<PAGE>
REGISTRATION STATEMENT NO. 33-________
As filed with the Securities and Exchange Commission on _________________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
_______________
ATLAS CORPORATION
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 1041 13-5503312
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification No.)
incorporation or organization) Classification Code Number)
</TABLE>
370 SEVENTEENTH STREET, SUITE 3150
DENVER, COLORADO 80202
(303) 825-1200
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
_______________
JEROME C. CAIN COPIES TO:
ATLAS CORPORATION JEFFREY E. COHEN, ESQ.
370 SEVENTEENTH STREET, SUITE 3150 COUDERT BROTHERS
DENVER, COLORADO 80202 1114 AVENUE OF THE AMERICAS
(303) 825-1200 NEW YORK, NY 10036-7794
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
_______________
Approximate date of commencement of proposed sale to the public:
As soon as practicable after this Registration Statement becomes effective.
_______________
If the only securities being registered on this Form are to be offered pursuant
to dividend or interest reinvestment plans, please check the following box.[_]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box.[X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering.[_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.[_]
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box.[_]
_______________
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CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------------
Proposed Maximum Proposed Maximum
Title of Each Class Amount to be Offering Aggregate Amount of
of Securities to be Registered Registered Price Offering Price Registration Fee
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
7% Exchangeable Debentures U.S.$10,000,000 100% U.S.$10,000,000 U.S.$3448.28(2)
due October 25, 2000(1)
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</TABLE>
(1)The common shares, no par value, of Granges Inc. deliverable upon exchange,
or (at the option of Atlas) redemption or maturity, including acceleration, of
such debentures are registered pursuant to a separate registration statement on
Form S-3 (33-______) filed by Granges Inc.
(2)Calculated pursuant to rule 457(c) under the Securities Act of 1933.
_______________
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
SUBJECT TO COMPLETION, DATED DECEMBER 13, 1995
PRELIMINARY PROSPECTUS
- ----------------------
ATLAS CORPORATION
U.S.$10 MILLION PRINCIPAL AMOUNT OF 7% EXCHANGEABLE DEBENTURE DUE OCTOBER 25,
2000
(EXCHANGEABLE FOR COMMON SHARES OF GRANGES INC.)
This Prospectus relates to the sale from time to time of U.S.$10,000,000
principal amount of 7% Exchangeable Debentures due October 25, 2000 (the
"Debentures") of Atlas Corporation ("Atlas" or the "Company") exchangeable for
common shares, no par value, owned by Atlas (the "Granges Common Shares"), of
Granges Inc. ("Granges") at an exchange rate (the "Exchange Rate") of 42.50
shares of Granges Common Shares for each U.S.$100 principal amount of
Debentures. The Exchange Rate is subject to adjustment, pursuant to the anti-
dilution provisions contained in the indenture relating to the Debentures (the
"Indenture"), upon certain events affecting Granges. The Debentures will be
subject to redemption on or after October 25, 1998, so long as (i) the Average
Market Price (as hereinafter defined) of Granges Common Shares is at least
U.S.$2.94 per share, and (ii) the holder of the Debentures does not exercise its
right to exchange the Debentures at any time prior to redemption, any such
redemption to be made at a redemption price equal to 100% of the outstanding
principal payable in cash or (at the option of Atlas), in whole or in part, in
shares of Granges Common Shares valued at the Exchange Rate. At maturity
(including upon acceleration), the Debentures are repayable in cash or, in whole
or (at the option of Atlas) in part, in shares of Granges Common Shares valued
at 95% of their Average Market Price. "Average Market Price" means the average
closing trading price of Granges Common Shares on the American Stock Exchange
for a 20-day period ending one trading day prior to maturity or redemption, as
the case may be.
The Debentures are secured by a pledge of 8,474,576 shares of Granges
Common Shares The pledged Granges Common Shares will be released from the pledge
for delivery to Debenture holders for exchange or for payments on redemption or
maturity and, net of such delivery or payment, will be released to Atlas in
proportion to the amount of any exchanges by Holders.
The Debentures may be sold hereunder from time to time by the holders
listed in the section entitled "Selling Debentureholders" and not by the
Company. The Company will not receive any proceeds from the sale of the
Debentures by the Selling Debentureholders. See "Use of Proceeds".
It is anticipated that the Debentures offered hereby will be sold from time
to time through customary brokerage channels, either through broker-dealers
acting as agents or brokers for the Selling Debentureholders or through broker-
dealers acting as principals who may then resell such Debentures on an exchange
or otherwise, or through privately negotiated sales, in each case at prevailing
market or other negotiated prices, or by a combination of such methods. There is
no underwriting agreement with respect to the Debentures offered hereby. The
Selling Debentureholders may pay commissions to designated broker-dealers for
assisting in the sale of the Debentures. Any such commissions will be subject to
negotiation. See "Plan of Distribution."
The Company has agreed to bear all of the expenses incurred by it in
connection with the registration of the Debentures offered hereby. Each of the
Selling Debentureholders will be responsible for the payment of expenses,
including brokerage fees or commissions and any transfer taxes, relating to the
offer and sale of the Debentures. See "Plan of Distribution."
There is currently no public market for the Debentures. The Company will
make application to list the Debentures on the Vancouver Stock Exchange and on a
United States stock exchange. Granges Common Shares are listed on the Toronto
Stock Exchange and on the American Stock Exchange. The closing price of Granges
Common Shares on December _____, 1995, as reported on the American Stock
Exchange was _____ per share.
PROSPECTIVE INVESTORS ARE ADVISED TO CAREFULLY CONSIDER THE DISCUSSION OF
CERTAIN FACTORS UNDER THE HEADING "RISK FACTORS" BEGINNING ON THE FOLLOWING PAGE
IN EVALUATING AN INVESTMENT IN THE DEBENTURES.
____________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION NOR HAS
THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
____________________
The date of this Prospectus is _______________, 1995.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information may be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the following Regional
Offices of the Commission: Northeast Regional Office, 7 World Trade Center,
Suite 1300, New York, New York 10048; and Midwest Regional Office, Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of
such material can also be obtained by mail from the Public Reference Section of
the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. The Company's Common Stock is listed on the New York Stock Exchange and
such reports, proxy statements and other information can also be inspected at
the offices of the New York Stock Exchange, 20 Broad Street, New York, New York
10005. Certain warrants of the Company are listed on the American Stock Exchange
and such reports, proxy statements and other information can also be inspected
at the offices of the American Stock Exchange, 86 Trinity Place, New York, New
York 10006.
This Prospectus does not contain all of the information set forth in the
Registration Statement on Form S-3, of which this Prospectus is a part, and
exhibits relating thereto which Atlas has filed.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the year ended June 30,
1995, Quarterly Report on Form 10-Q for the quarter ended September 30, 1995 and
Current Reports on Form 8-K filed on October 4, 1995, November 21, 1995 and on
December 5, 1995 filed with the Commission (File No. 1-2714) are incorporated by
reference in this Prospectus.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the Debentures shall be deemed to be incorporated
by reference in this Prospectus and to be a part hereof from the date of filing
of such documents. Any statement contained in a document incorporated or deemed
to be incorporated by reference herein or contained in this Prospectus, shall be
deemed to be modified or superseded for purposes of the Prospectus to the extent
that a statement contained herein or in any other subsequently filed document
which also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The information relating to the Company contained in this Prospectus does
not purport to be comprehensive and is based upon information contained in the
documents incorporated above. Accordingly, the information contained herein
should be read together with the information contained in such documents.
The Company hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom a copy of this Prospectus has been
delivered, on the written or oral request of any such person, a copy of any or
all of the documents referred to above which have been or may be incorporated in
this Prospectus by reference, other than exhibits to such documents (unless such
exhibits are specifically incorporated by reference therein). Requests for such
copies should be directed to the Secretary of Atlas Corporation, 370 Seventeenth
Street, Suite 3150, Denver, Colorado 80202 (telephone: (303) 825-1200).
RISK FACTORS
PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY, IN ADDITION TO THE OTHER
INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS, THE
FOLLOWING FACTORS BEFORE PURCHASING THE DEBENTURES OFFERED HEREBY.
RECOMMENCEMENT OF OPERATIONS AT GOLD BAR
During October 1995, Atlas reached an agreement in principal with Brown &
Root, Inc. for contract mining services and a U.S.$5 million loan guarantee to
be supplied by Brown & Root to be used in financing the resumption of mining
operations at its Gold Bar mine. Should continued negotiations fail to result in
the execution of a definitive agreement, or should Atlas not close on the
placement of the Debentures (see "Description of Debentures") there can be no
assurance that Atlas would be able to replace this required financial guarantee
and that operations at Gold Bar could restart as currently anticipated.
LIMITED FINANCIAL RESOURCES OF ATLAS; NO OBLIGATION ON THE PART OF GRANGES WITH
RESPECT TO THE DEBENTURES
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<PAGE>
Atlas currently has very limited working capital and, pending
recommencement of its operations at its Gold Bar mine and commencement of mining
at its other properties, is not generating revenues from operations. In order to
fund working capital, interest and repayment obligations under the Debentures,
and ongoing capital projects, Atlas anticipates it will need to raise additional
funds. Any failure to raise additional funds on terms favorable to Atlas will
adversely affect the business and financial condition of Atlas.
Although Atlas' indebtedness with respect to the Debentures is secured by
a pledge of 8,474,576 shares of Granges Common Shares, there can be no assurance
that the value realizable in respect of such shares in the event of any default
on the Debentures will be sufficient to repay the principal and unpaid interest
on the Debentures. Granges has no obligation with respect to the Debentures or
amounts to be paid to Holders, nor any obligation to take into consideration for
any reason the needs of Atlas or the Holders. Granges will not receive any of
the proceeds from the offering of the Debentures and is not responsible for the
determination of the time of, prices for or quantities of the Debentures to be
issued or the redemption of the Debentures.
COMPARISON TO OTHER DEBT SECURITIES; RELATIONSHIP TO GRANGES COMMON SHARES
The terms of the Debentures differ from those of ordinary debt securities
in that the value that a Holder will receive upon the optional exchange of the
Debentures is not fixed, but is based on the price from time to time of the
Granges Common Shares received by the Holder.
The opportunity for equity appreciation afforded by an investment in the
Debentures is less than the opportunity for equity appreciation afforded by an
investment in Granges Common Shares because the amount receivable by Holders
upon exchange will only exceed the principal amount of such Debentures if the
price of Granges Common Shares exceeds U.S.$2.35 per share. Because the price of
Granges Common Shares is subject to market fluctuations, the exchange of the
Debentures into Granges Common Shares may never be in the economic best interest
of Holders.
It is impossible to predict whether the price of Granges Common Shares
will rise or fall. Trading prices of Granges Common Shares will be influenced by
Granges' operational results and by complex and interrelated political,
economic, financial and other factors that can affect the capital markets
generally, the Toronto Stock Exchange and the American Stock Exchange (on which
the Granges Common Shares are traded) and the market segment of which Granges is
a part.
ABSENCE OF COVENANT PROTECTION
The Indenture does not limit the Company's ability to incur additional
indebtedness, or to grant liens on its assets to secure indebtedness, to pay
dividends or to repurchase shares of its capital stock. The Indenture does not
contain any provisions specifically intended to protect Holders in the event of
a future highly leveraged transaction involving the Company.
NO PRIOR PUBLIC MARKET
The Debentures will be listed on the Vancouver Stock Exchange [and
application will be made to list them on the New York Stock Exchange. There can
be no assurance that such listing will be granted.] At present there is no
established trading market for the Debentures. There can be no assurance as to
the liquidity of the market that may develop for the Debentures, the ability of
Holders to sell their Debentures or the prices at which Holders would be able to
sell their Debentures. The Debentures could trade at prices that are higher or
lower than the prices at which they were purchased depending on many factors,
including prevailing interest rates, the Company's and Granges' operating
results and the markets for similar securities.
NATURE OF MINERAL EXPLORATION AND PRODUCTION
Atlas and Granges (the "Companies") are each involved in the exploration
for and mining of gold. Exploration for and, if warranted, mining of minerals
such as gold is highly speculative and involves greater risks than many other
businesses. The business requires very large capital expenditures in advance of
anticipated revenues from operations. There is no assurance that the Companies
will always be able to obtain all of the financing that they require on
acceptable terms and conditions in order to exploit available opportunities.
Many exploration programs do not result in the discovery of mineralization and
any mineralization discovered may not be of sufficient quantity or quality to be
profitably mined. The grade of ore mined may differ from that indicated by
drilling results. Such a variation can have an adverse impact on production
results. The reliability of estimates of future production is also affected by
such factors as weather, strikes, environmental factors and the risks arising
from political or social forces. Uncertainties as to the metallurgical
amenability of any minerals discovered may not warrant the mining of these
minerals on the basis of available technology. Mining operations are also
subject to a number of other hazards and risks such as encountering unusual or
unexpected formations, environmental pollution, industrial accidents, rock
movements and folding, many of which cannot be insured against.
Some of the mines in which the Companies own an interest are operated
through joint ventures with other mining companies. Any failure of such other
companies to meet their obligations
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<PAGE>
to the Companies with respect to such joint ventures or to third parties could
have a material adverse effect on the joint ventures.
RESERVES
The reserves included in the Companies' public filings are primarily
estimates prepared by management. No assurance can be given that all available
reserves will be recovered by mining and not all of the gold contained in
minable reserves will be recovered in the course of mining. A significant
downward movement in the price of gold may render deposits containing relatively
lower grades of gold mineralization uneconomic. Moreover, short-term factors
relating to the ore reserves, such as the need for orderly development of ore
bodies or the processing of new or different grades, may impair the
profitability of a mine in any particular accounting period.
EXPLORATION AND ACQUISITION PROGRAM
The Companies continually expand their reserves through exploration and
through acquisition of properties which are in production or have mineral
potential, or through the acquisition of equity interests in companies owning
such properties. There are a number of risks inherent in any exploration
program, relating to the discovery and location of economic orebodies, the
development of appropriate metallurgical processes, the receipt of necessary
governmental permits and the construction of mining and milling facilities. In
addition, few properties which are explored are developed into producing mines
and those which are developed require at least two to five years from the
initial phases of drilling until commercial production is achieved.
FLUCTUATION IN THE PRICE OF GOLD
Because the Companies' revenues are derived primarily from the sale of
gold, earnings are directly related to gold prices. Gold prices fluctuate widely
and are affected by numerous factors beyond the Companies' control, including
expectations for inflation, the relative exchange rate of the dollar, global and
regional demand, political and economic conditions, expectations for inflation
and production costs in major gold producing regions including South Africa and
Russia. In addition, gold prices have on occasion been subject to very rapid
short-term changes due to speculative activities of investors. Gold prices are
also affected by worldwide production levels, which have increased in recent
years. Market price fluctuations of gold may render uneconomic the mining of
mineral deposits containing relatively lower grades of mineralization.
UNCERTAINTY OF TITLE
Certain of the Companies' mining properties are unpatented mining claims,
and the Companies have only possessory title with respect to such properties.
The validity of unpatented mining claims is often uncertain and may be
contested. Although the Companies have attempted to acquire satisfactory title
to their respective properties, the Companies, in accordance with mining
industry practices, in certain cases have not obtained title opinions and title
insurance with respect to unpatented claims, with the attendant risk that title,
particularly on undeveloped properties, may be defective.
COMPETITIVE CONDITIONS
The acquisition of precious metals mining projects is subject to intense
competition. The Companies compete with other companies in connection with the
acquisition, exploration and development of the mining properties that comprise
their various projects. Companies with greater financial resources, larger staff
and labor forces, more equipment for exploration and development and greater
experience may be in a better position than the Companies to compete for such
mineral properties.
The Companies compete with substantially larger companies in the
production and sale of gold and other minerals. No single competitor is a
material factor in these markets, however. Prices depend almost entirely upon
market conditions over which the Companies have no control. The Companies
believe that they can promptly sell at market prices all the gold they can
produce for either present or future delivery.
GOVERNMENT REGULATION
The Companies' mining operations are subject to various laws and
regulations concerning prospecting, development, production, exports, taxes,
labor standards, occupational health, waste disposal, toxic substances,
environmental protection, mine safety and other matters in both the United
States and Canada. Instances of noncompliance or the enactment of new laws or
regulations governing the operations and activities of mining companies could
have a material adverse impact on the Companies.
Legislation and other proposals have been introduced in the U.S. Congress
that would alter the provisions of the Mining Law of 1872. If enacted, such
legislation could increase the cost of
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<PAGE>
holding unpatented mining claims and could materially impair the abilities of
companies to develop mineral reserves on unpatented mining claims. Under the
terms of certain Federal budget proposals and proposed legislation, the ability
of mining companies to obtain a patent on unpatented claims would be nullified
or substantially impaired. Moreover, certain forms of such proposals contain
provisions for the payment of royalties to the federal government in respect of
production from unpatented mining claims, which could materially and adversely
affect the potential for development of such claims and the economics of
operating existing mines on federal unpatented mining claims. Such proposed
royalties are, however, expected to affect neither the existing reserves at Gold
Bar, which under current legislative proposals would be grandfathered due to
earlier filed patent applications, nor the Commonwealth property in central
Arizona optioned from Harvest Gold Corporation, which is comprised of patented
claims.
ENVIRONMENTAL MATTERS
Both existing environmental laws and regulations and environmental laws
and regulations enacted and adopted in the future may have a significant impact
upon the Companies' future operations. The Companies cannot now accurately
predict or estimate the impact of any such existing or future laws or
regulations on their operations. In connection with their mining and processing
activities, the Companies are required to comply with various U.S. and Canadian
federal, provincial, state and local laws and regulations pertaining to the
discharge or materials into the environment or otherwise relating to the
protection of the environment. Instances of noncompliance or the enactment of
new laws or regulations could have a material adverse impact on the Companies.
DEPENDENCE ON KEY PERSONNEL
A number of the executive officers and personnel of the Companies have
considerable expertise in the mining business. The loss of the services of any
one or more of these executive officers and personnel could have an adverse
effect upon the Companies.
PROFITABILITY
While certain of the Companies' mining properties may be operated at a
profit during a given fiscal period, the Companies' operations as a whole may be
unprofitable due to exploration, development, and operating costs on other
properties. Other items that may adversely affect profitability include selling
expenses, general and administrative costs, allowances for depreciation,
depletion and amortization of assets, and interest expense.
NO DIVIDENDS
For the foreseeable future, it is anticipated that each of the Companies
will use earnings, if any, to finance their respective growth and that dividends
will not be paid to shareholders.
CERTAIN TAX MATTERS
On December 7, 1995 the Clinton Administration proposed a package of
amendments to the Internal Revenue Code of 1986, as amended (the "Code"), one of
which (the "Proposal") appears to be directed at the U.S. Federal income tax
treatment of certain purported debt instruments payable in stock of the issuer
or certain "related parties," as specifically defined in the Proposal. However,
given Atlas' less-than-fifty percent ownership interest in Granges (see
"Relationship Between the Company and Granges"), the Proposal should not affect
the U.S. Federal income tax treatment of the Debentures, since Granges should
not be considered a "related party" with respect to Atlas for purposes of the
Proposal.
PROSPECTIVE INVESTORS IN ALL JURISDICTIONS ARE ADVISED TO CONSULT THEIR
OWN TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE PURCHASE,
OWNERSHIP, EXCHANGE AND OTHER DISPOSITION (AS APPLICABLE) OF THE DEBENTURES AND
THE GRANGES COMMON SHARES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL,
FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES
FEDERAL AND OTHER UNITED STATES OR FOREIGN TAX LAWS.
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THE COMPANY
Atlas is a mining company which is principally engaged in the business of
exploring for, producing and selling gold. The Company is a Delaware corporation
with its principal offices located at 370 Seventeenth Street, Suite 3150,
Denver, Colorado 80202 (telephone number (303) 825-1200). Incorporated in 1923,
the Company first traded on the New York Stock Exchange in 1937. The Company's
primary mining asset is the Gold Bar mine, located near Eureka, Nevada.
RATIO OF EARNINGS TO FIXED CHARGES
The Company's ratio of earnings to fixed charges is computed as follows
(all amounts in U.S. dollars):
<TABLE>
<CAPTION>
fiscal year ended:
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Three Three 1995 1994 1993 1992
months months
ended ended
9/30/95 9/30/94
<S> <C> <C> <C> <C> <C> <C>
Fixed Charges
.Interest expenses $ 94,000 $ 116,000 $ 316,000 $ 562,000 $ 79,000 $ 331,000
.Interest capitalized during
period 0 0 0 0 428,000 1,415,000
.Portion of rent expense
representative of interest 20,222 53,146 159,713 180,195 297,081 222,967
-------------------------------------------------------------------------------------
114,222 169,146 475,713 742,195 804,081 1,968,967
Earnings
.Income (Loss) from
continuing operations (1,743,000) (3,757,000) (20,397,000) (12,040,000) (27,589,000) (7,177,000)
before income taxes
.Fixed charges per above 114,222 169,146 475,713 742,195 804,081 1,968,967
.Less interest capitalized
during period 0 0 0 0 (428,000) (1,415,000)
.Current period
amortization of interest
capitalized in prior periods 0 0 0 0 336,000 681,000
-------------------------------------------------------------------------------------
(1,628,778) (3,587,854) (19,921,287) (11,297,805) (26,876,919) (5,942,033)
Earnings are inadequate to cover
fixed charges. The amount of
the coverage deficiency is: $ 1,743,000 $ 3,757,000 $ 20,397,000 $ 12,040,000 $ 27,681,000 $ 7,911,000
<CAPTION>
------------
1991
<S> <C>
Fixed Charges
.Interest expenses $ 214,000
.Interest capitalized during
period 1,763,000
.Portion of rent expense
representative of interest 193,401
------------
2,170,401
Earnings
.Income (Loss) from
continuing operations (2,483,000)
before income taxes
.Fixed charges per above 2,170,401
.Less interest capitalized
during period (1,763,000)
.Current period
amortization of interest 736,000
capitalized in prior periods
------------
(1,339,599)
Earnings are inadequate to cover
fixed charges. The amount of
the coverage deficiency is: $ 3,510,000
</TABLE>
RECENT TRANSACTIONS
On November 29, 1995, the Company purchased approximately 12.2 million
of the outstanding shares of Phoenix Financial Holdings Inc. ("Phoenix", ticker
symbol CDN:PGML.A,PGML.B), comprising 51% of the total issued shares of Phoenix,
for U.S.$1.3 million. With the purchase, the Company assumed board control of
Phoenix with David J. Birkenshaw, Chairman and Chief Executive Officer of Atlas,
appointed Chairman of Phoenix and Gerald E. Davis, Atlas' President, being
appointed Vice Chairman and Chief Executive Officer of Phoenix. Mr. Birkenshaw
had previously been Chairman of Phoenix from June 1991 until his resignation in
March, 1995. Atlas intends to propose the acquisition by Phoenix of Atlas'
Tucker Hill Perlite Property in return for a combination of cash, shares and a
retained royalty, the terms of which have not yet been determined. The terms of
any such transaction would be subject to approval by the independent members of
the Phoenix board, by the minority shareholders of Phoenix and by the Atlas
board, as well as the receipt of any required regulatory approvals.
GRANGES
Granges is a mining company engaged in the exploration for and the
acquisition, development and operation of mineral properties in North America,
Central America and South America. Granges is incorporated under the laws of the
Province of British Columbia, Canada and its common shares are listed on The
Toronto Stock Exchange and the American Stock Exchange. Granges' principal
mining asset and source of cash flow and earnings is the Crofoot/Lewis mine in
Nevada, which produces gold and by-product silver. Granges also owns 41% of the
issued common shares of Zamora Gold Corp., a Canadian company engaged in mineral
exploration in Ecuador.
The authorized capital of Granges consists of 1,500,000,000 shares
divided into 750,000,000 Common shares ("Granges Common Shares") without par
value and 750,000,000 Preferred shares ("Preferred Shares") without par value.
Each holder of record of Granges Common Shares is entitled to one vote
for each Granges Common Share held on all matters requiring a vote of
shareholders, including the election of directors. There are no preferences,
conversion rights, pre-emptive rights or subscription rights attached to the
Granges Common Shares. In the event of the liquidation, dissolution, or winding
up of Granges, the
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holders of Granges Common Shares are entitled to participate pro rata in the
assets of Granges available for distribution after satisfaction of the claims of
creditors. Shares ranking in priority to the Granges Common Shares, other than
the Preferred Shares, with respect to such matters as redemption, return of
capital, dividends or voting may be created by a special resolution passed by
not less than three quarters of the votes cast at a meeting of the shareholders
of Granges.
The Preferred Shares are issuable from time to time in one or more
series, and the directors of Granges may by resolution fix the number of
Preferred Shares in, and determine the designation of, each series and the
special rights and restrictions attached to each series subject to the special
rights and the restrictions attached to the Preferred Shares as a class as set
forth in the memorandum of Granges. The Preferred Shares as a class are entitled
to preference over the Granges Common Shares with respect to the payment of
dividends and the distribution of assets of Granges in the event of the
liquidation, dissolution or winding up of Granges or in the event of any other
distribution of assets of Granges among its shareholders for the purpose of
winding up its affairs, and the Preferred Shares of each series may be given
such other preference, not inconsistent therewith, over the Granges Common
Shares determined in the case of each series authorized to be issued by the
directors. To date, no series of the Preferred Shares have been created by the
directors of Granges and no Preferred Shares are issued or outstanding.
Investors should carefully examine the discussion of possible re-sale
restrictions under the caption "relationship between the company and Granges".
RELATIONSHIP BETWEEN THE COMPANY AND GRANGES
In August of 1994 Atlas completed the purchase of 12,694,200 shares of
Granges Inc. On such date, such shares represented 37.2 percent of the issued
and outstanding shares of Granges. 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). As a result of the subsequent amalgamation on May 1, 1995 of Granges
and its 50.5 percent owned subsidiary, Hycroft Resources & Development
Corporation ("Hycroft"), Atlas' interest in the amalgamated entity was reduced
to its present level of 27.7 percent.
If all of the Debentures were to be exchanged for Granges Common
Shares at the Exchange Rate, Atlas' interest in Granges (assuming the total
number of outstanding shares of Granges Common Shares remained constant) would
be reduced to 18.4 percent.
Pursuant to an agreement dated May 13, 1994 as amended by a subsequent
agreement dated February 24, 1995, Atlas agreed that, following the amalgamation
of Granges with Hycroft, which Atlas agreed to support, (i) Atlas would vote its
common shares of Granges in favor of a slate of eleven directors who would
constitute the first Board of Granges from and after its amalgamation with
Hycroft, (ii) that the number of directors would be reduced to an agreed slate
of nine from and after October 1, 1995, (iii) that Atlas would vote its Granges
Common Shares in favor of such nine directors at the first post-amalgamation
annual general meeting of Granges in 1996, and (iv) Michael B. Richings, then
President of Atlas, would become President and Chief Executive Officer of
Granges, subject to approval of the Granges Board, on October 1, 1995. The
agreement also provides for Atlas and Granges to establish a special committee
of the Granges Board of Directors to review and advise the Board on joint
exploration ventures, the development of a South American program and the
exchange of technical information. The agreement entitles Atlas to
representation on the Board of Granges proportionate with Atlas' percentage
shareholding of Granges.
Mr. Richings became President and Chief Executive Officer of Granges
effective June 1, 1995, and in connection therewith resigned his position as
President of Atlas, although he remains on the board of directors of Atlas. Both
Mr. Richings and David J. Birkenshaw, Chairman and Chief Executive Officer of
Atlas, serve on both the Board of Atlas and the Board of Granges.
GRANGES REGISTRATION STATEMENT
Pursuant to an agreement dated November 10, 1995 (the "Granges
Registration Agreement"), Granges has agreed to register for resale under the
Securities Act the shares of Granges Common Shares to be delivered upon exchange
of the Debentures or (at the option of Atlas) upon redemption or maturity
(including acceleration) of the Debentures (the "Underlying Shares"). The
Granges Registration Agreement provides that as soon as reasonably practicable,
Granges will file a registration statement under the Securities Act registering
the Underlying Shares for resale and will also file all required state
securities filings so that the registration statement becomes effective on or
before February 9, 1996. If that deadline is not met, Granges is required to use
its best efforts to do so after February 9, 1996. The Granges Agreement also
provides that Granges will maintain the registration statement for three years
after the latest date on which Underlying Shares are acquired by holders of
Debentures ("Holders"), or such earlier time when all of the Underlying Shares
have been sold under the registration statement, provided that Granges may, upon
notice, temporarily suspend sales under the registration statement during any
reasonable period in which its board of directors determines, in good faith,
that because of material corporate changes, it would not be feasible to maintain
a current prospectus during such period. In such an event, Granges is obligated,
at the earliest possible time, to take all necessary steps to update the
prospectus disclosure and notify Holders that exercise of the exchange right
under the registration statement may resume. Granges has filed the registration
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<PAGE>
statement on Form S-3 (33-_________) and it is expected to go effective
simultaneously with this registration statement. The Granges Registration
Agreement requires the Company to pay Granges the reasonable expenses of Granges
in connection with preparing, filing and keeping effective the registration
statement and otherwise in connection with the offering.
In a separate indemnification agreement (included as Exhibit 99.4) the
Company has agreed to indemnify and hold harmless Granges and its officers and
directors and each other person, if any, who controls Granges within the meaning
of Section 15 of the 1933 Act against any and all losses, claims, damages,
liabilities and expenses (including any reasonable investigation, legal and
other expenses incurred in connection with, and any amount paid in settlement
of, any action, suit or proceeding or any claim asserted), to which it or they
may become subject under the Ontario or British Columbia Securities Acts, the
Securities Act, the United States Securities Exchange Act of 1934, as amended,
or any other federal, provincial or state statutory law or regulation, or at
common law or otherwise in Canada or the United States insofar as such losses,
claims, damages, liabilities or expenses arise out of or are based upon any
misrepresentation or untrue statement or alleged untrue statement of a material
fact contained in (a) any private placement offering memorandum in connection
with the Special Warrants (as hereinafter defined), (b) any preliminary or final
prospectus filed with the securities commissions of Ontario or British Columbia
in connection with the Offering or (c) any registration statement filed with the
Securities and Exchange Commission of the United States and with any state
securities or "blue sky" administrators in any states thereof by the Company or
Granges in connection with offers, sales and resales of the Granges Shares under
any such offering memorandum, prospectus or registration statement, or the
omission or alleged omission to state in any such offering memorandum,
prospectus or registration statement a material fact required to be stated
therein or necessary to make the statements therein not misleading, provided,
however, that the Company will not be liable in any such case to the extent that
any such loss, claim, damage or liability arises out of or is based upon any
such untrue statement or alleged untrue statement or omission or alleged
omission made by Granges or made therein in reliance upon and in conformity with
written information furnished by Granges to the Company specifically for use in
connection with the preparation thereof, or in reliance upon and in conformity
with (whether by incorporation by reference or otherwise) information contained
in Granges' filings under Canadian or United States federal, provincial or state
securities laws or regulations.
RECENT ACTIVITIES
The Company currently anticipates capital requirements of $10,000,000
to resume mining operations at the Gold Bar Property. With a current gold
reserve of 2.7 million tons at an average grade of 0.07 ounces of gold per ton,
containing approximately 187,000 ounces, average annual gold production is
estimated at 52,000 ounces over a three-year period. On October 24, 1995, the
Company signed a letter of intent with Brown & Root Inc., a contract mining
company, establishing terms for a contract mining services agreement. In
addition to contract mining services, the letter of intent provides for a
$5,000,000 guarantee of project financing in return for a 20 percent non-
operating net profits interest in the project subject to a minimum payment of
$5000,000 and a maximum payment of $7,500,000. Contingent upon the successful
conclusion of such negotiations and closing on the sale of the Debentures, the
Company anticipates resuming mining operations at Gold Bar in early 1996. In
addition to the project financing provided for in the letter of intent, the
Company is intending to use approximately $5,000,000 of the proceeds of the
Debentures to fund the initial capital and startup costs. A six-month period of
overburden removal and stockpiling will be required prior to the resumption of
mining activities. The Company intends to use the remaining proceeds of the
Debentures to repay its $2,000,000 loan from First Marathon Inc. (see
"Description of Debentures"), for exploration and development of its other
properties and for working capital.
On December 19, 1995 the Company and Granges executed an exploration
joint venture agreement with Granges, effective as of September 29, 1995, with
respect to approximately thirty four square miles of the Company's Gold Bar
claim block located near Eureka, Nevada. The terms of the agreement will call
for Granges to spend U.S.$2.25 million on exploration and development within
three years on the 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. Granges will be able to terminate the agreement prior to the end
of any year. In a ddition, to earn a 50% undivided interest in not more than
fifteen square miles within the area of interest, Granges must complete an
independent reserve report recommending development of a deposit containing a
mineable reserve in excess of 300,000 ounces of gold. If a reserve study has not
been completed within the first three years, Granges has an option to earn a 50%
interest in a reduced three square mile area by spending an additional U.S.$1
million in each of the next succeeding two years and completing a reserve study.
Atlas has retained a two percent net smelter royalty on all claims not currently
carrying third party royalties. Atlas has agreed to make available to the
venture, at the time of Granges' earn in, milling throughput rights of not less
than 50% of the capacity of Atlas' existing Gold Bar mill.
The Company's proposed reclamation plan with respect to its former
uranium mill site located near Moab, Utah provides for capping the tailings on
site; the proposed plan is the subject of an Environmental Impact Statement
("EIS") and a Technical Evaluation Report, both reports to be issued by the
Nuclear Regulatory Commission ("NRC"). On November 29, 1995, the Company
announced that the NRC had released a preliminary Draft Technical Evaluation
Report ("DTER") regarding the Company's proposal for on-site reclamation of
tailings. The document identified a limited number of open issues that will need
to be resolved before the NRC can come to a final position on the Company's
proposal. The work required to address many of these issues will be completed
prior to the release of the DTER and associated Draft EIS, both of which the NRC
has indicated will be released for public comment in January 1996. The
recommendations of the preliminary DTER were in accordance with the expectations
of the Company. The Company was aware of most of the issues identified as being
outstanding and does not believe that any of the open items represent
significant concerns. Studies which address the known issues are nearly complete
and preliminary results are positive. The Company is confident that the ultimate
result of the review process will be approval of its reclamation plan involving
capping the tailings on site.
USE OF PROCEEDS
All of the Debentures offered hereby are to be issued for no
additional consideration to holders of currently outstanding Special Warrants
(as hereinafter defined). The Debentures will be sold by the Selling
Debentureholders for their own accounts and no proceeds from the sale of the
Debentures will be received by the Company.
SELLING DEBENTUREHOLDERS
The Debentures offered hereby consist of U.S.$10,000,000 of Debentures
to be issued on exercise of special warrants originally offered to U.S.
investors under Regulation D of the Act and outside the U.S. under Regulation S
of the Act.
The following table lists the amount of Debentures beneficially owned
by each of the Selling Debentureholders, the amount of Debentures being offered
by each hereunder and the amount of Debentures to be owned by each after this
offering. None of the Selling Debentureholders has had any position, office or
other material relationship with the Company or any of its predecessors or
affiliates within the past three years.
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<PAGE>
<TABLE>
<CAPTION>
Amount Amount Amount
Prior to Offering to be Offered After Offering
----------------- -------------- --------------
<S> <C> <C> <C>
James Capel Channel Islands Nominees Ltd. U.S.$100,000 U.S.$100,000 0
Robert Fleming & Co. Ltd. U.S.$400,000 U.S.$400,000 0
BPI Capital Management Corp. U.S.$1,500,000 U.S.$1,500,000 0
Gabelli Gold Fund Inc. U.S.$200,000 U.S.$200,000 0
Calabria Trust U.S.$10,000 U.S.$10,000 0
Rita L. Agnese, Living Trust U.S.$10,000 U.S.$10,000 0
Pietro Agnese Trust U.S.$30,000 U.S.$30,000 0
Pamela Hallisey U.S.$112,000 U.S.$112,000 0
Richard Hallisey U.S.$112,000 U.S.$112,000 0
Continental Casualty Company U.S.$2,000,000 U.S.$2,000,000 0
International Maongozi U.S.$500,000 U.S.$500,000 0
Dynamic Precious Metals Fund U.S.$1,000,000 U.S.$1,000,000 0
Altamira Management Ltd. U.S.$1,000,000 U.S.$1,000,000 0
Karglia Investments Inc. U.S.$100,000 U.S.$100,000 0
Silverton International Fund Limited U.S.$400,000 U.S.$400,000 0
CPP (Canada) LP U.S.$1,000,000 U.S.$1,000,000 0
AFM (Canada) LP U.S.$200,000 U.S.$200,000 0
North Pole Capital Investments Ltd. U.S.$400,000 U.S.$400,000 0
Indian Investment Limited U.S.$112,000 U.S.$112,000 0
795229 Ontario Inc. U.S.$244,200 U.S.$244,200 0
Euroswiss Securities Limited U.S.$379,800 U.S.$379,800 0
Hemery Nominees Limited U.S.$190,000 U.S.$190,000 0
</TABLE>
All of the aforesaid Debentures are included in the offering to which
this Prospectus relates. Each Selling Debentureholder will determine
individually the timing and amount of any sale or sales of Debentures covered by
this prospectus which are held by such Selling Debentureholder.
PLAN OF DISTRIBUTION
The Company will make application to list the Debentures on the Vancouver
Stock Exchange and on a United States stock exchange. The Company has been
advised that the Debentures offered hereby by the Selling Debentureholders will
be sold from time to time by such Selling Debentureholders, at the discretion of
each Selling Debentureholder, through customary brokerage channels, either
through broker-dealers acting as agents or brokers for the Selling
Debentureholders or through broker-dealers acting as principals who may then
resell such Debentures on an exchange or otherwise, or through privately
negotiated sales, in each case at prevailing marketing or other negotiated
prices, or by a combination of such methods. There is no underwriting agreement
with respect to the Debentures offered by the Selling Debentureholders. The
Selling Debentureholders may pay commissions to designated broker-dealers for
assisting in the sale of the Debentures. Any such commissions will be subject to
negotiation. The Selling Debentureholders and any broker-dealers acting as
principals who may purchase shares from the Selling Debentureholders and then
resell such Debentures, on an exchange or otherwise, may be deemed to be
statutory "underwriters" within the meaning of the Securities Act.
DESCRIPTION OF DEBENTURES
Pursuant to the provisions of a certain underwriting agreement dated as
of October 25, 1995 by and among the Company, Yorkton Securities Inc. and First
Marathon Securities Ltd. (the "Underwriting Agreement", included as Exhibit
99.1), the Company, on November 10, 1995, issued U.S.$10 million of special
warrants (the "Special Warrants") exercisable for a like principal amount of
Debentures on or before the earlier of: (i) the first business day which is
twelve months after November 10, 1995, or (ii) the fifth business day following
the date upon which the Company files (or causes to be filed): (a) a preliminary
prospectus and (final) prospectus in the Provinces of Ontario and British
Columbia qualifying the distribution of the Debentures upon exercise of the
Special Warrants and causes receipts to be issued therefor; (b) a registration
statement or registration statements under the Securities Act registering for
resale the Debentures and the Granges Shares and makes them effective, and files
(or causes to be filed) all required filings with state securities or "blue sky"
administrators in the states where the holders of such securities propose to
offer and sell the Debentures or Granges Shares and makes them effective; and
(c) a registration statement under the 1934 Act registering the class of
Debentures under Section 12(b) of the 1934 Act and makes it effective. All
Special Warrants not exercised prior to that date will be deemed to be exercised
on such date without further action or notice on the part of the holders
thereof.
Pursuant to the Underwriting Agreement, the proceeds of that issue are
being held in escrow until the exercise or deemed exercise of the Special
Warrants and the Company has entered into a loan agreement with First Marathon
Inc. with respect to obtaining a short-term secured loan of U.S.$2,000,000 at an
interest rate of 1.25% per month, such loan to be repayable by the earlier of
February 15, 1996 or the fifth business day following the completion of the
requirements set forth under "Listings and Registrations" below. In
consideration of entering into the loan agreement, the Company paid First
Marathon Inc. commitment and out of pocket fees totaling U.S.$120,000. The
Company has pledged as security approximately 2.4 million common shares of
Dakota Mining Corporation, approximately 4.2 million shares of Granges Inc. and
up to fifty
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<PAGE>
percent of the Granges Shares currently held in escrow as security for the
Debentures should they be released from escrow before repayment of the loan. The
Company intends to repay the First Marathon loan with a portion of the net
proceeds from the Debentures.
Pursuant to the Underwriting Agreement, the Debentures will be issued,
upon exercise or deemed exercise of the Special Warrants, under an indenture
with Chemical Bank as trustee (the "Indenture", included as Exhibit 4.1).
Capitalized terms used in this DESCRIPTION OF DEBENTURES and not otherwise
defined shall have the meaning specified in the Indenture. With respect to each
Debenture:
PRINCIPAL AND INTEREST
The Company will pay to the Holder, the principal sum stated on the
Debenture certificate in United States Dollars plus accrued and unpaid interest
in cash (or at the Company's option, evidenced by an Officers' Certificate (as
hereinafter defined) of the Company received by the Trustee not less than two
Business Days prior to October 25, 2000, the principal may be repaid, in whole
or in part, but in any case on a pro-rata basis to all holders of outstanding
Debentures under the Indenture, in shares of Granges Common Shares valued at
ninety five percent of the then per share market price of Granges Common Shares,
such market price to be calculated by the Company as the average closing trade
price of Granges Common Shares on the American Stock Exchange, or, if Granges
Common Shares are not then listed on the American Stock Exchange, the stock
exchange or over-the-counter market upon which the Granges Common Shares are
traded which, in aggregate, has the highest dollar trading volume, during the
twenty consecutive trading days ending on the last trading day prior to October
25, 2000, or, should Granges Common Shares not be traded on any stock exchange
or over-the-counter market, then ninety five percent of the per share fair value
of Granges Common Shares over such twenty-day period as determined in good faith
by an investment banking firm retained in good faith by the Company and which is
a member of the New York Stock Exchange or the Toronto Stock Exchange and as set
forth in an Officers' Certificate of the Company received by the Trustee
promptly after October 25, 2000) on October 25, 2000 (or, in the case of any
payment, in whole or in part, in Granges Common Shares, such cash and stock
shall be paid on or within five Business Days of October 25, 2000, payment by
such time to be deemed made on October 25, 2000, or, in the case of acceleration
of maturity on the date delivery of Granges Common Shares is made) and to pay
interest in cash on the principal thereof, retroactively from October 25, 1995,
or from the most recent Interest Payment Date (as defined below) to which
interest has been paid or duly provided for, semi-annually in arrears on May 1
and November 1 in each year (an "Interest Payment Date"), commencing May 1,
1996, at the rate of 7% per annum, until October 25, 2000, and at the rate of 7%
per annum on any overdue principal and, to the extent permitted by law, on any
overdue interest. The interest so payable, and punctually paid or duly provided
for, on any Interest Payment Date will, as provided in the Indenture, be paid to
the Person in whose name the Debenture (or one or more Predecessor Debentures)
is registered at the close of business on the Regular Record Date for such
interest, which shall be the April 15 or October 15 (whether or not a Business
Day) next preceding such Interest Payment Date. Except as otherwise provided in
the Indenture, any such interest not so punctually paid or duly provided for
will forthwith cease to be payable to the Holder in whose name the Debenture (or
one or more Predecessor Debentures) is registered on such Regular Record Date
and may either be paid to the Person in whose name the Debenture (or one or more
Predecessor Debentures) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Company, notice whereof shall be given to Holders not less than 10 days prior to
such Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Debentures may be listed, and upon such notice as may be required by such
exchange, all as more fully provided in the Indenture. Payments of principal
shall be made upon the surrender of the Debenture at the option of the Holder at
the Corporate Trust Office of the Trustee, or at such other office or agency of
the Company as may be designated by it for such purpose, in such coin or
currency of the United States of America as at the time of payment shall be
legal tender for the payment of public and private debts by United States Dollar
check mailed to the address of the Person entitled thereto as such address shall
appear in the Security Register maintained by the Trustee, or, upon written
application by the Holder to the Security Registrar (currently the Trustee)
setting forth wire instructions not later than fifteen days prior to the
relevant payment date, by transfer to a United States Dollar account (such
transfer to be made only to a Holder of an aggregate principal amount of
Debentures in excess of U.S.$500,000) maintained by the payee with a bank in The
City of New York (or in whole or in part by shares of Granges Common Shares as
applicable). Payment of interest on the Debenture may be made by United States
Dollar check mailed to the address of the Person entitled thereto as such
address shall appear in the Security Register, or, upon written application by
the Holder to the Security Registrar setting forth wire instructions not later
than the relevant Record Date, by transfer to a United States Dollar account
(such transfer to be made only to a Holder of an aggregate principal amount of
Debentures in excess of U.S.$500,000) maintained by the payee with a bank in The
City of New York.
In any case where the due date for the payment of the principal or
interest on the Debenture or the last day on which the Holder of the Debenture
has a right to exchange the Debenture shall not be a Business Day, then payment
of principal or interest or delivery for exchange of the Debenture need not be
made on or by such date at such place but may be made on or by the next
succeeding Business Day with the same force and effect as if made on the date
for such payment or the date fixed for redemption, or by such last day for
exchange, and no interest shall accrue for the period after such date.
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<PAGE>
The Debentures are issuable in denominations of U.S.$100 and integral
multiples of U.S.$100 in excess thereof. As provided in the Indenture and
subject to certain limitations therein set forth, Debentures are exchangeable
for a like aggregate principal amount of Debentures of any authorized
denominations as requested by the Holder surrendering the same upon surrender of
the Debenture or Debentures to be exchanged, (a) at the Corporate Trust Office
of the Trustee or at such other office or agency of the Company as may be
designated by it for such purpose or (b) at such other offices or agencies as
the Company may designate (each a "Transfer Agent"). The Transfer Agent will
then forward such surrendered Debentures (together with any payment surrendered
therewith) to the Trustee who in turn will issue the new Debentures.
EXCHANGE
Subject to and upon compliance with the provisions of the Indenture, the
Holder is entitled, upon provision, if applicable, of certification regarding
compliance with applicable securities laws, at his option evidenced by written
notice to the Trustee received not less than seven days prior to the date of
exercise (except that such seven-day notice shall be waived in case such notice
is provided within seven days of a Redemption Date), at any time after November
10, 1995 and on or before the close of business on October 25, 2000, or in case
the Debenture is called for redemp tion until and including, but (unless the
Company defaults in making the payment due upon redemption) not after, the close
of business on the Redemption Date, to exchange the Debenture (or any portion of
the principal amount thereof) into fully paid and nonassessable shares of
Granges Common Shares at an initial Exchange Rate of 42.50 shares of Granges
Common Shares per U.S.$100 principal amount of Debentures (or at the current
adjusted Exchange Rate if an adjustment has been made as provided in the
Indenture) by surrender of the Debenture, duly endorsed or assigned to the
Company or in blank together with the exchange notice thereon, duly executed, to
the Company at the Corporate Trust Office of the Trustee or at such other office
or agency of the Company as may be designated by it for such purpose (each an
"Escrow Agent"). The Company shall thereafter deliver to the Holder (together
with the cash payment of any accrued and unpaid interest or any cash adjustment,
as provided in the Indenture) the fixed number of shares of Granges Common
Shares into which the Debenture is exchangeable and such delivery will be deemed
to satisfy the Company's obligation to pay the principal amount of the
Debenture. No fractions of shares or scrip representing fractions of shares will
be issued on exchange, redemption or maturity but instead of any fractional
interest (calculated to the nearest 1/100th of a share) the Company shall pay a
cash adjustment as provided in the Indenture.
In the event of redemption or exchange in part only, a new Debenture or
Debentures for the unredeemed or unexchanged portion will be issued in the name
of the Holder.
REDEMPTION
The Debentures are subject to redemption, in whole or in part, at the
option of the Company on or after October 25, 1998 so long as the Average Market
Price of Granges Common Shares is at least U.S.$2.94 per share, upon not more
than 60 nor less than 30 days' notice to the Holders prior to the Redemption
Date, at a Redemption Price equal to 100% of the principal amount plus accrued
and unpaid interest to the Redemption Date, such payment to be made in cash or,
at the Company's option, upon not less than 20 days notice to the Holders prior
to the Redemption Date, the principal payable on such redemption may be paid in
whole or in part, but in any case on a pro-rata basis to all Holders of
outstanding Debentures under the Indenture being redeemed, in Granges Common
Shares (such cash and stock to be delivered to Holders on or before five
Business Days after the Redemption Date, payment by such time to be deemed made
on the Redemption Date) valued at the Exchange Rate, initially set at 42.50
shares of Granges Common Shares per U.S.$100 principal amount of Debentures (but
subject to adjustment as provided in the Indenture), provided, however, that
-------- -------
interest installments on Debentures whose Stated Maturity is on or prior to such
Redemption Date will be payable in cash to the Holders of such Debentures, or
one or more Predecessor Debentures, of record at the close of business on the
relevant Record Dates, all as provided in the Indenture; and provided further
-------- -------
that payments of principal and accrued and unpaid interest, if any, upon
redemption or exchange of any Debenture shall be made only upon delivery to the
Company of such certifications as the Company may reasonably require to comply
with any applicable laws or regulations. The term "Average Market Price" means
the average closing trading price of Granges Common Shares on the American Stock
Exchange (or, if Granges Common Shares are not then listed on the American Stock
Exchange, the stock exchange or over-the-counter market upon which the Granges
Common Shares are traded which, in aggregate, has the highest dollar trading
volume) during a 20 consecutive trading day period ending on the last trading
day prior to the date upon which the Company gives notice, pursuant to Section
1104 of the Indenture, of its option to redeem. Should Granges Common Shares not
be traded on any stock exchange or over-the-counter market, then the Debentures
shall not be subject to redemption until so traded.
Notice of redemption will be given by mail to Holders at least once not
more than 60 nor less than 30 days prior to the Redemption Date as provided in
the Indenture.
SECURITY INTEREST
No sinking fund is provided for the Debentures. The Company's obligations
under the Debentures and the Indenture are secured, pursuant to the Indenture
and an escrow and pledge
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<PAGE>
agreement (the "Escrow and Pledge Agreement") with Chemical Bank as Trustee and
with Chemical Bank as escrow agent (the "Escrow Agent"), by a pledge of shares
of Granges Common Shares owned by the Company (the "Exchange Property") in the
amount of 1 share of Granges Common Shares for each U.S.$1.18 of principal
amount of Special Warrants issued pursuant to the Underwriting Agreement, or a
maximum of 8,474,576 shares. In the event of any reduction of the principal
amount of Debentures outstanding, as evidenced by the delivery to the Trustee by
the Company of Debentures for cancellation, the Exchange Property held by the
Escrow Agent shall be reduced in the same proportion as the principal amount of
the Debentures was so reduced, provided, that the Escrow Agent shall retain a
--------
sufficient amount of Exchange Property to exchange all Debentures then
outstanding on the basis of the then applicable Exchange Rate and the other
terms and provisions of the Indenture, and the Company shall, upon Company
Request, be entitled to any excess Exchange Property created by such reduction
net of any Exchange Property delivered in connection with any reduction caused
by an exchange for Granges Common Shares.
ANTI-DILUTION PROVISIONS
The Exchange Rate is subject to adjustment upon certain events affecting
the capital structure of Granges as provided in Section 1204 of the Indenture.
In case Granges, at any time or from time to time after November 10,
1995, shall declare, order, pay or make a dividend or other distribution
(including, without limitation, any distribution of other or additional stock or
other securities or property or options by way of dividend or spinoff,
reclassification, recapitalization, merger or consolidation in which Granges is
the continuing or resulting corporation, or similar corporate rearrangement) on
the Granges Common Shares, other than a regular periodic cash dividend declared
out of accumulated earnings of Granges or enter into any agreement for the
issuance of Granges Common Shares (or securities convertible into or
exchangeable for Granges Common Shares) at a cash price per share (or having a
conversion or exchange price per share) less than the Average Market Price (the
date upon which the Company announces its intention to make such issuance being
the relevant record date), then, and in each such case, the Exchange Rate in
effect immediately prior to the close of business on the record date fixed for
the determination of the persons entitled to receive such dividend or
distribution shall be adjusted, effective as of the close of business on such
record date, by multiplying such Exchange Rate by the quotient obtained by
dividing (all amounts being calculated to the nearest cent or 1/100 of a share,
as the case may be) the Average Market Price in effect on such record date, by
such Average Market Price less the amount of such dividend or distribution (as
determined in good faith by the Board of Directors of the Company) applicable to
one share of Granges Common Shares.
As used in the preceding paragraph, the term "Average Market Price" means
the average closing trading price of Granges Common Shares on the American Stock
Exchange (or, if Granges Common Shares are not then listed on the American Stock
Exchange, the stock exchange or over-the-counter market upon which the Granges
Common Shares are traded which, in aggregate, has the highest dollar trading
volume) during a 20 consecutive trading day period ending one day prior to the
record date fixed for the determination of the persons entitled to receive such
dividend or distribution. Should Granges Common Shares not be traded on any
stock exchange or over-the-counter market, then "Average Market Price" shall
mean the fair value of Granges Common Shares over such twenty-day period as
determined in good faith by an investment banking firm retained in good faith by
the Company and which is a member of the New York Stock Exchange or the Toronto
Stock Exchange.
In case Granges, at any time or from time to time after November 10,
1995, shall effect a subdivision of the outstanding shares of Granges Common
Shares into a greater number of shares of Granges Common Shares (by
reclassification or except by payment of a dividend in Granges Common Shares),
then, and in each such case, the Exchange Rate in effect immediately prior to
such subdivision shall, concurrently with the effectiveness of such subdivision,
be proportionately increased to reflect such transaction, as determined by the
Board of Directors of the Company.
In case the outstanding shares of Granges Common Shares shall be combined
or consolidated, by reclassification or otherwise, into a lesser number of
shares of Granges Common Shares, the Exchange Rate in effect immediately prior
to such combination or consolidation shall, concurrently with the effectiveness
of such combination or consolidation, be proportionately decreased to reflect
such transaction, as determined by the Board of Directors of the Company.
All determinations by the Board of Directors of the Company shall be made
in good faith with due regard to the interests of the Holders, and in accordance
with good financial practice.
In case Granges (i) shall consolidate with or merge into any other person
and shall not be the continuing or surviving corporation in such consolidation
or merger, or (ii) shall permit any other person to consolidate with or merge
into Granges and Granges shall be the continuing or surviving person but, in
connection with such consolidation or merger, the Granges Common Shares shall be
changed into or exchanged for stock or other securities of any other person or
cash or any other property, or (iii) shall transfer all or substantially all of
its properties or assets to any other person, or (iv) shall effect a capital
reorganization or reclassification of the Granges Common Shares, then, and in
each such case, the Company shall execute and deliver to the Trustee a
supplemental indenture, and to the Escrow Agent a supplement to the Escrow and
Pledge Agreement, providing
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<PAGE>
that, upon the basis and the terms and in the manner provided in this paragraph,
each Holder, upon the exercise of any exchange privilege at any time after the
consummation of such consolidation, merger, transfer, reorganization or
reclassification, shall be entitled to receive at the aggregate Exchange Rate in
effect at the time of such consummation for all Granges Common Shares issuable
upon such exchange immediately prior to such consummation, in lieu of the
Granges Common Shares issuable upon such exchange prior to such consummation,
the stock and other securities, cash and property to which such Holder would
have been entitled upon such consummation if such Holder had exercised its
exchange privilege hereunder immediately prior thereto, provided, however, that
-------- -------
such Holder (i) is not a Person with which Granges consolidated or into which
Granges merged or which merged into Granges or to which such conveyance,
transfer or lease was made, as the case may be (a "Constituent Person"), or an
Affiliate of a Constituent Person and (ii) failed to exercise his rights of
election, if any, as to the kind or amount of securities, cash and other
property receivable upon such consolidation, merger, conveyance, transfer or
lease (provided that if the kind or amount of securities, cash and other
property receivable upon such consolidation, merger, conveyance, transfer or
lease is not the same for each share of Granges Common Shares held immediately
prior to such consolidation, merger, conveyance, transfer or lease by other than
a Constituent Person or any Affiliate thereof and in respect of which such
rights of election shall not have been exercised ("Non-Electing Shares"), then
for the purpose of this Section the kind and amount of securities, cash and
other property receivable upon such consolidation, merger, conveyance, transfer
or lease by the holders of each Non-Electing Share shall be deemed to be the
kind and amount so receivable per share by a plurality of the Non-Electing
Shares), and in each case subject to adjustments (subsequent to such corporate
action) as nearly equivalent as possible to the adjustments provided for herein.
Notice of any such supplemental indenture shall as soon as practicable be
filed with the Escrow Agent and mailed by or on behalf of the Company to the
Holders at their last addresses as they shall appear on the Security Register.
Neither the Trustee nor the Escrow Agent shall be under any
responsibility to determine the correctness of any provisions contained in any
such supplemental indenture relating either to the kind or amount of shares of
stock or securities or property or cash receivable by the Holders upon the
exchange of their Debentures after any such consolidation, merger, sale or
transfer or to any adjustment to be made with respect thereto.
No adjustment in the Exchange Rate shall be required unless such
adjustment would require an increase or decrease of at least one percent in the
Exchange Rate; provided, however, that any such adjustments which are not
-------
required to be made shall be carried forward and taken into account in any
subsequent adjustment.
In case any event shall occur as to which the provisions of Section 1204
of the Indenture are not strictly applicable but the failure to make an
adjustment would not fairly protect the exchange rights represented by the
Indenture and the Debentures in accordance with the essential intent and
principles of that Section, then, in each such case, the Company shall appoint a
firm of independent certified public accountants of recognized national standing
(which may be the regular independent auditors of the Company), which shall give
their opinion upon the adjustment, if any, on a basis consistent with the
essential intent and principles established in Section 1204 of the Indenture,
necessary to preserve, without dilution, the exchange rights represented by the
Indenture and the Debentures. Upon receipt of such opinion, the Company will
promptly mail a copy thereof to the Holders and shall make the adjustments
described therein.
In the case of any adjustment or readjustment in the shares of Granges
Common Shares issuable upon the exchange of Debentures, the Company at its
expense will promptly compute such adjustment or readjustment in accordance with
the terms of the Indenture and prepare a report setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Company will forthwith mail a copy of each such
report to the Trustee and to each Holder, and will, upon the written request at
any time of such Holder, furnish to each Holder a like report setting forth the
Exchange Rate at the time in effect and showing how it was calculated. The
Company will also keep copies of all such reports at its principal office and
will cause the same to be available for inspection at such office during normal
business hours by each Holder or any prospective purchaser of Debentures
designated by a Holder.
Distributions giving rise to an adjustment to the Exchange Rate shall
become Exchange Property subject to the lien of the Indenture. In the event that
any increase in the Exchange Rate shall cause the aggregate amount of Granges
Common Shares deliverable upon exchange of all outstanding Debentures to exceed
the number of shares of Granges Common Shares constituting Exchange Property,
the amount of any such excess shall be satisfied by apportioning to each Holder,
in proportion to the principal amount of outstanding Debentures held, such
Exchange Property as is not Granges Common Shares.
TAXES
Subject to Section 313(d) of the Indenture, any and all payments shall be
made subject to deduction for any present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto
including (i) United States withholding taxes applicable to the payment of
interest to a Holder (including United States withholding taxes applicable to
payments
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<PAGE>
to a Holder claiming that it is entitled to an exemption or relief from such
withholding taxes if such Holder does not comply with the requirements of
Section 313(d) of the Indenture) and (ii) any tax or charge arising from the
transfer of ownership of Debentures or the registration of Debentures in a name
other than that of the prior Holder (all such expenses being referred to as
"Taxes"). Except as specifically provided in the Indenture, the Company shall
not be required to make any payment with respect to any tax, assessment or other
governmental charge imposed by any government or any political subdivision or
taxing authority thereof or therein.
Section 313(d) of the Indenture provides that the Company shall, until
six months after the applicable statute of limitations with respect to the
relevant Taxes expires, maintain a record of the identity of any Person who held
a beneficial interest in the Debentures. To the extent applicable to such
Person, and to the extent such Person wishes to claim the benefits of Section
313, such Person shall provide to the Company its name and address and shall
certify to the Company that (i) it is entitled to receive payments of interest
subject to the portfolio interest exemption from United States withholding tax
on interest pursuant to Sections 871(h) and 881(c) of the Internal Revenue Code
of 1986, as amended (the "Code"), (ii) it is not a ten percent shareholder of
the Company within the meaning of Section 871(h)(3) of the Code, (iii) it is not
a controlled foreign corporation receiving interest from a related person for
purposes of Section 881(c)(3), (iv) it is not a United States person, citizen or
resident, and (v) it is not licensed to conduct a banking business or to accept
deposits from members of the public and, in fact, does not accept such deposits,
and such Person shall have undertaken to provide to the Company such tax forms,
including a Certificate of Foreign Status (Internal Revenue Service Form W-8),
as may reasonably be requested from time to time by the Company to ensure the
availability to such Person of such exemption from United States withholding tax
on interest pursuant to Sections 871(h) and 881(c) of the Code. In the event
that such a Person is unable to provide the certifications set forth in the
previous sentence, it shall provide to the Company, if applicable, a properly
completed U.S. Internal Revenue Service Form 1001 and shall certify to the
Company that it is entitled to receive interest subject to a reduced U.S.
withholding tax rate, or a properly completed Form 4224 and shall certify to the
Company that it is entitled to receive interest without deduction of U.S.
withholding taxes. Such certification by each such Person on such Form 1001
shall be accompanied by a copy of a Certificate of Foreign Status (Internal
Revenue Service Form W-8) duly executed by the Person named in such
certification or Form. Such Person shall also provide to the Company from time
to time any other documentation or information required by the Code and the
regulations, rulings and forms pertaining thereto or to any successor provision,
or by any other provision of law, with respect to any such applicable exemption
from United States withholding tax on interest or reduction in the rates thereof
with respect to payments to be made.
If any Taxes are assessed against the Company or the Trustee with respect
to payments previously made hereunder, the Holder of any Debenture in respect of
which such Taxes were assessed shall, and each such Holder, by his acceptance of
the Debenture, agrees to, promptly, upon demand, pay such Taxes directly to the
entity imposing such Taxes or, in case that the Company or Trustee, as the case
may be, shall have already made such payment, shall repay the full amount of
such Taxes so paid, and each such Holder, by his acceptance of the Debentures
further agrees that amounts not so repaid shall be paid directly to the Company
- ------- ------
or Trustee, as the case may be, and not to the Holder out of the amount of any
interest or principal payable to such Holder hereunder as such payments become
due or out of the amount of any Granges Common Shares otherwise deliverable to
such Holder upon exchange at the time such exchange takes place, whether or not
such payments or Granges Common Shares are deliverable in respect of the
Debenture in respect of which Taxes were paid, until such amount shall have been
fully repaid.
LISTINGS AND REGISTRATIONS
As provided in the Indenture, the Company shall, for the benefit of
Holders, as soon as practicable, file (or cause to be filed): (i) a preliminary
prospectus and final prospectus (the "Prospectus") in the Canadian Provinces of
Ontario and British Columbia qualifying the distribution of the Debentures and
(ii) a registration statement or registration statements (the "1933 Registration
Statement") under the Securities Act of 1933, as amended, registering the
Debentures and the underlying shares of Granges Common Shares for resale, and
shall also file (or cause to be filed) all required filings with state
securities or "blue sky" administrators in the states where the Holders of the
Debentures propose to offer and sell the Debentures and the underlying shares of
Granges Common Shares (the "Blue Sky Filings"). Subject to the following
paragraph, the Company shall use its best efforts to cause receipts to be issued
by the securities commissions in Ontario and British Columbia for the (final)
Prospectus and to cause the 1933 Registration Statement and Blue Sky Filings to
become effective not later than February 9, 1996 (the "Qualification Deadline")
and to cause the 1933 Registration Statement and the Blue Sky Filings to remain
effective and current until the date which is three years after the latest date
on which Granges Common Shares are acquired pursuant to the Indenture by
Holders; provided, however, that the Company may, upon notice to the Holders
-------- -------
temporarily suspend sales under the 1933 Registration Statement during any
reasonable period in which its board of directors determines, in good faith,
that because of material corporate changes, it would not be feasible to maintain
a current prospectus during such period, provided, further, that in such event,
-------- -------
the Company will, at the earliest possible time thereafter, take all necessary
steps to update the prospectus disclosure and notify the Holders that sales
under the 1933 Registration Statement may resume. The Company shall further, as
soon as practicable, file (or cause to be filed) with the United States
Securities and Exchange Commission a registration statement (the "1934
Registration Statement") under the Exchange Act, registering the Debentures
under Section 12(b) of the Exchange Act, and
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<PAGE>
to cause the 1934 Registration Statement to become effective not later than the
Qualification Deadline and to remain effective throughout the term of the
Debentures.
The Prospectus, the 1933 Registration Statement, the Blue Sky Filings and
the 1934 Registration Statement shall collectively be referred to hereinafter as
the "Registration Filings". In the event that the Registration Filings are not
made effective (or, in the case of the (final) Prospectus, the securities
commissions in Ontario and British Columbia have not issued receipts therefor)
on or before the Qualification Deadline, the Company shall, unless all Special
Warrants are retracted and cancelled pursuant to the Underwriting Agreement, be
obligated to complete the Registration Filings and to make such filings
effective as soon as practicable after the Qualification Deadline and cause the
1933 Registration Statement, the Blue Sky Filings and the 1934 Registration
Statement to remain effective for the period set forth herein.
The Company will cause the Debentures to be listed, posted and called for
trading on the Vancouver Stock Exchange (and will use its best efforts to have
the Debentures listed, posted and called for trading on the New York Stock
Exchange or such other U.S. securities exchange as is acceptable to the
Underwriters) not later than the earlier of either (i) the fifth Business Day
following the date upon which the requirements of the paragraph above have been
fulfilled or (ii) the first Business Day which is twelve months after November
10, 1995. The Company will maintain such listings throughout the term of the
Debentures.
TRANSFER
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of Debentures is registrable on the Security Register
upon surrender of a Debenture for registration of transfer (a) at the Corporate
Trust Office of the Trustee or at such other office or agency of the Company as
may be designated by it for such purpose, or (b) subject to any laws or
regulations applicable thereto and to the right of the Company to terminate the
appointment of any Transfer Agent, at the offices of the Transfer Agents
described in the Indenture or at such other offices or agencies as the Company
may designate, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security Registrar duly
executed by, the Holder thereof or its attorney duly authorized in writing, and
thereupon one or more new Debentures, of authorized denominations and for the
same aggregate principal amount, will be issued to the designated transferee or
transferees. No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
recover any tax or other governmental charge payable in connection therewith.
The Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name a Debenture is registered, as the owner thereof
for all purposes, whether or not the Debenture is overdue, and neither the
Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
EVENTS OF DEFAULT
An "Event of Default" under the Indenture occurs by either: (1) default
in the payment of interest when due and payable, and continuance of such default
for a period of 30 days; or (2) default in the payment of the principal of any
Debenture within the 5-day period of time after maturity in the case of payments
in whole or in part in Granges Common Shares; or (3) default in the performance
or observance, or breach, of any term, covenant, warranty or agreement of the
Company in the Debentures or the Indenture, and continuance of such default or
breach for a period of 60 days after written notice of such failure, requiring
the Company to remedy the same and stating that such notice is a "Notice of
Default", shall have been given to the Company by the Trustee or to the Company
and the Trustee by the Holders of at least 25% in aggregate principal amount of
the outstanding Debentures; or (4) (a) failure by the Company to pay when due an
aggregate amount in excess of U.S.$500,000 or the equivalent thereof in any
other currency in respect of any outstanding indebtedness and the continuance of
such failure beyond any applicable grace period provided for in the terms of
such indebtedness, or (b) default by the Company with respect to outstanding
indebtedness, which default results in the acceleration of indebtedness in an
aggregate amount in excess of U.S.$500,000 or the equivalent thereof in any
other currency, without, in the case of (a) or (b), such indebtedness having
been discharged or such payment default or acceleration, as the case may be,
having been cured, waived, rescinded or annulled within a period of 10 days
after written notice thereof by or on behalf of the holders of such
indebtedness; provided, however, that if, prior to the entry of judgment in
-------- -------
favor of any trustee with respect to any indebtedness or in favor of any holder
of any indebtedness or other representative of the holders thereof, such failure
or default under such indenture or instrument shall be remedied or cured by the
Company, or waived by or on behalf of the holders of such indebtedness, and such
acceleration (if applicable) shall be rescinded, then the Event of Default shall
be deemed likewise to have been remedied, cured or waived; or (5) the entry by a
court having jurisdiction in the premises of (A) a decree or order for relief in
respect of the Company in an involuntary case or proceeding under any applicable
Federal or State bankruptcy, insolvency, reorganization or other similar law or
(B) a decree or order adjudging the Company a bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of the Company under Federal
bankruptcy law or any other applicable Federal or State law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or of any substantial part of its property, or
ordering the winding up or
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<PAGE>
liquidation of its affairs, and the continuance of any such decree or order
unstayed and in effect for a period of 60 consecutive days; or (6) the
commencement by the Company of a voluntary case or proceeding under any
applicable Federal or State bankruptcy, insolvency, reorganization or other
similar law or of any other case or proceeding to be adjudicated a bankrupt or
insolvent, or the consent by it to the entry of a decree or order for relief in
respect of the Company in an involuntary case or proceeding under any applicable
Federal or State bankruptcy, insolvency, reorganization or other similar law or
to the commencement of any bankruptcy or insolvency proceedings against it, or
the filing by it of a petition or answer or consent seeking reorganization or
relief under Federal bankruptcy law or any other applicable Federal or State
law, or the consent by it to the filing of such petition or to the appointment
or taking possession of a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or of any substantial part
of its property, or the making by it of an assignment for the benefit of
creditors, or the admission by it in writing of its inability to pay its debts
generally as they become due, or the taking of corporate action by the Company
in furtherance of any such action.
Upon qualification of the Indenture under the Trust Indenture Act of
1939, the Company will be required to certify at least annually to the Trustee
as to compliance with all conditions and covenants under the indenture.
