacaba and, 12 except for any reserve set forth in the Interim Financial Statements (or with respect to receivables created after June 30, 1996 in the books and records of Arisur and Minera Andacaba), are fully collectible. Section 2.14 Contracts, Etc. Schedule 2.14 hereto correctly sets forth all agreements, arrangements or understandings, whether written or oral, in respect of any indebtedness between Arisur or Minera Andacaba and any of their respective Affiliates (as such term is defined in Rule 405 of the Securities Act of 1933, as amended (the "Securities Act")) and all such indebtedness has been paid in full or otherwise cancelled and all such arrangements, understandings or agreements have been terminated as of the date hereof. All material contracts and commitments of Arisur and Minera Andacaba, as of the date hereof, are valid and in full force and effect. Neither Arisur nor Minera Andacaba nor, to the best knowledge of Seller, any other party thereto, is in default thereunder, and no event has occurred which, with notice and/or lapse of time, would constitute a default by Arisur or Minera Andacaba, or to the best knowledge of Seller, any other party thereto. Schedule 2.14 hereto lists (except to the extent listed in other schedules to this Agreement) all such contracts and commitments as of June 30, 1996, and there have been no material changes thereto since such date. Section 2.15 Employees and Organizational Chart. Schedule 2.15 hereto contains a true and complete list as of June 30, 1996 of (i) all of the employees of Arisur and Minera Andacaba, whether full-time or part-time and consultants engaged by such entities and the compensation or other benefits payable to each, together with an organizational chart, as of such date, indicating names, titles and responsibilities of their respective management and supervisory personnel, and (ii) all employment or collective bargaining or consulting agreements in respect 13 of employees of Arisur and Minera Andacaba, and there has been no material change in the information set forth in such Schedule through the date of this Agreement. There are no disputes currently subject to any grievance procedure, arbitration or litigation, and neither Arisur or Minera Andacaba, nor, to the best knowledge of Seller, any other party thereto, is in default thereunder, and no event has occurred which with notice and/or lapse of time, would constitute a default by Seller, or, to the best knowledge of Seller, any other party thereto. There are no strikes, lockouts, work stoppages, slowdowns, jurisdictional disputes occurring or, to Seller's knowledge after due inquiry, threatened in connection with the properties or operations of Arisur or Minera Andacaba. Section 2.16 Litigation. There is no Litigation (as hereinafter defined) (i) by or before any court, governmental body or other regulatory or administrative agency or commission, domestic or foreign, or any arbitration pending, or, to the knowledge of Seller after due inquiry, threatened, to which Seller, Arisur or Minera Andacaba is a party or by which any of their respective assets or properties may be bound or affected, which, if adversely decided would have a material adverse effect on Arisur or Minera Andacaba; and (ii) by or before any court, governmental agency, or arbitrator, in each case pending or, to the knowledge of Seller after due inquiry, threatened, which seeks to restrain, enjoin, prevent the consummation of, or otherwise challenge this Agreement or any of the transactions contemplated hereby. For purposes of this Agreement, "Litigation" shall mean any action, suit, claim, proceeding, investigation or written governmental inquiry. Section 2.17 Business Permits. Arisur and Minera Andacaba have, to the best of Seller's knowledge after due inquiry, secured all permits, licenses or other authorizations necessary from 14 all relevant governmental or regulatory agencies to operate their respective businesses as presently conducted or as presently proposed to be conducted. All such permits, licenses or other authorizations are listed in Schedule 2.17 hereto. Seller shall cooperate with Buyer (at no cost to Buyer) to obtain any additional, or to modify any existing, permits or authorizations necessary in connection with the transactions contemplated hereby. Section 2.18 Insurance. Arisur and Minera Andacaba are adequately insured with reputable insurers in respect of their respective businesses, operations and the properties and assets related thereto, against risk normally insured against by companies in similar lines of business. Schedule 2.18 hereto lists all fire, theft, casualty, liability, business disruption, products liability and other insurance policies insuring such businesses, operations, properties and assets, specifying with respect to each such policy the name of the insurer, the risk insured against, the limits of coverage, the deductible amount (if any), the premium rate and the date through which coverage will continue by virtue of premiums already paid. Section 2.19 Compliance with Applicable Law. Arisur and Minera Andacaba have, to the knowledge of Seller after due inquiry, complied with all applicable laws and regulations of domestic and foreign governments and all agencies thereof which affect the respective businesses of Arisur and Minera Andacaba or any owned, used or leased properties employed in such businesses and to which said entities may be subject, including, without limitation, safety, health and environmental laws and regulations, and no claims have been filed against Arisur or Minera Andacaba alleging a violation of any such laws or regulations. Section 2.20 Bank Accounts; Powers of Attorney. Schedule 2.20 hereto sets forth a complete and correct list of showing (i) all bank accounts of Arisur and Minera Andacaba, 15 together with, in respect of each such account, the account number, the names of all signatories thereof and the authorized powers of each such signatory; and (ii) the names of all persons holding powers of attorney from Arisur and Minera Andacaba and a summary statement of the terms thereof. Section 2.21 Minute Books, etc. The respective minute books, stock certificates and stock ledgers of Arisur and Minera Andacaba have been delivered to Buyer and are complete and correct in all material respects and fairly reflect the conduct of the respective businesses of Arisur and Minera Andacaba. The minute books of Arisur and Minera Andacaba contain accurate and complete records of all meetings or written consents to action of their respective Boards of Directors and stockholders and accurately reflect all corporate actions of Arisur and Minera Andacaba which are required by law to be passed upon by such Boards of Directors or stockholders. Section 2.22 Disclosure. No representation or warranty by Seller contained in this Agreement and no statement contained in any Schedule, certificate or other document or instrument delivered or to be delivered by Seller pursuant to this Agreement contains or will contain any untrue statement of a material fact or omits or will omit to state any material fact necessary to make the statements contained therein not misleading. For the avoidance of confusion, it is hereby stipulated that with respect to any oral agreement or commitment disclosed in any Schedule, only those terms of such oral agreement expressly set forth in such Schedule shall be deemed to have been disclosed. Section 2.23 Brokers. No broker or finder has acted on behalf of Seller in connection with this Agreement or any transactions provided for hereby and Seller agrees to indemnify 16 Buyer for any broker's or finder's fees that may be payable in connection with any action taken by Seller. ARTICLE III Representations and Warranties of Buyer --------------------------------------- Buyer represents and warrants to Seller as follows: Section 3.1 Authorization; Binding Obligation. Buyer is a company duly organized, validly existing and in good standing under the laws of the State of Delaware; it has all requisite corporate power and authority to own, operate and lease the properties and assets it now owns, operates and leases and to carry on its business as presently (or as contemplated to be) conducted; it has the requisite power to execute, deliver and perform this Agreement and any documents contemplated herein to which it is or will be a party and to consummate the transactions contemplated hereby and thereby; all action on its part necessary to approve or to authorize the execution, delivery and performance of this Agreement and any such documents to which it is party and the consummation of the transactions contemplated hereby and thereby has been duly taken; this Agreement is the valid and binding obligation of, enforceable in accordance with its terms against, Buyer, except as enforcement thereof may be limited by bankruptcy, insolvency, conservatorship, receivership, liquidation, reorganization, moratorium or similar laws or general equitable principles; and any related document thereto is, or upon execution and delivery thereof will be, a valid and binding obligation of, enforceable in accordance with its terms against, it, except as enforcement thereof may be limited by 17 bankruptcy, insolvency, conservatorship, receivership, liquidation, reorganization, moratorium or similar laws or general equitable principles. Section 3.2 No Conflicts. Neither the execution, delivery or performance by Buyer of this Agreement and any agreement contemplated herein, nor the consummation by it of the transactions contemplated hereby or thereby, will: (a) constitute an event of default under, permit the termination of, give rise to a right to accelerate any indebtedness under any contract, lease, or governmental permit to which Buyer is a party, is maker or guarantor, or by which it is bound; (b) violate any order, writ, injunction, decree, judgment, ruling or law applicable to Buyer or by which Buyer or any of its properties is bound; or (c) require any consent, approval or authorization of any governmental or regulatory agency; other than for such of the foregoing matters which, or the absence of which, would not, individually or when taken together with all other such related matters, have a material adverse effect on Buyer. Section 3.2 Investment; Experience. Buyer is purchasing the Arisur Shares and the Minera Andacaba Shares for investment only and not with a view to resale or distribution thereof. Buyer is experienced in the acquisition and management of businesses similar to those of Arisur and Minera Andacaba. Section 3.3 Brokers. No broker or finder has been employed which is entitled to a fee by reason of the transactions contemplated hereby other than Endeavour Financial Inc., whose fees shall be borne in their entity by Buyer. 18 ARTICLE IV Covenants --------- Section 4.1 Covenant Not to Compete. Except as specifically contemplated and referred to in Schedule 4.1 hereto or that certain consulting agreement of even date herewith between Buyer and Suramco Holdings, Inc., each of Seller and each affiliate of Seller (as such term is defined in Rule 405 of the Securities Act) agrees that, for a period of three (3) years after the date of this Agreement, Seller and each such affiliate of Seller shall not, directly or indirectly, own (other than not more than 2% of the issued and outstanding capital stock of any company whose shares are traded on a national stock exchange or quoted on NASDAQ in the United States or which are traded on the facilities of a Designated Offshore Securities Market (as defined in Rule 902 under the Securities Act)), manage, operate, work for, consult with or otherwise provide services to, or otherwise be affiliated with, any corporation, person or entity engaged in the mining and/or milling or other processing of base or precious metals in Bolivia. Section 4.2 Transfer Taxes. Seller shall be responsible for, and agrees to pay promptly when and if due, all transfer, stamp, use or any other similar taxes payable in any jurisdiction in connection with or arising from the sale and transfer of the Arisur Shares and the Minera Andacaba Shares to Buyer hereunder. Section 4.3 Best Efforts. (a) Upon the terms hereof, each of the parties hereto agrees to take or cause to be taken, all action and to do, or cause to be done, all things necessary, proper or advisable to consummate and make effective the transactions contemplated by this Agreement and any related documents thereto. 19 (b) Except as otherwise expressly provided for in this Agreement, Buyer and Seller shall use their best efforts to obtain at the earliest practicable date all consents required for the consummation of the transactions contemplated by this Agreement and any related documents thereto, including without limitation, all consents, permissions and approvals required by the relevant authorities in the Cayman Islands and Bolivia. (c) Buyer and Seller shall provide such information and cooperate fully with each other in making such applications, filings and other submissions which may be required or reasonably necessary in order to obtain all approvals, consents, authorizations and waivers as may be required from any governmental or regulatory agency and others in connection with the transactions contemplated by this Agreement and any documents related thereto. (d) Except as otherwise expressly provided for in this Agreement, Buyer and Seller shall promptly take all actions necessary to make each filing, including without limitation, any supplemental filing, which either of them may be required to make with any governmental or regulatory agency as a condition to or consequence of the consummation of the transactions contemplated by this Agreement or any document related thereto. Section 4.4 Further Assurances. Subject to the terms and conditions of this Agreement, each of the parties hereto agrees to use all reasonable efforts to take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective the transactions contemplated by this Agreement. In case at any time after the date of this Agreement any further action is necessary or desirable to carry out the purposes hereof, the proper officers of Buyer, Seller, Arisur and Minera Andacaba shall take all such action. 20 ARTICLE V Indemnification and Related Matters ----------------------------------- Section 5.1 Indemnification by Seller. Seller agrees to indemnify and hold harmless Buyer and its directors, officers and employees against and in respect of any and all loss, liability, obligation, damage, deficiency or expense resulting from (a) any misrepresentation, breach of any warranty or non- fulfillment of any agreement of Seller under the terms of this Agreement or in any agreement or certification furnished pursuant hereto and (b) any actions, suits, proceedings, demands, judgments, costs and reasonable legal, investigatory and other expenses incident to any of the foregoing (regardless of whether, in the case of third party actions, suits or proceedings, Seller may have a meritorious defense). Section 5.2 Indemnification by Buyer. Buyer agrees to indemnify and hold harmless Seller and its directors, officers and employees against and in respect of any and all loss, liability, obligation, damage, deficiency or expense resulting from (a) any misrepresentation, breach of any warranty or non- fulfillment of any agreement of Buyer under the terms of this Agreement or in any statement or certification furnished pursuant hereto; and (b) any actions, suits, proceedings, demands, judgments, costs and reasonable legal, investigatory and other expenses incident to any of the foregoing (regardless of whether, in the case of third party actions, suits or proceedings, Buyer may have a meritorious defense). Section 5.3 Procedure. Promptly after receipt by any person that is entitled to indemnification under this Section 5 (the "Indemnified Party") of notice of the commencement of any action in respect of which the Indemnified Party will seek indemnification hereunder, the Indemnified Party shall notify the person obligated to provide such indemnification (the 21 "Indemnifying Party") thereof in writing, but any failure to so notify the Indemnifying Party shall not relieve the Indemnifying Party from any liability that it may have to the Indemnified Party under this Section 5, except to the extent that the Indemnifying Party is prejudiced by the failure to give such notice. The Indemnifying Party shall be entitled to participate in the defense of such action and to assume control of such defense with counsel reasonably satisfactory to such Indemnified Party; provided, however, that: (a) the Indemnified Party shall be entitled to participate in the defense of such claim and to employ counsel at its own expense to assist in the handling of such claim; (b) the Indemnifying Party shall obtain the prior written approval of the Indemnified Party before entering into any settlement of such claim or ceasing to defend against such claim, if pursuant to or as a result of such settlement or cessation, injunctive or other equitable relief would be imposed against the Indemnified Party or the Indemnified Party would be adversely affected thereby; (c) the Indemnifying Party shall not consent to the entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by each claimant or plaintiff to the Indemnified Party of a release from all liability in respect of such claim; and (d) the Indemnifying Party shall not be entitled to control the defense of any claim unless within 15 days after receipt of such written notice from the Indemnified Party the Indemnifying Party confirms in writing its responsibility for such defense and reasonably demonstrates that it will be able to pay the full amount of the reasonably expected liability in connection with any such claim. 22 After written notice by the Indemnifying Party to the Indemnified Party of its election to assume control of the defense of any such action in accordance with the foregoing, (i) the Indemnifying Party shall not be liable to such Indemnified Party hereunder for any expenses subsequently incurred by such Indemnified Party in connection with the defense thereof, and (ii) as long as the Indemnifying Party is reasonably contesting such action in good faith, the Indemnified Party shall not admit any liability with respect to, or settle, compromise or discharge the claim underlying such action without the Indemnifying Party's prior written consent. If the Indemnifying Party elects to so participate in or assume the defense of any such action, the Indemnified Party shall cooperate with the Indemnifying Party in connection with the defense. If the Indemnifying Party does not assume control of the defense of such claim as provided in this Section 5, the Indemnified Party shall have the right to defend and/or settle such claim in such manner as it may deem appropriate at the cost and expense of the Indemnifying Party, and the Indemnifying Party will promptly reimburse the Indemnified Party therefor in accordance with this Section 5. The reimbursement of fees, costs and expenses required by this Section 5 shall be made by periodic payments during the course of the investigation or defense, as and when bills are received or expenses incurred. Section 5.4 Related Matters. (a) Without prejudice to any remedies available to it by law or otherwise, Buyer shall have the right to offset against any payments or other consideration payable by it to Seller after the date of this Agreement pursuant to the terms hereof any claims that Buyer may have against Seller for any breach of any representations, warranties or undertakings. 23 (b) In the event that an Indemnifying Party shall be obligated to indemnify the Indemnified Party pursuant to this Section 5, an Indemnifying Party shall, upon payment of such indemnity in full, be subrogated to all rights of the Indemnified Party with respect to the claims to which such indemnification relates. In the event that an Indemnified Party becomes entitled to any indemnification from an Indemnifying Party, such indemnification shall be made in cash upon demand. Seller shall not be entitled to any contribution or reimbursement from Arisur or Minera Andacaba with respect to payments made by Seller under this Section 5. ARTICLE VI Miscellaneous ------------- Section 6.1 Headings. The descriptive headings of the several Articles and Sections of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. Section 6.2 Amendment. No modification or amendment of this Agreement shall be effective for any purpose unless in writing and signed by the parties hereto. Section 6.3 Notices. Any notices other communications required or permitted hereunder shall be given in writing and shall be delivered or sent by facsimile, next day delivery service, personal delivery or certified or registered mail, postage prepaid, addressed as follows: If to Buyer, to: Atlas Corporation 370 17th Street Suite 3050 Denver, Colorado 80202 Attn: President Fax: (303) 629-2445 24 Copy to: Coudert Brothers 1114 Avenue of the Americas New York, New York 10036 Attn: Jeffrey E. Cohen, Esq. Fax: (212) 626-4120 If to Seller, to: Arimetco International, Inc. 335 North Wilmot Road, Suite 410 Tucson, AZ 85711 Attn: Roy Shipes Fax: (520) 748-2626 Copy to: Cassels Brock & Blackwell Scotia Plaza, Suite 2100 40 King Street West Toronto, Canada M5H 3C2 Attn: Lori A. McBurney, Esq. Fax: (416) 360-8877 or to such other address or telefax number as shall be furnished in writing by such party, and any such notice or communication shall be effective and be deemed to have been given as of the date so dispatched, delivered or mailed; provided, that, any notice or communications changing any of the addresses set forth above shall be effective and deemed giving only upon its receipt. Section 6.4 Successors. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns, but neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto without the prior written consent of the other party. 25 Section 6.5 Entire Agreement. The Exhibits and Schedules referred to herein, whether or not attached hereto, are hereby incorporated in and made a part of this Agreement as if set forth in full herein. This Agreement constitutes the sole and entire agreement among the parties hereto with respect to the subject matter hereof and supersedes all prior arrangements or understandings with respect thereto; and there are no express or implied restrictions, agreements, promises, representations, warranties, covenants or undertakings other than those expressly set forth herein. Section 6.6 Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Section 6.7 Third Parties. Except as specifically set forth or referred to herein, nothing herein expressed or implied is intended or shall be construed to confer upon or give any entity, other than the parties hereto and their successors and permitted assigns, any rights or remedies under or by reason of this Agreement. Section 6.8 Counterparts. This Agreement may be executed in two or more counterparts all of which shall be considered one and the same agreement and each of which shall be deemed an original. Section 6.9 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to principles of conflicts of law thereunder. 