Additionally, upon any application or request by the Company to the Trustee or
the Principal Paying Agent to take any action under any provision of the
Indenture, the Company must furnish to the Trustee or the Principal Paying
Agent, as the case may be, a certificate signed by certain officers of the
Company (an "Officers' Certificate") stating that all conditions precedent, if
any, provided for in the Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such condi tions precedent, if any, have been complied with. The
Officers' Certificate must include: (1) a statement that each individual signing
such certificate or opinion has read such covenant or condition and the
definitions herein relating thereto; (2) a brief statement as to the nature and
scope of the examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based; and (3) a statement that, in
the opinion of such individual, he has made such examination or investigation as
is necessary to enable him to express an informed opinion as to whether or not
such covenant or condition has been complied with.
MODIFICATIONS
The rights of Holders are subject to modification by supplemental
amendments to the Indenture. Supplemental amendments may be made with or without
the consent of Holders. Modifications may be made by the Company upon consent of
the Trustee without the consent of Holders: (1) to evidence the succession of
another person or entity to the Company's obligations under the Debentures or
the Indenture; (2) to add to the covenants of the Company for the benefit of
Holders; (3) to effectuate certain anti-dilution provisions regarding the
Exchange Rate; (4) to cure any ambiguity or contradiction in the Debentures or
the Indenture; or (5) to comply with regulatory requirements. Modifications made
by the Holders may be made upon the written consent of a majority in principal
amount of outstanding Debentures or by a vote of 2/3 at a meeting of Holders.
Notwithstanding the foregoing, certain modifications may only be made with the
consent of the Holder of each Debenture so affected. These modifications include
changes to the maturity or interest payment dates, changes in the interest rate
of the Debentures and any waiver of a default in the payment of interest or
principal.
GOVERNING LAW
The Indenture and the Debentures shall be governed by and construed in
accordance with the laws of the State of New York, United States of America.
GRANGES COMMON SHARES
The shares of Granges Common Shares have no par value. Each holder of
record of Granges Common Shares is entitled to one vote for each Granges Common
Share held on all matters requiring a vote of shareholders, including the
election of directors. There are no preferences, conversion rights, pre-emptive
rights or subscription rights attached to the Granges Common Shares. In the
event of the liquidation, dissolution, or winding up of Granges, the holders of
Granges Common Shares are entitled to participate pro rata in the assets of
Granges available for distribution after satisfaction of the claims of
creditors. Shares ranking in priority to the Granges Common Shares, other than
the Preferred Shares, with respect to such matters as redemption, return of
capital, dividends or voting may be created by a special resolution passed by
not less than three quarters of the votes cast at a meeting of the shareholders
of Granges.
Unless and until any Granges Common Shares (i) shall become freely
transferable as a result of: (1) having been acquired in exchange for Debentures
pursuant to an effective registration statement of Granges, covering the resale
of Granges Common Shares, under the 1933 Act, or (2) having been acquired in
exchange for Debentures by a non-U.S. Person (not acting on behalf of a U.S.
Person) in accordance with the provisions of Regulation S, provided, that the
-------- ----
person acquiring such Granges Common Shares in exchange for Debentures delivers
a certificate to the Trustee, certifying that the Debentures were not exchanged
by or on behalf of a U.S. Person and certifying that it is not exercising its
right to acquire Granges Common Shares in exchange for Debentures within the
United States, and provided, further, that the address to which the Granges
-------- -------
Common Shares is delivered upon exchange of the Debentures is not within the
United States; or (ii) the
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<PAGE>
Trustee shall have received from the Holder an opinion of counsel having
substantial experience under the 1933 Act and otherwise reasonably satisfactory
to the Company that the legends on the Granges Common Shares may be removed,
such certificate representing Granges Common Shares delivered pursuant to the
Indenture shall bear the following restrictive legend:
THE SECURITIES COVERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), AND MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED WITHOUT REGISTRATION UNDER THE 1933 ACT UNLESS AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE OR REGISTRATION IS OTHERWISE NOT
REQUIRED PURSUANT TO REGULATION S, AS EVIDENCED BY AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY.
TRUSTEE
Chemical Bank (the "Trustee"), a New York banking corporation with no
material relationship with the Company or its affiliates, serves as trustee
under the Indenture.
The Holders of a majority in principal amount of the outstanding
Debentures have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee, provided that such direction is not in conflict
--------
with any rule of law or with the Indenture and could not involve the Trustee in
personal liability. The Trustee may take any other action it deems proper not
inconsistent with such direction or the Indenture. The Trustee is nevertheless
under no obligation to exercise any of the rights or powers vested in it by the
Indenture at the request or direction of any of the Holders, unless such Holders
shall have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by the Trustee in
compliance with such request or direction, nor is the Trustee required to expend
or risk its own funds or other wise incur any financial liability in the
performance of any of its duties, or in the exercise of any of its rights or
powers, if it has reasonable grounds to believe that repayment or adequate
indemnity against such risk or liability is not reasonably assured to it.
EXPERTS
The consolidated financial statements of Atlas Corporation appearing in
Atlas Corporation's Annual Report (Form 10-K) for the year ended June 30, 1995,
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon included therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
SEC Registration fee .......................................U.S.$3448.28
Printing .....................................................U.S.$1,550*
Trustee and registrar's fees .................................U.S.$3,000*
Accounting fees and expenses ................................U.S.$10,000*
Legal fees and expenses .....................................U.S.$25,000*
------------------
TOTAL U.S.$42,998.28
------------------
</TABLE>
_______________
* Estimated amount
All of such expenses are to be borne by the Registrant.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law empowers a Delaware
corporation to indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of such corporation) by reason of the fact that such person
is or was a director, officer, employee or agent of such corporation, or is or
was serving at the request of such corporation as a director, officer, employee
or agent of another corporation or enterprise. A corporation may indemnify such
person against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding if such person acted in good
faith and in a manner he or she reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his or her conduct was
unlawful. A Delaware corporation may indemnify officers and directors in an
action by or in the right of the corporation to procure a judgment in its favor
under the same conditions, except that no indemnification is permitted without
judicial approval if the officer or director is adjudged to be liable to the
corporation. Where an officer or director is successful on the merits or
otherwise in the defense of any action referred to above, the corporation must
indemnify him or her against the expenses (including attorneys' fees) which he
or she actually and reasonably incurred in connection therewith. The
indemnification provided is not deemed to be exclusive of any other rights to
which an officer or director may be entitled under any corporation's by-law,
agreement, vote of stockholders or disinterested directors or otherwise.
In accordance with Section 145 of the Delaware General Corporation Law, the
Certificate of Incorporation of the Registrant contains the following provisions
with respect to indemnification of directors, officers, employees or agents of
the Registrant and with respect to limitations on the personal liability of
directors of the Registrant:
NINTH: (b) No person shall be liable to the Corporation for any loss or
damage suffered by it on account of any action taken or omitted to be
taken by him as a director or officer of the Corporation in good faith,
if such person (i) exercised or used the same degree of care and skill as
a prudent man would have exercised or used under the circumstances in the
conduct of his own affairs, or (ii) took, or omitted to take, such action
in reliance upon advice of counsel for the Corporation or upon statements
made or information furnished by officers or employees of the Corporation
which he had reasonable grounds to believe or upon a financial statement
of the Corporation prepared by an officer or employee of the Corporation
in charge of its accounts or certified by a public accountant or firm of
public accountants.
(d) To the full extent permitted by subsections (a), (b)
and (e) of Section 145 of the General Corporation Law of Delaware or any
successor provisions thereto, (1) the Corporation shall (A) indemnify any
person who was or is a party, or is threatened to be made a party, to any
threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact
that such person is or was a director or officer of the Corporation,
against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlements actually and reasonably incurred by such
person in connection with such action, suit or proceeding and (B) pay
expenses incurred by such person in defending a civil or criminal action,
suit or proceeding in advance of the final disposition of such action,
suit or proceeding, and (2) the Corporation may (A) indemnify any person
who was or is a party, or is threatened to be made
-1-
<PAGE>
a party, to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that such person is or was an employee or agent of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee, agent or fiduciary of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorney's fees) judgments, fines and amounts paid in
settlements actually and reasonably incurred by such person in connection
with such action, suit or proceeding and (B) pay expenses incurred by
such person in defending a civil or criminal action, suit or proceeding
in advance of the final disposition of such action, suit or proceeding.
The foregoing indemnification and advancement of expenses provisions
shall not be deemed exclusive of any other rights to indemnification or
advancement of expenses to which any such person may be entitled under
any statute, by-law, agreement, vote of stockholders or disinterested
directors or otherwise. Any change in law that purports to restrict the
ability of the Corporation to indemnify or advance expenses to any such
person shall not affect the Corporation's obligation or right to
indemnify and advance expenses to any such person with respect to any
action, claim, suit or proceeding that occurred or arose, or that is
based on events or acts that occurred or arose, prior to such change in
law.
FIFTEENTH: No director of the Corporation shall be personally liable to
the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, provided that the foregoing provision of
this Article FIFTEENTH shall not apply to the liability of a director (i)
for any breach of the director's duty of loyalty to the Corporation or
its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the General Corporation Law of the State of Delaware or
(iv) for any transaction from which the director derived an improper
personal benefit. This Article FIFTEENTH shall not eliminate or limit the
liability of a director for any act or omission occurring prior to the
time this Article FIFTEENTH became effective.
The foregoing provisions of the Certificate of Incorporation grant
indemnification to directors, officers and other agents of the Company in terms
sufficiently broad to permit indemnification under certain circumstances for
liabilities, including expenses, arising in connection with the Securities Act
of 1933, as amended.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<S> <C>
4.1 Indenture dated as of November 10, 1995 between the Company
and Chemical Bank as Trustee.
4.2 Escrow and Pledge Agreement dated as of November 10, 1995
between the Company and Chemical Bank as Trustee and Chemical
Bank as Escrow Agent.
5.1 Opinion of Coudert Brothers.
12.1 Statement concerning computation of ratios.
23.1 Consent of Ernst & Young LLP.
24.1 Power of Attorney of Directors and Officers is included in the
signature page to this Registration Statement.
25.1 Form T-1, Statement of Eligibility under the Trust Indenture
Act of 1939 of Chemical Bank, dated as of November 13, 1995.
99.1 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.
99.2 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.
99.3 Granges Registration Agreement dated as of November 10, 1995
between the Company and Granges Inc.
</TABLE>
II-2
<PAGE>
<TABLE>
<S> <C>
99.4 Indemnification Agreement dated as of November 15, 1995
between the Company and Granges Inc.
99.5 Loan Agreement dated as of November 27, 1995 between the
Company and First Marathon Inc.
99.6 Pledge Agreement dated as of November 27, 1995 between the
Company and First Marathon Inc.
99.7 Option Agreement between the Company and Harvest Gold
Corporation signed September 13, 1995.
99.8 Purchase and Sale Agreement dated October 25, 1995 between the
Company and Independence Mining Company Inc.
99.9 Registration Rights Agreement dated October 25, 1995 between
the Company and Independence Mining Company Inc.
99.10 Agreement between the Company and Brown & Root, Inc. dated
October 23, 1995.
</TABLE>
II-3
<PAGE>
ITEM 17. UNDERTAKINGS.
A. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
ii) to reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most
recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in this Registration Statement; and
iii) to include any material information with respect to the plan
of distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement;
provided, however, that paragraphs (i) and (ii) shall not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to section 13 or section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in this
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
B. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in this Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the provisions described under Item 15 above, 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 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 a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing a Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Denver, State of Colorado, on .
ATLAS CORPORATION
By: /s/ David J. Birkenshaw
---------------------------------------
Name: David J. Birkenshaw
Title: Chairman and Chief Executive
Officer
Know All Men By These Presents, that each person whose signature appears
below constitutes and appoints David J. Birkenshaw, Gerald E. Davis and Jerome
C. Cain, severally, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his name, place and
stead, and in any and all capacities, to sign any and all amendments to this
Registration Statement, and to file the same with all exhibits thereto and other
documents in connection therewith with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, severally, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as
each such person might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or their substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ DAVID J. BIRKENSHAW Chairman of the Board
- -----------------------
David J. Birkenshaw and Chief Executive Officer
(Chief Executive Officer)
/s/ MICHAEL B. RICHINGS Director
- -----------------------
Michael B. Richings
/s/ DOUGLASS R. COOK Director
- --------------------
Douglass R. Cook
/s/ JAMES H. DUNNETT Director
- --------------------
James H. Dunnett
/s/ DAVID P. HALL Director
- -----------------
David P. Hall
/s/ PHILIP R. MENGEL Director
- --------------------
Philip R. Mengel
/s/ C. THOMAS OGRYZLO Director
- ---------------------
C. Thomas Ogryzlo
/s/ JEROME C. CAIN Treasurer and Secretary
- ------------------
Jerome C. Cain (Principal Financial Officer)
/s/ JAMES R. JENSEN Controller
- -------------------
James R. Jensen (Principal Accounting Officer)
</TABLE>
II-5
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- ------- ----------------------
<S> <C>
4.1 Indenture dated as of November 10, 1995 between the
Company and Chemical Bank as Trustee.
4.2 Escrow and Pledge Agreement dated as of November 10,
1995 between the Company and Chemical Bank as Trustee
and Chemical Bank as Escrow Agent.
5.1 Opinion of Coudert Brothers.
23.1 Consent of Ernst & Young LLP.
24.1 Power of Attorney of Directors and Officers is
included in the signature page to this Registration
Statement.
25.1 Form T-1, Statement of Eligibility under the Trust
Indenture Act of 1939 of Chemical Bank, dated as of
November 13, 1995.
99.1 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.
99.2 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.
99.3 Granges Registration Agreement dated as of November
10, 1995 between the Company and Granges Inc.
99.4 Indemnification Agreement dated as of November 15,
1995 between the Company and Granges Inc.
99.5 Loan Agreement dated as of November 27, 1995 between
the Company and First Marathon Inc.
99.6 Pledge Agreement dated as of November 27, 1995 between
the Company and First Marathon Inc.
99.7 Option Agreement between the Company and Harvest Gold
Corporation signed September 13, 1995.
99.8 Purchase and Sale Agreement dated October 25, 1995
between the Company and Independence Mining Company
Inc.
99.9 Registration Rights Agreement dated October 25, 1995
between the Company and Independence Mining Company
Inc.
99.10 Agreement between the Company and Brown & Root, Inc.
dated October 23, 1995.
</TABLE>
II-6
<PAGE>
==================================
ATLAS CORPORATION
ISSUER
TO
CHEMICAL BANK
TRUSTEE
________________
INDENTURE
DATED AS OF NOVEMBER 10, 1995
________________
U.S.$11,000,000
7% EXCHANGEABLE DEBENTURES
DUE OCTOBER 25, 2000
==================================
<PAGE>
CROSS REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Indenture
Section Section
- ------- -------
<S> <C>
310 (a) ..................................................... 609(d)(1), 614
(b) ..............................................................614(a)
(c) ................................................................N.A.
311 (a) .................................................614 (b)
(b) .............................................................614 (b)
(c) ................................................................N.A.
312 (a) .................................................614 (c)
(b) ................................................................1404
(c) ................................................................1404
313 (a) ..................................................613(a)
(b) ..............................................................613(a)
(c) ..............................................................613(a)
(d) ..............................................................613(b)
314 (a) .................................................102 (c)
(b) ...............................................................1312
(c) (1) ................................................................102
(c) (2) ................................................................102
(c) (3) ...............................................................N.A.
(d) ...............................................................1312
(e) .............................................................102(a)
(f) ...............................................................N.A.
315 (a) .................................................601 (a)
(b) ................................................................602
(c) ............................................................601 (b)
(d) ............................................................601 (c)
(e) ................................................................514
316 (a)
(a) (1) ...........................................................512, 513
(a) (2) ...............................................................N.A.
(b) ................................................................508
</TABLE>
Note: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
<PAGE>
<TABLE>
<S> <C>
(c) .............................................................103(e)
317 (a) (1) ................................................................503
(a) (2) ................................................................504
(b) ...............................................................1001
318 (a) ....................................................1403
</TABLE>
Note: This Cross Reference Table shall not, for any purpose, be deemed to be
part of the indenture.
<PAGE>
TABLE OF CONTENTS
__________
<TABLE>
<CAPTION>
Page
----
<S> <C>
PARTIES..................................................................... 1
RECITALS OF THE COMPANY................................................... 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. Definitions................................................ 2
Act 2
Affiliate.......................................................... 2
Authenticating Agent............................................... 2
Authorized Newspaper............................................... 2
Board of Directors................................................. 3
Board Resolution................................................... 3
Business Day....................................................... 3
Code 3
common stock....................................................... 3
Company............................................................ 3
Company Request.................................................... 3
Company Order...................................................... 3
Corporate Trust Office............................................. 4
corporation........................................................ 4
Defaulted Interest................................................. 4
Dollar" and "U.S.$................................................. 4
Event of Default................................................... 4
Exchange Rate...................................................... 4
Holder 5
Indebtedness....................................................... 5
Indenture.......................................................... 5
Interest Payment Date.............................................. 5
Maturity........................................................... 5
Officers' Certificate.............................................. 5
Opinion of Counsel................................................. 5
</TABLE>
Note: This table of contents shall not, for any purpose, be deemed to be part
of the Indenture.
-i-
<PAGE>
<TABLE>
Page
----
<S> <C>
Outstanding......................................................... 5
Paying Agent........................................................ 6
Person 6
Place of Exchange................................................... 6
Place of Payment.................................................... 6
Predecessor Security................................................ 6
Principal Paying Agent.............................................. 7
Record Date......................................................... 7
Redemption Date..................................................... 7
Redemption Price.................................................... 7
Regular Record Date................................................. 7
Responsible Officer................................................. 7
Securities.......................................................... 7
Security............................................................ 7
Security Register................................................... 7
Security Registrar.................................................. 7
Special Record Date................................................. 8
Stated Maturity..................................................... 8
Subsidiary.......................................................... 8
Transfer Agent...................................................... 8
Trustee............................................................. 8
Underwriting Agreement.............................................. 9
Vice President...................................................... 9
SECTION 102. Compliance Certificates and Opinions; Form of
Documents Delivered to Trustee................................ 9
SECTION 103. Acts of Holders of Securities................................. 10
SECTION 104. Notices, Etc., to Trustee and Company......................... 13
SECTION 105. Notice to Holders of Securities; Waiver....................... 13
SECTION 106. Effect of Headings and Table of Contents...................... 14
SECTION 107. Successors and Assigns........................................ 14
SECTION 108. Severability Clause........................................... 14
SECTION 109. Benefits of Indenture......................................... 14
SECTION 110. Governing Law................................................. 14
SECTION 111. Legal Holidays................................................ 15
</TABLE>
ARTICLE TWO
SECURITY FORMS
Note: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
-ii-
<PAGE>
<TABLE>
Page
----
<S> <C> <C>
SECTION 201. Forms Generally............................................... 16
SECTION 202. Form of Securities............................................ 16
SECTION 203. Form of Certificate of Authentication......................... 27
SECTION 204. Form of Exchange Notice....................................... 27
SECTION 205. Transfer Restrictions......................................... 29
ARTICLE THREE
THE SECURITIES
SECTION 301. Title and Terms............................................... 32
SECTION 302. Denominations................................................. 33
SECTION 304. Securities.................................................... 34
SECTION 305. Registration, Registration of Transfer and
Exchange; Restrictions on Transfer .......................... 34
SECTION 306. Mutilated, Destroyed, Lost or Stolen Securities............... 36
SECTION 307. Payment of Interest, Interest Rights Preserved................ 37
SECTION 308. Persons Deemed Owners......................................... 38
SECTION 309. Cancellation.................................................. 39
SECTION 310. Computation of Interest....................................... 39
SECTION 311. Form of Certification......................................... 39
SECTION 312. CUSIP Numbers................................................. 42
SECTION 313. Taxes and Withholding......................................... 42
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture....................... 45
SECTION 402. Application of Trust Money.................................... 46
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default............................................. 47
SECTION 502. Acceleration of Maturity; Rescission and Annulment............ 49
</TABLE>
Note: This table of contents shall not, for any purpose, be deemed to be apart
of the Indenture.
-iii-
<PAGE>
<TABLE>
Page
----
<S> <C> <C>
SECTION 503. Collection of Indebtedness and Suits
for Enforcement by Trustee.................................... 50
SECTION 504. Trustee May File Proofs of Claim.............................. 51
SECTION 505. Trustee May Enforce Claims Without Possession of
Securities.................................................... 52
SECTION 506. Application of Money Collected................................ 52
SECTION 507. Limitation on Suits........................................... 52
SECTION 508. Unconditional Right of Holders to Receive
Principal and Interest and to Exchange........................ 53
SECTION 509. Restoration of Rights and Remedies............................ 53
SECTION 510. Rights and Remedies Cumulative................................ 54
SECTION 511. Delay or Omission Not Waiver.................................. 54
SECTION 512. Control by Holders of Securities.............................. 54
SECTION 513. Waiver of Past Defaults....................................... 55
SECTION 514. Undertaking for Costs......................................... 55
SECTION 515. Waiver of Usury, Stay or Extension Laws....................... 55
ARTICLE SIX
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities........................... 57
SECTION 602. Notice of Defaults............................................ 58
SECTION 603. Certain Rights of Trustee..................................... 58
SECTION 604. Not Responsible for Recitals or Issuance
of Securities................................................. 60
SECTION 605. May Hold Securities, Act as Trustee
Under Other Indentures........................................ 60
SECTION 606. Money Held in Trust........................................... 60
SECTION 607. Compensation and Indemnification of Trustee
and Its Prior Claims.......................................... 60
SECTION 608. Corporate Trustee Required; Eligibility....................... 61
SECTION 609. Resignation and Removal; Appointment
of Successor.................................................. 62
SECTION 610. Acceptance of Appointment by Successor........................ 63
SECTION 611. Merger, Conversion, Consolidation or
Succession to Business........................................ 64
SECTION 612. Authenticating Agent.......................................... 64
</TABLE>
Note: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
-iv-
<PAGE>
<TABLE>
Page
----
<S> <C> <C>
SECTION 613. Reports by Trustee to Holders................................. 66
SECTION 614. Additional Qualifications and Duties Pursuant to the
Trust Indenture Act........................................... 66
ARTICLE SEVEN
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 701. Company May Consolidate, Etc., Only on Certain Terms.......... 68
SECTION 702. Successor Substituted......................................... 69
ARTICLE EIGHT
SUPPLEMENTAL INDENTURES
SECTION 801. Supplemental Indentures Without Consent of
Holders of Securities......................................... 70
SECTION 802. Supplemental Indentures with Consent of
Holders of Securities......................................... 71
SECTION 803. Execution of Supplemental Indentures.......................... 72
SECTION 804. Effect of Supplemental Indentures............................. 72
SECTION 805. Reference in Securities to Supplemental
Indentures.................................................... 72
SECTION 806. Notice of Supplemental Indentures............................. 73
ARTICLE NINE
MEETINGS OF HOLDERS OF SECURITIES
SECTION 901. Purposes for Which Meetings May Be Called..................... 74
SECTION 902. Call, Notice and Place of Meetings............................ 74
SECTION 903. Persons Entitled to Vote at Meetings.......................... 74
SECTION 904. Quorum; Action................................................ 75
SECTION 905. Determination of Voting Rights; Conduct
and Adjournment of Meetings................................... 75
SECTION 906. Counting Votes and Recording Action
of Meetings................................................... 76
</TABLE>
Note: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
-v-
<PAGE>
<TABLE>
Page
----
ARTICLE TEN
COVENANTS
<S> <C> <C>
SECTION 1001. Payment of Principal and Interest...................... 78
SECTION 1002. Maintenance of Offices or Agencies..................... 78
SECTION 1003. Money for Security Payments To Be Held
in Trust............................................... 79
SECTION 1004. Corporate Existence.................................... 80
SECTION 1005. Maintenance of Properties.............................. 81
SECTION 1006. Payment of Taxes and Other Claims...................... 81
SECTION 1007. Registration and Listing............................... 81
SECTION 1008. Statement by Officers as to Default.................... 83
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. Right of Redemption.................................... 84
SECTION 1102. Applicability of Article............................... 84
SECTION 1103. Election to Redeem; Notice to Trustee.................. 85
SECTION 1104. Notice of Redemption................................... 85
SECTION 1105. Deposit of Redemption Price............................ 86
SECTION 1106. Securities Payable on Redemption Date.................. 87
ARTICLE TWELVE
EXCHANGE OF SECURITIES
SECTION 1201. Right of Exchange...................................... 88
SECTION 1202. Method of Exchange..................................... 88
SECTION 1203. Fractional Interests................................... 90
SECTION 1204. Adjustment of Exchange Rate............................ 90
SECTION 1205. Escrow and Pledge Agreement............................ 94
SECTION 1206. Company to Give Notice of Certain Events............... 95
SECTION 1207. Covenant by the Company................................ 96
SECTION 1208. Transfer Taxes......................................... 96
SECTION 1209. Fully Paid Shares...................................... 97
</TABLE>
Note: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
-vi-
<PAGE>
<TABLE>
Page
----
<S> <C> <C>
SECTION 1210. Cancellation of Securities............................. 97
SECTION 1211. Obligations of Trustee and Escrow Agent................ 97
SECTION 1212. Exchange Arrangements in Case of Redemption............ 98
SECTION 1213. Tax Adjustments in Exchange Rate....................... 98
ARTICLE THIRTEEN
SECURITY AND PLEDGE OF COLLATERAL
SECTION 1301. Grant of Security Interest............................. 102
SECTION 1302. Delivery of Exchange Property.......................... 102
SECTION 1303. Representations and warranties......................... 102
SECTION 1304. Further Assurances..................................... 103
SECTION 1305. Dividends; Voting Rights: Withdrawal Rights............ 103
SECTION 1306. Trustee Appointed Attorney-in Fact..................... 105
SECTION 1307. Trustee May Perform.................................... 105
SECTION 1308. Trustee's Duties....................................... 105
SECTION 1309. Remedies upon Event of Default......................... 105
SECTION 1310. Application of Proceeds................................ 106
SECTION 1311. Continuing Lien........................................ 107
SECTION 1312. Certificates and Opinions.............................. 107
ARTICLE FOURTEEN
HOLDER'S LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 1401. Company to Furnish Trustee Names and
Addresses of Holders................................... 108
SECTION 1402. Preservation of Information............................ 108
SECTION 1403. Trust Indenture Act Controls........................... 109
SECTION 1404. Communication by Holders with Other Holders............ 109
</TABLE>
Note: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
-vii-
<PAGE>
INDENTURE, dated as of November 10, 1995, between Atlas Corporation, a
corporation duly organized and existing under the laws of the State of Delaware,
having its principal office at 370 Seventeenth Street, Suite 3150, Denver,
Colorado 80202 (herein called the "Company"), and Chemical Bank, a New York
banking corporation, as Trustee hereunder (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of its 7%
Exchangeable Debentures due October 25, 2000 (herein called the "Securities") of
substantially the tenor and amount hereinafter set forth, and to provide
therefor the Company has duly authorized the execution and delivery of this
Indenture.
All things necessary to make the Securities, when executed by the
Company and authenticated and delivered hereunder and duly issued by the
Company, the valid obligations of the Company and to make this Indenture a valid
agreement of the Company, in accordance with their and its terms, have been
done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Securities as follows:
<PAGE>
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles in the United States prevailing at the time of any relevant
computation hereunder; and
(3) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
"1933 Act" means the United States Securities Act of 1933, as amended.
"1934 Act" means the United States Securities Exchange Act of 1934, as
amended.
"Act", when used with respect to any Holder of a Security, has the
meaning specified in Section 103.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control", when used with respect to any specified Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" means any Person authorized pursuant to Section
612 to act on behalf of the Trustee to authenticate Securities.
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"Authorized Newspaper" means a newspaper, in an official language of
the country of publication or in the English language, customarily published on
each Monday, Tuesday, Wednesday, Thursday and Friday, whether or not published
on Saturdays, Sundays or holidays, and of general circulation in the place in
connection with which the term is used or in the financial community of such
place. Where successive publications are required to be made in Authorized
Newspapers, the successive publications may be made in the same or in different
newspapers in the same city meeting the foregoing requirements and in each case
on any Monday, Tuesday, Wednesday, Thursday and Friday.
"Board of Directors" means either the board of directors of the
Company or any committee of that board empowered to act for it with respect to
this Indenture.
"Board Resolution" means a resolution duly adopted by the Board of
Directors, a copy of which, certified by the Secretary or an Assistant Secretary
of the Company to have been duly adopted by the Board of Directors and to be in
full force and effect on the date of such certification, shall have been
delivered to the Trustee.
"Business Day", when used with respect to any Place of Payment, Place
of Exchange or any other place, as the case may be, means each Monday, Tuesday,
Wednesday, Thursday and Friday which is not a day on which banking institutions
in such Place of Payment, Place of Exchange or other place, as the case may be,
are authorized or obligated by law or executive order to close; provided,
--------
however, that a day on which banking institutions in New York, New York are
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authorized or obligated by law or executive order to close shall not be a
Business Day for purposes of Section 1001, 1003 or 1105.
"Code" has the meaning specified in Section 201.
"common stock" includes any stock of any class of capital stock,
including common shares, which has no preference in respect of dividends or of
amounts payable in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the issuer thereof and which is not subject to
redemption by the issuer thereof.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor corporation shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor corporation.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, its Vice
Chairman of the Board, its Chief Executive Officer, its President or a Vice
President, and by its principal
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financial officer, Treasurer, an Assistant Treasurer, its Secretary or an
Assistant Secretary, and delivered to the Trustee.
"Constituent Person" has the meaning specified in Section 1204.
"Corporate Trust Office" means the office of the Trustee at which at
any particular time its corporate trust business shall be principally
administered (which at the date of this Indenture is located at 450 West 33
Street, 15 floor, New York, New York 10001).
"corporation" means a corporation, limited liability company,
association, joint-stock company or business trust.
"Defaulted Interest" has the meaning specified in Section 307.
"Dollar" and "U.S.$" each means a dollar or other equivalent unit in
such coin or currency of the United States as at the time shall be legal tender
for the payment of public and private debts.
"Escrow Agent" means the Trustee, as Escrow Agent under the Escrow and
Pledge Agreement unless and until a successor Escrow Agent shall have become
such pursuant to the provisions of the Escrow and Pledge Agreement, and
thereafter "Escrow Agent" shall mean such successor Escrow Agent thereunder and
from time to time any subsequent successor.
"Escrow and Pledge Agreement" means the Escrow and Pledge Agreement
entered into pursuant to the provisions of Section 1205, as the same may be
supplemented and amended from time to time.
"Event of Default" has the meaning specified in Section 501.
"Exchange Property" means initially the shares of Granges Common Stock
delivered to the Escrow Agent by the Company pursuant to the Escrow and Pledge
Agreement simultaneously with the original execution and delivery of this
Indenture as provided in Section 1205, and thereafter means the securities
(including Granges Common Stock), cash and other property, if any, which at the
time are deliverable upon the surrender of the Securities for exchange in
accordance with the provisions of Article Twelve.
"Exchange Rate" has the meaning specified in Section 1201.
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"Granges" means Granges, Inc., a Vancouver-based precious metals
mining company whose shares are traded on the Toronto Stock Exchange and
American Stock Exchange.
"Granges Common Stock" means any common stock of Granges.
"Holder", when used with respect to any Security, means the Person in
whose name such Security is registered in the Security Register.
"Indebtedness" has the meaning specified in Section 501.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Securities.
"Maturity", when used with respect to any Security, means the date on
which the principal of such Security becomes due and payable as therein or
herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.
"Non-Electing Shares" has the meaning specified in Section 1204.
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, a Vice Chairman of the Board, its Chief Executive Officer, the
President or a Vice President and by the principal financial officer, the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of
the Company, and delivered to the Trustee. One of the officers signing an
Officers' Certificate given pursuant to Section 1008 shall be the principal
executive, financial or accounting officer of the Company.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for, or an employee of, the Company and who shall be reasonably
acceptable to the Trustee.
"Outstanding", when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
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(i) Securities theretofore canceled by the Trustee or delivered to
the Trustee for cancellation;
(ii) Securities for the payment or redemption of which money or
shares of Granges Common Stock (to the extent permitted hereby) in the
necessary amount has been theretofore deposited with the Trustee or any
Paying Agent (other than the Company) or set aside and segregated in trust by
the Company (if the Company shall act as its own Paying Agent) for the
Holders of such Securities, provided that if such Securities are to be
--------
redeemed, notice of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee has been made;
and
(iii) Securities which have been paid pursuant to Section 306 or in
exchange for or in lieu of which other Securities have been authenticated and
delivered pursuant to this Indenture, other than any such Securities in
respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona fide purchaser in
whose hands such Securities are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
- -------- -------
principal amount of Outstanding Securities are present at a meeting of Holders
of Securities for quorum purposes or have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or any other obligor upon the Securities or any Affiliate of the
Company or such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such determination as to the presence of a quorum or upon
any such request, demand, authorization, direction, notice, consent or waiver,
only Securities which the Trustee knows to be so owned shall be so disregarded.
Securities so owned which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Securities and that the pledgee
is not the Company or any other obligor upon the Securities or any Affiliate of
the Company or such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of or interest on any Securities on behalf of the Company and, except
as otherwise specifically set forth herein, such term shall include the Company
if it shall act as its own Paying Agent.
"Person" means any individual, corporation, partnership, joint
venture, trust, estate, unincorporated organization or government or any agency
or political subdivision thereof.
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"Place of Exchange" means the Corporate Trust Office of the Trustee
specified in Section 1002 for exchange of Securities, or such other place as the
Company or Trustee may designate for exchange of Securities pursuant to Article
Twelve.
"Place of Payment" has the meaning specified in Section 301.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Principal Paying Agent" means the Trustee, until and unless a
successor, if any, has been appointed pursuant to the terms hereof.
"Qualification Deadline" means February 9, 1996.
"Record Date" means any Regular Record Date or Special Record Date.
"Redemption Date", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Security to be
redeemed, means par value of such Security plus accrued interest to the
Redemption Date.
"Regular Record Date" for interest payable in respect of any Security
on any Interest Payment Date means the October 15 or April 15 (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.
"Regulation S" means Regulation S under the 1933 Act.
"Responsible Officer", when used with respect to the Trustee, means
any officer within the Corporate Trustee Administration Department (or any
successor group) of the Trustee including without limitation any vice president,
assistant vice president, assistant secretary or other officer of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of his
knowledge and familiarity with the particular subject.
"Restricted Securities" has the meaning specified in Section 205.
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"SEC" means the United States Securities and Exchange Commission.
"Securities" has the meaning ascribed to it in the first paragraph
under the caption "Recitals of the Company".
"Security" means one of the Securities.
"Security Register" has the meaning specified in Section 305.
"Security Registrar" has the meaning specified in Section 305.
"Special Record Date" for the payment of any Defaulted Interest means
a date fixed by the Company pursuant to Section 307.
"Special Warrant Indenture" means the special warrant indenture dated
November 10, 1995, between the Company and the Special Warrant Trustee.
"Special Warrant Trustee" means The Montreal Trust Company of Canada.
"Special Warrants" has the meaning specified in the Underwriting
Agreement.
"Stated Maturity", when used with respect to any Security or any
installment of interest thereon, means the date specified in such Security as
the fixed date on which the principal of such Security or such installment of
interest is due and payable.
"Subsidiary" means a corporation more than 50% of the outstanding
voting stock of which is owned, directly or indirectly, by the Company or by one
or more other Subsidiaries, or by the Company and one or more other
Subsidiaries. For the purposes of this definition, "voting stock" means stock
which ordinarily has voting power for the election of directors, whether at all
times or only so long as no senior class of stock has such voting power by
reason of any contingency.
"TIA" means the Trust Indenture Act.
"Transfer Agent" has the meaning specified in Section 202. The Company
has initially appointed the Corporate Trust Office of the Trustee as Transfer
Agent.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
effect on the date of this Indenture; provided, however, that in the event the
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Trust Indenture Act is
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amended after such date, "Trust Indenture Act" means, to the extent required by
any such amendment, the Trust Indenture Act of 1939 as so amended; provided
--------
further, that unless and until this Indenture shall become qualified under the
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Trust Indenture Act, the term "Trust Indenture Act" shall be a nullity and any
reference to it shall likewise be a nullity with no force or effect, imposing no
conditions or obligations and conferring no rights under this Indenture.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"U.S. Person" or "U.S. Persons" means a U.S. person or persons as such
terms are defined in Regulation S.
"Underwriter" has the meaning specified in the Underwriting Agreement.
"Underwriting Agreement" means the Underwriting Agreement, dated
October 25, 1995, among the Company, Yorkton Securities, Inc. and First Marathon
Securities, Inc.
"Vice President", when used with respect to the Company, means any
vice president, whether or not designated by a number or a word or words added
before or after the title "vice president".
SECTION 102. Compliance Certificates and Opinions; Form of
Documents Delivered to Trustee.
(a) Upon any application or request by the Company to the Trustee or
the Principal Paying Agent to take any action under any provision of this
Indenture, the Company shall furnish to the Trustee or the Principal Paying
Agent, as the case may be, an Officers' Certificate stating that all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with and an Opinion of Counsel stating that in the
opinion of such counsel all such conditions precedent, if any, have been
complied with.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than certificates
provided for in Section 1008) shall include:
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(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
(b) In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which such certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
(c) The Company shall make all reports required by TIA Section 314(a)
as provided therein.
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SECTION 103. Acts of Holders of Securities.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided or permitted by this Indenture to be given or
taken by Holders of Securities may be embodied in and evidenced by (1) one or
more instruments of substantially similar tenor signed by such Holders in person
or by an agent or proxy duly appointed in writing by such Holders or (2) the
record of Holders of Securities voting in favor thereof, either in person or by
proxies duly appointed in writing, at any meeting of Holders of Securities duly
called and held in accordance with the provisions of Article Nine. Except as
herein otherwise expressly provided, such action shall become effective when
such instrument or instruments or record is delivered to the Trustee and copies
thereof are delivered to the Company. The Trustee shall promptly deliver to the
Company copies of all such instruments and records delivered to the Trustee.
Such instrument or instruments and record (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the Holders
of Securities signing such instrument or instruments and so voting at such
meeting. Proof of execution of any such instrument or of a writing appointing
any such agent or proxy, or of the holding by any Person of a Security, shall be
sufficient for any purpose of this Indenture and (subject to Section 601)
conclusive in favor of the Trustee and the Company if made in the manner
provided in this Section. The record of any meeting of Holders of Securities
shall be proved in the manner provided in Section 906.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgements of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where
such execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority.
(c) The ownership, principal amount and serial number of any
Security held by any Person, and the date of his holding the same, shall be
proved by the Security Register.
(d) The fact and date of execution of any such instrument or writing
and the authority of the Person executing the same may also be proved in any
other manner which the Trustee or the Principal Paying Agent deems sufficient;
and the Trustee or the Principal Paying Agent may in any instance require
further proof with respect to any of the matters referred to in this Section
103.
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(e) The Company may set any day as the record date for the purpose of
determining the Holders entitled to give or take any request, demand,
authorization, direction, notice, consent, waiver or other action, or to vote on
any action, authorized or permitted by this Indenture to be given or taken by
Holders. Promptly and in any case not later than ten days after setting a
record date, the Company shall notify the Trustee, the Principal Paying Agent
and the Holders of such record date. If not set by the Company prior to the
first solicitation of a Holder made by any Person in respect of any such action,
or, in the case of any such vote, prior to such vote, the record date for any
such action or vote shall be the 30th day (or, if later, the date of the most
recent list of Holders required to be provided pursuant to Section 1401) prior
to such first solicitation or vote, as the case may be. With regard to any
record date, the Holders on such date (or their duly appointed agents or
proxies), and only such Persons, shall be entitled to give or take, or vote on,
the relevant action or revoke any Act relating thereto, whether or not such
Holders remain Holders after such record date. Notwithstanding the foregoing,
the Company shall not set a record date for, and the provisions of this
paragraph shall not apply with respect to, any notice, declaration or direction
referred to in the next paragraph.
Upon receipt by the Trustee or the Principal Paying Agent from any
Holder of (i) any notice of default or breach referred to in Section 501(3), if
such default or breach has occurred and is continuing and the Trustee shall not
have given such a notice to the Company, (ii) any declaration of acceleration
referred to in Section 502, if an Event of Default has occurred and is
continuing and the Trustee shall not have given such a declaration to the
Company, or (iii) any direction referred to in Section 512, if the Trustee shall
not have taken the action specified in such direction, then a record date shall
automatically and without any action by the Company or the Trustee be set for
determining the Holders entitled to join in such notice, declaration or
direction, which record date shall be the close of business on the tenth day
(or, if such day is not a Business Day, the first Business Day thereafter)
following the day on which the Trustee receives such notice, declaration or
direction. Promptly after such receipt by the Trustee, and as soon as
practicable thereafter, the Trustee shall notify the Company and the Holders of
any such record date so fixed. The Holders on such record date (or their duly
appointed agents or proxies), and only such Persons, shall be entitled to join
in such notice, declaration or direction, whether or not such Holders remain
Holders after such record date; provided that, unless such notice, declaration
--------
or direction shall have become effective by virtue of Holders of the requisite
principal amount of Securities on such record date (or their duly appointed
agents or proxies) having joined therein on or prior to the 90th day after such
record date, such notice, declaration or direction shall automatically and
without any action by any Person be cancelled and of no further effect. Nothing
in this paragraph shall be construed to prevent a Holder (or a duly appointed
agent or proxy thereof) from giving, before or after the expiration of such 90-
day period, a notice, declaration or direction contrary to or different from,
or, after the expiration of such period, identical to, the notice, declaration
or direction to which such record date relates, in which event a new record date
in respect thereof shall be set pursuant to this paragraph. In addition,
nothing in this paragraph shall be construed to render ineffective any notice,
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declaration or direction of the type referred to in this paragraph given at any
time to the Trustee and the Company by Holders (or their duly appointed agents
or proxies) of the requisite principal amount of Securities on the date such
notice, declaration or direction is so given.
(f) Except as provided in Sections 512 and 513, any request, demand,
authorization, direction, notice, consent, election, waiver or other Act of the
Holder of any Security shall bind every future Holder of the same Security and
the Holder of every Security issued upon the registration of transfer thereof or
in exchange therefor or in lieu thereof in respect of anything done, omitted or
suffered to be done by the Trustee or the Company in reliance thereon, whether
or not notation of such action is made upon such Security.
(g) The provisions of this Section 103 are subject to the provisions
of Section 905.
SECTION 104. Notices, Etc., to Trustee and Company.
Any request, demand, authorization, direction, notice, consent,
election, waiver or Act of Holders of Securities or other document provided or
permitted by this Indenture to be made upon, given or furnished to, or filed
with,
(1) the Trustee or the Principal Paying Agent by any Holder of
Securities or by the Company shall be sufficient for every purpose hereunder
if made, given, furnished or filed in writing to or with the Trustee at its
Corporate Trust Office, Attention: Corporate Trustee Administration
Department or
(2) the Company by the Trustee or by any Holder of Securities
shall be sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing, mailed, first-class postage prepaid, or
telecopied and confirmed by mail, first-class postage prepaid, or delivered
by hand or overnight courier, addressed to the Company at 370 Seventeenth
Street, Suite 3150, Denver, Colorado 80202, telecopy no.: (303) 892-8808,
Attention: Senior Vice President -- Legal and Business Affairs, or at any
other address previously furnished in writing to the Trustee by the Company.
Any request, demand, authorization, direction, notice, consent,
election or waiver required or permitted under this Indenture shall be in the
English language, except that any published notice may be in an official
language of the country of publication.
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SECTION 105. Notice to Holders of Securities; Waiver.
Except as otherwise expressly provided herein, where this Indenture
provides for notice to Holders of Securities of any event, such notice shall be
sufficient if in writing and mailed, first-class postage prepaid, to each Holder
affected by such event, at the address of such Holder as it appears in the
Security Register, not earlier than the earliest date and not later than the
latest date prescribed for the giving of such notice and such notice shall be
deemed to have been given when such notice is mailed.
In any case where notice to Holders is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders. In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification to Holders as shall be made with the approval of the
Trustee, which approval shall not be unreasonably withheld, shall constitute a
sufficient notification to such Holders for every purpose hereunder.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders of Securities shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
SECTION 106. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 107. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
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SECTION 108. Severability Clause.
In case any provision in this Indenture or the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 109. Benefits of Indenture.
Nothing in this Indenture or in the Securities express or implied,
shall give to any Person, other than the parties hereto, the Escrow Agent and
their successors and assigns hereunder and the Holders of Securities, any
benefit or legal or equitable right, remedy or claim under this Indenture.
SECTION 110. Governing Law.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, THE UNITED STATES OF
AMERICA.
SECTION 111. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date, or
Stated Maturity of any Security or the last day on which a Holder of a Security
has a right to exchange his Security shall not be a Business Day at a Place of
Payment or Place of Exchange, as the case may be, then (notwithstanding any
other provision of this Indenture or of the Securities) payment of interest or
principal or delivery for exchange of such Security need not be made at such
Place of Payment or Place of Exchange, as the case may be, on or by such day,
but may be made on or by the next succeeding Business Day at such Place of
Payment or Place of Exchange, as the case may be, with the same force and effect
as if made on the Interest Payment Date or Redemption Date, or at the Stated
Maturity or by such last day for exchange; provided, however, that in the case
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that payment is made on such succeeding Business Day, no interest shall accrue
on the amount so payable for the period from and after such Interest Payment
Date, Redemption Date, Stated Maturity or last day for exchange as the case may
be.
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ARTICLE TWO
SECURITY FORMS
SECTION 201. Forms Generally.
The Securities shall be in substantially the form set forth in this
Article, with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange, the Internal Revenue Code of 1986, as amended (the "Code"),
and regulations thereunder, or as may, consistently herewith, be determined by
the officers executing such Securities, as evidenced by their execution thereof.
The Trustee's certificates of authentication shall be in substantially
the form set forth in Section 203.
Exchange notices shall be in substantially the form set forth in
Section 204.
Securities shall bear any legend required by Section 205.
Securities shall be printed, lithographed or engraved or produced by
any combination of these methods on steel engraved borders or may be produced in
any other manner permitted by the rules of any securities exchange on which the
Securities may be listed, all as determined by the officers executing such
Securities, as evidenced by their execution thereof.
SECTION 202. Form of Securities.
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[FORM OF FACE]
[LEGEND TO APPEAR ON RESTRICTED SECURITIES]
THIS DEBENTURE WAS ORIGINALLY ISSUED (i) IN THE UNITED STATES AND TO U.S.
PERSONS IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), FOR OFFERS AND SALES
OF SECURITIES WHICH DO NOT INVOLVE ANY PUBLIC OFFERING, AND ANALOGOUS EXEMPTIONS
UNDER STATE SECURITIES LAWS AND (ii) OUTSIDE THE UNITED STATES TO PERSONS OTHER
THAN U.S. PERSONS IN ACCORDANCE WITH THE REQUIREMENTS OF REGULATION S UNDER THE
1933 ACT. THIS DEBENTURE AND THE SHARES OF COMMON STOCK OF GRANGES INC. FOR
WHICH IT MAY BE EXCHANGED HAVE NOT BEEN REGISTERED UNDER THE 1933 ACT OR THE
SECURITIES LAWS OF ANY OF THE STATES OF THE UNITED STATES, AND MAY NOT BE
OFFERED OR SOLD IN THE UNITED STATES OR TO U.S. PERSONS (AS SUCH TERM IS DEFINED
IN REGULATION S UNDER THE 1933 ACT), AND DEBENTURES MAY NOT BE EXCHANGED EXCEPT
BY A NON-U.S. PERSON (NOT ACTING ON BEHALF OF A U.S. PERSON) IN ACCORDANCE WITH
THE PROVISIONS OF REGULATION S UNDER THE 1933 ACT, UNLESS THE SECURITIES ARE
REGISTERED UNDER THE 1933 ACT OR AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE.
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ATLAS CORPORATION
7% EXCHANGEABLE DEBENTURE
DUE OCTOBER 25, 2000
(Exchangeable for Granges Common Stock)
No. R-_____________ U.S.$_____
CUSIP No. 049267 AB 3
Atlas Corporation, a corporation duly organized and existing under the
laws of the State of Delaware (herein called the "Company", which term includes
any successor Person under the Indenture referred to on the reverse hereof), for
value received, hereby promises to pay to _______________, or registered assigns
(the "Holder"), the principal sum of _____________ United States Dollars plus
accrued and unpaid interest in cash (or at the Company's option, evidenced by an
Officers' Certificate of the Company received by the Trustee not less than two
Business Days prior to October 25, 2000, the principal hereof may be repaid, in
whole or in part, but in any case on a pro-rata basis to all holders of
outstanding Securities under the Indenture, in shares of Granges Common Stock
valued at ninety five percent of the then per share market price of Granges
Common Stock, such market price to be calculated by the Company as the average
closing trade price of Granges Common Stock on the American Stock Exchange, or,
if Granges Common Stock is not then listed on the American Stock Exchange, the
stock exchange or over-the-counter market upon which the Granges Common Stock is
traded which, in aggregate, has the highest dollar trading volume, during the
twenty consecutive trading days ending on the last trading day prior to October
25, 2000, or, should Granges Common Stock not be traded on any stock exchange or
over-the-counter market, then ninety five percent of the per share fair value of
Granges Common Stock over such twenty-day period as determined in good faith by
an investment banking firm retained in good faith by the Company and which is a
member of the New York Stock Exchange or the Toronto Stock Exchange and as set
forth in an Officers' Certificate of the Company received by the Trustee
promptly after October 25, 2000) on October 25, 2000 (or, in the case of any
payment, in whole or in part, in Granges Common Stock, such cash and stock shall
be paid on or within five Business Days of October 25, 2000, payment by such
time to be deemed made on October 25, 2000) and to pay interest in cash on the
principal hereof, retroactively from October 25, 1995, or from the most recent
Interest Payment Date (as defined below) to which interest has been paid or duly
provided for, semi-annually in arrears on May 1 and November 1 in each year (an
"Interest Payment Date"), commencing May 1, 1996, at the rate of 7% per annum,
until October 25, 2000, and at the rate of 7% per annum on any overdue principal
and, to the extent permitted by law, on any overdue interest. The interest so
payable, and punctually
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paid or duly provided for, on any Interest Payment Date will, as provided in the
Indenture, be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest, which shall be the April 15 or October 15
(whether or not a Business Day) next preceding such Interest Payment Date.
Except as otherwise provided in the Indenture, any such interest not so
punctually paid or duly provided for will forthwith cease to be payable to the
Holder in whose name this Security (or one or more Predecessor Securities) is
registered on such Regular Record Date and may either be paid to the Person in
whose name this Security (or one or more Predecessor Securities) is registered
at the close of business on a Special Record Date for the payment of such
Defaulted Interest to be fixed by the Company, notice whereof shall be given to
Holders not less than 10 days prior to such Special Record Date, or be paid at
any time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, all as more fully provided in the
Indenture. Payments of principal shall be made upon the surrender of this
Security at the option of the Holder at the Corporate Trust Office of the
Trustee, or at such other office or agency of the Company as may be designated
by it for such purpose, in such coin or currency of the United States of America
as at the time of payment shall be legal tender for the payment of public and
private debts by United States Dollar check mailed to the address of the Person
entitled thereto as such address shall appear in the Security Register, or, upon
written application by the Holder to the Security Registrar setting forth wire
instructions not later than fifteen days prior to the relevant payment date, by
transfer to a United States Dollar account (such transfer to be made only to a
Holder of an aggregate principal amount of Securities in excess of U.S.$500,000)
maintained by the payee with a bank in The City of New York (or in whole or in
part by shares of Granges Common Stock as indicated in the first sentence hereof
or on the reverse hereof). Payment of interest on this Security may be made by
United States Dollar check mailed to the address of the Person entitled thereto
as such address shall appear in the Security Register, or, upon written
application by the Holder to the Security Registrar setting forth wire
instructions not later than the relevant Record Date, by transfer to a United
States Dollar account (such transfer to be made only to a Holder of an aggregate
principal amount of Securities in excess of U.S.$500,000) maintained by the
payee with a bank in The City of New York.
Subject to Section 313(d) of the Indenture, any and all payments shall
be made subject to deduction for any present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto
including (i) United States withholding taxes applicable to the payment of
interest to a Holder (including United States withholding taxes applicable to
payments to a Holder claiming that it is entitled to an exemption or relief from
such withholding taxes if such Holder does not comply with the requirements of
Section 313(d) of the Indenture) and (ii) any tax or charge arising from the
transfer of ownership of Securities or the registration of Securities in a name
other than that
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of the prior Holder. Except as specifically provided herein and in the
Indenture, the Company shall not be required to make any payment with respect to
any tax, assessment or other governmental charge imposed by any government or
any political subdivision or taxing authority thereof or therein.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof or by an Authenticating Agent by
the manual signature of one of its authorized officers, this Security shall not
be entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.
IN WITNESS WHEREOF, the Company has caused this Security to be duly
executed under its corporate seal.
ATLAS CORPORATION
[Corporate Seal]
By:__________________________
Title:
Attest:
________________________
Title:
[FORM OF REVERSE OF SECURITIES]
This Security is one of a duly authorized issue of securities of the
Company designated as its "7% Exchangeable Debentures due October 25, 2000"
(herein called the "Securities"), limited in aggregate principal amount to
U.S.$11,000,000, issued and to be issued under an Indenture, dated as of
November 10, 1995 (herein called the "Indenture"), between the Company and
Chemical Bank, as Trustee (herein called the "Trustee", which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
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rights, limitations of rights, duties and immunities thereunder of the Company,
the Trustee and the Holders of the Securities and of the terms upon which the
Securities are, and are to be, authenticated and delivered. All capitalized
terms used and not otherwise defined herein shall have the meanings specified in
the Indenture. The Securities are issuable in denominations of U.S.$100 and
integral multiples of U.S.$100 in excess thereof. As provided in the Indenture
and subject to certain limitations therein set forth, Securities are
exchangeable for a like aggregate principal amount of Securities of any
authorized denominations as requested by the Holder surrendering the same upon
surrender of the Security or Securities to be exchanged, (a) at the Corporate
Trust Office of the Trustee or at such other office or agency of the Company as
may be designated by it for such purpose or (b) at such other offices or
agencies as the Company may designate (each a "Transfer Agent"). The Transfer
Agent will then forward such surrendered Securities (together with any payment
surrendered therewith) to the Trustee who in turn will issue the new Securities.
No sinking fund is provided for the Securities. The Securities are
subject to redemption, in whole or in part, at the option of the Company on or
after October 25, 1998 so long as the Average Market Price of Granges Common
Stock is at least $2.94 per share, upon not more than 60 nor less than 30 days'
notice to the Holders prior to the Redemption Date, at a Redemption Price equal
to 100% of the principal amount plus accrued and unpaid interest to the
Redemption Date, such payment to be made in cash or, at the Company's option,
upon not less than 20 days notice to the Holders prior to the Redemption Date,
the principal payable on such redemption may be paid in whole or in part, but in
any case on a pro-rata basis to all Holders of Outstanding Securities under the
Indenture being redeemed, in Granges Common Stock (such cash and stock to be
delivered to Holders on or before five Business Days after the Redemption Date,
payment by such time to be deemed made on the Redemption Date) valued at the
Exchange Rate, initially set at 42.50 shares of Granges Common Stock per
U.S.$100 principal amount of Securities (but subject to adjustment as provided
in the Indenture), provided, however, that interest installments on Securities
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whose Stated Maturity is on or prior to such Redemption Date will be payable in
cash to the Holders of such Securities, or one or more Predecessor Securities,
of record at the close of business on the relevant Record Dates referred to on
the face hereof, all as provided in the Indenture; and provided further that
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payments of principal and accrued and unpaid interest, if any, upon redemption
or exchange of any Security shall be made only upon delivery to the Company of
such certifications as the Company may reasonably require to comply with any
applicable laws or regulations. The term "Average Market Price" means the
average closing trading price of Granges Common Stock on the American Stock
Exchange (or, if Granges Common Stock is not then listed on the American Stock
Exchange, the stock exchange or over-the-counter market upon which the Granges
Common Stock is traded which, in aggregate, has the highest dollar trading
volume) during a 20 consecutive trading day period ending on the last trading
day prior to the date upon
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which the Company gives notice, pursuant to Section 1104 of the Indenture, of
its option to redeem. Should Granges Common Stock not be traded on any stock
exchange or over-the-counter market, then the Securities shall not be subject to
redemption until so traded.
Notice of redemption will be given by mail to Holders of Securities at
least once not more than 60 nor less than 30 days prior to the Redemption Date
as provided in the Indenture.
In any case where the due date for the payment of the principal of or
interest on this Security or the last day on which the Holder of this Security
has a right to exchange this Security shall not be a Business Day, then payment
of principal or interest or delivery for exchange of this Security need not be
made on or by such date at such place but may be made on or by the next
succeeding Business Day with the same force and effect as if made on the date
for such payment or the date fixed for redemption, or by such last day for
exchange, and no interest shall accrue for the period after such date.
Subject to and upon compliance with the provisions of the Indenture,
the Holder of this Security is entitled, upon provision, if applicable, of
certification regarding compliance with applicable securities laws, at his
option evidenced by written notice to the Trustee received not less than seven
days prior to the date of exercise (except that such seven-day notice shall be
waived in case such notice is provided within seven days of a Redemption Date),
at any time after November 10, 1995 and on or before the close of business on
October 25, 2000, or in case this Security is called for redemption until and
including, but (unless the Company defaults in making the payment due upon
redemption) not after, the close of business on the Redemption Date, to exchange
this Security (or any portion of the principal amount thereof) into fully paid
and nonassessable shares of Granges Common Stock at an initial Exchange Rate of
42.50 shares of Granges Common Stock per U.S.$100 principal amount of Securities
(or at the current adjusted Exchange Rate if an adjustment has been made as
provided in the Indenture) by surrender of this Security, duly endorsed or
assigned to the Company or in blank together with the exchange notice hereon,
duly executed, to the Company at the Corporate Trust Office of the Trustee or at
such other office or agency of the Company as may be designated by it for such
purpose (each an "Escrow Agent"). The Company shall thereafter deliver to the
Holder (together with the cash payment of any accrued and unpaid interest or any
cash adjustment, as provided in the Indenture) the fixed number of shares of
Granges Common Stock into which this Security is exchangeable and such delivery
will be deemed to satisfy the Company's obligation to pay the principal amount
of this Security. No fractions of shares or scrip representing fractions of
shares will be issued on exchange, redemption or maturity but instead of any
fractional interest (calculated to the nearest 1/100th of a share) the Company
shall pay a cash adjustment as provided in the Indenture. The Indenture provides
for certain adjustments to
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the Exchange Rate to prevent dilution of the exchange rights contained in this
Security and the Indenture.
In the event of redemption or exchange of this Security in part only,
a new Security or Securities for the unredeemed or unexchanged portion hereof
will be issued in the name of the Holder hereof.
As provided in the Indenture, the Company shall, for the benefit of
Holders, as soon as practicable, file (or cause to be filed): (i) a preliminary
prospectus and final prospectus (the "Prospectus") in the Canadian Provinces of
Ontario and British Columbia qualifying the distribution of the Securities and
(ii) a registration statement or registration statements (the "1933 Registration
Statement") under the 1933 Act, registering the Securities and the underlying
shares of Granges Common Stock for resale, and shall also file (or cause to be
filed) all required filings with state securities or "blue sky" administrators
in the states where the Holders of the Securities propose to offer and sell the
Securities and the underlying shares of Granges Common Stock (the "Blue Sky
Filings"). Subject to the following paragraph, the Company shall use its best
efforts to cause receipts to be issued by the securities commissions in Ontario
and British Columbia for the (final) Prospectus and to cause the 1933
Registration Statement and Blue Sky Filings to become effective not later than
February 9, 1996 (the "Qualification Deadline") and to cause the 1933
Registration Statement and the Blue Sky Filings to remain effective and current
until the date which is three years after the latest date on which Granges
Common Stock is acquired pursuant to the Indenture by Holders; provided,
--------
however, that the Company may, upon notice to the Holders of Securities,
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temporarily suspend sales under the 1933 Registration Statement during any
reasonable period in which its board of directors determines, in good faith,
that because of material corporate changes, it would not be feasible to maintain
a current prospectus during such period, provided, further, that in such event,
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the Company will, at the earliest possible time thereafter, take all necessary
steps to update the prospectus disclosure and notify the Holders that sales
under the 1933 Registration Statement may resume. The Company shall further, as
soon as practicable, file (or cause to be filed) with the United States
Securities and Exchange Commission a registration statement (the "1934
Registration Statement") under the 1934 Act, registering the Securities under
Section 12(b) of the 1934 Act, and to cause the 1934 Registration Statement to
become effective not later than the Qualification Deadline and to remain
effective throughout the term of the Securities.
The Prospectus, the 1933 Registration Statement, the Blue Sky Filings
and the 1934 Registration Statement shall collectively be referred to
hereinafter as the "Registration Filings". In the event that the Registration
Filings are not made effective (or, in the case of the (final) Prospectus, the
securities commissions in Ontario and British Columbia have not issued receipts
therefor) on or before the Qualification Deadline, the
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Company shall, unless all Special Warrants are retracted and cancelled pursuant
to the Underwriting Agreement, be obligated to complete the Registration Filings
and to make such filings effective as soon as practicable after the
Qualification Deadline and cause the 1933 Registration Statement, the Blue Sky
Filings and the 1934 Registration Statement to remain effective for the period
set forth herein.
The Company will cause the Securities to be listed, posted and called
for trading on the Vancouver Stock Exchange (and will use its best efforts to
have the Securities listed, posted and called for trading on the New York Stock
Exchange or such other U.S. securities exchange as is acceptable to the
Underwriters) not later than the earlier of either (i) the fifth Business Day
following the date upon which the requirements of the paragraph above have been
fulfilled or (ii) the first Business Day which is twelve months after November
10, 1995. The Company will maintain such listings throughout the term of the
Securities.
The Company's obligations under this Security and the Indenture are
secured by a pledge of shares of Granges Common Stock owned by the Company (the
"Exchange Property") in the amount of 1 share of Granges Common Stock for each
$1.18 of principal amount of Special Warrants issued on the date hereof, or a
maximum of 8,474,576 shares. In the event of any reduction of the principal
amount of Securities Outstanding, as evidenced by the delivery to the Trustee by
the Company of Securities for cancellation, the Exchange Property held by the
Escrow Agent shall be reduced in the same proportion as the principal amount of
the Securities was so reduced, provided, that the Escrow Agent shall retain a
--------
sufficient amount of Exchange Property to exchange all Securities then
Outstanding on the basis of the then applicable Exchange Rate and the other
terms and provisions of the Indenture, and the Company shall, upon Company
Request, be entitled to any excess Exchange Property created by such reduction
net of any Exchange Property delivered in connection with any reduction caused
by an exchange pursuant to the fifth paragraph of the reverse of this Security.
If an Event of Default shall occur and be continuing, the principal of all the
Securities, together with accrued and unpaid interest to the date of
declaration, may be declared due and payable in the manner and with the effect
provided in the Indenture. Upon (i) payment of the amount of principal so
declared due and payable, together with accrued and unpaid interest to the date
of declaration, and of interest on any overdue principal and overdue interest,
or (ii) delivery of Granges Common Stock or, if applicable, Granges Common Stock
and cash, to the Holder upon exchange pursuant to Article Twelve of the
Indenture or upon redemption or Stated Maturity as provided above, all of the
Company's obligations in respect of the payment of the principal of and interest
on the Securities shall terminate.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and
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the rights of the Holders of the Securities under the Indenture at any time by
the Company and the Trustee with either (a) the written consent of the Holders
of a majority in principal amount of then Outstanding Securities, or (b) by the
adoption of a resolution, at a meeting of Holders of the Outstanding Securities
at which a quorum is present, by the Holders of two-thirds in principal amount
of the Outstanding Securities represented and entitled to vote at such meeting.
The terms of the Indenture may also be modified, subject to Section 508 of the
Indenture, in any non-material way acceptable to the Company and the Trustee so
as to comply with the requirements or suggestions of any official or semi-
official regulatory or self-regulatory body having jurisdiction over the Company
or the Securities, provided, however, that nothing in this sentence shall permit
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any such modification disadvantageous in any material respect to the Holders
without the consent or vote of Holders pursuant to the procedures specified in
Section 802 of the Indenture. The Indenture also contains provisions permitting
the Holders of specified percentages in principal amount of Outstanding
Securities, on behalf of the Holders of all the Securities, to waive certain
past defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Security shall be conclusive and binding upon such
Holder and upon all future Holders of this Security and of any Security issued
in exchange herefor or in lieu hereof, whether or not notation of such consent
or waiver is made upon this Security or such other Security.
As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default, the Holders of not
less than 25% in principal amount of the Outstanding Securities shall have made
written request to the Trustee to institute proceedings in respect of such Event
of Default as Trustee and offered the Trustee reasonable indemnity and the
Trustee shall not have received from the Holders of a majority in principal
amount of Outstanding Securities a direction inconsistent with such request, and
shall have failed to institute any such proceeding, for 45 days after receipt of
such notice, request and offer of indemnity. The foregoing shall not apply to
any suit instituted by the Holder of this Security for the enforcement of any
payment of principal hereof or interest hereon on or after the respective due
dates expressed herein.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of and interest on this
Security at the times, places and rate, and in the coin or currency and stock,
herein prescribed or to exchange this Security as provided in the Indenture.
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As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of Securities is registrable on the Security
Register upon surrender of a Security for registration of transfer (a) at the
Corporate Trust Office of the Trustee or at such other office or agency of the
Company as may be designated by it for such purpose, or (b) subject to any laws
or regulations applicable thereto and to the right of the Company to terminate
the appointment of any Transfer Agent, at the offices of the Transfer Agents
described in the Indenture or at such other offices or agencies as the Company
may designate, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security Registrar duly
executed by, the Holder thereof or its attorney duly authorized in writing, and
thereupon one or more new Securities, of authorized denominations and for the
same aggregate principal amount, will be issued to the designated transferee or
transferees. No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
recover any tax or other governmental charge payable in connection therewith.
The Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name a Security is registered, as the owner
thereof for all purposes, whether or not the Security is overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
THE INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA.
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SECTION 203. Form of Certificate of Authentication.
The Trustee's certificates of authentication shall be in substantially
the following form:
This is one of the Securities referred to in the within-mentioned
Indenture.
Dated: _______________
CHEMICAL BANK
as Trustee
By:______________________
Authorized Officer
SECTION 204. Form of Exchange Notice.
EXCHANGE NOTICE
The undersigned Holder of this Security hereby irrevocably exercises
the option to exchange this Security, or any portion of the principal amount
hereof below designated, into shares of Granges Common Stock in accordance with
the terms of the Indenture referred to in this Security and directs that such
shares, together with a check in payment for any fractional share and any
Securities representing any unexchanged principal amount hereof, be delivered to
and be registered in the name of the undersigned unless a different name has
been indicated below. The undersigned hereby certifies (please check one):
____The undersigned is a non-U.S. Person (not acting on behalf of a U.S.
Person); is not exercising this option within the United States; and the
securities issuable in respect of the exercise of this option are to be
delivered to an address outside the United States;
____The undersigned is exercising this option pursuant to an effective
Registration Statement under the Securities Act of 1933 (the "1933 Act");
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____The undersigned is an "accredited investor" within the meaning of Rule
501(a) under the 1933 Act and is not exercising this option with a view to a
distribution.
(In the absence of checking one of the above boxes, the undersigned will be
required to deliver herewith an opinion of counsel with substantial experience
under the 1933 Act and otherwise reasonably acceptable to the Company to the
effect that the undersigned's exercise of this option complies with the 1933
Act.)
If shares of Granges Common Stock or Securities are to be registered in the name
of a Person other than the undersigned, the undersigned will pay all transfer
taxes payable with respect thereto and, if this Security is a Restricted
Security as defined in the Indenture, the undersigned is delivering herewith a
certificate in proper form provided for in Section 311 of the Indenture referred
to in the Security certifying that the applicable restrictions on transfer have
been complied with.
Dated: _____________________
____________________
Signature
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<TABLE>
<S> <C>
If shares or Securities are to be registered If only a portion of the Securities is to be
in the name of a Person other than the exchanged, indicate:
Holder, please print such Person's name
and address:
1. Principal amount to be exchanged
($100 or integral multiples thereof):
_________________________ U.S.$___________
Name
2. Principal amount and denomination of
Securities representing unexchanged
principal amount to be issued ($100 or
_________________________ integral multiples thereof):
Address
Amount: U.S.$________
_________________________ Denominations:
Social Security or other Taxpayer U.S.$______
Identification Number, if any
_________________________ Signature Guaranteed
(Commercial bank, trust company or
member firm of the New York Stock
Exchange)
</TABLE>
SECTION 205. Transfer Restrictions.
(a) Unless and until any Security shall become freely transferrable as a
result of:
(1) its sale pursuant to an effective registration statement of the
Company under the 1933 Act covering the resale of the Securities and an
effective registration statement of Granges covering the offer for resale of
the Granges Common Stock deliverable in exchange therefor, as evidenced by an
Officers' Certificate of the Company (not subsequently withdrawn) delivered
to the Trustee, stating that such registration statements covering such
Securities and such Granges Common Stock have been declared effective; legend
provided in Section 202, and the
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(2) its sale in, on or through the facilities of a Designated
Offshore Securities Market, as that term is defined in Regulation S,
provided, that, the seller of such Security delivers a certificate to the
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Trustee, certifying that such Security has been so sold, that neither the
seller nor any affiliate of the seller nor any person acting on their behalf
shall have made any directed selling efforts (as that term is defined in
Regulation S) in the United States, and that neither such seller nor anyone
acting on its behalf knows that the sale of such Security was pre-arranged
with a buyer in the United States; or
(3) its sale in compliance with Rule 144 under the 1933 Act (or any
successor provision thereto); (provided that the Trustee has received an
opinion of counsel having substantial experience in practice under the 1933
Act and otherwise reasonably acceptable to the Company, addressed to the
Company and in form acceptable to the Company, with respect to compliance
with Rule 144 or such successor provision);
such Security, and all Securities issued pursuant to Section 305 or 306 in
respect of such Security are "Restricted Securities" and shall bear the legend
set forth on the face of the form of Security in Section 202, provided, however,
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that after December 20, 1995 the Transfer Agent will promptly upon the written
request of a holder of a Security who certifies to the Trustee that such
Security was originally sold under a Private Placement Subscription Agreement
for Non-U.S. Subscribers and that such Security is not owned by or on behalf of
a U.S. Person (unless, and then only to the extent that, the SEC adopts revised
legend requirements applicable to the Security, without charge to such Holder
and in accordance with the procedure set forth in Section 305(a) regarding
registration of transfer, authenticate and deliver to such Holder, a new
Security not bearing the Company will as a condition to such transfer, if
required by the Transfer Agent, furnish the Transfer Agent with a supporting
Opinion of Counsel. Except as provided in the preceding sentence, the Trustee
shall not issue any unlegended Security until it has received an Officers'
Certificate from the Company directing it to do so.
(b) All Securities as to which the legend set forth in Section 202 shall
have been removed in accordance with subsection (a) above shall be imprinted
with a legend to the following effect:
THIS DEBENTURE MAY NOT BE EXCHANGED FOR SHARES OF COMMON STOCK OF
GRANGES, INC. EXCEPT (i) BY A NON-U.S. PERSON (NOT ACTING ON BEHALF OF
A U.S. PERSON) IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S
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UNDER THE U.S. SECURITIES ACT OF 1933 (THE "1933 ACT") OR (ii) IF SUCH
SHARES OF GRANGES, INC. ARE REGISTERED UNDER THE 1933 ACT OR AN
EXEMPTION FROM REGISTRATION IS AVAILABLE.
(c) Unless and until any shares of Granges Common Stock (i) shall become
freely transferable as a result of:
(1) having been acquired in exchange for Securities pursuant to an
effective registration statement of Granges, covering the resale of Granges
Common Stock, under the 1933 Act, as evidenced by an officers' certificate of
Granges delivered to the Trustee (and not subsequently withdrawn), stating
that a registration statement covering the Granges Common Stock has been
declared effective, or
(2) having been acquired in exchange for Securities by a non-U.S.
Person (not acting on behalf of a U.S. Person) in accordance with the
provisions of Regulation S, provided, that the person acquiring such Granges
-------- ----
Common Stock in exchange for Securities delivers a certificate to the
Trustee, certifying that the Securities were not exchanged by or on behalf of
a U.S. Person and certifying that it is not exercising its right to acquire
Granges Common Stock in exchange for Securities within the United States, and
provided, further, that the address to which the Granges Common Stock is
-------- -------
delivered upon exchange of the Securities is not within the United States; or
(ii) the Trustee shall have received from the Holder an opinion of counsel
having substantial experience under the 1933 Act and otherwise reasonably
satisfactory to the Company that the legends on the Granges Common Stock may be
removed, such certificate representing Granges Common Stock delivered pursuant
to the Indenture shall bear the following restrictive legend:
THE SECURITIES COVERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), AND MAY
NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED WITHOUT REGISTRATION UNDER THE
1933 ACT UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE OR
REGISTRATION IS OTHERWISE NOT REQUIRED PURSUANT TO REGULATION S, AS EVIDENCED
BY AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY.
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ARTICLE THREE
THE SECURITIES
SECTION 301. Title and Terms.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is limited to U.S.$11,000,000,
except for Securities authenticated and delivered in exchange for, or in lieu
of, other Securities pursuant to Section 305, 306 or 1202.
The Securities shall be known and designated as the "7% Exchangeable
Debentures due October 25, 2000" of the Company. Their Stated Maturity shall be
October 25, 2000 and they shall bear interest on their principal amount
retroactively from October 25, 1995, payable semi-annually in arrears on May 1
and November 1 in each year, commencing May 1, 1996, at the rate of 7% per annum
until the principal thereof is due and at the rate of 7% per annum on any
overdue principal and, to the extent permitted by law, on any overdue interest;
provided, however, that payments shall only be made on Business Days as provided
- -------- -------
in Section 111.
The principal of and interest on the Securities shall be payable as
provided in the forms of Securities set forth in Section 202 (any city in which
any Paying Agent is located being herein called a "Place of Payment"), provided,
--------
however, that no fractional shares of Granges Common Stock shall be delivered
- -------
upon payment at Stated Maturity. If more than one Security being paid shall be
held by the same Holder, the number of whole shares (or other integral units of
securities), payable shall be computed on the basis of the aggregate principal
amount of the Securities (or specified portions thereof to the extent permitted
hereby) held and being paid. Instead of any fractional share (or other
fractional unit) which would otherwise be payable on any Security or Securities
the Escrow Agent on behalf of the Company shall pay (but only from the sources
specified below) a cash adjustment in respect of such fractional interest in an
amount equal to the same fraction of the market price per share of the Granges
Common Stock (or per unit of such other security), such market price to be
calculated by the Company as ninety-five percent of the average closing trade
price of Granges Common Stock on the American Stock Exchange, or, if Granges
Common Stock is not then listed on the American Stock Exchange, the stock
exchange or over-the-counter market upon which the Granges Common Stock is
traded which, in aggregate, has the highest dollar trading volume, during the
twenty consecutive trading days ending on the last trading day prior to Stated
Maturity, or, should Granges Common Stock not be traded on any stock exchange or
over-the-counter market, then ninety five percent of the per share fair value of
Granges Common Stock over such twenty-
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day period as determined in good faith by an investment banking firm retained in
good faith by the Company and which is a member of the New York Stock Exchange
or the Toronto Stock Exchange. The Company shall deliver to the Escrow Agent, or
at its option authorize the Escrow Agent to obtain by the sale of shares of
Granges Common Stock (or other securities which are part of the Exchange
Property) held by it, the funds necessary or anticipated by the Escrow Agent to
be necessary for payment of such fractional interests. The Company agrees to
furnish or cause to be furnished to the Escrow Agent any additional funds
required to permit such cash payments in respect of fractional interests.
The Securities shall be redeemable at the option of the Company at any
time on or after October 25, 1998, as provided in Article Eleven and in the form
of Securities set forth in Section 202.
The Securities shall be exchangeable as provided in Article Twelve.
SECTION 302. Denominations.
The Securities shall be issuable, without coupons, in denominations as
indicated in Section 202.
SECTION 303. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its
Chairman of the Board, its Vice Chairman of the Board, its Chief Executive
Officer, its President or one of its Vice Presidents, under a facsimile of its
corporate seal reproduced thereon attested by its Secretary or one of its
Assistant Secretaries. Any such signature may be manual or facsimile.
Securities bearing the manual or facsimile signature of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee or an
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Authenticating Agent by manual signature of an authorized officer, and such
certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder.
SECTION 304. Securities.
(a) The Trustee shall authenticate, register and deliver Securities
for original issuance as instructed from time to time by a requisition of the
Special Warrant Trustee. Under no circumstances will the Trustee authenticate,
register and deliver Securities for original issuance without first having
received such requisition. Such requisition shall specify the aggregate
principal amount of Securities previously issued under this Indenture, the
remaining aggregate principal amount of Securities authorized under this
Indenture, the name or names to be registered, the principal amount or amounts
to be authenticated and the manner and place of delivery and shall otherwise be
in a format agreed upon by the Trustee and the Special Warrant Trustee. In the
event that a retraction right arises with respect to the Special Warrants, the
Company shall give the Trustee immediate notice thereof and, thereafter, prior
to the issuance of any Securities pursuant to this Section 304(a), the Trustee
shall be entitled to receive an Opinion of Counsel to the effect that the
issuance of such Securities is entitled to an exemption under the 1933 Act.
Promptly upon receipt of such requisition, the Trustee shall give written notice
to the Special Warrant Trustee as to the time by which it reasonably expects to
be able to authenticate, register and deliver the Securities referred to in such
requisition. Upon such authentication, registration and delivery, the Trustee
shall notify the Company and the Special Warrant Trustee in writing thereof and
the Company shall deliver to the Trustee a receipt therefor.
(b) The Securities shall be issued in definitive registered form,
without coupons, substantially in the form specified in Section 202.
(c) At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities executed by the
Company to the Trustee or to its order for authentication pursuant to this
Section 304 together with a Company order for authentication and delivery of
such Securities, and the Trustee or an Authenticating Agent in accordance with
such Company Order shall authenticate and deliver such Securities as in this
Indenture provided and not otherwise. In connection with any Company Order for
authentication, a compliance certificate and Opinion of Counsel pursuant to
Section 102 shall not be required.
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SECTION 305. Registration, Registration of Transfer and
Exchange; Restrictions on Transfer.
(a) The Company shall cause to be kept at the Corporate Trust Office
of the Trustee a register (the register maintained in such office being herein
sometimes referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities and of transfers of Securities. The Trustee is hereby
appointed "Security Registrar" for the purpose of registering Securities and
transfers and exchanges of Securities as herein provided.
Upon surrender for registration of transfer of any Security at an
office or agency of the Company designated pursuant to Section 1002 for such
purpose, the Company shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Securities of any authorized denominations and of a like aggregate principal
amount and bearing such restrictive legends as may be required by this Indenture
(including Section 205).
At the option of the Holder, and subject to the other provisions of
this Section 305, Securities may be exchanged for other Securities of any
authorized denominations and of a like aggregate principal amount, upon
surrender of the Securities to be exchanged at any such office or agency.
Whenever any Securities are so surrendered for exchange, and subject to the
other provisions of this Section 305, the Company shall execute, and the Trustee
shall authenticate and deliver, the Securities which the Holder making the
exchange is entitled to receive. Every Security presented or surrendered for
registration of transfer or for exchange shall (if so required by the Company or
the Security Registrar) be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Company and the Security
Registrar duly executed, by the Holder thereof or his attorney duly authorized
in writing.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and subject to the other provisions of this Section 305, entitled to the
same benefits under this Indenture, as the Securities surrendered upon such
registration of transfer or exchange.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 1202 (other than where the shares of Granges
Common Stock are to be issued or delivered in a name other than that of the
Holder of the Security) not involving any transfer.
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(b) Beneficial ownership of every Security shall be subject to the
restrictions on transfer provided in the legend required to be set forth on the
face of each Security pursuant to Section 205, unless such restrictions on
transfer shall be waived by the written consent of the Company, and the Holder
of each Security, by such Holder's acceptance thereof, agrees to be bound by
such restrictions on transfer. Whenever any such legended Security is presented
or surrendered for registration of transfer or for exchange for a Security
registered in a name other than that of the Holder, such Security must be
accompanied by a certificate in substantially the form set forth in Section 311,
dated the date of such surrender and signed by the Holder of such Security, as
to compliance with such restrictions on transfer. Neither the Security Registrar
nor any Transfer Agent shall be required to accept for such registration of
transfer or exchange any such legended Security not so accompanied by a properly
completed certificate.
As used in the preceding paragraph of this Section 305, the term
"transfer" encompasses any sale, pledge, transfer or other disposition of any
Security.
(c) Neither the Trustee, the Principal Paying Agent nor any of their
agents shall (1) have any duty to monitor compliance with or with respect to any
federal or state or other securities or tax laws or (2) have any duty to obtain
documentation on any transfers or exchanges other than as specifically required
hereunder.
SECTION 306. Mutilated, Destroyed, Lost or Stolen Securities.
If any mutilated Security is surrendered to the Trustee or a Transfer
Agent the Company shall execute, the Trustee or an Authenticating Agent shall
authenticate and the Trustee or Transfer Agent shall deliver in exchange
therefor a new Security of like tenor and principal amount and bearing a number
not contemporaneously outstanding.
If there be delivered to the Company and the Trustee or a Transfer
Agent:
(1) evidence to their satisfaction of the destruction, loss or theft
of any Security, and
(2) such security or indemnity as may be satisfactory to the Company
and the Trustee and such Transfer Agent to save each of them and any agent of
either of them harmless,
then, in the absence of actual notice to the Company, the Trustee or the
Transfer Agent that such Security has been acquired by a bona fide purchaser,
the Company shall execute, the Trustee or an Authenticating Agent shall
authenticate and the Trustee or Transfer Agent
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<PAGE>
shall deliver, in lieu of any such destroyed, lost or stolen Security, a new
Security of like tenor and principal amount and bearing a number not
contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion, but
subject to any exchange rights, may, instead of issuing a new Security, pay such
Security upon satisfaction of the conditions set forth in the preceding
paragraph.
Upon the issuance of any new Security under this Section 306, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee, the Principal Paying
Agent and the Transfer Agent) connected therewith.
Every new Security issued pursuant to this Section 306 in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and such new
Security shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Securities duly issued hereunder.
The provisions of this Section 306 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 307. Payment of Interest, Interest Rights Preserved.
Interest on any Security which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person in
whose name that Security (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest.
Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date (herein called
"Defaulted Interest") shall forthwith cease to be payable to the Holder on the
relevant Regular Record Date by virtue of having been such Holder, and such
Defaulted Interest may be paid by the Company, at its election in each case, as
provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Securities (or their respective Predecessor
Securities)
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<PAGE>
are registered at the close of business on a Special Record Date for the
payment of such Defaulted Interest, which shall be fixed in the following
manner. The Company shall notify the Trustee in writing of the amount of
Defaulted Interest proposed to be paid on each Security, the date of the
proposed payment and the Special Record Date, and at the same time the
Company shall deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such Defaulted Interest or
shall make arrangements satisfactory to the Trustee for such deposit prior to
the date of the proposed payment, such money when deposited to be held in
trust for the benefit of the Persons entitled to such Defaulted Interest as
in this Clause provided. The Special Record Date for the payment of such
Defaulted Interest shall be not more than 15 days and not less than 10 days
prior to the date of the proposed payment and not less than 10 days after the
receipt by the Trustee of the notice of the proposed payment. Not less than
10 days prior to a Special Record Date, the Trustee, in the name and at the
expense of the Company, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be mailed, first-
class postage prepaid, to each Holder of Securities at such Holder's address
as it appears in the Security Register. Notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor having been so
mailed, such Defaulted Interest shall be paid to the Persons in whose names
the Securities (or their respective Predecessor Securities) are registered at
the close of business on such Special Record Date and shall no longer be
payable pursuant to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities may be listed, and upon such notice as may
be required by such exchange, if, after notice given by the Company to the
Trustee of the proposed payment pursuant to this Clause, such manner of
payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section and Section 305,
each Security delivered under this Indenture upon registration of transfer of or
in exchange for or in lieu of any other Security shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Security.
In the case of any Security which is exchanged as permitted by Section
1201 interest accrued to the date of exchange on the principal amount exchanged
shall be payable and such interest (whether or not punctually paid or duly
provided for) shall be paid to the Person in whose name such Security (or one or
more Predecessor Securities) is registered at the close of business on the date
on which such Security shall have been properly surrendered for exchange.
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SECTION 308. Persons Deemed Owners.
Prior to due presentment of a Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name such Security is registered as the owner of such
Security for the purpose of receiving payment of principal of and (subject to
Sections 305 and 307) interest on such Security and for all other purposes
whatsoever, whether or not such Security be overdue, and neither the Company,
the Trustee nor any agent of the Company or the Trustee shall be affected by
notice to the contrary.
SECTION 309. Cancellation.
All Securities surrendered for payment, redemption, registration of
transfer or exchange shall, if surrendered to any Person other than the Trustee,
be delivered to the Trustee. All Securities so delivered to the Trustee shall
be canceled promptly by the Trustee. No Securities shall be authenticated in
lieu of or in exchange for any Securities canceled as provided in this Section
309 except as expressly permitted by this Indenture. All canceled Securities
and any certificates in connection therewith held by the Trustee shall be
delivered to the Company.
SECTION 310. Computation of Interest.
Interest on the Securities shall be computed on the basis of a 360-day
year of twelve 30-day months.
SECTION 311. Form of Certification.
In connection with the certification contemplated by Section 305 or
1202 relating to compliance with certain restrictions relating to transfers of
Restricted Securities, such certification shall be provided substantially in the
form of the following certificate, with only such changes as shall be approved
by the Company and the Trustee:
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"CERTIFICATE
ATLAS CORPORATION
7% EXCHANGEABLE DEBENTURES DUE OCTOBER 25, 2000
This is to certify that as of the date hereof with respect to
U.S.$________ principal amount (as defined in the Indenture) of the above-
captioned securities presented or surrendered on the date hereof (the
"Surrendered Securities") for registration of transfer, or for exchange for like
Securities of other denominations or for Granges Common Stock where the
securities issuable upon such exchange are to be registered in a name other than
that of the undersigned Holder (each such transaction being a "transfer"), the
undersigned Holder (as defined in the Indenture) certifies that the transfer of
Surrendered Securities associated with such transfer complies with the
restrictive legend set forth on the face of the Surrendered Securities for the
reason checked below:
__________ The transfer of the Surrendered Securities complies with Rule 144
under the United States 1933 Act of 1933, as amended (the "1933 Act"); or
__________ The transfer of the Surrendered Securities complies with Rule 144A
under the 1933 Act; or
__________ The transfer of the Surrendered Securities complies with Rule 904
under the 1933 Act.
__________ The transfer of the Surrendered Securities has been made to an
individual or institution that is an "accredited investor" within the meaning of
Rule 501(a) under the 1933 Act in a transaction exempt from the registration
requirements of the 1933 Act because such institution is:
__________ any bank as defined in Section 3(a)(2) of the 1933 Act, or
any savings and loan association or other institution as
defined in Section 3(a)(5)(A) of the 1933 Act whether
acting as an individual or fiduciary capacity; any broker
or dealer registered pursuant to Section 15 of the 1934
Act; any insurance company as defined in Section 2(13) of
the 1933 Act; any investment company registered under the
Investment Company Act of 1940
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or a business development company as defined in Section
2(a)(48) of that act; any Small Business Investment
Company licensed by the U.S. Small Business Administration
under Section 301(c) or (d) of the Small Business
Investment Act of 1958; any plan established and
maintained by a state, its political subdivisions, or any
agency or instrumentality of a state or its political
subdivisions for the benefit of its employees, if such
plan has total assets in excess of $5,000,000; any
employee benefit plan within the meaning of the Employee
Retirement Income Security Act of 1974 if the investment
decision is made by a plan fiduciary, as defined in
Section 3(21) of such act, which is either a bank, savings
and loan association, insurance company, or registered
investment adviser, of if the employee benefit plan has
total assets in excess of $5,000,000 or, if a self-
directed plan, with investment decisions made solely by
persons that are accredited investors;
__________ any private business development company as defined in
Section 202(a)(22) of the Investment Advisers Act of 1940;
__________ any organization described in Section 501(c)(3) of the
Internal Revenue Code, corporation, Massachusetts or
similar business trust, or partnership, not formed for the
specific purposes of acquiring the securities offered,
with total assets in excess of $5,000,000;
__________ any director, executive officer, or general partner of the
Company;
__________ any natural person whose individual net worth, or joint
net worth with that person's
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spouse, at the time of his purchase exceeds $1,000,000;
__________ any natural person who had an individual income in excess
of $200,000 in each of the two most recent years or joint
income with that person's spouse in excess of $300,000 in
each of those years and has a reasonable expectation of
reaching the same income level in the current year;
__________ Any trust, with total assets in excess of $5,000,000, not
formed for the specific purpose of acquiring the
securities offered, whose purchase is directly by a
sophisticated person as described in Rule 506(b)(2)(ii) of
Regulation D under the 1933 Act; or
__________ any entity in which all of the equity owners are
accredited investors.
________ The transfer of the Surrendered Securities has been made pursuant to
an effective registration statement filed under the 1933 Act.
[Name of Holder]
____________________
Dated: ____________, ____*"
* To be dated the date
of presentation or
surrender
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<PAGE>
SECTION 312. CUSIP Numbers.
The Company in issuing Securities may use "CUSIP" numbers (if then
generally in use) in addition to serial numbers; if so, the Trustee shall use
such "CUSIP" numbers in addition to serial numbers in notices of redemption as a
convenience to Holders; provided that any such notice may state that no
--------
representation is made as to the correctness of such CUSIP numbers either as
printed on the Securities or as contained in any notice of a redemption and that
reliance may be placed only on the serial or other identification numbers
printed on the Securities, and any such redemption shall not be affected by any
defect in or omission of such CUSIP numbers.
SECTION 313. Taxes and Withholding.
(a) Unless the requirements of Section 313(d) are met and then except
to the extent that the certifications in Section 313(d) validly provide for
exemption or relief therefrom, any and all payments hereunder shall be made
subject to deduction for any present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto
including (i) United States withholding taxes applicable to the payment of
interest to a Holder, and (ii) any tax or charge arising from the transfer of
ownership of Securities or the registration of Securities in a name other than
that of prior Holder (all such expenses being referred to as "Taxes").
(b) The Company shall promptly furnish to the Trustee Internal
Revenue Service Form 1042S evidencing payment of Taxes or other evidence of
payment chosen by the Company, in each case to the extent reasonably available,
and the Trustee shall in turn distribute copies of such evidence to each Person
requesting such copies on whose behalf taxes were paid.
(c) Without prejudice to the survival of any other agreement of the
Company hereunder, the agreements and obligations of the Company contained in
this Section 313 shall survive the satisfaction and discharge of this Indenture
until six months after the applicable statute of limitations with respect to the
relevant Taxes expires.
(d) The Company shall, until the end of the period described in
paragraph (c) of this Section 313, maintain a record of the identity of any
Person who held a beneficial interest in the Securities. To the extent
applicable to such Person, and to the extent such Person wishes to claim the
benefits of this Section 313, such Person shall provide to the Company its name
and address and shall certify to the Company that (i) it is entitled to receive
payments of interest hereunder subject to the portfolio interest exemption from
United States withholding tax on interest pursuant to Sections 871(h) and 881(c)
of the
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Code, (ii) it is not a ten percent shareholder of the Company within the
meaning of Section 871(h)(3) of the Code, (iii) it is not a controlled foreign
corporation receiving interest from a related person for purposes of Section
881(c)(3), (iv) it is not a United States person, citizen or resident, and (v)
it is not licensed to conduct a banking business or to accept deposits from
members of the public and, in fact, does not accept such deposits, and such
Person shall have undertaken to provide to the Company such tax forms, including
a Certificate of Foreign Status (Internal Revenue Service Form W-8), as may
reasonably be requested from time to time by the Company to ensure the
availability to such Person of such exemption from United States withholding tax
on interest pursuant to Sections 871(h) and 881(c) of the Code. In the event
that such a Person is unable to provide the certifications set forth in the
previous sentence, it shall provide to the Company, if applicable, a properly
completed U.S. Internal Revenue Service Form 1001 and shall certify to the
Company that it is entitled to receive interest subject to a reduced U.S.
withholding tax rate, or a properly completed Form 4224 and shall certify to the
Company that it is entitled to receive interest without deduction of U.S.
withholding taxes. Such certification by each such Person on such Form 1001
shall be accompanied by a copy of a Certificate of Foreign Status (Internal
Revenue Service Form W-8) duly executed by the Person named in such
certification or Form. Such Person shall also provide to the Company from time
to time any other documentation or information required by the Code and the
regulations, rulings and forms pertaining thereto or to any successor provision,
or by any other provision of law, with respect to any such applicable exemption
from United States withholding tax on interest or reduction in the rates thereof
with respect to payments to be made hereunder.
(e) The Company shall give the Trustee an Officers' Certificate as to
the necessity, if any, to withhold any amounts from payments to Holders (and the
amount of any such withholding) whether pursuant to this Section 313 or arising
from the delivery by a Holder of any certificate or notice pursuant to Section
204 of this Indenture and the Trustee and any Paying Agent may rely conclusively
on such Officers' Certificate in making payments hereunder.
(f) If any Taxes are assessed against the Company or the Trustee with
respect to payments previously made hereunder, the Holder of any Security in
respect of which such Taxes were assessed shall, and each such Holder, by his
acceptance of the Securities, hereby agrees to, promptly, upon demand, pay such
Taxes directly to the entity imposing such Taxes or, in case that the Company or
Trustee, as the case may be, shall have already made such payment, shall repay
the full amount of such Taxes so paid, and each such Holder, by his acceptance
of the Securities further agrees that amounts not so repaid shall be paid
------- ------
directly to the Company or Trustee, as the case may be, and not to the Holder
out of the amount of any interest or principal payable to such Holder hereunder
as such payments become due or out of the amount of any Granges Common Stock
otherwise
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deliverable to such Holder upon exchange hereunder at the time such exchange
takes place, whether or not such payments or Granges Common Stock are
deliverable in respect of the Security in respect of which Taxes were paid,
until such amount shall have been fully repaid.
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ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of further
effect (except as to any surviving rights of exchange, or registration of
transfer or exchange pursuant to Section 305, or replacement of Securities
herein expressly provided for and the Company's obligations to the Trustee
pursuant to Section 607), and the Trustee, at the expense of the Company, shall
execute proper instruments acknowledging satisfaction and discharge of this
Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered
(other than (i) Securities which have been destroyed, lost or stolen
and which have been replaced or paid as provided in Section 306, and
(ii) Securities for whose payment money has theretofore been deposited
in trust or segregated and held in trust by the Company and thereafter
repaid to the Company or discharged from such trust, as provided in
Section 1003) have been delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the Trustee
or the Principal Paying Agent or its agent for cancellation (other
than Securities referred to in clauses (i) and (ii) of clause (1)(A)
above)
(i) have become due and payable, or
(ii) will have become due and payable at their Stated Maturity
within one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the
Company,
and the Company, in the case of clause (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust funds
(immediately available to the Holders in the case of clause (i), which
funds may include, in the case of a deposit under clause (i), Granges
Common Stock if
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permitted by the first sentence of the face or by the reverse of the
Securities) in trust an amount sufficient, and for the purpose, to pay
and discharge the entire indebtedness on such Securities not
theretofore delivered to the Trustee for cancellation, for principal
and interest to the date of such deposit (in the case of Securities
which have become due and payable) or to the Stated Maturity or
Redemption Date, as the case may be; and
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607, the obligations of
the Company to any Authenticating Agent under Section 612 and, if money shall
have been deposited with the Trustee pursuant to clause (1)(B) of this Section
401, the obligations of the Trustee under Section 402 and the last paragraph of
Section 1003 shall survive.
SECTION 402. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 1003, all
money and securities deposited with the Trustee pursuant to Section 401 shall be
held in trust and applied by it, in accordance with the provisions of the
Securities and this Indenture, to the payment, either directly or through any
Paying Agent (including the Company acting as its own Paying Agent), to the
Persons entitled thereto, of the principal and interest for whose payment such
money and securities has been deposited with the Trustee.
All moneys deposited with the Trustee pursuant to Section 401 (and
held by it or any Paying Agent) for the payment of Securities subsequently
exchanged shall be returned to the Company upon Company Request.
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ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default.
"Event of Default", wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(1) default in the payment of any interest (including any Additional
Amount) upon any Security when it becomes due and payable, and continuance of
such default for a period of 30 days; or
(2) default in the payment of the principal of any Security within
the period of time after Maturity as provided in Sections 1001 and 1106, as
applicable; or
(3) default in the performance or observance, or breach, of any term,
covenant, warranty or agreement of the Company in the Securities or this
Indenture, and continuance of such default or breach for a period of 60 days
after written notice of such failure, requiring the Company to remedy the
same and stating that such notice is a "Notice of Default", shall have been
given to the Company by the Trustee or to the Company and the Trustee by the
Holders of at least 25% in aggregate principal amount of the Outstanding
Securities; or
(4) (a) failure by the Company to pay when due an aggregate amount in
excess of U.S.$500,000 or the equivalent thereof in any other currency in
respect of any outstanding Indebtedness and the continuance of such failure
beyond any applicable grace period provided for in the terms of such
Indebtedness, or (b) default by the Company with respect to outstanding
Indebtedness, which default results in the acceleration of Indebtedness in an
aggregate amount in excess of U.S.$500,000 or the equivalent thereof in any
other currency, without, in the case of (a) or (b), such Indebtedness having
been discharged or such payment default or acceleration, as the case may be,
having been cured, waived, rescinded or annulled within a period of 10 days
after written notice thereof by or on behalf of the holders of such
Indebtedness; provided, however, that if, prior to the entry of judgment in
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favor of any trustee with respect to any Indebtedness or in favor of any
holder of any Indebtedness or other representative of the holders thereof,
such failure or default under such indenture or instrument shall be remedied
or cured by the Company, or waived by or on behalf of
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the holders of such Indebtedness, and such acceleration (if applicable) shall
be rescinded, then the Event of Default under this Indenture shall be deemed
likewise to have been remedied, cured or waived; "Indebtedness" is defined to
mean obligations of, or guaranteed or assumed by, the Company for borrowed
money, including obligations evidenced by bonds, debentures, notes or other
similar instruments (it being understood that "Indebtedness" does not include
obligations under the Securities and obligations to pay the purchase price of
goods if such goods are acquired, and such obligations are incurred, in the
ordinary course of the Company's business); or
(5) the entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of the Company in an involuntary case
or proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order adjudging the
Company a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in
respect of the Company under Federal bankruptcy law or any other applicable
Federal or State law, or appointing a custodian, receiver, liquidator,
assignee, trustee, sequestrator or other similar official of the Company or
of any substantial part of its property, or ordering the winding up or
liquidation of its affairs, and the continuance of any such decree or order
unstayed and in effect for a period of 60 consecutive days; or
(6) the commencement by the Company of a voluntary case or proceeding
under any applicable Federal or State bankruptcy, insolvency, reorganization
or other similar law or of any other case or proceeding to be adjudicated a
bankrupt or insolvent, or the consent by it to the entry of a decree or order
for relief in respect of the Company in an involuntary case or proceeding
under any applicable Federal or State bankruptcy, insolvency, reorganization
or other similar law or to the commencement of any bankruptcy or insolvency
proceedings against it, or the filing by it of a petition or answer or
consent seeking reorganization or relief under Federal bankruptcy law or any
other applicable Federal or State law, or the consent by it to the filing of
such petition or to the appointment or taking possession of a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Company or of any substantial part of its property, or the
making by it of an assignment for the benefit of creditors, or the admission
by it in writing of its inability to pay its debts generally as they become
due, or the taking of corporate action by the Company in furtherance of any
such action.
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SECTION 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than an Event of Default specified in
Section 501(5) or 501(6)) occurs and is continuing, then in every such case the
Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities may declare the principal of all the Securities to be due
and payable immediately, by a notice in writing to the Company (and to the
Trustee if given by the Holders), and upon any such declaration such principal
and all accrued interest thereon shall become immediately due and payable. If
an Event of Default specified in Section 501(5) or 501(6) occurs, the principal
of, and accrued interest on, all the Securities shall ipso facto become
---- -----
immediately due and payable without any declaration or other Act of the Holder
or any act on the part of the Trustee.
At any time after such declaration of acceleration has been made and
before a judgment or decree for payment of the money due or delivery of the
Pledged Shares has been obtained by the Trustee as hereinafter in this Article
Five provided, the Holders of a majority in principal amount of the Outstanding
Securities, by written notice to the Company and the Trustee, may rescind and
annul such declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest on all Securities,
(B) the principal of any Securities which have become due
otherwise than by such declaration of acceleration and any interest
thereon at the rate borne by the Securities,
(C) interest upon overdue interest at a rate of 7% per annum,
and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel;
and
(2) all Events of Default, other than the nonpayment of the principal
of, and any interest on, Securities which have become due solely by such
declaration of acceleration, have been cured or waived as provided in Section
513.
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In addition to the foregoing, if any declaration of acceleration is
based solely on an Event of Default specified in Section 501(4) and if, at any
time after such declaration and before a judgment or decree for payment of the
money due has been obtained by the Trustee as hereinafter in this Article
provided, such Event of Default is deemed to have been remedied, cured or waived
pursuant to the proviso of Section 501(4) and the conditions set forth in
Clauses (1) and (2) of the preceding paragraph have been satisfied, then such
declaration and its consequences shall be deemed to have been automatically
rescinded and annulled without any further action by the Trustee or the Holders.
No rescission or annulment referred to above shall affect any
subsequent default or impair any right consequent thereon.
SECTION 503. Collection of Indebtedness and Suits
for Enforcement by Trustee.
The Company covenants that if
(1) default is made in the payment of any interest on any Security
when it becomes due and payable and such default continues for a period of 30
days, or
(2) default is made in the payment of the principal of any Security
within the period of time after the Maturity thereof as provided in Sections
1001 and 1106, as applicable,
the Company will, upon demand of the Trustee, pay to it in cash, for the benefit
of the Holders of such Securities the whole amount then due and payable on such
Securities for principal and interest and interest on any overdue principal and
on any overdue interest, at a rate of 7% per annum, and in addition thereto,
such further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the whole amount of such interest and principal
remaining unpaid, and may prosecute such proceeding to judgment or final decree
and may enforce the same against the Company or any other obligor upon the
Securities.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders of Securities by such appropriate judicial proceedings as the Trustee
shall deem most effectual to protect
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and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.
SECTION 504. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or either of
their creditors, the Trustee (irrespective of whether the principal of, and any
interest on, the Securities shall then be due and payable as therein expressed
or by declaration or otherwise and irrespective of whether the Trustee shall
have made any demand on the Company for the payment of overdue principal or
interest) shall be entitled and empowered, by intervention in such proceeding or
otherwise,
(1) to file and prove a claim for the whole amount of principal and
interest owing and unpaid in respect of the Securities and to file such other
papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel)
and of the Holders of Securities allowed in such judicial proceeding, and
(2) to collect and receive any moneys or other property payable or
deliverable on any such claim and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder of Securities to make such payments to the Trustee and, in the event
that the Trustee shall consent to the making of such payments directly to the
Holders of Securities, to pay to the Trustee any amount due to it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel and any other amounts due the Trustee under Section 607.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder of a Security
any plan of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder of a Security in any such proceeding;
provided, however, that the Trustee may, on
- -------- -------
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behalf of such Holders, vote for the election of a trustee in bankruptcy or
similar official and be a member of a creditors' or other similar committee.
SECTION 505. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which judgment
has been recovered.
SECTION 506. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article Five shall
be applied in the following order, at the date or dates fixed by the Trustee
and, in case of the distribution of such money on account of principal or
interest, upon presentation of the Securities and the notation thereon of the
payment if only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
607;
SECOND: To the payment of the amounts then due and unpaid for
interest on the Securities in respect of which or for the benefit of which
such money has been collected;
THIRD: To the payment of the amounts then due and unpaid for
principal on the Securities in respect of which or for the benefit of which
such money has been collected; and
FOURTH: Any remaining amounts shall be repaid to the Company.
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SECTION 507. Limitation on Suits.
No Holder of any Security shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless:
(1) such Holder has previously given written notice to the Trustee of
a continuing Event of Default;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 45 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 45-day period by the Holders of a majority
in principal amount of the Outstanding Securities;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all such
Holders.
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SECTION 508. Unconditional Right of Holders to Receive
Principal and Interest and to Exchange.
Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of and (subject to Section 307) interest on
such Security on the respective Stated Maturities expressed in such Security
(or, in the case of redemption on the Redemption Date), and to exchange such
Security in accordance with Article Twelve, and to institute suit for the
enforcement of any such payment and right to exchange, and such rights shall not
be impaired without the consent of such Holder.
SECTION 509. Restoration of Rights and Remedies.
If the Trustee or any Holder of a Security has instituted any
proceeding to enforce any right or remedy under this Indenture and such
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Trustee or to such Holder, then and in every such
case, subject to any determination in such proceeding, the Company, the Trustee
and the Holders of Securities shall be restored severally and respectively to
their former positions hereunder and thereafter all rights and remedies of the
Trustee and such Holders shall continue as though no such proceeding had been
instituted.
SECTION 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in the last paragraph
of Section 306, no right or remedy herein conferred upon or reserved to the
Trustee or to the Holders of Securities is intended to be exclusive of any other
right or remedy, and every right and remedy shall, to the extent permitted by
law, be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.
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SECTION 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Security
to exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
any acquiescence therein. Every right and remedy given by this Article Five or
by law to the Trustee or to the Holders of Securities may be exercised from time
to time, and as often as may be deemed expedient, by the Trustee or (subject to
the limitations contained in this Indenture) by the Holders of Securities.
SECTION 512. Control by Holders of Securities.
The Holders of a majority in principal amount of the Outstanding
Securities shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee, provided that
--------
(1) such direction shall not be in conflict with any rule of law or
with this Indenture and could not involve the Trustee in personal liability,
and
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction or this Indenture.
SECTION 513. Waiver of Past Defaults.
The Holders, either (a) through the written consent of Holders of not
less than a majority in principal amount of the Outstanding Securities, or (b)
by the adoption of a resolution, at a meeting of Holders of the Outstanding
Securities at which a quorum is present, by the Holders of at least two thirds
in principal amount of the Outstanding Securities represented at such meeting,
may waive any past default hereunder and its consequences, except a default (1)
in the payment of the principal of or interest on any Security, or (2) in
respect of a covenant or provision hereof which under Article Eight cannot be
modified or amended without the consent of the Holders of each Outstanding
Security affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
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SECTION 514. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security
by his acceptance thereof shall be deemed to have agreed, that any court may in
its discretion require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may in
its discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section 514 shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding in
the aggregate more than 10% in principal amount of the Outstanding Securities,
or to any suit instituted by any Holder of any Security for the enforcement of
the payment of the principal of or interest on any Security on or after the
respective Stated Maturity or Maturities expressed in such Security (or, in the
case of redemption, on or after the Redemption Date) or for the enforcement of
the right to exchange any Security in accordance with Article Twelve.
SECTION 515. Waiver of Usury, Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any usury, stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
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ARTICLE SIX
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture; but in the
case of any such certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee shall be
under a duty to examine the same to determine whether or not they conform to
the requirements of this Indenture, but not to verify the contents thereof.
This Section 601(a) shall be in lieu of Section 315(a) of the TIA and such
Section 315(a) is hereby expressly excluded from this Indenture, as permitted by
the TIA.
(b) In case an Event of Default has occurred and is continuing
(provided, in the case of an Event of Default under Section 501(4), the Trustee
is deemed to have notice of such Event of Default pursuant to Section 603(8)),
the Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
(c) No provision of this Indenture shall be construed to relieve
the Trustee from liability for its own negligent action, its own negligent
failure to act, or its own wilful misconduct, except that
------
(1) this paragraph (c) shall not be construed to limit the effect of
paragraph (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts;
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(3) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction
of the Holders of a majority in principal amount of the Outstanding
Securities relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust
or power conferred upon the Trustee, under this Indenture; and
(4) no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder, or in the exercise of any of
its rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability
is not reasonably assured to it.
(d) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
SECTION 602. Notice of Defaults.
Within 60 days after the occurrence of any default hereunder as to
which the Trustee has received notice, the Trustee shall give to all Holders of
Securities, in the manner provided in Sections 105 and 613, notice of such
default, unless such default shall have been cured or waived; provided,
--------
however, that in the case of any default of the character specified in Section
- -------
501(3), no such notice to Holders of Securities shall be given until at least 30
days after the occurrence thereof, provided further, that, except in the case of
----------------
default in the payment of principal or interest on any Security, the Trustee may
withhold such notice if and so long as the board of directors, executive
committee, or a trust committee of directors and/or responsible officers, of the
Trustee in good faith determine that the withholding of such notice is in the
interests of the Holders. For the purpose of this Section, the term "default"
means any event which is, or after notice or lapse of time or both would become,
an Event of Default.
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SECTION 603. Certain Rights of Trustee.
Subject to the provisions of Section 601:
(1) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officers' Certificate, other
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, coupon, other evidence of
indebtedness or other paper or document believed by it to be genuine and to
have been signed or presented by the proper party or parties;
(2) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors shall be sufficiently evidenced by a
Board Resolution;
(3) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith
on its part, rely upon an Officers' Certificate;
(4) the Trustee may consult with counsel of its selection and the
written advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon;
(5) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders of Securities pursuant to this Indenture, unless such
Holders shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which might be incurred by it in
compliance with such request or direction;
(6) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, coupon, other evidence of indebtedness or other paper
or document, but the Trustee may make such further inquiry or investigation
into such facts or matters as it may see fit, and, if the Trustee shall
determine to make such further inquiry or investigation, it shall be entitled
to examine the books, records and premises of the Company, personally or by
agent or attorney;
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(7) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder; and
(8) the Trustee shall not be deemed to have notice of any Event of
Default under Section 501(4) unless a Responsible Officer of the Trustee
shall have received notice thereof from Holders of not less than 25% in
principal amount of the Outstanding Securities.
SECTION 604. Not Responsible for Recitals or Issuance
of Securities.
The recitals contained herein and in the Securities (except the
Trustee's certificates of authentication) shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Securities. The Trustee shall not be accountable for the
use or application by the Company of Securities or the proceeds thereof.
SECTION 605. May Hold Securities, Act as Trustee
Under Other Indentures.
Subject to Section 614(a), the Trustee, any Authenticating Agent, any
Paying Agent, any Escrow Agent or any other agent of the Company or the Trustee,
in its individual or any other capacity, may become the owner or pledgee of
Securities and may otherwise deal with the Company with the same rights it would
have if it were not Trustee, Authenticating Agent, Paying Agent, Escrow Agent or
such other agent.
Subject to Section 614(a), the Trustee may become and act as trustee
under other indentures under which other securities, or certificates of interest
or participation in other securities, of the Company are outstanding in the same
manner as if it were not Trustee hereunder.
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SECTION 606. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed in writing with the Company.
SECTION 607. Compensation and Indemnification of Trustee
and Its Prior Claims.
The Company covenants and agrees to pay to the Trustee from time to
time, and the Trustee shall be entitled to, such compensation as the Company and
the Trustee shall from time to time agree on in writing (which shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust) and the Company covenants and agrees to pay or reimburse the
Trustee upon its request for all reasonable expenses, disbursements and advances
incurred or made by or on behalf of it in accordance with any of the provisions
of this Indenture (including the reasonable compensation and the expenses and
disbursements of its counsel and of all agents and other persons not regularly
in its employ), except to the extent that any such expense, disbursement or
advance is due to its negligence or bad faith. The Company also covenants to
indemnify the Trustee for, and to hold it harmless against, any and all loss,
liability, damage, claims or expense including taxes (other than taxes based on
or measured or determined by the income of the Trustee) incurred by it, arising
out of or in connection with the acceptance or administration of this Indenture
or the trusts hereunder or the performance of its duties hereunder, including
the costs and expenses of defending itself against or investigating any claim or
liability in the premises, except to the extent that any such loss, liability,
damage, claims or expense was due to the Trustee's negligence or bad faith. The
obligations of the Company under this Section 607 to compensate and indemnify
the Trustee and to pay or reimburse the Trustee for expenses, disbursements and
advances shall constitute additional indebtedness hereunder and shall survive
the satisfaction and discharge of this Indenture. To secure the Company's
payment obligations under this Section, the Trustee shall have a lien prior to
the Securities on (i) all money or property held or collected by the Trustee, as
such, except money or property held in trust to pay the principal of or interest
on particular Securities and (ii) all Exchange Property held under the Escrow
and Pledge Agreement and such lien shall survive the satisfaction and discharge
of the Indenture and any other termination of the Indenture including any
termination under any bankruptcy law. Without limiting any other rights
available to the Trustee under applicable law, when the Trustee incurs expenses
or renders services in connection with an Event of Default specified in Section
501(5) or (6), the Holders by their acceptance of the Securities hereby agree
that such expenses and the compensation for such services are intended to
constitute expenses of administration under
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any bankruptcy law. "Trustee" for purposes of this Section 607 shall include any
predecessor Trustee, but the negligence or bad faith of any Trustee shall not
(except to the extent otherwise required by law) affect the indemnification of
any other Trustee.
SECTION 608. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the laws of the United States of
America, any State thereof, or the District of Columbia, authorized under such
laws to exercise corporate trust powers, having a combined capital and surplus
of at least U.S.$50,000,000, subject to supervision or examination by federal or
state authority and in good standing. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article and a
successor shall be appointed pursuant to Section 609.
SECTION 609. Resignation and Removal; Appointment
of Successor.
(a) No resignation or removal of the Trustee and no appointment
of a successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 610.
(b) The Trustee may resign at any time by giving written notice
thereof to the Company. If the instrument of acceptance by a successor Trustee
required by Section 610 shall not have been delivered to the Trustee within 30
days after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
(c) The Trustee may be removed at any time by Act of the Holders
of a majority in principal amount of the Outstanding Securities, delivered to
the Trustee and the Company.
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(d) If at any time:
(1) the Trustee shall cease to be eligible under this Article and
shall fail to resign after written request therefor by the Company or by any
Holder of a Security who has been a bona fide Holder of a Security for at
least six months, or
(2) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent or a receiver of the Trustee or of its property shall
be appointed or any public officer shall take charge or control of the
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation,
then, in any such case (i) the Company by a Board Resolution may remove the
Trustee, or (ii) subject to Section 514, any Holder of a Security who has been a
bona fide Holder of a Security for at least six months may, on behalf of himself
and all others similarly situated, petition any court of competent jurisdiction
for the removal of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable
of acting, or if a vacancy shall occur in the office of Trustee for any cause,
the Company, by a Board Resolution, shall promptly appoint a successor Trustee
who shall comply with the applicable requirements of this Section and Section
610. If, within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding Securities
delivered to the Company and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment in accordance
with the applicable requirements of Section 610, become the successor Trustee
and supersede the successor Trustee appointed by the Company. If no successor
Trustee shall have been so appointed by the Company or the Holders and accepted
appointment in the manner required by this Section and Section 610, any Holder
of a Security who has been a bona fide Holder of a Security for at least six
months may, on behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee to all
Holders of Securities in the manner provided in Section 105. Each notice shall
include the name of the successor Trustee and the address of its Corporate Trust
Office.
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SECTION 610. Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Company and to the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers, trusts
and duties of the retiring Trustee; but, on the request of the Company or the
successor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all the
rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder. Upon request of any such successor Trustee,
the Company shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Trustee all such rights, powers and
trusts.
No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be eligible under this Article.
SECTION 611. Merger, Conversion, Consolidation or
Succession to Business.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise eligible under this Article,
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without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities.
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SECTION 612. Authenticating Agent.
The Trustee may, with the consent of the Company, appoint an
Authenticating Agent or Agents acceptable to the Company with respect to the
Securities which shall be authorized to act on behalf of the Trustee to
authenticate Securities issued upon transfer, exchange or substitution pursuant
to this Indenture. The Trustee shall so appoint any such agent required to
effectuate the listing on the Vancouver Stock Exchange contemplated by Section
1007.
Securities authenticated by an Authenticating Agent shall be entitled
to the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder, and every reference in
this Indenture to the authentication and delivery of Securities by the Trustee
or the Trustee's certificate of authentication shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent
and a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall at all times be a
corporation organized and doing business under the laws of the United States of
America, any State thereof, the District of Columbia or the federal or any
provincial laws of Canada, authorized under such laws to act as Authenticating
Agent and subject to supervision or examination by government or other fiscal
authority. If at any time an Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section 612, such Authenticating Agent
shall resign immediately in the manner and with the effect specified in this
Section 612.
Any corporation into which an Authenticating Agent may be merged or
exchanged or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
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under this Section 612, without the execution or filing of any paper or any
further act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Company. Upon receiving such a notice
of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section 612, the Trustee may appoint a successor
Authenticating Agent which shall be acceptable to the Company. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all the rights, powers and duties of its predecessor hereunder, with
like effect as if
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originally named as an Authenticating Agent. No successor Authenticating Agent
shall be appointed unless eligible under the provisions of this Section 612.
The Company agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section 612.
If an Authenticating Agent is appointed with respect to the Securities
pursuant to this Section 612, the Securities may have endorsed thereon, in
addition to or in lieu of the Trustee's certification of authentication, an
alternative certificate of authentication in the following form:
This is one of the Securities referred to in the within-mentioned
Indenture.
__________________________,
as Trustee
By [Authenticating Agent],
as Authenticating Agent
By ___________________________
Authorized Officer
If the Special Warrant Trustee or any other Canadian Person is
appointed to act as an Authenticating Agent with respect to the Securities
pursuant to this Section 612, the Securities may have endorsed thereon, in
addition to or in lieu of the Trustee's certification of authentication, an
alternative certificate of authentication in the following form:
Countersigned for Authentication Only
_______________________,
as Transfer Agent
By ___________________________
Authorized Officer
SECTION 613. Reports by Trustee to Holders.
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(a) The Trustee shall transmit to Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to the
TIA at the times and in the manner provided pursuant thereto. To the extent
that any such report is required by the TIA with respect to any 12-month period,
such report shall cover the 12-month period ending May 15 and shall be
transmitted within 60 days thereafter.
(b) A copy of each report at the time of its mailing to Holders shall
be filed with the United States Securities and Exchange Commission and each
securities exchange on which the Securities are listed. The Company shall
notify the Trustee whenever the Securities become listed on any securities
exchange and any delisting therefrom.
(c) The Trustee shall also transmit any reports made pursuant to this
Section 613 to those parties required to receive them by virtue of the TIA.
SECTION 614. Additional Qualifications and Duties Pursuant to the Trust
Indenture Act.
In addition to the other qualifications and duties required of the
Trustee by this Article Six, the Trustee shall also comply with the following:
(a) the Trustee shall at all times satisfy the requirements of TIA
Sections 310(a)(1), 310(a)(5) and 310(b);
(b) The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated
therein.
(c) The Company shall furnish or cause to be furnished to the
Trustee, at six-month intervals and at such other times as the Trustee shall
request in writing, all information in its possession or control, or the control
of any Paying Agents, regarding the names and addresses of Holders, and the
Trustee shall preserve such information in as current a form as is reasonably
practicable, including any such information received by the Trustee as Paying
Agent.
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ARTICLE SEVEN
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 701. Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not consolidate with or merge into any other Person
or convey, transfer, sell or lease all or substantially all of its properties
and assets to any Person, and the Company shall not permit any Person to
consolidate with or merge into the Company or convey, transfer, sell or lease
all or substantially all of its properties and assets to the Company, unless:
(1) in case the Company shall consolidate with or merge into another
Person or convey, transfer, sell or lease all or substantially all of its
properties and assets to any Person, the Person formed by such consolidation
or into which the Company is merged or the Person which acquires by
conveyance, transfer or sale, or which leases, all or substantially all of
the properties and assets of the Company shall be a corporation, partnership
or trust, shall be organized and validly existing under the laws of the
United States of America, any State thereof or the District of Columbia and
shall expressly assume, by an indenture supplemental hereto, executed and
delivered to the Trustee, in form satisfactory to the Trustee, the due and
punctual payment of the principal of and interest on all of the Securities
and the performance or observance of every covenant of this Indenture on the
part of the Company to be performed or observed and shall have provided for
exchange rights in accordance with Section 1204(a)(5) if applicable;
(2) immediately after giving effect to such transaction and treating
any Indebtedness which becomes an obligation of the Company as a result of
such transaction as having been incurred by the Company at the time of such
transaction, no Event of Default, and no event which, after notice or lapse
of time or both, would become an Event of Default, shall have happened and be
continuing; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger,
conveyance, transfer or lease and, if a supplemental indenture is required in
connection with such transaction, such supplemental indenture comply with
this Article and that all conditions precedent herein provided for relating
to such transaction have been complied with, together with any documents
required under Section 803.
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SECTION 702. Successor Substituted.
Upon any consolidation of the Company with, or merger of the Company
into, any other Person or any conveyance, transfer or lease of all or
substantially all the properties and assets of the Company in accordance with
Section 701, the successor Person formed by such consolidation or into which the
Company is merged or to which such conveyance, transfer or lease is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture with the same effect as if such successor
Person had been named as the Company herein, and thereafter, except in the case
of a lease, the predecessor Person shall be relieved of all obligations and
covenants under this Indenture and the Securities.
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ARTICLE EIGHT
SUPPLEMENTAL INDENTURES
SECTION 801. Supplemental Indentures Without Consent of
Holders of Securities.
Without the consent of any Holders of Securities, the Company, when
authorized by a Board Resolution, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto, for any of the
following purposes:
(1) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants and obligations of the
Company herein and in the Securities as permitted by this Indenture; or
(2) to add to the covenants of the Company for the benefit of the
Holders of Securities, or to surrender any right or power herein conferred
upon the Company; or
(3) to make provision with respect to the exchange rights of Holders
of Securities pursuant to Section 1204(a)(5);
(4) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein or which is
otherwise defective, or to make any other provisions with respect to matters
or questions arising under this Indenture as the Company and the Trustee may
deem necessary or desirable, provided, such action pursuant to this clause
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(4) shall not adversely affect the interests of the Holders of Securities; or
(5) subject to Section 508, to comply, by a non-material modification
of terms, with the requirements or suggestions of any official or semi-
official regulatory or self-regulatory body having jurisdiction over the
Company or the Securities, provided, however, that nothing in this paragraph
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(5) shall permit any modification disadvantageous in any material respect to
the Holders without the consent or vote of Holders pursuant to the procedures
specified in Section 802.
Upon Company Request, accompanied by a Board Resolution authorizing
the execution of any such supplemental indenture, and subject to and upon
receipt by the Trustee of the documents described in Section 803 hereof, the
Trustee shall join with the Company in the execution of any supplemental
indenture authorized or permitted by the
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terms of this Indenture and to make any further appropriate agreements and
stipulations which may be therein contained.
SECTION 802. Supplemental Indentures with Consent of
Holders of Securities.
With either (a) the written consent of the Holders of not less than a
majority in principal amount of the Outstanding Securities, by the Act of said
Holders delivered to the Company and the Trustee, or (b) by the adoption of a
resolution, at a meeting of Holders of the Outstanding Securities at which a
quorum is present, by the Holders of two-thirds in principal amount of the
Outstanding Securities represented at such meeting, the Company, when authorized
by a Board Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders of Securities under this
Indenture; provided, however, that no such supplemental indenture shall, without
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the consent or affirmative vote of the Holder of each Outstanding Security
affected thereby,
(1) change the Stated Maturity of the principal of, or any
installment of interest on, any Security, or reduce the principal amount or
the rate of interest payable thereon, or reduce the amount of principal that
would be due and payable upon a declaration of acceleration of the maturity
thereof pursuant to Section 502 or a redemption thereof pursuant to Article
Eleven, or change the coin or currency in which any Security or the interest
thereon or any other amount in respect thereof is payable, or impair the
right to institute suit for the enforcement of any payment in respect of any
Security on or after the Stated Maturity thereof (or, in the case of
redemption on or after the Redemption Date) or, except as permitted by
Section 1204, adversely affect the right to exchange any Security as provided
in Article Twelve, or
(2) reduce the requirements of Section 904 for quorum or voting, or
reduce the percentage in principal amount of the Outstanding Securities the
consent of whose Holders is required for any such supplemental indenture or
the consent of whose Holders is required for any waiver provided for in this
Indenture, or
(3) modify the obligation of the Company to maintain an office or
agency pursuant to Section 1002, or
(4) modify any of the provisions of this Section or Section 513,
except to increase any voting requirements contained herein or therein or to
provide that certain
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other provisions of this Indenture cannot be modified or waived without the
consent of the Holder of each Outstanding Security affected thereby, or
(5) waive a default in the payment of the principal of or interest on
any Security.
It shall not be necessary for any Act of Holders of Securities under
this Section to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.
SECTION 803. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Sections 601 and 603) shall be fully protected in relying upon,
an Opinion of Counsel stating that the execution of such supplemental indenture
is authorized or permitted by this Indenture, that such supplemental indenture
has been duly authorized, executed and delivered by the Company and constitutes
a valid and legally binding obligation of the Company enforceable against the
Company in accordance with its terms. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
SECTION 804. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
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SECTION 805. Reference in Securities to Supplemental
Indentures.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the Company and the
Trustee, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee in exchange for
Outstanding Securities.
SECTION 806. Notice of Supplemental Indentures.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of Section 802, the Company
shall give notice to all Holders of Securities of such fact, setting forth in
general terms the substance of such supplemental indenture, in the manner
provided in Section 105. Any failure of the Company to give such notice, or any
defect therein, shall not in any way impair or affect the validity of any such
supplemental indenture.
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ARTICLE NINE
MEETINGS OF HOLDERS OF SECURITIES
SECTION 901. Purposes for Which Meetings May Be Called.
A meeting of Holders of Securities may be called at any time and from
time to time pursuant to this Article to make, give or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be made, given or taken by Holders of Securities.
SECTION 902. Call, Notice and Place of Meetings.
(a) The Trustee may at any time call a meeting of Holders of
Securities for any purpose specified in Section 901, to be held at such time and
at such place as the Trustee shall determine. Notice of every meeting of
Holders of Securities, setting forth the time and the place of such meeting and
in general terms the action proposed to be taken at such meeting, shall be
given, in the manner provided in Section 105, not less than 21 nor more than 180
days prior to the date fixed for the meeting.
(b) In case at any time the Company, pursuant to a Board Resolution,
or the Holders of at least 10% in principal amount of the Outstanding Securities
shall have requested the Trustee to call a meeting of the Holders of Securities
for any purpose specified in Section 901, by written request setting forth in
reasonable detail the action proposed to be taken at the meeting, and the
Trustee shall not have mailed notice of such meeting within 21 days after
receipt of such request or shall not thereafter proceed to cause the meeting to
be held as provided herein, then the Company or the Holders of Securities in the
amount specified, as the case may be, may determine the time and the place for
such meeting and may call such meeting for such purposes by giving notice
thereof as provided in paragraph (a) of this Section with regard to notice by
the Trustee, for which purpose the Trustee shall, upon written request of the
Company or such Holders, provide the names and addresses of all Holders as
indicated in the Security Register.
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SECTION 903. Persons Entitled to Vote at Meetings.
To be entitled to vote at any meeting of Holders of Securities, a
Person shall be (a) a Holder of one or more Outstanding Securities, or (b) a
Person appointed by an instrument in writing as proxy for a Holder or Holders of
one or more Outstanding Securities by such Holder or Holders. The only Persons
who shall be entitled to be present or to speak at any meeting of Holders shall
be the Persons entitled to vote at such meeting and their counsel, any
representatives of the Trustee and its counsel and any representatives of the
Company and its counsel.
SECTION 904. Quorum; Action.
The Persons entitled to vote a majority in principal amount of the
Outstanding Securities shall constitute a quorum. In the absence of a quorum
within 30 minutes of the time appointed for any such meeting, the meeting shall,
if convened at the request of Holders of Securities, be dissolved. In any other
case, the meeting may be adjourned for a period of not less than 10 days as
determined by the chairman of the meeting prior to the adjournment of such
meeting. In the absence of a quorum at any such adjourned meeting, such
adjourned meeting may be further adjourned for a period not less than 10 days as
determined by the chairman of the meeting prior to the adjournment of such
adjourned meeting (subject to repeated applications of this sentence). Except
as provided in Section 905(d), notice of the reconvening of any adjourned
meeting shall be given as provided in Section 902(a), except that such notice
need only be given not less than five days prior to the date on which the
meeting is scheduled to be reconvened. Notice of the reconvening of an
adjourned meeting shall state expressly the percentage of the principal amount
of the Outstanding Securities which shall constitute a quorum.
At a meeting or an adjourned meeting duly reconvened and at which a
quorum is present as aforesaid, any resolution and all matters (except as
limited by the proviso to Section 802) shall be effectively passed and decided
if passed or decided by the Persons entitled to vote not less than two-thirds in
principal amount of Outstanding Securities represented and entitled to vote at
such meeting.
Any resolution passed or decisions taken at any meeting of Holders of
Securities duly held in accordance with this Section shall be binding on all the
Holders of Securities, whether or not present or represented at the meeting.
The Trustee shall, in the name and at the expense of the Company, notify all the
Holders of Securities of any such resolutions or decisions pursuant to Section
105.
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SECTION 905. Determination of Voting Rights; Conduct
and Adjournment of Meetings.
(a) Notwithstanding any other provisions of this Indenture, the
Trustee may make such reasonable regulations as it may deem advisable for any
meeting of Holders of Securities in regard to proof of the holding of Securities
and of the appointment of proxies and in regard to the appointment and duties of
inspectors of votes, the submission and examination of proxies, certificates and
other evidence of the right to vote, and such other matters concerning the
conduct of the meeting as it shall deem appropriate. Except as otherwise
permitted or required by any such regulations, the holding of Securities shall
be proved in the manner specified in Section 103 and the appointment of any
proxy shall be proved in the manner specified in Section 103.
(b) The Trustee shall, by an instrument in writing, appoint a
temporary chairman (which may be the Trustee) of the meeting, unless the meeting
shall have been called by the Company or by Holders of Securities as provided in
Section 902(b), in which case the Company or the Holders of Securities calling
the meeting, as the case may be, shall in like manner appoint a temporary
chairman. A permanent chairman and a permanent secretary of the meeting shall
be elected by vote of the Persons entitled to vote a majority in principal
amount of the Outstanding Securities represented at the meeting.
(c) At any meeting, each Holder of a Security or proxy shall be
entitled to one vote for each U.S.$1,000 principal amount of Securities held or
represented by him; provided, however, that no vote shall be cast or counted at
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any meeting in respect of any Security challenged as not Outstanding and ruled
by the chairman of the meeting to be not Outstanding. The chairman of the
meeting shall have no right to vote, except as a Holder of a Security or proxy.
(d) Any meeting of Holders of Securities duly called pursuant to
Section 902 at which a quorum is present may be adjourned from time to time by
Persons entitled to vote a majority in principal amount of the Outstanding
Securities represented at the meeting, and the meeting may be held as so
adjourned without further notice.
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SECTION 906. Counting Votes and Recording Action
of Meetings.
The vote upon any resolution submitted to any meeting of Holders of
Securities shall be by written ballots on which shall be subscribed the
signatures of the Holders of Securities or of their representatives by proxy and
the principal amounts at Stated Maturity and serial numbers of the Outstanding
Securities held or represented by them. The permanent chairman of the meeting
shall appoint two inspectors of votes who shall count all votes cast at the
meeting for or against any resolution and who shall make and file with the
secretary of the meeting their verified written reports in duplicate of all
votes cast at the meeting. A record, at least in duplicate, of the proceedings
of each meeting of Holders of Securities shall be prepared by the secretary of
the meeting and there shall be attached to said record the original reports of
the inspectors of votes on any vote by ballot taken thereat and affidavits by
one or more Persons having knowledge of the facts setting forth a copy of the
notice of the meeting and showing that said notice was given as provided in
Section 902 and, if applicable, Section 904. Each copy shall be signed and
verified by the affidavits of the permanent chairman and secretary of the
meeting and one such copy shall be delivered to the Company and another to the
Trustee to be preserved by the Trustee, the latter to have attached thereto the
ballots voted at the meeting. Any record so signed and verified shall be
conclusive evidence of the matters therein stated.
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ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal and Interest.
The Company covenants and agrees that it will duly and punctually pay
the principal of and interest on the Securities in accordance with the terms of
the Securities and this Indenture. The Company will deposit or cause to be
deposited with the Trustee or the Principal Paying Agent, prior to the due date
for any installment of interest, all payments so due, which payments shall be in
immediately available funds on the due date. Any payments so deposited shall be
held in trust for the Holders and the Trustee, and any Paying Agent shall give
notice to the Trustee of any default by the Company in making any payments so
due. Upon maturity of the Securities the Company shall retire the Securities by
making payment in cash, Granges Common Stock or cash and Granges Common Stock as
provided in Section 202.
In the case of any payments of principal due at Stated Maturity, in
whole or in part, in Granges Common Stock, the Company will deposit or cause to
be deposited with the Trustee or the Principal Paying Agent on or before the
fifth Business Day after the Stated Maturity of the Securities the cash due in
accordance with the first sentence of the face of the Securities set forth in
Section 202 and, in the case that the Exchange Property to be released from the
lien of this Indenture for payment on Maturity in accordance with Section 11 of
the Escrow and Pledge Agreement is insufficient to make payment in accordance
with the first sentence of the face of the Securities set forth in Section 202,
the Company shall also deliver on or before such fifth Business Day a sufficient
amount of Granges Common Stock to make up such insufficiency, such cash or stock
to be held in trust for the Holders and the Trustee, and any Paying Agent shall
give notice to the Trustee of any default by the Company in making any such
payments so due.
In the case of any payments of principal due at Stated Maturity made
wholly in cash, such cash will be deposited with the Trustee or the Principal
Paying Agent prior to Stated Maturity, to be held in trust for the Holders and
the Trustee, and any Paying Agent shall give notice to the Trustee of any
default by the Company in making any such payments so due.
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SECTION 1002. Maintenance of Offices or Agencies.
The Company hereby appoints (a) the Corporate Trust Office of the
Trustee as its agent in the Borough of Manhattan, The City of New York, where
Registered Securities may be presented or surrendered for payment, where
Securities may be surrendered for registration of transfer or exchange, where
Securities may be surrendered for exchange and where notices and demands to or
upon the Company in respect of the Securities and this Indenture may be served.
The Company may at any time and from time to time vary or terminate
the appointment of any such agent or appoint any additional agents for any or
all of such purposes; provided, however, that until all of the Securities have
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been delivered to the Trustee for cancellation, or moneys sufficient to pay the
principal of and interest on the Securities have been made available for payment
and either paid or returned to the Company pursuant to the provisions of Section
1003, the Company will maintain an office or agency where Securities may be
presented or surrendered for payment and exchange, where Securities may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Company in respect of, the Securities and this Indenture
may be served. The Company will give prompt written notice to the Trustee, and
notice to the Holders in accordance with Section 105, of the appointment or
termination of any agents and of the location and any change in the location of
any such office or agency.
If at any time the Company shall fail to maintain an office or agency,
or shall fail to furnish the Trustee with the address thereof, presentations and
surrenders may be made and notices and demands may be served on the Corporate
Trust Office of the Trustee.
SECTION 1003. Money for Security Payments To Be Held
in Trust.
If the Company shall act as a Paying Agent, it will, on or before each
due date of the principal of or interest on any of the Securities, segregate and
hold in trust for the benefit of the Persons entitled thereto a sum sufficient
to pay the principal or interest so becoming due until such sums shall be paid
to such Persons or otherwise disposed of as herein provided and the Company will
promptly notify the Trustee of its action or failure so to act.
The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:
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(1) hold all sums held by it for the payment of the principal of or
interest on Securities for the benefit of the Persons entitled thereto until
such sums shall be paid to such Persons or otherwise disposed of as herein
provided;
(2) give the Trustee notice of any default by the Company (or any
other obligor upon the Securities) in the making of any payment of principal
or interest; and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so held
by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent and the Company shall be released from all further liability
with respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of or interest on any
Security and remaining unclaimed for two years after such principal or interest
has become due and payable shall be paid to the Company on Company Request, or
(if then held by the Company) shall be discharged from such trust; and the
Holder of such Security shall thereafter, as an unsecured general creditor, look
only to the Company for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease; provided, however, that the
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Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Company cause to be published once, in an Authorized
Newspaper in each Place of Payment, notice that such money remains unclaimed and
that, after a date specified therein, which shall not be less than 30 days from
the date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
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SECTION 1004. Corporate Existence.
Subject to Article Seven, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence, rights (charter and statutory) and franchises; provided, however,
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that the Company shall not be required to preserve any such right or franchise
if the Board of Directors, or Chief Executive Officer and Chief Financial
Officer of the Company jointly, determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company and that the loss
thereof is not disadvantageous in any material respect to the Holders.
SECTION 1005. Maintenance of Properties.
The Company will cause all properties used or useful in the conduct of
its business or the business of any Subsidiary to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment
and will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of the Company may
be necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided, however, that
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nothing in this Section shall prevent the Company from discontinuing the
operation or maintenance of any of such properties if such discontinuance is, in
the judgment of the Company, desirable in the conduct of its business or the
business of any Subsidiary and not disadvantageous in any material respect to
the Holders.
SECTION 1006. Payment of Taxes and Other Claims.
The Company will promptly pay or discharge, or cause to be paid or
discharged, before the same may become delinquent, (1) all taxes, assessments
and governmental charges levied or imposed upon the Company or any Subsidiary or
upon the income, profits or property, real or personal, or upon any part
thereof, of the Company or any Subsidiary, and (2) all claims for labor,
materials and supplies which, if unpaid, might by law become a lien or charge
upon the property of the Company or any Subsidiary; provided, however, that
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neither the Company nor any Subsidiary shall be required to pay or discharge or
cause to be paid or discharged any such tax, assessment, charge or claim (i)
whose amount, applicability or validity is being contested in good faith by
appropriate proceedings, or (ii) if the effect of such failure to pay or
discharge would not have a material adverse effect on the assets, business,
operations, properties or condition (financial or otherwise) of the Company and
its Subsidiaries taken as a whole.
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SECTION 1007. Registration and Listing.
The Company shall, for the benefit of Holders, as soon as practicable,
file (or cause to be filed): (i) a preliminary prospectus and final prospectus
(the "Prospectus") in the Canadian Provinces of Ontario and British Columbia
qualifying the distribution of the Securities and (ii) a registration statement
or registration statements (the "1933 Registration Statement") under the 1933
Act, registering the Securities and the underlying shares of Granges Common
Stock for resale, and shall also file (or cause to be filed) all required
filings with state securities or "blue sky" administrators in the states where
the Holders of the Securities propose to offer and sell the Securities and the
underlying shares of Granges Common Stock (the "Blue Sky Filings"). Subject to
the following paragraph, the Company shall use its best efforts to cause
receipts to be issued by the securities commissions in Ontario and British
Columbia for the (final) Prospectus and to cause the 1933 Registration Statement
and Blue Sky Filings to become effective not later than the Qualification
Deadline and to cause the 1933 Registration Statement and the Blue Sky Filings
to remain effective and current until the date which is three years after the
latest date on which Granges Common Stock is acquired pursuant to the Indenture
by Holders; provided, however, that the Company may, upon notice to the Holders
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of Securities, temporarily suspend sales under the 1933 Registration Statement
during any reasonable period in which its board of directors determines, in good
faith, that because of material corporate changes, it would not be feasible to
maintain a current prospectus during such period, provided, further, that in
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such event, the Company will, at the earliest possible time thereafter, take all
necessary steps to update the prospectus disclosure and notify the Holders that
sales under the 1933 Registration Statement may resume. The Company shall
further, as soon as practicable, file (or cause to be filed) with the SEC a
registration statement (the "1934 Registration Statement") under the 1934 Act,
registering the Securities under Section 12(b) of the 1934 Act, and shall use
its best efforts to cause the 1934 Registration Statement to become effective
not later than the Qualification Deadline and to remain effective throughout the
term of the Securities.