26 IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be duly executed as of the day and year first above written. ARIMETCO INTERNATIONAL INC. By: /s/ John A. McKinney ------------------------------------ Name: John A. McKinney Title: Senior Vice President ATLAS CORPORATION By: /s/ Gerald E. Davis ------------------------------------ Name: Gerald E. Davis Title: President 27 EX-2.3 4 STOCK PURCHASE AGREEMENT DATED 12-31-96 Exhibit 2.3 STOCK PURCHASE AGREEMENT BETWEEN ATLAS CORPORATION AND CORNERSTONE INDUSTRIAL MINERALS CORPORATION December 13, 1996 STOCK PURCHASE AGREEMENT THIS AGREEMENT is entered into on the 13th day of December, 1996, by and between Atlas Corporation, a Delaware corporation (the "Seller"), and Cornerstone Industrial Minerals Corporation (formerly Phoenix Financial Holdings Inc.), an Ontario corporation (the "Buyer"). The Buyer and the Seller are referred to collectively herein as the "Parties". The Seller owns all of the outstanding capital stock of Atlas Perlite, Inc. ("API"), an Oregon corporation. The Buyer and the Seller are parties to a letter agreement, dated July 3, 1996 (the "Letter Agreement"), which contemplates a transaction in which the Buyer will purchase from the Seller, and the Seller will sell to the Buyer, all of the issued and outstanding shares of common stock of API (being all of the issued and outstanding shares) (the "API Shares") in return for cash, Common Shares and the Royalty. The Letter Agreement provides that the Buyer and the Seller will enter into this Agreement in order to set forth the definitive terms and conditions of the transaction. NOW THEREFORE, in consideration of the foregoing premises and the promises and covenants herein made, together with other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows: 1. Definitions. "Affiliate" has the meaning set forth in Rule 12b-2 of the regulations promulgated under the Securities Exchange Act of 1934, as amended. "API" has the meaning set forth in the preface above. "API Financial Statements" means the unaudited financial statements of API as at and for the year ended December 31, 1995 and the unaudited interim financial statements of API as at and for the nine months ended September 30, 1996; "API Shares" has the meaning set forth in the preface above. "Approval" means approval given at the Meeting by the minority shareholders of the Buyer of the purchase and sale of the API Shares contemplated hereby in accordance with Policy Statement No. 9.1 of the Ontario Securities Commission. "Automatic Termination Date" means December 31, 1996. "Base Load Contracts" means agreements for the supply of perlite mined from the Project to customers which set forth: (i) a minimum of a three year delivery schedule; (ii) price per ton and tonnage which result in a price per ton times annual tonnage of at least $1,350,000; and (iii) specified dates for initial delivery. 2 "Buyer" has the meaning set forth in the preface above. "Buyer Financial Statements" means the published audited financial statements of the Buyer as at and for the year ended December 31, 1995 and the published unaudited financial statements of the Buyer as at and for the six months ended June 30, 1996. "Closing" has the meaning set forth in paragraph 2(c) below. "Closing Date" has the meaning set forth in paragraph 2(c) below. "Code" means the Internal Revenue Code of 1986, as amended. "Commercial Production" means the initial delivery of perlite under the Base Load Contracts. "Common Shares" means the common shares without par value in the capital of the Buyer after giving effect to the Reorganization. "Confidential Information" has the meaning set forth in paragraph 12 below. "Definitive Project Financing" means financing for the Project on reasonable commercial terms in an amount not less than $2,000,000 plus the amount by which costs and expenses incurred on the Project by the Seller and API after November 30, 1995 and prior to the commencement of Commercial Production exceeds $1,746,000. "Environmental Costs" means any clean-up costs, remediation, removal, or other response costs, legal expenses (including reasonable attorneys' fees), investigation costs (including reasonable fees of consultants, counsel and other experts in connection with any environmental investigation or testing), losses, liabilities, obligations, payments, fines, penalties (civil and criminal) and damages. "Environmental Law" means any federal, state, provincial, regional, territorial, municipal, local or foreign statute code, ordinance, rule, regulation, policy, guideline, permit, consent, approval, license, judgment, order, writ, decree, injunction or other authorization, relating to: (a) emissions, discharges, releases or threatened releases of Hazardous Substances into the natural or human environment, including, without limitation, air, soil, sediments, land surface or subsurface, surface water, ground water, buildings or facilities, treatment works, drainage systems or septic systems; or (b) the generation, treatment, storage, disposal, use, handling, manufacturing, transportation or shipment of Hazardous Substances; or 3 (c) mining or mined land reclamation; or (d) otherwise relating to the pollution or protection of health or safety or the environment, solid waste handling, treatment or disposal or operation or reclamation of mines. "Hazardous Substances" means (i) hazardous materials, pollutants, contaminants, constituents, toxic substances, hazardous wastes and hazardous substances as those terms are defined in the following statutes and their implementing regulations: the Hazardous Materials Transportation Act, 49 U.S.C. (S) 1801 et seq., the Resource Conservation and Recovery Act, 42 U.S.C. (S) 6901 et seq., the Comprehensive Environmental Response, Compensation and Liability Act, as amended by the Superfund Amendments and Reauthorization Act 42 U.S.C. (S) 1906 et seq., the Clean Water Act,33 U.S.C. (S) 1251 et seq., the Toxic Substances Control Act, 15 U.S.C. (S) 2601 et seq., and the Clean Air Act, 42 U.S.C. (S) 7401 et seq., (ii) petroleum, including crude oil and any fractions thereof, (iii) natural gas, synthetic gas and any mixtures thereof, (iv) asbestos and/or asbestos- containing materials, (v) PCBs, or PCB-containing materials or fluids, (vi) any other substance with respect to which any federal, state or local agency or other governmental entity may require either an environmental investigation or an environmental remediation, and (vii) any other hazardous or noxious substance, material, pollutant or solid or liquid waste that is required by, or forms the basis of liability under, any environmental law. "Internal Financial Statements" means unaudited statements of income and cash flows of the Buyer to be prepared by management of the Buyer in accordance with generally accepted accounting principles. "Meeting" means the annual and special meeting of shareholders of the Buyer held on September 3, 1996 to consider, among other things, the purchase and sale of the API Shares contemplated hereby and the Reorganization. "Mineral Leases" means 66.5 acres of state mineral leases owned by the Seller that comprise part of the Tucker Hill Property. "Operating Permits" means all permits necessary for commencement of mining operations for the Project. "Party" has the meaning set forth in the preface above. "Person" means an individual, a partnership, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, or a governmental entity (or any department, agency, or political subdivision thereof). "Process Plant Land" means the land described in Schedule "A" covering approximately 26 acres in the northern outskirts of Lakeview, Oregon which includes approximately 700 4 feet of dedicated rail siding upon which construction is underway for a process plant capable of processing the raw perlite mined from the Tucker Hill Property. "Project" means, collectively, the Process Plant Land and the Tucker Hill Property. "Reorganization" means the amendment to the articles of the Buyer approved at the Meeting and made effective September 3, 1996 pursuant to which the articles were amended to, among other things: (i) create an unlimited number of Common Shares; (ii) change each of the issued and outstanding Class A Subordinate Voting Shares and Class B Multiple Voting Shares of the Buyer into one Common Share; and (iii) cancel all remaining unissued Class A Subordinate Voting Shares and Class B Multiple Voting Shares of the Buyer. "Representatives" means the officers, directors, employees and agents, including legal counsel and outside accountants, of a Party. "Royalty" means a 2% gross proceeds royalty on sales from the Tucker Hill Property calculated as set forth in the Royalty Deed annexed hereto as Schedule "C". "Securities Act" means the United States Securities Act of 1933, as amended; "Seller" has the meaning set forth in the preface above. "Subsidiary" means any corporation with respect to which a specified Person (or a Subsidiary thereof) owns a majority of the common stock or has the power to vote or direct the voting of sufficient securities to elect a majority of the directors. "Tucker Hill Property" means the land described in Schedule "B" consisting of 45 unpatented lode mining claims and the Mineral Leases located in Lake County, Oregon. 2. Purchase and Sale of API Shares. (a) Basic Transaction. On and subject to the terms and conditions of this Agreement, the Buyer agrees to purchase from the Seller, and the Seller agrees to sell to the Buyer, all of the API Shares for aggregate consideration of $2,000,000 plus the Royalty, such $2,000,000 to be paid in the manner specified below: (i) At the Closing, the Buyer shall pay to the Seller $125,000 and shall issue to the Seller 1,205,998 Common Shares; (ii) On the later of: (A) the Closing; or (B) two business days following delivery by the Seller to the Buyer of evidence satisfactory to the Buyer, acting reasonably, of the issuance of the Operating Permits and the successful resolution of any related appeals, the Buyer shall pay the Seller $500,000 and shall issue to the Seller 4,823,993 Common Shares; 5 (iii) On the later of: (A) the Closing; or (B) two business days following delivery by the Seller to the Buyer of evidence satisfactory to the Buyer, acting reasonably, of the execution by API of Base Load Contracts the Buyer shall pay the Seller $125,000 and shall issue to the Seller 1,205,998 Common Shares; (iv) On the later of: (A) the Closing; or (B) two business days following delivery by the Seller to the Buyer of evidence satisfactory to the Buyer, acting reasonably, of the execution of an agreement for Definitive Project Financing, the Buyer shall pay the Seller $125,000 and shall issue to Seller 1,205,998 Common Shares; and (v) On the later of: (A) the Closing; or (B) two business days following delivery by the Seller to the Buyer of evidence satisfactory to the Buyer, acting reasonably, of the commencement of Commercial Production, the Buyer shall pay the Seller $125,000 and shall issue to the Seller 1,205,999 Common Shares. For the purposes of this Agreement, the Common Shares shall have an ascribed value of $0.1036 (C $0.1415) per share. It is acknowledged and agreed that the payments set forth above are to be made sequentially, in the order set forth above, as each condition precedent to payment is satisfied. As an example and for greater certainty, the payment referred to in subparagraph (iii) is not to be made until the conditions set forth in subparagraph (i) and (ii) have been satisfied and the payments called for therein have been made. (b) In addition to the consideration to be paid by the Buyer as set forth in subparagraph 2(a), the Buyer shall also reimburse the Seller concurrently with the payment provided for in subparagraph 2(a)(v) for all expenditures incurred by the Seller on or for the benefit of the Project from December 1, 1995 to the date of Commencement of Commercial Production. Such costs will be accounted for in a separate accrual account by API and will include the payment by the Seller of any API accounts payable in addition to those shown on the balance sheet of API as at November 30, 1995, being in the aggregate amount of $36,422. The Seller represents and warrants to the Buyer that as to the date hereof the total of such expenditures is approximately $1.7 million. (c) In the event the Buyer is unable to make the cash payments provided for in subparagraphs 2(a) and 2(b) or is unable to pay for development capital expenditures for the Project as and when required, the Seller will defer such cash payments or will advance the funds required for such expenditures, as the case may be on such terms as may be agreed upon by the Buyer and the Seller. All 6 amounts deferred or advanced by the Seller pursuant to this subparagraph 2(c) and not otherwise repaid to the Seller shall be repaid at the option of the Seller from either the Definitive Project Financing or income from the Project. (d) The Closing. The transfer of the API Shares by the Seller to the Buyer (the "Closing") shall take place at the offices of the Buyer and the Seller in Denver, Colorado, commencing at 11:00 a.m. local time on December 16, 1996 or at such other place or time on such other date as the Buyer and the Seller may mutually determine (the "Closing Date"); provided, however, that in no event shall the Closing Date be later than the Automatic Termination Date. The Buyer acknowledges and agrees that, except as otherwise specifically provided herein to the contrary, upon its acquisition of the API Shares, API and its assets will be subject to all of the liabilities of API, known or unknown, and whether now in existence or hereafter arising. (e) Deliveries at the Closing. At the Closing, (i) the Seller will deliver to the Buyer: (A) the various certificates, instruments, and documents referred to in subparagraph 8(a) below; (B) stock certificates representing all of the API Shares, endorsed in blank or accompanied by duly executed assignment documents, and (C) a declaration that the Seller holds the Mining Leases in trust for API; and (ii) the Buyer will deliver to the Seller: (A) the various certificates, instruments, and documents referred to in subparagraph 8(b) below; (B) the cash and share consideration specified in subparagraph 2(a) (as applicable) above, including, without limitation, share certificates representing the requisite number of Common Shares; and (C) the Royalty Deed. (f) Deliveries after Closing. On the dates specified in subparagraphs 2(a)(ii)-(v) and 2(b), the Buyer shall deliver to the Seller the cash and share consideration specified in such subparagraphs, including, without limitation, certificates representing the requisite number of Common Shares. 3. Representations and Warranties Concerning the Transaction. (a) Representations and Warranties of the Seller. The Seller represents and warrants to the Buyer that the statements contained in this subparagraph 3(a) are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this subparagraph 3(a)): (i) Organization of the Seller. The Seller is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware. (ii) Authorization of Transaction. The Seller has full corporate power and authority to execute and deliver this Agreement and to perform its 7 obligations hereunder. This Agreement has been duly authorized, executed and delivered by the Seller and constitutes the valid and legally binding obligation of the Seller, enforceable in accordance with its terms and conditions, subject to: (A) bankruptcy, insolvency, reorganization, moratorium and other laws relating to or affecting creditors' rights generally; (B) the qualification that equitable remedies, including without limitation, specific performance and injunction, may be granted only in the discretion of a court of competent jurisdiction; and (C) the qualification that rights to indemnity may be limited by applicable law. (iii) Noncontravention. Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will violate (A) any provision of the Articles of Incorporation or Bylaws of the Seller; (B) any provision of law; (C) any order of any court or other agency of government; (D) any provision of any indenture, agreement or other instrument to which Seller or API is a party or by which the Project is bound; or (E) be in conflict with, result in a breach of or constitute (with due notice and lapse of time) a default under any such indenture, agreement or other instrument. To the knowledge of the Seller, there is no law, rule or regulation, nor is there any judgment, decree or order of any court or governmental authority binding on Seller or API which would be contravened by the execution, delivery, performance or enforcement of this Agreement or any instrument or agreement required hereunder. (iv) Brokers' Fees. The Seller has no liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which the Buyer could become liable or obligated. (v) Investment. The Seller understands that the shares of the Buyer to be issued hereunder have not been and will not be registered under the Securities Act or under any state securities laws. The Seller is a sophisticated investor with knowledge and experience in business and is not acquiring such shares with a view to or for sale in connection with any distribution thereof within the meaning of the Securities Act. (vi) API Shares. The Seller holds of record and owns beneficially all of the API Shares, free and clear of any restrictions on transfer (other than restrictions under applicable securities laws), taxes, security interests, options, warrants, purchase rights, contracts, commitments, equities, claims or demands and no voting trust, proxy, or other agreement or understanding exists with respect to the voting of the API Shares. 8 (vii) Consents, Approvals. No consent, approval, licence, order, authorization, regulation or declaration of, or filing with, any governmental authority or other Person is required by the Seller or API, in connection with (a) the Closing or (b) the execution and delivery by the Seller of this Agreement or the other documents to be delivered by the Seller to the Buyer hereunder or (c) the observance and performance by the Seller of its obligations under this Agreement or such other documents. (viii) Title to Mineral Leases. Except as disclosed in the title report prepared by Morrison and Foerster LLP and the documents referred to therein, (collectively the "Title Report"), a copy of which has been provided to the Buyer by the Seller, to the Seller's knowledge: (A) the Seller is the registered owner of the Mineral Leases and the Mineral Leases are free and clear of all liens, encumbrances or other burdens on production or claims of third parties other than API; (B) the Seller holds the Mineral Leases in trust exclusively for API and API is the sole beneficial owner of the Mineral Leases; (C) the Mineral Leases are in good standing under all applicable laws; and (D) there are no actions or administrative or other proceedings pending or threatened against or affecting the Mineral Leases (b) Representations and Warranties of the Buyer. The Buyer represents and warrants to the Seller that the statements contained in this paragraph 3(b) are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this paragraph 3(b)) and will remain correct and complete until such time as the Seller has received all of the consideration to which it is entitled hereunder as set forth in paragraph 2: (i) Organization of the Buyer. The Buyer is a corporation duly organized, validly existing, and in good standing under the laws of the Province of Ontario. (ii) Authorization of Transaction. The Buyer has full corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement has been duly authorized, executed and delivered by the Buyer and constitutes the valid and legally binding obligation of the Buyer, enforceable in accordance with its terms and conditions, subject to: (A) bankruptcy, insolvency, reorganization, 9 moratorium and other laws relating to or affecting creditors' rights generally (B) the qualification that equitable remedies, including, without limitation, specific performance and injunction, may be granted only in the discretion of a court of competent jurisdiction; and (C) the qualification that rights to indemnity may be limited by applicable law. (iii) Shareholder Approval. The Buyer has received the Approval. (iv) Noncontravention. Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will violate (A) the charter or bylaws of the Buyer; (B) any provision of law; (C) any order of any court or other agency of government; (D) any provision of any indenture, agreement or other instrument to which Buyer is a party or by which its properties or assets are bound; or (E) be in conflict with, result in a breach of or constitute (with due notice and lapse of time) a default under any such indenture, agreement or other instrument. To the knowledge of the Buyer, there is no law, rule or regulation, nor is there any judgment, decree or order of any court or governmental authority binding on the Buyer which would be contravened by the execution, delivery, performance or enforcement of this Agreement or any instrument or agreement required hereunder. (v) Brokers' Fees. The Buyer has no liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which the Seller could become liable or obligated. (vi) Investment. The Buyer understands that the API Shares have not been and will not be registered under the Securities Act or under any state securities laws. The Buyer is a sophisticated investor with knowledge and experience in business and is not acquiring the API Shares with a view to or for sale in connection with any distribution thereof within the meaning of the Securities Act. (vii) The Common Shares. The Reorganization was approved by the shareholders of the Buyer at the Meeting and on the date of this Agreement, the authorized capital of the Buyer consists of an unlimited number of Common Shares of which 23,997,938 have been validly issued and are outstanding. All of the Common Shares to be issued to the Seller hereunder have been duly authorized for issuance and allotted to the Seller and, when issued in accordance with the terms hereof, all such shares shall be validly issued as fully paid and nonassessable, free and clear of all liens, charges and encumbrances. There does not exist any pre-emptive right in favour of any person with respect to any of such shares. No Person has any agreement or any option, right or privilege capable of becoming 10 an agreement, for the purchase, subscription or issuance of any unissued shares of the Buyer, other than as set forth in the Financial Statements, or otherwise publicly disclosed or as contemplated hereby. (viii) Financial Statements and Reports. The Buyer Financial Statements and the notes thereto were prepared in accordance with the books and records of the Buyer and fairly present the financial condition and results of the operations of the Buyer at the date and for the periods covered thereby all in accordance with Canadian generally accepted accounting principles consistently applied. None of the Buyer Financial Statements contained, as of its date, any untrue statement of a material fact or any omission to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Each of the balance sheets included in the Buyer Financial Statements (including any related notes) presents fairly in all material respects the financial position of the Buyer as of its date and the Buyer Financial Statements (including any related notes) present fairly in all material respects the results of operations, changes in financial position, cash flows and changes in stockholders' equity, as the case may be, of Buyer for the periods therein set forth, subject, in the case of unaudited financial statements, to normal year-end audit adjustments, in each case in accordance with generally accepted accounting principles consistently applied during the periods involved (except as otherwise stated therein). (ix) No Material Changes. Since June 30, 1996, there has not been, except as publicly disclosed or as contemplated hereby, (A) any material adverse change, however caused, in the business, assets, liabilities (actual or contingent), results of operations, prospects, financial or other condition or operations of Buyer; (B) any change in Buyer's authorized or actual equity capitalization; (C) any damage, destruction or casualty loss, materially and adversely affecting the business, assets, liabilities (actual or contingent), results of operations, prospects, or financial or other condition or operations of Buyer, whether or not insured; (D) any incurrence by the Buyer of long-term debt or any other material liability or obligation, actual or contingent, other than current liabilities incurred in the ordinary and usual course of business consistent with past practices; 11 (E) entry into, or agreement or commitment to enter into, any agreement, commitment or transaction by the Buyer (including, without limitation, any borrowing, capital expenditure or financing or any amendment, modification or termination of any existing agreement, commitment or transaction) other than in the ordinary and usual course of business consistent with past practices; (F) acquisition or disposition of, or entry into any agreement by the Buyer with respect to the acquisition or disposition of a significant amount of assets; or (G) any agreement with respect to any of the foregoing. 