The Prospectus, the 1933 Registration Statement, the Blue Sky Filings
and the 1934 Registration Statement shall collectively be referred to
hereinafter as the "Registration Filings". In the event that the Registration
Filings are not made effective (or, in the case of the (final) Prospectus, the
securities commissions in Ontario or British Columbia have not issued receipts
therefor) on or before the Qualification Deadline, the Company shall, unless all
Special Warrants are retracted and cancelled pursuant to the Underwriting
Agreement, be obligated to complete the Registration Filings and to make such
filings effective as soon as practicable after the Qualification Deadline and
cause the 1933 Registration Statement, the Blue Sky filings and the 1934
Registration Statement to remain effective for the period set forth herein.
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The Company will cause the Securities to be listed, posted and called
for trading on the Vancouver Stock Exchange (and will use its best efforts to
have the Securities listed, posted and called for trading on the New York Stock
Exchange or such other U.S. securities exchange as is acceptable to the
Underwriters) not later than the earlier of either (i) the fifth Business Day
following the date upon which the requirements of the paragraph above have been
fulfilled or (ii) the first Business Day which is twelve months after November
10, 1995. The Company will maintain such listings throughout the term of the
Securities.
SECTION 1008. Statement by Officers as to Default.
The Company shall deliver to the Trustee within 120 days after the end
of each fiscal year of the Company an Officers' Certificate stating that in the
course of performance by the signers of their duties as such officers of the
Company they would normally obtain knowledge of whether any default exists in
the performance and observance of any of the terms, provisions and conditions of
this Indenture and whether the Company has kept, observed, performed and
fulfilled its obligations under this Indenture. Such Certificate shall further
state, as to each such officer signing such Certificate, to the best of the
knowledge of such officer, as of the date of such Officers' Certificate, (a)
whether any such default exists, (b) whether the Company during the preceding
fiscal year kept, observed, performed and fulfilled each and every covenant and
obligation of the Company under this Indenture and (c) whether there was any
default in the performance and observance of any of the terms, provisions or
conditions of this Indenture during such preceding fiscal year. If the officers
signing the Certificate know of such a default, whether then existing or
occurring during such preceding fiscal year, the Officers' Certificate shall
describe such default and its status with particularity. The Company shall also
promptly notify the Trustee if the Company's fiscal year is changed so that the
end thereof is on any date other than the then current fiscal year end date.
The Company will deliver to the Trustee, forthwith upon becoming aware
of any default in the performance or observance of any covenant, agreement or
condition contained in this Indenture, or any Event of Default, an Officers'
Certificate specifying with particularity such default or Event of Default and
further stating what action the Company has taken, is taking or proposes to take
with respect thereto.
Any notice required to be given under this Section 1008 shall be
delivered to the Trustee at its Corporate Trust Office.
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ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. Right of Redemption.
The Securities may be redeemed in accordance with the provisions of
the form of Securities set forth in Section 202, provided, however, that no
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fractional shares of Granges Common Stock (or any form of fractional interest in
any other security which is part of the Exchange Property) shall be delivered
upon redemption of Securities. If more than one Security held by a Holder shall
be redeemed at one time, the number of whole shares (or other integral units of
securities), which shall be delivered upon payment shall be computed on the
basis of the aggregate principal amount of the Securities (or specified portions
thereof to the extent permitted hereby) so redeemed. Instead of any fractional
share (or other fractional unit) which would otherwise be deliverable upon
redemption of any Security or Securities (or specified portions thereof), the
Escrow Agent on behalf of the Company shall pay (but only from the sources
specified below) a cash adjustment in respect of such fractional interest in an
amount equal to the quotient obtained by dividing the product of the fractional
amount of such fractional share and one hundred by the Exchange Rate. The
Company shall deliver to the Escrow Agent, or at its option authorize the Escrow
Agent to obtain by the sale of shares of Granges Common Stock (or other
securities which are part of the Exchange Property) held by it, the funds
necessary or anticipated by the Escrow Agent to be necessary for payment of such
fractional interests, provided that after such sale the number of shares of
Granges Common Stock (and of such other securities) held by it as Exchange
Property shall be sufficient to permit the exchange of all Outstanding
Securities for Granges Common Stock (and any other Exchange Property), on the
basis of the Exchange Rate then in effect, in accordance with the provisions of
Article Twelve. The Company agrees to furnish or cause to be furnished to the
Escrow Agent any additional funds required to permit such cash payments in
respect of fractional interests.
SECTION 1102. Applicability of Article.
Redemption of Securities at the election of the Company or otherwise,
as permitted or required by any provision of the Securities or this Indenture,
shall be made in accordance with such provision and this Article Eleven.
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SECTION 1103. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be
evidenced by a Board Resolution. In case of any redemption at the election of
the Company of any of the Securities, the Company shall, not more than 60 nor
less than 40 days prior to the Redemption Date fixed by the Company (unless a
shorter notice shall be satisfactory to the Trustee), notify the Trustee in
writing of such Redemption Date which notice shall be revocable until the time
the notice of the redemption pursuant to Section 1104 is given. If the
Securities are to be redeemed pursuant to an election of the Company which is
subject to a condition specified in the form of Securities set forth in Section
202, the Company shall furnish the Trustee with an Officers' Certificate stating
that the Company is entitled to effect such redemption and setting forth a
statement of facts showing that the conditions precedent to the right of the
Company so to redeem have occurred.
In case of the Company's election to pay the principal due upon
redemption, in whole or in part, in shares of Granges Common Stock, the Company
shall, not less than 30 days prior to the Redemption Date fixed by the Company,
notify the Trustee in writing of such election. Not less than 20 days prior to
the Redemption Date, the Trustee shall notify Holders, in the manner provided in
Section 105, of any such election.
SECTION 1104. Notice of Redemption.
Notice of redemption shall be given in the manner provided in Section
105 to the Holders of Securities to be redeemed not less than 30 nor more than
60 days prior to the Redemption Date, and such notice shall be irrevocable.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price, and accrued interest, if any,
(3) if then known, whether payment of principal will be made wholly
in cash or in cash and Granges Common Stock or wholly in Granges Common
Stock,
(4) that on the Redemption Date the Redemption Price, and accrued
interest, if any, will become due and payable upon each such Security to be
redeemed, and that interest thereon shall cease to accrue on and after said
date,
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(5) the Exchange Rate, the date on which the right to exchange the
Securities to be redeemed will terminate and the places where such Securities
may be surrendered for exchange,
(6) the place or places that any certificate required by Section 311
shall be delivered, and the form of such certificate,
(7) the place or places where such Securities are to be surrendered
for payment of the Redemption Price and accrued interest, if any, and
(8) the serial and CUSIP numbers (if any) of the Securities called
for redemption and the portions thereof called for redemption.
Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name of and at the expense of the Company.
SECTION 1105. Deposit of Redemption Price.
In the case of any payment to be made solely in cash, one Business Day
prior to any Redemption Date, the Company shall deposit with the Trustee or with
the Principal Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money (all of which shall be in immediately available form on such Redemption
Date) sufficient to pay such Redemption Price of and accrued interest on, all
the Securities which are to be redeemed on that date other than any Securities
called for redemption on that date which have been exchanged prior to the date
of such deposit.
In the case of any payment to be made in whole or in part in Granges
Common Stock, the Company will deposit or cause to be deposited with the Trustee
or the Principal Paying Agent on or before the fifth Business Day after the
Redemption Date of the Securities any cash due in accordance with the reverse of
the Securities set forth in Section 202 and, in the case that the Exchange
Property to be released from the lien of this Indenture for payment on
Redemption in accordance with Section 11 of the Escrow and Pledge Agreement is
insufficient to make payment in accordance with the reverse of the Securities
set forth in Section 202, the Company shall also deliver by such fifth Business
Day a sufficient amount of Granges Common Stock to make up such insufficiency,
If any Security called for redemption is exchanged, any money
deposited with the Trustee or with a Paying Agent or so segregated and held in
trust for the
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redemption of such Security shall (subject to any right of the Holder of such
Security or any Predecessor Security to receive interest as provided in the last
paragraph of Section 307) be paid to the Company on Company Request or, if then
held by the Company, shall be discharged from such trust.
SECTION 1106. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified; provided, however, that any payment made in
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whole or in part in Granges Common Stock (including any cash payable therewith)
may be made up to five Business Days after the Redemption Date, and any such
payment made within such period shall be deemed paid on the Redemption Date, and
from and after such Redemption Date (unless the Company shall default in the
payment of the Redemption Price, including accrued interest) such Securities
shall cease to bear interest. Upon surrender of any Security for redemption in
accordance with said notice, such Security shall be paid by the Company at the
Redemption Price together with accrued and unpaid interest to the Redemption
Date; provided, however, that installments of interest on Securities whose
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Stated Maturity is on or prior to the Redemption Date shall be payable to the
Holders of such Securities, or one or more Predecessor Securities, registered as
such on the relevant Record Date according to their terms and the provisions of
Section 307.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal amount of such Security shall,
until paid, bear interest from the Redemption Date at a rate of 7% per annum and
each Security shall remain exchangeable into Granges Common Stock until the
principal of such Security (or portion thereof, as the case may be) shall have
been paid or duly provided for.
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ARTICLE TWELVE
EXCHANGE OF SECURITIES
SECTION 1201. Right of Exchange.
Subject to and upon compliance with the provisions of this Article
Twelve, at the option of the Holder thereof, any Security may, at any time on or
before the close of business on October 25, 2000, or in the case of Securities
called for redemption in accordance with Section 1101, on or before the close of
business on the Business Day next preceding the Redemption Date (unless the
Company shall default in the payment of the Redemption Price), be exchanged for
fully paid and non-assessable shares (calculated as to each exchange to the
nearest 1/1,000 of a share) of Granges Common Stock (and other Exchange
Property, if any, as provided in this Article) at the Exchange Rate hereinafter
provided.
The rate at which shares of Granges Common Stock shall be deliverable
upon exchange of each U.S.$100.00 principal amount of Securities (herein called
the "Exchange Rate") shall be initially 42.50 shares of Granges Common Stock.
The Exchange Rate shall be subject to adjustment as provided in Sections 1204
and 1213.
SECTION 1202. Method of Exchange.
Subject to the requirement of prior notice set forth in the reverse of
the form of Security set forth in Section 202, in order to exercise the right of
exchange, the Holder of any Security to be exchanged shall surrender such
Security for exchange by delivering such Security, duly endorsed or assigned to
the Company or in blank, to the Company at the Corporate Trust Office of the
Escrow Agent, or at such other office or agency of the Company as may be
designated by it for such purpose, or at such other offices or agencies as the
Company may designate. Securities surrendered shall be accompanied in each
case by written notice, substantially in the form set forth in Section 204 (with
an appropriate box filled in or accompanied by an opinion of counsel with
substantial experience in practice under the 1933 Act and otherwise reasonably
acceptable to the Company, that the Holder's exercise of its right to exchange
is in compliance with the 1933 Act), that the Holder elects to exchange such
Security or, if less than the entire principal amount of a Security is to be
exchanged, the portion thereof to be exchanged, which shall be in an authorized
denomination.
As promptly as practicable after the proper surrender of such Security
for exchange as aforesaid (subject however to the following paragraph of this
Section 1202) and
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in accordance with the procedures set forth in the Escrow and Pledge Agreement
the Company shall deliver or cause the Escrow Agent to deliver at said office or
agency to such Holder, or on his written order, a certificate or certificates
for the number of whole shares of Granges Common Stock and any other Exchange
Property deliverable upon exchange of such Security (or specified portion
thereof), and a check payable to such Holder for any interest accrued on the
principal amount exchanged to the date upon which such Security shall have been
properly surrendered. In addition, provision shall be made for any fraction of a
share as provided in Section 1203. Such exchange shall be deemed to have been
effected immediately prior to the close of business on the date on which such
Security shall have been properly surrendered for exchange as aforesaid, and at
such time the rights of the Holder of such Security as a Holder shall cease and
the Person or Persons in whose name or names any certificate or certificates for
shares of Granges Common Stock or other Exchange Property shall be deliverable
upon such exchange shall, as between such Person or Persons and the Escrow
Agent, be deemed to have become the holder or holders of record of the shares
represented thereby.
Delivery of such certificate or certificates and of any check for any
cash may be delayed for a reasonable period at the request of the Company in
order to effectuate the calculations of the adjustments pursuant to this Article
Twelve, to obtain any certificate representing securities to be delivered or to
complete any reapportionment of the shares of Granges Common Stock and any other
Exchange Property apportioned thereto which is required by this Article Twelve.
If, between the date of exchange and the date of delivery of the applicable
security or securities, such security or securities shall cease to have any or
certain rights, or a record date or effective date of a transaction to which
Section 1204 applies shall occur, the Person entitled to receive such security
or securities shall be entitled only to receive such security or securities as
so modified and any dividends or proceeds received thereon on or after the date
of exchange, and the Company, the Trustee and the Escrow Agent shall not be
otherwise liable with respect to the modification, from the date of exchange to
the date of such delivery, of such security or securities.
Except as otherwise expressly provided in this Indenture, no payment
or adjustment shall be made upon any exchange on account of any interest after
the date on which the Securities are properly surrendered or on account of any
dividends on the Granges Common Stock or other Exchange Property delivered upon
such exchange.
In the case of any Security which is exchanged in part only, upon such
exchange the Company shall execute and the Trustee shall authenticate and
deliver to the Holder thereof, at the expense of the Company, a new Security or
Securities of authorized denominations in principal amount equal to the
unexchanged portion of such Security.
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If shares of Granges Common Stock to be issued upon exchange of a
Restricted Security, or Securities to be issued upon exchange of a Restricted
Security in part only, are to be registered in a name other than that of the
beneficial owner of such Restricted Security, then such Holder must deliver to
the Escrow Agent a certificate in substantially the form set forth in Section
311, dated the date of surrender of such Restricted Security and signed by such
beneficial owner, as to compliance with the restrictions on transfer applicable
to such Restricted Security. Neither the Trustee nor the Escrow Agent,
Registrar or Transfer Agent shall be required to register in a name other than
that of the Holder shares of Granges Common Stock or Securities issued upon
exchange of any such Restricted Security not so accompanied by a properly
completed certificate.
SECTION 1203. Fractional Interests.
No fractional shares of Granges Common Stock (or any form of
fractional interest in any other security which is part of the Exchange
Property) shall be delivered upon exchange of Securities. If more than one
Security shall be surrendered for exchange at one time by the same Holder, the
number of whole shares (or other integral units of securities), which shall be
delivered upon exchange shall be computed on the basis of the aggregate
principal amount of the Securities (or specified portions thereof to the extent
permitted hereby) so surrendered. Instead of any fractional share (or other
fractional unit) which would otherwise be deliverable upon exchange of any
Security or Securities (or specified portions thereof), the Escrow Agent on
behalf of the Company shall pay (but only from the sources specified below) a
cash adjustment in respect of such fractional interest in an amount equal to the
quotient obtained by dividing the product of the fractional amount of such
fractional share and one hundred by the Exchange Rate. The Company shall deliver
to the Escrow Agent, or at its option authorize the Escrow Agent to obtain by
the sale of shares of Granges Common Stock (or other securities which are part
of the Exchange Property) held by it, the funds necessary or anticipated by the
Escrow Agent to be necessary for payment of such fractional interests, provided
that after such sale the number of shares of Granges Common Stock (and of such
other securities) held by it as Exchange Property shall be sufficient to permit
the exchange of all Outstanding Securities for Granges Common Stock (and any
other Exchange Property), on the basis of the Exchange Rate then in effect, in
accordance with the provisions of this Article. The Company agrees to furnish or
cause to be furnished to the Escrow Agent any additional funds required to
permit such cash payments in respect of fractional interests.
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SECTION 1204. Adjustment of Exchange Rate.
(a) The Exchange Rate shall be subject to adjustments from time to
time as follows:
(1) In case Granges, at any time or from time to time after November
10, 1995, shall declare, order, pay or make a dividend or other distribution
(including, without limitation, any distribution of other or additional stock or
other securities or property or options by way of dividend or spinoff,
reclassification, recapitalization, merger or consolidation in which Granges is
the continuing or resulting corporation, or similar corporate rearrangement) on
the Granges Common Stock, other than a regular periodic cash dividend declared
out of accumulated earnings of Granges or enter into any agreement for the
issuance of Granges Common Stock (or securities convertible onto or exchangeable
for Granges Common Stock) at a cash price per share (or having a conversion or
exchange price per share) less than the Average Market Price (the date upon
which the Company announces its intention to make such issuance being the
relevant record date), then, and in each such case, the Exchange Rate in effect
immediately prior to the close of business on the record date fixed for the
determination of the persons entitled to receive such dividend or distribution
shall be adjusted, effective as of the close of business on such record date, by
multiplying such Exchange Rate by the quotient obtained by dividing (all amounts
being calculated to the nearest cent or 1/100 of a share, as the case may be)
the Average Market Price in effect on such record date, by such Average Market
Price less the amount of such dividend or distribution (as determined in good
faith by the Board of Directors of the Company) applicable to one share of
Granges Common Stock.
As used in this Section 1204(a)(1), the term "Average Market Price"
means the average closing trading price of Granges Common Stock on the American
Stock Exchange (or, if Granges Common Stock is not then listed on the American
Stock Exchange, the stock exchange or over-the-counter market upon which the
Granges Common Stock is traded which, in aggregate, has the highest dollar
trading volume) during a 20 consecutive trading day period ending one day prior
to the record date fixed for the determination of the persons entitled to
receive such dividend or distribution. Should Granges Common Stock not be
traded on any stock exchange or over-the-counter market, then "Average Market
Price" shall mean the fair value of Granges Common Stock over such twenty-day
period as determined in good faith by an investment banking firm retained in
good faith by the Company and which is a member of the New York Stock Exchange
or the Toronto Stock Exchange.
(2) In case Granges, at any time or from time to time after November
10, 1995, shall effect a subdivision of the outstanding shares of Granges Common
Stock into a greater number of shares of Granges Common Stock (by
reclassification or except by
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payment of a dividend in Granges Common Stock), then, and in each such case, the
Exchange Rate in effect immediately prior to such subdivision shall,
concurrently with the effectiveness of such subdivision, be proportionately
increased to reflect such transaction, as determined by the Board of Directors
of the Company.
(3) In case the outstanding shares of Granges Common Stock shall be
combined or consolidated, by reclassification or otherwise, into a lesser number
of shares of Granges Common Stock, the Exchange Rate in effect immediately prior
to such combination or consolidation shall, concurrently with the effectiveness
of such combination or consolidation, be proportionately decreased to reflect
such transaction, as determined by the Board of Directors of the Company.
(4) All determinations by the Board of Directors of the Company under
the provisions of this Indenture shall be made in good faith with due regard to
the interests of the Holder, and in accordance with good financial practice.
(5) In case Granges (i) shall consolidate with or merge into any
other person and shall not be the continuing or surviving corporation in such
consolidation or merger, or (ii) shall permit any other person to consolidate
with or merge into Granges and Granges shall be the continuing or surviving
person but, in connection with such consolidation or merger, the Granges Common
Stock shall be changed into or exchanged for stock or other securities of any
other person or cash or any other property, or (iii) shall transfer all or
substantially all of its properties or assets to any other person, or (iv) shall
effect a capital reorganization or reclassification of the Granges Common Stock,
then, and in each such case, the Company shall execute and deliver to the
Trustee a supplemental indenture, and to the Escrow Agent a supplement to the
Escrow and Pledge Agreement, providing that, upon the basis and the terms and in
the manner provided in this Section 1204(a)(5), each Holder, upon the exercise
of any exchange privilege provided herein at any time after the consummation of
such consolidation, merger, transfer, reorganization or reclassification, shall
be entitled to receive at the aggregate Exchange Rate in effect at the time of
such consummation for all Granges Common Stock issuable upon such exchange
immediately prior to such consummation, in lieu of the Granges Common Stock
issuable upon such exchange prior to such consummation, the stock and other
securities, cash and property to which such Holder would have been entitled upon
such consummation if such Holder had exercised its exchange privilege hereunder
immediately prior thereto, provided, however, that such Holder (i) is not a
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Person with which Granges consolidated or into which Granges merged or which
merged into Granges or to which such conveyance, transfer or lease was made, as
the case may be (a "Constituent Person"), or an Affiliate of a Constituent
Person and (ii) failed to exercise his rights of election, if any, as to the
kind or amount of securities, cash and other property receivable upon such
consolidation, merger, conveyance, transfer or lease (provided that if the kind
or amount of securities, cash and other property
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receivable upon such consolidation, merger, conveyance, transfer or lease is not
the same for each share of Granges Common Stock held immediately prior to such
consolidation, merger, conveyance, transfer or lease by others than a
Constituent Person or any Affiliate thereof and in respect of which such rights
of election shall not have been exercised ("Non-Electing Shares"), then for the
purpose of this Section the kind and amount of securities, cash and other
property receivable upon such consolidation, merger, conveyance, transfer or
lease by the holders of each Non-Electing Share shall be deemed to be the kind
and amount so receivable per share by a plurality of the Non-Electing Shares),
and in each case subject to adjustments (subsequent to such corporate action) as
nearly equivalent as possible to the adjustments provided for herein.
Notice of any such supplemental indenture shall as soon as practicable
be filed with the Escrow Agent and mailed by or on behalf of the Company to the
Holders at their last addresses as they shall appear on the Security Register.
Neither the Trustee nor the Escrow Agent shall be under any
responsibility to determine the correctness of any provisions contained in any
such supplemental indenture relating either to the kind or amount of shares of
stock or securities or property or cash receivable by the Holders upon the
exchange of their Securities as herein provided after any such consolidation,
merger, sale or transfer or to any adjustment to be made with respect thereto.
(6) No adjustment in the Exchange Rate shall be required unless such
adjustment would require an increase or decrease of at least one percent in the
Exchange Rate; provided, however, that any adjustments which by reason of this
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Section 1204 are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Article shall
be made to the nearest cent or to the nearest one-hundredth of a share, as the
case may be.
(7) In case any event shall occur as to which the provisions of this
Section 1204 are not strictly applicable but the failure to make an adjustment
would not fairly protect the exchange rights represented by this Indenture and
the Securities in accordance with the essential intent and principles of this
Section, then, in each such case, the Company shall appoint a firm of
independent certified public accountants of recognized national standing (which
may be the regular independent auditors of the Company), which shall give their
opinion upon the adjustment, if any, on a basis consistent with the essential
intent and principles established in this Section 1204, necessary to preserve,
without dilution, the exchange rights represented by this Indenture and the
Securities. Upon receipt of such opinion, the Company will promptly mail a copy
thereof to the Holders and shall make the adjustments described therein.
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(b) In the case of any adjustment or readjustment in the shares of
Granges Common Stock issuable upon the exchange of Securities pursuant to this
Article Twelve, the Company at its expense will promptly compute such adjustment
or readjustment in accordance with the terms of this Indenture and prepare a
report setting forth such adjustment or readjustment and showing in detail the
facts upon which such adjustment or readjustment is based. The Company will
forthwith mail a copy of each such report to the Trustee and to each Holder, and
will, upon the written request at any time of such Holder, furnish to each
Holder a like report setting forth the Exchange Rate at the time in effect and
showing how it was calculated. The Company will also keep copies of all such
reports at its principal office and will cause the same to be available for
inspection at such office during normal business hours by each Holder or any
prospective purchaser of Securities designated by a Holder.
(c) Distributions giving rise to an adjustment to the Exchange
Rate pursuant to paragraph (a) of this Section 1204 shall become Exchange
Property subject to the lien of this Indenture. In the event that any increase
in the Exchange Rate shall cause the aggregate amount of Granges Common Stock
deliverable upon exchange of all Outstanding Securities to exceed the number of
shares of Granges Common Stock constituting Exchange Property, the amount of any
such excess shall be satisfied by apportioning to each Holder, in proportion to
the principal amount of Outstanding Securities held, such Exchange Property as
is not Granges Common Stock.
SECTION 1205. Escrow and Pledge Agreement.
(a) The Company simultaneously with the execution and delivery of
this Indenture is entering into the Escrow and Pledge Agreement with the Trustee
as Escrow Agent, pursuant to which it is depositing with the Escrow Agent, and
granting a security interest for the benefit of the Trustee and the Holders in,
1 share of Granges Common Stock for each $1.18 of principal amount of Special
Warrants issued on the date hereof, or a maximum of 8,474,576 shares of Granges
Common Stock, initially constituting the Exchange Property. The Escrow Agent
shall be the exchange agent for the exchange of Securities for Granges Common
Stock hereunder.
(b) All cash received by the Escrow Agent as herein provided will be
invested upon the written request of the Company by the Escrow Agent from time
to time as so requested by the Company pursuant to the Escrow and Pledge
Agreement.
(c) In the event of any reduction of the principal amount of
Securities Outstanding, as evidenced by the delivery to the Trustee by the
Company of Securities for cancellation, the Exchange Property held by the Escrow
Agent shall be reduced in the same
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proportion as the principal amount of the Securities was so reduced, provided,
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that the Escrow Agent shall retain a sufficient amount of Exchange Property to
exchange all Securities then Outstanding on the basis of the then applicable
Exchange Rate and the other terms and provisions of this Article Twelve and of
the Escrow and Pledge Agreement, and the Company shall, upon Company Request, be
entitled to any excess Exchange Property created by such reduction net of any
Exchange Property delivered in connection with any reduction caused by an
exchange pursuant to this Article. Upon expiration of the right to surrender
Securities for exchange pursuant to this Article and when all other obligations
of the Company shall have been satisfied under the Escrow and Pledge Agreement,
the Trustee will cause all Granges Common Stock and cash and investments and
other property held by the Escrow Agent under the Escrow and Pledge Agreement
which are not required with respect to Securities previously surrendered for
exchange to be delivered by the Escrow Agent to the Company pursuant to the
terms of the Escrow and Pledge Agreement.
(d) The Escrow Agent shall not make any distribution of Exchange
Property to the Company prior to the receipt by the Escrow Agent from the
Company of an Officers' Certificate to the effect that no Event of Default
exists hereunder and no event or condition exists hereunder which with notice or
lapse of time or both would become such an Event of Default and which states in
detail the basis asserted by the Company for such distribution.
(e) The obligations, covenants and agreements contained in the Escrow
and Pledge Agreement shall not constitute obligations, covenants or agreements
contained in this Indenture or any of the Securities and neither the failure by
the Company to observe any obligation, covenant or agreement contained in the
Escrow and Pledge Agreement nor the failure of the Escrow Agent to fulfill any
obligations, agreements or covenants set forth therein shall constitute (with or
without the giving of notice, the passage of time or both) an Event of Default;
provided, however, that nothing in this paragraph shall impair the right of a
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Holder to receive the Exchange Property apportioned to such Holder's Securities
in exchange for such Securities in accordance with the terms and conditions of
this Article Twelve, and nothing in this paragraph shall impair the rights and
remedies of the Trustee and the Holders under Article Five with respect to a
failure by the Company to observe its express agreements and covenants to cause
the exchange of Securities actually surrendered for exchange pursuant to this
Article Twelve for Exchange Property apportioned thereto in accordance with the
terms and conditions of this Article Twelve.
SECTION 1206. Company to Give Notice of Certain Events.
In case at any time after November 10, 1995:
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(a) Granges shall declare a dividend (or any other distribution)
on the Granges Common Stock which the Escrow Agent would be entitled to hold
and apply for the benefit of the Holders of the Securities in accordance with
Sections 1204 or 1305; or
(b) there shall occur any reclassification of Granges Common
Stock (other than a subdivision or combination of outstanding shares of
Granges Common Stock) or any consolidation or merger to which Granges is a
party and for which approval of any stockholders of Granges is required, or
the sale or transfer of all or substantially all of the assets of Granges; or
(c) there shall occur the voluntary or involuntary dissolution,
liquidation or winding up of Granges:
then the Company shall cause to be filed at each office or agency maintained
pursuant to Section 1002, and shall cause to be mailed to the Holders of
Securities at their last addresses as they shall appear upon the Security
Register, at least 20 days or such shorter period which may be necessary under
the circumstances (or six days in any case specified in Clause (a) above) prior
to the record date or other applicable date hereinafter specified, a notice
stating (x) the date, if known by the Company, on which a record is to be taken
for the purpose of such dividend, distribution or rights, or, if a record is not
to be taken, the date as of which the holders of Granges Common Stock of record
to be entitled to such dividend or distribution are to be determined, or (y) the
date, if known by the Company, on which such reclassification, merger,
consolidation, sale, transfer, dissolution, liquidation or winding up is
expected to become effective, and the date as of which it is expected that
holders of Granges Common Stock of record shall be entitled to exchange their
shares of Granges Common Stock for securities or other property deliverable upon
such reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up.
SECTION 1207. Covenant by the Company.
So long as any Securities shall be Outstanding and exchangeable
pursuant to this Article, the Company shall use its best efforts to preserve
unimpaired the right of each Holder of Securities, upon exchange thereof, to
receive shares of Granges Common Stock or all other securities, cash or other
property as such Holder shall from time to time be entitled to receive in
accordance with the provisions of this Article.
SECTION 1208. Transfer Taxes.
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The Company will pay any and all taxes that may be payable in respect
of the transfer and delivery of shares of Granges Common Stock (and any other
securities included in the Exchange Property) pursuant hereto, other than
income, capital gains and similar taxes imposed on any Holder by reason of
exchange of Securities for Exchange Property; provided, however, that the
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Company shall not be required to pay any tax which may be payable in respect of
any transfer involved in the delivery, upon an exchange of Securities, of shares
of Granges Common Stock (or any other securities included in the Exchange
Property) in a name other than that in which the Securities so exchanged were
registered, and no such transfer shall be made unless and until the Person
requesting such transfer has paid to the Company or the Escrow Agent the amount
of any such tax, or has established to the satisfaction of the Company and the
Escrow Agent that such tax has been paid.
SECTION 1209. Fully Paid Shares.
The Company covenants that all shares of Granges Common Stock
delivered upon the exchange of Securities will be fully paid and non-assessable
and that each Holder who receives shares of Granges Common Stock (or other
Exchange Property) in exchange for his Security pursuant to this Article will
receive valid and marketable title to such shares (or other Exchange Property),
free and clear of all claims, liens and encumbrances provided, however, that,
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except as provided in Section 1007, the Company shall bear no responsibility
for, and makes no covenant regarding, restrictions on transferability that may
be imposed under the securities laws of the United States or any State thereof
(including the 1933 Act, the Exchange Act and state securities and Blue Sky
laws), Canada, or any Province thereof, or any authority (including official or
semi-official regulatory or self-regulatory bodies) of any government asserting
jurisdiction. Except as provided in Section 1208 and Section 313, the Company
will pay all taxes, liens and charges with respect to the delivery of Granges
Common Stock (and other Exchange Property) in exchange for Securities hereunder.
SECTION 1210. Cancellation of Securities.
All Securities delivered for exchange shall be delivered by the Escrow
Agent to the Trustee and be cancelled by the Trustee, and the Trustee shall
dispose of the same as provided in Section 309.
SECTION 1211. Obligations of Trustee and Escrow Agent.
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Subject to the provisions of Section 601, neither the Trustee nor the
Escrow Agent shall at any time be under any duty or responsibility to any Holder
of Securities to determine whether any facts exist which may require any
adjustment of the Exchange Rate, or with respect to the nature or extent of any
such adjustment when made, or with respect to the method employed, or herein or
in any supplemental indenture provided to be employed, in making the same.
Neither the Trustee nor the Escrow Agent shall be accountable with respect to
the validity or value (or the kind or amount) of any Exchange Property which may
at any time be issued or delivered upon the exchange of any Security; and
neither the Trustee nor the Escrow Agent makes any representation with respect
thereto. Neither the Trustee nor the Escrow Agent shall be responsible for any
failure of the Company to transfer or deliver any Exchange Property or
certificates or other evidence thereof to the Escrow Agent as provided herein,
or to comply with any of the covenants of the Company contained in this Article
Twelve.
SECTION 1212. Exchange Arrangements in Case of Redemption.
In connection with any redemption of Securities, the Company may
arrange for the purchase and exchange for Exchange Property of all or any part
of such Securities by an arrangement with one or more investment bankers or
other purchasers to purchase such Securities by paying to the Holders thereof,
or to the Trustee in trust for such Holders, on or before the close of business
on the Business Day next preceding the Redemption Date, an amount not less than
the applicable Redemption Price of the Securities to be purchased, plus interest
accrued to the Redemption Date. Notwithstanding anything to the contrary
contained in Article Eleven, the obligation of the Company to pay the Redemption
Price of such Securities, plus interest accrued to the Redemption Date, shall be
satisfied and discharged to the extent such amount is so paid by such
purchasers. Any Securities to be purchased pursuant to such agreement which are
not presented for redemption or not duly surrendered for exchange by the Holders
thereof shall be deemed acquired by such purchasers from the Holders and
surrendered by such purchasers for exchange, all as of immediately prior to the
close of business on the Business Day next preceding the Redemption Date,
subject to payment of the above amount as aforesaid. Notwithstanding anything
to the contrary contained in this Article Twelve, in the event that any
Securities subject to such agreement are surrendered for exchange (other than by
the purchasers) by the close of business on the Business Day next preceding the
Redemption Date, the amounts so paid to the Trustee in trust for the Holders of
the Securities so surrendered for exchange shall be returned to such purchasers.
SECTION 1213. Tax Adjustments in Exchange Rate.
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If an event shall occur which causes the Exchange Rate to be subject
to adjustment pursuant to Section 1204 hereof, or a merger, consolidation or
sale or transfer of assets shall occur requiring a supplemental indenture, and
if, within ten days after the effective date of such transaction the Company
shall furnish the Escrow Agent with an Opinion of Counsel to the effect that
such transaction is taxable to the Company or the Escrow Agent and an Officers'
Certificate as to the amount of federal, state and local tax payable by the
Company and the Escrow Agent as a result of such transaction (computed at the
marginal tax rate applicable to such transaction), the Escrow Agent shall pay
to, or to the order of, the Company, in the case of taxes payable by the
Company, or itself, in the case of taxes payable by it, the cash held by it and
apportioned or to be apportioned to the Exchange Property for which outstanding
Securities are exchangeable, up to the amount of such taxes. In the event that
the cash held by the Escrow Agent and so apportioned or to be apportioned is
insufficient to pay to the Company or the Escrow Agent the amount of such taxes,
the Escrow Agent shall, as soon as reasonably practicable and to the extent
legally permissible, sell in accordance with written instructions received from
the Company, or if no such instructions are received it may at its option sell,
as determined by the Escrow Agent, such Exchange Property (including any
securities or other property included therein as shall be specified in such
written instructions) as may be necessary to pay, from the proceeds thereof
after payment of any taxes by the Company and the Escrow Agent on such sale
(which shall be similarly evidenced by an Opinion of Counsel and Officers'
Certificate), the amount of any such insufficiency. The Escrow Agent shall
notify the Company and the Trustee of any such sale and the Exchange Property
sold. In the event that proceeds from the sale of all Exchange Property is
insufficient to pay to the Escrow Agent the amount of such taxes, the Company
shall pay such insufficiency from its own assets. Following payment of all
necessary amounts to the Company and to the Escrow Agent, the Exchange Property
held by the Escrow Agent and any cash apportioned thereto shall be
proportionately adjusted (based on an Officers' Certificate) so as to be
apportioned equally to the Securities Outstanding as of immediately after the
close of business on the record date or the effective date for the transaction
to which this Section 1213 applies (as shall be specified in Section 1204). Any
Holder surrendering any Securities after such record date, or such effective
date, as the case may be, shall be entitled to receive the Exchange Property and
any cash apportioned thereto as so adjusted pursuant to this paragraph. If this
Section 1213 shall apply to a transaction and the sale by the Escrow Agent of
the consideration receivable therein shall not be legally permissible and the
amount of cash apportioned to the Exchange Property shall not be sufficient to
pay all taxes payable by the Company and the Escrow Agent which arise from such
transaction, the Company may direct the Escrow Agent to segregate for the
benefit of the Company or the Escrow Agent (as the case may be) or deliver to
the Company or to the Escrow Agent (as the case may be) an amount of Exchange
Property theretofore held by the Escrow Agent for exchange of Securities having
an Average Market Price equal to the unsatisfied portion of the tax payable by
the Company or the Escrow Agent (as the case may be) with respect to
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such transaction including any tax payable upon the delivery or sale thereof in
order to satisfy the aforementioned tax, and such Exchange Property shall
thereafter be solely for the account of the Company or the Escrow Agent (as the
case may be) and Holders of Securities shall have no rights thereto.
As used in this Section 1213 the term "Average Market Price" means the
average closing trading price of Granges Common Stock on the American Stock
Exchange (or, if Granges Common Stock is not then listed on the American Stock
Exchange, the stock exchange or over-the-counter market upon which the Granges
Common Stock is traded which, in aggregate, has the highest dollar trading
volume) during a 20 consecutive trading day period ending one day prior to the
date fixed for segregation of Exchange Property. Should Granges Common Stock
not be traded on any stock exchange or over-the-counter market, then "Average
Market Price" shall mean the fair value of Granges Common Stock over such
twenty-day period as determined in good faith by an investment banking firm
retained in good faith by the Company and which is a member of the New York
Stock Exchange or the Toronto Stock Exchange.
In the event that an Opinion of Counsel given pursuant to this
Indenture concludes that whether taxes are payable by the Company or the Escrow
Agent is uncertain under the then state of the law or facts or both, the Company
shall have the option of requiring the Escrow Agent to segregate the amount of
funds that would be payable (or securities or other property in lieu thereof),
pursuant to an Officers' Certificate, if such taxes were deemed payable,
together with the amount estimated in good faith to be the reasonable costs and
expenses (including attorneys' fees) of obtaining a determination as set forth
below. The Holders shall have no rights to such funds or securities or other
property, which shall be held by the Escrow Agent for the Company (or for the
Escrow Agent, as the case may be), the Exchange Property and any cash
apportioned thereto deliverable upon exchange of Securities pursuant to this
Article Twelve shall be reapportioned (based on an Officers' Certificate from
the Company) as though such segregated amounts had been paid to the Company or
the Escrow Agent for such taxes, and any Holder surrendering any Security after
the record or effective date of the applicable transaction giving rise to an
adjustment pursuant to Section 1204 shall be entitled to receive only such
Exchange Property and any cash apportioned thereto upon exchange of Securities
pursuant to this Article Twelve as so reapportioned. The Company shall
thereupon in good faith seek an appropriate determination from the appropriate
agencies and, if judged necessary by the Company in good faith, from appropriate
courts, as to whether taxes are so payable. If an appropriate determination is
made that such taxes are so payable then the Escrow Agent shall immediately pay
the funds or deliver the securities or other property so segregated to the
Company (or, if taxes are payable by the Escrow Agent, shall retain such funds
or securities or other property for itself), and if an appropriate determination
is made that such taxes are not payable or an amount of tax is payable which is
less than the amount of funds
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or property so segregated, then the Escrow Agent, after paying to the Company
(or itself, as the case may be) out of such funds or securities or other
property the reasonable expenses and costs (including attorneys' fees) of
obtaining such determination (and any taxes so payable), shall apportion such
remaining funds or securities or other property which had been so segregated
among the Exchange Property and cash apportioned thereto as of immediately after
the close of business on the record date or the effective date of such
transaction giving rise to an adjustment pursuant to Section 1204 hereof,
whichever is applicable. If any Security has been exchanged on or after such
record date or such effective date, as the case may be, and before a
determination is made that no taxes are payable or an amount of tax is payable
which is less than the amount of funds or securities or other property so
segregated, the Escrow Agent, to the extent not previously delivered, shall
deliver such Exchange Property and any cash apportioned thereto as reapportioned
following such determination, to the person to which and in the manner in which
the other proceeds of the exchange of such Security were delivered.
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ARTICLE THIRTEEN
SECURITY AND PLEDGE OF COLLATERAL
SECTION 1301. Grant of Security Interest.
(a) To secure the full and punctual payment when due and the full and
punctual performance of the Company's obligations under this Indenture, the
Company hereby grants to the Trustee as Escrow Agent, for the benefit of the
Trustee and the Holders, a security interest in all its right, title and
interest in all Exchange Property, all distributions on Exchange Property giving
rise to an adjustment to the Exchange Rate pursuant to Section 1204(a) (such
distributions to become Exchange Property) and all proceeds from the sale of
Exchange Property.
SECTION 1302. Delivery of Exchange Property.
Any and all certificates or instruments representing or evidencing
Exchange Property shall be delivered to and held by the Escrow Agent, on behalf
of the Trustee and the Holders, and shall be in suitable form for transfer by
delivery, or shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form satisfactory to the Trustee. The Trustee shall
have the right at any time to exchange certificates or instruments representing
or evidencing Exchange Property for certificates or instruments of different
denominations.
SECTION 1303. Representations and warranties.
The Company hereby represents and warrants as follows:
(a) It is, and at the time of delivery of the Exchange Property to
the Escrow Agent pursuant to the Escrow and Pledge Agreement will be, the record
and beneficial owner of the Exchange Property, free and clear of any lien,
except for the Liens created by this Indenture and the Escrow and Pledge
Agreement.
(b) It has full corporate power, authority and legal right to pledge
and grant a security interest in all the Exchange Property pledged by it
pursuant to this Indenture.
(c) The pledge in accordance with the terms of this Indenture and the
Escrow and Pledge Agreement creates a valid and perfected first priority lien on
the
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Exchange Property and all proceeds from the sale thereof, securing payment and
performance of the Company's obligations under this Indenture.
SECTION 1304. Further Assurances.
The Company agrees that at any time and from time to time, at the
expense of the Company, the Company will promptly execute and deliver all
further instruments and documents and take all further action that may be
necessary or that the Trustee may reasonably request in order to perfect and
protect any Lien granted or purported to be granted hereby or in the Escrow and
Pledge Agreement or to enable the Escrow Agent or the Trustee to exercise and
enforce its rights and remedies hereunder or under the Escrow and Pledge
Agreement with respect to any Exchange Property.
SECTION 1305. Dividends; Voting Rights: Withdrawal Rights.
(a) So long as no Event of Default has occurred and is continuing,
and except to the extent received pursuant to a plan of liquidation or partial
liquidation, the Company may retain and dispose of, free and clear of the lien
of this Indenture, any interest, dividends paid and distributions made on the
Exchange Property received by it not giving rise to an adjustment to the
Exchange Rate pursuant to Section 1204(a); provided, that if the Escrow Agent
shall receive any such interest, dividends paid and distributions made to which
the Company is entitled pursuant hereto, the Escrow Agent shall not be required
to transfer to the Company any such dividends paid, distributions made or
interest to which the Company is entitled pursuant hereto until receipt of an
Officers' Certificate to the effect that the Company is entitled to such
dividends paid, distributions made or interest pursuant hereto. The Company
shall also be entitled to any interest or gain on investments made by the Escrow
Agent pursuant to Section 8 of the Escrow and Pledge Agreement, which shall be
paid to the Company on demand as provided in the Escrow and Pledge Agreement.
Any loss on such investments shall be for the account of the Company.
Dividends and distributions giving rise to an adjustment to the
Exchange Rate pursuant to Section 1204(a) shall become Exchange Property subject
to the lien of this Indenture.
(b) So long as an Event of Default has occurred and is continuing,
and at all times in the case of distributions on the Exchange Property received
pursuant to a plan of liquidation or partial liquidation, the Trustee shall be
entitled to receive and retain as collateral all interest, dividends paid and
distributions made in respect of the Exchange Property. Any such interest,
dividends and distributions shall, if received by the Company,
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be received in trust for the benefit of the Trustee, be segregated from the
other property or funds of the Company, and be forthwith delivered to the Escrow
Agent as Exchange Property in the same form as so received (with any necessary
endorsement). In addition, the Trustee may during such continuance of an Event
of Default by instrument in writing direct the Escrow Agent not to make any
payments to the Company pursuant to Section 11 of the Escrow and Pledge
Agreement and either (i) to make all payments to which the Company would have
been entitled pursuant to such Section 11 directly to the Trustee or (ii) to add
such payments to the Exchange Property.
(c) Until an Event of Default has occurred and is continuing and
thereafter until written notice from the Trustee to the Company that the Trustee
intends to exercise its right to vote the Exchange Property, the Company shall
be entitled to exercise any and all voting and other consensual rights relating
to the Exchange Property or any securities forming part of the Exchange Property
or any part thereof for any purpose; provided, however, that no vote shall be
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cast, and no consent, waiver or ratification given or action taken, which would
be inconsistent with or violate any provision of the Indenture or the
Securities.
(d) Upon the occurrence and during the continuance of an Event of
Default, all rights of the Company to exercise the voting and other consensual
rights that it would otherwise be entitled to exercise pursuant to Section
1305(c) shall cease upon notice from the Trustee to the Company pursuant thereto
and upon the giving of such notice all such rights shall thereupon be vested in
the Trustee who shall thereupon have the sole right to exercise such voting and
other consensual rights.
(e) In order to permit the Trustee to exercise the voting and other
consensual rights which it may be entitled to exercise pursuant to Section
1305(d), and to receive all interest, dividends and distributions which it may
be entitled to receive under Sections 1305(a) and 1305(b), the Company shall, if
necessary, upon written notice of the Trustee, from time to time execute and
deliver to the Trustee or the Escrow Agent such instruments as the Trustee or
the Escrow Agent, as the case may be, may reasonably request.
(f) The Company shall be entitled to retain, free of the lien of this
Indenture, any Exchange Property released to the Company in accordance with
Article Twelve hereof and Section 11 of the Escrow and Pledge Agreement.
(g) Any Exchange Property delivered to the Escrow Agent, as provided
in the Escrow and Pledge Agreement, for the satisfaction of the Company's
obligations under this Indenture (including redemption of Securities pursuant to
Article Eleven and Exchange of Securities pursuant to Article Twelve) shall,
upon such delivery, be released from the Lien of this Indenture.
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<PAGE>
(h) It is specifically agreed that, until this Indenture has been
discharged, any release or transfer of Exchange Property other than as
contemplated by Sections 7 or 11 of the Escrow and Pledge Agreement shall not
terminate the lien of this Indenture on such Exchange Property.
SECTION 1306. Trustee Appointed Attorney-in Fact.
The Company hereby appoints the Trustee as the Company's attorney-in-
fact, with full authority in the place and stead of the Company and in the name
of the Company or otherwise, from time to time during the continuance of an
Event of Default in the Trustee's discretion, to take any action and to execute
any instrument which the Trustee may deem necessary or advisable in order to
accomplish the purposes of this Indenture, including to receive, endorse and
collect all instruments made payable to the Company representing any dividend,
interest payment or other distribution in respect of the Exchange Property or
any part thereof and to give full discharge for the same. This power, being
coupled with an interest, is irrevocable.
SECTION 1307. Trustee May Perform.
If the Company fails to perform any agreement contained herein, the
Trustee may itself perform, or cause performance of, such agreement, and the
expenses of the Trustee incurred in connection therewith shall be payable by the
Company.
SECTION 1308. Trustee's Duties.
The powers conferred on the Trustee under this Article are solely to
protect its interest in the Exchange Property and shall not impose any duty upon
it to exercise any such powers. Except for the safe custody of any Exchange
Property in its possession and the accounting for moneys actually received by it
hereunder, the Trustee shall have no duty as to any Exchange Property or as to
the taking of any necessary steps to preserve rights against prior parties or
any other rights pertaining to any Exchange Property.
SECTION 1309. Remedies upon Event of Default.
If any Event of Default shall have occurred and be continuing, the
Trustee may exercise in respect of the Exchange Property, in addition to other
rights and remedies
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<PAGE>
provided for herein or otherwise available to it, all the rights and remedies
provided a secured party upon the default of the debtor under the New York
Uniform Commercial Code at that time, and the Trustee may also, without notice
except as specified below, sell the Exchange Property or any part thereof in one
or more parcels at public or private sale, at any exchange, broker's board or at
any of the Trustee's offices or elsewhere, for cash, on credit or for future
delivery, upon such terms as the Trustee may determine to be commercially
reasonable, and the Trustee or any Holder may be the purchaser of any of or all
the Exchange Property so sold and thereafter hold the same, absolutely, free
from any right or claim of whatsoever kind. The Company agrees that, to the
extent notice of sale shall be required by law, at least 10 days' notice to
the,Company of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification. The Trustee
shall not be obligated to make any sale of collateral regardless of notice of
sale having been given. The Trustee may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was so
adjourned. The Trustee shall incur no liability as a result of the sale of the
Exchange Property, or any part thereof, at any private sale.
The Company recognizes that, by reason of certain prohibitions
contained in the 1933 Act and applicable state securities laws, the Trustee may
be compelled, with respect to any sale of all or any part of the Exchange
Property, to limit purchasers to those who will agree, among other things, to
acquire such securities for their own account, for investment, and not with a
view to the distribution or resale thereof. The Company acknowledges and agrees
that such sale may result in prices and other terms less favorable to the seller
than if such sale were a public sale without such restrictions and,
notwithstanding such circumstances, agrees that any such sale shall be deemed to
have been made in a commercially, reasonable manner. Until the Qualification
Deadline shall have passed, the Trustee may, in the event that the Company
provides the Trustee with an Officers' Certificate stating that the Company will
complete the Registration Filings and make such filings effective not later than
the Qualification Deadline, delay the sale of any securities forming part of the
Exchange Property for the period of time necessary (but such obligation shall
cease after the Qualification Deadline) to permit the Company to complete
registration and listing of the securities as provided in Section 1007 if such
delay will, in the opinion of the Trustee, be beneficial to Holders.
SECTION 1310. Application of Proceeds.
Any cash held by the Trustee as Exchange Property during the
continuance of an Event of Default may, and all cash proceeds received by the
Trustee in respect of any sale of, collection from, or other realization upon,
all or any part of the Exchange Property shall, be applied by the Trustee in the
manner specified in Section 506.
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<PAGE>
SECTION 1311. Continuing Lien.
This Indenture shall create a continuing Lien on the Exchange Property
that shall (i) remain in full force and effect until this Indenture is
discharged pursuant to Section 401, (ii) be binding upon the Company and its
successors and assigns and (iii) inure to the benefit of the Trustee and its
successors, transferees and assigns.
SECTION 1312. Certificates and Opinions.
Unless otherwise exempted therefrom by order of the SEC, the Company
shall comply with (i) TIA Section 314(b) relating to opinions of Counsel
regarding the Lien of this Indenture and (ii) TIA Section 314(d), relating to
the release of Exchange Property from the Lien of this Indenture and Officers'
Certificates or other documents regarding fair value of the Exchange Property,
to the extent such provisions are applicable. Any certificate or opinion
required by TIA Section 314(d) may be executed and delivered by an officer of
the Company to the extent permitted by TIA Section 314(d).
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<PAGE>
ARTICLE FOURTEEN
HOLDER'S LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 1401. Company to Furnish Trustee Names and
Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee:
(a) semi-annually, not more than 15 days after each Regular Record
Date, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders of Registered Securities as of such
Regular Record Date, and
(b) at such other times as the Trustee may reasonably request in
writing, within 30 days after the receipt by the Company of any such request,
a list of similar form and content as of a date not more than 15 days prior
to the time such list is furnished;
excluding from any such list names and addresses received by the Trustee in its
- ---------
capacity as Security Registrar.
SECTION 1402. Preservation of Information.
The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 1401 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it pursuant to Section
1401 upon receipt of a new list so furnished.
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<PAGE>
SECTION 1403. Trust Indenture Act Controls.
If and to the extent that any provision of this Indenture limits,
qualifies and conflicts with the duties imposed by, or with another provision
(an "incorporated provision") included in this Indenture by operation of,
Sections 310 to 318 inclusive, of the TIA, such imposed duties or incorporated
provision shall control.
SECTION 1404. Communication by Holders with Other Holders.
Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under this Indenture or the Securities.
The Company, the Trustee, the Registrar, the Escrow Agent and anyone else shall
have the protection of TIA Section 312(c).
_____________________
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
-110-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
ATLAS CORPORATION
By /s/ Gerald E. Davis
----------------------------
Name: Gerald E. Davis
Title: President
[SEAL]
Attest:
/s/ Gregg B. Shafter
- ------------------------------
Name: Gregg B. Shafter
Title: Vice President
CHEMICAL BANK
By /s/ Peter Morse
--------------------------------
Name: Peter Morse
Title: Vice President
[SEAL]
Attest:
/s/ L.O'Brien
- ------------------------------------
Name: L. O'Brien
Title: Senior Trust Officer
-111-
<PAGE>
ESCROW AND PLEDGE AGREEMENT
ESCROW AND PLEDGE AGREEMENT, dated as of November 10, 1995 (the
"Agreement"), between ATLAS CORPORATION, a Delaware corporation (the
"Company"), Chemical Bank, as escrow agent (the "Escrow Agent"), and
Chemical Bank, as trustee (the "Trustee") under the below-referenced
Indenture.
WHEREAS the Company has executed an Indenture (as amended from time to
time, the "Indenture") dated as of November 10, 1995, to the Trustee
(together with its successors and assigns in such capacity, the "Trustee");
WHEREAS under and pursuant to the Indenture the Company may issue up
to $11,000,000 principal amount, of 7% Exchangeable Debentures due October
25, 2000 (the "Securities");
WHEREAS pursuant and subject to the terms of the Securities and the
Indenture, the Securities are exchangeable at any time prior to their
maturity at the option of the holder thereof for shares of common stock, no
par value per share ("Granges Common Stock"), of Granges, Inc. a British
Columbian corporation;
WHEREAS pursuant to the Indenture the Company has agreed to grant a
security interest in certain collateral for the benefit of the Trustee and
the holders of Securities;
WHEREAS the parties want to provide for the custody of such
collateral; and
WHEREAS it is the intention of the Company that so long as any
Securities shall be outstanding the holders thereof shall be afforded a
free and unfettered opportunity to exchange such Securities for Exchange
Property in accordance with Article Twelve of the Indenture and otherwise
to give effect to the terms thereof.
<PAGE>
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the Company and the Escrow Agent hereby agree
as follows:
Definitions. Capitalized terms used in this Agreement but not defined
-----------
herein shall have the meanings specified in the Indenture. The following terms
shall for purposes of this Agreement have the meanings specified in this Section
unless expressly provided otherwise or unless the context otherwise requires:
"Escrowed Property" means Exchange Property as defined in the Indenture;
provided, however, that any cash, securities or other assets properly released
- -------- -------
by the Escrow Agent in accordance with the terms hereof and the Indenture shall
thereupon cease to be Escrowed Property.
"Lien" means the lien, pledge and security interest created by the
Indenture in the Escrowed Property for the benefit of the Trustee and the
Holders as collateral for the Securities.
"Obligations" means all the obligations of the Company under the Indenture,
the Securities and this Agreement, including without limitation the full and
punctual payment of all amounts payable thereunder and the full and punctual
performance of the Company's obligations thereunder.
"Temporary Cash Investments" means any of the following: (i) any investment
in direct obligations of the United States of America or any agency thereof or
obligations guaranteed by the United States of America or any agency thereof, in
each case maturing within 360 days of the date of acquisition thereof, (ii)
investments in time deposit accounts, certificates of deposit and money market
deposits maturing within 180 days of the date of acquisition thereof issued by a
bank or trust company which is organized under the laws of the United States of
America, any state thereof or any foreign country recognized by the United
States of America having capital surplus and undivided profits aggregating in
excess of $250,000,000 and whose long-term unsecured debt is rated "A" (or such
similar equivalent rating) or higher by at least one nationally recognized
statistical rating organization (as defined in Rule 436 under the 1933 Act),
(iii) repurchase obligations with a term of not more than 30 days for underlying
securities of the
<PAGE>
type described in clause (i) above entered into with a bank meeting the
qualifications described in clause (ii) above, (iv) investments in commercial
paper, maturing not more than 90 days after the date of acquisition, issued by a
corporation (other than an affiliate of the Company) organized and existing
under the laws of the United States of America or any foreign country recognized
by the United States of America with a rating at the time at which any
investment therein is made of "P-2" (or higher) according to Moody's Investors
Service, Inc. or "A-2" (or higher) according to Standard & Poor's Rating
Services, (v) securities with maturities of six months or less from the date of
acquisition backed by standby or direct pay letters of credit issued by any bank
satisfying the requirements of clause (ii) above and (vi) securities with
maturities of six months or less from the date of acquisition issued or fully
guaranteed by any state, commonwealth or territory of the United States of
America, or by any political subdivision or taxing authority thereof, with a
rating at the time at which any investment therein is made of at least "A" by
Standard & Poor's Corporation or "A" by Moody's Investors Service, Inc.
Delivery of Escrowed Property. The Company confirms that it has today
------------------------------
delivered to the Escrow Agent, and the Escrow Agent confirms that it has today
received and possesses, share certificate No. AC35293 evidencing 8,474,576
shares of Granges Common Stock, together with duly executed instruments of
transfer in blank. The Company shall deliver to the Escrow Agent any and all
certificates or instruments representing or evidencing Escrowed Property on
behalf of the Trustee and the Holders, which shall be in suitable form for
transfer by delivery, or shall be accompanied by duly executed instruments of
transfer or assignment in blank, all in form satisfactory to the Trustee. The
Escrow Agent shall have the right at any time to exchange certificates or
instruments representing or evidencing Escrowed Property for certificates or
instruments of different denominations.
Escrow Agent as Agent for Trustee and Holders. The Escrow Agent, the
---------------------------------------------
Trustee and the Company acknowledge and agree that (i) the Company has granted a
security interest pursuant to the Indenture in all Escrowed Property (including,
without limitation, all Granges Common Stock) in favor of the Trustee for the
benefit of the Trustee and all the Holders, (ii) the Trustee hereby designates
the Escrow Agent to take possession of the Escrowed Property (iii) all Escrowed
Property delivered to the Escrow Agent shall be accepted and held by the Escrow
Agent as agent for and on behalf of the Trustee and all the Holders, and (iv)
that the Escrow Agent will perform the functions of the Escrow Agent under the
Indenture.
Covenants of the Escrow Agent. The Escrow Agent hereby agrees that
-----------------------------
the Escrowed Property received by it pursuant to this Agreement shall be
accepted and held for and applied only in conformity with the purposes and upon
the terms and conditions set forth in the
<PAGE>
Indenture and this Agreement. The Escrow Agent shall be entitled to all the
rights and privileges of the Trustee contained in the Indenture in respect of
the Escrowed Property, including, where applicable, the protection and
immunities of the Trustee relating thereto. Except as permitted by the Indenture
or this Agreement, no action may be taken by the Escrow Agent with respect to
the Escrowed Property without the prior written consent of the Company.
Representations and Warranties. The Company hereby represents and
------------------------------
warrants as follows:
(a) It is, and at the time of delivery of the Escrowed Property to the
Escrow Agent pursuant to this Agreement will be, the record and beneficial owner
of the Escrowed Property, free and clear of any lien, except for the Lien
created by the Indenture and this Agreement.
(b) It has full corporate power, authority and legal right to pledge and
grant a security interest in all the Escrowed Property.
(c) The pledge in accordance with the terms of the Indenture and this
Agreement creates a valid and perfected first priority lien on the Escrowed
Property and all proceeds from the sale thereof, securing payment and
performance of the Obligations.
The Escrow Agent represents and warrants that (i) it has full corporate
power and authority to enter into and perform this Agreement and to comply with
such terms of the Indenture as apply to its performance of this Agreement and
(ii) this Agreement has been duly and validly executed by the Escrow Agent and
constitutes the valid and binding obligation of the Escrow Agent enforceable
against the Escrow Agent in accordance with the respective terms, except as the
enforceability thereof may be subject to (A) bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium or other similar
laws now or hereafter in effect affecting creditors' rights generally and (B)
general principles of equity (regardless of whether enforceability is considered
in a proceeding at law or in equity).
Record Owner; Further Assurances. The Company agrees that at any time
--------------------------------
and from time to time, at the expense of the Company, the Company will promptly
execute and deliver all further instruments and documents and take all further
action that may be necessary or that the Escrow Agent or the Trustee may
reasonably request in order to perfect and protect any lien granted or purported
to be granted hereby or under the Indenture or to enable the Escrow Agent or
<PAGE>
the Trustee to exercise and enforce its rights and remedies hereunder or under
the Indenture with respect to any Escrowed Property.
Dividends; Voting Rights: Withdrawal Rights; Rights Upon Default.
----------------------------------------------------------------
(a) So long as no Event of Default has occurred and is continuing,
and except to the extent received pursuant to a plan of liquidation or partial
liquidation, the Company may retain and dispose of, free and clear of the Lien
of the Indenture, any interest, dividends paid and distributions made on the
Escrowed Property received by it not giving rise to an adjustment to the
Exchange Rate pursuant to Section 1204(a) of the Indenture, provided, that if
the Escrow Agent shall receive any such interest, dividends paid and
distributions made to which the Company is entitled pursuant hereto, the Escrow
Agent shall not be required to transfer to the Company any such dividends paid,
distributions made or interest to which the Company is entitled pursuant hereto
until receipt of an Officers' Certificate to the effect that the Company is
entitled to such dividends paid, distributions made or interest pursuant hereto.
The Company shall also be entitled to any interest or gain on investments made
by the Escrow Agent pursuant to Section 8, which shall be paid to the Company on
demand.
Dividends and distributions giving rise to an adjustment to the
Exchange Rate pursuant to Section 1204(a) of the Indenture shall become Escrowed
Property subject to the Lien of the Indenture.
(b) So long as an Event of Default has occurred and is continuing,
and at all times in the case of distributions on the Escrowed Property received
pursuant to a plan of liquidation or partial liquidation, the Trustee (or the
Escrow Agent, as the case may be) shall be entitled to receive and retain as
collateral all interest, dividends paid and distributions made in respect of the
Escrowed Property. Any such interest, dividends and distributions shall, if
received by the Company, be received in trust for the benefit of the Trustee, be
segregated from the other property or funds of the Company, and be forthwith
delivered to the Escrow Agent as Escrowed Property in the same form as so
received (with any necessary endorsement). In addition, the Trustee may during
such continuance of an Event of Default by instrument in writing direct the
Escrow Agent not to make any payments to the Company pursuant to Section 11 and
either (i) to make all payments to which
<PAGE>
the Company would have been entitled pursuant to such Section 11 directly to the
Trustee or (ii) to add such payments to the Escrowed Property.
(c) The Company shall be entitled to retain, free of the Lien of the
Indenture, any Escrowed Property released to the Company in accordance with
Section 11.
(d) Any Escrowed Property delivered to the Escrow Agent, as provided
in this Agreement, for the satisfaction of the Company's obligations under the
Indenture (including, without limitation, redemption of Securities pursuant to
Article Eleven of the Indenture and Exchange of Securities pursuant to Article
Twelve of the Indenture) shall, upon such delivery, be released from the Lien of
the Indenture.
(e) Until an Event of Default has occurred and is continuing and
thereafter until written notice from the Trustee to the Company that the Trustee
intends to exercise its right to vote the Escrowed Property, the Company shall
be entitled to exercise any and all voting and other consensual rights relating
to the Escrowed Property or any securities forming part of the Escrowed Property
or any part thereof for any purpose; provided, however, that no vote shall be
-------- -------
cast, and no consent, waiver or ratification given or action taken, which would
be inconsistent with or violate any provision of the Indenture or the
Securities.
(f) Upon the occurrence and during the continuance of an Event of
Default, all rights of the Company to exercise the voting and other consensual
rights that it would otherwise be entitled to exercise pursuant to Section 7(e)
hereof shall cease upon notice from the Trustee to the Company pursuant thereto
and upon the giving of such notice all such rights shall thereupon be vested in
the Trustee who shall thereupon have the sole right (which it may delegate to
the Escrow Agent without notice to the Company) to exercise such voting and
other consensual rights.
(g) In order to permit the Escrow Agent to exercise the voting and
other consensual rights which it may be entitled to exercise pursuant to Section
7(f) of the Indenture, and to receive all interest, dividends and distributions
which it may be entitled to receive under Sections 7(a) and 7(b) hereof, the
Company shall, if necessary, upon written notice of the Trustee, from time to
time
<PAGE>
execute and deliver to the Trustee or the Escrow Agent such instruments as the
Trustee or the Escrow Agent, as the case may be, may reasonably request.
(h) The Company shall be entitled to retain, free of the Lien, any
Escrowed Property released to the Company in accordance with Section 11 hereof
and Article Twelve of the Indenture.
(i) It is specifically agreed that, until the Indenture has been
discharged, any release or transfer of Escrowed Property other than as
contemplated by this Section 7 or by Section 11 shall not terminate the Lien on
such Escrowed Property.
(j) If any Event of Default shall have occurred and be continuing,
the Trustee, or the Escrow Agent acting on behalf of the Trustee, shall have and
may exercise all the rights and remedies with respect to Escrowed Property
provided for in the Indenture, including without limitation Section 1309
thereof.
Investment of Cash. At the written direction of the Company, the
------------------
Escrow Agent shall invest any cash forming part of the Escrowed Property in
specified Temporary Cash Investments. Any such written direction shall certify
that the investment constitutes a Temporary Cash Investment. The Company shall
be entitled to any net income or gain resulting from such investments and shall
reimburse the Escrow Agent for any losses realized in respect of such
investments.
Taxes. Subject to the provisions of Section 10, any taxes imposed on
-----
or with respect to the Escrowed Property shall be for the account of the
Company, and the Company shall promptly reimburse the Escrow Agent for any and
all such taxes.
Tax Adjustments in Exchange Rate. If an event shall occur which
--------------------------------
causes the Exchange Rate to be subject to adjustment pursuant to Section 1204 of
the Indenture, or a merger, consolidation or sale or transfer of assets shall
occur requiring a supplemental indenture, and if, within ten days after the
effective date of such transaction the Company shall furnish the Escrow Agent
with an Opinion of Counsel to the effect that such transaction is taxable to the
Company or the Escrow Agent and an Officers' Certificate as to the amount of
federal, state and local tax payable by the Company and the Escrow Agent as a
result of such transaction (computed at the marginal tax rate applicable to such
transaction), the Escrow Agent shall pay to, or to the order of, the Company, in
the case of taxes payable by the Company, or itself, in the case of taxes
payable by it, the cash held by it and apportioned or to be apportioned to the
Escrowed Property for which outstanding Securities are exchangeable, up to the
amount of such taxes. In the event that the cash held by the Escrow Agent and
so apportioned or to be apportioned is insufficient to pay to the
<PAGE>
Company or the Escrow Agent the amount of such taxes, the Escrow Agent shall, as
soon as reasonably practicable and to the extent legally permissible, sell in
accordance with written instructions received from the Company, or if no such
instructions are received it may at its option sell, as determined by the Escrow
Agent, such Escrowed Property (including any securities or other property
included therein as shall be specified in such written instructions) as may be
necessary to pay, from the proceeds thereof after payment of any taxes by the
Company and the Escrow Agent on such sale (which shall be similarly evidenced by
an Opinion of Counsel and Officers' Certificate), the amount of any such
insufficiency. The Escrow Agent shall notify the Company and the Trustee of any
such sale and the Escrowed Property sold. In the event that proceeds from the
sale of all Escrowed Property is insufficient to pay to the Escrow Agent the
amount of such taxes, the Company shall pay such insufficiency from its own
assets. Following payment of all necessary amounts to the Company and to the
Escrow Agent, the Escrowed Property held by the Escrow Agent and any cash
apportioned thereto shall be proportionately adjusted (based on an Officers'
Certificate) so as to be apportioned equally to the Securities Outstanding as of
immediately after the close of business on the record date or the effective date
for the transaction to which this Section 10 applies (as shall be specified in
Section 1204 of the Indenture). Any Holder surrendering any Securities after
such record date, or such effective date, as the case may be, shall be entitled
to receive the Escrowed Property and any cash apportioned thereto as so adjusted
pursuant to this paragraph. If this Section 10 shall apply to a transaction and
the sale by the Escrow Agent of the consideration receivable therein shall not
be legally permissible and the amount of cash apportioned to the Escrowed
Property shall not be sufficient to pay all taxes payable by the Company and the
Escrow Agent which arise from such transaction, the Company may direct the
Escrow Agent to segregate for the benefit of the Company or the Escrow Agent (as
the case may be) or deliver to the Company or to the Escrow Agent (as the case
may be) an amount of Escrowed Property theretofore held by the Escrow Agent for
exchange of Securities having an Average Market Price equal to the unsatisfied
portion of the tax payable by the Company or the Escrow Agent (as the case may
be) with respect to such transaction including any tax payable upon the delivery
or sale thereof in order to satisfy the aforementioned tax, and such Escrowed
Property shall thereafter be solely for the account of the Company or the Escrow
Agent (as the case may be) and Holders of Securities shall have no rights
thereto.
As used in this Section 10, the term "Average Market Price" means the
weighted average closing trading price of Granges Common Stock on the American
Stock Exchange (or, if Granges Common Stock is not then listed on the American
Stock Exchange, the stock exchange or over-the-counter market upon which the
Granges Common Stock is listed which, in aggregate, has the highest dollar
trading volume) during a 20 consecutive trading day period ending three days
prior to the record date fixed for segregation of Escrowed Property. Should
Granges Common Stock not be traded on any stock exchange or over-the-counter
market, then "Average Market Price" shall mean the fair value of Granges Common
Stock over such twenty-day period as determined in good faith by an investment
banking
<PAGE>
firm retained in good faith by the Company and which is a member of the New York
Stock Exchange or the Toronto Stock Exchange.