4. Representations and Warranties Concerning API. The Seller represents and warrants to the Buyer that the statements contained in this paragraph 4 are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this paragraph 4): (a) Organization, Qualification, and Corporate Power. API is a corporation duly organized, validly existing, and in good standing under the laws of the State of Oregon. API is duly authorized to conduct business and is in good standing under the laws of the State of Oregon. API has the corporate power and authority to carry on the businesses in which it is engaged and to own and use the properties owned and used by it. No proceedings have been taken or authorized by API or, to the best of the Seller's knowledge, any other Person, with respect to the bankruptcy, insolvency, liquidation, dissolution or winding up of API or with respect to any amalgamation, merger, consolidation, arrangement or reorganization relating to API. (b) Capitalization. The API Shares are the only issued and outstanding equity securities of API and the API Shares have been duly authorized, are validly issued, fully paid, and nonassessable. No Person has any agreement or any option, right or privilege capable of becoming an agreement for the purchase, subscription or issuance of any securities of API or any securities convertible into or exchangeable for securities of API. (c) Brokers' Fees. API does not have any liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement. (d) Employees. API has no employees. (e) Subsidiaries. API has no Subsidiaries. 12 (f) Royalties. Except as set forth in Schedule 4(f), to Seller's knowledge there are no royalties or other burdens on production affecting the Tucker Hill Property. (g) Permits and Licenses. A list of all currently active material permits, licenses, consents, approvals, authorizations, and qualifications obtained by API in connection with its operations on the Tucker Hill Property as of the date of this Agreement, true and correct copies of each of which have been made available to Buyer, is set forth on Schedule 4(g)(i); the only other permits, licenses, consents, approvals, authorizations and qualifications required in order to operate the Project in the normal course of business are set forth in Schedule 4(g)(ii). To Seller's knowledge, API's ownership and operation of the Tucker Hill Property is not in violation of and has resulted in no liability (other than liability for compliance with existing permits and laws, including but not limited to performance of reclamation) under any statute, rule or regulation of any governmental authority applicable to the Tucker Hill Property, other than violations or liability, if any, which have not resulted and would not be reasonably expected to result in any material loss or liability. (h) Title to Claims. Except as disclosed in the Title Report, to Seller's knowledge, as to the unpatented mining claims comprising the Tucker Hill Property (the "Claims") subject to the paramount title of the United States: (A) API is in exclusive possession thereof; free and clear of all liens, encumbrances or other burdens on production or claims of third parties arising by, through or under API; (B) since API acquired the Claims, assessment work, intended in good faith to satisfy the requirements of state and federal laws and regulations and generally regarded in the mining industry as sufficient, for all assessment years up to and including the assessment year ending September 1, 1992, was timely performed on or for the benefit of the Claims and affidavits evidencing such work were timely recorded; (C) since API acquired the Claims, claim rental and maintenance fees required to be paid under federal law in lieu of the performance of assessment work, in order to maintain the Claims commencing with the assessment year ending on September 1, 1993 and through the assessment year ending on September 1, 1996, have been timely and properly paid, and affidavits or other notices evidencing such payments and required under federal or state laws or regulations have been timely and properly filed or recorded; (D) since API acquired the Claims, all filings with the Bureau of Land Management with respect to the Claims which are required under the 13 Federal Land Policy and Management Act of 1976 have been timely and properly made, and (E) there are no actions or administrative or other proceedings pending or threatened against or affecting the Claims. Nothing herein shall be deemed a representation that any of the Claims contain a discovery of valuable minerals. (i) Title to Assets. Except as otherwise set forth or contemplated herein, API has good and marketable title to all of its assets (including, without limiting the generality of the foregoing, the Process Plant Land), free and clear of all liens, encumbrances or claims of third parties. (j) Environmental Compliance. To the knowledge of Seller, there are no conditions or activities at or on the Project which would result in a violation of or liability under applicable Environmental Laws, except for such matters as would not have a material adverse effect on the Project taken as a whole. To the knowledge of Seller, there have been issued under applicable Environmental Laws no notices of violation or consent orders to which API (with respect to its operations at the Project) or the Project are subject, except for such matters as would not have a material adverse effect on the Project taken as a whole. There are no pending or, to the knowledge of Seller, threatened proceedings by or before any court or other governmental authority against API with respect to its operation or ownership of the Project alleged to be, or have been, in violation of, under, any Environmental Law, except for such matters as would not have a material adverse effect on the Project taken as a whole. (k) Material Contracts and Commitments. A list of all contracts, agreements, mortgages, indentures and leases (including equipment leases) to which API is a party (collectively the "Contracts") is set forth in Schedule 4(k). True and correct copies of all of the Contracts have been provided by the Seller to the Buyer prior to the date hereof. To Seller's knowledge, API has performed all material obligations required to be performed by it under the Contracts and is not in default, and will not be in default as a result of the consummation of the transactions contemplated herein, under any Contract or any license, judgment, injunction, decree, order, determination, restriction, or other instrument to which it is subject in connection with the Project, except for such matters as would not have a material effect on the Project taken as a whole. (l) Legality. To the knowledge of Seller, API's operations on the Project have been conducted in material compliance with applicable laws, rules, ordinances and other governmental regulations, including without limitation, those relating to zoning, condemnation, mining, reclamation, environmental matters, equal employment, and federal, state, or local health and safety laws, rules, and 14 regulations, except for such violations as would not materially adversely affect the Project. (m) Litigation and Claims. To the knowledge of Seller, other than matters affecting the U.S. mining industry as a whole, there are no actions, suits or proceedings pending or threatened against or affecting the Project, including any actions, suits, or proceedings being prosecuted by any federal, state, or local department, commission, board, bureau, agency, or instrumentality. To the knowledge of Seller, API is not in any material default with respect to, or subject to, any order, writ, injunction, judgment or decree of any court or any federal, state or local department, commission, board, bureau, agency or instrumentality which relates to the Project. (n) Consents. API has obtained all consents, approvals, authorizations, declarations, or filing required by any federal, state, local, or other authority, or any lenders, lessors, creditors, and other third parties in connection with the consummation of the transactions contemplated hereby. (o) Taxes. API, so long as it has been in possession of the Project, has duly and timely filed, in correct form, all federal, state and local income, excise, property and other tax returns, reports or statements required to be filed by it with respect to the Project and has fully paid all taxes, fees, assessments, penalties, and interest due in respect of any such returns, reports, or statements, except for such matters as would not have a material adverse effect on the Project taken as a whole. (p) API Financial Statements. The API Financial Statements: (A) have been prepared in accordance with generally accepted accounting principles, applied on a basis consistent with that of the preceding periods; (B) are complete and accurate in all material respects; (C) accurately disclose the assets, liabilities (whether accrued, absolute, contingent or otherwise) and financial condition of API and the results of the operations of API, as at the dates thereof and for the periods covered thereby; (D) reflect all proper accruals as at the dates thereof and for the periods covered thereby of all amounts which, though not payable until a time after the end of the relevant period, are attributable to activities undertaken during that period; and (E) contain or reflect adequate reserves for all liabilities and obligations of API of any nature, whether absolute, contingent or otherwise, matured or unmatured, as at the date thereof. 15 No information has become available to API that would render the API Financial Statements incomplete or inaccurate. There have been no significant changes in API's financial condition since September 30, 1996 as reflected in the API Financial Statements. (q) Undisclosed Liabilities. API has no liabilities (whether accrued, absolute, contingent or otherwise, matured or unmatured) of any kind except: (A) liabilities disclosed or provided for in the API Financial Statements; and (B) liabilities incurred in the ordinary course of business since September 30, 1996, which are consistent with past practice, are not, in the aggregate, material and adverse to API, the API Shares or the Project and do not violate any covenant contained in this Agreement or constitute a breach of any representation or warranty made in or pursuant to this Agreement. (r) Absence of Changes. Since September 30, 1996: (A) API has conducted its business in the ordinary course, has not incurred any debt, obligation or liability out of the ordinary course of business or of an unusual or extraordinary nature and has used its best efforts to preserve its business and assets; (B) there has not been any change in the condition of API's business or assets other than changes in the ordinary course of business, and such changes have not, either individually or in the aggregate, been materially adverse and have not had nor may they be reasonably expected to have, either before or after the closing time, a material adverse effect on the condition of API's business or assets; (C) to the Seller's knowledge, there has not been any change in, or creation of, any applicable law, any termination, amendment or revocation of any license or any damage, destruction, loss, labour dispute or other event, development or condition of any character (whether or not covered by insurance) which has had, or could have, a material adverse affect on API's business or assets; and (D) there has not been any change in the accounting principles, policies, practices or procedures of API or their application to API. (s) Absence of Unusual Transactions. Since September 30, 1996 API has not: (A) transferred, assigned, sold or otherwise disposed of any of its assets or cancelled any debts or claims; 16 (B) incurred or assumed any obligation or liability (fixed or contingent) other than obligations or liabilities included in the API Financial Statements and obligations and liabilities incurred since September 30, 1996 in the ordinary course of business; (C) settled any liability, claim, dispute, proceedings, suit or appeal pending against it or against any of its assets; (D) discharged or satisfied any lien or encumbrance, or paid any obligation or liability (fixed or contingent) other than liabilities included in the API Financial Statements and liabilities incurred since September 30, 1996; (E) made any material change with respect to any method of management operation or accounting in respect of its business; (F) waived or omitted to take any action in respect of any rights of substantial value or entered into any commitment or transaction if such loss, rights, commitment or transaction is or would be material in relation to its assets or business; (G) created any encumbrance on any of its assets or suffered or permitted any such encumbrance that has arisen on its assets since that date to remain; (H) modified, amended or terminated any contract, agreement or arrangement to which it is or was a party, or waived or released any right which it has or had, other than in the ordinary course of its business; (I) incurred any debt, liability or obligation for borrowed money, or incurred any other debt, liability or obligation except in the ordinary course of its business; (J) issued or sold any securities or issued, granted or delivered any right, option or other commitment for the issuance of any securities; (K) declared or paid any dividend or other distribution in respect of any shares in its capital or purchased or redeemed any such shares; (L) modified, amended or terminated any contract, agreement or arrangement to which it is or was a party, or waived or released any right which it has or had, other than in the ordinary course of its business; or (M) authorized or agreed or otherwise become committed to do any of the foregoing. 17 (t) Absence of Guarantees. API has not given nor agreed to give, and is not a party to or bound by, any guarantee of indebtedness or other obligations of third parties nor any other commitment by which API is, or is contingently, responsible for such indebtedness or other obligations. (u) Restrictions on Business. API is not a party to any agreement, lease, mortgage, security document, obligation or instrument, or subject to any restriction in its articles, by-laws or its directors' or shareholders' resolutions or subject to any restriction imposed by any governmental authority or subject to any applicable law or order which could materially restrict or interfere with the conduct of its business or its use of assets or which could materially limit or restrict or otherwise adversely affect the shares or the assets or business of API, other than statutory provisions and restrictions of general application to its business. (v) Conditions of Assets. All material tangible assets of API are in good working condition and good repair and comply with all standards and requirements of all applicable governmental authorities. (w) Insurance. API is insured by reputable insurers against liability, loss and damage in such amounts and against such risks as are customarily carried and insured against by owners of comparable businesses, properties and assets, and such insurance coverage will be continued in full force and effect to and including the Closing Date. True and complete copies of all of the most recent inspection reports, if any, received from insurance underwriters as to the condition of the assets and the business have been delivered to the Buyer. API is not in default will respect to any of the provisions contained in any such insurance policy and there are no current claims that have not been settled or finally determined. All such policies of insurance are in full force and effect and API is not in default, whether as to the payment of premium or otherwise, under the terms of any such policy. (x) No Expropriation. API has not received any notice of expropriation of all or any of its assets and API is not aware of any expropriation proceeding pending or threatened against or affecting its assets nor of any discussions or negotiations which could lead to any such expropriation. (y) Government Grants. There are no contracts or agreements relating to grants or other forms of assistance, including loans with interest at below market rates, received by API from any governmental authority. (z) Restrictive Covenants. API is not a party to or bound or affected by any commitment, agreement or document which limits the freedom of API to compete in any line of business, transfer or move any of its assets or operations or which does or could adversely affect the business practices, operations or conditions of API after the Closing. 18 (aa) Books and Records. The Seller has made available to the Buyer all books and records of or relating to API. Such books and records fairly and correctly set out and disclose in all respects the financial position of API in accordance with good business practice and all financial transactions relating to API have been accurately recorded in such books and records. The books and records, (A) accurately reflect the basis for the financial condition of API shown in the API Financial Statements; and (B) together with all disclosures made in this Agreement or in the schedules hereto, present fairly the financial condition of API as of and to the date hereof. No information, records or systems pertaining to the operation or administration of API are in the possession of, recorded, stored, maintained by or otherwise dependent on any other person. The Seller has disclosed the existence of and made available for review by the Buyer all the books and records. (bb) No Joint Venture Interests. API has not nor has it agreed to become, a partner, member, owner, proprietor or equity investor of or in any partnership, joint venture co-tenancy or other similar jointly-owned business undertakings or to acquire or lease any other business operation and does not have any other significant investment interests in any similar business owned or controlled by any third party. (cc) Bank Accounts. The name of each bank or other depository in which API maintains any bank account, trust account or safety deposit box is set forth in Schedule 4(cc), along with the names of all persons authorized to draw thereon or who have access thereto. (dd) Disclosure. No representation or warranty in this agreement contains any untrue statement of a material fact and the representations and warranties contained in this Agreement do not omit to state any material fact necessary to make any of the representations or warranties contained herein not misleading to a prospective purchaser of the API Shares seeking full information as to the API Shares, API and API's business and assets. Without limiting the scope of the foregoing, the Seller is not aware of any change, event or occurrence that has taken place or is pending that has, or in the future could have, a material adverse effect on the value or ownership of the API Shares, API or API's business and its assets, or the ability of the Buyer to operate API's business subsequent to the Closing in the manner in which it has been operated by API prior to the Closing or which could materially increase the costs incurred by the Buyer in operating API's business subsequent to the Closing, including any pending or present change in any 19 applicable law or other requirement, including the obtaining or maintenance of licenses or approvals. 5. Pre-Closing Covenants. The Parties agree as follows with respect to the period between the execution of this Agreement and the Closing. (a) General. Each of the Parties will use his or its reasonable best efforts to take all action and to do all things necessary, proper, or advisable in order to consummate and make effective the transactions contemplated by this Agreement (including satisfaction, but not waiver, of the closing conditions set forth in paragraph 8 below). (b) Notices and Consents. Each of the Parties will (and the Seller will cause API to) give any notices to, make any filings with, and use its reasonable best efforts to obtain any required authorizations, consents, and approvals of governments and governmental agencies in connection with the transactions contemplated by this Agreement. (c) Operation of Business. The Seller will not cause or permit API to engage in any practice, take any action, or enter into any transaction outside the ordinary course of business of API consistent with the past practice and custom of API. (d) For so long as the Seller is holding the Mineral Leases in trust for API and until such time as API becomes the registered owner of the Mineral Leases, the Seller will not sell, transfer or encumber the Mineral Leases. (e) Full Access for Due Diligence. The Seller will cause API to permit the Buyer and its Representatives to have full access at all reasonable times, and in a manner so as not to interfere with the normal business operations of API, to all premises, properties, personnel, books, records (including tax records), contracts, and documents of or pertaining to API, which may relate, in the good faith judgment of the Buyer, to the titles held by API and to its properties, to the financial condition of API, to environmental matters related to API and its properties, and to the ore reserve calculations of API. The Buyer and Seller hereby acknowledge and agree that the Seller makes no representation or warranty as to the reliability, accuracy or completeness of any of the information or date referred to in this paragraph 5(d). The Buyer (and its Representatives) will treat and hold as Confidential Information any and all information received from the Seller, API and their Representatives in the course of the review contemplated by this paragraph 5(d). 20 (f) Exclusivity. Unless and until this Agreement is terminated prior to Closing pursuant to paragraph 10 hereof, the Seller will not (and will not cause or permit API to) solicit, initiate, or encourage the submission of any proposal or offer from any Person relating to the acquisition of all or substantially all of the capital stock or assets of API (including any acquisition structured as a merger, consolidation or share exchange), unless such proposal or offer pertains to the Seller as a whole and is made subject to this Agreement. 6. Post-Closing Covenants. The Parties agree as follows with respect to the period following the Closing. (a) General. In case at any time after the Closing any further action is necessary to carry out the purposes of this Agreement, each of the parties will take such further actions (including the execution and delivery of such further instruments and documents) as any other Party reasonably may request, all at the sole cost and expense of the requesting Party (unless the requesting Party is entitled to indemnification hereunder). (b) Litigation Support. In the event and for so long as any Party actively is contesting or defending against any third party action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand in connection with (i) any transaction contemplated under this Agreement or (ii) any fact, situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident, action, failure to act, or transaction on or prior to the Closing Date involving API, the other Party shall cooperate with it and its counsel in the defense or contest, make available its personnel, and provide such testimony and access to its books, records and properties as shall be necessary in connection with the defense or contest, all at the sole cost and expense of the contesting or defending Party (unless the contesting or defending Party is entitled to indemnification therefor hereunder). (c) Transition. The Seller will not take any action that is designed or intended to have the effect of discouraging any material lessor, licensor, customer, supplier, or other business associate of API from maintaining substantially the same business relationships with API after the Closing as it maintained with API prior to the Closing. 21 (d) Tax Treatment. (i) Post-Closing Taxes. It is understood by the Parties that the Buyer shall pay, or cause to be paid, and the Buyer and API shall jointly and severally indemnify the Seller and its Affiliates against and hold them harmless from any liability of API for taxes, additions to tax, interest, penalties or other tax detriment (which shall include, but not be limited to, the utilization of any tax credits or other tax attributes) for periods after the Closing Date or arising from any action or failure to act by the Buyer or any Affiliate of the Buyer (including API) from and after the Closing, including without limitation, any sale or other disposition of assets by the API. (ii) Prior Tax Agreements. As of the Closing, API will not be a party to, bound by, or subject to any obligation under any tax sharing or similar agreement. (e) Bonding. For a period not to exceed 90 days (the "Bond Period") following the Closing, the Seller shall maintain full force and effect all reclamation and other bonds presently maintained by or for the benefit of API. The Buyer's pro rata share (not to exceed 3/12) of all actual costs and expenses incurred by the Seller in maintaining such bonds shall be included in the amounts to be reimbursed to the Seller pursuant to subparagraph 2(b) hereof. As soon as possible following the Closing, and in any event within the Bond Period, the Buyer shall replace all such outstanding bonds with substitute bonds, letters of credit or other financial assurances acceptable to the Bureau of Land Management or the other authorities which require or have jurisdiction over such bonds. (f) Corporate Records. As soon as practicable after the Closing Date the Seller shall deliver to the Buyer all corporate records of API which are maintained by the Seller or its agents or Affiliates provided that the Buyer and the Seller shall coordinate and agree upon a mutually acceptable schedule for the assembly and delivery of such documents. Following the Closing the Buyer shall afford the Seller reasonable access to such documents upon reasonable notice and during regular business hours. (g) Internal Financial Statements. The Buyer will prepare Internal Financial Statements in respect of each calendar month until such time as the Seller has received all of the consideration to which it may become entitled hereunder and the Buyer will deliver to the Seller within 15 days of the end of each calendar month a copy of the Internal Financial Statements for the previous month. 22 7. Indemnity. (a) Environmental Indemnity to Buyer. The Seller shall indemnify, defend and hold harmless the Buyer and its Affiliates (collectively the "Buyer Indemnitees") from any and all Environmental Costs (collectively "Losses") sought or claimed by any Person, including any governmental agency, which are based upon the violation or alleged violation by Seller or API of, or liability imposed on Seller or API by, any Environmental Law, or relating to the use, treatment, handling, storage, disposal or release of Hazardous Substances on or in connection with the Project, with respect to all such Losses which arise as the result of or in connection with acts, omissions or conditions occurring or arising from and after October 24, 1988 (with respect to the Tucker Hill Property) and from and after May 1, 1996 (with respect to the Process Plant Land), up to and including the Closing Date, and regardless of whether such Losses arise as a result of or on connection with acts, omissions, conditions or occurrences which are known to either of the Parties upon the date of this Agreement or on the Closing Date. The indemnity for Environmental Costs provided for by this subparagraph (7)a constitutes a principal element of the consideration for the transactions contemplated by this Agreement, and the maximum amount of the Seller's liability under this indemnity may exceed the purchase price paid by the buyer for the API Shares. (b) Environmental Indemnity to Seller. The Buyer shall indemnify, defend and hold harmless the Seller and its Affiliates (collectively the "Seller Indemnitees") from any and all Environmental Costs (collectively "Losses") sought or claimed by any Person, including any governmental agency, which are based upon the violation or alleged violation of, or liability imposed by, any Environmental Law, or relating to the use, treatment, handling, storage, disposal or release of Hazardous Substances on or in connection with any properties or assets of API, with respect to all such Losses which arise as the result of or in connection with acts, omissions or conditions occurring or arising from and after the Closing Date, and regardless of whether such Losses arise as a result of or in connection with acts, omissions, conditions or occurrences which are known to either of the Parties upon the date of this Agreement or on the Closing Date. The indemnity for Environmental Costs provided for by this subparagraph 7(b) constitutes a principal element of the consideration for the transactions contemplated by this Agreement, and the maximum amount of the Buyer's liability under this indemnity may exceed the purchase price paid by the buyer for the API Shares. (c) Additional Indemnification of Buyer. Seller hereby indemnifies and agrees to hold Buyer, its successors and assigns, harmless from and against any and all liabilities, claims, damages, losses, or expenses, including interest and penalties, reasonable attorneys' fees, and other reasonable expenses of defending any actions relating thereto (collectively "Losses"), incurred or sustained by Buyer in or as a result of or arising out of or attributable to any breach of the specific 23 representations and warranties made by Seller herein, or the breach of any of the agreements, covenants, conditions, and obligations of Seller contained in this Agreement. (d) Additional Indemnification of Seller. Buyer hereby indemnifies and agrees to hold Seller, its successors and assigns, harmless from and against any and all liabilities, claims, damages, losses, or expenses, including interest and penalties, reasonable attorneys' fees and other reasonable expenses of defending any actions relating thereto, (collectively "Losses"), incurred or sustained by Seller in or as a result of or arising out of or attributable to any breach of the specific representations and warranties made by Buyer herein, or the breach by Buyer of any of the agreements, covenants, conditions, and obligations of Buyer contained in this Agreement. (e) Indemnification Procedure. In the case of any claim for indemnification brought under this paragraph 7, the Buyer Indemnitee or the Seller Indemnitee, (an "Indemnitee") , as the case may be, shall give the Buyer or Seller (the "Indemnitor"), as the case may be, reasonably prompt notice of the Losses which give rise to such claim; provided, however, that the failure to so notify the Indemnitor shall not affect the obligation of the Indemnitor to indemnify the Indemnitee hereunder unless the Indemnitor shall have been materially prejudiced by such failure to so notify. The Indemnitor shall, at its option, be entitled to assume the defense of any action, suit or proceeding ("Action") related to such claim at its sole cost and expense and with counsel reasonably satisfactory to the Indemnitee; provided, however, that the Indemnitee shall have the right to participate in such defense at its own expense. If the Indemnitor fails to defend any Action, any defense by the Indemnitee thereof shall be at the sole cost and expense of the Indemnitor. The party defending an Action shall control the conduct thereof. The Parties agree to make available to each other, their counsel and accountants, any information and documents reasonably available to them which relate to such Action and their employees, and the Parties hereto agree to render to each other such assistance as they may reasonably require of each other in order to insure the proper and adequate defense of any Action. 8. Conditions of Obligation to Close. (a) Conditions to Obligation of the Buyer. The obligation of the buyer to consummate the transactions to be performed by it in connection with the Closing is subject to satisfaction of the following conditions: (i) the representations and warranties set forth in paragraph 3(a) and paragraph 4 hereof shall be true and correct in all material respects at and as of the Closing Date; 24 (ii) the Seller shall have performed and complied with all of its covenants hereunder in all material respects through the Closing; (iii) there shall not be any injunction, judgment, order, decree, ruling, or charge in effect preventing consummation of any of the transactions contemplated by this Agreement; (iv) the Seller shall have delivered to the Buyer a certificate to the effect that each of the conditions specified above in paragraph 8(a)(i)-(iii) is satisfied in all respects; (v) the Seller shall have delivered to the Buyer a copy of the resolutions of the Board of Directors of the Seller authorizing the execution, delivery and performance of this Agreement by the Seller, certified by the corporate secretary of the Seller; and (vi) all actions to be taken by the Seller in connection with consummation of the transactions contemplated hereby and all certificates, instruments, and other documents required to effect the transactions contemplated hereby will be reasonably satisfactory in form and substance to the Buyer. The Buyer may waive any condition specified in this paragraph 8(a) (other than those referred to in paragraph (iii)) by notice in writing given at or prior to the Closing. (b) Conditions to Obligation of the Seller. The obligation of the Seller to consummate the transactions to be performed by it in connection with the Closing is subject to satisfaction of the following conditions: (i) the representations and warranties set forth in paragraph 3(b) above shall be true and correct in all material respects at and as of the Closing Date; (ii) the Buyer shall have performed and complied with all of its covenants hereunder in all material respects through the Closing; (iii) there shall not be any injunction, judgment, order, decree, ruling, or charge in effect preventing consummation of any of the transactions contemplated by this Agreement; (iv) the Buyer shall have delivered to the Seller a certificate to the effect that each of the conditions specified above in paragraph 8(b)(i)-(iii) is satisfied in all respects; (v) the Buyer shall have delivered to the Seller a copy of the resolutions of the Board of Directors of the Buyer authorizing the execution, delivery and 25 performance of this Agreement by the Buyer, certified by the corporate secretary of the Buyer; and (vi) all actions to be taken by the buyer in connection with consummation of the transactions contemplated hereby and all certificates, instruments, and other documents required to effect the transactions contemplated hereby will be reasonably satisfactory in form and substance to the Seller. The Seller may waive any condition specified in this paragraph 8(b) (other than that referred to in paragraph (iii) by notice in writing given at or prior to the Closing. 9. Survival of Representations and Warranties. Except as set forth in subparagraph 3(b), the representations and warranties of the Buyer and the Seller contained herein shall survive the Closing for a period of one year thereafter with the exception of the representations and warranties of the Seller set forth in subparagraphs 3(a)(viii), 4(b) and 4(i), which shall survive for a period of two years from the Closing Date, and the representations and warranties of the Buyer set forth in subparagraph 3(b)(vii), which shall survive for a period of one year following the last issuance of Common Shares to the Seller pursuant to paragraph 2. 10. Termination. (a) Termination of Agreement by the Parties. Certain of the Parties may terminate this Agreement as provided below: (i) the Buyer and the Seller may terminate this Agreement by mutual written consent at any time prior to the Closing; or (ii) the Buyer may terminate this Agreement by giving written notice to the Seller at any time prior to the Closing in the event the Seller has breached any material representation, warranty, or covenant contained in this Agreement in any material respect, the Buyer has notified the Seller of the breach, and the Seller has not disputed the existence or nature of such breach or such breach has not been cured by the Automatic Termination Date; or (iii) the Seller may terminate this Agreement by giving written notice to the Buyer at any time prior to the Closing in the event the Buyer has breached any material representation, warranty, or convenant contained in this Agreement in any material respect, the Seller has notified the Buyer of the breach, and the Buyer has not disputed the existence or nature of such breach or such breach has not been cured by the Automatic Termination Date. (b) Automatic Termination. This Agreement shall automatically terminate, without further action on the part of either Party in the event that the Closing has not 26 occurred, for any reason, before the close of business on the Automatic Termination Date. (c) Effect of Termination. If either Party terminates this Agreement (or if it terminates automatically) pursuant to this paragraph 10 all rights and obligations of the Parties hereunder shall terminate without any liability of either Party to the other Party except for any liability of any Party then in breach; provided, however, that the confidentiality provisions of paragraph 12 shall survive termination. 11. Rescission of Transaction. In the event the Closing occurs prior to the Automatic Termination Date but API has not received the Operating Permits on or before the Automatic Termination Date, the Buyer may elect to rescind its purchase of the API Shares by giving written notice to the Seller at any time from the Automatic Termination Date until 5:00 p.m. (Denver time) on January 15, 1997. In the event of such rescission: (i) the Buyer will forthwith transfer the API Shares to the Seller; and (ii) the Seller will forthwith (a) return to the Buyer for cancellation any Common Shares issued to the Seller hereunder and (b) pay the Buyer an amount equal to the aggregate of all cash payments theretofore made to the Seller hereunder, together with simple interest calculated at the rate of 10% per annum. Subject to the foregoing, all rights and obligations of the Parties hereunder shall terminate upon such rescission without any liability of either Party to the other Party except for any liability of any Party then in breach; provided, however, that confidentiality provisions of paragraph 12 shall survive such rescission on the same basis as would apply if this Agreement had been terminated prior to the Closing. 12. Confidentiality. The Buyer acknowledges that any and all information concerning the businesses, properties and affairs of API which is disclosed to the Buyer or its Representatives by the Seller or its Representatives or by API or its Representatives, or which is discovered by the Buyer or its Representatives in the course of the due diligence contemplated by paragraph 5(d) hereof constitutes the unique, proprietary and confidential information of the Seller (collectively "Confidential Information"). Notwithstanding the foregoing, however, "Confidential Information" shall not include any information or data which is in, or becomes a part of, the public domain by any means other than the breach by the Buyer or its Representatives of the obligations hereunder. Until the earlier to occur of the Closing or the second anniversary of the termination of this Agreement pursuant to paragraph 10 hereof the Buyer shall maintain all Confidential Information disclosed to or received by it pursuant to this Agreement in confidence and shall not disclose the same to any third party unless required to do so by court order or by law, in which case the Buyer shall notify the Seller, in writing, prior to making such disclosure and shall cooperate with the Seller to preserve and protect the confidentiality of the Confidential Information to the fullest extent possible. Additionally, except as specifically contemplated by this Agreement, the Buyer shall not utilize any Confidential Information for its own benefit or for the benefit of any other party until the earlier to occur of the Closing or the second anniversary of the termination of this Agreement in accordance with the provisions of paragraph 10 hereof. If this Agreement is terminated, for any reason whatsoever, the Buyer and its Representatives will return to the Seller all tangible embodiments (and all copies) of the Confidential Information which are in their possession. 27 13. Miscellaneous. (a) Report of Micon International Limited. The Buyer acknowledges receipt from the Seller of a report prepared by Micon International Limited which states that the Tucker Hill Property has proven reserves to provide a mine life of at least three years. (b) Disclosure of Information Concerning API. The Seller has instructed its Representatives, and the Representatives of API to answer questions concerning the businesses, affairs, operations and properties of API which are addressed to them by the Buyer and its Representatives during the course of the due diligence conducted by the Buyer pursuant to paragraph 5(d) hereof. Additionally, the Seller has instructed its Representatives and the Representatives of API to provide to the Buyer and its Representatives copies of documents requested by the Buyer and its Representatives in the course of the due diligence conducted by the Buyer pursuant to paragraph 5(d) hereof and to otherwise cooperate with and assist the Buyer and its Representatives in such due diligence efforts. The Parties acknowledge and agree that all such information and documents are Confidential Information. (c) Press Releases and Public Announcements. No Party shall issue any press release or make any public announcement relating to the subject matter of this Agreement prior to the Closing without the prior written approval of the Buyer and the Seller; provided, however, that any Party may make any public disclosure it believes in good faith is required by applicable law or any listing or trading agreement concerning its publicly-traded securities (in which case the disclosing Party will use its best efforts to advise the other Party prior to making the disclosure). (d) No Third-Party Beneficiaries. This Agreement shall not confer any rights or remedies upon any Person other than the Parties and their respective successors and permitted assigns. (e) Entire Agreement. This Agreement (including the Exhibits referred to herein) constitutes the entire agreement among the Parties and their Affiliates in regard to the subject matter hereof and supersedes any prior understandings, agreements, or representations (specifically including the Letter Agreement) by or among the Parties or their Affiliates, written or oral, to the extent they relate in any way to the subject matter hereof. (f) Succession and Assignment. This Agreement shall be binding upon and inure to the benefit of the Parties named herein and their respective successors and permitted assigns. No Party may assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of the Buyer and the Seller; provided, however, that the Seller may (i) assign any or all of its 28 rights and interests hereunder to one or more of its Affiliates and (ii) designate one or more of its Affiliates to perform its obligations hereunder (in any or all of which case the Seller nonetheless shall remain responsible for the performance of all of its obligations hereunder). (g) Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. (h) Headings. The paragraph headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement. (i) Notices. All notices, requests, demands, claims, and other communications hereunder shall be in writing. Any notice, request, demand, claim, or other communication hereunder shall be deemed duly given if sent by prepaid overnight courier or transmitted by telecopier addressed to the intended recipient as set forth below: If to the Seller: Atlas Corporation Suite 3050 Republic Plaza 370 17th Street Denver, Colorado 80202 Attention: Jerome C. Cain, Secretary-Treasurer Telecopier No.: (303) 629-2445 If to the Buyer: Cornerstone Industrial Minerals Corporation Suite 3050 Republic Plaza 370 17th Street Denver, Colorado 80202 Attention: John Leahy, President Telecopier No.: (303) 629-2445 Any notice, request, demand, claim, or other communication hereunder sent to the intended recipient at the address set forth above shall be deemed to have been duly given on the business day following the day upon which it is given to the courier or on the day (or the next business day is such day is not a business day) upon which it is telecopied. Any Party may change the 29 address to which notices, requests, demands, claims, and other communications hereunder are to be delivered by giving the other Party notice in the manner herein set forth. (j) Governing Law. This Agreement shall be governed by and construed in accordance with the domestic laws of the State of Oregon without giving effect to any choice or conflict of law provision or rule (whether of the State of Oregon or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Oregon. (k) Amendments and Waivers. No amendment of any provision of this Agreement shall be valid unless the same shall be in writing and signed by the Buyer and the Seller. No waiver by any Party of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence. (l) Severability. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. (m) Expenses. Each of the Buyer and the Seller will bear its own costs and expenses (including legal fees and expenses) incurred in connection with this Agreement and the transactions contemplated hereby. (n) Currency. All dollar amounts contained herein are expressed in lawful currency of the United States of America. (o) Construction. The Parties have participated jointly in the negotiation and drafting of this Agreement in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favouring or disfavouring any Party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any federal, state, local or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The word "including" shall mean including without limitation. (p) Incorporation of Schedules. The Schedules identified in this Agreement are incorporated herein by reference and made a part hereof. (q) Arbitration of Disputes. 30 (i) Unresolved Disputes. Any disagreement or dispute arising out of or relating to this Agreement, its existence, interpretation, performance or enforcement (including but not limited to the existence of a default) not resolved by the Parties within fifty (50) days after the date on which one party notifies the other of any such disagreement or dispute shall be settled by arbitration in accordance with this paragraph 13(q). (ii) Rules. Matters subject to arbitration shall be settled by arbitration before a panel of three arbitrators in Denver, Colorado, in accordance with the commercial arbitration rules of the American Arbitration Association in effect at the time of arbitration. In the event of a conflict between those commercial arbitration rules and this paragraph 13(p), this paragraph 13(p) shall control. The judgment of the arbitrators as to such matters shall be binding upon the parties to this Agreement, and judgment upon any award rendered by the arbitrators may be entered in any court having jurisdiction under the provision of the Colorado Revised Statutes pertaining to arbitration and award as they may be amended from time to time. (iii) Demand. To demand arbitration any party (the "demanding party") shall give written notice to the other party (the "responding party"). Such notice shall specify the nature of the issues in dispute, the amount involved, and the remedy requested. Within twenty (20) days of the receipt of the notice, the responding party shall answer the demand in writing, specifying the issues that party disputes. The parties shall thereupon each select one arbitrator, who shall be qualified by skill and experience in the subject matter under dispute. Within fifteen (15) days thereafter, the two appointed arbitrators shall jointly select a third arbitrator similarly qualified. (iv) Proceedings. Within twenty (20) days after the third arbitrator has been selected or appointed, each party to the dispute shall submit to the arbitrators a written statement of its position as to the matter being arbitrated, including its position on the necessity for discovery or a formal hearing. The arbitrators shall, within fifteen (15) days after submission of statements, establish a schedule for the arbitration proceedings and issues orders relating to the conduct of such proceedings, governing, among other matters, the extent and nature of any discovery to be allowed and the necessity of a formal hearing. If a hearing is held, the arbitrators shall issue a decision as to the resolution of the dispute within fifteen (15) days after the hearing. A majority ruling by the arbitrators shall be binding on the parties. All costs, expenses and fees, plus reasonable attorneys' fees, shall be recoverable by or paid to the substantially prevailing party in any dispute resolved by arbitration. 31 IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by their duly authorized representatives upon the date first herein written. BUYER: CORNERSTONE INDUSTRIAL MINERALS CORPORATION By: /s/ John R. Leahy --------------------------- John R. Leahy, President SELLER: ATLAS CORPORATION By: /s/ Jerome C. Cain --------------------------- Name: Jerome C. Cain Title: V.P. - Finance, Treasurer & Secretary EX-10.36 5 RESIGNATION AGREEMENT DATED 6-21-96 Exhibit 10.36 RESIGNATION AGREEMENT AND GENERAL RELEASE THIS RESIGNATION AGREEMENT AND GENERAL RELEASE, made and entered into as of this 21st day of June, 1996, by and between DAVID J. BIRKENSHAW (hereinafter referred to as the "Employee") and ATLAS CORPORATION, a corporation organized under the laws of Delaware (hereinafter referred to as the "Company"). W I T N E S S E T H : - - - - - - - - - - WHEREAS, the Employee has been employed by the Company as its Chairman and Chief Executive Officer, pursuant to the provisions of an employment agreement between the Company and the Employee dated September 22, 1993 as the same has been amended from time to time (the "Employment Agreement"); and WHEREAS, the Employee and the Company deem it to be in their mutual interest that Employee's employment with the Company shall terminate; and WHEREAS, the Employee and the Company desire to settle fully and finally all outstanding matters between them, including, but in no way limited to, any outstanding matters that might arise out of the Employment Agreement, Employee's employment with the Company and the termination thereof; NOW, THEREFORE, in consideration of the premises and mutual promises herein contained, it is agreed as follows: 1. Termination Date. The parties agree that the Employee's employment by the Company shall terminate effective as of June 21, 1996 (the "Termination Date"). Employee understands and agrees that, effective as of the Termination Date, he is no longer authorized to incur any expenses, obligations or liabilities on behalf of the Company. Employee acknowledges that he has submitted, and has been paid in full, for all outstanding expenses incurred or claimed by him through such date. 2. Resignation. The execution of this Agreement shall serve as the resignation by the Employee as an officer, director and employee of the Company and of each "Affiliate" of the Company (as that term is defined by Paragraph 15(c) of this Agreement) and as a trustee, fiduciary or administrator of any employee benefit plan of the Company or an Affiliate, effective as of the Termination Date. 3. Terms of Separation. In consideration of the agreements by Employee provided herein, including without limitation the release by the Employee in Paragraph 4 hereof, the Company agrees to provide the following payments and benefits to the Employee [as soon as -2- practicable after this Agreement becomes irrevocable pursuant to the provisions of Section 10 hereof:] (a) The Company shall pay to the Employee in full satisfaction of any claims by him against the Company or any Affiliate for salary, bonus, vacation, holiday, [expense or similar reimbursement,] pension or profit sharing benefits, separation or severance pay and any other claim for compensation or benefits of any kind whatsoever under the Employment Agreement or otherwise, (i) a single lump sum payment of $337,500 (less applicable withholding for payroll and other taxes), which amount shall be applied in payment of those expenses, advances, loans, other amounts owed to the Company and its Affiliates and other items listed in Exhibit D hereto which are presently known to the Company, and (ii) an additional payment totaling $112,500 to be paid in six equal monthly installments of $18,750 (less applicable withholdings for payroll and other taxes), which amount shall be reduced by the amount of any expenses, advances, loans, other amounts owed to the Company and its Affiliates or similar items which the Company or its Affiliates may become obligated to pay after the date hereof but which are not presently known to the Company and its Affiliates. Such payments shall be made by depositing such amount to the Employee's checking account or such other account, or by check, as Employee may authorize in writing. (b) The Company and the Employee agree that any stock options and restricted stock or other awards which may have been granted to Employee under the Company's Long Term Incentive Plan are hereby canceled and the Employee hereby waives any claims to or in respect of such stock options or stock awards. Immediately following the Termination Date, the Company agrees that it shall award to Employee an option to purchase an aggregate of 200,000 shares of the Company's common stock at an exercise price of $1.50 per share, which option shall be exercisable in whole or in part at any time prior to June 20, 1999. If not exercised by June 20, 1999, such stock option shall expire. The terms and conditions of such stock option award shall reflected in a written option agreement between the Company and the Employee in the form attached hereto as Exhibit C. (c) The Employee shall be placed on an unpaid personal leave of absence as an employee through December 18, 1996. During such leave of absence, Employee shall not have any duties or responsibilities, shall not have the authority to bind the Company in any way or to incur any liabilities on behalf of the Company or to hold himself out as acting for or on behalf of the Company in any way. (d) The Company shall make available to the Employee through June 20, 1997 coverage under the Company's medical benefits plan for himself and his dependents under the same terms and conditions, including required contributions, as apply to active employees. Thereafter, the Employee may purchase, if eligible, continuation medical benefits coverage to the extent and for the period provided by federal law. -3- (e) Distributions or payments to Employee shall be made under any tax-qualified employee benefit plans of the Company in which the Employee participated prior to the Termination Date, to the extent provided by such plans. (f) Subject to Employee providing the Company with documentation and records satisfactory to the Company, the Company agrees to treat certain Canadian securities trades undertaken by Employee in the name of the Company in securities of Kyrgoil Corp. as for the account of the Employee individually. At such time as the Company shall receive the proceeds of any such trades, it shall remit to Employee the net amount received by the Company less all taxes, expenses, fees and similar charges of any kind which may be incurred by the Company. Employee represents that such securities trades were undertaken for his own account and without any prior knowledge by any officer or director of the Company. (g) In exchange for the release of any and all claims by Employee for personal and business moving, relocation or similar expenses, and for the other agreements of the Employee hereunder, the Company agrees to forgive the repayment of the $60,000 unsecured housing loan, and any accrued but unpaid interest thereon, which the Company made to the Employee in connection with his relocation to Denver, Colorado. 4. Release by Employee. In consideration for the promises contained herein, Employee hereby irrevocably and unconditionally releases, acquits and forever discharges for himself and his heirs, executors, administrators, successors and assigns, the Company and each of the Company's parent companies, stockholders, predecessors, successors, assigns, agents, directors, officers, employees, representatives, attorneys, divisions, subsidiaries, Affiliates (and stockholders, agents, directors, officers, employees, representatives and attorneys of such, parent companies, divisions, subsidiaries and Affiliates), and all persons acting by, through, under or in concert with any of them (collectively, the "Company Releasees"), or any of them, from any and all charges, complaints, claims, liabilities, obligations, promises, agreements, controversies, damages, actions, causes of action, suits, rights, demands, costs, losses, debts and expenses (including attorneys' fees and costs actually incurred) of any nature whatsoever, known or unknown, suspected or unsuspected, including, but not limited to, claims arising directly or indirectly out of the Employee's employment by the Company, and the termination of the Employee's employment, claims under the Employment Agreement, claims under the Long Term Incentive Plan, claims for compensation of any kind, claims for workers' compensation, claims in equity or law for wrongful discharge, claims arising in tort, personal injury, defamation, mental anguish, emotional distress, injury to health and reputation, claims under federal, state or local laws prohibiting discrimination on account of age, national origin, race, sex, handicap, religion and similar classifications, claims under the Civil Rights Acts of 1866 and 1871, as amended; the Civil Rights Act of 1964, Title VII, as amended; the Civil Rights Act of 1991; the Age Discrimination in Employment Act of 1967, as amended; the Employee Retirement Income Security Act of 1974, as amended; the Americans with Disabilities Act of 1990; similar Colorado laws, including Colorado Rev. Stat. (S) 24-34-402(1)(a), (S) 24-34-301(1)(1994), and similar claims under the laws of Canada and any province or political -4- subdivision thereof ("Claim" or "Claims"), which Employee now has, or ever claimed to have, or could claim against each or any of the Company Releasees. Employee hereby agrees to forego any right to file any charges or complaints with any governmental agencies or a lawsuit against the Company Releasees under any of the laws referenced in this paragraph or with respect to any matters covered by the release in this paragraph. Notwithstanding the foregoing, the release by the Employee in this paragraph shall not limit the right of the Employee to seek to enforce the provisions of this Agreement. 5. Confidentiality and Non-Disclosure Agreements. (a) Employee acknowledges that any confidentiality, proprietary rights or nondisclosure agreement(s) in favor of the Company or the Company Releasees, including without limitation, those agreements contained in Paragraph 7 of the Employment Agreement, which he may have entered into in connection with his employment ("Nondisclosure Agreement(s)") with the Company, is understood to survive, and does survive, any termination of such employment, and accordingly nothing in this Agreement shall be construed as terminating, limiting or otherwise affecting any such Nondisclosure Agreement(s) or Employee's obligations thereunder. Without limiting the generality of the foregoing, no time period set forth in this Agreement shall be construed as shortening or limiting the term of any such Nondisclosure Agreement(s), which term shall continue as set forth therein. (b) Employee agrees that, except to the extent compelled by law or legal process, he (i) will not hereafter disclose or communicate confidential information of the Company, its Affiliates or their customers to any third party (including as a third party for this purpose, employees and former employees of the Company, its Affiliates and governmental agencies), (ii) will not make use of confidential information of the Company, its Affiliates or their customersfor his own behalf, or on behalf of any third party, and (iii) will not facilitate, assist, persuade or attempt to facilitate, assist or persuade any third party to commence or prosecute any legal proceedings against the Company, its Affiliates and their customers and any Company Releasee. In the event Employee receives, is notified of or is served with a subpoena, summons, complaint, order, notice, notice of deposition or any other legal process or documents (collectively, "Legal Process") in connection with any legal or quasi-legal proceeding, including but not limited to any action at law or equity, arbitral, administrative proceeding or governmental investigation (collectively, "Litigation"), relating to the performance of his services as an employee, officer or director of the Company or its Affiliates or which, if complied with by Employee, might compel or lead to the disclosure by Employee of confidential information of the Company, its Affiliates or their customers, the Employee shall promptly, but in no event later than 2 business days after receipt unless 2 business days is not reasonable under the circumstances, provide the Company with a copy of the same, and shall in no event and under no circumstances disclose any such information prior to the last date specified in the Legal Process for making such disclosure. If the Company wishes Employee to contest such Legal Process or to be represented by counsel selected by it, the Company shall as soon as possible, but in no event later than 1 day prior to the date specified in such Legal Process for complying with the same, (i) notify Employee in writing that it wishes Employee to contest such Legal -5- Process and agree to pay Employee the costs and expenses of attorneys' fees incurred by the Employee in connection with contesting such Legal Process, not to exceed $5,000, or (ii) notify Employee that counsel selected by the Company shall, at the sole expense of the Company, participate in or control the response of the Employee to such Legal Process insofar as such response relates to the Employee's performance of services for the Company or the possible disclosure of confidential information of the Company, its Affiliates or their customers. Employee agrees to take such lawful action in connection with contesting any such Legal Process as the Company shall reasonably request from time to time. Employee agrees to promptly notify the Company of any action taken or proposed to be taken from time to time in connection with any Legal Process or Litigation which might lead to the disclosure of the confidential information of the Company, its Affiliates or their customers, and to make available to the Company any Legal Process of documents related thereto. The Employee further agrees to cooperate with the Company by providing a reasonable amount of testimony relating to any Litigation, to the extent requested by the Company. 6. Company Property and Information. Employee has returned or will immediately return to the Company all Company Information and related reports, customer lists, trade secrets notes, maps, files, blueprints, drawings, memoranda, manuals, and records; credit cards, cardkey passes; door and file keys; automobiles, computer access codes, computer discs, magnetic media or business information in any form; software; other business information of the Company Releasees; and other physical or personal property which Employee received or prepared or helped prepare in connection with his employment; and Employee has not retained and will not retain any copies, duplicates, reproductions, or excerpts thereof in any form. The term "Company Information" as used in this Agreement includes, without limitation, information received from third parties, other confidential business or financial information, and other materials and information described in this paragraph. 7. Confidentiality of this Agreement. Employee represents and agrees that he will keep the terms and fact of this Resignation Agreement and General Release completely confidential, and that he will not hereafter disclose any information concerning this Resignation Agreement and General Release to anyone, except to his immediate family and his legal and tax advisors; provided that such persons agree to keep such information confidential and not disclose it to others. 8. Consideration. Employee acknowledges that the Company is not otherwise required to enter into this Agreement, that the payments and agreements in this Agreement are in addition to anything of value to which he is already entitled, that the consideration to be received by him under this Agreement is adequate, and that such promises and agreements are made by the Company because of his agreement to provide the releases in Paragraph 4 hereof. 9. Receipt of Agreement. Employee acknowledges receiving this Agreement on June 21, 1996 and that he has twenty-one (21) days from that date to consider the terms of this Agreement. -6- 10. REVOCABILITY. This Agreement is revocable by Employee for seven (7) days after it is signed by him. This Agreement shall not be effective or enforceable until the period for revocation has expired. 11. ARBITRATION. In the event there shall arise any question or dispute between the parties with respect to the provisions of this Resignation Agreement and General Release or its interpretation, such dispute shall be settled exclusively by arbitration in Denver, Colorado in accordance with the commercial rules then in effect of the American Arbitration Association. Judgment upon an award rendered by the arbitrator(s) may be entered in any court of competent jurisdiction, including courts in the state of Colorado. Any award so rendered shall be final and binding upon the parties hereto. All costs and expenses of the arbitrator(s) and all costs and expenses of experts, attorneys, witnesses and other persons retained by the parties shall be borne by them respectively. In the event that injunctive relief shall become necessary under this Agreement, either of the parties shall have the right to seek provisional remedies prior to an ultimate resolution by arbitration. 12. NO ADMISSION. This Resignation Agreement and General Release shall not in any way be construed as an admission by the Company that it has acted wrongfully with respect to the Employee in connection with his employment by the Company or the termination thereof. Except with respect to the compensation payable to Employee under Paragraph 3 hereof, the Company specifically disclaims any liability to the Employee, and wrongful acts against Employee, on the part of itself, and the Company Releasees. 13. VOLUNTARY AGREEMENT. Employee represents and agrees that he fully understands his right to discuss all aspects of this Resignation Agreement and General Release with his private attorney, that he has availed himself of this right, that he has carefully read and fully understands all of the provisions of this Resignation Agreement and General Release, and that he is voluntarily entering into this Resignation Agreement and General Release. 