In the event that an Opinion of Counsel given pursuant to the
Indenture concludes that whether taxes are payable by the Company or the Escrow
Agent is uncertain under the then state of the law or facts or both, the Company
shall have the option of requiring the Escrow Agent to segregate the amount of
funds that would be payable (or securities or other property in lieu thereof),
pursuant to an Officers' Certificate, if such taxes were deemed payable,
together with the amount estimated in good faith to be the reasonable costs and
expenses (including attorneys' fees) of obtaining a determination as set forth
below. The Holders shall have no rights to such funds or securities or other
property, which shall be held by the Escrow Agent for the Company (or for the
Escrow Agent, as the case may be), the Escrowed Property and any cash
apportioned thereto deliverable upon exchange of Securities pursuant to Article
Twelve of the Indenture shall be reapportioned (based on an Officers'
Certificate from the Company) as though such segregated amounts had been paid to
the Company or the Escrow Agent for such taxes, and any Holder surrendering any
Security after the record or effective date of the applicable transaction giving
rise to an adjustment pursuant to Section 1204 of the Indenture shall be
entitled to receive only such Escrowed Property and any cash apportioned thereto
upon exchange of Securities pursuant to Article Twelve of the Indenture as so
reapportioned. The Company shall thereupon in good faith seek an appropriate
determination from the appropriate agencies and, if judged necessary by the
Company in good faith, from appropriate courts, as to whether taxes are so
payable. If an appropriate determination is made that such taxes are so payable
then the Escrow Agent shall immediately pay the funds or deliver the securities
or other property so segregated to the Company (or, if taxes are payable by the
Escrow Agent, shall retain such funds or securities or other property for
itself), and if an appropriate determination is made that such taxes are not
payable or an amount of tax is payable which is less than the amount of funds or
property so segregated, then the Escrow Agent, after paying to the Company (or
itself, as the case may be) out of such funds or securities or other property
the reasonable expenses and costs (including attorneys' fees) of obtaining such
determination (and any taxes so payable), shall apportion such remaining funds
or securities or other property which had been so segregated among the Escrowed
Property and cash apportioned thereto
<PAGE>
as of immediately after the close of business on the record date or the
effective date of such transaction giving rise to an adjustment pursuant to
Section 1204 of the Indenture, whichever is applicable. If any Security has been
exchanged on or after such record date or such effective date, as the case may
be, and before a determination is made that no taxes are payable or an amount of
tax is payable which is less than the amount of funds or securities or other
property so segregated, the Escrow Agent, to the extent not previously
delivered, shall deliver such Escrowed Property and any cash apportioned thereto
as reapportioned following such determination, to the person to which and in the
manner in which the other proceeds of the exchange of such Security were
delivered.
Release of Assets from Escrow. (a) In the event of any reduction of
-----------------------------
the principal amount of Securities Outstanding under the Indenture as evidenced
by the delivery to the Trustee by the Company of Securities for cancellation,
the Escrow Property held by the Escrow Agent shall be reduced in the same
proportion as the principal amount of the Securities was so reduced, provided,
--------
that the Escrow Agent shall retain a sufficient amount of Escrow Property to
exchange all Securities then Outstanding on the basis of the then applicable
Exchange Rate and the other terms and provisions of Article Twelve of the
Indenture and of this Agreement, and the Company shall upon Company Request, be
entitled to any excess Escrow Property created by such reduction, net of any
Escrow Property delivered in connection with any reduction caused by an exchange
pursuant to this section; provided, however, that the Escrow Agent shall not
-------- -------
make any distribution of Escrowed Property to the Company prior to the receipt
from the Company of an Officers' Certificate to the effect that no Event of
Default exists under the Indenture and no event or condition exists under the
Indenture which with notice or lapse of time or both would become such an Event
of Default and which states in detail the basis asserted by the Company for such
distribution. Upon expiration of the right to surrender Securities for exchange
pursuant to Article Twelve of the Indenture and when all other obligations of
the Company shall have been satisfied under the Indenture, the Escrow Agent
shall, upon Company Request, release and deliver all Granges Common Stock and
cash and investments and other property held by the Escrow Agent under this
Agreement which are not required with respect to Securities previously
surrendered for exchange.
(b) The Escrow Agent shall release Escrowed Property to Holders of
Securities surrendered for exchange pursuant to Article Twelve of the Indenture.
(c) The Escrow Agent shall release Escrowed Property promptly upon written
request from the Trustee therefor to permit the delivery of such Escrowed
Property to Holders as part of a Redemption pursuant to Article Eleven of the
Indenture.
<PAGE>
(d) The Escrow Agent shall release Escrowed Property promptly upon written
request from the Trustee therefor to permit the delivery of such Escrowed
Property to Holders as part of a payment upon Stated Maturity pursuant to
Article Three of the Indenture.
(e) Upon the termination of this Agreement in accordance with Section 18
of this Agreement, the Escrow Agent shall release Escrowed Property to the
Company promptly upon written request from the Company therefor.
Reliance on Information Supplied. The Escrow Agent may rely on the
--------------------------------
contents of any Officers' Certificate furnished hereunder and, in delivering any
such Officers' Certificate, the Company may rely on information furnished to the
Company by the Escrow Agent or the Trustee as to the quantity and identity of
Escrowed Property, or any other property held by it and the quantity and
identity of Escrowed Property delivered to the Holders upon exchange of the
Securities. The Escrow Agent shall furnish such information to the Company upon
request.
Expenses of the Escrow Agent. The Company shall pay the Escrow Agent
----------------------------
reasonable compensation for all services rendered by the Escrow Agent in the
performance of its duties under this Agreement and reimburse the Escrow Agent
upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Escrow Agent in accordance with any of the provisions of
this Agreement (including the reasonable compensation and the expenses and
disbursements of its counsel and of all persons not regularly in its employ)
except any such expense, disbursement or advance as may arise from its
negligence or willful misconduct.
Indemnification. (a) The Company shall indemnify and hold harmless
---------------
the Escrow Agent, each of the Escrow Agent's directors, officers, employees,
agents and each person, if any, who controls the Escrow Agent within the meaning
of the 1933 Act, from and against any loss, claim, damage or liability (other
than consequential damages), joint or several, arising out of or in connection
with this Agreement, under the 1933 Act or otherwise, and shall reimburse the
Escrow Agent and such directors, officers, employees, agents, and controlling
persons for any legal and other expenses (other than compensation and expenses
of persons regularly in the employ of the Escrow Agent) reasonably incurred in
investigating, defending or preparing to defend against any such loss, claim,
damage, liability or action, threatened or commenced, insofar as such loss,
claim, damage, liability or action arises out of, is based upon, or relates to
this Agreement, including, without limitation, any of the following: (i) any
untrue statement or alleged untrue statement of a material fact contained in any
documents or filings in connection with the offer and/or sale of the Securities
by the Company or the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, (ii) any violation or alleged violation of the federal
securities laws (including, without limitation, Section 5 of the 1933 Act) in
connection with the offer and/or sale of the Securities by the Company, the
exchange of Securities for Escrowed Property or the purchase or redemption of
the Securities by
<PAGE>
the Company when Escrowed Property (or the proceeds of the sale thereof) are
used to pay, in whole or in part, the principal or the Redemption Price, and
(iii) any violation or alleged violation by the Escrow Agent of this Agreement
and/or any duty or law not described above unless such violation resulted from
the negligence or willful misconduct on the part of the Escrow Agent.
The obligations of the Company under Sections 13 and 14 to
compensate and indemnify the Escrow Agent and to pay or reimburse the Escrow
Agent for expenses, disbursements and advances shall survive the satisfaction
and discharge of this Agreement. To secure the Company's obligations under
Sections 13 and 14, the Escrow Agent shall have a lien prior to the Securities
on (i) all money or property held or collected by the Escrow Agent, as such,
except money or property held in trust to pay the principal of or interest on
particular Securities and (ii) all Escrowed Property held under this Agreement
and such lien shall survive the satisfaction and discharge of this Agreement and
any other termination of this Agreement including any termination under any
bankruptcy law. Without limiting any other rights available to the Escrow Agent
under applicable law, when the Escrow Agent incurs expenses or renders services
in connection with an Event of Default, the Holders by their acceptance of the
Securities agree pursuant to Section 607 of the Indenture that such expenses and
the compensation for such services are intended to constitute expenses of
administration under any bankruptcy law. "Escrow Agent" for purposes of this
Section 14(b) shall include any predecessor Escrow Agent, but the negligence or
bad faith of any Escrow Agent shall not (except to the extent otherwise required
by law) affect the indemnification of any other Escrow Agent.
The Escrow Agent shall give the Company prompt notice of the
existence of any claim for which indemnity may be sought pursuant to this
Section, and the Company shall have the right to assume the defense of such
claim with counsel of its choice. The Escrow Agent shall have the right to
employ separate counsel and to participate in the defense of such claim,
provided that the fees and expenses of such separate counsel shall be at the
expense of the Company only if (i) the Company shall have failed, within 30 days
after receipt of notice of such claim, to notify the Escrow Agent that the
Company will assume the defense thereof, or (ii) the Escrow Agent shall have
been advised by counsel that, in the opinion of such counsel, there exists an
actual or potential conflict of interest which would prevent counsel for the
Company from representing the Escrow Agent. No settlement or compromise of any
claim for which indemnity may be sought pursuant to this Section 14 may be made
by the Escrow Agent without the written consent of the Company.
The Escrow Agent, its directors, officers, employees, agents, and
controlling persons, if any, shall not be liable to the Company or any record or
beneficial owner of Securities for (i) any matter described in this Section 14
pursuant to which the Escrow Agent is to be indemnified hereunder, (ii) any
error of judgment made in good faith or (iii) any misconduct of any agent
appointed by it with due care hereunder.
Change of Escrow Agent. Any change in the Escrow Agent shall be
----------------------
effected as set forth in Article Six of the Indenture with respect to the
Trustee.
<PAGE>
Succession of Escrow Agent. After appointment, any successor Escrow
--------------------------
Agent shall be vested with the same powers, rights, duties and responsibilities
as if it had been originally named as Escrow Agent without further act or deed
and upon the receipt of all amounts owed to it by the Company under this
Agreement, the former Escrow Agent shall deliver and transfer to the successor
Escrow Agent any property at the time held by it hereunder, and shall execute
and deliver any further assurances, conveyance, act or deed necessary for the
purpose, including, without limitation, to perfect the security interest granted
by the Indenture.
Supplements and Amendments. (a) This Agreement may be supplemented
--------------------------
or amended from time to time either (i) with the consent of the Holders of a
majority in principal amount of Outstanding Securities obtained in the manner
provided for in the Indenture with regard to amendments to the Indenture; or
(ii) by the adoption of a resolution, at a meeting of Holders of the Outstanding
Securities at which a quorum is present convened and held in accordance with the
applicable provisions of the Indenture, by the Holders of two-thirds in
principal amount of the Outstanding Securities represented at such meeting. The
Company, the Trustee and the Escrow Agent may from time to time supplement or
amend this Agreement, without the approval of any Holder, (i) in order to cure
any ambiguity or to correct or supplement any provision contained herein which
may be defective or inconsistent with any other provision herein, or to conform
this Agreement to the Indenture as the Indenture may be amended from time to
time, (ii) to make any other provision in regard to matters or questions arising
hereunder which the Company, the Trustee and the Escrow Agent may deem necessary
or desirable and which shall not be inconsistent with the provisions of the
Indenture and which shall not adversely affect the right to exchange any
Security for Escrowed Property upon the terms set forth in the Indenture or
(iii) subject to Section 508 of the Indenture, to comply with the requirements
or suggestions of any official or semi-official regulatory or self-regulatory
body having jurisdiction over the Company or the Securities, provided, however,
-------- -------
that nothing in this clause (iii) shall permit any modification disadvantageous
in any material respect to the Holders without the consent of the Holders
pursuant to Section 802 of the Indenture.
(b) In executing, or accepting the additional duties created by, any
supplements and amendments permitted by this Section or the modifications
thereby of the duties created by this Agreement, the Escrow Agent shall be
entitled to receive, and (subject to Section 19) shall be fully protected in
relying upon, an Opinion of Counsel stating that the execution of such
supplements and amendments is authorized or permitted by this Agreement and that
such supplement or amendment has been duly authorized, executed and delivered by
the Company and constitutes a valid and legally binding obligation of the
Company enforceable against the Company in accordance with its terms. The
Escrow Agent may, but shall not be obligated to, enter into any such supplements
or amendments which affect the Escrow Agent's own rights, duties or immunities
under this Agreement or otherwise.
<PAGE>
Termination of Agreement. This Agreement shall terminate when the
------------------------
Indenture is discharged pursuant to Section 401 thereof, which termination shall
be evidenced by a certificate of the Trustee to that effect. Upon termination
of this Agreement, any Escrowed Property remaining in the hands of the Escrow
Agent shall be delivered to the Company, free and clear of any and all interests
of the Escrow Agent, the Trustee and the Holders, or any of them. Sections 13
and 14 of this Agreement shall survive any termination hereof.
Duties of the Escrow Agent. (a) The Escrow Agent shall not be
--------------------------
accountable with respect to the validity or value or any Escrowed Property and
the Escrow Agent makes no representation or warranty with respect thereto. The
Escrow Agent shall not be responsible for any failure of the Company to comply
with any of the covenants of the Company contained in this Agreement.
The Escrow Agent shall be obligated to perform only such duties
as are specifically set forth in the Indenture and this Agreement. The Escrow
Agent shall not be liable for any action taken, omitted or suffered by it in
good faith and reasonably believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Agreement, and may
conclusively rely and shall be protected in acting or refraining from acting in
reliance upon an opinion of counsel or upon any certificate, request or other
document reasonably believed by it to be genuine and to have been signed or
presented by the proper party or parties. Without limiting the generality of the
foregoing, it is expressly agreed that the Escrow Agent shall not be responsible
for any governmental approvals which may be required in connection with the
issuance or delivery of Escrowed Property. The Escrow Agent shall not be
required to take any action hereunder which, in the opinion of its counsel,
would be contrary to law.
The Escrow Agent shall not be under any duty hereunder to pay out
or distribute any cash or other property to any person unless such cash or other
property has been received by the Escrow Agent pursuant to this Agreement.
The Escrow Agent is exclusively the agent, custodian and bailee
of the Trustee as secured party for the benefit of the Trustee and the Holders,
such that the Trustee shall be deemed in possession of the Escrowed Property and
of the proceeds and investments of such Escrowed Property as required by
Sections 9-305, 8-313 and 8-321, of the Uniform Commercial Code of the State of
New York, as in effect on the date hereof, unless otherwise released or
disbursed in accordance with the provisions of this Agreement. The Escrow Agent
agrees to accept, hold and keep the Escrowed Property as agent, custodian and
bailee solely for the Trustee as secured party for the benefit of the Trustee
and the holders of the Securities separate and apart on the books and records of
the Escrow Agent from any other property of the Company or the Trustee which the
Escrow Agent may hold and to identify the Escrowed Property as being subject to
the Lien in favor of the Trustee and the holders of the Securities, all in
accordance with the terms and conditions of this Agreement.
<PAGE>
Notices. Any request, demand, authorization, notice, waiver, consent
-------
or communication pursuant to this Agreement shall be in writing and delivered in
person or mailed by first-class mail, postage prepaid, addressed as follows or
transmitted by facsimile transmission to the following facsimile numbers:
If to the Company:
Atlas Corporation
370 Seventeenth Street, suite 3150
Denver, Colorado 80202
Attention: Secretary
Facsimile No.: (303) 892-8808
If to the Escrow Agent or the Trustee:
Chemical Bank
450 West 33rd Street, 15th Floor
New York, New York 10001
Attention: Corporate Trust Department
Facsimile No.: (212) 946-3918
The Company or the Escrow Agent by notice given to the other in the manner
provided above may designate additional or different addresses for subsequent
notices or communications.
Any notice or communication given to a Holder shall be mailed to the
Holder, by first-class mail, postage prepaid, at the Holder's address as it
appears on the registration books of the Registrar and shall be sufficiently
given if so mailed within the time prescribed.
Failure to mail a notice or communication to a Holder or any defect in it
shall not affect its sufficiency with respect to other Holders. If a notice or
communication is mailed to a Holder in the manner provided above, it is duly
given, whether or not received by the addressee.
If the Company mails a notice or communication to the Holders, it shall
mail a copy to the Trustee and the Escrow Agent and each Registrar, Paying Agent
or co-registrar pursuant to the Indenture.
<PAGE>
Governing Law; Submission to Jurisdiction. THIS AGREEMENT SHALL BE
-----------------------------------------
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
THE UNITED STATES OF AMERICA.
Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be construed as an original for all purposes,
but all of which taken together shall constitute one and the same agreement.
Headings. The headings contained in this Agreement are for
--------
convenience of reference only and shall have no effect on the interpretation or
operation of this Agreement.
Benefits of Agreement. Nothing in this Agreement or the Securities,
---------------------
expressed or implied, shall give or be construed to give any person, other than
the parties hereto and the Holders of Securities as such, any legal or equitable
right, remedy or claim under any covenant, condition or provision herein
contained, all the covenants, conditions and provisions contained in this
Agreement being for the sole benefit of the parties hereto and the Holders of
the Securities as such.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed, and their respective corporate seals to be hereunto
affixed and attested, all as of the day and year first above written.
ATLAS CORPORATION,
By: /s/ Gerald E. Davis
------------------------
Name: Gerald E. Davis
Title: President
[SEAL]
Attest:
/s/ Gregg B. Shafter
- ---------------------------
Name: Gregg B. Shafter
Title: Vice President
CHEMICAL BANK
as Escrow Agent,
<PAGE>
By: /s/ Peter Morse
--------------------
Name: Peter Morse
Title: Vice President
[SEAL]
Attest:
/s/ L. O'Brien
- ----------------------------------
Name: L. O'Brien
Title: Senior Trust Officer
CHEMICAL BANK
as Trustee,
By: /s/ Peter Morse
---------------------
Name: Peter Morse
Title: Vice President
[SEAL]
Attest:
/s/ L. O'Brien
- ----------------------------------
Name: L. O'Brien
Title: Senior Trust Officer
<PAGE>
[LETTER HEAD OF COUDERT BROTHERS APPEARS HERE]
December 11, 1995
Atlas Corporation
370 Seventeenth Street, Suite 3150
Denver, Colorado 80202
Gentlemen:
We have acted as counsel to Atlas Corporation ("Atlas") in connection with
the preparation and filing of a Registration Statement on Form S-3 (the
"Registration Statement") under the Securities Act of 1933, as amended, covering
$10,000,000 principal amount of 7% Exchangeable Debentures of Atlas (the
"Debentures"), which Debentures are exchangeable for shares of Common Stock, no
par value, of Granges Inc. Capitalized terms used herein and not otherwise
defined herein shall have the meanings set forth in the Underwriting Agreement
(the "Underwriting Agreement") dated October 25, 1995 by and among Atlas
Corporation (the "Company"), Yorkton Securities Inc. and First Marathon
Securities Ltd.
We are familiar with the corporate proceedings of the Company relating to
the authorization for issuance of the Debentures, and we have examined copies of
(i) the Underwriting Agreement, (ii) the Trust Indenture, (iii) the Escrow and
Pledge Agreement, (iv) the forms of the subscription agreements entered into by
each purchaser of Special Warrants, (v) the forms of the Debentures included in
the Trust Indenture, (vi) the Special Warrant Indenture, (vii)
<PAGE>
the forms of the Special Warrants included in the Special Warrant Indenture and
(viii) such other instruments, documents, records and certificates, and we have
made such other inquiries and investigation of law, as we have deemed necessary
or appropriate for the opinions expressed herein.
This opinion is subject to the following qualifications. We are attorneys
admitted to practice in the State of New York, and we express no opinion as to
any laws other than the laws of the State of New York, the General Corporation
Law of the State of Delaware and the federal laws of the United States of
America. As to questions of fact material to our opinion, we have relied upon
representations made by you in the Underwriting Agreement, the Subscription
Agreements, the Trust Indenture, the Pledge and Escrow Agreement, the Special
Warrant Indenture, as well as on certificates from public officials. We have
assumed the authenticity of all documents submitted to us as copies and the
genuineness of all signatures of the respective parties to such documents. We
have assumed that the Underwriting Agreement, the Trust Indenture, the Escrow
and Pledge Agreement, the Special Warrant Indenture and the Subscription
Agreements have been duly authorized, executed and delivered by all parties
thereto other than you.
Based upon and subject to the foregoing, and having due regard for such
other legal and factual considerations as we deem relevant, we are of the
opinion that the Debentures will, upon issuance in accordance with the terms of
the Trust Indenture, be legally and validly issued and will be binding
obligations of Atlas, subject to applicable bankruptcy, insolvency and other
laws affecting creditors' rights generally and, as to enforceability, to general
principles of equity, regardless of whether enforcement is sought in a
proceeding in equity or at law.
Very truly yours,
/s/ COUDERT BROTHERS
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference of our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Atlas Corporation
for the registration of $10,000,000 of its 7% exchangeable debentures and to the
incorporation by reference therein of our report dated September 6, 1995, with
respect to the consolidated financial statements and schedules of Atlas
Corporation included in its Annual Report (Form 10-K) for the year ended June
30, 1995, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Denver, Colorado
December 15, 1995
<PAGE>
______________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
_________________________
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
___________________________________________
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
________________________________________
CHEMICAL BANK
(Exact name of trustee as specified in its charter)
NEW YORK 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
_____________________________________________
ATLAS CORPORATION
(Exact name of obligor as specified in its charter)
DELAWARE 13-5503312
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
370 SEVENTEENTH STREET, SUITE 3150
DENVER, COLORADO 80202
(Address of principal executive offices) (Zip Code)
___________________________________________
7% EXCHANGEABLE DEBENTURES DUE OCTOBER 25, 2000
(Title of the indenture securities)
_____________________________________________________
<PAGE>
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
New York State Banking Department, State House, Albany, New York
12110.
Board of Governors of the Federal Reserve System, Washington, D.C.,
20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty Street,
New York,
N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
-2-
<PAGE>
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of Amendment
dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985 and December 2, 1991 (see Exhibit 1 to Form T-1 filed in
connection with Registration Statement No. 33-50010, which is incorporated by
reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form
T-1 filed in connection with Registration Statement No. 33-84460, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act (see
Exhibit 6 to Form T-1 filed in connection with Registration Statement No. 33-
50010, which is incorporated by reference).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, Chemical Bank, a corporation organized and existing under the laws of
the State of New York, has duly caused this statement of eligibility to be
signed on its behalf by the undersigned, thereunto duly authorized, all in the
City of New York and State of New York, on the 13TH day of NOVEMBER, 1995.
CHEMICAL BANK
By ________________________________
_____________________________________
L. O'Brien
Senior Trust Officer
-3-
<PAGE>
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
Chemical Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business June 30, 1995, in
accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
DOLLAR AMOUNTS
ASSETS IN MILLIONS
<S> <C> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin...................................... $ 5,573
Interest-bearing balances.............................. 2,681
Securities:..............................................
Held to maturity securities.............................. 6,027
Available for sale securities............................ 18,304
Federal Funds sold and securities purchased under
agreements to resell in domestic offices of the
bank and of its Edge and Agreement subsidiaries,
and in IBF's:
Federal funds sold..................................... 1,516
Securities purchased under agreements to resell........ 287
Loans and lease financing receivables:
Loans and leases, net of unearned income $ 73,829
Less: Allowance for loan and lease losses 1,885
Less: Allocated transfer risk reserve..... 104
-------
Loans and leases, net of unearned income,
allowance, and reserve................................. 71,840
Trading Assets........................................... 25,315
Premises and fixed assets (including capitalized
leases)................................................ 1,395
Other real estate owned.................................. 69
Investments in unconsolidated subsidiaries and
associated companies................................... 158
Customer's liability to this bank on acceptances
outstanding............................................ 1,120
Intangible assets........................................ 484
Other assets............................................. 7,254
-----
TOTAL ASSETS............................................. $142,023
========
</TABLE>
-4-
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES
<S> <C>
Deposits
In domestic offices..................................... $46,128
Noninterest-bearing .........................$16,282
Interest-bearing ............................ 29,846
------
In foreign offices, Edge and Agreement subsidiaries,
and IBF's............................................... 30,833 Noninterest-bearing
.........................$ 199
Interest-bearing ............................ 30,634
------
Federal funds purchased and securities sold under agree-
ments to repurchase in domestic offices of the bank and
of its Edge and Agreement subsidiaries, and in IBF's
Federal funds purchased................................. 16,779
Securities sold under agreements to repurchase.......... 810
Demand notes issued to the U.S. Treasury.................. 1,001
Trading liabilities....................................... 20,888
Other Borrowed money:
With original maturity of one year or less.............. 6,505 With original maturity
of more than one year...... 602
Mortgage indebtedness and obligations under capitalized
leases.................................................. 18
Bank's liability on acceptances executed and outstanding 1,126
Subordinated notes and debentures......................... 3,411
Other liabilities......................................... 6,287
TOTAL LIABILITIES......................................... 134,388
--------
EQUITY CAPITAL
Common stock.............................................. 620
Surplus................................................... 4,524
Undivided profits and capital reserves.................... 2,724
Net unrealized holding gains (Losses)
on available-for-sale securities.......................... (241)
Cumulative foreign currency translation adjustments....... 8
TOTAL EQUITY CAPITAL...................................... 7,635
--------
TOTAL LIABILITIES, LIMITED-LIFE PREFERRED
STOCK AND EQUITY CAPITAL................................ $142,023
==========
</TABLE>
I, Joseph L. Sclafani, S.V.P. & Controller of the
above-named bank, do hereby declare that this Report of
Condition has been prepared in conformance with the in-
structions issued by the appropriate Federal regulatory
authority and is true to the best of my knowledge and
belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness
of this Report of Condition and declare that it has been
examined by us, and to the best of our knowledge and
belief has been prepared in conformance with the in-
structions issued by the appropriate Federal regulatory
authority and is true and correct.
WALTER V. SHIPLEY )
EDWARD D. MILLER )DIRECTORS
WILLIAM B. HARRISON )
-5-
<PAGE>
YORKTON SECURITIES INC. FIRST MARATHON SECURITIES LTD.
Suite 1000, 1055 Dunsmuir Street 2 First Canadian Place
Vancouver, British Columbia Toronto, Ontario
V7X 1L4 M4X 1J9
October 25, 1995
Atlas Corporation
Suite 3150, 370 Seventeenth Street
Denver, Colorado
U.S.A. 80202
Attention: David J. Birkenshaw, CEO
- ------------------------------------
Dear Sirs:
We understand that Atlas Corporation (the "Corporation") proposes to offer (the
"Offering") up to US $15,000,000 principal amount of Special Debenture Warrants
(the "Special Warrants") for aggregate gross proceeds of up to US $15,000,000 to
be used for Atlas' general corporate purposes.
Subject to the terms and conditions set forth below, Yorkton Securities Inc.
("Yorkton") and First Marathon Securities Ltd. ("First Marathon") (collectively,
the "Underwriters") hereby offer to purchase from the Corporation and, by its
acceptance hereof the Corporation agrees to sell to the Underwriters at the
Closing (as hereinafter defined) on the Closing Date (as hereinafter defined),
the amount of Special Warrants determined in accordance with this Agreement.
The rights and obligations of the Underwriters to purchase the Special Warrants
(or arrange substitute purchasers therefor) shall be several (as distinguished
from joint) and be divided, as between themselves, in the ratios of 70% (or up
to US $10.5 million of Special Warrants) to Yorkton and 30% (or up to US $4.5
million of Special Warrants) to First Marathon.
All references to dollars or $ herein are to lawful currency of the United
States of America, unless otherwise indicated.
TERMS AND CONDITIONS
- --------------------
<PAGE>
The terms and conditions relating to the purchase and sale of the Debentures are
as follows:
DESCRIPTION OF SECURITIES
-------------------------
The material attributes and characteristics of the Special Warrants shall
be as follows:
the Special Warrants will be issued in multiples of $100 and each
Special Warrant shall entitle the holder to receive upon exercise (or
deemed exercise) $100 principal amount (subject to adjustment as
provided for herein) of Exchangeable Debentures (the "Debentures") of
the Corporation, without the payment of any additional consideration;
the Special Warrants will be exercisable on or before 5:00 p.m.
(Vancouver Time) on the date (the "Expiry Date") which is the earlier
of:
the fifth business day following the date (the "Qualification
Date") upon which all Qualification and Registration Requirements
(as hereinafter defined) have been met; and
the first business day which is twelve (12) months after the
Closing Date (as hereinafter defined.
All Special Warrants not exercised prior to the Expiry Date will be
deemed to be exercised on the Expiry Date without further action or
notice on the part of the holders thereof;
at the Closing (as hereinafter defined), the gross proceeds of the
Private Placement (the "Escrow Funds") will be placed into escrow in
an account of the Special Warrant Trustee (as hereinafter defined)
with a U.S. "bank" as such term is defined in section 3(a)(6) of the
United States Securities Exchange Act of 1934 (the "1934 Act"). The
Escrow Funds may be released to the Corporation only upon exercise (or
deemed exercise) of the Special Warrants and will be released to
holders of Special Warrants only in the event of retraction and
cancellation pursuant to clause (iv) below;
if all of the Qualification and Registration Requirements have not
been met on or before 8:00 p.m. (Vancouver time) on the first business
day following ninety (90) days from the Closing Date (the
"Qualification Deadline") holders of Special Warrants may, until 5:00
p.m. (Vancouver Time) on the tenth day (or next succeeding business
day if the tenth day is not a business day) following the
Qualification Deadline (the "Retraction Deadline") tender their
Special Warrants to the Special Warrant Trustee for retraction and
<PAGE>
cancellation at a cash price of $105 per Special Warrant. Each Special
Warrant outstanding following the Retraction Deadline will entitle the
holder to receive, upon exercise (or deemed exercise), $110 principal
amount of Debentures, without the payment of any additional
consideration; and
in the event that the Escrow Funds are insufficient for payment of the
Special Warrants upon retraction, the Corporation will forthwith
provide the Special Warrant Trustee with sufficient funds for such
purpose.
The material attributes and characteristics of the Debentures shall be as
follows:
the Debentures will be issued in registered form in multiples of US
$100, and will bear interest on the outstanding principal amount at
the rate of 7% per annum, calculated semi-annually, not in advance
with interest payments accruing retroactive to October 25, 1995.
Interest will be paid semi-annually in cash on November 1 and May 1 of
each year. The principal amount of the Debentures together with
accrued interest will be repayable on October 25, 2000 (the "Due
Date");
at any time prior to repayment of the Debentures by the Corporation,
holders of Debentures will have the right (the "Exchange Right") upon
seven days notice to exchange their Debentures, in whole or in part,
for common shares ("Granges Shares") of Granges Inc. ("Granges")
currently held by the Corporation, at the rate of forty-two and one-
half (42.5) Granges Shares for each US $100 of principal amount of
Debentures outstanding (the "Exchange Price");
commencing on October 25, 1998 until the Due Date, the Corporation
will have the right (the "Redemption Right"), upon thirty (30) days
notice (the "Redemption Notice Period") to redeem the Debentures,
provided that the Average Market Price (as hereinafter defined) of the
Granges Shares on the date that the Redemption Right is exercised is
not less than US $2.94 per share. Holders of Debentures may exercise
their Exchange Right during the Redemption Notice Period;
upon exercise of the Redemption Right, the Corporation shall not later
than five (5) business days following expiry of the Redemption Notice
Period, redeem the Debentures by repaying all outstanding interest on
the Debentures (in cash) and by repaying the outstanding principal
amount of the Debentures either in cash or in Granges Shares at a
price per share equal to the Exchange Price (or any combination
thereof, on a pro-rata basis to all holders of Debentures);
upon maturity of the Debentures the Corporation shall, on the first
business day following the Due Date, retire the Debentures by repaying
all
<PAGE>
outstanding interest on the Debentures (in cash) and by repaying the
outstanding principal amount of the Debentures either in cash or in
Granges Shares at a price per share equal to 95% of the Average Market
Price of the Granges Shares as calculated on the Due Date (or any
combination thereof, on a pro-rata basis to all holders of
Debentures); and
"Average Market Price" of the Granges Shares means the average of the
closing prices of the Granges Shares on the American Stock Exchange
(or, if Granges' shares are not then listed on the American Stock
Exchange, the stock exchange or over-the-counter market upon which the
Granges Shares are traded which in aggregate, has the highest dollar
trading volume) for the twenty consecutive trading days preceding the
date upon which the Average Market Price is calculated; and
the number, price and class of the Granges Shares to be delivered to
holders upon Exchange, Redemption and repayment of the Debentures will
be adjusted proportionately upon the occurrence of certain events
respecting Granges or the Granges Shares referred to in the Trust
Indenture (as hereinafter defined) including any stock-splits,
consolidations, reclassifications, mergers, amalgamations,
arrangements, payment of stock dividends, payment of extraordinary
cash dividends, or the issuance by Granges of any Granges Shares for
cash at a price less than the Average Market Price.
In this Agreement "Securities" means the Special Warrants, the Debentures
and the Granges Shares, and "Subject Securities" means the Debentures and
the Granges Shares.
Registration, Qualification and Stock Exchange Listing Requirements
-------------------------------------------------------------------
The Corporation shall, as soon as practicable following Closing, file (or
cause to be filed) the following documents (collectively, the
"Qualification and Registration Filings"):
a preliminary prospectus and (final) prospectus (the "Prospectus") in
the Provinces of Ontario and British Columbia qualifying the
distribution of the Debentures upon exercise of the Special Warrants;
a registration statement or registration statements (the "1933
Registration Statement") under the United States Securities Act of
1933, as amended (the "1933 Act"), registering for resale the Subject
Securities, and shall also file (or cause to be filed) all required
filings with state securities or "blue sky" administrators in the
states where the holders of such Securities propose to offer and sell
the Securities (the "Blue Sky Filings"); and
<PAGE>
a registration statement (the "1934 Registration Statement") under the
1934 Act registering the class of Debentures under Section 12(b) of
the 1934 Act.
The Corporation will use its best efforts to
cause receipts to be issued by the securities commissions in Ontario
and British Columbia for the (final) Prospectus;
cause the 1933 Registration Statement, the 1934 Registration
Statement, and Blue Sky Filings to become effective
(collectively, the "Qualification and Registration Requirements") on or
before the Qualification Deadline.
If the Qualification and Registration Requirements are not met on or before
the Qualification Deadline, the Corporation will continue to use its best
efforts to cause the Qualification and Registration Requirements to be met,
unless all Special Warrants have been retracted and cancelled pursuant to
section 1(a)(iv) hereof, notwithstanding the change in the exercise ratio
of Debentures to Special Warrants pursuant to section 1(a)(iv) hereof.
Subject to section 2(e) below, the Corporation will cause the 1933
Registration Statement, as it relates to the Debentures, to remain
effective until a date which is three (3) years after the issuance of the
Debentures, and, as it relates to the Granges Shares, to remain effective
until the date which is three (3) years after the latest date upon which
Granges Shares are acquired by holders of Debentures and will cause the
1934 Registration Statement to remain effective throughout the term of the
Debentures.
The Corporation may, upon notice to the holders of Debentures, temporarily
suspend sales under the 1933 Registration Statement (insofar as it relates
to the Corporation) during any reasonable period in which its board of
directors determines, in good faith, that because of material corporate
changes, it would not be feasible to maintain a current prospectus during
such period, provided that in such event, the Corporation will, at the
earliest possible time thereafter, take all necessary steps to update the
prospectus disclosure and notify the Subscriber that sales under the 1933
Registration Statement may resume.
Prior to the filing of the Registration Filings and any documents
supplemental thereto or any amending or supplementary prospectuses,
registration statements or other supplemental documents or any similar
document (collectively, the "Supplementary Material"), the Corporation
agrees to permit the Underwriters and their counsel to participate fully in
the preparation of such documents and allow the Underwriters and their
counsel to conduct all due diligence which the Underwriters may reasonably
require to conduct in order to fulfill their obligations under applicable
securities legislation.
<PAGE>
The Corporation will cause the Special Warrants to be listed, posted and
called for trading on the Vancouver Stock Exchange, exempt market, as soon
as possible following the Closing Date but in any event, not later than
thirty (30) days from the Closing Date and will cause the Debentures to be
listed, posted and called for trading on the Vancouver Stock Exchange (and
will use its best efforts to have the Debentures listed, posted and called
for trading on the New York Stock Exchange or such other U.S. stock
exchange as is acceptable to the Underwriters) immediately upon deemed
exercise of the Special Warrants. The Corporation will maintain such
listings of the Debentures throughout the term of the Debentures. The
Corporation acknowledges that the stock exchange listing requirements are a
fundamental term of the Offering and that any breach thereby would
constitute a fundamental breach giving rise to the remedy of rescission on
the part of Purchasers.
Special Warrant Indenture, Trust Indenture and Subscription Agreement
---------------------------------------------------------------------
The terms and conditions governing the Special Warrants and release of the
Escrow Funds will be contained in an indenture (the "Special Warrant
Indenture") to be entered into between the Corporation and Montreal Trust
Company of Canada (the "Special Warrant Trustee") and a subscription
agreement or agreements (collectively, the "Subscription Agreement")
between the Corporation and purchasers of Special Warrants. The terms and
conditions of the Special Warrant Indenture shall be mutually satisfactory
to the Corporation and the Underwriters acting reasonably, and consistent
with the terms of this Agreement.
The Debentures shall be issued pursuant to the provisions of a trust
indenture (the "Trust Indenture") to be entered into between the
Corporation and Chemical Bank (the "Trustee"). The terms and conditions of
the Trust Indenture and Subscription Agreement shall be mutually
satisfactory to the Corporation and the Underwriters acting reasonably, and
consistent with the terms of this Agreement.
It shall be a term of the Trust Indenture that the Corporation shall pledge
(the "Pledge") Granges Shares with the Trustee as continuing security for
the repayment of principal and interest on the Debentures. The Granges
Shares subject to the Pledge shall be delivered to the Trustee at Closing
on the basis of one (1) Granges Share for each $1.18 of principal amount of
Special Warrants sold on the Closing Date. The Trust Indenture will provide
that the Granges Shares subject to the Pledge may be released by the
Trustee from the Pledge only for exercises of the Exchange Right or the
Redemption Right, or upon repayment of the Debentures.
The Special Warrant Indenture and the Trust Indenture may not be amended
without the prior written consent of the Underwriters.
Offering
--------
<PAGE>
The Underwriters will advise the Corporation as to the amount of Special
Warrants to be purchased (up to $15,000,000) not later than the business
day immediately prior to the Closing Date. Although this offer is presented
on behalf of the Underwriters as purchasers, prior to the Closing Date, the
Underwriters will endeavour to arrange substituted purchasers as principals
and on their own behalf, for the Special Warrants. The Underwriters'
commitment to purchase the Special Warrants shall be reduced by the
aggregate dollar amount of Special Warrants in respect of which certified
cheques or bank drafts for the purchase price thereof are delivered to the
Corporation on behalf of substituted purchasers at the Closing (as
hereinafter defined). Any reference in this agreement to a "Purchaser" or
the "Purchasers" shall be taken to be a reference to the Underwriters and
to such substituted purchasers, if any.
The sale of the Special Warrants to Purchasers in Ontario is to be effected
in a manner exempt from the prospectus requirements of the Securities Act
--------------
(Ontario) and the Regulation thereunder. Each Purchaser of the Special
Warrants resident in Ontario shall purchase under subsection 72(1)(a), (c)
or (d) of the Securities Act (Ontario) and in the case of 72(1)(d) as
--------------
qualified by subsection 27(1) of the Regulation thereto and, insofar as
other Provinces of Canada are concerned, shall purchase the Special
Warrants under the corresponding sections of the applicable securities laws
of each such Province.
The Securities may be offered in the United States of America solely to
accredited investors without any general solicitation or general
advertising, in accordance with the terms set forth in the Subscription
Agreement for U.S. Purchasers, in such a manner as to be exempt from
registration under the 1933 Act, and exempt from the registration and
qualification requirements under applicable securities and "blue sky" laws
of the states in which such securities are offered and sold.
The parties agree that all offers and sales of the Securities by them prior
to the expiration of the restricted period(s) specified by Rule 903(c)(2)
(the "Restricted Period") shall be made only
in accordance with the provisions of Rule 903 or Rule 904 of
Regulation S;
pursuant to registration under the 1933 Act; or
pursuant to an available exemption from the registration requirements
of the 1933 Act.
All offering materials and documents (other than press releases) used in
connection with offers and sales of the Securities prior to the expiration
of the Restricted Period shall include statements to the effect that the
Securities have not been registered under the 1933 Act and may not be
offered or sold in the United States or to "U.S. persons" (as defined in
Regulation S), other than distributors, unless the Securities
<PAGE>
are registered under the 1933 Act or an exemption from the registration
requirements of the 1933 Act is available.
The Securities shall be offered and sold in reliance upon Regulation S only
in "offshore transactions" (as defined in Regulation S) to purchasers which
have
certified that they are not U.S. persons and are not acquiring the
Securities for the account or benefit of a U.S. person; and
agreed to sell the Securities only in accordance with the provisions
of Regulation S, pursuant to registration under the 1933 Act, or
pursuant to an available exemption from registration.
The Securities, when issued or sold by the Corporation, shall bear a legend
to the effect that transfer of the Securities is prohibited except in
accordance with the provisions of Regulation S, unless registered or exempt
from the registration requirements of the 1933 Act. The parties acknowledge
that Rule 903(c)(2) of Regulation S [unlike Rule 903(c)(3)] does not
contain a provision requiring the imposition of a restrictive legend on
securities sold thereunder, and that such a legend will nevertheless
voluntarily be imposed on the Securities when issued or sold by the
Corporation under Regulation S, because certain requirements of Regulation
S remain to be satisfied during the subsequent Restricted Period.
Therefore, the Corporation covenants that, unless, and then only to the
extent that, the SEC adopts a legend requirement for securities sold under
Rule 903(c)(2), the Corporation will instruct the transfer agent of the
Subject Securities promptly after the end of the Restricted Period to
reissue the Securities without restrictive legend and will, if required by
such transfer agent, furnish the transfer agent with a supporting legal
opinion from counsel to the Corporation. The Underwriters agree to co-
operate with the Corporation in providing any certificates or other
information reasonably necessary for the Corporation to confirm that Rule
903 and Rule 903(c)(2) have been satisfied. The foregoing notwithstanding,
the parties acknowledge and agree that Rule 902(m) of Regulation S requires
that a legend restricting the exercise of the Exchange Right be placed on
the Debentures issued under Regulation S until such time as the Exchange
Right is exercised in conformity with such legend.
The parties agree that, during the period in which the Securities are
offered for sale and during the Restricted Period, no "directed selling
efforts" (as defined in Regulation S) shall be made in the Untied States by
the Corporation, the Underwriters, any of their respective affiliates, or
any person acting on behalf of any of the foregoing.
The Corporation agrees to pay to the Underwriters at the Closing a
commission (the "Commission") equal to 5 1/2% of the aggregate gross
proceeds derived from the sale of the Special Warrants, in consideration of
the services to be rendered by the Underwriters in connection with the
Offering, which services shall include:
<PAGE>
advising the Corporation with respect to the private placement of the
Special Warrants;
assisting in the preparation of the form of Subscription Agreement,
Special Warrant Indenture, and Trust Indenture to be entered into by
the Corporation; and
endeavouring to arrange for substituted purchasers for the purchase of
the Special Warrants.
The Corporation agrees that the Underwriters, respectively, will be
permitted to appoint other registered dealers (or other dealers duly
qualified in their respective jurisdictions) as their agents ("Selling
Group Members") to assist in the Offering and that the Underwriters may
determine the remuneration payable to such other dealers appointed by them.
The Underwriters covenant with the Corporation that they will and will use
their reasonable best efforts to ensure that their respective Selling Group
Members, if any, will
conduct activities in connection with arranging for the sale of the
Special Warrants in compliance with applicable securities laws and
regulations; and
not solicit offers to purchase the Special Warrants in a manner that
would require registration thereof or filing of a prospectus with
respect thereto under the laws of any jurisdiction including, without
limitation, the United States or any state thereof.
The Underwriters have offered and sold, and will offer and sell, the
Securities
as part of the distribution thereof at any time, and
otherwise until 40 days after the Closing Date only in accordance with
Rule 903 of Regulation S under the 1933 Act or pursuant to an
available exemption from the registration requirements of the 1933
Act.
Accordingly, neither the Underwriters, their affiliates nor any persons
acting on behalf of the foregoing, have engaged or will engage in any
directed selling efforts in the United States with respect to the
Securities, and the Underwriters, such affiliates and such other persons
have complied and will comply with the offering restrictions requirements
of Regulation S. The Underwriters agree that, at or prior to confirmation
of sale of the Securities, they will have sent to each distributor, dealer
or person receiving a selling concession, fee or other remuneration that
purchases the Securities during
<PAGE>
the Restricted Period a confirmation or notice to substantially the
following effect:
"The securities covered hereby have not been registered under the U.S.
Securities Act of 1933 (the "1933 Act") and may not be offered or sold
within the United States or to, or for the account or benefit of, U.S.
persons
(i) as part of their distribution at any time or
(ii) otherwise until [INSERT THE DATE WHICH IS 40 DAYS AFTER THE
CLOSING DATE] except in either case in accordance with the
provisions of Regulation S under the 1933 Act or pursuant to an
available exemption from the registration requirements of the
1933 Act."
The Underwriters agree to obtain substantially identical undertakings from
their respective Selling Group Members, if any. Other than any agreement
with Selling Group Members, the Underwriters have not entered into any
contractual arrangement with respect to the distribution of the Securities,
except with their affiliates. Terms used in this subsection have the
meanings given to them by Regulation S.
Right of First Refusal
----------------------
The Corporation hereby grants to the Underwriters a right of first refusal to
acquire (or act as agent with respect to dispositions of) any Granges Shares
held by the Corporation (and not subject to the Pledge) for a period of twelve
(12) months following the Closing Date and the Underwriters shall have fifteen
(15) days from receipt of notice of any proposed disposition of Granges Shares
by the Corporation to exercise such right. Such right of first refusal does not
apply in respect of any future pledges by the Corporation of shares of Granges,
or any tender offers, mergers, exchange offers, amalgamations, or consolidations
respecting Granges or the shares of Granges.
<PAGE>
Representations and Warranties of the Corporation
-------------------------------------------------
The Corporation represents and warrants to the Underwriters and acknowledges
that the Underwriters are relying upon such representations and warranties, as
follows:
the Corporation has been duly incorporated and organized and is validly
existing under the laws of the jurisdiction of its incorporation and
(except as noted in Schedule "B") is duly qualified to carry on its
business and is in good standing in each jurisdiction in which it conducts
its business or the ownership, leasing or operation of its property and
assets requires such qualification and has all requisite corporate power
and authority to carry on its business as now conducted and as currently
proposed to be conducted and to own, lease and operate its property and
assets;
each of the subsidiaries of the Corporation (the "Subsidiaries") is
properly described in Schedule "A" hereto and has been duly incorporated
and organized and is validly existing under the laws of the jurisdiction of
its incorporation and (except as noted in Schedule "B" hereto) is duly
qualified to carry on its business and is in good standing in each
jurisdiction in which it conducts its business or the ownership, leasing or
operation of its property and assets requires such qualification and has
all requisite corporate power and authority to carry on its business as now
conducted and as currently proposed to be conducted and to own, lease and
operate its property and assets;
the Corporation has full corporate power and authority to undertake the
Offering, to issue the Special Warrants, and the Debentures, to pay the
Commission to the Underwriters, to Pledge the Granges Shares and to deliver
the Granges Shares to holders of Debentures upon exercise of Exchange
Rights, Redemption Rights and upon repayment of the Debentures;
at the Time of Closing the Special Warrants will be duly and validly
created, authorized and issued and the Debentures will be duly and validly
authorized for issuance upon exercise (or deemed exercise) of the Special
Warrants;
the Corporation is not party to and has not granted any agreement, warrant,
option or right or privilege capable of becoming an agreement, for the
purchase, subscription or issuance of any Granges Shares or securities
convertible into or exchangeable for Granges Shares except as contemplated
hereunder or as disclosed in the Corporation's Form 10-K for the fiscal
year ended June 30, 1995 and all documents and information incorporated
therein by reference (the "Form 10-K"), a copy of which has been delivered
to the Underwriters;
<PAGE>
the authorized and issued capital of the Corporation is as disclosed in the
Form 10-K;
the Corporation has full corporate power and authority to enter into this
Agreement, the Subscription Agreements, the Special Warrant Indenture, and
the Trust Indenture and to perform its obligations set out herein and
therein and each of this Agreement, the Subscription Agreements, the
Special Warrant Indenture, and the Trust Indenture has been, or will be
upon execution thereof, duly authorized, executed and delivered by the
Corporation and constitutes, or will constitute when executed, a legal,
valid and binding obligation of the Corporation enforceable in accordance
with their respective terms;
the Corporation is not in default or breach of, and the execution and
delivery of each of this Agreement, the Subscription Agreements, the
Special Warrant Indenture, and the Trust Indenture and the performance of
the transactions contemplated thereby will not result in a breach of, and
do not create a state of facts which, after notice or lapse of time or
both, will result in a breach of, and do not and will not conflict with,
any of the terms, conditions or provisions of the constating documents,
resolutions or by-laws of the Corporation or any indenture, contract,
agreement (written or oral), instrument, lease or other document to which
the Corporation is a party or by which the Corporation is or will be
contractually bound as of the Time of Closing (as hereinafter defined);
no actions, suits, inquiries or proceedings are pending or, to the
knowledge of the Corporation, are contemplated or threatened to which the
Corporation or the Subsidiaries is a party or to which the property of the
Corporation or the Subsidiaries is subject that would result individually
or in the aggregate in any material adverse change in the business
operations, business, condition (financial or otherwise) of the Corporation
and the Subsidiaries, on a consolidated basis or which might reasonably be
expected to affect the consummation of this Agreement;
the audited annual financial statements of the Corporation as at and for
the year ended June 30, 1995 (the "Financial Statements") present fairly,
in all material respects, the financial position of the Corporation as at
June 30, 1995 and the results of its operations and the changes in its
financial position for the periods then ended in accordance with generally
accepted accounting principles in the United States of America;
there has not been any material adverse change in the assets, liabilities
or obligations (absolute, accrued, contingent or otherwise) of the
Corporation and the Subsidiaries, on a consolidated basis, in the positions
as set forth in the Financial Statements and there has not been any
material adverse change in the business, operations or condition (financial
or otherwise) or results of the operations of the Corporation and the
Subsidiaries, on a consolidated basis, since June 30, 1995, and since that
date there have been no material facts, transactions, events or
<PAGE>
occurrences which materially adversely affect the business of the
Corporation and the Subsidiaries, on a consolidated basis;
other than the Underwriters and their agents, there is no person, firm or
corporation acting or purporting to act at the request of the Corporation,
who is entitled to any brokerage or finder's fee in connection with the
transactions contemplated herein and in the event that any person, firm or
corporation acting or purporting to act for the Corporation establishes a
claim for any fee from the Underwriters, the Corporation covenants to
indemnify and hold harmless the Underwriters with respect thereto and with
respect to all costs reasonably incurred in defence thereof;
(except as set forth in Schedule "B") the Corporation and the Subsidiaries
have conducted and are conducting their respective businesses in material
compliance with all applicable laws, by-laws, rules and regulations of each
jurisdiction in which their respective businesses are carried on and hold
all licences, registrations, permits, consents or qualifications (whether
governmental, regulatory or otherwise) required in order to enable their
respective businesses to be carried on as now conducted or as proposed to
be conducted, and all such licences, registrations, permits, consents and
qualifications are valid and subsisting and in good standing and neither
the Corporation nor the Subsidiaries have received any notice of
proceedings relating to the revocation or modification of any such license,
registration, permit, consent or qualification which, if the subject of an
unfavourable decision, ruling or finding, would materially adversely affect
the conduct of the business, operations, condition (financial or otherwise)
or income of the Corporation and the Subsidiaries, on a consolidated basis;
no order ceasing or suspending trading in securities of the Corporation or
prohibiting the sale of securities by the Corporation has been issued and
no proceedings for this purpose have been instituted, are pending,
contemplated or threatened;
the issued and outstanding common shares of the Corporation are listed and
posted for trading on the New York Stock Exchange;
none of the materials filed by or on behalf of the Corporation within the
past twelve (12) months with any stock exchange or securities commission
(federal or state) (the "Public Record") contains a material
misrepresentation as at the date of such filing;
the Corporation has not, directly or indirectly, declared or paid any
dividend or declared or made any other distribution on any of its shares or
securities of any class, or, directly or indirectly, redeemed, purchased or
otherwise acquired any of its shares or securities or agreed to do any of
the foregoing;
<PAGE>
each of the material contracts referred to in the Form 10-K to which the
Corporation or the Subsidiaries are a party has been duly authorized,
executed and delivered by the parties thereto and is a legal, valid and
binding obligation of the parties thereto enforceable in accordance with
their respective terms;
the issued and outstanding common shares of Granges (including the Granges
Shares) are listed and posted for trading on the American Stock Exchange
and The Toronto Stock Exchange;
the Corporation is the legal and beneficial owner of 12,714,200 Granges
Shares, all of which are free and clear of any liens, charges, encumbrances
or security interests;
any Granges Shares delivered to a holder of Debentures upon Exchange,
Redemption or repayment of the Debentures will be freely tradeable under
the provisions of the 1933 Act
in transactions through The Toronto Stock Exchange (or otherwise) made
in compliance with Rule 904 of Regulation S, and
in transactions made while the 1933 Registration Statement (relating
to resale of the Granges Shares) is in effect and has not been
suspended, provided the holder complies with the prospectus delivery
requirements of the 1933 Act;
the Debentures will be freely tradeable under the provisions of the 1933
Act in transactions made while the 1933 Registration Statement is in effect
and has not been suspended, provided the holder complies with the
prospectus delivery requirements of the 1933 Act;
upon the Corporation receiving receipts for the (final) Prospectus from the
British Columbia and Ontario Securities Commissions the delivery by the
Corporation of the Debentures and the Granges Shares upon Exchange,
Redemption or repayment of the Debentures, may be effected to holders of
Special Warrants or Debentures resident in Ontario and British Columbia,
without any further requirements under applicable securities legislation in
Ontario or British Columbia;
upon the Corporation receiving receipts for the (final) Prospectus from the
British Columbia and Ontario Securities Commissions, the resale of the
Subject Securities acquired by a holder of Special Warrants or Debentures
will not be subject to prospectus requirements under applicable securities
legislation in Ontario or British Columbia (subject to resale restrictions
affecting "control persons" as defined in applicable securities
legislation);
<PAGE>
payment for the Granges Shares (when acquired by the Corporation) was not
made out of funds (whether principal, interest or proceeds thereof)
deposited in the Corporation's checking account number 12331-09300 or COR
account number 12331-61582 with Bank of America National Trust and Savings
Association; and
all of the representations and warranties made by the Corporation in this
Agreement will continue to be true and correct as of the Time of Closing
(as hereinafter defined).
Covenants of the Corporation
----------------------------
The Corporation hereby covenants to and with the Underwriters that it will:
allow the Underwriters and their counsel to conduct all due diligence in
connection with the Offering and the Registration and Qualification Filings
which the Underwriters may reasonably require;
duly, punctually and faithfully fulfil all legal requirements to permit the
creation, issuance, offering and sale of the Special Warrants including,
without limitation, compliance with all applicable securities legislation
to enable the Securities to be offered for sale and sold in accordance with
this Agreement;
ensure that the offer, sale and distribution of the Securities will fully
comply with the requirements of applicable securities legislation;
cause to be delivered to the Underwriters, if requested, prior to the
filing of the Registration and Qualification Filings and any Supplementary
Material, comfort letters of the auditors of the Corporation addressed to
the Underwriters in form and substance satisfactory to the Underwriters
acting reasonably, relating to the financial statements to be included in
the Registration and Qualification Filings and any Supplementary Material
and verifying the financial information, accounting data and other
numerical data contained in the Registration and Qualification Filings or
any Supplementary Material and matters involving changes or developments
since the respective dates as of which specified financial information is
given to a date not more than two (2) Business Days prior to the date of
such letter;
duly and punctually perform all the obligations to be performed by it under
this Agreement, the Trust Indenture, the Special Warrant Indenture, and the
Subscription Agreements;
during the period commencing with the date hereof and ending on the Due
Date promptly inform the Underwriters of:
<PAGE>
the issuance by a securities commission, stock exchange or similar
regulatory authority or by any other competent authority of any order
to cease or suspend trading of any Securities or of the institution or
threat or institution of any proceedings for that purpose; and
the receipt by the Corporation of any communication from any
securities commission, stock exchange, or similar regulatory authority
relating to the Securities; and
rectify all matters with respect to the Corporation's qualification to
carry on business and own assets in the jurisdictions set out in Schedule
"B" hereto, within thirty (30) days of Closing.
Conditions of Closing
---------------------
The purchase and sale of the Special Warrants and the Closing shall be subject
to the following conditions:
the Corporation having obtained all requisite regulatory approvals required
to be obtained by the Corporation in respect of the Offering on terms
mutually acceptable to the Corporation and the Underwriters;
the Corporation having complied fully with all relevant statutory and
regulatory requirements required to be complied with prior to the Time of
Closing in connection with the Offering;
the Corporation having taken all necessary corporate action to authorize
and approve this Agreement, the Subscription Agreements, the Special
Warrant Indenture, the Trust Indenture, the issuance of the Special
Warrants and Debentures, and the transfer of the Granges Shares and all
other matters relating thereto;
the Underwriters having received at Closing a favourable legal opinion of
Coudert Brothers, counsel to the Corporation, addressed to the
Underwriters, the Underwriters' counsel and each of the Purchasers,
acceptable in all reasonable respects to counsel to the Underwriters to the
following effect:
each of the Corporation and the Subsidiaries is a corporation validly
existing and in good standing under the laws of the jurisdiction of
its incorporation and is qualified to carry on business and own its
assets under the laws of each jurisdiction in which it carries on
business and owns its assets;
each of the Corporation and the Subsidiaries has all requisite
corporate capacity, power and authority to carry on its business as
now conducted by
<PAGE>
it and own its assets and the Corporation has all requisite corporate
capacity, power and authority to execute and deliver this Agreement,
the Subscription Agreements, the Special Warrant Indenture, and the
Trust Indenture and perform all transactions contemplated hereby and
thereby;
the authorized and issued capital of the Corporation is as disclosed
in the Form 10-K;
each of this Agreement, the Subscription Agreements, the Special
Warrant Indenture, and the Trust Indenture to be entered into by the
Corporation has been duly authorized, executed and delivered by the
Corporation and constitutes a legal, valid and binding obligation of
the Corporation enforceable in accordance with its terms;
all necessary corporate action has been taken by the Corporation to
authorize the creation and issuance of the Special Warrants subject to
the terms of the Special Warrant Indenture;
all necessary corporate action has been taken by the Corporation to
authorize the creation and issuance of the Debentures subject to the
terms of the Trust Indenture;
the Granges Shares to be transferred upon the exchange of the
Debentures have been conditionally allotted for delivery to the
holders, from time to time, of the Debentures;
the issue and sale of the Special Warrants has been (and the delivery
of the Granges Shares upon Redemption, Exchange or repayment of the
Debentures will be) effected in such a manner as to be exempt, either
by statute or regulation or order, from the prospectus and
registration requirements of the securities legislation of the
Provinces of Ontario and British Columbia, subject to the filing of
all necessary reports, certificates or undertakings required to be
filed under applicable securities legislation;
any Granges Shares delivered to a holder of Debentures upon Exchange,
Redemption or repayment of the Debentures will be freely tradeable
under the provisions of the 1933 Act
in transactions through The Toronto Stock Exchange (or otherwise)
made in compliance with Rule 904 of Regulation S, and
in transactions made while the 1933 Registration Statement
(relating to resale of the Granges Shares) is in effect and has
not been suspended, provided the holder complies with the
prospectus delivery requirements of the 1933 Act;
<PAGE>
the Debentures will be freely tradeable under the provisions of the
1933 Act in transactions made while the 1933 Registration Statement is
in effect and has not been suspended, provided the holder complies
with the prospectus delivery requirements of the 1933 Act;
upon the Corporation receiving receipts for the (final) Prospectus
from the British Columbia and Ontario Securities Commissions the
delivery by the Corporation of the Debentures and the Granges Shares
upon Exchange, Redemption or repayment of the Debentures, may be
effected to holders of Special Warrants or Debentures resident in
Ontario and British Columbia, without any further requirements under
applicable securities legislation in Ontario or British Columbia;
upon the Corporation receiving receipts for the (final) Prospectus
from the British Columbia and Ontario Securities Commissions, the
resale of the Subject Securities acquired by a holder of Special
Warrants or Debentures will not be subject to prospectus requirements
under applicable securities legislation in Ontario or British Columbia
(subject to resale restrictions affecting "control persons" as defined
in applicable securities legislation);
the execution and delivery of this Agreement, the Subscription
Agreements, the Special Warrant Indenture, and the Trust Indenture and
the performance of the transactions contemplated thereby do not and
will not result in a breach of, and do not create a state of facts
which, after notice or lapse of time or both, will result in a breach
of, and do not and will not conflict with, any of the terms,
conditions or provisions of the constating documents or by-laws of the
Corporation or to counsel's knowledge any law, order or regulation
applicable to the Corporation;
the forms of Special Warrant and Debenture have been approved and
adopted by the directors of the Corporation and conform with all
applicable corporate legislation and stock exchange requirements;
that Montreal Trust Company of Canada has been duly appointed by the
Corporation as the registrar and transfer agent of the Special
Warrants and as the trustee in respect of the Special Warrants;
that Chemical Bank has been duly appointed by the Corporation as the
registrar and transfer agent of the Debentures and as the trustee in
respect of the Debentures;
except for the matters disclosed in the Public Record, there is no
pending or, to counsel's best knowledge after due inquiry, threatened
action or proceeding against the Corporation before any court,
governmental agency or arbitrator that is likely to have a materially
adverse effect upon the financial condition or operations of the
Corporation;
<PAGE>
the Granges Shares have been validly pledged to the Trustee under the
terms of the Trust Debenture, and the Trustee has a perfected security
interest in the Granges Shares, as security for the payment and
performance of the obligations of the Corporation under the Debentures
and the Trust Indenture;
the offer and sale of the Securities in the United States has been
effected in such a manner as to be exempt from registration under the
1933 Act;
the offer and sale of the Securities outside of the United States has
been effected in such a manner as not to require registration under
the 1933 Act by virtue of compliance with Rule 903 of Regulation S,
including Rule 903(c)(2);
the Corporation and Granges are each "reporting issuers" as that term
is defined in Rule 902(l) of Regulation S; and
such other matters including compliance with United States federal and
state securities legislation as the Underwriters may reasonably
request in connection with the Offering.
In giving the opinions contemplated above, counsel to the Corporation shall
be entitled to rely, where appropriate, upon such opinions of local counsel
that counsel to the Corporation opines to the Underwriters are in form and
substance satisfactory to counsel to the Corporation and that the
Underwriters are entitled to rely on, and shall be entitled, as to matters
of fact, to rely upon the representations and warranties of Purchasers
contained in the executed Subscription Agreements, a certificate of fact of
the Corporation signed by officers in a position to have knowledge of such
facts and their accuracy and certificates of such public officials and
other persons as are necessary or desirable;
the Underwriters and each of the Purchasers having received a certificate
of the Corporation dated the Closing Date (as hereinafter defined) signed
by the President of the Corporation or by such other officers acceptable to
the Underwriters certifying as to certain matters reasonably requested by
the Underwriters including certification that:
the Corporation has complied with all covenants and satisfied all
terms and conditions of this Agreement on its part to be complied with
and satisfied up to the Time of Closing (as hereinafter defined);
all of the representations and warranties contained in this Agreement
are true and correct as of the Closing Date with the same force and
effect as if
<PAGE>
made at and as of the Closing Date, after giving effect to the
transactions contemplated hereby;
since the date hereof, there has been no material adverse change
(actual, proposed or prospective, whether financial or otherwise) in
the business, affairs, operations, assets, liabilities (contingent or
otherwise) or capital of the Corporation and the Subsidiaries on a
consolidated basis;
no order, ruling or determination having the effect of ceasing or
suspending trading in any securities of the Corporation or Granges
(including the Debentures) has been issued and no proceedings for such
purposes are pending, or, to the knowledge of such officers,
contemplated or threatened;
the execution and delivery of this Agreement, the Subscription
Agreements, the Special Warrant Indenture, and the Trust Indenture and
the performance of the transactions contemplated thereby do not and
will not result in a breach of, and do not create a state of facts
which, after notice, or lapse of time or both, will result in a breach
of, and do not and will not conflict with, any of the terms,
conditions or provisions of the constating documents or by-laws of the
Corporation or any trust indenture, agreement, or instrument to which
the Corporation is contractually bound on the Closing Date.
Closing
-------
The purchase and sale of the Special Warrants (the "Closing") shall be completed
at the offices of Lang Michener Lawrence & Shaw, Suite 2500, 595 Burrard Street,
Vancouver, British Columbia, at 9:00 a.m. (Vancouver time) (the "Closing Time")
on November 10, 1995 (the "Closing Date") or at such other time or on such other
date as the Corporation and the Underwriters may agree upon.
At the Time of Closing, the Corporation shall deliver to the Underwriters on
behalf of the Purchasers:
certificates representing the Special Warrants duly registered as the
Underwriters may direct;
the requisite legal opinions and certificate as contemplated in section 8
hereof;
certified cheques payable to the Underwriters representing the Commission
and the expenses referred to in Section 10 hereof; and
such further documentation as may be contemplated herein or as counsel to
the Underwriters or the applicable regulatory authorities may reasonably
require;
<PAGE>
against payment of the purchase price by certified cheque delivered to the
Special Warrant Trustee and payable to Bank of Nova Scotia Trust Company of New
York with respect to the purchase and sale of the Special Warrants and against
confirmation satisfactory to the Corporation that the purchase price has been
received as aforesaid by the Special Warrant Trustee in an aggregate amount
equal to the aggregate purchase price for the Special Warrants.
Expenses
--------
Whether or not Closing occurs, the Corporation shall pay all costs, fees and
expenses of or incidental to the performance of the obligations under this
Agreement including, without limitation:
the cost of preparing and printing this Agreement, the Subscription
Agreements, the Special Warrant Indenture, and the Trust Indenture;
the cost of preparing, printing and filing all securities and blue sky
filings required in connection with the Offering;
the costs of applying for and obtaining all listings of the Special
Warrants and Debentures on securities exchanges pursuant to this Agreement;
costs of the Corporation's transfer agent and the transfer agent of
Granges;
costs of the Special Warrant Trustee and fees and expenses of the Special
Warrant Trustee's counsel;
costs of the Trustee and fees and expenses of the Trustee's counsel;
the cost of preparing, printing and filing the Registration and
Qualification Filings (including fees and costs of counsel to the
Underwriters);
registration, countersignature and delivery of the Special Warrants and
Debentures;
the fees and expenses of the Corporation's auditors, counsel and any local
counsel;
the reasonable fees and expenses of the Underwriters' counsel; and
the Underwriters' reasonable out-of-pocket expenses (including marketing
expenses).
<PAGE>
Such amounts payable to the Underwriters shall be paid by the Corporation at the
Time of Closing to the Underwriters upon receiving an invoice therefor from the
Underwriters. Failure by the Corporation to make full payment, as aforesaid, at
the Time of Closing does not constitute a waiver by the Underwriters of the
Company's obligation to pay all such costs, fees and expenses.
Indemnities
-----------
The Corporation hereby covenants and agrees to protect, indemnify and hold
harmless the Underwriters and their directors, officers and employees,
solicitors and agents (individually, an "Indemnified Party" and, collectively,
the "Indemnified Parties") from and against all losses, claims, costs, damages
or liabilities which they may suffer or incur caused by or arising directly or
indirectly by reason of:
any information or statement (except any information or statement relating
solely to or supplied by the Underwriters) contained in the Public Record
or Registration and Qualification Filings or any Supplementary Material
being or being alleged to be a misrepresentation;
the omission or alleged omission to state in the Public Record or
Registration and Qualification Filings or any Supplementary Material a
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances under which
it was made (except the omission to state a material fact relating solely
to the Underwriters);
the Corporation not complying with any requirement of any securities
legislation or regulatory requirements in connection with the Offering or
the sale of the Granges Shares;
any order made or any inquiry, investigation or proceeding commenced or
threatened by any regulatory authority based upon an allegation that any
untrue statement or alleged omission or any misrepresentation or alleged
misrepresentation in the Public Record, Registration and Qualification
Filings (except omissions or statements relating solely to the
Underwriters), or any Supplementary Material exists which prevents or
restricts the trading in or distribution of the Debentures or the Granges
Shares; or
the Corporation's failure to comply with any of its obligations hereunder
including any breach of or default under any representation, warranty,
covenant or agreement of the Corporation in any of this Agreement, the
Subscription Agreements, the Special Warrant Indenture, or the Trust
Indenture or any other document to be delivered pursuant thereto.
<PAGE>
If any action or claim shall be asserted against an Indemnified Party in respect
of which indemnity may be sought from the Corporation pursuant to the provisions
hereof, or if any potential claim contemplated by this section shall come to the
knowledge of an Indemnified Party, the Indemnified Party shall promptly notify
the Corporation in writing of the nature of such action or claim (provided that
any failure to so notify shall not affect the Corporation's liability under this
paragraph unless such delay has prejudiced the defence to such claim). The
Corporation shall be entitled but not obliged to participate in or assume the
defence thereof, provided, however that the defence shall be through legal
counsel acceptable to the Indemnified Party, acting reasonably. In addition,
the Indemnified Party shall also have the right to employ separate counsel in
any such action and participate in the defence thereof, and the fees and expense
of such counsel shall be borne by the Indemnified Party unless
(a) the employment thereof has been specifically authorized in writing by the
Corporation;
(b) the Indemnified Party has been advised by counsel acceptable to the
Corporation, acting reasonably, that representation of the Corporation and
the Indemnified Party by the same counsel would be inappropriate due to
actual or potential differing interests between them; or
(c) the Corporation has failed within a reasonable time after receipt of such
written notice to assume the defence of such action or claim.