14. PRESS RELEASE. The termination of the Employee's employment with the Company shall be announced in a notice to employees of the Company and a press release in the form annexed to this Agreement as Attachments A and B, respectively. Except as set forth in Attachment A, or as required by law or legal process, neither the Company nor the Employee shall issue any press release, or make any statements to or grant any interview to any press or media representative relating to the termination of the Employee's employment with the Company or any matter referred to in this Agreement. Without limitation of the foregoing, the Employee further agrees that he will not make any statements to any party that could reasonably be construed as damaging to the business, image or reputation of the Company, its Affiliates or their respective management. 15. GENERAL. (a) Employee represents and acknowledges that in executing this Resignation Agreement and General Release, he does not rely and has not relied upon any representation, inducement agreement or statement not set forth herein made by any of the -7- Company Releasees or by any of the Company Releasees' agents, representatives, or attorneys with regard to the subject matter, basis or effect of this Resignation Agreement and General Release or otherwise. (b) The provisions of this Resignation Agreement and General Release are severable, and if any part of it is found to be unenforceable, the other paragraphs shall remain fully valid and enforceable. This Resignation Agreement and General Release shall survive the termination of any arrangements contained herein. (c) As used herein, the term "Affiliate" shall mean any corporation or business entity controlling, controlled by or under common control with the Company, including as an Affiliate, Granges Inc., Phoenix Financial Holdings Inc. and Zamora Gold Corporation and the affiliates of each of such companies. (d) The Employee represents that he has not assigned or transferred or purported to assign or transfer any claim or matter released herein. (e) This Resignation Agreement and General Release sets forth the entire agreement between the parties hereto, and fully supersedes any and all prior agreements or understandings between the parties hereto pertaining to the subject matter hereof. (f) The effect, intent and construction of this Agreement shall be governed by the laws of Colorado, without giving effect to the conflict of laws rules thereof. IN WITNESS WHEREOF, the parties have duly executed this Resignation Agreement and General Release as of the date first set forth above. /s/ David J. Birkenshaw ------------------------------------ DAVID J. BIRKENSHAW ATLAS CORPORATION By: /s/ J.H. Dunnett ------------------------------------ Name: James H. Dunnett Title: Director EXHIBIT A EMPLOYEE ANNOUNCEMENT June 21, 1996 TO: All Employees FROM: Gary E. Davis Today David Birkenshaw resigned as CEO and Chairman of the Company. As further discussed in the attached press release which was just released, David has decided to leave the Company so he can dedicate more time to the pursuit of other business interests. Since David's association with Atlas in 1993, the Company has significantly strengthened its balance sheet and made several notable acquisitions, including the Granges control block, the Doby George gold property and the Phoenix public shell through which we intend to pursue development of industrial minerals. Given the ongoing efforts to restart Gold Bar, pending the signing of an appropriate gold hedging program, and the resulting commitment of both monies and manpower to this, it was David's opinion that this new direction was better left to others for implementation. I am sure you will join me in thanking David and in wishing him the best in his new endeavors. EX-10.37 6 SUPPORT LETTER DATED 8-16-96 Exhibit 10.37 STRICTLY PRIVATE & CONFIDENTIAL ------------------------------- August 16, 1996 SUPPORT LETTER -------------- TO: ATLAS CORPORATION (the "Shareholder") Granges Inc. ("Granges") and Da Capo Resources Ltd. ("Da Capo") propose to enter into an agreement (the "Definitive Agreement") providing for the amalgamation (the "Amalgamation") of Granges and Da Capo to become effective under the provisions of the British Columbia Company Act (the "Act"). Under the Amalgamation, each issued and outstanding common share of Granges will be exchanged for one common share in the capital of the amalgamated company ("Amalco") and each issued and outstanding common share of Da Capo will be exchanged for two common shares in the capital of Amalco. This letter is intended to set out the terms and conditions of the agreement of Atlas Corporation (the "Shareholder"): (i) to support the Amalgamation, including any Alternative Transaction (as defined in section 1.3); (ii) to vote its common shares (the "Shares") in Granges as set out opposite its name in Schedule "A" in favour of the Amalgamation and any Alternative Transaction; and (iii) to abide by the restrictions and covenants set forth herein. 1. Shareholder Commitments to the Amalgamation 1.1 Commitment, Non-Solicitation. Subject to the covenants of Granges herein, the Shareholder covenants that until the date upon which the certificate is issued under the Act giving effect to the Amalgamation (the "Effective Date"): (a) except to the extent permitted hereunder, the Shareholder will not take any steps, directly or indirectly, which may in any way adversely affect the transactions contemplated hereby and to be contemplated in the Definitive Agreement; (b) the Shareholder will not solicit, initiate or encourage submissions, proposals or offers from any other person, entity or group relating to, or facilitate or encourage any effort or attempt with respect to, the acquisition or disposition of all or any substantial part of the issued or unissued shares of Granges or Da Capo or their respective subsidiaries, or any arrangement, amalgamation, merger, sale of all or any substantial part of their respective assets, take-over bid, reorganization recapitalization, liquidation or winding-up of, or other business combination or similar transaction involving Granges or Da Capo or any of their respective subsidiaries and any other party (each an "Extraordinary Business Combination"). The Shareholder will not participate in any discussions or negotiations regarding, or (except as required by law) furnish to any other person, entity or group, any information with respect to, or otherwise cooperate in any way with, or assist or participate in, any Extraordinary Business Combination. If the Shareholder receives any such inquiry, submission, proposal or offer, the Shareholder will promptly notify Granges and Da Capo in writing of all relevant details relating thereto; and (c) the Shareholder will use all reasonable efforts to assist Granges and Da Capo to complete the Amalgamation or an Alternative Transaction as the case may be. 1.2 Voting. The Shareholder covenants that it will vote its Shares in favour of the Amalgamation at each meeting or adjournment or adjournments thereof (the "Meeting") of holders of shares of Granges to be held to consider the Amalgamation. -2- 1.3 Change In Nature of Transaction. The Shareholder agrees that if Granges and Da Capo mutually agree that it is necessary or desirable to proceed with another form of transaction (an "Alternative Transaction") whereby either Granges or Da Capo or any of their respective affiliates is effectively to acquire 100% of the Common Shares of the other and merge such entities on economic terms (including tax treatment) which, in relation to the Shareholder, are substantially equivalent to or better than those contemplated by the Agreement, and provided that the consideration paid to shareholders of either continues to be satisfied in common shares of the other, the Shareholder will support the completion of such Alternative Transaction in the same manner as the Amalgamation. 1.4 Meeting of Shareholders. If the Alternative Transaction involves a meeting or meetings of holders of shares of Granges, the Shareholder agrees to vote in favour of any matters necessary or ancillary to the completion of the transactions contemplated by the Alternative Transaction. 1.5 Change of References. In the event of any proposed Alternative Transaction, the references in this agreement to "Amalgamation" shall be changed to "Alternative Transaction" and all terms covenants, representations and warranties of this agreement shall be and shall be deemed to have been made in the context of the Alternative Transaction. All references to the "Effective Date" herein shall also refer to the date of closing of the transactions contemplated by the Alternative Transaction. 1.6 No Dissent. The Shareholder covenants that it will not exercise any rights of dissent provided under sections 231 and 273 of the Act with respect to the Amalgamation or any Alternative Transaction. 2. GENERAL 2.1 Personal Warranties. By executing this Agreement, the Shareholder represents and warrants to Granges and Da Capo that the Shareholder has the sole right to vote its Shares at the Meeting. -3- 2.2 Transfer of Shares. The Shareholder agrees with Granges and Da Capo that it will not during the term of this Agreement transfer or assign or agree to transfer or assign any of the Shares without the prior consent of Granges and Da Capo, which consent shall not be unreasonably withheld if it is sought for bona fide tax, planning purposes which does not prejudice, directly or indirectly, Granges or Da Capo; provided however that such consent is not necessary if the transfer is (i) to a holding company beneficially owned by the Shareholder; or (ii) a transfer by the Shareholder, which is a holding company, to a shareholder who controls the holding company, where such holding company or shareholder of such holding company, as the case may be, executes this Agreement. 2.3 Acquired Shares. The Shareholder agrees that any shares of Granges or Da Capo purchased or as to which the Shareholder acquires beneficial ownership after the execution of this Agreement, shall be subject to the terms of this Agreement to the same extent as if they constituted Shares. The Shareholder agrees not to purchase or sell any shares of Granges or Da Capo until the Amalgamation becomes effective or the Definitive Agreement is terminated. 2.4 Standstill. Granges agrees not to purchase or sell any shares of Da Capo until the Amalgamation becomes effective or the Definitive Agreement is terminated. Da Capo agrees not to purchase or sell any Shares of Granges until the Amalgamation becomes effective or the Definitive Agreement is terminated. 2.5 Covenants of Granges. Granges covenants and agrees with the Shareholder, and Granges' compliance with such covenants shall be a condition to the Shareholders' obligations hereunder, as follows: (a) to use all reasonable efforts to assist the Shareholder in reducing the number of Shares pledged by the Shareholder as security for the 7% Exchangeable Debentures due October 25, 2000 issued by the Shareholder; (b) to negotiate in good faith an amendment to the Gold Bar joint venture agreement between Granges and the Shareholder consistent with discussions -4- between Granges and the Shareholder immediately prior to the signing of this Agreement; (c) to file and use its best efforts to cause to become effective not later than November 30, 1996 all registration statements and other filings (federal, provincial or state) and shall deliver or cause to be delivered such certificates and opinions as shall be necessary on the part of Granges to enable the Shareholder to dispose of its Shares on The Toronto Stock Exchange and American Stock Exchange or otherwise in Canada or the United States without restriction of any kind whatsoever under applicable securities laws and to maintain, in the case of any registration statement filed with the U.S. Securities and Exchange Commission, the effectiveness of such registration and other applicable filings until at least December 31, 2000, with the costs incurred by Granges in connection with the aforesaid matters to be borne by Granges; (d) to cause Mike Richings, if and when requested by the Shareholder, to resign from the Board of Directors of the Shareholder; and (e) to reimburse promptly all expenses (other than brokerage commissions or underwriting fees) incurred by the Shareholder in connection with this Agreement, the Amalgamation or any Alternative Transaction or any of sub-paragraphs (a) to (d) above including, without limitation, all reasonable fees of the Shareholder's counsel in connection with any such matter. 2.6 Disclosure. No disclosure of this Agreement and any resulting agreement shall be made by Granges, Da Capo or the Shareholder or any corporation or other entity which is associated with the Shareholder except as may be required by applicable law or regulatory authorities. The parties shall coordinate the making and dissemination of any public announcement relating to the subject matter of this Agreement. -5- 2.7 Time of the Essence. Time shall be of the essence of this Agreement. 2.8 Termination Date. It is intended that the Effective Date shall occur as soon as is practicable following receipt of the appropriate shareholder, court and regulatory approvals but not later than December 31, 1996 and (except with the written consent of the Shareholder) if the Effective Date does not occur by such date, the Agreement shall be of no further force and effect. The covenants of Granges in section 2.5 will survive any termination of this Agreement. 2.9 Counterparts. This agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which shall constitute one and the same agreement. ________________________ If the terms and conditions of this letter are acceptable to you please indicate your acceptance by dating and signing the same as noted above. Yours very truly, GRANGES INC. By: /s/ Michael B. Richings ------------------------- DA CAPO RESOURCES LTD. By: /s/ Ross J. Beaty ----------------- We irrevocably agree with and accept the terms of this letter. ATLAS CORPORATION By: /s/ Jerome C. Cain ------------------- -6- SCHEDULE A ---------- DA CAPO SHAREHOLDERS SHAREHOLDER NUMBER OF DA CAPO COMMON SHARES - ----------- ------------------------------- Ross Beaty 800,000 416554 B.C. Ltd. 3,497,308 Kestrel Holdings Ltd. 124,000 GRANGES SHAREHOLDERS SHAREHOLDER NUMBER OF GRANGES COMMON SHARES - ----------- ------------------------------- Atlas Corporation 12,714,900 -7- EX-10.38 7 AMENDMENT TO RESIGNATION AGREEMENT DATED 10-96 Exhibit 10.38 AMENDMENT TO RESIGNATION AGREEMENT AND GENERAL RELEASE This Amendment to Resignation Agreement and General Release (the "Amendment") is entered into as of this _____ day of October, 1996 by and between David J. Birkenshaw ("Birkenshaw") and Atlas Corporation, a corporation organized under the laws of Delaware ("Atlas"). Recitals -------- A. Birkenshaw and Atlas are parties to the Resignation Agreement and General Release made and entered into as of June 21, 1996 (the "Agreement"). B. Certain disputes and issues have arisen between Birkenshaw and Atlas concerning the interpretation of, and performance under, the Agreement. C. The parties have agreed to compromise their differences and to settle their disputes by entering into this Amendment. Agreement --------- In consideration of the mutual promises contained herein, the parties incorporate by reference and agree to the accuracy of the above Recitals and further agree as follows: 1. Lump Sum Payment. With regard to Paragraph 3(a) of the Agreement, Birkenshaw and Atlas agree as follows: (a) In full satisfaction of Atlas's outstanding obligation as of the date of this Amendment to make monthly installment payments as contemplated by Paragraph 3(a)(ii) of the Agreement, the parties agree that Atlas shall pay the amount of $54,000 to Birkenshaw. This amount shall not be reduced by the amount of any expenses, advances, loans, or other amounts owed to Atlas and its Affiliates (as that term is defined in the Agreement) which were known to Atlas as of October 8, 1996. Atlas specifically waives its rights to deduct or otherwise collect such amounts from Birkenshaw provided, however, that Atlas specifically reserves and does not waive its right to collect and seek reimbursement for any such amounts or expenses of which Atlas becomes aware at any time after October 8, 1996. (b) Birkenshaw warrants and represents that, as of October 1, 1996, he is a Canadian citizen and resident for tax purposes, and that he is no longer a United States citizen or resident for tax purposes. In reliance upon this warranty and representation, Atlas agrees that it will not withhold payroll or other taxes from the amount to be paid to Birkenshaw pursuant to subparagraph (a). In the event that any taxing authority treats or attempts to treat that payment as payment of wages subject to withholding and/or income taxes, Birkenshaw agrees to pay his own taxes, attorneys' fees, penalties and interest associated with or arising from any such treatment or attempted treatment. He further agrees to indemnify and hold Atlas harmless against any and all amounts (including, without limitation, taxes, attorneys' fees, penalties and interest), which are or become due from Birkenshaw or from Atlas to any taxing authority as a result of this Amendment and the payment provided by the preceding subparagraph. (c) Atlas's payment shall be made, within 5 business days after the date of this Amendment, by depositing such amount as Birkenshaw may direct. 2. Jones, Gable & Company Limited. With regard to Jones, Gable & Company Limited ("Jones, Gable"), Birkenshaw and Atlas agree as follows: (a) Atlas hereby assigns all of its right, title, interest, and ownership rights to Jones, Gable Account No. 300202-9 to Birkenshaw. Atlas and Birkenshaw agree that Paragraph 3 (f) of the Agreement is superseded by the preceding sentence of this subparagraph. Immediately after the transfer of this account, Birkenshaw shall apply that account toward partial payment of the invoice referred to in subparagraph (b). (b) Birkenshaw agrees to assume all responsibility, and to hold harmless and indemnify Atlas, with regard to the March 27, 1996 Jones, Gable invoice to Atlas in the -3- amount of US$24,000.00. Birkenshaw agrees to pay the full amount of that invoice to Jones, Gable within 5 business days after receipt of the payment specified in subparagraph (c). (c) Within 5 business days after the date of this Amendment, Atlas shall pay Birkenshaw the amount of $6,000 in consideration for his promises set forth in subparagraphs (a) and (b). This amount is in addition to the amount referred to in Paragraph 1 of this Amendment. (d) Concurrently with the execution of this Amendment, Atlas and Birkenshaw shall execute a document, in the form of that attached hereto as Exhibit A, advising Jones, Gable of their agreement set forth in subparagraphs (a) and (b). Atlas shall then deliver the original of that document to Jones, Gable. 3. Medical Benefits. As of the date of this Amendment, Birkenshaw hereby waives all right, on behalf of himself and his dependents, to be provided with coverage under Atlas's medical benefits plan pursuant to Paragraph 3(d) of the Agreement. 4. Status. Birkenshaw and Atlas agree to delete Paragraph 3(c) of the Agreement, and they further agree that, as of the effective date of this Amendment, Birkenshaw is not an Atlas employee in any sense or capacity. -4- 5. Effect of Agreement. Except to the extent that it has been specifically modified or amended by this Amendment, the Agreement remains in full force and effect, and Birkenshaw and Atlas agree that the Agreement and Amendment, taken together, constitute the entire agreement between the parties hereto. /s/ David J. Birkenshaw ----------------------- David J. Birkenshaw ATLAS CORPORATION By: /s/ Gerald E. Davis -------------------- Name: Gerald E. Davis Title: President -5- [LETTERHEAD OF ATLAS CORPORATION] October 11, 1996 Mr. D. M. Ross Jones, Gable & Company Limited 110 Yonge Street Toronto, Ontario M5C 1T6 Canada Dear Mr. Ross: Atlas Corporation hereby transfers all of its right, title and interest to Account No. 300202-9 (Account Name: Atlas Corporation) to David J. Birkenshaw. David J. Birkenshaw simultaneously assumes all responsibility for payment of the March 27, 1996 invoice to Atlas Corporation in the amount of US$24,000.00. ATLAS CORPORATION By: /s/ Jerome C. Cain -------------------- Jerome C. Cain Vice President Finance Agreed to on October 11, 1996 /s/ David J. Birkenshaw - --------------------------- David J. Birkenshaw Jones, Gable & Company Limited hereby agrees to the assignment of all ownership rights of Atlas' Account #300202-9 to David J. Birkenshaw and further agrees to release Atlas Corporation from any and all obligations heretofore due Jones & Gable. Agreed to on October 15, 1996 /s/ Jones & Gable Company Limited - --------------------------------- Jones & Gable Title: Clerk -------------------------- EX-10.39 8 RESIGNATION AGREEMENT DATED 11-5-96 Exhibit 10.39 RESIGNATION AGREEMENT AND GENERAL RELEASE THIS RESIGNATION AGREEMENT AND GENERAL RELEASE, made and entered into as of the 5th day of November, 1996, by and between GERALD E. DAVIS (hereinafter referred to as the "Employee") and ATLAS CORPORATION, a corporation organized under the laws of Delaware (hereinafter referred to as the "Company"). W I T N E S S E T H : - - - - - - - - - - WHEREAS, the Employee has been employed by the Company as its President, pursuant to the provisions of an employment agreement between the Company and the Employee dated June 1, 1995, as the same may have been amended from time to time (the "Employment Agreement"); and WHEREAS, the Employee and the Company deem it to be in their mutual interest that Employee's employment with the Company shall terminate; and WHEREAS, the Employee and the Company desire to settle fully and finally all outstanding matters between them, including, but in no way limited to, any outstanding matters that might arise out of the Employment Agreement, Employee's employment with the Company and the termination thereof; and WHEREAS, the Company has agreed to grant the Employee, under the terms of this Agreement, additional compensation in the form of stock options, which the Company is not otherwise obligated to grant and is in addition to anything of value to which the Employee is otherwise entitled; NOW, THEREFORE, in consideration of the premises and mutual promises herein contained, it is agreed as follows: 1. TERMINATION DATE. The parties agree that the Employee's employment by the Company shall terminate effective as of November 5, 1996 (the "Termination Date"). Employee understands and agrees that, effective as of the Termination Date, he is no longer authorized to incur any expenses, obligations or liabilities on behalf of the Company. Employee acknowledges that he has submitted, and has been paid in full, for all outstanding expenses incurred or claimed by him through such date. 2. RESIGNATION. The execution of this Agreement shall serve as the resignation by the Employee as an officer, director and employee of the Company and of any "Affiliate" of the Company (as that term is defined by Paragraph 16(c) of this Agreement), including, without limitation, its Cornerstone subsidiary, and as a trustee, fiduciary or administrator of any employee benefit plan of the Company or any Affiliate, effective as of the Termination Date. -2- The Executive shall not, for a period of three (3) years from the Termination Date, serve as an officer, director or employee of, or consult for or have a financial interest in (other than an interest of not more than 2% in any entity whose shares are publicly traded), any Affiliate of the Company, without the Company's written consent. 3. TERMS OF SEPARATION. In consideration of the agreements by Employee provided herein, including without limitation the release by the Employee in Paragraph 4 hereof, the Company agrees to provide the following payments and benefits to the Employee: (a) The Company shall pay to the Employee, in full satisfaction of any claims by him for salary, bonus, vacation, holiday, pension or profit sharing benefits, separation or severance pay and any other claim for compensation or benefits of any kind whatsoever under the Employment Agreement or otherwise, a total payment of $325,656.96 (less applicable withholding for payroll and other taxes). Such payment shall be made by the Company by mailing to the Employee, by first class mail, on the date that this Agreement becomes irrevocable in accordance with Paragraph 11 hereof, a check in the amount of $25,656.96 (less applicable withholding for payroll and other taxes) and, on January 2, 1997, a check in the amount of $300,000 (less applicable withholding for payroll and other taxes). (b) (i) At any time prior to the first anniversary of the Termination Date, the Employee may exercise the options granted to him on May 19, 1995 and August 10, 1995 under the Company's Long Term Incentive Plan (the "Existing Options") to purchase 100,000 shares of stock of the Company at an exercise price of $2 per share. The Existing Options shall expire if not exercised by the first anniversary of the Termination Date. The exercise procedures and other terms of the Existing Options are as provided by the Long Term Incentive Plan maintained by the Company. (ii) At any time prior to the second anniversary of the Termination Date, the Employee may exercise the additional options granted to him hereunder by the Company (the "Additional Options") to purchase 100,000 shares of stock of the Company at an exercise price of $1 per share. The Additional Options shall expire if not exercised by the second anniversary of the Termination Date. The exercise procedures and other terms of the Additional Options are as provided by the related Stock Option Agreement between the Employee and the Company. (c) It is acknowledged that the Company has made available to the Employee through the Termination Date coverage under the Company's medical benefits plan for himself and his dependents under the same terms and conditions, including required contributions, as apply to active employees. Thereafter, the Employee may purchase, if eligible, continuation medical benefits coverage to the extent and for the period provided by federal law; provided that, with respect to the first six months of such continuation medical benefits coverage, the Company shall pay the premium which would otherwise be payable by the Employee. -3- (d) Distributions or payments to Employee shall be made under any tax- qualified employee benefit plans of the Company in which the Employee participated prior to the Termination Date, to the extent provided by such plans. 4. RELEASE BY EMPLOYEE. In consideration for the promises contained herein, Employee hereby irrevocably and unconditionally releases, acquits and forever discharges for himself and his heirs, executors, administrators, successors and assigns, the Company and each of the Company's parent companies, stockholders, predecessors, successors, assigns, agents, directors, officers, employees, representatives, attorneys, divisions, subsidiaries, Affiliates (and stockholders, agents, directors, officers, employees, representatives and attorneys of such, parent companies, divisions, subsidiaries and Affiliates), and all persons acting by, through, under or in concert with any of them (collectively, the "Company Releasees"), or any of them, from any and all charges, complaints, claims, liabilities, obligations, promises, agreements, controversies, damages, actions, causes of action, suits, rights, demands, costs, losses, debts and expenses (including attorneys' fees and costs actually incurred) of any nature whatsoever, known or unknown, suspected or unsuspected, including, but not limited to, claims arising directly or indirectly out of the Employee's employment by the Company, and the termination of the Employee's employment, claims under the Employment Agreement, claims under the Long Term Incentive Plan, claims for compensation of any kind, claims for workers' compensation, claims in equity or law for wrongful discharge, claims arising in tort, personal injury, defamation, mental anguish, emotional distress, injury to health and reputation, claims under federal, state or local laws prohibiting discrimination on account of age, national origin, race, sex, handicap, religion and similar classifications, claims under the Civil Rights Acts of 1866 and 1871, as amended; The Civil Rights Act of 1964, Title VII, as amended; the Civil Rights Act of 1991; the Age Discrimination in Employment Act of 1967, as amended; the Employee Retirement Income Security Act of 1974, as amended; the Americans with Disabilities Act of 1990; Colorado Rev. Stat. (S) 24-34- 402(1)(a), (S) 24-34-301(1)(1994), and similar claims under the laws of Canada and any province or political subdivision thereof ("Claim" or "Claims"), which Employee now has, or ever claimed to have, or could claim against each or any of the Company Releasees. Employee hereby agrees to forego any right to file any charges or complaints with any governmental agencies or a lawsuit against the Company Releasees under any of the laws referenced in this paragraph or with respect to any matters covered by the release in this paragraph. Notwithstanding the foregoing, the release by the Employee in this paragraph shall not (i) limit the right of the Employee to seek to enforce the provisions of this Agreement, (ii) limit the Employee's right to indemnification under and in accordance with any indemnification provisions applicable to officers and directors of the Company under the Company's Certificate of Incorporation or by-laws or under the corporate law of Delaware, to the extent applicable to the Employee or (iii) limit the Executive's rights under any insurance policy covering officers or directors of the Company, to the extent applicable to the Employee. 5. RELEASE BY THE COMPANY. In consideration for the promises contained herein, the Company hereby irrevocably and unconditionally releases, acquits and forever discharges the Employee from all charges, complaints, claims, liabilities, obligations, promises, -4- agreements, controversies, damages, actions, causes of action, suits, rights, demands, costs, losses, debts and expenses (including attorneys' fees and costs actually incurred) of any nature whatsoever, known or unknown, suspected or unsuspected, arising out of the Employee's employment by the Company through the Termination Date. 6. CONFIDENTIALITY AND NON-DISCLOSURE AGREEMENTS. (a) Employee acknowledges that any confidentiality, proprietary rights or nondisclosure agreement(s) in favor of the Company or the Company Releasees, including without limitation, those agreements contained in Paragraph 7 of the Employment Agreement, which he may have entered into in connection with his employment ("Nondisclosure Agreement(s)") with the Company, is understood to survive, and does survive, any termination of such employment, and accordingly nothing in this Agreement shall be construed as terminating, limiting or otherwise affecting any such Nondisclosure Agreement(s) or Employee's obligations thereunder. Without limiting the generality of the foregoing, no time period set forth in this Agreement shall be construed as shortening or limiting the term of any such Nondisclosure Agreement(s), which term shall continue as set forth therein. (b) Employee agrees that, except to the extent compelled by law or legal process, he (i) will not hereafter disclose or communicate confidential information of the Company, its Affiliates or their customers to any third party (including as a third party for this purpose, employees and former employees of the Company, its Affiliates and governmental agencies), (ii) will not make use of confidential information of the Company, its Affiliates or their customers for his own behalf, or on behalf of any third party, and (iii) will not facilitate, assist, persuade or attempt to facilitate, assist or persuade any third party to commence or prosecute any legal proceedings against the Company, its Affiliates and their customers and any Company Releasee. In the event Employee receives, is notified of or is served with a subpoena, summons, complaint, order, notice, notice of deposition or any other legal process or documents (collectively, "Legal Process") in connection with any legal or quasi- legal proceeding, including but not limited to any action at law or equity, arbitral, administrative proceeding or governmental investigation (collectively, "Litigation"), relating to the performance of his services as an employee of the Company or which, if complied with by Employee, might compel or lead to the disclosure by Employee of confidential information of the Company, its Affiliates or their customers, the Employee shall promptly, but in no event later than 2 business days after receipt unless 2 business days is not reasonable under the circumstances, provide the Company with a copy of the same, and shall in no event and under no circumstances disclose any such information prior to the last date specified in the Legal Process for making such disclosure. If the Company wishes Employee to contest such Legal Process or to be represented by counsel selected by it, the Company shall as soon as possible, but in no event later than 1 day prior to the date specified in such Legal Process for complying with the same, (i) notify Employee in writing that it wishes Employee to contest such Legal Process and agree to pay Employee the costs and expenses of attorneys' fees incurred by the Employee in connection with contesting such Legal Process, not to exceed $5,000, or (ii) notify Employee that counsel selected by the Company shall, at the sole expense of the Company, participate in or control the response of the -5- Employee to such Legal Process insofar as such response relates to the Employee's performance of services for the Company or the possible disclosure of confidential information of the Company, its Affiliates or their customers. Employee agrees to take such lawful action in connection with contesting any such Legal Process as the Company shall reasonably request from time to time. Employee agrees to promptly notify the Company of any action taken or proposed to be taken from time to time in connection with any Legal Process or Litigation which might lead to the disclosure of the confidential information of the Company, its Affiliates or their customers, and to make available to the Company any Legal Process of documents related thereto. The Employee further agrees to cooperate with the Company by providing a reasonable amount of testimony relating to any Litigation, to the extent requested by the Company. 7. COMPANY PROPERTY AND INFORMATION. Employee has returned or will immediately return to the Company all Company Information and related reports, customer lists, trade secrets notes, maps, files, blueprints, drawings, memoranda, manuals, and records; credit cards, cardkey passes; door and file keys; automobiles, computer access codes, computer discs, magnetic media or business information in any form; software; other business information of the Company Releasees; and other physical or personal property which Employee received or prepared or helped prepare in connection with his employment; and Employee has not retained and will not retain any copies, duplicates, reproductions, or excerpts thereof in any form. The term "Company Information" as used in this Agreement includes, without limitation, information received from third parties, other confidential business or financial information, and other materials and information described in this paragraph. 8. CONFIDENTIALITY OF THIS AGREEMENT. Employee represents and agrees that he will keep the terms and fact, of this Resignation Agreement and General Release completely confidential, and that he will not hereafter disclose any information concerning this Resignation Agreement and General Release to anyone, except to his immediate family and his legal and tax advisors; provided that such persons agree to keep such information confidential and not disclose it to others. 9. CONSIDERATION. Employee acknowledges that the Company is not otherwise required to enter into this Agreement, that the payments and agreements in this Agreement, including, without limitation, the grant of the Additional Options as set forth in Paragraph 3(b)(ii), are in addition to anything of value to which he is already entitled, that the consideration to be received by him under this Agreement is adequate, and that such promises and agreements are made by the Company because of his agreement to provide the releases in Paragraph 4 hereof and the covenant set forth in the second sentence of Paragraph 2 hereof. 10. RECEIPT OF AGREEMENT. Employee acknowledges receiving this Agreement on December 10, 1996 and that he has twenty-one (21) days from that date to consider the terms of this Agreement. -6- 11. REVOCABILITY. This Agreement is revocable by Employee for seven (7) days after it is signed by him. This Agreement shall not be effective or enforceable until the period for revocation has expired. 12. ARBITRATION. In the event there shall arise any question or dispute between the parties with respect to the provisions of this Resignation Agreement and General Release or its interpretation, such dispute shall be settled exclusively by arbitration in Denver, Colorado in accordance with the commercial rules then in effect of the American Arbitration Association. Judgment upon an award rendered by the arbitrator(s) may be entered in any court of competent jurisdiction, including courts in the state of Colorado. Any award so rendered shall be final and binding upon the parties hereto. All costs and expenses of the arbitrator(s) and all costs and expenses of experts, attorneys, witnesses and other persons retained by the parties shall be borne by them respectively. In the event that injunctive relief shall become necessary under this Agreement, either of the parties shall have the right to seek provisional remedies prior to an ultimate resolution by arbitration. 13. NO ADMISSION. This Resignation Agreement and General Release shall not in any way be construed as an admission by the Company that it has acted wrongfully with respect to the Employee in connection with his employment by the Company or the termination thereof. Except with respect to the compensation payable to Employee under Paragraph 3 hereof, the Company specifically disclaims any liability to the Employee, and wrongful acts against Employee, on the part of itself, and the Company Releasees. 14. VOLUNTARY AGREEMENT. Employee represents and agrees that he fully understands his right to discuss all aspects of this Resignation Agreement and General Release with his private attorney, that he has availed himself of this right, that he has carefully read and fully understands all of the provisions of this Resignation Agreement and General Release, and that he is voluntarily entering into this Resignation Agreement and General Release. 15. PRESS RELEASE. (a) The Employee shall not issue any press release, or make any statements to or grant any interview to any press or media representative relating to the termination of the Employee's employment with the Company or any matter referred to in this Agreement. Without limitation of the foregoing, the Employee further agrees that he will not make any statements to any party that could reasonably be construed as damaging to the business, image or reputation of the Company, its Affiliates or their respective management. (b) The Company agrees that it shall not issue any press release, or make any statements to or grant any interview to any press or media representative relating to the termination of the Employee's employment with the Company or any matter referred to in this Agreement without prior notice to and consultation with the Employee. Without limitation of the foregoing, the Company further agrees that it will not make any statements to any party that could reasonably be construed as damaging to the reputation of the Employee. -7- 16. GENERAL. (a) Employee represents and acknowledges that in executing this Resignation Agreement and General Release, he does not rely and has not relied upon any representation, inducement agreement or statement not set forth herein made by any of the Company Releasees or by any of the Company Releasees' agents, representatives, or attorneys with regard to the subject matter, basis or effect of this Resignation Agreement and General Release or otherwise. (b) The provisions of this Resignation Agreement and General Release are severable, and if any part of it is found to be unenforceable, the other paragraphs shall remain fully valid and enforceable. This Resignation Agreement and General Release shall survive the termination of any arrangements contained herein. (c) As used herein, the term "Affiliate" shall mean any corporation or business entity controlling, controlled by or under common control with the Company. Inc. (d) The Employee represents that he has not assigned or transferred or purported to assign or transfer any claim or matter released herein. (e) This Resignation Agreement and General Release sets forth the entire agreement between the parties hereto, and fully supersedes any and all prior agreements or understandings between the parties hereto pertaining to the subject matter hereof. (f) The effect, intent and construction of this Agreement shall be governed by the laws of Colorado, without giving effect to the conflict of laws rules thereof. IN WITNESS WHEREOF, the parties have duly executed this Resignation Agreement and General Release as of the date first set forth above. /s/ Gerald E. Davis 12/10/96 ------------------------------- Gerald E. Davis ATLAS CORPORATION By: /s/ Douglas R. Cook 12/12/96 ----------------------------- Douglas R. Cook Chairman of the Board EX-10.40 9 AMENDMENT TO RESIGNATION AGREEMENT DATED 1-14-97 Exhibit 10.40 [LETTERHEAD OF ATLAS CORPORATION APPEARS HERE] AMENDMENT TO RESIGNATION AGREEMENT AND GENERAL RELEASE THIS AMENDMENT TO THE RESIGNATION AGREEMENT AND GENERAL RELEASE, made and entered into as of the 14th day of January, 1997, by and between GERALD E. DAVIS (the "Employee") and ATLAS CORPORATION, a corporation organized under the laws of Delaware (the "Company") (the "Amendment"). WITNESSETH ---------- WHEREAS, a Resignation Agreement and General Release was entered into between the Company and the Employee as of November 5, 1997 (the "Agreement"); WHEREAS, Section 3(a) of the Agreement provided for the payment by the Company to the Employee of $300,000 in a lump sum payment on January 2, 1997; WHEREAS, because of cash flow problems, the Company advised the Employee that it could not pay such amount at this time; and WHEREAS, the Company and the Employee have agreed that it would be in their mutual best interest to amend the Agreement to set forth a new payment schedule, whereby the Employee would receive a portion of the amount due immediately, and the remainder in a series of payments through June 13, 1997. NOW, THEREFORE, in consideration of the premises and mutual promises contained in this Amendment, the parties agree as follows: 1. The provision of Section 3(a) of the Agreement which currently reads "...on January 2, 1997, a check in the amount of $300,000..." is hereby amended to read as follows: "... on the date of this Amendment a check in the amount of $50,000, and on each of February 13, 1997, March 13, 1997, April 14, 1997, May 13, 1997 and June 13, 1997 a check in the amount of $50,000. In addition, the final payment to be made on June 13, 1997 shall include interest at the rate of 1% per month on the unpaid balance from time to time outstanding from January 2, 1997 through the date of such final payment. AMENDMENT TO RESIGNATION AGREEMENT AND GENERAL RELEASE Page 2 of 2 2. Apart from this Amendment; the Agreement shall remain in full force and effect. IN WITNESS WHEREOF, the parties have duly executed this Amendment to the Agreement as of the date first set forth above. ATLAS CORPORATION /s/ Gerald E. Davis /s/ Jerome C. Cain - ------------------- ------------------ Gerald E. Davis Jerome C. Cain EX-10.41 10 EMPLOYMENT AGREEMENT DATED 12-1-96 Exhibit 10.41 EMPLOYMENT AGREEMENT -------------------- THIS EMPLOYMENT AGREEMENT (the "Agreement") is made as of December 1, 1996 between ATLAS CORPORATION, a Delaware corporation ("Employer"), and Gregg B. Shafter of Employer ("Executive"). Employer and Executive agree as follows: 1. EMPLOYMENT. In accordance with the terms and conditions of this Agreement, Employer agrees to employ Executive as an officer of Employer commencing June 1, 1995, and continuing until that employment is terminated (a) by either Employer or Executive or (b) by reason of Executive's normal retirement in accordance with Employer's retirement programs applicable to Executive at the time of his retirement ("Executive's Retirement"). Executive accepts that employment and agrees to perform the duties associated therewith. Subject to the terms and conditions of this Agreement, Executive's employment by Employer may be terminated at any time by either Executive or Employer by 10 days prior written notice to that effect. 2. DUTIES. As long as Executive is employed by Employer hereunder, Executive shall be subject to the direction of and be responsible to the President of Employer or his designee with respect to the performance of his duties hereunder, shall report to the President of Employer in that connection at such times and in such detail as the President of Employer may require and shall devote his full business time, attention, skill and efforts to the business and affairs of Employer. 3. SALARY. As compensation for the services to be furnished by Executive to Employer hereunder, as long as Executive is employed by Employer hereunder, Employer shall pay Executive a salary at a minimum annual rate of $85,000 payable in accordance with Employer's standard payroll policies applicable to officers. 4. BASIC EMPLOYEE BENEFIT PLANS AND PROGRAMS. As long as Executive is employed by employer hereunder, Executive shall be entitled to participate in all regular and key employee benefit plans and programs which are or may be made available by Employer for its officers. 5. EXPENSES. Employer shall provide for the payment of, or reimbursement of Executive for, all travel and other out-of-pocket expenses reasonably incurred by Executive in the performance of his duties hereunder. 6. TERMINATION. 