It is understood and agreed that the Corporation shall not, in connection with
any suit in the same jurisdiction, be liable for the legal fees and expenses of
more than one separate legal firm to represent the Indemnified Parties. Neither
party shall effect any settlement of any such action or claim or make any
admission of liability without the written consent of the other party, such
consent not to be unreasonably withheld or delayed. The indemnity hereby
provided for shall remain in full force and effect and shall not be limited to
or affected by any other indemnity in respect of any matters specified in this
section obtained by the Indemnified Party from any other person.
To the extent that any Indemnified Party is not a party to this Agreement the
Underwriters shall obtain and hold the right and benefit of this section in
trust for and on behalf of such Indemnified Party.
<PAGE>
The Corporation hereby consents to personal jurisdiction and service and venue
in any court in which any claim which is subject to indemnification hereunder is
brought against the Underwriters or any Indemnified Party and to the assignment
of the benefit of this section to any Indemnified Party for the purpose of
enforcement provided that nothing herein shall limit the Corporation's right or
ability to contest the appropriate jurisdiction or forum for the determination
of any such claims.
Contribution
------------
In the event that, for any reason, the indemnity provided for in section 11
hereof is illegal or unenforceable, the Underwriters and the Corporation shall
contribute to the aggregate of all losses, claims, costs, damages, expenses or
liabilities of the nature provided for in section 11 such that the Underwriters
shall be responsible for that portion represented by the percentage that the
Commission bears to the gross proceeds from the Offering and the Corporation
shall be responsible for the balance. Notwithstanding the foregoing, a person
guilty of fraudulent misrepresentation shall not be entitled to contribution
from any other party. Any party entitled to contribution will, promptly after
receiving notice of commencement of any claim, action, suit or proceeding
against such party in respect of which a claim for contribution may be made
against another party or parties under this section, notify such party or
parties from whom contribution may be sought. In no case shall such party from
whom contribution may be sought be liable under this contribution agreement
unless such notice shall have been provided, but the omission to so notify such
party shall not relieve the party from whom contribution may be sought from any
other obligation it may have otherwise than under this section. The right to
contribution provided in this section shall be in addition to, and not in
derogation of, any other right to contribution which the Underwriters may have
by statute or otherwise by law.
Termination Rights
------------------
The Underwriters shall be entitled, at their option, to terminate all of
their obligations under this Agreement, and the obligations of any person
from whom the Underwriters have solicited an order to purchase the
Debentures that has executed a Subscription Agreement, by notice to that
effect delivered to the Corporation at any time prior to the Time of
Closing in the event that:
there shall occur or come into effect any event, condition or
circumstance which constitutes a material change financial or
otherwise (actual, proposed or prospective, whether factual or
otherwise) in the business, affairs,
<PAGE>
operations, assets, liabilities (contingent or otherwise), prospects,
condition or capital of the Corporation or its Subsidiaries on a
consolidated basis (or Granges) which has not been generally disclosed
by the Corporation (or Granges) which would reasonably be expected to
have an adverse effect on the business of the Corporation or the
market price or value of the Debentures or the Granges Shares;
the Underwriters (or either of them) are of the opinion that the
Offering cannot be profitably marketed, based upon their assessment of
the state of the financial markets;
there is an enquiry or investigation (whether formal or informal) by
any securities regulatory authority in relation to the Corporation or
Granges or any one of the Corporation's directors, officers;
any order to cease trading in the securities of the Corporation or the
Granges Shares is made by a securities regulatory authority and that
order is still in effect;
the Underwriters determine that any one of the representations or
warranties made by the Corporation herein, is or has become false in
any material respect; or
there should develop, occur or come into effect any catastrophe of
national or international consequence or any action, governmental law
or regulation, inquiry or other occurrence of any nature whatsoever
which, in the opinion of the Underwriters (or either of them),
seriously affects or may seriously affect the financial markets or the
business of the Corporation.
The right of the Underwriters to terminate their obligations under this
Agreement is in addition to such other remedies as they may have or have in
respect of any default, act or failure to act of the Corporation in respect of
any of the matters contemplated by this Agreement.
Breach of Agreement
-------------------
Any breach of, or failure by the Corporation to comply with, any term or
condition of this Agreement in any material respect shall entitle the
Underwriters and any person from whom the Underwriters have solicited an order
to purchase the Debentures, to terminate their respective obligations to
purchase the Debentures by notice to that effect given to the Underwriters prior
to the Time of Closing.
<PAGE>
Notices
-------
Any notice under this Agreement shall be given in writing and either delivered
or telecopied to the party to receive such notice at the address or telecopy
numbers indicated below:
to the Corporation:
Atlas Corporation
Suite 3150, 370 Seventeenth Street, Denver, Colorado, U.S.A., 80202
Attention: David J. Birkenshaw, CEO
Telefax: (303) 892 - 8808
with a copy to:
Coudert Brothers
1114 Avenue of the Americas, New York, New York, U.S.A., 10036-7703
Attention: Jeffrey E. Cohen
Telefax: (212) 626 - 4120
- and to -
Lang Michener
Suite 2500, 181 Bay Street, Toronto, Ontario, M5J 2T7
Attention: David Knight
Telefax: (416) 365 - 1719
to the Underwriters:
Yorkton Securities Inc.
10th floor, 1055 Dunsmuir Street, Vancouver, British Columbia, V7X 1L4
Attention: Gordon Keep, Telefax: (604) 640 - 0512
- and to -
First Marathon Securities Limited
Exchange Tower, Box 21, 2 First Canadian Place, Toronto, Ontario, M5X 1J9
Attention: Richard S. Hallisey, Telefax (416) 869 - 3277
with a copy to:
<PAGE>
Sobolewski Anfield
Suite 1600, 609 Granville Street, Vancouver, British Columbia, V7Y 1C3
Attention: Jay Sujir
Telefax: (604) 669 - 3877
- and to -
Miller & Holguin
Seventh Floor, 1801 Century Park East, Los Angeles, California, U.S.A.,
90067
Attention: J. Brad Wiggins
Telefax: (310) 557 - 2205
or such other address or telecopy number as such party may hereafter designate
by notice in writing to the other party. If a notice is delivered, it shall be
effective from the date of delivery; if such notice is telecopied (with receipt
confirmed), it shall be effective on the Business Day following the date such
notice is telecopied.
Survival
--------
All representations, warranties, and agreements of the Corporation contained
herein or contained in any document submitted pursuant to this Agreement or in
connection with the purchase of the Special Warrants shall survive the purchase
of the Special Warrants by the Purchasers and shall continue in full force and
effect unaffected by any subsequent disposition, exercise or Exchange of the
Special Warrants or Debentures.
Time of the Essence
-------------------
Time shall, in all respects, be of the essence hereof.
Headings
--------
The headings contained herein are for convenience only and shall not affect the
meaning or interpretation hereof.
Singular and Plural, etc.
-------------------------
<PAGE>
Where the context so requires, words importing the singular number include
plural and vice versa, and words importing gender shall include the masculine,
feminine and neuter genders.
Severability
------------
The invalidity or unenforceability of any particular provision of this Agreement
shall not affect or limit the validity or enforceability of the remaining
provisions of this Agreement.
Governing Law
-------------
This Agreement shall be governed by and construed in accordance with the laws of
the Province of British Columbia and the laws of Canada, applicable therein.
Successors and Assigns
----------------------
The terms and provisions of this Agreement shall be binding upon and enure to
the benefit of the Corporation, the Underwriters and the Purchasers and their
respective successors and permitted assigns; provided that, except as herein
provided, this Agreement shall not be assignable by any party without the
written consent of the others.
Further Assurances
------------------
Each of the parties hereto shall do or cause to be done all such acts and things
and shall execute or cause to be executed all such documents, agreements and
other instruments as may reasonably be necessary or desirable for the purpose of
carrying out the provisions and intent of this Agreement.
<PAGE>
Entire Agreement
----------------
The provisions herein contained constitute the entire agreement between the
parties hereto and supersede all previous communications, representations,
understandings and agreements between the parties with respect to the subject
matter hereof, whether verbal or written, including without limitation, the term
sheets between the Corporation and the Underwriters dated and accepted by the
Corporation on September 28 and October 25, 1995.
Counterparts
------------
This Agreement may be executed in any number of counterparts all of which when
taken together shall be deemed to be one and the same document and not
withstanding their actual date of execution shall be deemed to be dated as of
the date first above written.
Effective Date
--------------
This Agreement is intended to and shall take effect as of the date first set
forth above, notwithstanding its actual date of execution or delivery.
If the above is in accordance with your understanding, please sign and return to
the Underwriters a copy of this letter, whereupon this letter and your
acceptance shall constitute a binding agreement between the Corporation and the
Underwriters.
YORKTON SECURITIES INC.
Per: /s/ GORDON KEEP
-------------------------------
<PAGE>
Per: /s/ JOHN MCLELLAN
-------------------------------
The above offer is hereby accepted and agreed to as of the date first above
written.
ATLAS CORPORATION
Per: /s/ GERALD E. DAVIS
-------------------------------
<PAGE>
ATLAS CORPORATION
SPECIAL WARRANT INDENTURE
DATED NOVEMBER 9, 1995
CONTAINING TERMS AND CONDITIONS GOVERNING THE
ISSUE AND EXERCISE OF SPECIAL DEBENTURE WARRANTS
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE 1
INTERPRETATION............................... 2
--------------
1.1 ...........................................................Definitions 2
1.2 ..............................................................Headings 5
1.3 ................................................................Gender 5
1.4 .................................................Weekends and Holidays 5
1.5 ..............................................Meaning of "Outstanding" 6
1.6 ..................................................................Time 6
1.7 ........................................................Applicable Law 6
1.8 ..............................................................Currency 6
ARTICLE 2
ISSUE AND PURCHASE OF SPECIAL WARRANTS.................. 6
--------------------------------------
2.1 ..........................Creation, Form and Terms of Special Warrants 6
2.2 .....................Transferability and Ownership of Special Warrants 7
2.3 ....................................................Cancellation Right 8
2.4 ....................................................Insufficient Funds 9
2.5 ...............................Special Warrantholders Not Shareholders 9
2.6 ...........................................Signing of Special Warrants 9
2.7 ........................................................Countersigning 9
2.8 ............Loss, Mutilation, Destruction or Theft of Special Warrants 9
2.9 ..........................................Exchange of Special Warrants 10
2.10 .........................Purchase of Special Warrants for Cancellation 10
2.11 ..........................................................Escrow Funds 10
ARTICLE 3
REPRESENTATIONS, WARRANTIES, AND COVENANTS
------------------------------------------
OF THE COMPANY................................ 11
--------------
3.1 ......................To Issue Special Warrants and Reserve Debentures 12
</TABLE>
Note: This table of contents shall not, for any purpose, be deened to be a part
of the Indenture
-i-
<PAGE>
-(ii)-
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
3.2 .........................................To Execute Further Assurances 12
3.3 ..................................................To Carry On Business 12
3.4 ......................................................Reporting Issuer 12
3.5 ...........................Qualification and Registration Requirements 12
3.6 ................................................Stock Exchange Listing 13
3.7 Notice of Qualification and Registration Requirements to Trustee
and Underwriters................................................... 13
3.8 .................................Securities Qualification Requirements 14
ARTICLE 4
ADJUSTMENTS................................ 14
-----------
4.1 ....................................Adjustment of Amount of Debentures 14
4.2 Protection of Trustee.............................................. 14
ARTICLE 5
EXERCISE OF SPECIAL WARRANTS....................... 15
----------------------------
5.1 Notice of Registration and Qualification Requirements to Special
Warrantholders..................................................... 15
5.2 .........................................Voluntary Exercise of Special 15
..............................................................Warrants 15
5.3 ...................................Deemed Exercise of Special Warrants 15
5.4 ................................Effect of Exercise of Special Warrants 16
5.5 .............................Special Warrants Void After Exchange Time 16
5.6 ...............................................Fractions of Debentures 16
5.7 ..............................................Accounting and Recording 16
ARTICLE 6
MEETINGS OF SPECIAL WARRANTHOLDERS...................... 17
----------------------------------
6.1 ...........................................................Definitions 17
6.2 ....................................................Convening Meetings 17
6.3 ......................................................Place of Meeting 17
6.4 ................................................................Notice 17
6.5 ............................................Persons Entitled to Attend 18
6.6 ................................................................Quorum 18
6.7 ..............................................................Chairman 18
</TABLE>
<PAGE>
-(iii)-
<TABLE>
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<S> <C>
6.8 .....................................................Adjourned Meeting 18
6.9 .........................................................Show of Hands 18
6.10 ..................................................................Poll 19
6.11 ...........................................................Regulations 19
6.12 ......................................Powers of Special Warrantholders 19
6.12 ...................................................Minutes of Meetings 21
6.14 ...................................................Written Resolutions 21
6.15 ........................................................Binding Effect 21
ARTICLE 7
SUPPLEMENTAL INDENTURES, MERGER, SUCCESSORS................ 22
-------------------------------------------
7.1 ............Provision for Supplemental Indentures for Certain Purposes 22
7.2 ........................Company May Consolidate, etc. on Certain Terms 22
7.3 ...................................Successor Body Corporate Substitued 23
ARTICLE 8
CONCERNING THE TRUSTEE..........................23
----------------------
8.1 .....................................................Duties of Trustee 23
8.2 .....................................................Action by Trustee 23
8.3 ............................................Certificate of the Company 24
8.4 ..................................Trustee May Employ Experts or Agents 24
8.5 ................................Resignation and Replacement of Trustee 24
8.6 .................................................Indenture Legislation 25
8.7 ................................................................Notice 25
8.8 .......................................................Use of Proceeds 25
8.9 ..........................................................No Inquiries 25
8.10 .................................Trustee Not Required to Give Security 25
8.11 ...............................................No Conflict of Interest 25
8.12 ..........................................Trustee Not Ordinarily Bound 26
8.13 .......................................Trustee May Deal in Instruments 26
8.14 ........................Recitals or Statements of Fact Made by Company 26
8.15 .........................................Trustee's Discretion Absolute 26
8.16 .....................................No Representations as to Validity 26
8.17 ..................................................Acceptance of Trusts 27
8.18 ..............................Trustee's Authority to Carry on Business 27
8.19 ..........................................................Disagreement 27
</TABLE>
<PAGE>
-(iv)-
<TABLE>
<CAPTION>
PAGE
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<S> <C>
8.20 .............................................................Indemnity 28
ARTICLE 9
NOTICES.................................. 28
-------
9.1 ...........................Notice to Company, Trustee and Underwriters 28
9.2 ......................................Notice to Special Warrantholders 29
ARTICLE 10
POWER OF BOARD OF DIRECTORS...................... 30
---------------------------
10.1 ....................................................Board of Directors 30
ARTICLE 11
MISCELLANEOUS PROVISIONS.......................... 30
------------------------
11.1 ....................................................Further Assurances 30
11.2 ...................................................Unenforceable Terms 30
11.3 .............................................................No Waiver 30
11.4 .......................................Suits By Special Warrantholders 30
11.5 .............................................................Enurement 31
11.6 ........................................Formal Date and Effective Date 31
</TABLE>
SCHEDULES
Schedule "A" - Special Warrant Certificate
<PAGE>
SPECIAL WARRANT INDENTURE
-------------------------
DATED AS OF NOVEMBER 9, 1995
BETWEEN:
ATLAS CORPORATION
-----------------
Suite 3150, 370 Seventeenth Street
Denver, Colorado
U.S.A. 80202
(hereinafter referred to as the "COMPANY")
OF THE FIRST PART
AND:
THE MONTREAL TRUST COMPANY OF CANADA
------------------------------------
3rd floor, 510 Burrard Street
Vancouver, British Columbia
V6C 3B9
(hereinafter referred to as the "TRUSTEE")
OF THE SECOND PART
Containing Terms and Conditions governing the Issue and
Exercise of up to US $15,000,000 of Special Debenture
Warrants of the Company
WHEREAS the Company has created and proposes to issue Special Warrants to be
constituted and issued in the manner herein set forth;
Note: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
-i-
<PAGE>
-2-
AND WHEREAS the Company, under the laws relating thereto, is duly authorized to
create and issue the Special Warrants;
AND WHEREAS the Company represents to the Trustee that all necessary resolutions
of the directors of the Company have been or will be duly enacted, passed or
confirmed and all other proceedings taken and conditions complied with to
authorize the execution, issue and delivery of the Special Warrants and to make
the Special Warrants legal, valid and binding on the Company with the benefits
of and subject to the terms and conditions of this Indenture, and to approve and
confirm the terms and conditions of this Indenture;
AND WHEREAS the foregoing recitals are made as representations and statements of
fact by the Company and not by the Trustee;
AND WHEREAS the Trustee has agreed to act as trustee on behalf of the Special
Warrantholders on the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the premises and in further consideration of
the mutual covenants herein set forth, the parties hereto agree as follows:
INTERPRETATION
--------------
Definitions
-----------
In this Indenture and the Special Warrant Certificate (unless there is something
in the subject matter or context inconsistent therewith):
"1933 ACT" means the United States Securities Act of 1933, as
amended;
"1934 ACT" means the United States Securities Exchange Act of
1934, as amended;
"1933 REGISTRATION STATEMENT" means a registration statement or
registration statements under the 1933 Act, registering for
resale the Subject Securities;
"1934 REGISTRATION STATEMENT" means a registration statement
under the 1934 Act registering the class of Debentures under
Section 12(b) of the 1934 Act;
"APPLICABLE LEGISLATION" means the provisions, if any, for the
time being, of any statute of Canada or a province thereof, and
of the regulations under such statute, relating to trust
indentures and/or to the rights, duties and obligations of
trustees under trust indentures, and of corporations issuing
their securities under trust indentures, to the extent that any
such provisions are in force and applicable to this Indenture;
<PAGE>
-3-
"CANCELLATION NOTICE" has the meaning ascribed thereto in Section
2.3 hereof;
"CANCELLATION RIGHT" means the right of holders of Special
Warrants to require the Company to redeem their Special Warrants
at a cash price of US $105 for each (US) $100 of Special Warrants
redeemed, if the Qualification Date does not occur on or before
the Qualification Deadline, pursuant to subsection 2.3 herein;
"CHEMICAL BANK" means the trustee under the Chemical Bank
Indenture being Chemical Bank of 450 West 33rd Street, 15th
floor, New York, New York, U.S.A., 10001;
"CHEMICAL BANK INDENTURE" means the indenture dated November 9,
1995 between the Company and Chemical Bank governing the terms
and conditions of the Debentures;
"CLOSING DATE" means November 9, 1995 or such other date as the
Underwriters and the Company may agree upon in writing;
"CLOSING TIME" means 9:00 a.m. (Vancouver time) on the Closing
Date;
"COMPANY" means Atlas Corporation;
"COMPANY'S AUDITORS" means the firm of accountants appointed by
the shareholders of the Company and serving as the auditors of
the Company at the relevant time;
"DEBENTURES" means the exchangeable debentures of the Company
into which Special Warrants are convertible, to be issued in
denominations of US $100 (or multiples thereof), the terms and
conditions of which Debentures are contained in the Chemical Bank
Indenture;
"DESIGNATED PROVINCES" means the Provinces of Ontario and British
Columbia;
"DIRECTOR" means a director of the Company for the time being and
reference without more to action by the directions means action
by the directors of the Company as a board or, whenever duly
empowered, action by a committee of the board;
"ESCROW FUNDS" means the gross proceeds from the sale of the
Special Warrants, which amount is deposited with the Trustee
pursuant to section 2.11 hereof, and all interest earned thereon;
"EXCHANGE DATE" means the earlier of:
the fifth business day following the Qualification Date; and
<PAGE>
-4-
the first business day which is 12 months after the Closing
Date;
"EXCHANGE TIME" means 5:00 p.m. (Vancouver time) on the Exchange
Date;
"FIRST MARATHON" means First Marathon Securities Ltd.;
"GRANGES" means Granges Inc., a British Columbia company;
"GRANGES SHARES" means the common shares of Granges beneficially
owned by the Company;
"INDENTURE", "HEREIN", "HERETO, "HEREUNDER", "HEREOF", "HEREBY"
and similar expressions mean or refer to this Indenture and not
to any particular Article, Section, Subsection, paragraph,
clause, subdivision or portion hereof and include any indenture,
deed or instrument supplemental or ancillary hereto; and the
expressions "ARTICLE", "SECTION", "SUBSECTION" AND "PARAGRAPH"
followed by a number mean and refer to the specified Article,
Section, Subsection or paragraph of this Indenture;
"PRIVATE PLACEMENT" means an aggregate of up to US $15,000,000 of
Special Warrants being sold pursuant to the Underwriting
Agreement;
"PROSPECTUS" means a (final) prospectus of the Company filed with
the applicable securities regulatory authorities in the
Designated Provinces which qualifies the issuance of the
Debentures in the Designated Provinces, pursuant to the exercise
of the Special Warrants;
"QUALIFICATION DATE" means the date upon which the last of the
following has occurred:
receipts have been issued for the Prospectus by each of the
securities commissions in the Designated Provinces;
the 1933 Registration Statement has become effective; and
the 1934 Registration Statement has become effective;
"QUALIFICATION DEADLINE" means 8:00 p.m. (Vancouver time) on
February 9, 1996;
"REGULATION D" means Regulation D promulgated by the SEC under
the 1933 Act;
"REGULATION S" means Regulation S promulgated by the SEC under
the 1933 Act;
<PAGE>
-5-
"RETRACTION DEADLINE" means 5:00 p.m. (Vancouver time) on the
tenth day (or the next succeeding business day if the tenth day
is not a business day) following the Qualification Deadline;
"SEC" means the United States Securities and Exchange Commission;
"SECURITIES" means the Special Warrants, the Debentures and the
Granges Shares;
"SPECIAL WARRANTS" means the special debenture warrants of the
Company issued in denominations of US $100 (or multiples thereof)
pursuant to this Indenture, each $100 of Special Warrants
entitling the holder to acquire US $100 principal amount of
Debentures upon exercise, subject to adjustment in accordance
with this Indenture;
"SPECIAL WARRANT CERTIFICATE" means a certificate supplied by the
Company evidencing one or more Special Warrants issuable
hereunder, substantially in the form attached hereto as Schedule
"A";
"SPECIAL WARRANTHOLDER" means the registered holder of an
outstanding Special Warrant;
"SUBJECT SECURITIES" means the Debentures and the Granges Shares;
"SUBSIDIARY OF THE COMPANY" means a corporation of which voting
securities carrying a majority of the votes attached to all
outstanding voting securities are owned, directly or indirectly,
by the Company or by one or more subsidiaries of the Company, or
by the Company and one or more subsidiaries of the Company, and,
as used in this definition, voting securities means securities,
other than debt securities, carrying a voting right to elect
directors either under all circumstances or under some
circumstances that may have occurred and are continuing;
"TRUSTEE" means Montreal Trust Company of Canada, having an
office at 3rd floor, 510 Burrard Street, Vancouver, British
Columbia, V6C 3B9;
"UNDERWRITERS" means collectively, Yorkton and First Marathon;
"UNDERWRITING AGREEMENT" means the underwriting agreement dated
as of October 25, 1995 between the Underwriters and the Company
pursuant to which the Underwriters have agreed to purchase up to
(U.S.) $15,000,000 of the Special Warrants (or obtain
subscriptions for Special Warrants from substituted purchasers);
and
"UNITED STATES" OR "U.S." means the United States of America, its
territories and possessions, and states of the United States, and
the District of Columbia;
<PAGE>
-6-
"U.S. PERSON" has the meaning ascribed thereto in Rule 902 of
Regulation S; and
"YORKTON" means Yorkton Securities Inc.
Headings
--------
The division of this Indenture into Articles, Sections, Subsections or other
subdivisions, the provision of a Table of Contents and the insertion of headings
are for convenience of reference only and will not affect the construction or
interpretation of this Indenture or the Special Warrants.
Gender
------
Words importing the singular number also include the plural and vice versa and
words importing the masculine gender include the feminine gender.
Weekends and Holidays
---------------------
If the date for the taking of any action under this Indenture expires on a
Saturday, Sunday or a legal holiday in the Province of British Columbia, such
action may be taken on the next succeeding business day with the same force and
effect as if taken within the period for the taking of such action.
Meaning of "Outstanding"
------------------------
Every Special Warrant represented by a Special Warrant Certificate countersigned
by the Trustee and delivered to the holder is deemed to be outstanding until it
is cancelled or delivered to the Trustee for cancellation or until the Exchange
Time. Where a new Special Warrant Certificate has been issued pursuant to
Section 2.8 hereof to replace one which has been mutilated, lost, stolen or
destroyed, the Special Warrants represented by only one of such Special Warrant
Certificates are counted for the purpose of determining the aggregate number of
Special Warrants outstanding.
Time
----
Time is of the essence hereof.
<PAGE>
-7-
Applicable Law
--------------
This Indenture and the Special Warrant Certificate are subject to and construed
in accordance with the laws of the province of British Columbia. The parties
hereto will submit to the jurisdiction of the Courts in the Province of British
Columbia. The parties agree that any litigation between the parties which arises
pursuant to or in connection with this Indenture, or any of its provisions, will
be referred to the Courts in the Province of British Columbia and will not be
referred to the Courts in any other jurisdiction.
Currency
--------
All dollar amounts set out herein refer to U.S. dollars, unless otherwise
indicated.
ISSUE AND PURCHASE OF SPECIAL WARRANTS
--------------------------------------
Creation, Form and Terms of Special Warrants
--------------------------------------------
The Company hereby creates and authorizes for issuance,
$15,000,000 of Special Warrants entitling Special Warrantholders
to acquire $15,000,000 principal amount of Debentures, subject to
the adjustment provisions of section 4.1 hereof.
Subject to the provisions hereof, the Special Warrants issued
under this Indenture are limited in the aggregate to 150,000
Special Warrants of $100 face value per Special Warrant (issuable
in denominations of $100, or multiples thereof) and each Special
Warrant entitles the holder thereof to acquire, without payment
of any consideration in addition to that paid for the Special
Warrant, one Debenture in the principal amount of $100, provided
that the amount of Debentures receivable on exercise of a Special
Warrant is subject to increase so as to give effect to the
adjustments required by Article 4.
The Special Warrants will be issued in registered form and the
Special Warrant Certificate will be substantially in the form set
out or referred to in Schedule "A" hereto with, subject to the
provisions of this Indenture, such additions, variations, or
omissions as may from time to time be permitted pursuant to this
Indenture or as may be agreed upon between the Company and the
Trustee or the Special Warrantholders and will be numbered in
such manner as the Company may prescribe. All Special Warrants
will be, save as to denominations, of like tenor and effect. The
Special Warrant Certificates will be engraved and printed in such
manner as is necessary to have the Special Warrants listed,
posted and called for
<PAGE>
-8-
trading on the Vancouver Stock Exchange. No change in the form of
the Special Warrant Certificates will be required by reason of
any adjustment made pursuant to Article 4 hereof in the amount of
Debentures which may be acquired pursuant to the exercise of the
Special Warrants.
Transferability and Ownership of Special Warrants
-------------------------------------------------
The Company will cause the Trustee to keep at its Vancouver
office set forth in Section 1.1 a register in which the Trustee
will enter the names and addresses of the Special Warrantholders
and particulars of the Special Warrants held by them. The Trustee
will cause the register to be open at all reasonable times for
inspection by the Company, the Underwriters and any Special
Warrantholder.
The Special Warrants may be transferred, in accordance with
applicable laws and upon compliance with the conditions herein,
only on the register kept at the office of the Trustee set forth
in Section 1.1 by means of the Special Warrantholder (or its
legal representatives or its attorney duly appointed) and its
transferee duly executing the transfer form attached to the
Special Warrant Certificate and complying with such other
reasonable requirements as the Company or the Trustee may
prescribe and such transfer will be duly noted on the register by
the Trustee.
Notwithstanding anything contained in this Indenture, in the
Special Warrant Certificate or in any subscription agreements
under which Special Warrants were issued and sold, the Trustee,
relying solely on the transfer form or such other reasonable
requirements as the Company or Trustee may prescribe pursuant to
Subsection 2.2(B) will not register any transfer of a Special
Warrant if it has reasonable grounds to believe that such
transfer is otherwise not in accordance with applicable law.
Upon any transfer of Special Warrants in accordance with the
provisions of this Indenture, the Company covenants and agrees
with the Trustee, on behalf of the transferee holder and with the
transferee holder, that the transferee holder is a permitted
assignee of the transferring holder and is entitled to the
benefits of the covenants of the Company set forth under the
heading "Contractual Right of Action for Rescission" in the
Prospectus subject, in each case, to the restrictions and
limitations described thereunder.
The Company and the Trustee will deem and treat the registered
holder of any Special Warrant as the absolute legal and
beneficial owner thereof for all purposes and neither the Company
nor the Trustee is affected by any notice to the contrary except
where the Company or the Trustee is required to take notice by
statute or by order of a court of competent jurisdiction.
<PAGE>
-9-
Subject to the provisions of this Indenture and applicable law,
the registered Special Warrantholder is entitled to the rights
and privileges attaching to the Special Warrants, and the issue
of Debentures and delivery of certificates representing the
Debentures on exercise of Special Warrants by any Special
Warrantholder thereof in accordance with the terms and conditions
herein contained and neither the Company nor the Trustee is bound
to inquire into the title of any such registered holder.
Cancellation Right
------------------
If the Qualification Date does not occur on or before the Qualification
Deadline, the Special Warrantholders shall be entitled to exercise the
Cancellation Right on or before the Retraction Deadline and the Company shall
forthwith give written notice to the Trustee and the Underwriters. The Trustee
will forthwith give written notice thereof to the Special Warrantholders. In
order to exercise the Cancellation Right Special Warrantholders shall provide
the Trustee with written notice (the "Cancellation Notice") on or before the
Retraction Deadline specifying the number of Special Warrants to be redeemed,
together with Special Warrant Certificates representing no less than such number
of Special Warrants. Following the Retraction Deadline the Trustee will
forthwith:
cause the number of Special Warrants specified in the
Cancellation Notice to be cancelled;
deliver, or cause to be delivered or credited (out of the Escrow
Funds) to the holders of Special Warrants, the sum of $105 for
each $100 of Special Warrants which have been cancelled; and
deliver, or cause to be delivered, a Special Warrant Certificate
representing the balance of any Special Warrants delivered to the
Trustee pursuant to this subsection, but not specified to be
purchased by the Company in the Cancellation Notice.
If any Special Warrantholder does not provide the Trustee with the aforesaid
Cancellation Notice, then such Special Warrantholder shall, with respect to the
amended terms of the Debentures, be deemed to have renewed the representations
to the Company appearing in Section 9 of the subscription agreement pursuant to
which Special Warrants were originally issued to such Special Warrantholder.
<PAGE>
-10-
Insufficient Funds
------------------
In the event that the Escrow Funds are insufficient for redemption and purchase
of the number of Special Warrants to be cancelled pursuant to Section 2.3
hereof, the Company will forthwith provide the Trustee with sufficient funds
therefor.
Special Warrantholders Not Shareholders
---------------------------------------
A Special Warrantholder is not deemed or regarded as a shareholder of the
Company or of Granges nor is such Special Warrantholder entitled to any right or
interest except as is expressly provided in this Indenture and in the Special
Warrant Certificates.
Signing of Special Warrants
---------------------------
Any one director or officer of the Company will sign the Special Warrant
Certificates either manually or by facsimile signature. A facsimile signature
upon any Special Warrant Certificate is for all purposes hereof, deemed to be
the signature of the person whose signature it purports to be and to have been
signed at the time such facsimile signature is reproduced. If a person whose
signature, either manually or in facsimile, appears on a Special Warrant
Certificate is not a director or officer of the Company at the date of this
Indenture or at the date of the countersigning and delivery of such Special
Warrant Certificate, such fact does not affect in any way the validity of the
Special Warrants or the entitlement of the Special Warrantholder to the benefits
of this Indenture or of the Special Warrant Certificate.
Countersigning
--------------
No Special Warrant Certificate is to be issued, or if issued, is valid or
exercisable or entitles the holder thereof to the benefits of this Indenture
until the Special Warrant Certificate has been countersigned by the Trustee. The
countersignature or authentication by or on behalf of the Trustee on any Special
Warrant Certificate is not construed as a representation or warranty by the
Trustee as to the validity of this Indenture or of the Special Warrants or as to
the performance by the Company of its obligations under this Indenture and the
Trustee is in no way liable or answerable for the use made of the Special
Warrants or the proceeds therefrom except as specifically set out herein. The
countersignature or authentication of the Trustee is, however, a representation
and warranty of the Trustee that the Special Warrant Certificate has been duly
countersigned by or on behalf of the Trustee pursuant to the provisions of this
Indenture. For the purposes of this Special Warrant Indenture "countersignature"
and "authentication" have the same meaning.
<PAGE>
-11-
Loss, Mutilation, Destruction or Theft of Special Warrants
----------------------------------------------------------
In case any of the Special Warrant Certificates issued and countersigned
hereunder is mutilated or lost, destroyed or stolen, the Company, subject to
applicable laws, and the provisions hereof, shall issue and deliver a new
Special Warrant Certificate of like date and tenor in exchange for and in place
of the one mutilated, lost, destroyed or stolen and upon surrender and
cancellation of such mutilated Special Warrant Certificate or in lieu of and in
substitution for such lost, destroyed or stolen Special Warrant Certificate and
the substituted Special Warrant Certificate entitles the holder thereof to the
benefits hereof and ranks equally in accordance with its terms with all other
Special Warrants issued hereunder.
The Special Warrantholder applying for the issue of a new Special Warrant
Certificate pursuant to this Section will bear the cost of the issue thereof and
in case of loss, destruction or theft will, as a condition precedent to the
issue thereof, furnish to the Company such evidence of ownership and of the
loss, destruction or theft of the Special Warrant Certificate so lost, destroyed
or stolen as is satisfactory to the Company and the Trustee in their sole
discretion. The Company or the Trustee may require such applicant to furnish an
indemnity or surety bond in amount and form satisfactory to the Company or the
Trustee in their sole discretion, and the applicant will pay the reasonable
charges of the Company and the Trustee in connection therewith.
Exchange of Special Warrants
----------------------------
A Special Warrantholder may at any time prior to the Exchange Time, by written
instruction delivered to the Trustee at the office set forth in Section 1.1,
exchange his Special Warrant Certificates for Special Warrant Certificates
evidencing Special Warrants in other denominations (in multiples of $100), in
which case the Trustee may make a charge sufficient to reimburse it for any
government fees or charges required to be paid and an additional reasonable
charge for every Special Warrant Certificate issued upon exchange. The Special
Warrantholder surrendering such Special Warrant Certificate will bear such fee
and charge. Payment of the charges is a condition precedent to the exchange of
the Special Warrant Certificate. The Company will sign and the Trustee will
countersign all Special Warrant Certificates necessary to carry out exchanges as
aforesaid.
Purchase of Special Warrants for Cancellation
---------------------------------------------
Subject to applicable law, the Company may, at any time or from time to time,
purchase all or any of the Special Warrants in the market, by private contract
or otherwise on such terms as the Company may determine.
Escrow Funds
------------
<PAGE>
-12-
The Company hereby deposits with the Trustee, and the Trustee hereby
acknowledges receipt of, the Escrow Funds and the Trustee agrees to hold the
Escrow Funds in trust upon and subject to the following irrevocable
authorizations and instructions, and the Company hereby irrevocably authorizes
and instructs the Trustee as follows:
The Trustee will direct that the Escrow Funds promptly be
deposited by wire transfer in a separate bank account of the
Trustee with a bank (as such term is defined in section 3(a)6 of
the 1934 Act) located in the United States (the "U.S. Bank") as
trustee pending disbursement.
Pending disbursements of the Escrow Funds, the Trustee will cause
the Escrow Funds to be invested and reinvested in United States
Dollar short term interest bearing or discount obligations issued
by or guaranteed by the United States Government or a Schedule I
Canadian chartered bank, as determined by the Company from time
to time. Failing such determination by the Company, the Escrow
Funds will be invested or reinvested in thirty day treasury bills
issued by the United States Government (the "Qualified
Investments"). All Qualified Investments will, if registerable,
be registered in the name of the U.S. Bank, and if in bearer form
shall be physically held by the U.S. Bank or by its approved
custodian pending their realization and shall be retained by the
U.S. Bank or by its approved custodian in safekeeping to be held
in trust by the U.S. Bank on behalf of the persons who have an
interest therein pursuant to this Indenture.
If the Qualification Date occurs on or before the Qualification
Deadline and the Trustee receives confirmation from Chemical Bank
that it is ready, willing and able to deliver the Debentures
pursuant to section 5.2 or 5.3 herein, then the Trustee will, on
the first business day following the Exchange Date, realize on
the Qualified Investments and disburse the Escrow Funds and all
interest earned thereon to the Company.
If the Qualification Date does not occur on or before the
Qualification Deadline, then the Trustee will realize on the
Qualified Investments and disburse the Escrow Funds as follows:
upon receipt from any Special Warrantholder who elects to
have its Special Warrants retracted pursuant to Section 2.3
hereof of (A) a Cancellation Notice and (B) the certificate
or certificates for the Special Warrants tendered for
retraction and cancellation pursuant to such Cancellation
Notice in accordance with the terms of Section 2.3 hereof,
the amount that is required to be paid to such Special
Warrantholder;
upon the exercise by any Special Warrantholder of any
Special Warrants held by it, an amount equal to the purchase
price paid for such Special Warrants and interest accrued
thereon, to the Company; and
<PAGE>
-13-
the balance, if any, remaining on the first business day
following the Exchange Date to the Company.
REPRESENTATIONS, WARRANTIES, AND COVENANTS OF THE COMPANY
---------------------------------------------------------
The Company represents, warrants, covenants and agrees with the Trustee for the
benefit of the Trustee and the Special Warrantholders as follows:
To Issue Special Warrants and Reserve Debentures
------------------------------------------------
The Company is duly authorized to create and issue the Special Warrants and the
Special Warrants, when issued and countersigned by the Trustee, will be valid
and enforceable against the Company and, subject to the provisions of this
Indenture, the Company will cause the Debentures from time to time acquired
pursuant to the exercise of Special Warrants and the certificates representing
the Debentures, to be duly issued to the Special Warrantholders without payment
of additional consideration. At all times while any of the Special Warrants are
outstanding, the Company will reserve and allot under the Chemical Bank
Indenture an amount of Debentures sufficient to enable the Company to meet its
obligation to issue Debentures in respect of the exercise of all Special
Warrants. All Debentures acquired pursuant to the Special Warrants will be fully
paid and non-assessable.
To Execute Further Assurances
-----------------------------
The Company will do, execute, acknowledge and deliver or cause to be done,
executed, acknowledged and delivered, all other acts, deeds and assurances in
law as may reasonably be required for the better accomplishing and effecting of
the intentions and provisions of this Indenture.
<PAGE>
-14-
To Carry On Business
--------------------
Subject to the express provisions hereof, the Company will carry on and conduct
and will cause to be carried on and conducted its business in the same manner as
heretofore carried on and conducted, except that the Company or any subsidiary
of the Company may cease to operate or may dispose of any business, premises,
property, assets or operation if in the opinion of the directors or officers of
the Company or any subsidiary of the Company, as the case may be, it would be
advisable and in the best interests of the Company or any subsidiary of the
Company to do so. Subject to the express provisions hereof, the Company will do
or cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence, except that nothing herein contained prevents
the amalgamation, consolidation, merger, sale, winding-up or liquidation of the
Company or any subsidiary of the Company or the abandonment of any rights and
franchises of the Company or any subsidiary of the Company if, in the opinion of
the directors or officers of the Company or any subsidiary of the Company, as
the case may be, it is advisable and in the best interest of the Company or of
such subsidiary of the Company to do so.
Reporting Issuer
----------------
The Company is presently a reporting issuer under the 1934 Act.
Qualification and Registration Requirements
-------------------------------------------
The Company shall, as soon as practicable following the Closing
Date, file (or cause to be filed) the following documents:
a preliminary prospectus and (final) Prospectus in the
Designated Provinces qualifying the distribution of the
Debentures upon exercise of the Special Warrants;
the 1933 Registration Statement, and shall also file (or
cause to be filed) all required filings with state
securities or "blue sky" administrators in the states where
the holders of such Securities propose to offer and sell the
Securities (the "Blue Sky Filings"); and
the 1934 Registration Statement.
The Corporation will use its best efforts to
cause receipts to be issued by the securities commissions in
Ontario and British Columbia for the Prospectus; and
<PAGE>
-15-
cause the 1933 Registration Statement and the 1934
Registration Statement to become effective
(collectively, the "Qualification and Registration Requirements")
on or before the Qualification Deadline.
If the Qualification and Registration Requirements are not met on
or before the Qualification Deadline, the Corporation will
continue to use its best efforts to cause the Qualification and
Registration Requirements to be met, unless all Special Warrants
have been redeemed and cancelled pursuant to section 2.3 hereof,
notwithstanding the change in the exercise ratio of Debentures to
Special Warrants pursuant to section 4.1 hereof.
Stock Exchange Listing
----------------------
The Company will cause the Special Warrants to be listed, posted and called for
trading on the Vancouver Stock Exchange as soon as possible following the
Closing Date but in any event not later than thirty (30) days from the Closing
Date.
Notice of Qualification and Registration Requirements to Trustee
----------------------------------------------------------------
and Underwriters
----------------
On the first business day following the Qualification Date the Company will give
prompt notice to the Trustee and the Underwriters thereof, together with such
documentation as is necessary to substantiate that the Qualification and
Registration Requirements have been met including confirmation from the
Company's counsel and counsel for the Underwriters.
Securities Qualification Requirements
-------------------------------------
If, in the opinion of the Company's counsel, any instrument is required to be
filed with or any permission is required to be obtained from any securities
regulatory authority or any other step is required under any federal or
provincial law in Canada or under any federal or state law in the United States,
before any securities or property which a Special Warrantholder is entitled to
receive pursuant to the exercise of a Special Warrant may properly and legally
be delivered upon the due exercise of a Special Warrant, the Company covenants
that it will use its best efforts to take all such action, at its expense, as is
required or appropriate in the circumstances.
<PAGE>
-16-
ADJUSTMENTS
-----------
Adjustment of Amount of Debentures
----------------------------------
If the Qualification Date does not occur on or before the Qualification Deadline
as contemplated in Section 3.5 hereof, each $100 of Special Warrants (unless
previously exercised pursuant to Section 5.2 or cancelled pursuant to Section
2.3) shall entitle the Special Warrantholder to receive, upon exercise, $110
principal amount of Debentures.
Protection of Trustee
---------------------
The Trustee:
is not at any time under any duty or responsibility to a Special
Warrantholder to independently determine whether any facts exist
which require any adjustment contemplated by Section 4.1, or with
respect to the nature or extent of any such adjustment when made,
or with respect to the method employed in making the same;
is not responsible for any failure of the Company to make any
cash payment or to issue, transfer or deliver Debentures upon the
surrender of any Special Warrants for the purpose of the exercise
of such rights; and
will not incur any liability or responsibility whatever or be in
any way responsible for the consequence of any breach on the part
of the Company of any of the representations, warranties or
covenants herein contained or of any acts of the agents or
servants of the Company.
EXERCISE OF SPECIAL WARRANTS
----------------------------
Notice of Registration and Qualification Requirements to Special
----------------------------------------------------------------
Warrantholders
--------------
Upon receipt of a written notice pursuant to Section 3.7, the Trustee will
forthwith give notice to the Special Warrantholders, which notice must include a
statement that any Special Warrants not exercised prior to the Exchange Time
will be deemed by the Company and the Trustee to be exercised pursuant to
Section 5.3.
<PAGE>
-17-
Voluntary Exercise of Special Warrants
--------------------------------------
A Special Warrantholder may, at any time before the Exchange Time, exercise all
or any number of the Special Warrants held, by surrendering to the Trustee the
Special Warrant Certificate or certificates representing the number of Special
Warrants to be exercised, together with a duly completed and executed exercise
form(s) in the form attached to the Special Warrant Certificate(s). Voluntary
exercise, at a time when the Company has not received a final receipt for the
Prospectus from all the applicable securities regulatory authorities in the
Designated Provinces, is subject to compliance with and may be restricted by the
securities laws of the Designated Provinces and is further subject to the
Special Warrantholders providing such assurances and executing such documents as
may, in the reasonable opinion of the Company or the Trustee, be required to
ensure compliance with applicable securities legislation. If, at the time of the
exercise of the Special Warrants, there remain restrictions on resale under
applicable securities legislation on the Debentures so acquired, the Company,
may, if required on the advice of its counsel, endorse the certificates
representing the Debentures with respect to those restrictions. Upon the
exercise of Special Warrants pursuant to this Section 5.2, the Trustee will
promptly notify Chemical Bank and the Company of such exercise including the
principal amount of Debentures and registration and delivery particulars of
Debenture certificates issuable thereunder, such notice to be provided in a
format agreed upon between the Trustee, Chemical Bank, and the Company.
Deemed Exercise of Special Warrants
-----------------------------------
Any Special Warrants not exercised by the Special Warrantholder pursuant to
Section 5.2 or cancelled pursuant to Section 2.3 prior to the Exchange Time will
be deemed to have been exercised immediately prior to the Exchange Time and
surrendered by the Special Warrantholders without any further action on the part
of the Special Warrantholder. In that event, the Trustee will promptly notify
Chemical Bank and the Company of such exercise including the principal amount of
Debentures and registration and delivery particulars of Debenture certificates
issuable thereunder, such notice to be provided in a format agreed upon between
the Trustee, Chemical Bank. and the Company.
Effect of Exercise of Special Warrants
--------------------------------------
Upon exercise of the Special Warrants as provided in either Section 5.2 or 5.3,
the Debentures, in respect of which the Special Warrants are exercised are
deemed to have been issued, at which time each Special Warrantholder is deemed
to have become the holder or holders of record of such Debentures.
<PAGE>
-18-
Special Warrants Void After Exchange Time
-----------------------------------------
After the full exercise of a Special Warrant as provided in either Section 5.2
or 5.3, the holder of a Special Warrant Certificate representing the Special
Warrant so exercised no longer has any rights either under this Indenture or the
Special Warrant Certificate, other than the right to receive certificates
representing Debentures, and the Special Warrant is void and of no value or
effect.
Fractions of Debentures
-----------------------
Where a Special Warrantholder is entitled to receive, as a result
of the adjustments provided for in Section 4.1 or otherwise, on
the exercise or partial exercise of its Special Warrants a
fraction of a Debenture, such right may only be exercised in
respect of such fraction in combination with another Special
Warrant or other Special Warrants which in the aggregate entitle
the Special Warrantholder to receive a whole number of Debentures
(in $100 multiples).
If a Special Warrantholder is not able to, or elects not to,
combine Special Warrants so as to be entitled to acquire a whole
number of Debentures, the Special Warrantholder may not exercise
the right to acquire a fractional Debenture and, as a result, has
the right to acquire only that number of Debentures equal to the
next lowest whole number of Debentures (in $100 multiples).
Accounting and Recording
------------------------
The Trustee will promptly notify the Company and Chemical Bank with respect to
Special Warrants exercised or surrendered for cancellation. The Trustee will
record the particulars of the Special Warrants exercised and surrendered for
cancellation which include the name or names and addresses of the person who
become holders of Debentures on exercise pursuant to this Article 5 and the
amount of Debentures to be issued. Within two (2) business days of the exercise
of each Special Warrant pursuant to either Section 5.2 or 5.3, the Trustee will
provide those particulars in writing to the Company and Chemical Bank.
MEETINGS OF SPECIAL WARRANTHOLDERS
----------------------------------
Definitions
-----------
In this Article 6 or otherwise in this Indenture:
"Adjourned Meeting" means a meeting adjourned in accordance with
Section 6.8;
<PAGE>
-19-
"Extraordinary Resolution" means a resolution passed as an
extraordinary resolution at a Meeting duly convened and held in
accordance with the provisions of this Article 6, and carried by
not less than 2/3 of the votes cast on such resolution; and
"Meeting" means a meeting of the Special Warrantholders.
Convening Meetings
------------------
The Trustee or the Company may convene a Meeting at any time at the expense of
the Company. Upon receipt of a written requisition signed by Special
Warrantholders holding not less than 25% of the Special Warrants outstanding,
the Trustee or the Company will convene a Meeting, provided that adequate
provision has been made by the Company or the Special Warrantholders for the
costs of convening and holding a Meeting. If the Trustee or the Company fails to
convene the Meeting within 15 business days after being duly requisitioned to do
so, the Special Warrantholders holding not less than 25% of the Special Warrants
outstanding may themselves convene a Meeting the notice for which must be signed
by a person that those Special Warrantholders specify, provided that the Trustee
and Company receive notice of the Meeting in accordance with Section 6.4. A
written requisition must state, generally, the reason for the Meeting and
business to be transacted at the Meeting.
Place of Meeting
----------------
Every Meeting must be held in Vancouver, British Columbia or at such other place
that the Trustee and Company approve.
Notice
------
The Trustee will give written notice of each Meeting to each Special
Warrantholder at the expense of the Company in the manner specified in Article 9
at least 25 days before the date of the Meeting. The Trustee will give written
notice of each Adjourned Meeting to each Special Warrantholder in the manner
specified in Article 9 at least 12 hours before the date of the Adjourned
Meeting. The notice for a Meeting must state the time and place of the Meeting
and, generally, the reason for the Meeting and the business to be transacted at
the Meeting. The notice for an Adjourned Meeting must state the time and place
of the Adjourned Meeting but need not specify the business to be transacted at
an Adjourned Meeting. The accidental omission by the Trustee to give notice of a
Meeting or an Adjourned Meeting to a Special Warrantholder does not invalidate a
resolution passed at a Meeting or Adjourned Meeting.
<PAGE>
-20-
Persons Entitled to Attend
--------------------------
The Company may and the Trustee will, each by its authorized representatives,
attend every Meeting and Adjourned Meeting but neither the Company nor the
Trustee has the right to vote. The legal advisors of the Company, Trustee, and
any Special Warrantholders, respectively, may also attend a Meeting or Adjourned
Meeting and may address such Meeting but do not have the right to vote.
Quorum
------
A quorum for a Meeting of the Special Warrantholders consists of two or more
persons present in person and owning or representing by proxy not less than 25%
of the Special Warrants then outstanding.
Chairman
--------
The Trustee will nominate a natural person as the chairman of a Meeting or
Adjourned Meeting. If the person so nominated is not present within 25 minutes
after the time set for holding the Meeting or Adjourned Meeting, the Special
Warrantholders and proxies for Special Warrantholders present will choose one of
their number to be chairman.
Adjourned Meeting
-----------------
If a quorum of the Special Warrantholders is not present within 30 minutes after
the time fixed for holding a Meeting, the Meeting stands adjourned to a date not
less than 10 calendar days and not more than 30 calendar days later, at a place
determined in accordance with Section 6.3, and at a time specified by the
chairman. The Trustee will promptly and in accordance with Section 6.4 send a
notice of the Adjourned Meeting to each Special Warrantholder. At an Adjourned
Meeting, two or more Special Warrantholders or persons representing Special
Warrantholders by proxy constitutes a quorum for the transaction of business for
which the Meeting was convened.
Show of Hands
-------------
Subject to a poll and except as otherwise required herein, every question
submitted to a Meeting or Adjourned Meeting is decided, in the first instance,
by the majority of votes in a show of hands. If the vote is tied, the chairman
does not have a casting vote and the motion is not carried.
<PAGE>
-21-
Poll
----
When requested by a Special Warrantholder acting in person or by the proxy
representing the Special Warrantholder, the chairman of a Meeting or Adjourned
Meeting will request a poll on a question submitted to the meeting. Except as
otherwise required herein, if a question has been put to a poll, that question
is decided by the affirmative vote of not less than a majority of the votes
given on the poll. If the vote is tied, the motion is not carried. On a poll,
each Special Warrantholder is entitled to one vote for every Special Warrant
then outstanding and of which he is the registered holder. A declaration made by
the chairman that a resolution has been carried or lost is conclusive evidence
thereof. In the case of joint registered Special Warrantholders, any one of them
present in person or represented by proxy may vote in the absence of the other
or others but when more than one of them is present in person or by proxy, they
may only vote together in respect of the Special Warrants of which they are
joint registered holders.
Regulations
-----------
Subject to the provisions of this Indenture, the Trustee, or the Company with
the approval of the Trustee, may from time to time make and, thereafter, vary
regulations not contrary to the provisions of this Indenture as it deems fit
providing for and governing the following:
setting a record date for a Meeting for determining Special
Warrantholders entitled to receive notice of and vote at a
Meeting;
voting by proxy, the form of instrument appointing a proxy, the
manner in which a proxy instrument must be executed, and the
production of the authority of any person signing an instrument
of a proxy on behalf of a Special Warrantholder;
lodging and the means of forwarding the instruments appointing
proxies, and the time before a Meeting or Adjourned Meeting by
which an instrument appointing a proxy must be deposited; and
any other matter relating to the conduct of a meeting of Special
Warrantholders.
A regulation so made is binding and effective and votes given in accordance with
such a regulation are valid. The Trustee may permit Special Warrantholders to
make proof of ownership in the manner the Trustee approves.
Powers of Special Warrantholders
--------------------------------
By Extraordinary Resolution passed pursuant to this Article 6 by
not less than a 2/3 majority of the votes cast in respect thereof, the Special
Warrantholders may:
<PAGE>
-22-
agree to any modification, abrogation, alteration, compromise, or
arrangement of the rights of the Special Warrantholders whether
arising under this Indenture, or otherwise at law, including the
rights of the Trustee in its capacity as trustee hereunder or on
behalf of the Special Warrantholders against the Company, which
has been agreed to by the Company;
direct and authorize the Trustee to exercise any discretion,
power, right, remedy or authority given to it by or under this
Indenture in the manner specified in such resolution or to
refrain from exercising any such discretion, power, right,
remedy, or authority;
direct the Trustee to enforce any covenant on the part of the
Company contained in this Indenture or to waive any default by
the Company in compliance with any provisions of this Indenture
either unconditionally or upon any conditions specified in such
resolution;
assent to any change in or omission from the provisions contained
in this Indenture or the Special Warrant Certificates or any
ancillary or supplemental instrument which is agreed to by the
Company, and to authorize the Trustee to concur in and execute
any ancillary or supplemental indenture embodying the change or
omission;
with the consent of the Company, remove the Trustee or its
successor in office and to appoint a new registrar and trustee to
take the place of the Trustee so removed;
upon the Trustee being furnished with an indemnity that is, in
its discretion, sufficient, require the Trustee to enforce any
covenant of the Company contained in this Indenture or the
Special Warrant Certificates, or to enforce any right of the
Special Warrantholders in any manner specified in such
Extraordinary Resolution, or to refrain from enforcing any such
covenant or right;
restrain any Special Warrantholder from instituting or continuing
any suit or proceeding against the Company for the enforcement of
a covenant on the part of the Company contained in this Indenture
or any of the rights conferred upon the Special Warrantholders as
set out in this Indenture or the Special Warrant Certificates;
direct a Special Warrantholder who, as such, has brought a suit,
action or proceeding to stay or discontinue or otherwise deal
with the same upon payment of the costs, charges, and expenses
reasonably and properly incurred by such Special Warrantholder in
connection therewith;
waive and direct the Trustee to waive a default by the Company in
complying with any of the provisions of this Indenture or the
Special Warrant Certificate either unconditionally or upon any
conditions specified in such Extraordinary Resolution;
<PAGE>
-23-
assent to a compromise or arrangement with a creditor or
creditors or a class or classes of creditors, whether secured or
otherwise, and with holders of any shares or other securities of
the Company;
direct the Trustee to release (or cause to be released) up to 50%
of the Escrow Funds to the Company prior to the Qualification
Date; or
amend, alter, or repeal any resolution previously passed pursuant
to this Section 6.12.
An Extraordinary Resolution of the Special Warrantholders is
binding upon all the Special Warrantholders whether present or not present at
the Meeting or Adjourned Meeting at which the Extraordinary Resolution was
passed or whether or not assented to in writing, and each Special Warrantholder,
the Trustee and the Company will give effect to the Extraordinary Resolution to
the extent that the Extraordinary Resolution applies to such party.
Minutes of Meetings
-------------------
The Trustee will make and maintain minutes and records of all resolutions and
proceedings at a Meeting or Adjourned Meeting and will make available those
minutes and records at the office of the Trustee for inspection by a Special
Warrantholder or his authorized representative at reasonable times. If signed by
the chairman of the Meeting or by the chairman of the next succeeding Meeting of
the Special Warrantholders, such minutes will be prima facie evidence of the
matters therein stated.
Written Resolutions
-------------------
Notwithstanding the foregoing, a written resolution or instrument signed in one
or more counterparts by the Special Warrantholders holding not less than a
majority of the Special Warrants outstanding in the case of a resolution, or not
less than 2/3 of the Special Warrants outstanding in the case of an
Extraordinary Resolution, is deemed to be the same as, and to have the same
force and effect as, a resolution or Extraordinary Resolution, as the case may
be, duly passed at a Meeting or Adjourned Meeting.
Binding Effect
--------------
A resolution of the Special Warrantholders passed pursuant to this Article 6 is
binding upon all Special Warrantholders. Upon the passing of a Special
Warrantholder's resolution at a meeting of the Special Warrantholders, or upon
the signing of a written resolution or instrument pursuant to Section 6.14 and
delivery by the Company to the Trustee of an original, certified or notarial
copy, or copies, of such resolution as executed or passed by the Special
Warrantholders, the Trustee is entitled to and will give effect thereto.
<PAGE>
-24-
SUPPLEMENTAL INDENTURES, MERGER, SUCCESSORS
-------------------------------------------
Provision for Supplemental Indentures for Certain Purposes
----------------------------------------------------------
From time to time the Company will, when authorized by the directors of the
Company, and the Trustee may, subject to the provisions of this Indenture,
execute and deliver by their proper offices, deeds, indentures or instruments
supplemental hereto, which thereafter form part hereof for any one or more or
all of the following purposes:
adding to the provisions hereof such additional covenants,
enforcement provisions, and release provisions (if any) as in the
opinion of counsel acceptable to the Company and counsel for the
Trustee are necessary or advisable, provided the same are not, in
the opinion of counsel for the Trustee prejudicial to the
interests of the Special Warrantholders;
adding to the covenants of the Company in this Indenture for the
protection of the Special Warrantholders;
evidencing any succession, (or successive successions), of other
companies to the Company and the covenants of, and obligations
assumed by, such successor (or successors) in accordance with the
provisions of this Indenture;
making such provisions not inconsistent with this Indenture as
may be deemed necessary or desirable with respect to matters or
questions arising hereunder;
giving effect to an Extraordinary Resolution;
to rectify any ambiguity, defective provision, clerical omission
or mistake or manifest or other error contained herein or in any
deed or indenture supplemental or ancillary hereto provided that,
in the opinion of the Trustee, the rights of the Special
Warrantholder are not prejudiced thereby;
adding to or altering the provisions hereof in respect of the
transfer of Special Warrants, making provision for the exchange
of Special Warrant Certificates of different denominations, and
making any modification in the form of the Special Warrant
Certificate which does not affect the substance thereof; or
for any other purpose not inconsistent with the provisions of
this Indenture.
<PAGE>
-25-
Company May Consolidate, etc. on Certain Terms
----------------------------------------------
Nothing in this Indenture prevents any consolidation, amalgamation or merger of
the Company with or into any other body corporate or bodies corporate, or a
conveyance or transfer of all or substantially all the properties and assets of
the Company as an entirety to any body corporate lawfully entitled to acquire
and operate the same, provided, however, that the body corporate formed by such
consolidation or amalgamation or into which such merger has been made, or which
has acquired by conveyance or transfer all or substantially all the properties
and assets of the Company as an entirety in circumstances resulting in the
Special Warrantholders being entitled to receive property from or securities of
such body corporate, will execute prior to or contemporaneously with such
consolidation, amalgamation, merger, conveyance or transfer, an indenture
supplemental hereto, satisfactory in form to the Trustee, wherein the due and
punctual performance and observance of all the covenants and conditions of this
Indenture to be performed or observed by the Company are assumed by the
successor body corporate. The Trustee is entitled to receive and is fully
protected in relying upon an opinion of counsel that any such consolidation,
amalgamation, merger, conveyance or transfer, and a supplemental indenture
executed in connection therewith, complies with the provisions of this Section.
Successor Body Corporate Substituted
------------------------------------
Where the Company, pursuant to Section 7.2 hereof, is consolidated, amalgamated
or merged with or into any other body corporate or bodies corporate or conveys
or transfers all or substantially all of the properties and assets of the
Company as an entirety to another body corporate, the successor body corporate
formed by such consolidation or amalgamation or into which the Company has been
merged or which has received a conveyance or transfer as aforesaid succeeds to
and is substituted for the Company hereunder with the same effect as nearly as
may be possible as if it had been named herein. Such changes may be made in the
Special Warrants as may be appropriate in view of such consolidation,
amalgamation, merger, conveyance or transfer.
CONCERNING THE TRUSTEE
----------------------
Duties of Trustee
-----------------
By way of supplement to the provisions of any statute for the time being
relating to trustees, and notwithstanding any other provision of this Indenture,
in the exercise of the rights, duties and obligations prescribed or conferred by
the terms of this Indenture, the Trustee will exercise that degree of care,
diligence and skill that a reasonably prudent trustee would exercise in
comparable circumstances. Provided that the Trustee has exercised such standard
of care, diligence and skill, and in the absence of wilful neglect, gross
negligence or fraud, the Company will indemnify and save harmless the Trustee
from all loss, costs or damages it may suffer in administering the trusts of
this Indenture.
<PAGE>
-26-
Action by Trustee
-----------------
The Trustee is not obligated to do any act or thing except where required to do
so by this Indenture and, in the case of a default, only when it has actual
notice thereof.
Certificate of the Company
--------------------------
If in the administration of the trusts of this Indenture, the Trustee deems it
necessary or desirable that any matter be proved or established by the Company,
prior to taking or suffering any action hereunder, the Trustee may accept and
rely on a written order, request, consent, certificate or other document signed
in the name of the Company by any one of the Chairman of the Board, the Vice-
Chairman of the Board, the President, a Vice-President, or Treasurer of the
Company and may consist of one or more instruments so executed, as conclusive
evidence of the truth of any fact relating to the Company or its assets therein
stated and proof of the regularity of any proceedings or actions associated
therewith, but the Trustee may in its discretion require further evidence or
information before acting or relying on any such order, request, consent,
certificate or other document.
Trustee May Employ Experts or Agents
------------------------------------
The Trustee may, at the Company's expense, employ or retain such lawyers,
accountants, engineers, appraisers or other experts, advisers or agents as it
may reasonably require for the purpose of discharging its duties hereunder and
may pay reasonable remuneration for such services rendered to it but it is not
responsible for any misconduct, mistake or error of judgment on the part of any
of them. The Company will reimburse the Trustee for all disbursements, costs and
expenses made or incurred by the Trustee in the discharge of its duties and in
the management of the trusts hereunder. The Trustee may rely upon the Company
and act upon the opinion or advice of, or information obtained from, any such
lawyer, accountant, engineer, appraiser or other expert, adviser or agent in
relation to any matter arising in the administration of the trusts hereof. The
Trustee will not incur any liability for the acts or omissions of such lawyers,
accountants, engineers, appraisers or other experts, advisers or agents employed
by the Trustee in good faith.
<PAGE>
-27-
Resignation and Replacement of Trustee
--------------------------------------
The Trustee may resign its trust and be discharged from all
further obligations hereunder by giving to the Company written
notice at least 90 days before the effective date of the
resignation. If the Trustee resigns, or becomes incapable of
acting hereunder, the Company will forthwith appoint in writing a
new trustee. Failing such appointment by the Company, the
retiring Trustee or any Special Warrantholder may apply to a
Judge of the Supreme Court of British Columbia on such notice as
such Judge may direct, for the appointment of a new trustee. The
Special Warrantholders may, by Extraordinary Resolution, remove
the Trustee (including a trustee appointed by the Company or by a
Judge as aforesaid) and appoint a new trustee. On any new
appointment, the new trustee is vested with the same powers,
rights, duties and obligations as if it had been originally named
as Trustee without any further assurance, conveyance, act or
deed. If for any reason it becomes necessary or expedient to
execute any further deed or assurance, the former Trustee will
execute the same in favour of the new trustee.
Any company resulting from a merger, consolidation or
amalgamation to which the Trustee for the time being is a party
is to be the successor Trustee under this Indenture without any
further act.
Indenture Legislation
---------------------
The Company and the Trustee agree that each will at all times in relating to
this indenture and to any action to be taken hereunder, observe and comply with
and be entitled to the benefits of all Applicable Legislation. If and to the
extent that any provision of this indenture limits, qualifies or conflicts with
any mandatory requirement of Applicable Legislation, such mandatory requirement
prevails.
Notice
------
The Trustee is not required to give notice to third parties, including the
Special Warrantholders, of the execution of this Indenture.
Use of Proceeds
---------------
The Trustee is in no way responsible for the use by the Company of the proceeds
of the Private Placement.
<PAGE>
-28-
No Inquiries
------------
Prior to the countersignature and delivery of any Special Warrant Certificates
under any provisions of this Indenture, the Trustee is not bound to make any
inquiry or investigation as to the correctness of the matters set out in any of
the resolutions, opinions, certificates or other documents required by the
provisions of this Indenture, but is entitled to accept and act upon the
resolutions, opinions, certificates or other documents. The Trustee may
nevertheless, in its discretion, require further proof in cases where it deems
further proof desirable. The Trustee is not bound to make any inquiry or
investigation as to the performance by the Company of the Company's covenants
hereunder.
Trustee Not Required to Give Security
-------------------------------------
The Trustee is not required to give any bonds or security with respect to the
execution or administration of the trusts and powers of this Indenture.
No Conflict of Interest
-----------------------
The Trustee represents to the Company that, at the date of execution and
delivery by it of this Indenture, there exists no material conflict of interest
in the role of the Trustee as a fiduciary hereunder but if, notwithstanding the
provisions of this Section 8.11, such a material conflict of interest exists,
the validity and enforceability of this Indenture and the instruments issued
hereunder is not affected in any manner whatsoever by reason only that such
material conflict of interest exists or arises. The Trustee will, within 90 days
after ascertaining that it has a material conflict of interest, either eliminate
such material conflict of interest or resign in the manner and with the effect
specified in Section 8.5.
Trustee Not Ordinarily Bound
----------------------------
The Trustee is not obligated to spend its own funds in connection with the
commencement or continued exercise of its duties hereunder. The obligation of
the Trustee to commence or continue any act or action is conditional upon
Special Warrantholders furnishing, when required in writing so to do by the
Trustee, funds sufficient for commencing or continuing the act, action or
proceeding and an indemnity reasonably satisfactory to the Trustee to protect
and hold harmless the Trustee against any loss, damage or liability by reason
thereof.
<PAGE>
-29-
Trustee May Deal in Instruments
-------------------------------
The Trustee may in its personal or other capacity, buy, sell, lend upon and deal
in and hold securities of the Company and generally contract and enter into
financial transactions with the Company or otherwise, without being liable to
account for any profits made thereby.
Recitals or Statements of Fact Made by Company
----------------------------------------------
Subject to the provisions hereof, the Trustee is not liable for or by reason of
any of the statements of fact or recitals contained in this Indenture or in the
Special Warrant Certificates and is not required to verify the same but all such
statements and recitals are and are deemed to have been made by the Company
only.
Trustee's Discretion Absolute
-----------------------------
The Trustee, except as herein otherwise provided, has, as regards all the
trusts, powers, authorities and discretion vested in it, absolute and
uncontrolled discretion as to the exercise thereof, whether in relation to the
manner or as to the mode and time for the exercise thereof.
No Representations as to Validity
---------------------------------
The Trustee is not:
under any responsibility in respect of the validity of this
Indenture or the execution and delivery thereof or in respect of
the validity or the execution of any Special Warrant issued
hereunder;
responsible for any breach by the Company of any covenant or
condition contained in this Indenture or in any such Special
Warrant Certificate; or
by any act hereunder, deemed to make any representation or
warranty as to the authorization or reservation of any Debentures
to be issued as provided in this Indenture or in any Special
Warrant Certificate or as to whether any Debentures or Granges
Shares will when issued be duly authorized or be validly issued
and fully paid and non-assessable. The duty and responsibility as
to all the matters and things referred to in this Section 8.16
rests upon the Company and not upon the Trustee and the failure
of the Company to discharge any such duty and responsibility does
not in any way render the Trustee liable or place upon it any
duty or responsibility for breach of which it would be liable.
<PAGE>
-31-
Acceptance of Trusts
--------------------
The Trustee hereby accepts the trusts of this Indenture and agrees to perform
the same upon the terms and conditions herein set forth or referred to unless
and until discharged therefrom by resignation or in some other lawful way.
Trustee's Authority to Carry on Business
----------------------------------------
The Trustee represents to the Company that at the date hereof it is authorized
to carry on the business of a trust company in the Province of British Columbia.
If, notwithstanding the provisions of this Section 8.18, it ceases to be
authorized to carry on such business in the Province of British Columbia, the
validity and enforceability of this Indenture and of the Special Warrants issued
hereunder are not affected in any manner whatsoever by reason only of such
event, provided that the Trustee will, within 30 days after ceasing to be
authorized to carry on such business in such Province, either becomes so
authorized or resigns in the manner and with the effects specified in Section
8.5.
Disagreement
------------
In the event of any disagreement between any of the parties to this Agreement,
or between them or either of them and any other person, resulting in demands or
adverse claims being made in connection with or for any asset involved herein or
affected hereby, the Trustee shall be entitled, at its discretion, to refuse to
comply with any demands or claims on it, as long as such disagreement shall
continue, and in so refusing the Trustee may make no delivery or other
disposition of any asset involved herein or affected hereby, and in so doing the
Trustee shall not be or become liable in any way or to any person or party or
for its failure or refusal to comply with such conflicting demands or adverse
claims, and it shall be entitled to continue so to refrain from acting and so to
refuse to act until the right of person or party shall have been finally
adjudicated in a court assuming and having jurisdiction on the asset involved
herein or affected hereby, or all differences shall have been adjusted by
agreement and the Trustee shall have been notified in writing signed by all
persons and parties interested.
Indemnity
---------
<PAGE>
-32-
Without limiting any protection or indemnity of the Trustee under any other
provision hereof, or otherwise at law, every party to this Agreement hereby
agrees to jointly and severally indemnify and hold harmless the Trustee from and
against any and all liabilities, losses, damages, penalties, claims, actions,
suits, costs, expenses and disbursements, including reasonable legal or advisor
fees and disbursements, of whatever kind and nature which may at any time be
imposed on, incurred by or asserted against the Trustee in connection with the
performance of its duties and obligations hereunder, other than such labilities,
losses, damages, penalties, claims, actions, suits, costs, expenses and
disbursements arising by reason of the gross negligence or fraud of the Trustee.
This provision shall survive the resignation or removal of the Trustee, or the
termination of the Indenture. The Trustee shall not be under any obligation to
prosecute or to defend any action or suit in respect of the relationship which,
in the opinion of its counsel, may involve it in expense or liability, unless
the party hereto shall, so often as required, furnish the Trustee with
satisfactory indemnity and funding against such expense or liability.
NOTICES
-------
Notice to Company, Trustee and Underwriters
-------------------------------------------
Any notice to the Company, Trustee or Underwriters under the provisions of this
Indenture is valid and effective if in writing delivered or sent by telecopier:
to the Corporation:
Atlas Corporation
Suite 3150, 370 Seventeenth Street, Denver, Colorado, U.S.A.,
80202
Attention: David J. Birkenshaw, CEO
Telefax: (303) 892 - 8808
with a copy to:
Coudert Brothers
1114 Avenue of the Americas, New York, New York, U.S.A.,
10036-7703
Attention: Jeffrey E. Cohen
Telefax: (212) 626 - 4120
- and to -
Lang Michener
Suite 2500, 181 Bay Street, Toronto, Ontario, M5J 2T7
Attention: David Knight
Telefax: (416) 365 - 1719
<PAGE>
-33-
to the Underwriters:
Yorkton Securities Inc.
10th floor, 1055 Dunsmuir Street, Vancouver, British Columbia,
V7X 1L4
Attention: Gordon Keep, Telefax: (604) 640 - 0512
- and to -
First Marathon Securities Limited
Exchange Tower, Box 21, 2 First Canadian Place, Toronto,
Ontario, M5X 1J9
Attention: Richard S. Hallisey, Telefax (416) 869 - 8013
with a copy to:
Sobolewski Anfield
Suite 1600, 609 Granville Street, Vancouver, British Columbia,
V7Y 1C3
Attention: Jay Sujir
Telefax: (604) 669 - 3877
- and to -
Miller & Holguin
Seventh Floor, 1801 Century Park East, Los Angeles, California,
U.S.A., 90067
Attention: J. Brad Wiggins
Telefax: (310) 557 - 2205
to the Trustee at:
3rd floor, 510 Burrard Street, Vancouver, British Columbia,
V6C 3B9
Attention: The Manager, Corporate Trust Department
Telecopier: (604) 669 - 1548
and is deemed to have been effectively given on the date of delivery if
delivered if that date is a business day or the business day following the date
of delivery, if such date is not a business day, and on the date of sending if
sent by telecopier if that date is a business day or the business day following
the date of delivery, if such date is not a business day.
<PAGE>
-34-
Notice to Special Warrantholders
--------------------------------
Any notice to the Special Warrantholders under the provisions of this Indenture
is valid and effective if delivered or sent by telecopier to each Special
Warrantholder at its address appearing on the register of Special Warrants kept
by the Trustee or, in the case of joint holders, to the first such address, and
is deemed to have been effectively given on the date of delivery, if delivered,
if that date is a business day or the business day following the date of
delivery, if such date is not a business day, and on the date of sending if sent
by telecopier if that date is a business day or the business day following the
date of delivery, if such date is not a business day.
POWER OF BOARD OF DIRECTORS
---------------------------
Board of Directors
------------------
In this Indenture, where the Company is required or empowered to exercise any
acts, all such acts may be exercised by the directors of the Company, by any
duly appointed committee of the directors of the Company or by those officers of
the Company authorized to exercise such acts.
MISCELLANEOUS PROVISIONS
------------------------
Further Assurances
------------------
The parties covenant and agree from time to time, as may be reasonably required
by any party hereto, to execute and deliver such further and other documents and
do all matters and things which are convenient or necessary to carry out the
intention of this Indenture more effectively and completely.
Unenforceable Terms
-------------------
If any term, covenant or condition of this Indenture or the application thereof
to any party or circumstance is invalid or unenforceable to any extent, the
remainder of this Indenture or application of such term, covenant or condition
to a party or circumstance other than those to which it is held invalid or
unenforceable is not affected thereby and each remaining term, covenant or
condition of this Indenture is valid and enforceable to the fullest extent
permitted by law.
<PAGE>
-35-
No Waiver
---------
No consent or waiver, express or implied, by either party to or of any breach or
default by the other party in the performance by the other party of its
obligations hereunder is deemed or construed to be a consent or waiver to or of
any other breach or default in the performance of obligations hereunder by such
party. Failure on the part of either party to complain of any act or failure to
act of the other party or to declare the other party in default, irrespective of
how long such failure continues, does not constitute a waiver by such party of
its rights hereunder.
Suits By Special Warrantholders
-------------------------------
No Special Warrantholder has any right to institute any action,
suit or proceeding at law or in equity for the purpose of
enforcing the execution of any trust or power hereunder or for
the appointment of a liquidator or receiver or for a receiving
order under the Bankruptcy Act (Canada) or to have the Company
--------------
wound up or to file or prove a claim in any liquidation or
bankruptcy proceedings or for any other remedy hereunder unless
the Special Warrantholders by Extraordinary Resolution (which
Resolution has not been countermanded or superseded by a
subsequent Extraordinary Resolution) have made a request to the
Trustee and the Trustee has been afforded reasonable opportunity
to proceed or complete any action or suit for any such purpose
whether or not in its own name and the Special Warrantholders or
any or them have furnished to the Trustee, when so requested by
the Trustee sufficient funds and security and indemnity
satisfactory to it against the costs, expenses and liabilities to
be incurred therein or thereby and the Trustee has failed to act
within a reasonable time or the Trustee has failed to actively
pursue any such act or proceeding.
Subject to the provisions of this Section and otherwise in
this Indenture, all or any of the rights conferred upon a
Special Warrantholder by the terms of a Special Warrant may
be enforced by such Special Warrantholder by appropriate
legal proceedings without prejudice to the right which is
hereby conferred upon the Trustee to proceed in its own name
to enforce each and all of the provisions herein contained
for the benefit of the Special Warrantholders from time to
time.
Enurement
---------
This Indenture enures to the benefit of and is binding upon the
parties hereto and their respective successors and assigns.
<PAGE>
A - 36
Formal Date and Effective Date
------------------------------
For the purpose of convenience this Indenture is referred to as
bearing the formal date of November 9, 1995, however notwithstanding
such formal date, this Indenture becomes effective as between the
Company and any particular Special Warrantholder upon the date of
issuance of a Special Warrant Certificate to such Special
Warrantholder.
ATLAS CORPORATION
Per: /s/ GERALD E. DAVIS
------------------------------------------
THE MONTREAL TRUST COMPANY OF CANADA
Per:___________________________________________
Per:___________________________________________
<PAGE>
A - 37
This Special Warrant was originally issued (i) in the United States
and to U.S. Persons in reliance upon an exemption from the
registration requirements of the U.S. Securities Act of 1933, as
amended (the "1933 Act"), for offers and sales of securities which do
not involve any public offering, and analogous exemptions under state
securities laws and (ii) outside the United States to persons other
than U.S. Persons in accordance with the requirements of Regulation S
under the 1933 Act. This Special Warrant, the Debentures issuable upon
exercise hereof, and the shares of common stock of Granges Inc. into
which such Debentures may be exchanged have not been registered under
the 1933 Act or the securities laws of any of the states of the United
States, and may not be offered or sold in the United States or to U.S.
Persons (as such term is defined in Regulation S under the 1933 Act),
and Special Warrants and Debentures issued outside the United States
to non-U.S. Persons in reliance upon Regulation S may not be exercised
or exchanged by or on behalf of a U.S. Person, unless the securities
are registered under the 1933 Act or an exemption from such
registration is available.
SPECIAL DEBENTURE WARRANT
CERTIFICATE
ATLAS CORPORATION
(Incorporated pursuant to the laws of Delaware)
<TABLE>
<CAPTION>
=========================================================================================
<S> <C>
US $ .
SPECIAL DEBENTURE SPECIAL DEBENTURE WARRANTS
WARRANT ("SPECIAL WARRANTS"), EACH SPECIAL WARRANT
CERTIFICATE NO. ENTITLING THE HOLDER TO ACQUIRE US $100 PRINCIPAL
AMOUNT OF EXCHANGEABLE DEBENTURES ("DEBENTURES")
OF THE COMPANY
=========================================================================================
</TABLE>
THE SPECIAL WARRANTS ARE EXERCISABLE ON OR BEFORE 5:00 P.M. (VANCOUVER
TIME) ON THE DATE (THE "EXPIRY DATE") WHICH IS THE EARLIER OF:
THE FIFTH BUSINESS DAY FOLLOWING THE DATE (THE "QUALIFICATION
DATE") UPON WHICH ALL QUALIFICATION AND REGISTRATION REQUIREMENTS
(AS HEREINAFTER DEFINED) HAVE BEEN MET; AND
NOVEMBER ., 1996
<PAGE>
A - 38
(HEREINAFTER REFERRED TO AS THE "EXCHANGE TIME").
THE SPECIAL WARRANTS REPRESENTED HEREBY WILL BE VOID AFTER 5:00 P.M.
(VANCOUVER TIME) ON THE EXPIRY DATE.
THIS IS TO CERTIFY THAT, FOR VALUE RECEIVED,
__________________________________
______________________________________________________________________
________ of
______________________________________________________________________
__________
______________________________________________________________________
__________ (herein called the "Special Warrantholder") is the
registered holder of the dollar amount of special debenture warrants
(the "Special Warrants") stated above and is entitled to be issued, in
the manner and at the time and subject to the restrictions contained
in the Indenture hereinafter referred to, the amount of Debentures of
Atlas Corporation (the "Company") as is equal to the amount of Special
Warrants represented hereby (subject to adjustment as set out in the
Indenture), all without payment of any consideration in addition to
that paid for the Special Warrants represented hereby.
The Special Warrants represented by this certificate are issued under
and pursuant to a certain indenture (herein called the "Indenture")
made as of November 9, 1995 between the Company and the Montreal Trust
Company of Canada, 510 Burrard Street, Vancouver, British Columbia,
V6C 3B9 (the "Trustee" which expression includes any successor trustee
appointed under the Indenture), to which Indenture and any instruments
supplemental thereto reference is hereby made for a full description
of the rights of the Special Warrantholders and the terms and
conditions upon which such Special Warrants are, or are to be, issued
and held, all to the same effect as if the provisions of the Indenture
and all instruments supplemental thereto were herein set forth, to all
of which provisions the holder of these Special Warrants by acceptance
hereof assents. All terms defined in the Indenture are used herein as
so defined. In the event of any conflict or inconsistency between the
provisions of the Indenture and the provisions of this Special Warrant
Certificate, except those that are necessary by context, the
provisions of the Indenture will prevail. The Company will furnish to
the holder of this Special Warrant Certificate, upon request and
without charge, a copy of the Indenture.
The Special Warrants represented by this Special Warrant Certificate
may be exercised by the holder at any time before the Exchange Time.
Pursuant to the Indenture the Company has covenanted to use its best
efforts to cause receipts for a (final) Prospectus qualifying the
Debentures, to be issued by the
<PAGE>
A - 39
securities regulatory authorities in Ontario and British Columbia, and
to cause registration of the Debentures and certain common shares of
Granges Inc. to be made effective under the United States Securities
Act of 1933 and to cause registration of the class of Debentures under
the United States Securities Exchange Act of 1934 (collectively, the
"Qualification and Registration Requirements") on or before 8:00 p.m.
(Vancouver time) on February ., 1996 (the "Qualification Deadline").
Upon meeting the Qualification and Registration Requirements on or
before the Exchange Date (as defined in the Indenture), the Company
will forthwith give written notice to each of the Trustee and the
Underwriters.
Upon receipt by the Trustee of a written notice from the Company
pursuant to Section 3.7 of the Indenture, the Trustee will forthwith
give notice to the Special Warrantholder, which notice must state that
any Special Warrants not exercised prior to the Exchange Time are
deemed to have been exercised immediately prior to the Exchange Time
pursuant to Section 5.3 of the Indenture.
If the Qualification and Registration Requirements are not met on or
before the Qualification Deadline, then the holder of this Special
Warrant Certificate, pursuant to Section 2.3 of the Indenture, may on
or before 5:00 p.m. (Vancouver time) on February ., 1996 (the
"Retraction Deadline"), require the Company to redeem the outstanding
Special Warrants held by it at a price of $105 for each $100 of
Special Warrants held.
In order to exercise the Cancellation Right, the holder of this
Special Warrant must provide the Trustee with written notice (the
"Cancellation Notice") on or before the Retraction Deadline specifying
the number of Special Warrants to be redeemed, together with Special
Warrant Certificates representing no less than such number of Special
Warrants. Upon receipt of the Cancellation Notice, the Trustee will
forthwith:
(a) cause the number of Special Warrants specified in the
Cancellation Notice to be cancelled;
(b) deliver, or cause to be delivered or credited to the holder of
this Special Warrant, the sum of US $105 for each US $100 of
Special Warrants that have been cancelled; and
(c) deliver, or cause to be delivered, a Special Warrant
Certificate representing the balance of any Special Warrants
delivered to the Company pursuant to subsection 2.3(C) of the
Indenture, but not specified to be redeemed by the Company in
the Cancellation Notice.
In the event that the Qualification and Registration Requirements are
not met on or before the Qualification Deadline, each US $100 of
Special Warrants exercised thereafter shall entitle the Special
Warrantholders to receive upon exercise, US $110 principal amount of
Debentures in lieu of US $100 principal amount of Debentures.
<PAGE>
A - 40
If the holder of this Special Warrant does not provide the Trustee
with the aforesaid Cancellation Notice, then the holder shall, with
respect to the amended terms of the Debentures, be deemed to have
renewed the representations appearing in Section 9 of the subscription
agreement pursuant to which the Special Warrants were originally
issued.
Special Warrantholders may, at any time before the Exchange Time,
exercise all or any number of the Special Warrants represented hereby,
by surrendering to the Trustee a certificate or certificates
representing the number of Special Warrants to be exercised, together
with the duly completed and executed exercise form attached. ANY SUCH
EXERCISE, AT A TIME WHEN THE QUALIFICATION AND REGISTRATION
REQUIREMENTS HAVE NOT BEEN MET, IS SUBJECT TO COMPLIANCE WITH, AND MAY
BE RESTRICTED BY, APPLICABLE SECURITIES LAWS AND IS FURTHER SUBJECT TO
THE HOLDER PROVIDING SUCH ASSURANCES AND EXECUTING SUCH DOCUMENTS AS
MAY, IN THE REASONABLE OPINION OF THE COMPANY OR THE TRUSTEE, BE
REQUIRED TO ENSURE COMPLIANCE WITH APPLICABLE SECURITIES LEGISLATION.
IF, AT THE TIME OF THE EXERCISE OF THE SPECIAL WARRANTS, THERE REMAIN
RESTRICTIONS ON RESALE UNDER APPLICABLE SECURITIES LEGISLATION ON THE
DEBENTURES ACQUIRED, THE COMPANY, MAY, IF REQUIRED ON THE ADVICE OF
COUNSEL, ENDORSE THE CERTIFICATES REPRESENTING THE DEBENTURES ACQUIRED
WITH RESPECT TO SUCH RESALE RESTRICTIONS.
If the Special Warrants represented hereby have not been exercised by
the holder thereof pursuant to Section 5.2 of the Indenture prior to
the Exchange Time, such Special Warrants will be deemed to have been
exercised by the holder immediately prior to the Exchange Time without
any further action on the part of the holder. In that event, the
Trustee will deliver certificates for the securities comprised in the
Special Warrants issued upon such deemed exercise in the name of the
Special Warrantholder to the address of the Special Warrantholder as
specified in the register for the Special Warrants.
The Debentures in respect of which the Special Warrants are exercised
are deemed to have been issued on the date of such exercise pursuant
to Section 5.2 or 5.3 of the Indenture, at which time each Special
Warrantholder or the person(s) in whose name the Debentures so
subscribed for are to be issued is deemed to have become the holder of
record of such Debentures.
After the exercise of Special Warrants pursuant to either Section 5.2
or 5.3 of the Indenture, the Trustee will notify the separate trustee
under the Debentures to mail by first class insured mail, or if
instructed, delivered, at the expense of the Special Warrantholder
requesting such delivery, to each Special Warrantholder or the
person(s) in whose name the Debentures so subscribed for are to be
issued at its address specified in the exercise form, or in the case
of the deemed exercise of the Special Warrants, to the address of the
Special Warrantholder appearing in the register for the Special
Warrants, certificates for the appropriate amount of Debentures
issuable
<PAGE>
A - 41
in respect of such Special Warrants, not exceeding those which such
person(s) is entitled to acquire pursuant to the Special Warrants so
exercised.
Pursuant to the Indenture, Debentures will be issued in multiples of
US $100 and any exercise of Special Warrants in multiples of other
than $100 will entitle the holder to receive that number of Debentures
equal to the next lowest $100 multiple of Debentures.
The holder of this Special Warrant Certificate may at any time up to
the Exchange Time, upon written instruction delivered to the Trustee
and payment of the charges provided for in the Indenture and otherwise
in accordance with the provisions of the Indenture, exchange this
Special Warrant Certificate for other Special Warrant Certificates (in
multiples of US $100) evidencing Special Warrants entitling the holder
to acquire in the aggregate the same amount of Debentures as may be
acquired under this Special Warrant Certificate. If the holder of this
Special Warrant Certificate exercises a lesser number of Special
Warrants than may be acquired under this Special Warrant Certificate,
the Trustee will issue to such holder a new Special Warrant
Certificate representing the Special Warrants not then exercised. The
Trustee will retain possession of all Special Warrant Certificates
delivered to it upon exchange in accordance with the provisions of the
Indenture.
The holding of the Special Warrants evidenced by this Special Warrant
Certificate does not constitute the Special Warrantholder a
shareholder of the Company or of Granges Inc., or entitle such holder
to any right or interest in respect thereof except as herein and in
the Indenture expressly provided.
The Special Warrants evidenced by this Special Warrant Certificate may
be transferred only upon compliance with the conditions prescribed in
the Indenture, on the register kept at the offices of the Trustee, by
the registered Special Warrantholder (or its legal representatives or
its attorney duly appointed) and its transferee duly executing the
transfer form in the form attached hereto and complying with
applicable laws and such other reasonable requirements as the Company
and Trustee may prescribe.
The Indenture contains provisions making binding upon all holders of
Special Warrants outstanding thereunder resolutions passed at meetings
of such holders held in accordance with such provisions and
instruments in writing signed by such holders.
This Special Warrant Certificate is construed in accordance with the
laws of the Province of British Columbia and of Canada applicable
therein and will be treated in all respects as a British Columbia
contract.
This Special Warrant Certificate is not valid for any purpose whatever
unless and until it has been countersigned by or on behalf of the
Trustee.
<PAGE>
A - 42
After the exercise of any of the Special Warrants represented by this
Special Warrant Certificate, the Special Warrantholder no longer has
any rights under either the Indenture or this Special Warrant
Certificate, other than the right to receive certificates representing
Debentures issuable on the exercise of those Special Warrants, and
those Special Warrants exercised or deemed to have been exercised are
void and of no further value or effect.
IN WITNESS WHEREOF the Company has caused this Special Warrant
Certificate to be signed by its duly authorized officers as of
ATLAS CORPORATION
Per:_______________________________________
Countersigned by:
MONTREAL TRUST COMPANY OF CANADA
Per:_______________________________________
<PAGE>
A - 43
EXERCISE FORM
TO: ATLAS CORPORATION
c/o Montreal Trust Company of Canada
510 Burrard Street, Vancouver, British Columbia, V6C 3B9
The undersigned hereby irrevocably exercises the right to acquire US
$_________________ of Debentures of Atlas Corporation (or such number of other
securities or property to which such Special Warrants entitle the undersigned in
lieu thereof or in addition thereto under the provisions of the Indenture
referenced in the within Special Warrant Certificate) according to the terms of
the Indenture referenced in the within Special Warrant Certificate.
Amount (US $) of Special
Warrants: ____________________________________________________
DATED this _________ day of _______________________, 199___.
===============================================================================
--------------------------- ------------------------------------------
Signature Witnessed (Signature of Special Warrantholder, to be
(See instructions to Special the same as appears on the face of this
Warrantholders) Special Warrant Certificate)
===============================================================================
Name of Special Warrantholder:
Address:
===============================================================================
<PAGE>
A - 44
FORM OF TRANSFER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
(name)__________________ (the "Transferee"), of (residential address)___________
__________________________________________ (US $) __________ Special Warrants
of Atlas Corporation registered in the name of the undersigned on the records of
Montreal Trust Company of Canada represented by the within certificate, and
irrevocably appoints____________________________________________________________
__________________________________________ as the attorney of the undersigned to
transfer the said securities on the books or register of transfer, with full
power of substitution.
DATED the ________ day of _________________________, 199___.
===============================================================================
--------------------------- ------------------------------------------
Signature Guaranteed (Signature of transferring Special
(See instructions to Special Warrantholder, to be the same as appears
Warrantholders) on the face of this Special Warrant
Certificate)
===============================================================================
--------------------------- ------------------------------------------
Witness as to Signature of (Signature of Transferee)
Transferee
===============================================================================
<PAGE>
A - 45
INSTRUCTIONS TO SPECIAL WARRANTHOLDERS
TO EXERCISE OR TRANSFER:
If the Special Warrantholder voluntarily exercises Special Warrants
prior to the Exchange Time pursuant to the Indenture, it must
complete, sign and deliver the Exercise Form together with the Special
Warrant Certificates to the Trustee indicating the amount of
Debentures to be acquired. In such case, the signature of such
registered holder on the Exercise Form must be witnessed.
If the Exercise Form or the Transfer Form is signed by a trustee,
executor, administrator, curator, guardian, attorney, officer of a
corporation or any person acting in a fiduciary or representative
capacity, the Special Warrant Certificates must also be accompanied by
evidence of authority to sign satisfactory to the Trustee or the
Company.
If the Special Warrant Certificate is transferred, the Special
Warrantholder's signature on the Transfer Form must be guaranteed by
an authorized officer of a chartered bank, trust company or an
investment dealer who is a member of a recognized stock exchange.
For the protection of the Special Warrantholder, it would be prudent
to use registered mail if forwarding this Special Warrant Certificate
by mail .
<PAGE>
-47-
Agreement of Granges, Inc.
--------------------------
This Agreement relates to the offering ("Offering") by Atlas Corporation
("Atlas") of up to $15,000,000 of special debenture warrants (the "Special
Warrants") which may, under certain circumstances, be exercised for the purchase
of exchangeable debentures of Atlas in principal amount of up to $16,500,000
(the "Debentures"), which in turn (as to principal) may, under certain
circumstances, be exchanged for, redeemed for, or paid in common shares of
Granges Inc. ("Granges") owned by Atlas (the "Granges Shares"). Pursuant to an
underwriting agreement to be dated October 25, 1995 (the "Underwriting
Agreement") between Atlas, Yorkton Securities Inc. ("Yorkton") and First
Marathon Securities Ltd. ("First Marathon"), Atlas proposes to undertake certain
obligations that will require the cooperation of Granges. Therefore, for good
and valuable consideration, the receipt of which is hereby acknowledged, Granges
hereby covenants with Atlas, Yorkton and First Marathon as follows:
Granges will, as soon as reasonably practicable after the closing of
the Offering, file a registration statement (the "Registration Statement") under
the United States Securities Act of 1933, as amended, registering for resale the
Granges Shares, and shall also file all required filings with state securities
or "blue sky" administrators in the states where the holders of the Granges
Shares propose to offer and sell the Granges Shares (the "Blue Sky Filings").
Granges will use its best efforts to cause the Registration Statement
and the Blue Sky Filings to become effective (collectively, the "Registration
Statements") on or before February 9, 1996 (the "Registration Deadline"). If
the Registration Requirements are not met on or before the Registration
Deadline, Granges will continue to use its best efforts to cause the
Registration Requirements to be met unless all of the Special Warrants have been
retracted and canceled pursuant to the terms of the Underwriting Agreement.
Granges will cause the Registration Statement to remain effective
until the date which is three (3) years after the latest date upon which the
Granges Shares are acquired by holders of Debentures (or such earlier time when
all of the Granges Shares have been sold under the Registration Statement);
provided, however, that Granges may, upon notice to the selling security
holders, temporarily suspend sales under the Registration Statement during any
reasonable period in which its board of directors determines, in good faith,
that because of material corporate changes, it would not be feasible to maintain
a
<PAGE>
-48-
current prospectus during such period; provided further, that in such event,
Granges will, at the earliest possible time thereafter, take all necessary steps
to update the prospectus disclosure and notify the selling security holders that
sales under the Registration Statement may resume.
Atlas agrees to pay Granges the reasonable expenses of Granges in
connection with preparing, filing and keeping effective the Registration
Statement and otherwise in connection with the Offering.
Atlas and Granges will agree on an acceptable form of indemnity by
Atlas in favor of Granges in connection with the Registration Statement and the
Offering.
Dated this 10th day of November, 1995
ATLAS CORPORATION GRANGES INC.
By: /s/ GERALD E. DAVIS By: /s/ A.J. ALI
---------------------- ----------------------------
Gerald E. Davis A. J. Ali
President VP Finance
By: /s/ JANIS D. BUSSE
----------------------------
Janis D. Busse
General Counsel & Corporate Secretary
<PAGE>
-50-
INDEMNIFICATION LETTER
Granges Inc.
2230 - 885 West Georgia Street
Vancouver, B.C.
V6C 3E8
Ladies and Gentlemen:
In connection with and in consideration for your agreement with Atlas
Corporation (the "Company") dated November 10, 1995 to file a registration
statement under the United States Securities Act of 1933 (the "1933 Act")
registering for resale the common shares (the "Granges Shares") of Granges Inc.
("Granges") held by the Company, all in connection with the offering (the
"Offering") by the Company of up to $15 million (U.S.) of special debenture
warrants (the "Special Warrants") which may, under certain circumstances, be
exercised for the purchase of exchangeable debentures of the Company in
principal amount of up to $16,500,000 (U.S.) (the "Debentures"), which in turn
(as to principal) may, under certain circumstances, be exchanged for, redeemed
for or paid in the Granges Shares pursuant to an Underwriting Agreement dated
October 25, 1995 between the Company, Yorkton Securities Inc. and First Marathon
Securities Ltd., the Company agrees to indemnify and hold harmless Granges and
its officers and directors and each other person, if any, who controls Granges
within the meaning of Section 15 of the 1933 Act against any and all losses,
claims, damages, liabilities and expenses (including any reasonable
investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claim
asserted), to which it or they may become subject under the Ontario or British
Columbia Securities Acts, the 1933 Act, the United States Securities Exchange
Act of 1934, as amended, or any other federal, provincial or state statutory law
or regulation, or at common law or otherwise in Canada or the United States
insofar as such losses, claims, damages, liabilities or expenses arise out of or
are based upon any misrepresentation or untrue statement or alleged untrue
statement of a material fact contained in (a) any private
<PAGE>
-51-
placement offering memorandum in connection with the Special Warrants, (b) any
preliminary or final prospectus filed with the securities commissions of Ontario
or British Columbia in connection with the Offering or (c) any registration
statement filed with the Securities and Exchange Commission of the United States
and with any state securities or "blue sky" administrators in any states thereof
by the Company or Granges in connection with offers, sales and resales of the
Granges Shares under any such offering memorandum, prospectus or registration
statement, or the omission or alleged omission to state in any such offering
memorandum, prospectus or registration statement a material fact required to be
stated therein or necessary to make the statements therein not misleading,
provided, however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon any such untrue statement or alleged untrue statement or omission or
alleged omission made by Granges or made therein in reliance upon and in
conformity with written information furnished by Granges to the Company
specifically for use in connection with the preparation thereof, or in reliance
upon and in conformity with (whether by incorporation by reference or otherwise)
information contained in Granges' filings under Canadian or United States
federal, provincial or state securities laws or regulations.
Promptly after receipt by an indemnified party of notice of commencement of any
action, suit or proceeding against such party in respect to which a claim is to
be made against any indemnifying party, it will notify the indemnifying party of
the commencement of such action, suit or proceeding, and forward to the
indemnifying party a copy of all papers served, but the omission so to notify
such indemnifying party of any such action, suit or proceeding shall not relieve
it from any liability that it may have to any indemnified party otherwise. In
case any such action, suit or proceeding shall be brought against any
indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate in, and, to the
extent that it wishes, to assume the defense thereof, with counsel satisfactory
to such indemnified party, and after such notice
<PAGE>
-52-
from the indemnifying party to such indemnified party of the election by the
indemnifying party so to assume the defense thereof, the indemnifying party
shall not be liable to such indemnified party for legal or other expenses,
except as provided below and except for the reasonable costs of investigation
subsequently incurred by such indemnified party in connection with the defense
thereof. The indemnified party shall have the right to employ its own counsel in
such action, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the employment of counsel by such
indemnified party has been authorized in writing by the indemnifying party; (ii)
the indemnified party shall have reasonably concluded that there may be one or
more legal defenses available to it which are in conflict with those available
to the indemnifying party in which case the indemnifying party shall not have
the right to direct the defense of such action on behalf of the indemnified
party; or (iii) the indemnifying party shall not in fact have employed counsel
to assume the defense of such action, in each of which cases the fees and
expenses of counsel shall be at the expense of the indemnifying party. An
indemnifying party shall not be liable for any settlement of any action or claim
effected without its written consent.
DATED this 15th day of November, 1995.
Atlas Corporation
By: /s/ GERALD E. DAVIS
------------------------------
Title: Gerald E. Davis
President
Agreed:
<PAGE>
-53-
Granges Inc.
By: /s/ A.J. ALI By: /s/ J.D. BUSSE
--------------------------- ------------------------
Title: A.J. Ali J.D. Busse
Vice President of Finance General Counsel
& Corporate
Secretary
Date: November 15, 1995
<PAGE>
-55-
LOAN AGREEMENT
--------------
MEMORANDUM OF AGREEMENT made this as of the 21st day of November,
1995.
B E T W E E N:
ATLAS CORPORATION, a corporation incorporated under the laws of
the State of Delaware
(hereinafter called "Borrower")
OF THE FIRST PART
- and -
FIRST MARATHON INC., a corporation incorporated under the laws of
the Province of Ontario
(hereinafter called "Lender")
OF THE SECOND PART
WHEREAS the Lender has agreed to make available to the Borrower a
secured loan of U.S. funds, on the terms and subject to the conditions
hereinafter set forth;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the
covenants and agreements contained herein and for other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged by
each of the parties), the parties hereby covenant and agree as follows:
I. 00
INTERPRETATION
--------------
<PAGE>
1.01 DEFINITIONS
-----------
Where used in this agreement or in any amendment hereto, the following
terms shall, unless the context otherwise requires, have the following meanings,
respectively:
A. "Advance" or "Advances" means an advance under the Loan;
B. "Advance Date" means the date on which an Advance is made;
C. "Business Day" means any day other than a Saturday, Sunday or any
other day on which banks are authorized or obligated to close under the
laws of Canada or the Province of Ontario;
D. "Events of Default" means those events or circumstances mentioned in
Article 8.00 hereof;
E. "Loan" means the aggregate of all Advances outstanding established
hereunder;
F. "Loan Facility" means the U.S. dollar loan established hereunder;
G. "Pledged Securities" means the common shares of Granges Inc., the
common shares of Dakota Mining Corporation and the Net Proceeds more
particularly described in Section 5.01 and in the Securities Pledge
Agreement; and
H. "Securities Pledge Agreement" means the securities pledge agreement
referred to in Article 5.00 and set forth in the form attached as Schedule
"A" hereto;
1.02 U.S. FUNDS
----------
Unless otherwise indicated, all dollar amounts referred to herein
shall refer to lawful money of the United States.
1.03 PROPER LAW
----------
This Agreement shall be governed by and construed and interpreted in
accordance with the laws of the Province of Ontario and the laws of Canada
applicable therein.
<PAGE>
1.04 INTERPRETATION NOT AFFECTED BY HEADINGS, ETC.
---------------------------------------------
The division of this Agreement into Articles, sections, paragraphs,
subparagraphs and clauses and the insertion of headings and an index are for
convenience of reference only and shall not affect the construction or
interpretation of this Agreement. The terms "this Agreement", "hereof",
"herein", "hereunder" and similar expressions refer to this Agreement and not to
any particular Article, section, paragraph or other portion hereof and include
any agreement or instrument supplementary or ancillary hereto.
1.05 NUMBER AND GENDER
-----------------
Words importing the singular number only shall include the plural and
vice versa. Words importing persons shall include firms and corporations and
vice versa.
1.06 SEVERABILITY
------------
In the event that one or more of the provisions contained in this
Agreement shall be invalid, illegal or unenforceable in any respect under any
applicable law, the validity, legality or enforceability of the remaining
provisions hereof shall not be affected or impaired thereby.
I. 00
LOAN FACILITY
-------------
2.01 COMMITMENT
----------
Upon the terms and subject to the conditions contained herein and so
long as no Event of Default or an event which with notice or lapse of time or
both would constitute an Event of Default has occurred that has not been waived,
the Lender agrees to make available to the Borrower a loan in U.S. dollars in an
amount equal to $2,000,000.
2.02 PURPOSES
--------
The Borrower shall utilize the funds made available to it hereunder
for its general corporate purposes.
<PAGE>
2.03 PREPAYMENT
----------
The Borrower may prepay all or any part of the Loan without notice or
bonus at any time and from time to time.
2.04 ADVANCE
-------
The Loan Facility may be drawn down by the Borrower at any time prior
to 5:00 p.m. (Toronto time) on November 30, 1995 or such later date as may be
agreed to in writing by the Lender.
<PAGE>
2.05 INTEREST ON LOAN/FEES AND OTHER CONSIDERATION
---------------------------------------------
Except as otherwise set forth below, the Borrower shall pay the Lender
interest on the daily outstanding principal amount of the Loan at a rate equal
to 1.25% per month, as well after as before default, maturity and judgment, with
interest on overdue interest at the same rate. For the purposes of Section 4 of
the Interest Act (Canada) the equivalent annual rate of interest is 15% per
annum, and the parties hereby agree that the deemed reinvestment principle shall
not apply. Such interest shall be calculated daily computed from the Advance
Date and payable monthly in arrears on the last Business Day of each calendar
month until the Loan is repaid. Notwithstanding the foregoing, for the first
four months of the term of the Loan, no interest shall accrue or be payable to
the Borrower, nor shall interest accrue or be payable for any month for which
extension fees (as described below) are paid. The Borrower shall pay to the
Lender a fee of $100,000 as consideration for arranging the Loan and for
agreeing to advance the Loan. Such fee of $100,000 shall be payable on the
Advance Date and shall be netted against the Advance and retained by the Lender
and shall be non-refundable, notwithstanding the Borrower's right to prepay the
Loan as set forth in clause 2.03 above. In addition, an amount equal to
$180,000, representing the aggregate of certain amounts due and owing by the
Borrower to the Lender for past services rendered, plus $20,000 for out of
pocket charges and related expenses of the Lender shall be paid by the Borrower
to the Lender on the Advance Date, such amount to be netted against the Advance
and retained by the Lender. The Borrower hereby acknowledges the Lender's right
to net from the Advance such $100,000 of fees, such $180,000 due and owing for
past services and such $20,000 for out of pocket charges and related expenses,
and authorizes the Lender to do so from the Advance on the Advance Date. In
addition to the foregoing, the Borrower shall and hereby agrees to pay a monthly
extension fee of $20,000, for each month (or portion thereof) that the Loan is
outstanding commencing on the Advance Date. Such fee shall be payable to the
Lender by not later than the fifth Business Day following the commencement of
any month during the period of the Loan. In the event the Loan is outstanding
following the date which is 4 months from the Advance Date, the extension fee
shall increase to $40,000 per month. Notwithstanding the foregoing, the
Borrower shall not be obliged to make any payments of interest or other amounts
payable to the Lender hereunder in excess of an amount which would result in the
receipt by the Lender of interest at a criminal rate (as such terms are
construed under the Criminal Code (Canada)).
All payments by the Borrower whether in respect of principal,
interest, fees or any other items shall be made in full without any deduction or
withholding (whether in respect of set-off, counterclaim, duties, taxes, charges
or otherwise whatsoever).
I. 00
<PAGE>
CONDITIONS TO ADVANCE OF FUNDS
------------------------------
3.01 CONDITIONS TO ADVANCE OF FUNDS
------------------------------
The obligation of the Lender to make the Advance hereunder is
conditional upon the fulfillment by the Borrower of each of the following
conditions to the satisfaction of the Lender on or prior to the Advance Date:
A. this Agreement shall have been duly authorized, executed and delivered
by the Borrower and shall constitute a legal, valid and binding obligation
of the Borrower, enforceable against the Borrower in accordance with the
terms and conditions contained herein;
B. the Borrower shall have duly authorized, executed and delivered to the
Lender the Securities Pledge Agreement;
C. the Borrower shall have taken all necessary steps to perfect and
validly register the Securities Pledge Agreement under applicable personal
property security legislation and the Securities Pledge Agreement shall be
a perfected first security interest in favour of the Lender over the
Pledged Securities; and
D. the Borrower shall have provided an opinion of its counsel as to the
perfection and registration of the security interest referred to in Article
5.00 and as to those matters set forth in clauses 3.01(a) and (b) and in
clauses 6.01(a), (b) and (e), in such form as the Lender or its counsel may
reasonably require.
3.02 WAIVER OF CONDITIONS
--------------------
Each of the conditions set forth in section 3.01 is for the exclusive
benefit of the Lender and may be waived in whole or in part by the Lender,
provided, however, that any such waiver shall only be effective for the period
provided for therein and shall not preclude the Lender from insisting on strict
performance of the relevant condition in the future.
I. 00
PAYMENT AND OTHER CHARGES
-------------------------
4.01 MANDATORY REPAYMENT OF LOAN
---------------------------
i) the occurrence of an Event of Default as described in Article
8.00 hereof; (b) February 15, 1996 and (c); 5 Business days following the
"Clearance Date". For the
<PAGE>
purposes hereof, "Clearance Date" means the date on which the last of the
receipts have been issued for the (final) prospectus of the Borrower to qualify
for distribution the (U.S.)$10 million principal amount of Exchangeable
Debentures underlying the 100,000 Special Warrants issued by the Borrower on
November 10, 1995. The Borrower represents and warrants to the Lender that (a)
these Exchangeable Debentures are exchangeable for common shares of Granges Inc.
owned by the Borrower (the "Underlying Granges Shares"), which are being held in
escrow pursuant to an escrow and pledge agreement and a trust indenture, both
dated November 10, 1995 made between the Borrower and Chemical Bank
(collectively, the "Escrow Agreement"); (b) the net proceeds from the sale of
the Special Warrants (the "Net Proceeds") are being held in escrow by Montreal
Trust Company of Canada (the "Trustee") pursuant to the terms of a special
warrant indenture dated November 10, 1995 (the "Trust Agreement"); (c) in the
event the Clearance Date occurs on or before February 9, 1996, the Special
Warrants will be automatically deemed exercised into Exchangeable Debentures and
the Net Proceeds will be released by the Trustee to the Borrower; and (d) in the
event the Clearance Date occurs after February 9, 1996, the holders of the
Special Warrants will have the option of either exercising their Special
Warrants for Exchangeable Debentures or rescinding their Special Warrant
purchase and receiving for each Special Warrant rescinded, (U.S.)$105 per
Special Warrant, from the Net Proceeds held by the Trustee and other funds of
the Borrower, if required.
4.02 PAYMENT OF LEGAL AND OTHER COSTS
--------------------------------
All reasonable costs and expenses of collection of any amounts owing
hereunder or enforcement of any security granted as provided for hereunder shall
be for the account of the Borrower.
4.03 INTEREST ON FEES AND OTHER CHARGES
----------------------------------
All fees and other charges or amounts outstanding after demand,
maturity, default or judgment owing to the Lender shall bear interest at a rate
specified in Section 2.05 above.
4.04 TIME, PLACE AND MANNER OF PAYMENT
---------------------------------
Unless otherwise directed by the Lender, the Borrower shall make each
payment to be made by it hereunder not later than 3:00 p.m. (Toronto time) on
the day when due by certified cheque or bank draft delivered to the Lender at
its address set forth in Article 9.00 or to such other address as the Lender
shall from time to time designate.
<PAGE>
4.05 RIGHTS OF SET-OFF, DEFENCES AND COUNTERCLAIMS
---------------------------------------------
A. The Borrower hereby authorizes the Lender, if and to the extent any
payment due to it hereunder is not made when due, to recover the amount so
due from time to time from any monies of the Borrower held by the Lender or
by First Marathon Securities Limited ("FMSL") and to set-off such amounts
against the amount due.
B. The Borrower hereby authorizes the Lender, if and to the extent any
payment due to it hereunder is not made when due, to set-off any
obligations of the Lender to the Borrower against the amount due.
C. To the fullest extent permitted by law, the Borrower shall make all
payments hereunder without reduction or set-off, and regardless of any
defence or counterclaim, including, without limitation, any defence or
counterclaim based on any law, rule or policy which is now or hereafter
promulgated by any governmental authority or regulatory body and which may
adversely affect the Borrower's obligation to make, or the Lender's right
to receive, such payments.
<PAGE>
II. 00
SECURITY
--------
5.01 SECURITY
--------
As security to secure the due and punctual payment by the Borrower of
the principal of and interest on the Loan and all other amounts payable by the
Borrower under this Agreement and to secure the due and punctual performance of
the Borrower's other obligations hereunder, the Borrower shall deliver to the
Lender a securities pledge agreement, in substantially the form of Schedule "A"
hereto, pledging in favour of the Lender the Pledged Securities and the interest
of the Borrower in the Pledged Securities, defined as follows: (a) 4,219,624
common shares of Granges Inc. owned by the Borrower and not subject to the terms
of the Escrow Agreement; (b) 2,419,355 common shares of Dakota Mining
Corporation owned by the Borrower; (c) subject to any prior rights under the
Escrow Agreement, up to 50% of the Underlying Granges Shares, provided that (i)
the Clearance Date occurs after February 9, 1996 and (ii) as a result of
retraction of any Special Warrants, any such Underlying Granges Shares are no
longer reserved for the purposes of exchanges of the Exchangeable Debentures and
are accordingly released from escrow in accordance with the Escrow Agreement;
and (d) subject to any prior rights under the Trust Agreement, the Net Proceeds
(or any portion thereof) that are not required to satisfy the rescission price
of any rescinded Special Warrants, provided that either (i) the Clearance Date
occurs prior to February 9, 1996 and the Net Proceeds are released to the
Borrower; or (ii) the Clearance Date does not occur by February 9, 1996 but as
the result of the exercise of any Special Warrants, such Net Proceeds (or any
portion thereof) are released to the Borrower. For greater certainty, the
Borrower and Lender acknowledge and agree that the pledge in respect of the
Pledged Securities referred to in sub-clauses (c) and (d) above shall attach on
the Advance Date, subject to any prior rights or security interests under the
Trust Agreement or the Escrow Agreement.
II. 00
REPRESENTATIONS AND WARRANTIES
------------------------------
6.01 REPRESENTATIONS AND WARRANTIES OF THE BORROWER
----------------------------------------------
The Borrower represents and warrants to the Lender as follows and
acknowledges that the Lender is relying upon such representations and warranties
in entering into this Agreement and making the Advance hereunder:
<PAGE>
A. the Borrower is a validly subsisting corporation under
the laws of its jurisdiction of incorporation;
B. except as set forth in the Trust Agreement and subject
to applicable securities laws, the Borrower is the sole and
lawful owner of the Pledged Securities and has good and
marketable title to the Pledged Securities and the Pledged
Securities are free and clear of any and all liens, charges,
re-sale restrictions, encumbrances, security interests,
royalties, or other interests of third parties arising by,
through, or under the Borrower. For greater certainty, the
Pledged Securities are not subject to any restrictions
contained in Section 25 of the Regulation under the
Securities Act (Ontario) (the "Act") or the equivalent
provisions of the securities legislation of the other
applicable Canadian provinces (the "Restrictions") (except
such Restrictions as are referred to in the opinion referred
to in clause 3.01(d) and otherwise acceptable to the
Lender's counsel, and each of Granges Inc. and Dakota Mining
Corporation have been reporting issuers in Ontario for the
requisite time periods prescribed by Section 72(7)(b) and
(c) of the said Act and as of the date hereof are not, to
the knowledge of the Borrower, in default of any
requirements for reporting issuers under that Act. The
Borrower covenants that if there are Restrictions and if
requested to do so by the Lender or its counsel, it shall
use all reasonable efforts to seek discretionary relief
orders from all applicable regulatory authorities to obtain
relief from the Restrictions;
C. except as set forth in the Trust Agreement, the
Borrower has not entered into an agreement or granted an
option or any right or privilege capable of becoming an
agreement or option to acquire any right or interest in the
Pledged Securities or any part thereof;
D. the Borrower has all necessary right, power and
authority to enter into, execute and deliver this Agreement
and to perform its obligations hereunder;
E. this Agreement and the Securities Pledge Agreement each
constitute a legal, valid and binding obligation of the
Borrower enforceable against the Borrower in accordance with
its terms, except as enforceability may be
<PAGE>
limited by bankruptcy, insolvency, reorganization or other
laws generally affecting creditors' rights and by general
equitable principles; and
F. the entering into of this Agreement will not result in
the violation of any of the terms or provisions of the
constating documents or by-laws of the Borrower or any
agreement to which the Borrower is a party or by which it is
bound.
II. 00
COVENANTS OF THE BORROWER
-------------------------
7.01 AFFIRMATIVE COVENANTS
---------------------
The Borrower covenants and agrees with the Lender that until the date
of repayment in full of the Loan (and all interest, fees and other amounts due
and owing hereunder), the Borrower shall, unless the Lender otherwise consents
in writing:
A. duly and punctually pay to the Lender all amounts payable by it
hereunder when due;
B. comply with and fulfil its obligations under this Agreement and under
any documents, instruments or certificates executed pursuant to the terms
hereof and promptly cure or cause to be cured any defects in the execution
and delivery of this Agreement or any documents, instruments and agreements
executed pursuant hereof and hereto and, at its expense, execute and
deliver, or cause to be executed and delivered, all such documents,
instruments and agreements as may be necessary or desirable for the
foregoing purposes and make all necessary filings and recordings for the
foregoing purposes;
C. give the Lender prompt notice of any Event of Default or any event
which with notice or lapse of time, or both, would constitute an Event of
Default and provide the Lender with a detailed statement of the steps, if
any, being taken to cure or remedy such default;
D. subject to the Trust Agreement and the Escrow Agreement, not sell,
transfer, pledge, hypothecate, encumber or in any manner otherwise alienate
any of the Pledged Securities; and
<PAGE>
E. deliver possession of the Underlying Granges Shares and the Net
Proceeds to the Lender to the extent contemplated by sub-clauses (c) and
(d) of clause 5.01.
II. 00
EVENTS OF DEFAULT AND REMEDIES
------------------------------
8.01 EVENTS OF DEFAULT AND ACCELERATION
----------------------------------
If any one or more of the following Events of Default shall occur and
be continuing then, in addition to its rights as set forth in Section 4.01, the
Lender may, at its option, declare all amounts of principal and interest on the
Loan and all other amounts payable by the Borrower provided for herein to be
then immediately due and payable:
A. if the Borrower shall fail to pay when due any amount of principal,
interest or fees owing to the Lender under this Agreement;
B. if any representation or warranty made by the Borrower hereunder or in
any certificate or other document delivered to the Lender pursuant hereto
or thereto shall have been false or incorrect in any material respect as of
the date when such representation or warranty was made;
C. if the Borrower shall fail to perform or observe or be in compliance
in any material respect with any other provision, term, condition or
covenant contained or provided for in this Agreement or in any other
document executed pursuant to this Agreement, on its part to be performed
or observed and such failure shall not have been remedied within 15 days of
written notice thereof by the Lender to the Borrower, unless the Lender
shall have agreed to a longer period and, in such event, within the period
agreed to by the Lender;
D. if the Borrower becomes insolvent, makes any assignment in bankruptcy
or makes any other assignment for the benefit of creditors, makes any
proposal under any bankruptcy law or regulation, is adjudged bankrupt, or
files a petition or proposal to take advantage or any act of insolvency;
E. if a writ of execution, distress or attachment or similar process is
issued or levied against all or a substantial portion of the assets of the
Borrower in connection with any default by him in the payment of any amount
and such writ of execution,distress, attachment or similar process is not
released, bonded, satisfied, discharged, vacated or stayed within 45 days
after its issue or levy; and
<PAGE>
F. if this Agreement or any other document executed pursuant to this
Agreement shall, for any reason, cease to be in full force and effect or is
declared to be null and void by the Borrower.
8.02 REMEDIES UPON DEFAULT
---------------------
Upon the occurrence of any Event of Default and acceleration of
amounts owing as provided for in section 8.01 the Lender may realize upon its
security and/or commence legal action or proceedings as it in its sole
discretion deems expedient, including such as is provided for in the documents
constituting any such security, all without any additional notice, presentation,
demand, protest, noting of protest, entering into possession of any of the
assets, or any other action, notice of all of which to the Borrower is hereby
expressly waived.
The Borrower expressly acknowledges and agrees that the interest rate
applicable hereunder shall continue to apply to any and all overdue amounts
after the occurrence of an Event of Default until payment in full and during the
course of any and all proceedings to collect such amounts or realize upon any
security taken by the Lender, and such interest rate shall apply to and be
exigible as additional damages in any award of damages made by any court of
competent jurisdiction pursuant to any such action all without the necessity of
any further act or agreement of or notification to the Borrower.
I. 00
MISCELLANEOUS
-------------
9.01 SURVIVAL OF COVENANTS, REPRESENTATIONS AND WARRANTIES
-----------------------------------------------------
Each of the covenants, representations and warranties herein set forth
or contained herein or in any certificates or documents delivered to the Lender
pursuant hereto shall not merge in or be prejudiced by and shall survive the
date of the Advance hereunder and shall continue in full force and effect so
long as any amounts are owing hereunder by the Borrower to the Lender.
9.02 NOTICES
-------
Any notice or other instrument required or permitted to be given
hereunder shall be in writing and delivered personally or sent by
telecommunications device and addressed to:
<PAGE>
A. in the case of the Borrower, at:
Atlas Corporation
Republic Plaza
370 Seventeenth Street
Suite 3150
Denver, Colorado
Attention: The President
Facsimile No.: (303) 892-8808
A. in the case of the Lender, at:
2 First Canadian Place
Suite 3200
Toronto, Ontario
M5X 1J9
Attention: Robert Sellers
Facsimile No.: (416) 869-7400
Any notice or other instrument given as aforesaid shall be deemed to have been
effectively given on the date of personal delivery, or if sent by
telecommunications device, on the first Business Day following such
transmission.
9.03 NO WAIVER, REMEDIES
-------------------
No failure on the part of the Lender to exercise and no delay in
exercising any right hereunder shall operate as a waiver thereof nor shall any
single or partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
9.04 WHOLE AGREEMENT AND TIME OF ESSENCE
-----------------------------------
This Agreement constitutes the whole and entire agreement between the
parties with respect to the subject matter hereof and cancels and supersedes any
prior agreements, undertakings, declarations, representations, written or
verbal, in respect of it. Time shall be of the essence of this Agreement.
<PAGE>
9.05 WAIVERS, ETC.
-------------
No amendment or waiver of any provision of this Agreement or any
document referred to herein or contemplated hereby shall in any event be
effective unless and until the same shall be in writing and signed by the Lender
and, if applicable, the Borrower and such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which it was
given. Any wavier by the Lender of the strict observance, performance or
compliance with any term, covenant or condition of this Agreement and any
indulgence granted by the Lender, shall not be construed as a waiver of any
subsequent default.
9.06 ENUREMENT
---------
This Agreement shall enure to the benefit of and be binding upon the
parties and their respective successors and assigns, provided, however, the
Borrower shall not assign its rights hereunder or any interest herein without
the prior written consent of the Lender. For greater certainty, the Lender may
assign its rights under this agreement at any time provided that if it does so
it shall provide the Borrower with prompt notice thereof.
9.07 FURTHER ASSURANCES
------------------
The Borrower agrees that it will form time to time execute,
acknowledge, and deliver or cause to be delivered any and all such further
instruments as may be reasonably required in conformity with this Agreement for
the purposes of giving effect to this Agreement and to the security given herein
or confirming to the Lender any matters which the Lender may reasonably require
herein to be evidenced, confirmed or otherwise acknowledged.
<PAGE>
9.08 EXECUTION IN COUNTERPARTS
-------------------------
This Agreement may be executed in counterparts, each of which, when so
executed and delivered to the other party, shall be deemed to be an original and
when taken together shall be deemed to be one and the same agreement.
IN WITNESS WHEREOF the parties have executed this Agreement as of the
date first above written.
ATLAS CORPORATION
Per:_________________________
Per:_________________________
FIRST MARATHON INC.
Per:_________________________
Per:_________________________
<PAGE>
THIS PLEDGE AGREEMENT made as of the 21st day of November, 1995.
B E T W E E N:
ATLAS CORPORATION, a corporation incorporated under the laws of
the State of Delaware
(hereinafter called the "Pledgor")
OF THE FIRST PART
- and -
FIRST MARATHON INC., a corporation incorporated under the laws of
the Province of Ontario
(hereinafter called the "Pledgee")
OF THE SECOND PART
WHEREAS pursuant to a loan agreement (the "Agreement") made as of the
21st day of November, 1995 made between the Pledgor and the Pledgee, the Pledgor
promised to pay certain principal, interest, fees and expenses to the Pledgee;
i) 4,219,624 common shares of Granges Inc; (b) 2,419,355 common shares of
Dakota Mining Corporation; (c) subject to any prior rights under the Escrow
Agreement (as defined in the Agreement) up to 50% of the Underlying Granges
Shares (as defined in the Agreement) in the circumstances and under the
conditions described in clause 5.01 of the Agreement; and (d) subject to any
prior rights under the Trust Agreement (as defined in the Agreement), the Net
Proceeds (as defined in the Agreement) or any portion thereof which are released
to the Pledgor, in the circumstances and under the conditions described in
clause 5.01 of the Agreement (collectively, the "Securities");
NOW THEREFORE, in consideration of the premises and the respective
covenants and agreements hereinafter contained and other good and valuable
consideration,
<PAGE>
the receipt and sufficiency of which is hereby acknowledged by the parties
hereto, the parties hereto covenant and agree each with the other as follows:
I. As collateral security for the due and punctual payment by the
Pledgor of all amounts owing to the Pledgee, from time to time, under the
Agreement and the due performance by the Pledgor of all of its obligations
thereunder (collectively, the "Obligations"), the Pledgor hereby grants to the
Pledgee a continuing security interest (the "Security Interest") in the
Securities pursuant to the Personal Property Security Act, (Ontario) (the
"Act"), and pursuant to the provisions of any other applicable personal property
security legislation in any jurisdiction where the Securities may be situate.
The Pledgor and Pledgee agree that the attachment of the Security Interest has
not been postponed. Furthermore, for greater certainty, the Pledgor and Pledgee
acknowledge and agree that the Security Interest in respect of the Securities
referred to in sub-clauses (d) and (e) of the second recital hereof shall attach
on the date hereof, subject to any prior rights or security interests under the
Trust Agreement and the Escrow Agreement.
II. Subject as hereinafter provided, the certificate(s) (or, in the
case of the Net Proceeds, evidence of deposit) evidencing the Securities,
together with transfer power(s) in respect thereof, duly executed in blank by
the Pledgor, shall be held and retained by the Pledgee (or in trust for its
benefit) and shall be dealt with in accordance with the provisions of this
agreement and the Act and the Securities evidenced by such certificates shall
act as general and continuing security for the due and punctual performance by
the Pledgor of the Obligations.
III. Until such time as the Security Interest becomes enforceable by the
Pledgee, the Pledgor shall be entitled to: (i) receive all dividends or other
distributions and interest paid in respect of the Securities, which the Pledgor
covenants and agrees will be applied exclusively for payment of interest and
principal due and owing under the Agreement in the event that the Security
Interest becomes enforceable, and (ii) exercise, either directly or indirectly
or, if the Securities are registered in the name of the Pledgee or its nominee,
by power of attorney or proxy, all the rights and powers of a holder of such
Securities including, without limitation, the right to vote from time to time
exercisable in respect of the Securities and to give proxies, consents and
waivers in respect thereof. If the Securities have been registered in the name
of the Pledgee or its nominee, the Pledgee will execute and deliver (or cause to
be executed and delivered) to the Pledgor all directions and other instruments
as the Pledgor may request for the purpose of enabling the Pledgor to receive
and retain all payments that the Pledgor would otherwise be entitled to retain
pursuant to item (i) above.
IV. Subject to the provisions set out below, the Pledgor shall be
entitled, upon the payment in full of all amounts owing under the Agreement and
the discharge thereof by the Pledgee, to require the Pledgee and the Pledgee
hereby agrees to release and deliver or take
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<PAGE>
whatever steps are necessary to release and deliver to the Pledgor or its
nominee(s) the certificates evidencing the Securities, if then in the possession
of the Pledgee or if such certificates are not then in possession of the
Pledgee, to acknowledge that its interest in the Securities has been released
and to take whatever steps are necessary in order to discharge such interest
under the Act.
V. Subject to the term of the Trust Agreement (as defined in the
Agreement), the Pledgor covenants that so long as any amounts remain owing under
the Agreement, unless the Pledgee otherwise consents in writing, the Pledgor
shall not sell, loan, mortgage, pledge, charge, subject to a security interest
or otherwise dispose of or encumber the Securities or suffer or permit the
Securities to be sold, loaned, mortgaged, pledged, charged, subjected to a
security interest or otherwise disposed of.
VI. If:
A. the Pledgor shall fail to pay when due any amount of principal,
interest or fees owing to the Lender under the Agreement;
B. if any representation or warranty made by the Pledgor in the
Agreement or hereunder or in any certificate or other document delivered
to the Pledgee pursuant hereto or thereto shall have been false or
incorrect in any material respect as of the date when such representation
or warranty was made;
C. if the Pledgor shall fail to perform or observe or be in compliance
in any material respect with any other provision, term, condition or
covenant contained or provided for hereunder or in the Agreement or in
any other document executed pursuant hereto or the Agreement, on its part
to be performed or observed and such failure shall not have been remedied
within 15 days of written notice thereof by the Pledgee to the Pledgor,
unless the Pledgee shall have agreed to a longer period and, in such
event, within the period agreed to by the Pledgee;
D. if the Pledgor becomes insolvent, makes any assignment in
bankruptcy or makes any other assignment for the benefit of creditors,
makes any proposal under any bankruptcy law or regulation, is adjudged
bankrupt, or files a petition or proposal to take advantage or any act of
insolvency;
E. if a writ of execution, distress or attachment or similar process
is issued or levied against all or a substantial portion of the assets of
the Pledgor in connection with any default by it in the payment of any
amount and such writ of execution,distress, attachment or similar process
is not released, bonded, satisfied, discharged, vacated or stayed within
45 days after its issue or levy; and
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<PAGE>
F. if this agreement or the Agreement or any other document executed
pursuant to this agreement or the Agreement shall, for any reason, cease
to be in full force and effect or is declared to be null and void by the
Pledgor.
the Pledgee shall give the Pledgor written notice of such default, which notice
shall set forth the particulars of such default (the "Notice of Default"),
whereupon the Security Interest shall immediately become enforceable.
I. Upon the Security Interest becoming enforceable the provisions of
the Act shall govern the respective rights, remedies and obligations of the
Pledgee and the Pledgor in respect of the default in question.
II. If the Securities or any of them are changed, classified or
reclassified, subdivided, consolidated or converted into a different number or
class of securities or otherwise, the securities resulting from such change,
classification, reclassification, subdivision, consolidation or conversion shall
be delivered to and held by or on behalf of the Pledgee, in place of or in
addition to the Securities and the provisions of this agreement shall apply
thereto, mutatis mutandis.
III. Any notice or other communication required or permitted to be given
by one party to the other shall be given in writing by personal delivery
addressed and delivered to such other party as follows:\
A. to the Pledgor at:\
Atlas Corporation
Republic Plaza
370 Seventeenth Street
Suite 3150
Denver, Colorado
Attention: The President
Facsimile No.: (303) 892-8808
A. to the Pledgee at:\
2 First Canadian Place
Suite 3200
Toronto, Ontario
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<PAGE>
M5X 1J9
Attention: Robert Sellers
Facsimile No.: (416) 869-7400
and any such notice shall have been deemed to have been given when delivered, or
if sent by telecommunications device, on the first Business Day following such
transmission.
I. The division of this agreement into Sections and subsections is for
convenience of reference only and shall not affect the interpretation or
construction of this agreement.
II. This agreement shall be governed by and construed in accordance
with the laws of the Province of Ontario and the parties agree to submit to the
jurisdiction of the courts of such province should any dispute arise among them
with respect to any of the matters contemplated by this agreement.
III. In this agreement the use of the singular number shall include the
plural and vice versa, the use of gender shall include the masculine, feminine
and neuter genders and the word "person" shall include an individual, a trust, a
partnership, a body corporate or politic, an association or any other
incorporated or unincorporated form of organization or entity.
IV. When calculating the period of time within which or following which
any act is to be done or step taken pursuant to this agreement, the date which
is the reference date in calculating such period shall be excluded. If the last
day of such period is not a business day (being a day other than a Saturday,
Sunday or statutory holiday in the City of Toronto, Ontario), the period in
question shall end on the immediately following business day.
V. The agreement may be executed in several counterparts (by original
or facsimile signature) with all copies thereof together constituting one
original document and, not withstanding its date of execution, shall be deemed
to have been executed as of the date first above written.
VI. The parties hereto shall sign such further and other documents,
cause such meetings to be held, resolutions passed and by-laws enacted, exercise
their vote and influence, do and perform and cause to be done and performed such
further and other acts and things as may be necessary or desirable in order to
give full effect to this agreement and every part thereof.
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<PAGE>
VII. This agreement constitutes the entire agreement between the parties
hereto with respect to all of the matters herein and its execution has not been
induced by, nor do any of the parties hereto rely upon or regard as material,
any representations or writings whatsoever not incorporated herein and made a
part hereof. This agreement supersedes any and all agreements, understandings
and representations made between the Pledgee and the Pledgor or by any of them
to the other prior to the date hereof with respect to the subject matter of this
agreement and this agreement shall not be amended except by a memorandum in
writing signed by both parties hereto, and any amendment hereof shall be null
and void and shall not be binding upon or affect any party which has not given
its consent as aforesaid.
VIII. This agreement shall enure to the benefit of and be binding upon
the parties hereto and their respective successors and assigns. For greater
certainty, the Pledgee may assign its rights under this agreement at any time to
a person to which it assigns its rights under the Agreement, but only if such
assignee acknowledges in writing the rights of the Pledgor under this agreement.
IN WITNESS WHEREOF the parties hereto have duly executed this
agreement as of the date set forth at the top of the first page hereof.
ATLAS CORPORATION
Per:__________________________ c/s
Authorized Signing Officer
FIRST MARATHON INC.
Per:__________________________ c/s
Authorized Signing Officer
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<PAGE>
OPTION AGREEMENT
----------------
THIS OPTION AGREEMENT (the "Agreement") is made and entered into as of
the 15th day of August, 1995, by and between Harvest Gold Corporation, a
Colorado corporation, whose address is P.O. Box 2590, Evergreen, Colorado 80437
(hereinafter referred to as "Harvest") and Atlas Corporation, a Delaware
corporation, whose address is 370 17th Street, Suite 3150, Denver, Colorado
80202 (hereinafter referred to as "Atlas").
RECITALS
--------
A. Harvest represents (i) that it is the owner of certain unpatented
mining claims situated in Cochise County, Arizona, as more fully described in
Part 1 of Exhibit A attached hereto and incorporated herein by reference (the
"Harvest Claims"), (ii) that it holds an undivided 100% leasehold interest in
certain unpatented mining claims, patented mining claims, and fee land situated
in Cochise County, Arizona, as more particularly described in Part 2 of Exhibit
A (the "Leased Property"), (iii) that it owns certain unpatented mining claims
situated in Inyo County, California and in Lyon County, Nevada, as more
particularly described in Part 3 of Exhibit A (the "Walker/Giroux Claims"), (iv)
that it owns all of the issued and outstanding shares of stock (the "Sovereign
Stock") of Sovereign Gold Company (Argentine) Ltd. ("Sovereign"), which holds
certain property interests and rights to royalties from properties in Argentina
(all of Sovereign's right, title and interest, contractual or otherwise, in and
to any real property in Argentina shall be referred to hereinafter as the
"Argentina Property"), and (v) that it holds subordinated debentures from
Horizon Resources Corporation, a Colorado corporation, in the amount of
$5,703,703, which are due on September 15, 1996 (the "Debentures") together with
all improvements, all easements, rights of way, water rights, and all other
appurtenances thereto (the Harvest Claims, the Leased Property, the
Walker/Giroux Claims, the Sovereign Stock and the Debentures, together with any
right, title or interest of Harvest in and to any property within one aerial
mile of the Harvest Claims
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<PAGE>
or the Leased Property ("Additional Property"), will be collectively referred to
hereinafter as the "Assets").
B. Harvest also represents that it is the owner of certain machinery
and equipment used in connection with the Assets, as is more particularly
described in Exhibit B attached hereto and incorporated herein by reference
(hereinafter the "Personalty").
C. Harvest desires to grant to Atlas and Atlas desires to acquire
from Harvest an option to purchase Harvest's interest in some or all of the
Assets and the Personalty, for the consideration and upon the terms and
conditions described in this Agreement.
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<PAGE>
AGREEMENT
---------
NOW, THEREFORE, in consideration of the sum of $30,000, the receipt
and sufficiency of which Harvest hereby confirms and acknowledges, and the
mutual promises, covenants, and conditions herein contained and recited, the
parties hereto agree as follows:
Section 1. Grant.
-----
a. Harvest hereby irrevocably grants to Atlas an exclusive option to
purchase any, some or all of the Assets and the Personalty, during the term
hereof and subject to the conditions herein contained (hereinafter the "Option")
for and in consideration of $125,000 plus an additional amount (to be determined
in accordance with the provisions of Section 3) of cash (the "Cash"), plus a
certain number of unregistered shares of Atlas common stock, $1.00 par value
(the "Shares"). The Cash, the Shares and the $125,000 payment shall be
collectively referred to hereinafter as the "Purchase Price" (the method of
calculation of the Purchase Price is set forth in Section 3 below), payable as
follows:
(i) In addition to the $30,000 already paid to Harvest by Atlas,
upon execution of this Agreement, Atlas shall pay to Harvest the sum of $95,000
(those two payments will be collectively referred to hereinafter as the "Option
Payments");
(ii) At the Closing (as defined in Section 3 below), Atlas shall
deliver to Harvest the Cash and a certificate representing the Shares.
b. Harvest hereby grants, lets and demises unto Atlas, its permitted
successors and assigns, the exclusive right to enter upon and use all or any
part of the surface and subsurface of the Harvest Claims and the Leased Property
(hereinafter collectively referred to as the "Commonwealth Property"), the
Walker/Giroux Claims and the Argentina Property during the Option Period (as
defined below), for the purposes of conducting Exploration and Development Work
(which for purposes of this Agreement shall be defined as surveying,
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<PAGE>
prospecting, bulk sampling, drilling, exploring and testing for any and all
ores, metals, minerals, mineral substances and materials of every kind and
character whatsoever (hereinafter the "Valuable Minerals") found in, on or under
the Commonwealth Property, the Walker/Giroux Claims or the Argentina Property).
Moreover, during the Option Period, Atlas shall be entitled to evaluate the
Assets with regard to title, permits, licenses, and operational and
environmental compliance with federal, state and local laws, rules and
regulations. Harvest agrees that it will provide reasonable assistance to Atlas
and make available such documents as are reasonably requested by Atlas in
performing such evaluations.
c. This Option is an exclusive option. During the Option Period,
neither Harvest nor any of its officers, directors, employees, representatives,
agents or affiliates shall solicit, initiate or participate in any way in
discussions or negotiations, nor enter into any agreement or understanding, oral
or written, with any other person or entity regarding the sale or other
disposition of any of the Assets.
Section 2. Option Term; Termination. Unless sooner terminated
------------------------
pursuant to this Section 2, the Option shall expire at 5:00 p.m. Mountain time,
on September 3, 1996 (the "Option Period"). The Option is exercisable solely by
delivery from Atlas to Harvest of a notice of election to exercise the Option,
specifying with particularity which of the Assets Atlas desires to purchase.
The notice of election to exercise the Option must be delivered to Harvest, if
at all, before the expiration of the Option Period. In the event Atlas wishes
to terminate this Agreement for any reason, including but not limited to a
determination by Atlas, in its reasonable opinion, that title to the
Commonwealth Property is materially defective, Atlas may terminate this
Agreement by giving Harvest written notice of termination and this Agreement
shall be deemed terminated immediately upon receipt by Harvest of said notice.