6.1 Certain Definitions. As used in this Section 6: (a) "Board" means the Board of Directors of Employer. (b) "Cause" means, and is limited to, (i) the conviction of Executive for a felony or misdemeanor (other than minor motor vehicle and similar offenses) under the laws of the United States or any state thereof; (ii) any material breach by Executive of this Agreement or the failure of Executive to comply with any lawful directive of the Chairman of the Board or to follow Employer policies; (iii) dishonesty, gross negligence or malfeasance by Executive in the performance of his duties hereunder (other than the mere failure to achieve financial results); (iv) Executives habitual insobriety or substance abuse; (v) unlawful appropriation by Executive of a corporate opportunity of Employer or any of its affiliates; or (vi) the Executives taking or omission to take any other action or actions in the performance of his duties hereunder or the making of any statement which, in the good faith determination of the Board, is disruptive or damaging to the business, reputation, operations, prospects or business relations of Employer or its affiliates of which achieves general notoriety with respect to conduct or alleged conduct by Executive which is illegal, immoral or scandalous. (c) "Change of Control Event" means any one of the following: (i) Continuing Directors no longer constitute at least two thirds of the Directors constituting the Board; (ii) any person or group (as defined in Rule 13d-5 under the Securities Exchange Act of 1934), together with its affiliates, other than Mackenzie Financial Corporation, M.I.M. Holdings Limited or H. R. Shipes (in each case, together with its affiliates), becomes the beneficial owner, directly or indirectly, of 15% or more of Employer's then outstanding Common Stock or 15% or more of the voting power of Employer's then outstanding securities entitled generally to vote for the election of Directors, provided that the foregoing circumstances shall not constitute a Change of Control Event if such beneficial owner is Employer, any subsidiary of Employer, any employee benefit plan or employee stock plan of Employer or of any subsidiary of Employer; and provided further that, notwithstanding the foregoing, a Change of Control Event shall be deemed to occur if Mackenzie Financial Corporation, and its affiliates, M.I.M. Holdings Limited, and its affiliates, or H. R. Shipes and his affiliates, shall acquire 25% or more of the Employer's then outstanding Common Stock or the voting power of the Employer's then outstanding securities entitled generally to vote for the election of Directors; (iii) the approval by Employer's stockholders of the merger or consolidation of Employer with any other corporation, the sale of substantially all of Employer's assets or the liquidation or dissolution of Employer, unless, in the case of a merger or consolidation, the Continuing Directors in office immediately prior to such merger or consolidation constitute at least two thirds of the directors constituting the board of directors of the surviving corporation of such merger or consolidation and any parent (as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934) of such corporation; or (iv) at least two thirds of the Continuing Directors in office immediately prior to any other action taken or proposed to be taken by Employer's stockholders or by the Board determines that such action constitutes, or that such 2 proposed action, if taken, would constitute, a change of control of Employer and such action is taken. (d) "Continuing Director" means any person who (i) is a Director on the date of this Agreement; (ii) was designated before such person's initial election as a Director as a Continuing Director by a majority of the Continuing Directors; or (iii) has been a Director for at least two years after the occurrence of one or more Change of Control Events. (e) "Director" means a member of the Board. (f) "Disability" means, as applied to Executive, that (i) he has been so incapacitated by bodily injury or disease as to be unable to perform the duties contemplated to be performed by him hereunder, (ii) the incapacity shall have continued for a period of three consecutive months and (iii) the incapacity will, in the opinion of a qualified physician acceptable to Employer, be permanent and continuous for a period of at least one year. (g) "Good Reason" means (i) without Executive's written consent (A) (1) the assignment to Executive of any duties and responsibilities, or any limitation of Executive's duties and responsibilities, if such assignment or limitation is materially inconsistent with Executive's positions, duties, responsibilities and status as an executive of Employer or (2) any removal of Executive from, or any failure to reelect Executive to, any of Executive's positions with Employer except for Cause or as a result of the death or Disability of Executive, and (B) the continuance thereof for a period of 20 days after written notice thereof to Employer from Executive; (ii) any failure by Employer to pay, or any reduction by Employer of, the salary payable to Executive under Section 3 of this Agreement; (iii) any failure by Employer (A) to continue to provide Executive with the opportunity to participate, on terms no less favorable than those in effect immediately prior to a Change of Control Event, in any benefit plan or program in which Executive was participating immediately prior to the Change of Control Event, or their equivalent, or (B) to provide Executive with all other fringe benefits, or their equivalent, from time to time in effect for the benefit of any of Employer's salaried employees; (iv) the failure by Employer to obtain the specific assumption of this Agreement by a successor or assign of Employer or by any person acquiring substantially all of Employer's assets; or (v) any material breach by Employer of any provision of this Agreement. 6.2 Compensation of Executive in the Event of Termination of Executive's Employment Hereunder. (a) In the event of Executive's Disability, Executive's employment by Employer hereunder may be terminated by Employer upon written notice from Employer to Executive which shall specify a date not less than 30 days from the date of such notice as the date on which such termination shall become effective. If Executive's employment by Employer hereunder is terminated because of Executive's Disability or death, Executive, or his heirs, executors or administrators if termination is because of Executive's death, shall be entitled to 3 receive the salary payable to Executive under Section 3 until the date on which the termination occurs. (b) (i) Executive shall be entitled to compensation as specified in Section 6.2(b)(ii) and (iii) if (A) Employer terminates Executive's employment hereunder without Cause either prior to 3 months before a Change of Control Event or more than two years after the last Change of Control Event, or (B) Executive voluntarily terminates his employment hereunder with Good Reason either prior to 3 months before a Change of Control Event or more than two years after the last Change of Control Event. (ii) Prior to the 30th day following the date of such termination Employer shall pay Executive (A) an amount equal to one-twelfth of such Executive's annual rate of base salary that is in effect on the date of termination multiplied by the number of full years of employment by the Company, provided that in no event shall such amount be less than one-half of the amount of Executive's annual base salary in effect on the date of termination, and (B) all amounts which had accrued but were not paid prior to such termination for personal services actually rendered before the termination. (iii) As soon as practicable following the date of such termination, or at such later date as Executive may validly elect, Employer shall pay Executive all amounts payable under then existing employee benefit plans and programs. Notwithstanding the foregoing, if the sum of all of the payments to Executive whether under this Agreement or otherwise (but excluding any payments which need not be included in determining if a "parachute payment" has been made within the meaning of Internal Revenue Code (the "Code") (S) 280G(b)(2)) exceeds the product of multiplying the Base Amount times 2.99, then such payments hereunder shall be reduced by the amount of such excess. For purposes of this Agreement, the term Base Amount is defined in Code (S) 280G(b)(3) and the Treasury Regulations promulgated thereunder, calculated as of the date required under the Code. (c) (i) Executive shall be entitled to compensation as specified in Section 6.2(c)(ii) and (iii) if (A) Employer terminates Executive's employment hereunder without Cause either (1) within 3 months prior to a Change of Control Event or (2) upon or after a Change of Control Event but within two years after the date of that Change of Control Event, or (B) Executive voluntarily terminates his employment hereunder with Good Reason either (1) within 3 months prior to a Change of Control Event or (2) upon or after a Change of Control Event but within two years after the date of that Change of Control Event. (ii) Prior to the 30th day following the date of such termination Employer shall pay Executive (A) the amount which equals the Executive's annual rate of base salary that is in effect on the date of termination, and (B) all amounts which had accrued but were not paid prior to such termination for personal services actually rendered before the termination. (iii) As soon as practicable following the date of such termination, or at such later date as Executive may validly elect, Employer shall pay Executive all amounts payable under then existing employee benefit plans and programs. Notwithstanding the foregoing, if the sum of all of the payments to Executive whether under this Agreement or otherwise (but excluding any payments which need not be included in determining if a "parachute payment" has been made within the meaning of Code (S) 280G(b)(2)) exceeds the Base Amount times 2.99, then such payments hereunder shall be reduced by the amount of such excess. 4 (d) If Executive's employment hereunder is terminated by Employer or by Executive under any circumstances other than as set forth in Section 6.2(a), 6.2(b), or 6.2(c), all payments required by this Agreement shall cease and the termination shall relieve Employer of its obligations to make any further payments under this Agreement except payments under the employee benefit plans and programs and payments of amounts which had accrued but were not yet paid prior to the termination. 7. CONFIDENTIAL INFORMATION AND TRADE SECRETS. Executive acknowledges that all information possessed by him relating to activities of Employer that is of a secret or confidential nature, including without limitation financial information, exploration, mining and milling information, lists of customers, technical and production know-how, developments, inventions, processes and administrative procedures, is the property of Employer, and as long as Executive is employed by Employer hereunder, and for a period of two years thereafter, Executive shall not use any such information for the benefit of anyone other than Employer or disclose any such information to others except in the course of Employer's business. 8. PAYMENT TO ESTATE OR BENEFICIARY. If Executive dies before any payments required to be paid by Employer to Executive hereunder have been paid, Employer shall make all such payments to the beneficiary or beneficiaries designated by Executive in a written notice previously delivered by Executive or Employer or, in the absence of such a notice, to Executive's estate. 9. ARBITRATION. Any and all disputes arising under or relating to this Agreement shall be subject to mandatory binding arbitration in Denver, Colorado, before the American Arbitration Association in accordance with its Commercial Arbitration Rules. Discovery shall be allowed but subject to the limits and procedures set forth in Rule 26.1 of the Colorado Rules of Civil Procedure. The prevailing party in any such arbitration proceeding shall be entitled to an award of his or its reasonable costs and attorney fees. 10. BINDING EFFECT; SUCCESSORS, ASSIGNMENT. Subject to the provisions of this Section 10, this Agreement shall be binding upon, inure to the benefit of and be enforceable by Employer and Executive and their respective heirs, legal representatives, successors and assigns. If Employer shall be merged into or consolidated with another entity, the provisions of this Agreement shall be binding upon and inure to the benefit of the entity surviving such merger or resulting from such consolidation. 11. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of Colorado applicable to contracts made and to be performed therein. 5 12. NOTICE. Any notice required to be given hereunder shall be in writing and delivered by certified mail, return receipt requested, addressed: To Employer at: Republic Plaza 370 Seventeenth Street Suite 3050 Denver, Colorado 80202 To Executive at: Republic Plaza 370 Seventeenth Street Suite 3050 Denver, Colorado 80202 or in either case to such other address as may be specified in a written notice given as provided above. 13. ENTIRE AGREEMENT; AMENDMENT. This Agreement represents the entire agreement of Employer and Executive with respect to the subject matter hereof and shall supersede any and all previous agreements, arrangements and understandings between Employer and Executive in that regard. This Agreement may be amended only by the written agreement of Employer and Executive. ATLAS CORPORATION By: /s/ Mario Caron ----------------------- Chief Executive Officer EXECUTIVE By: /s/ Gregg B. Shafter ----------------------- Gregg B. Shafter 6 EX-10.42 11 LETTER AGREEMENT DATED 1-6-97 [LOGO OF GRANGES INC.] Exhibit 10.42 SUITE 3000 370 SEVENTEENTH STREET DENVER, CO. U.S.A. 80202 TELEPHONE: (303) 629-2450 FAX: (303) 629-2499 January 6, 1997 PERSONAL DELIVERY - ----------------- Mr. Gregg B. Shafter Vice President Atlas Corporation 370 Seventeenth Street, Suite 3050 Denver, Colorado 80202 Re: Withdrawal from Mining Venture Agreement Gold Bar Property, Eureka County, Nevada Dear Gregg: Subject to the terms and conditions set forth herein, this letter is written notice of Granges (U.S.), Inc.'s ("Granges") election to withdraw (the "Election") from that certain Mining Venture Agreement between Granges and Atlas Corporation, Atlas Precious Metals Inc. and Atlas Gold Mining Inc. (collectively, "Atlas") dated as of September 29, 1995 (the "Agreement"). This Election by Granges is made in accordance with Section 12.1.B. of the Agreement, which sets forth that Granges' "sole liabilities and responsibilities ... resulting from or surviving such termination, shall be those set forth in Sections 5.1(C)(2) and (C)(6), Section 5.2 and Section 5.8." For your information and without having effect to interpretation of the Agreement, the preceding recitals pertain to the following issues: * Section 5.1(C)(2): - ----------------- Granges required to reclaim areas of the Properties disturbed by Granges' activities, to the extent disturbed by its activities, and shall indemnify Atlas through completion of reclamation work in accordance with applicable Environmental Laws for disturbance to the Properties caused by Granges" Operations under the Agreement. Section 5.1(C)(6): - ----------------- After termination of the Agreement, Granges shall have the right of reasonable access to the Properties in order to complete reclamation of the Properties disturbed by Granges' Operations. - ------------------ /*/Unless defined otherwise in this letter, all capitalized terms shall have the meanings and definitions provided for them in the Agreement. Mr. Gregg B. Shafter January 6, 1997 Page 2 Section 5.2: - ----------- Granges shall remain responsible for obligations or liabilities to third parties resulting from its Operations prior to the date of delivery of this letter. Further, Granges shall reconvey to Atlas its interst in the Assets by a quitclaim deed, free of all liens, claims or other encumbrances arising by, through or under Grages. Upon delivery of the quitclaim deed, Granges is relieved of liability or obligation to complete its Initial Contribution. Section 5.8: - ----------- This Section is not applicable since Granges has made this Election prior to July 31 of 1997. In consideration of Granges' withdrawal from the Agreement, Atlas hereby agrees to pay to Granges the sum of $450,000, to be paid as follows: $100,000 due not later than five (5) business days after Atlas receives approval by its Board of Directors for execution of this letter (however in no event beyond January 10, 1997) with $350,000 to be paid on May 16, 1997. Simple interest in the amount of eight percent (8%) will be paid on May 16, 1997, calculated on $350,000 for 150 days. In the event Atlas sells or otherwise disposes of the Properties prior to May 16, 1997, the $350,000 plus accrued interest shall be paid to Granges within five (5) days of such a sale of disposition, with interest prorated to the date of such payment. Granges hereby represents to Atlas that Granges' Operations have been conducted in compliance with the Agreement. Upon Granges' completion of its reclamation obligations under the Agreement as set forth above, as additional consideration for the withdrawal of Granges, Atlas hereby agrees to indemnify and save harmless Granges and its Affiliates from and against all claims, demands, actions, damages, costs, losses, expenses (including but not limited to reasonable attorneys' fees) and liabilities which may arise with respect to any of the Assets or Operations under the Agreement, including but not limited to those arising under any Environmental Laws in connection with Granges' Operations under the Agreement, or pertaining to the facilities for processing of ores at the Atlas Mill Complex, to include the tailings pond associated therewith; provided, however, that Granges shall indemnify and hold Atlas harmless from and against any claims, demands, actions, damages, costs, losses, expenses (including but not limited to reasonable attorneys' fees) and liabilities that Atlas may incur to third parties as a result of any condition or event that Mr. Gregg B. Shafter January 6, 1997 Page 3 constitutes a breach by Granges of its representation in the first sentence of this paragraph, or as a result of Granges' failure to complete its reclamation obligations under the Agreement. Atlas' right to bring any action against Granges based upon this indemnification shall terminate on midnight, Mountain Standard Time, December 31, 1998. The parties understand and agree that, after this notice, Granges' sole obligations with respect to the Assets shall be: (i) the indemnification of Atlas, as set forth in the paragraph above; and (ii) filing and recording of the Deed, as set forth in the paragraph below. Upon receipt from you of a fully-executed original of this letter and the $100,000 payment described above, Granges will immediately proceed to file with the Nevada State Office of the Bureau of Land Management and to record in Eureka County, Nevada, with BLM filing fee and county recordation fee to be paid by Granges, an executed and notarized Deed in the form attached hereto and incorporated herein by reference, with a proper Exhibit A attached thereto. Thank you for your cooperation. Sincerely, GRANGES (U.S.), INC. By: /s/ Michael B. Richings ------------------------ Michael B. Richings President Agreed to and accepted on this 10th day of January, 1997 by: /s/ Gregg B. Shafter - -------------------- Gregg B. Shafter Vice President Atlas Corporation EXHIBIT A DEED ---- THIS DEED ("Deed"), dated as of January 8, 1997, is between: "GRANTOR": GRANGES (U.S.), INC. a Nevada corporation 350 South Rock Blvd., #E Reno, NV 89502 and "GRANTEE": ATLAS CORPORATION a Delaware corporation 370 Seventeenth Street, Suite 3050 Denver, CO 80202 FOR TEN DOLLARS ($10.00) and other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged by Grantee, Grantor conveys and quitclaims to Grantee the "Properties" situated in Eureka County, Nevada, that are more particularly described in Exhibit A, appended hereto and by this reference incorporated herein, together with: (i) all of Grantor's right, title and interest in and to all mineral deposits, mineral rights, extralateral rights and subsurface rights therein, thereunder and appurtenant thereto; and (ii) with respect to the Properties described in Parts 2-4 of Exhibit A, all of Grantor's right, title and interest in and to all buildings, facilities, improvements, surface rights, water, water rights, mineral stockpiles, mineral dumps, roads, easements, rights of ingress and egress and all other appurtenances and hereditaments thereon, therein, thereunder or appurtenant thereto. Grantor warrants that there are no persons or entities lawfully claiming any interest in the Properties by, through, or under Grantor, subject to the paramount title of the United States of America. This Deed is executed and delivered pursuant to and in accordance with that certain Mining Venture Agreement dated as of September 29, 1995 ("Venture Agreement") by and between Grantor and Grantee, a Memorandum of which is recorded in Book 291 at Page 235 of the Official Records of Eureka County, Nevada, as amended by that certain letter agreement, dated December 27, 1996, in order to evidence the termination of, and pursuant to and in accordance with, that Venture Agreement. IN WITNESS WHEREOF, Grantor has executed this Deed effective as of the date first above written. "GRANTOR" GRANGES (U.S.), INC. By: /s/ Michael B. Richings ------------------------- Michael B. Richings President STATE OF COLORADO } } ss. COUNTY OF DENVER } Before me personally appeared Michael B. Richings on this 8th day of January, 1997, and first being duly sworn, executed the above DEED, as President of GRANGES (U.S.), INC., a Nevada corporation, and acknowledged to me that he executed the same in that capacity. Witness my hand and official seal. /s/ Lori K. Crosby ----------------------------- (Seal) NOTARY PUBLIC My commission expires: 3\3\98 EX-21 12 SUBIDIARIES OF THE COMPANY EXHIBIT 21 ATLAS CORPORATION LIST OF SUBSIDIARIES OF THE REGISTRANT Atlas Precious Metals Inc. (Incorporated in Nevada) Atlas Gold Mining Inc. (Incorporated in Nevada), a subsidiary of Atlas Precious Metals, Inc. Cornerstone Industrial Minerals Corporation (organized under the laws of Ontario, Canada) Arisur Inc. (organized under the laws of Grand Cayman). Suramco Metals, Inc. (organized under the laws of Nevada). EX-23 13 CONSENT OF INDEPENDENT AUDITORS CONSENT OF INDEPENDENT AUDITORS We consent to the addition of the financial statement schedule, listed in the accompanying index to the financial statements covered by our report dated February 28, 1997, except for note 1, as to which the date is April 14, 1997, included herein. We also consent to the incorporation by reference in Post Effective Amendment Number 19 to Registration Statement Number 2-8439 on Form S-3 dated November 10, 1983, Post Effective Amendment Number 1 to Registration Statement Number 33- 18316 on Form S-8 dated December 14, 1987, Registration Statement Number 33- 87992 on Form S-3 dated January 13, 1995 and Post Effective Amendment Number 1 to Registration Statement Number 33-65165 on Form S-3 dated February 2, 1996 and the Related Prospectuses of our report on the financial statements and schedule included in this Annual Report on Form 10-K of Atlas Corporation for the year ended December 31, 1996. /s/ Ernst & Young LLP Denver, Colorado April 14, 1997 -----END PRIVACY-ENHANCED MESSAGE-----