Following expiration or termination of the Agreement for any reason other than
as a result of a material defect in title, neither Harvest nor Atlas shall have
any further obligation hereunder, except that
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<PAGE>
Atlas shall have the obligation to make the cash payment described in Section
7(a), and Atlas shall forfeit all Option Payments made to Harvest pursuant to
Section 1 hereof. Following termination of this Agreement as a result of a
material defect in title identified by Atlas not later than October 6, 1995 (as
more fully described in Section 7(l) below), neither Harvest nor Atlas shall
have any further obligation hereunder, except that Harvest shall return to Atlas
an amount equal to (i) fifty percent (50%) of the Option Payments made by Atlas
and (ii) all land holding payments actually paid pursuant to this Agreement by
Atlas. Upon termination of this Agreement for any reason other than exercise of
the Option by Atlas, Atlas shall promptly thereafter deliver to Harvest a
quitclaim deed in recordable form, conveying to Harvest all of Atlas' interest
in the Assets. If Atlas exercises the Option as to less than all of the Assets,
simultaneous with its notice of exercise of the Option as to some of the Assets,
Atlas shall deliver to Harvest a quitclaim deed or deeds in recordable form,
conveying to Harvest all of Atlas' interest in the remaining Assets.
Section 3. The Closing. The Closing shall take place within thirty
-----------
(30) days after the notice of election to exercise the Option is delivered by
Atlas to Harvest (the "Closing") at a time mutually agreeable to Atlas and
Harvest at Atlas' Denver offices.
At the Closing, Atlas shall deliver to Harvest:
a. The Cash and a certificate representing the correct number of
Shares as determined in Section 3(b) and bearing the following legend:
The shares represented by this Certificate have not been registered
under the Securities Act of 1933, as amended (the "Act"), and are
"restricted" as that term is defined in Rule 144 under the Act and may
not be sold, transferred, assigned, pledged or hypothecated except
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<PAGE>
pursuant to an effective registration statement or an opinion of
counsel satisfactory to Atlas to the effect that registration under
the Act is not required.
b. The number of Shares and the amount of Cash to be delivered at
Closing will be based on a prefeasibility engineering and reserve study to be
completed for the Commonwealth Property by a mutually agreed upon independent
third party (the "Reserve Study"). Using existing project data and new data
generated by Atlas during the Option Period, the Reserve Study will develop a
reserve estimate based on a recommended processing plan and determine most
likely recoveries for both gold and silver from production of Valuable Minerals
from the Commonwealth Property, based upon the recommended processing plan.
Recoverable ounces of silver will be converted to gold equivalent ounces
employing a conversion rate of 78 ounces of silver per 1 ounce of gold. The
Purchase Price for all of the Assets (or those particular Assets for which Atlas
decides to exercise the Option) will be determined by multiplying the
recoverable gold and gold equivalent ounces (as derived from recoverable silver)
as determined by the Reserve Study by $25. The Purchase Price so derived will
be paid to Harvest in a combination of Cash and Shares in a ratio of 25% cash
and 75% Shares; provided, however, that the calculated Cash component shall not
exceed $1,300,000, and in the event that application of the above-referenced
ratio would result in a Cash figure in excess of $1,300,000, the excess amount
will also be paid with Shares. The Shares will be valued 50% on the 20-day
average closing price for the period immediately preceding the date of this
Agreement and 50% on the 20-day average closing price for the period immediately
preceding the date on which Atlas decides to exercise the Option. The Purchase
Price may be further adjusted pursuant to Section 8(a).
At the Closing, Harvest shall deliver to Atlas, as applicable
(depending upon which of the Assets Atlas has elected to purchase):
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<PAGE>
a. A fully executed and acknowledged special warranty deed
substantially in the form of Exhibit C attached hereto and by this reference
incorporated herein, conveying to Atlas the Harvest Claims and any Additional
Property free and clear of all liens, claims and encumbrances as provided
therein;
b. A fully executed and acknowledged special warranty deed
substantially in the form of Exhibit D attached hereto and by this reference
incorporated herein conveying to Atlas the Walker/Giroux Claims free and clear
of all liens, claims and encumbrances as provided therein;
c. A fully executed and acknowledged assignment substantially in the
form of Exhibit E attached hereto and by this reference incorporated herein,
conveying to Atlas Harvest's interest in the Leased Property and any Additional
Property;
d. A certificate representing all of the issued and outstanding
shares of stock of Sovereign;
e. An assignment of its interest in the Debentures in a form
reasonably satisfactory to Atlas;
f. A fully executed and acknowledged bill of sale substantially in
the form of Exhibit F attached hereto and by this reference incorporated herein
(the "Bill of Sale"), conveying to Atlas the Personalty, free and clear of all
liens, claims and encumbrances as provided in the Bill of Sale; and
g. For each state in which purchased Assets are located, a fully
executed and acknowledged quitclaim deed substantially in the form of Exhibit G
attached hereto and by this reference incorporated herein, conveying to Atlas
all of the water and water rights owned or held by Harvest and used in
connection with those Assets.
Section 4. Agreements with Respect to the Shares.
-------------------------------------
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<PAGE>
a. Harvest shall not transfer the Shares, in whole or in part, until
it has first given written notice to Atlas describing briefly the manner and
nature of the proposed transfer and until:
(i) sold pursuant to an effective registration statement filed
by Atlas with respect to the Shares; or
(ii) Atlas and Harvest have complied with Rule 144 under the
Act; or
(iii) Harvest presents Atlas with a "no-action" letter from the
United States Securities and Exchange Commission ("SEC") specifically with
respect to the proposed transfer; or
(iv) Harvest provides Atlas with an opinion from counsel to
Harvest, reasonably acceptable to Atlas and its counsel, that such transfer can
be made without compliance with the registration provisions of the Act or other
applicable federal and state securities laws.
Upon compliance with the foregoing, Harvest shall be entitled to
transfer the Shares, or any portion thereof; provided, however, that upon
transfer of all or any portion of the Shares, the transferee shall agree in
writing to be bound by all of the terms and provisions of this agreement
applicable to such Shares.
b. Harvest acknowledges that (i) Atlas is under no obligation to
assist Harvest in establishing any exemption from registration and (ii) the
Shares may not be resold under Rule 144 of the Act unless all of the conditions
of that rule are met.
c. During the two-year period following the Closing, if Atlas
determines to register its unregistered common stock with the SEC, Atlas will
use its good faith efforts to include the Shares in such registration; provided,
however, that if the investment bankers and managers ( the "Underwriters") who
are administering such registration (who
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<PAGE>
may be selected by Atlas in its sole discretion) advise Atlas to reduce the
number of shares included in the offering contemplated by such registration,
then the number of Shares included in such offering shall be reduced pro-rata in
proportion to the total number of Shares versus the total number of shares of
common stock of Atlas originally scheduled for inclusion in such offering. If
all of the Shares are not included in a particular offering pursuant to this
subparagraph (c), Harvest shall have the right, subject to all of the terms and
provisions of this subparagraph (c), to have the Shares included in subsequent
offerings during the two-year period referred to above. In connection with any
registration pursuant to this subparagraph (c), Harvest (i) shall bear all of
its own expenses, including without limitation any underwriting commissions or
fees relating to the offer and sale of the Shares and (ii) shall enter into an
underwriting agreement with the Underwriters in form satisfactory to Atlas in
its sole discretion.
Section 5. Conditions Precedent to Obligations of Horizon. Following
----------------------------------------------
an election by Atlas to exercise the Option, the obligations of Harvest to
consummate the transactions referred to in Sections 1 and 2 are subject to the
fulfillment by Atlas or the waiver of Harvest of each of the following
conditions prior to or at the Closing:
a. The representations and warranties of Atlas made herein, which
shall be deemed to have been made again on and as of the Closing, shall be true
as of the Closing in all respects, except that representations and warranties
which were expressly made as of a specified date need only be true as of such
specified date; and Atlas shall have performed and complied in all respects with
all of the undertakings and agreements required by this Agreement to be
performed or complied with prior to or at the Closing; and
b. Atlas shall have performed all of its obligations and agreements
hereunder from the date hereof to the Closing.
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<PAGE>
Section 6. Conditions Precedent to Obligations of Atlas. Following
--------------------------------------------
an election by Atlas to exercise the Option, the obligations of Atlas to
consummate the transactions referred to in Sections 1 and 2 are subject to the
fulfillment by Harvest, or waiver by Atlas, of each of the following conditions
prior to or at the Closing:
a. The representations and warranties of Harvest made hereunder,
which shall be deemed to have been made again on and as of the Closing, shall be
true as of the Closing in all respects, except that representations and
warranties which were expressly made as of a specified date need only be true as
of such specified date; and Harvest shall have performed and complied in all
respects with all of the undertakings and agreements required by this Agreement
to be performed or complied with prior to or at the Closing;
b. There shall have been no material adverse change in the business,
financial position or results of Harvest which materially affects the Assets;
c. All proceedings to be taken in connection with the transactions
contemplated hereby and all documents incident thereto shall be reasonably
satisfactory in form and substance to Atlas and its counsel;
d. Harvest shall have performed all of its obligations and
agreements hereunder from the date hereof to the Closing, including, without
limitation, renegotiation of the CRI Agreement (as defined below) in accordance
with the provisions of Section 8(a); and
e. No action shall have been commenced challenging the transactions
contemplated hereby and no preliminary or permanent injunction or other order
shall have been sought or issued that seeks to prevent or prevents consummation
of the transactions contemplated hereby.
Section 7. Operations by Atlas on the Claims.
---------------------------------
a. Work Program. During the Option Period, Atlas agrees to
------------
undertake a work program on the Commonwealth
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<PAGE>
Property, which shall require Atlas to incur at least $425,000 in Exploration
and Development Expenses (as defined below) in performing Exploration and
Development Work. Exploration and Development Expenses shall mean and include
all costs, fees, expenses, liabilities and charges paid, incurred or accrued by
Atlas which are directly related to Exploration and Development Work conducted
on or for the benefit of the Commonwealth Property during the Option Period,
including without limitation:
(i) All direct costs and expenses incurred in conducting
exploration, prospecting and development activities, including the building,
maintenance and repair of roads, drill site preparation, site security,
drilling, water, logging, surveying, sampling, geochemical, geophysical,
metallurgical, engineering and laboratory costs and charges;
(ii) All costs incurred in performing any reclamation,
restoration or other work required by any federal, state or local agency or
authority;
(iii) Salaries and wages (including costs of providing benefits)
of Atlas' employees engaged in activities relating to the Commonwealth Property,
including salaries of those who are temporarily assigned to and directly
employed on work relating to the Commonwealth Property for the periods of time
such employees are engaged in such activities, and including costs of contract
labor;
(iv) All costs incurred in connection with preparation of the
Reserve Study and other economic analyses, whether carried out by Atlas or by
third parties under contract with Atlas;
(v) Taxes and assessments, other than income taxes, assessed or
levied upon or against the Commonwealth Property or any improvements situated
thereon for which Atlas is responsible;
(vi) Costs of material, equipment and supplies acquired, leased
or hired, for use in conducting exploration, development or mining operations
relating to the Commonwealth
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property; provided, however, that equipment owned and supplied by Atlas shall be
chargeable at rates no greater than the most favorable rental rates available in
the area of the Commonwealth Property;
(vii) Costs and expenses of establishing and maintaining field
offices, camps and housing facilities;
(viii) Costs incurred by Atlas in examining the title and
environmental condition of the Commonwealth Property, in curing title, in
maintaining the Commonwealth Property pursuant to Section 7(k) hereof, in
satisfying surface use or damage obligations to landowners, or in satisfying any
underlying mining lease or property payment obligations, including annual
minimum royalties paid by Atlas to third party lessors, etc.; and
(ix) Any other reasonable cost or expense which may be
specifically identified as qualifying as an Exploration and Development Expense.
Atlas agrees to consult with Harvest in structuring the goals and
objectives of the work program required under this Section 7(a), but the
ultimate direction and management of that work program shall be determined by
Atlas in its sole discretion. Atlas further agrees to maintain a separate
ledger to account for the amount of Exploration and Development Expenditures it
has incurred, along with reasonable back-up information (such as invoices,
receipts, etc.). Atlas will provide to Harvest an accounting of its Exploration
and Development Expenditures on a quarterly basis.
At any time during the Option Period, Atlas may elect by written
notice to Harvest to discontinue the work program and terminate this Agreement;
provided, however, that in the event of such an election by Atlas, Atlas shall
pay to Harvest an amount equal to fifty percent (50%) of the difference between
$425,000 and the amount of Exploration and Development Expenses actually
incurred by Atlas. Such payment shall be made to Harvest within ten (10) days
after delivery to Harvest of the written notice referred to above. Upon receipt
of such notice by Harvest, Atlas' obligations to make
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the payments referred to in Section 7(k) below will immediately terminate;
provided, however, that Atlas will remain responsible for any such payments due
within forty-five (45) days after Harvest's receipt of such notice.
b. Conduct of Operations. During the Option Period, Atlas shall
---------------------
have exclusive control of all Exploration Work performed on or for the benefit
of the Commonwealth Property and the Walker/Giroux Property (hereinafter the
"Properties") and of any and all equipment, supplies, machinery and other assets
purchased or otherwise acquired or under its control in connection with such
Exploration and Development Work. All of the Exploration and Development Work
which may be performed by Atlas hereunder shall be performed in accordance with
good mining practices. Except as otherwise set forth in Section 7(a), however,
the timing, nature, manner and extent of the work program or any other
operations hereunder shall be in the sole discretion of Atlas, and there shall
be no implied covenant to begin or continue any such operations.
c. Geological Data. Upon execution of this Agreement, Harvest shall
---------------
deliver to Atlas copies of all metallurgical, geological, geophysical,
geochemical, and engineering data, and interpretive reports derived therefrom,
concerning the Properties which Harvest possesses or to which it has access. If
it elects not to exercise the Option, Atlas shall promptly return to Harvest all
data provided to Atlas pursuant to this Section 7(c), as well as any similar
data developed by Atlas during the Option Period.
d. Indemnity. Except as to damages sustained by Harvest while on
---------
the Properties pursuant to Section 7(g), Atlas agrees to indemnify and hold
Harvest harmless from and against any loss, liability, expense or damage it may
incur to third persons or corporations for injury to or death of persons or
damage to property which is the result of Atlas conducting any operations on the
Properties.
e. Insurance. Atlas agrees to carry such insurance, covering all
---------
persons working in or on the
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Properties for Atlas, as will fully comply with the requirements of the statutes
of the states of Arizona, Nevada and California (as applicable) pertaining to
worker's compensation and occupational disease and disabilities as are now in
force or as may be hereafter amended or enacted.
f. Compliance with Laws. Atlas agrees to do and perform all of its
--------------------
operations in substantial compliance with all valid and applicable federal,
state and local laws, rules and regulations.
g. Inspection. Harvest and its authorized agents, at Harvest's risk
----------
and expense, shall have the right, exercisable during regular business hours, at
a mutually convenient time, and in a reasonable manner so as not to interfere
with Atlas' operations, to go upon the Properties for the purpose of confirming
that Atlas is conducting its operations in the manner required by this
Agreement. Harvest shall hold Atlas harmless from all claims for damages
arising out of any death, personal injury or property damage sustained by
Harvest, its agents or employees, while in or upon the Properties, whether or
not Harvest, its agents or employees are in or upon the Properties pursuant to
this Section 7(g), unless such death, injury or damage is due to Atlas' gross
negligence or willful misconduct. If requested by Atlas, Harvest, its agents
and employees will confirm in writing their waiver of claims against Atlas.
h. Governmental Permits. Harvest hereby grants to Atlas the right
--------------------
and authority to apply, in Atlas' name, for all necessary permits, licenses and
other approvals from the United States of America, the states of Arizona, Nevada
and California or from county or local authorities, and Harvest agrees to
support and cooperate fully with Atlas in any such efforts.
i. Liens and Encumbrances. Atlas shall keep the title to the Assets
----------------------
free and clear of all liens and encumbrances resulting from its activities
hereunder; provided, however, that Atlas may refuse to pay any claims asserted
against it which it disputes in good faith. At its
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sole cost and expense, Atlas shall contest any suit, demand or action commenced
to enforce such a claim and, if the suit, demand or action is decided by a court
or other authority of ultimate and final jurisdiction against Atlas or the
Assets, ATLAS shall promptly pay the judgment and shall post any bond and take
all other action necessary to prevent any sale or loss of the Properties or any
part thereof.
j. Taxes. During the term of this Agreement and prior to the
-----
Closing, Atlas shall pay all taxes and assessments as hereafter may be levied or
become due upon the Assets and Personalty before the same become delinquent.
k. Maintenance of Properties. During the term of this Agreement,
-------------------------
Atlas shall make all payments required to maintain Harvest's interest in the
Leased Property and pay all federal claim maintenance fees required to maintain
the Harvest Claims and the unpatented claims comprising a portion of the Leased
Property. In the event that Atlas terminates this Agreement without exercising
the Option, or exercises the Option as to less than all of the Assets, if Atlas
does not provide notice of such termination to Harvest at least forty-five (45)
days prior to the date any payments necessary to maintain Harvest's interest in
the Leased Property are due, Atlas shall be responsible for making such payments
despite such termination. Harvest hereby agrees that Atlas may seek to amend
the terms of the agreements by which Harvest holds its interest in the Leased
Property, provided that any such amendment shall be subject to the prior written
consent of Harvest, which consent shall not be unreasonably withheld.
l. Title Inspection. Atlas, upon the execution of this Agreement,
----------------
may order an abstract of title covering the Commonwealth Property or otherwise
examine title to the Commonwealth Property, all at its sole expense, and shall
have a period of time ending on October 6, 1995 to complete such examination.
If Atlas, in its reasonable opinion, determines at any time on or before October
6, 1995 that there exists a material defect in the title to the Commonwealth
Property, Atlas may terminate this Agreement upon written notice to Harvest, and
upon receipt of such notice by Harvest, this
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Agreement shall be deemed terminated, and Harvest shall promptly refund to Atlas
an amount equal to the payments made by Atlas under Section 7(k) above.
m. Reclamation. Atlas shall reclaim the surface of the Properties,
-----------
to the extent disturbed by its operations hereunder, in accordance with
applicable governmental laws, rules and regulations. Under no circumstances
shall Atlas be deemed to have any obligation to reclaim any disturbance of the
Assets existing as of the date of this Agreement, except to the extent such
existing disturbances are redisturbed by Atlas.
Section 8. Obligations of Harvest.
----------------------
a. Termination of CRI Agreement. Prior to the Closing Harvest
----------------------------
shall, at its sole cost and expense, renegotiate the terms and conditions of
that Assignment between CRI and Harvest dated January 25, 1994, as amended (the
"CRI Agreement"), in such a manner that to the reasonable satisfaction of Atlas
removes any current or future burdens or costs of any kind that encumber or
would encumber all or any of the Assets. If Harvest fails to renegotiate the
terms of the CRI Agreement in accordance with the provisions of this Section
8(a) within ten (10) days after Atlas' exercise of the Option, Atlas may elect,
in its sole discretion, to (i) attempt to renegotiate the terms and conditions
of the CRI Agreement as set forth above (and deduct from the Purchase Price all
costs incurred by Atlas in connection with such renegotiation, including without
limitation sums paid to CRI), or, (ii), in the event such efforts at
renegotiation are unsuccessful, deduct from the Purchase Price an amount
reasonably equivalent to the then present value of the remaining obligations to
CRI under the CRI Agreement. Harvest shall indemnify and hold Atlas harmless
from and against all costs, expenses, fees, royalties or payments owed to or for
the benefit of CRI, predecessor in interest to Horizon at the Commonwealth
Property.
b. Services. In consideration of the Option Payments, John E.
--------
Watson and Richard A. Forrest, two officers
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of Harvest, agree to provide certain services to Atlas, as Atlas may direct, in
connection with Atlas' activities on the Commonwealth Property hereunder or with
other Atlas projects. Mr. Watson and Mr. Forrest shall each provide 500 hours of
such service, and agree to account for their time in writing and in a manner
reasonably acceptable to Atlas. Such obligation to provide services shall
terminate upon termination of this Agreement or the exercise of the Option.
c. Conduct of Business by Sovereign. .During the Option Period,
--------------------------------
Harvest shall cause Sovereign to operate its business in the ordinary course and
in such a manner so as (i) not to impair title to or cause any additional liens
or encumbrances on the Argentina Property, and (ii) not to suffer any material
adverse change in its financial condition, working capital, assets, liabilities,
business or operations.
Section 9. Possession; Passing of Title; Risk of Loss. Title shall
------------------------------------------
pass to Atlas and Harvest shall deliver exclusive possession of the Assets and
the Personalty which Atlas has elected to purchase at the time of the Closing.
The risk of loss from any damage to any equipment, machinery or improvements by
any casualty prior to the Closing shall be on Harvest. Notwithstanding damage
to equipment, machinery or improvements by any casualty, Atlas may elect to
close the purchase and sale of the Assets and the Personalty upon the terms and
conditions of this Agreement and, upon Atlas' request, Harvest shall promptly
assign to Atlas any and all proceeds from insurance maintained by Harvest on
said equipment, machinery and improvements.
Section 10. Covenants, Representations and Warranties of Harvest.
----------------------------------------------------
Harvest represents and warrants to Atlas as of the date hereof as follows, and
covenants that if the Option is exercised these representations and warranties
will be true and correct on the Closing date:
a. Organization and Standing. Harvest is a corporation duly
-------------------------
organized, validly existing, and in good standing under the laws of the State of
Colorado.
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b. Qualification. Harvest is duly qualified to do business in the
-------------
State of Arizona, and Sovereign is duly qualified under the laws of Argentina to
conduct business in that country.
c. Corporate Power. Harvest has the requisite power and authority
---------------
(i) to enter into this Agreement and all other agreements contemplated hereby,
and (ii) to carry out and perform its obligations under the terms and provisions
of this Agreement and all agreements contemplated hereby.
d. Authorization. All requisite corporate action on the part of
-------------
Harvest, and its officers, directors, and shareholders, necessary for the
execution, delivery, and performance of this Agreement and all other agreements
of Harvest contemplated hereby, have been taken. This Agreement and all
agreements and instruments contemplated hereby are, and when executed and
delivered, will be, legal, valid, and binding obligations of Harvest enforceable
against Harvest in accordance with their respective terms. The execution,
delivery and performance of this Agreement will not violate any provision of
law; any order of any court or other agency of government; or any provision of
any indenture, agreement or other instrument to which Harvest is a party or by
which its properties or assets are bound; or 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. There is no law, rule or
regulation, nor is there any judgment, decree or order of any court or
governmental authority binding on Harvest which would be contravened by the
execution, delivery, performance, or enforcement of this Agreement or any
instrument or agreement required hereunder.
e. Royalties. Except as set forth in Exhibit A, Harvest has granted
---------
no royalties or other burdens on production affecting the Assets.
f. Permits and Licenses. To the best of its knowledge, Harvest has
--------------------
obtained all permits, licenses, approvals, authorizations and qualifications of
all federal, state and local authorities required for it to carry on its
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operations on or in connection with the Assets. To the best of its knowledge,
Harvest is not in violation of and has 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 Assets, other than violations or
liability, if any, which have not resulted and will not at any time result in
any material loss or liability.
g. Title to the Assets.
-------------------
(i) Harvest represents that, from and after the date it
acquired ownership or possession of the Harvest Claims and the unpatented mining
claims comprising a portion of the Leased Property (collectively referred to
hereinafter as the "Claims"), and as of the date of execution of this Agreement,
it is in exclusive possession of and owns or controls the Claims subject only to
the paramount title of the United States and the underlying agreements by which
Harvest holds its interest in the Leased Property, all of which are listed on
Exhibit H attached hereto and by this reference incorporated herein, true and
correct copies of which Harvest has previously provided to Atlas. Harvest
further represents that, from and after the date it acquired ownership or
possession of the Claims, and as of the date of execution of this Agreement, to
the best of its knowledge (a) the Claims were properly located and monumented;
(b) location and any required validation work for each of the Claims has been
properly performed; (c) location notices and certificates have been properly
recorded or filed for each of the Claims; (d) all filings required to maintain
the Claims in good standing, including evidence of their location and the
performance of assessment work, or the equivalent thereof, under the Federal
Land Policy and Management Act of 1976, 43 U.S.C. (S) 1744, and other applicable
state, federal and local law, have been timely and properly made; and (e)
assessment work, performed reasonably and in good faith in accordance with
accepted mining industry practice, which Harvest believes was sufficient to
satisfy all requirements for holding the Claims was performed (or deferred or
excused) through the assessment year ending September 1, 1992. Harvest further
represents
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that all rentals or maintenance fees to the United States government pursuant to
the United States Interior and Related Agencies Appropriations Act of 1993, as
amended, required to be paid to hold the Claims in good standing through August
31, 1996 have been paid in a timely manner and notices or affidavits of such
payment have been properly and timely recorded in the counties in which they are
located.
(ii) Harvest represents that, as of the date of its execution of
this Agreement, the underlying agreements by which Harvest controls the Assets,
all of which are listed on Exhibit H, true and correct copies of which Harvest
has previously provided to Atlas, are in full force and effect, valid and
enforceable against all other parties thereto pursuant to their terms; that all
rentals, royalties and other payments required to be made to all other parties
thereto have been made in a timely fashion; that there are no breaches or
uncured defaults thereunder; and that Harvest has received no notice alleging
any breach or default thereunder.
(iii) Harvest represents that the Assets are free and clear of
all liens and encumbrances created, suffered or allowed by Harvest, including
any lease, right or license, except taxes not yet due and payable.
(iv) Harvest makes no representation or warranty whatsoever,
express or implied, as to the existence of any discovery on any of the Claims.
h. Environmental Compliance. Except with respect to the Tailings
------------------------
Piles (as that term is used in the Options to Purchase referred to in Parts 2.A
and 2.C of Exhibit A), to the best of the knowledge of Harvest, there is no
condition or activity on the Assets which constitutes a nuisance or which would
result in a violation of or liability under applicable federal, state or local
laws, orders, regulations, directives or restrictions concerning protection of
the environment or health and safety. Harvest has not received any notice of
violation or any consent order issued under applicable federal, state or local
laws, orders, regulations, directives or restrictions concerning protection of
the environment and
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<PAGE>
health and safety to which the Assets or Harvest's operations thereon are now
subject or may become subject. There are no pending or, to the best of the
knowledge of Harvest, threatened proceedings by or before any court or other
governmental authority against Harvest with respect to its operations on or the
ownership of the Assets are or alleged to be, or have been, in violation of, or
to be the basis of liability under, any federal, state or local law, order,
rule, regulation, ordinance, directive or restriction concerning protection of
the environment of health and safety.
i. Material Contracts and Commitments. To the best of its
----------------------------------
knowledge, Harvest has performed all material obligations required to be
performed by it under any contracts and commitments affecting the Assets to
which it is a party, 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, agreement, commitment, mortgage, indenture, loan agreement, lease,
license, or other instrument to which it is a party.
j. Legality. To the best of its knowledge, Harvest is not in
--------
material violation of any law, rule, ordinance, or other governmental
regulation, 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 regulations, the
lack of compliance with which could materially adversely affect the Assets.
k. Litigation and Assets. There are no actions, suits or
---------------------
proceedings pending or, to the vest of the knowledge of Harvest, threatened
against or affecting the Assets, including any actions, suits, or proceedings
being prosecuted by any federal, state or local department, commission, board,
bureau, agency, or instrumentality. To the best of its knowledge, Harvest is not
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 Assets.
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l. Consents. Harvest has obtained all consents, approvals,
--------
authorizations, declarations, or filings required by any federal, state, local,
or other authority, or any other third party (including, without limitation, the
parties to the agreements listed on Exhibit I) in connection with the valid
execution, delivery, and performance of this Agreement and the consummation of
the transactions contemplated hereby.
m. Brokerage or Finder's Fee. All negotiations relative to this
-------------------------
Agreement and the transactions contemplated hereby have been carried on by
Harvest in such manner as not to give rise to any valid claim against Atlas for
a brokerage commission, finder's fee, or other fee or commission arising by
reason of the transactions contemplated by this Agreement. Harvest has incurred
brokerage fee obligations to Mr. Rex Loesby, and shall indemnify and hold Atlas
harmless from and against liability for the same.
n. Investment Intent. Except in the event of a dissolution of
-----------------
Harvest after the exercise of the Option by Atlas, and the subsequent
distribution of the assets of Harvest to its shareholders (in the event of which
Harvest agrees that any distributions of the Shares shall be made subject to all
of the terms and conditions of this Agreement), Harvest is acquiring the Stock
solely for the purpose of investment, and not with a view to the distribution or
sale of any part thereof. Harvest acknowledges that the Shares it will be
receiving under this Agreement if Atlas exercises the Option have not been and
will not be registered under the Securities Act or any state securities law, and
will be issued and sold in reliance on exemptions from such registration
requirements that are available only if the Stock is not being offered to the
public and is being acquired for investment and not with a view to its
distribution or sale. Harvest agrees that it will not sell the Shares except as
provided in Section 4.
o. Ownership of Sovereign. Harvest owns, beneficially and of
----------------------
record, good and marketable title to the Sovereign Stock, which constitutes all
of the issued and outstanding capital stock of Sovereign, free and clear of all
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mortgages, pledges, restrictions, charges, security interests, liens, adverse
claims, encumbrances, proxies, options or shareholder's agreements, and will
convey the same to Atlas. The authorized capital stock of Sovereign consists of
____shares of common stock, par value $____ per share, of which _____shares are
issued and outstanding, and no shares of such capital stock are held in
Sovereign's treasury. All of the issued and outstanding shares of capital stock
of Sovereign are duly authorized, validly issued, fully paid and nonassessable,
and have been issued in full compliance with applicable securities and other
laws and regulations. There exist no options, warrants, subscriptions or other
rights to purchase, or securities convertible into or exchangeable for, the
capital stock of Sovereign. Neither Harvest nor, to the best of its knowledge,
Sovereign, are parties to or bound by, nor do they have any knowledge of, any
agreement, instrument, arrangement, contract, obligation, commitment or
understanding of any character, whether written or oral, express or implied,
relating to the sale, assignment, encumbrance, conveyance, transfer or delivery
of any capital stock of Sovereign.
p. Representations. To the best knowledge of Harvest, no
---------------
statements, warranties, or representations made by it herein contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements made, in light of the circumstances under which such
statements were or will be made, not misleading .
Section 11. Representations and Warranties of Atlas. Atlas
---------------------------------------
represents and warrants to Harvest as of the date hereof as follows, and
covenants that if the Option is exercised these representations and warranties
will be true and correct on the Closing date:
a. Organization and Standing. Atlas is a corporation duly
-------------------------
organized, validly existing, and in good standing under the laws of the State of
Delaware.
b. Qualification. Atlas is duly qualified to do business in the
-------------
State of Nevada.
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<PAGE>
c. Corporate Power. Atlas has the requisite corporate power and
---------------
authority (i) to enter into this Agreement and all other agreements contemplated
hereby, and (ii) to carry out and perform its obligations under the terms and
provisions of this Agreement and all agreements contemplated hereby.
d. Authorization. All requisite corporate action on the part of
-------------
Atlas, and its officers and directors, necessary for the execution, delivery and
performance of this Agreement and all other agreements of Atlas contemplated
hereby have been taken. This Agreement and all agreements and instruments
contemplated hereby, when executed and delivered by Atlas, will be the legal,
valid, and binding obligations of Atlas enforceable against Atlas in accordance
with their terms.
e. Brokerage or Finder's Fee. All negotiations relative to this
-------------------------
Agreement and the transactions contemplated hereby have been carried on by Atlas
in such manner as not to give rise to any valid claim against Harvest for a
brokerage commission, finder's fee or other fee or commission arising by reason
of the transactions contemplated by this Agreement.
f. The Shares. The Shares have been duly authorized for issuance
----------
and reserved therefor and, when issued, all of the Shares shall be validly
issued, fully paid and nonassessable shares of capital stock of Atlas, free and
clear of all liens, charges and encumbrances. There does not exist any
preemptive right in favor of any person with respect to the Shares.
g. Representations. To Atlas' knowledge, no statements, warranties
---------------
or representations made by Atlas herein contain any untrue statement of material
fact or omit to state a material fact necessary in order to make the statement
made in light of the circumstances under which such statements were made or will
be made, not misleading.
Section 12. Notices. All notices given in connection herewith shall
-------
be in writing, and all such notices and deliveries to be made pursuant hereto
shall be given or
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made in person, by certified or registered mail, by reputable overnight courier,
or by facsimile acknowledged upon receipt. Such notices and deliveries shall be
deemed to have been duly given and received when actually delivered in person,
when sent by facsimile or courier, or when deposited in a receptacle for United
States mail, postage prepaid, and addressed as follows:
a. If to Atlas:
Atlas Corporation
370 Seventeenth Street, Suite 3150
Denver, Colorado 80033
Facsimile No.: (303) 892-8808
Attention: Gregg Shafter
b. If to Harvest Gold Corporation:
Harvest Gold Corporation
P.O. Box 2590
Evergreen, Colorado 80437
Facsimile No.: (303) 674-3222
Attention: John E. Watson
Either party may change its address for the receipt of notice by providing
written notice of such change in the manner set forth above.
Section 13. General Indemnity.
-----------------
a. By Harvest. Harvest agrees to defend, indemnify and hold
----------
harmless Atlas, its successors, affiliates, assigns, officers, directors and
employees from and against any and all claims, actions, suits, losses,
liabilities, damages, assessments, judgments, costs and expenses, including
reasonable attorneys' fees, arising out of any breach by Harvest of any
representation, covenant or warranty set forth herein.
b. By Atlas. Atlas agrees to defend, indemnify and hold harmless
--------
Harvest, its successors, affiliates, assigns, officers, directors and employees
from and against
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any and all claims, actions, suits, losses, liabilities, damages, assessments,
judgments, costs and expenses, including reasonable attorneys' fees, arising out
of any breach by Atlas of any representation, covenant or warranty set forth
herein.
c. Notification. Any party who has a claim giving rise to
------------
indemnification liability pursuant to this Agreement (an "Indemnified Party")
which results from a claim by a third party shall give prompt notice to the
other party (the "Indemnifying Party") of such claim, together with a reasonable
description thereof. Failure to provide such notice shall not relieve a party
of any of its obligations hereunder except to the extent materially prejudiced
thereby. With respect to any claim by a third party against any party to this
Agreement which is subject to indemnification under this Agreement, the
Indemnifying Party shall be afforded the opportunity, at its expense, to defend
or settle the claim if it utilizes counsel reasonably satisfactory to the
Indemnified Party, and promptly commences the defense of such claim and pursues
such defense with diligence; provided, however, that the Indemnifying Party
shall secure the consent of the Indemnified Party to any settlement, which
consent shall not be unreasonably withheld. The Indemnified Party may
participate in the defense of any claim at its expense, and until the
Indemnifying Party has agreed to defend such claim, the Indemnified Party may
file any motion, answer or other pleading or take such other action as it deems
appropriate to protect its interests or those of the Indemnifying Party. If an
Indemnifying Party does not elect to contest any third-party claim, the
Indemnifying Party shall be bound by the results obtained with respect thereto
by the Indemnified Party, including any settlement of such claim.
Section 14. Entire Agreement. This Agreement constitutes the entire
----------------
agreement and understanding between the parties and supersedes all prior
agreements and understandings relating to purchase and sale of the Assets and
the Personalty.
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Section 15. Attorneys' Fees. In the event that any action is brought
---------------
by either party against the other with respect to or arising under this
Agreement, the party in whose favor final judgment is rendered shall be entitled
to recover all costs and expenses, including reasonable attorneys' fees,
incurred by it in connection with such action.
Section 16. Public Announcements. Disclosure of information relating
--------------------
to this Agreement or the Assets may be made by Atlas. Atlas agrees that it
will, in advance of making public any information concerning the Assets or this
Agreement, give Harvest written notice of the text of the proposed disclosure
and provide Harvest with the opportunity to comment on the content thereof
before issued. Except as otherwise set forth above, the parties agree to treat
all data received or obtained under this Agreement as confidential, and such
data shall not be disclosed to any other person or corporation except
corporations or business entities who are engaged in activities on the
Commonwealth Property or who are affiliates of the parties.
Section 17 Amendments; Miscellaneous. This Agreement may be amended
-------------------------
or modified only by a writing signed by the parties hereto. The headings of the
sections of this Agreement are included solely for convenience of reference and
if there be any conflict between the headings and the text of this Agreement,
the text shall control. Harvest and Atlas, without additional consideration,
shall execute any and all documents and each shall take such action as may be
reasonably requested by the other to carry out the purposes of this Agreement
and any and all exhibits and attachments hereto. This Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of Colorado. The respective representations, warranties, and obligations of
Harvest and Atlas contained herein shall be deemed to survive the Closing. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, personal representatives, successors, and permitted
assigns. This Option Agreement may be assigned by either party hereto upon the
prior written consent of the other party, which consent shall not be
unreasonably withheld, but
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<PAGE>
only if the proposed assignee is financially capable of undertaking the
assignor's obligations hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Option
Agreement to be duly executed, delivered, and effective from the date first
above written.
HARVEST GOLD CORPORATION,
a Colorado corporation
By: /s/ John E. Watson
John E. Watson, President
ATLAS CORPORATION,
a Delaware corporation
By: /s/ Gerald E. Davis
Gary E. Davis, President
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<PAGE>
Acknowledgments
---------------
STATE OF ________________ )
) ss.
COUNTY OF _______________ )
This instrument was acknowledged before me on __________, 19___, by
John E. Watson, as President of Harvest Gold Corporation, a Colorado
corporation.
WITNESS my hand and official seal.
____________________________________
Notary Public
[SEAL]
My commission expires: _________________
STATE OF ________________ )
) ss.
COUNTY OF _______________ )
This instrument was acknowledged before me on __________, 19___, by
Gary E. Davis, as President of Atlas Corporation, a Delaware corporation.
WITNESS my hand and official seal.
____________________________________
Notary Public
[SEAL]
My commission expires: _________________
-107-
<PAGE>
EXHIBIT A
PART 1
The Harvest Claims
------------------
The following unpatented lode mining claims situated in Section 4,
Township 18 South, Range 25 East, Cochise County, Arizona:
Cochise County Recording
Claim Name Book Page BLM Serial No.
- ---------- ---- ---- --------------
HAR-4, located August 4, 1995, county recording and BLM Serial No. pending.
PART 2
The Leased Property
-------------------
A. An undivided eleven percent interest in the following lands which is
covered by that Option to Purchase dated January 31, 1994 among Columbia
Resources, Inc. ("CRI") and John C.S. Breitner, as Trustee of the Hermine
Summer Trust, and Glenna R. Ellsworth, as Personal Representative of the
Estate of Mary E. Reed, which CRI assigned to Harvest by Assignment dated
January 25, 1994:
(i) Patented Claims. The following patented mining claims situated in
---------------
Section 32, Township 17 South, Range 25 East, and in Sections 4 and 5,
Township 18 South, Range 25 East, Cochise County, Arizona:
Cochise County Recording (Deed of Mines)
<TABLE>
<CAPTION>
Patented Claim Book Page Mineral Survey No.
-------------- ---- ---- ------------------
<S> <C> <C> <C>
Sulphur Spring Valley 26 154 1391
Ocean Wave 12 282 1249A
Silver Wave 12 282 1249A
North Bell 12 282 1249A
</TABLE>
A-1
<PAGE>
<TABLE>
<S> <C> <C> <C>
Commonwealth 12 282 1249A
Silver Crown 12 282 1249A
One and All 12 282 1249B
One and All Mill Site 12 282 1249B
</TABLE>
(ii) Fee Lands. Lots 1-12, inclusive, and Lots 32-41, inclusive, Block 17,
---------
TOWNSITE OF PEARCE, according to Book 1 of Maps, Page 109, official
records of Cochise County, Arizona.
(iii) Unpatented Mining Claims. The following unpatented placer mining
------------------------
claims situated in Sections 4 and 5, Township 18 South, Range 25 East,
Cochise County, Arizona:
Cochise County Recording
<TABLE>
<CAPTION>
Claim Name Book Page BLM Serial No.
---------- ---- ---- --------------
<S> <C> <C> <C>
Mamie I 1028 411 AMC 50136
Mamie II 1028 412 AMC 50137
</TABLE>
B. The following patented and unpatented mining claims which are covered by
that Mining Lease with Option to Purchase dated January 31, 1994, among CRI
and COR-FORD, Inc., a Texas corporation, Vicky Carol Klekar, individually,
and as Trustee of the Carl Thetford Family Trust, Chris Alan Thetford and
Clayton Rummelt, which CRI assigned to Harvest by Assignment dated January
25, 1994:
(i) Patented Claims. An undivided eighty-eight percent interest in the
---------------
following patented mining claims situated in Section 32, Township 17 South,
Range 25 East, and in Sections 4 and 5, Township 18 South, Range 25 East,
Cochise County, Arizona:
Cochise County Recording (Deed of Mines)
Patented Claim Book Page Mineral Survey No.
-------------- ---- ---- ------------------
A-2
<PAGE>
<TABLE>
<S> <C> <C> <C>
Sulphur Spring Valley 26 154 1391
Ocean Wave 12 282 1249A
Silver Wave 12 282 1249A
North Bell 12 282 1249A
Commonwealth 12 282 1249A
Silver Crown 12 282 1249A
One and All 12 282 1249B
One and All Mill Site 12 282 1249B
</TABLE>
(ii) Unpatented Claims. An undivided one hundred percent interest in the
-----------------
following unpatented lode and placer mining claims situated in Sections 4
and 5, Township 18 South, Range 25 East, Cochise County, Arizona:
Cochise County Recording
<TABLE>
<CAPTION>
Claim Name Book Page BLM Serial No.
- ---------- ---- ---- --------------
<S> <C> <C> <C>
Mamie I (placer) 1028 411 AMC 50136
Mamie II (placer) 1028 412 AMC 50137
Mamie III (placer) 1028 413 AMC 50138
Mamie IV (placer) 1028 414 AMC 50139
</TABLE>
A-3
<PAGE>
Cochise County Recording
<TABLE>
<CAPTION>
Claim Name Book Page BLM Serial No.
- ---------- ---- ---- --------------
<S> <C> <C> <C>
Lyle 1 997 518 AMC 313326
Lyle 2 997 519 AMC 313327
Lyle 3 997 520 AMC 50142
Lyle 4 997 521 AMC 50143
Lyle 5 997 522 AMC 50144
Lyle 6 997 523 AMC 50145
Lyle 7 997 523* AMC 313328
Pan 8 996 313 AMC 50146
Pan 8 AMENDED 910406278 (instrument no.)
Pan 9 996 314 AMC 50147
Pan 9 AMENDED 910406279 (instrument no.)
Pan 10 996 315 AMC 50148
Pan 10 AMENDED 910406280 (instrument no.)
Pan 11 996 316 AMC 50149
Pan 11 AMENDED 910406281 (instrument no.)
Pan 12 996 317 AMC 50150
Pan 12 AMENDED 910406282 (instrument no.)
Pan 13 996 318 AMC 50151
Pan 14 996 319 AMC 50152
Pan 14 AMENDED 910406283 (instrument no.)
Pan 15 996 320 AMC 50153
Mamie V (placer) 1483 490 AMC 128288
MamieVI (placer) 1483 491 AMC 128289
</TABLE>
A-4
<PAGE>
<TABLE>
<S> <C> <C> <C>
Mamie VII (placer) 1483 492 AMC 128290
</TABLE>
C. An undivided one percent interest in the following lands which is covered
by that Option to Purchase Agreement dated September 17, 1993 between CRI and
the Estate of Helen S. Jessup, which CRI assigned to Harvest by Assignment
dated January 25, 1994:
(i) Patented Claims. The following patented mining claims situated in
---------------
Section 32, Township 17 South, Range 25 East and Sections 4 and 5,
Township 18 South, Range 25 East, Cochise County, Arizona:
Cochise County Recording (Deed of Mines)
<TABLE>
<CAPTION>
Patented Claim Book Page Mineral Survey No.
- -------------- ---- ---- ------------------
<S> <C> <C> <C>
Sulphur Spring Valley 26 154 1391
Ocean Wave 12 282 1249A
Silver Wave 12 282 1249A
North Bell 12 282 1249A
Commonwealth 12 282 1249A
</TABLE>
Cochise County Recording (Deed of Mines)
<TABLE>
<CAPTION>
Patented Claim Book Page Mineral Survey No.
- -------------- ---- ---- ------------------
<S> <C> <C> <C>
Silver Crown 12 282 1249A
One and All 12 282 1249B
One and All Mill Site 12 282 1249B
</TABLE>
(ii) Fee Lands. Lots 1-12, inclusive, and Lots 32-41, inclusive, Block
---------
17, TOWNSITE OF PEARCE, according to Book 1 of Maps, Page 109, official
records of Cochise County, Arizona.
A-5
<PAGE>
(iii) Unpatented Mining Claims. The following unpatented placer mining
------------------------
claims situated in Sections 4 and 5, Township 18 South, Range 25 East,
Cochise County, Arizona:
Cochise County Recording
<TABLE>
<CAPTION>
Claim Name Book Page BLM Serial No.
- ---------- ---- ---- --------------
<S> <C> <C> <C>
Mamie I 1028 411 AMC 50136
Mamie II 1028 412 AMC 50137
</TABLE>
D. The following lands which are covered by that Lease and Option Agreement
dated August 16, 1995, among Seven Enterprises, Inc., a Missouri corporation,
L.A. Galyen and Frances Galyen, husband and wife, and Harvest Gold
Corporation:
(i) Fee Lands. The following real property situated in Township 18 South,
---------
Range 25 East, Cochise County Arizona:
Section 4. Lots 1, 2, 3, 5, 10, 11, 12 and 13; SE/4NE/4; E/2SE/4;
---------
SW/4SE/4; SE/4SW/4; SW/4NE/4; and NW/4SE/4.
Section 9. NE/4NE/4; W/2SW/4; NW/4; and W/2NE/4.
---------
Section 16. NE/4NW/4.
----------
(ii) Patented Mining Claims. The following patented mining claims situated
----------------------
in Section 32, Township 17 South, Range 25 East, and Sections 4 and 5,
Township 18 South, Range 25 East, Cochise County, Arizona:
Cochise County Recording (Deed of Mines)
<TABLE>
<CAPTION>
Patented Claim Book Page Mineral Survey No.
- -------------- ---- ---- ------------------
<S> <C> <C> <C>
Arthur 28 142 3062
Rainbow 28 142 3062
</TABLE>
A-6
<PAGE>
<TABLE>
<S> <C> <C> <C>
Hornspoon 28 142 3062
Silver Thread 28 142 3062
</TABLE>
(iii) Unpatented Claims. The following unpatented lode mining claims
-----------------
situated in Sections 4 and 5, Township 18 South, Range 25 East, Cochise
County, Arizona:
Cochise County Recording
<TABLE>
<CAPTION>
Claim Name Book Page BLM Serial No.
- ---------- ---- ----- --------------
<S> <C> <C> <C>
Ayn Rand 1 1014 367 AMC 38120
Ayn Rand 2 1014 368 AMC 38121
Pan 1 996 305 AMC 38050
Pan 2 996 307* AMC 38051
Pan 3 996 308 AMC 38052
Pan 24 996 329 AMC 38065
Pan 24 AMENDED 910406291 (instrument no.)
Pan 26 996 331 AMC 38067
Pan 26 AMENDED 910406293 (instrument no.)
Pan 26 2ND AMENDED 930822325 (instrument no.)
Pan 29 996 334 AMC 38070
Pan 29 AMENDED 910406296 (instrument no.)
Pan 29 2ND AMENDED 930822326 (instrument no.)
Pan 31 996 336 AMC 38072
Pan 31 AMENDED 910406298 (instrument no.)
Pan 31 2ND AMENDED 930822327 (instrument no.)
Pan 36 996 341 AMC 38077
Pan 36 AMENDED 910406303 (instrument no.)
Pan 36 2ND AMENDED 930822328 (instrument no.)
Pan 68 996 373 AMC 38109
Pan 68 AMENDED 910406333 (instrument no.)
</TABLE>
A-7
<PAGE>
<TABLE>
<S> <C> <C> <C>
Pan 68 2ND AMENDED 930822329 (instrument no.)
Pan 72 996 377 AMC 38133
Pan 72 AMENDED 910406335 (instrument no.)
Pan 72 2ND AMENDED 930822330 (instrument no.)
</TABLE>
A-8
<PAGE>
PART 3
The Walker/Giroux Claims
------------------------
A. The BEVE # 6 unpatented lode mining claim, situated in Section
24, Townhip 19 South, Range 40 East, and Section 19, Township 19 South, Range 41
East, the location certificate for which is of record in the official records of
Inyo County, California, in Book 91 at Page 1383, BLM Serial No. CAMC 244212.
B. An undivided fifty percent interest in the following unpatented
lode mining claim situated in Section ____, Township ____, Range ____, Lyon
County, Nevada:
Lyon County Recording
<TABLE>
<CAPTION>
Claim Name Book Page BLM Serial No.
---------- ---- ---- --------------
<S> <C> <C> <C>
T Pending Pending
</TABLE>
A-9
<PAGE>
EXHIBIT B
THE PERSONALTY
--------------
Weather Station
Sample Prep Lab
<PAGE>
EXHIBIT C
SPECIAL WARRANTY DEED
---------------------
THIS SPECIAL WARRANTY DEED is made and entered into this ____ day of
________, 19___, from HARVEST GOLD CORPORATION, a Colorado corporation, whose
address is 1546 Cole Boulevard, Suite 70, Golden, Colorado 80401 ("HARVEST") to
ATLAS CORPORATION, a Delaware corporation, whose address is 370 Seventeenth
Street, Suite 3150, Denver, Colorado 80202 ("ATLAS").
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, HARVEST does hereby grant, bargain and sell unto
ATLAS all of the right, title and interest in and to those unpatented mining
claims listed on Exhibit A attached hereto and incorporated herein by reference
(the "Claims").
TOGETHER WITH all lodes, ledges, veins and mineral bearing rock, both
known and unknown, lying within the boundaries of the Claims, together with all
dips, spurs, and angles, and all the ores, mineral-bearing quartz, rock and
earth or other deposits therein or thereon and all of the rights, privileges and
franchises thereto incident, and all and singular the tenements and
hereditaments thereunto or in anywise appertaining, and the rents, issues and
profits thereof; and also all the estate, right, title, interest, property,
possession, claim and demand whatsoever, as well in law as in equity, of
HARVEST, of, in or to the premises and every part and parcel thereof, including
all after acquired title.
TOGETHER WITH all water and water rights, ditches and ditch rights,
reservoirs and reservoir rights, springs, wells and rights to springs and wells
appurtenant to the Claims, associated therewith, or used on or for the benefit
thereof.
TO HAVE AND TO HOLD all and singular the said premises, unto ATLAS,
its successors and assigns forever.
HARVEST warrants and will forever defend title to the Claims against
all persons claiming any interest in the same by, through or under HARVEST.
A-1
<PAGE>
EXHIBIT D
SPECIAL WARRANTY DEED
---------------------
THIS SPECIAL WARRANTY DEED is made and entered into this ____ day of
________, 19___, from HARVEST GOLD CORPORATION, a Colorado corporation, whose
address is 1546 Cole Boulevard, Suite 70, Golden, Colorado 80401 ("HARVEST") to
ATLAS CORPORATION, a Delaware corporation, whose address is 370 Seventeenth
Street, Suite 3150, Denver, Colorado 80202 ("ATLAS").
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, HARVEST does hereby grant, bargain and sell unto
ATLAS all of the right, title and interest in and to those unpatented mining
claims listed on Exhibit A attached hereto and incorporated herein by reference
(the "Claims").
TOGETHER WITH all lodes, ledges, veins and mineral bearing rock, both
known and unknown, lying within the boundaries of the Claims, together with all
dips, spurs, and angles, and all the ores, mineral-bearing quartz, rock and
earth or other deposits therein or thereon and all of the rights, privileges and
franchises thereto incident, and all and singular the tenements and
hereditaments thereunto or in anywise appertaining, and the rents, issues and
profits thereof; and also all the estate, right, title, interest, property,
possession, claim and demand whatsoever, as well in law as in equity, of
HARVEST, of, in or to the premises and every part and parcel thereof, including
all after acquired title.
TOGETHER WITH all water and water rights, ditches and ditch rights,
reservoirs and reservoir rights, springs, wells and rights to springs and wells
appurtenant to the Claims, associated therewith, or used on or for the benefit
thereof.
TO HAVE AND TO HOLD all and singular the said premises, unto ATLAS,
its successors and assigns forever.
HARVEST warrants and will forever defend title to the Claims against
all persons claiming any interest in the same by, through or under HARVEST.
A-2
<PAGE>
EXHIBIT E
ASSIGNMENT
----------
THIS ASSIGNMENT is made and entered into this ____ day of _______,
199___, by and between HARVEST GOLD CORPORATION, a Colorado corporation, whose
address is 1546 Cole Boulevard, Suite 70, Golden, Colorado 80401 ("HARVEST"),
and ATLAS CORPORATION, a Delaware corporation, whose address is 370 Seventeenth
Street, Suite 3150, Denver, Colorado 80202 ("ATLAS").
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of
which are hereby acknowledged, HARVEST hereby transfers, sets over and assigns
to ATLAS, its successors and assigns, all of HARVEST's right, title and interest
in and to the following agreements (collectively, the "Agreements"):
1. Option to Purchase dated January 31, 1994 among Columbia Resources,
Inc. ("CRI") and John C.S. Breitner, as Trustee of the Hermine
Summer Trust, and Glenna R. Ellsworth, as Personal Representative
of the Estate of Mary E. Reed, which CRI assigned to HARVEST by
Assignment dated January 25, 1994;
2. Mining Lease with Option to Purchase dated January 31, 1994, among
CRI and CORFORD, INC., a Texas corporation, Vicky Carol Klekar,
individually, and as Trustee of the Carl Thetford Family Trust,
Chris Alan Thetford and Clayton Rummelt, which CRI assigned to
HARVEST by Assignment dated January 25, 1994;
3. Option to Purchase Agreement dated September 17, 1993 between CRI
and the Estate of Helen S. Jessup, which CRI assigned to HARVEST by
Assignment dated January 25, 1994;
4. Lease and Option Agreement dated August 16, 1995, among Seven
Enterprises, Inc., a Missouri corporation, L. A. Galyen and Frances
Galyen, husband and wife, and HARVEST.
A-3
<PAGE>
The Agreements cover certain unpatented mining claims, patented mining claims
and fee lands situated in Cochise County, Arizona, as more particularly
described in Exhibit A attached hereto and incorporated herein by reference.
ATLAS hereby agrees to be bound by all of the terms and conditions of the
Agreements.
IN WITNESS WHEREOF, the parties have executed this Assignment
effective the date first written above.
HARVEST GOLD CORPORATION, a
Colorado corporation
By:
______________________
_______________ (name)
______________ (title)
ATLAS CORPORATION, a Delaware
corporation
By:
______________________
_______________ (name)
______________ (title)
A-4
<PAGE>
[THIS PAGE LEFT INTENTIONALLY BLANK]
A-5
<PAGE>
EXHIBIT F
BILL OF SALE
------------
THIS BILL OF SALE is made and entered into this _____ day of _______,
199_, from Harvest Gold Corporation, a Colorado corporation whose address is
1546 Cole Boulevard, Suite 70, Golden Colorado 80402 ("Harvest"), to Atlas
Corporation, a Delaware corporation whose address is 370 Seventeenth Street,
Suite 3150, Denver, Colorado 80202 ("Atlas").
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Harvest does hereby grant, sell, transfer and
deliver to Atlas, its successors and assigns forever, all right, title and
interest of Harvest in and to the personal property listed on Exhibit A attached
hereto and incorporated herein by reference (the "Personalty").
Harvest disclaims any and all warranties, express or implied,
including, without limitation, warranties of title, merchantability or fitness
of purpose with respect to the Personalty transferred hereby.
IN WITNESS WHEREOF, Harvest has executed this Bill of Sale as of the date first
set forth above.
HARVEST GOLD CORPORATION, a
Colorado corporation
By:
______________________
_______________ (name)
______________ (title)
STATE OF ______________ )
) ss.
COUNTY OF _____________ )
<PAGE>
This instrument was acknowledged before me on __________, 19___, by
_______________ as ____________ of Harvest Gold Corporation, a Colorado
corporation.
Witness my hand and official seal.
My commission expires: _________________________
EXHIBIT G
QUITCLAIM DEED (WATER RIGHTS)
-----------------------------
THIS QUITCLAIM DEED is made and entered into this _____ day of _______,
199_, from Harvest Gold Corporation, a Colorado corporation whose address is
1546 Cole Boulevard, Suite 70, Golden, Colorado 80401 ("Harvest"), to Atlas
Corporation, a Delaware corporation whose address is 370 Seventeenth Street,
Suite 3150, Denver, Colorado 80202 ('Atlas").
For good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Harvest hereby quitclaims sells and conveys unto Atlas,
its successors and assigns forever, all of Harvest's right, title and interest
in and to those waters and water rights listed on Exhibit A attached hereto and
incorporated herein by this reference (the "Water Rights".
IN WITNESS WHEREOF, Harvest has executed this Quitclaim Deed as of the date
first written above.
HARVEST GOLD CORPORATION, a
Colorado corporation
By:
______________________
_______________ (name)
______________ (title)
STATE OF ______________ )
) ss.
COUNTY OF _____________ )
<PAGE>
This instrument was acknowledged before me on __________, 19___, by
_______________ as ____________ of Harvest Gold Corporation, a Colorado
corporation.
Witness my hand and official seal.
My commission expires: _________________________
<PAGE>
EXHIBIT H
CONTRACTS
---------
<PAGE>
PURCHASE AND SALE AGREEMENT
BETWEEN
INDEPENDENCE MINING COMPANY INC.
AND
ATLAS CORPORATION
October 25, 1995
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C> <C>
ARTICLE I PURCHASE OF INDEPENDENCE'S INTEREST IN THE PROPERTIES................... 1
1.1 Transfer of Interests to Atlas.................................. 1
1.2 Purchase Price.................................................. 1
ARTICLE II CLOSING................................................................. 2
2.1 Closing......................................................... 2
2.2 Deliveries at Closing........................................... 2
ARTICLE III OTHER AGREEMENTS OF INDEPENDENCE AND ATLAS.............................. 3
3.1 Information and Data............................................ 3
3.2 Transfer of Permits............................................. 4
3.3 Assumption of Obligations....................................... 4
3.4 NYSE Listing Requirements....................................... 4
3.5 Reasonable Best Efforts; Further Assurances..................... 4
3.6 Access to Records Before Closing................................ 4
3.7 Sales, Use, Transfer and Other Taxes............................ 4
3.8 BLM Exchange Property........................................... 5
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF INDEPENDENCE.......................... 6
4.1 Representations and Warranties of Independence.................. 6
(a) Organization and Standing................................ 6
(b) Qualification............................................ 6
(c) Corporate Power.......................................... 6
(d) Authorization............................................ 6
(e) Royalties................................................ 7
(f) Permits and Licenses..................................... 7
(g) Title to Claims.......................................... 7
(h) Water Rights............................................. 9
(i) Environmental Compliance................................. 9
(j) Material Contracts and Commitments....................... 9
(k) Legality.................................................10
(l) Litigation and Claims....................................10
(m) Consents.................................................10
(n) Taxes....................................................10
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C> <C>
(o) Brokerage or Finder's Fee................................10
(p) Investment Intent........................................10
(q) Private Placement Representations........................11
(r) Disclaimer of Warranties.................................11
ARTICLE V REPRESENTATIONS AND WARRANTIES OF ATLAS.................................11
5.1 Representations and Warranties of Atlas.........................11
(a) Organization and Standing................................11
(b) Qualification............................................11
(c) Corporate Power..........................................12
(d) Authorization............................................12
(e) Brokerage or Finder's Fee................................12
(f) The Shares...............................................12
(g) Financial Statements and Reports.........................13
(h) Absence of Certain Changes...............................13
(i) Disclaimer of Warranties.................................14
(j) Investigation............................................14
ARTICLE VI INDEMNIFICATION.........................................................14
6.1 Indemnification of Independence.................................14
6.2 Indemnification of Atlas........................................15
6.3 Notification; Defense of Third-Party Claims.....................15
6.4 Notice; Defense of Non-Third-Party Claims.......................16
6.5 Threshold.......................................................16
6.6 Affiliate Indemnitees...........................................16
6.7 Reliance Upon Representations and Warranties....................16
ARTICLE VII CONDITIONS PRECEDENT TO CLOSING.........................................17
7.1 Mutual Conditions...............................................17
(a) Litigation...............................................17
7.2 Conditions to Independence's Obligations........................17
(a) Representations and Warranties True......................17
(b) No Material Event........................................17
(c) Consents and Waivers.....................................17
(d) Performance of Obligations...............................17
7.3 Conditions to Atlas' Obligations................................17
(a) Representations and Warranties True......................18
(b) No Material Event........................................18
(c) Consents and Waivers.....................................18
(d) Performance of Obligations...............................18
</TABLE>
-ii-
<PAGE>
<TABLE>
<S> <C> <C>
ARTICLE VIII [intentionally omitted].................................................18
ARTICLE IX SURVIVAL OF REPRESENTATIONS AND WARRANTIES..............................18
9.1 Survival........................................................18
ARTICLE X GENERAL PROVISIONS......................................................18
10.1 Notices.........................................................18
10.2 Governing Law...................................................19
10.3 Parties in Interest; Assignment.................................20
10.4 Entire Agreement................................................20
10.5 Modifications; Waiver...........................................20
10.6 Severability....................................................20
10.7 Remedies Cumulative.............................................20
10.8 Attorneys' Fees.................................................20
10.9 Counterparts....................................................20
10.10 Further Assurances..............................................20
10.11 Headings........................................................21
10.12 Public Announcements............................................21
10.13 Confidentiality.................................................21
10.14 Certain Definitions.............................................21
10.15 Inconsistencies with Exhibits...................................23
</TABLE>
-iii-
<PAGE>
SCHEDULES AND EXHIBITS
SCHEDULE 4.1(e) ROYALTIES
SCHEDULE 4.1(f) PERMITS AND LICENSES
SCHEDULE 4.1(h) WATER RIGHTS
SCHEDULE 5.1(f) ATLAS CONVERTIBLE SECURITIES AND REGISTRATION RIGHTS
SCHEDULE 5.1(h) ATLAS ADVERSE CHANGES
EXHIBIT A-1 DESCRIPTION OF ACQUIRED CLAIMS, LOCATED CLAIMS AND LEASED
CLAIMS
EXHIBIT A-2 EXCHANGE PROPERTY
EXHIBIT B-1 REAL PROPERTY QUITCLAIM DEED
EXHIBIT B-2 ASSIGNMENT OF LEASES
EXHIBIT B-3 BILL OF SALE
EXHIBIT B-4 WATER RIGHTS QUITCLAIM DEED
EXHIBIT B-5 ASSUMPTION AGREEMENT
EXHIBIT C FORM OF OFFICER'S CERTIFICATE - INDEPENDENCE
EXHIBIT D REGISTRATION RIGHTS AGREEMENT
EXHIBIT E FORM OF OFFICER'S CERTIFICATE - ATLAS
EXHIBIT F OPINIONS OF COUDERT BROTHERS AND MORRISON & FOERSTER
-iv-
<PAGE>
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT ("Agreement") is made and entered
into this twenty-fifth day of October, 1995, between INDEPENDENCE MINING COMPANY
INC., a Delaware corporation, ("Independence"), whose address is 5251 DTC
Parkway, Suite 700, Englewood, Colorado 80111 and ATLAS CORPORATION, a Delaware
corporation ("Atlas"), whose address is Suite 3150, 370 Seventeenth Street,
Denver, Colorado 80202.
RECITALS
--------
WHEREAS, Independence is the owner of the Doby George and Maggie
Summit properties located in Elko County, Nevada, as more particularly described
in Exhibit A attached hereto and incorporated herein by reference; and
WHEREAS, Independence desires to sell and Atlas desires to purchase
all of Independence's right, title and interest in and to said properties,
including all mines and associated facilities, permits, water rights, and
rights-of-way owned or held by Independence in connection therewith (the
"Properties");
NOW, THEREFORE, in consideration of the mutual promises herein, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
PURCHASE OF INDEPENDENCE'S INTEREST IN THE PROPERTIES
-----------------------------------------------------
Transfer of Interests to Atlas. On the terms and subject to the
------------------------------
conditions set forth herein, Independence agrees to deliver to Atlas at the
closing provided for in Article II hereof (the "Closing") (a) a Real Property
Quitclaim Deed, (b) an Assignment of Leases, (c) a Bill of Sale and (d) a Water
Rights Quitclaim Deed collectively conveying the Properties from Independence to
Atlas, in the forms attached hereto as Exhibit B, and certain other instruments
and documents as are set forth in Section 2.2(a).
Purchase Price. The purchase price (the "Purchase Price") to be
--------------
paid to Independence by Atlas pursuant to this Agreement is 1,400,000 shares
(the "Shares") of Atlas common stock, par value $1.00 per share (the "Common
Stock"), and Four Hundred Thousand and No/100 Dollars ($400,000.00). On the
terms and subject to the conditions set
<PAGE>
forth herein, at the Closing Atlas agrees to pay the Purchase Price to
Independence and deliver certain other documents, all as described in Section
2.2(b).
ARTICLE II
CLOSING
-------
Closing. Upon the terms and subject to the conditions set forth
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in this Agreement, the Closing of the transactions provided for in Article I
hereof will take place at the offices of Davis, Graham & Stubbs, L.L.C., in
Denver, Colorado, on October 25, 1995, or such other date as mutually agreed by
the parties (the "Closing Date").
Deliveries at Closing. At the Closing:
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Independence will deliver to Atlas the following:
An executed and acknowledged Real Property Quitclaim
Deed covering the Acquired Claims and the Located Claims (as set forth in parts
(ii) and (iii) of Exhibit A-1) in the form attached hereto as Exhibit B-1;
An executed and acknowledged Assignment of Leases
covering the Leased Claims (as set forth in part (i) of Exhibit A-1) in the form
attached hereto as Exhibit B-2;
An executed and acknowledged Bill of Sale covering any
personal property associated with the Acquired Claims, the Located Claims or the
Leased Claims in the form attached hereto as Exhibit B-3;
An executed and acknowledged Water Rights Quitclaim
Deed covering the Water Rights in the form attached hereto as Exhibit B-4;
Certificates of good standing for Independence from the
Secretary of State of the States of Delaware and Nevada; and
An Officer's Certificate in the form attached hereto as
Exhibit C.
Atlas will deliver to Independence the following:
A certificate or certificates representing the Shares,
registered in Independence's name and bearing the following legend:
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<PAGE>
The shares represented by this Certificate have not
been registered under the Securities Act of 1933, as amended (the
"Act"), and are "restricted securities" as that term is defined in
Rule 144 under the Act and may not be sold, transferred, assigned,
pledged or hypothecated except pursuant to an effective registration
statement or an opinion of counsel reasonably satisfactory to Atlas
Corporation to the effect that registration under the Act is not
required. The shares are being acquired solely for the purpose of
investment, and not with a view to the distribution or sale of any
part thereof. The shares have been acquired subject to the terms and
conditions of that certain Purchase and Sale Agreement between
Independence Mining Company Inc. and Atlas Corporation dated October
25, 1995.
$400,000.00 in immediately available funds, plus an
amount of money (in immediately available funds) equal to the federal and state
claim holding and filing fees required to maintain the Properties in good
standing, prorated on a daily basis to the date hereof, for the assessment year
commencing September 1, 1995;
If the Closing occurs on or after November 4, 1995,
$30,000.00 in immediately available funds in respect of Independence's payment
to Thomas E. and Frances Bilbao under a certain Mining Lease dated November 4,
1983 as more fully described in Exhibit A-1;
An assumption of obligations in the form of the
Assumption Agreement attached hereto as Exhibit B-5 as required by Section 3.3;
A registration rights agreement pertaining to the
Shares in the form of Exhibit D;
A certificate of good standing for Atlas from the
Secretary of State of the State of Delaware;
An Officer's Certificate in the form attached hereto as
Exhibit E; and
The opinions of Coudert Brothers and Morrison &
Foerster in the form of Exhibit F hereto.
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ARTICLE III
OTHER AGREEMENTS OF INDEPENDENCE AND ATLAS
------------------------------------------
Information and Data. Upon Closing, Independence shall deliver
--------------------
to Atlas originals and copies of all records, data and information in its
possession relating to the Properties, including, without limitation, title and
environmental data, and all maps, surveys, technical reports, drill logs, and
all metallurgical, geological, geophysical, geochemical, permitting and other
technical data pertaining to the Properties in its possession; provided,
however, that Independence may retain copies of any or all of such data; and
provided, further, that if any such data includes information other than with
respect to the Properties the data may be excerpted so as to provide only the
information with respect to the Properties.
Transfer of Permits. For a period of sixty days following
-------------------
Closing, Independence shall cooperate with Atlas to achieve, to the extent
reasonably possible, the assignment from Independence to Atlas of any existing
permits with respect to the Properties.
Assumption of Obligations. Upon Closing, Atlas shall assume
-------------------------
Independence's obligations in connection with the Properties as set forth in the
Assumption Agreement, including obligations arising under any permits issued by
any federal, state or local authority, and reclamation obligations, and Atlas
will execute an assumption of such obligations in the form of Exhibit B-5.
NYSE Listing Requirements. At the time of Closing, Atlas shall
-------------------------
have complied with the requirements of the New York Stock Exchange regarding the
issuance by Atlas of the Shares, and the Shares shall have been accepted for
listing on such exchange.
Reasonable Best Efforts; Further Assurances. Subject to the
-------------------------------------------
terms and conditions herein provided, each of the parties hereto agrees to use
its reasonable best efforts to take, or cause to be taken, all action, and to
do, or cause to be done, all things reasonably necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement. Atlas and Independence will each
use their respective reasonable best efforts (without incurring any
extraordinary expense or payment to any third party in excess of $2,500, or
instituting litigation) to obtain consents of all third parties and governmental
bodies necessary to the consummation of the transactions contemplated by this
Agreement; provided, however, that the foregoing expense limitation shall not
apply to Atlas' costs in acquiring any permits from Independence or to any
action necessary or advisable in connection with the issuance, listing or
registration of the Shares. As used herein, "Further Assurances" shall mean any
deeds, assignments, consents, powers of attorney or other documents which may be
reasonably required to transfer ownership of the Properties to Atlas, to confirm
such ownership or facilitate effective recordation thereof, or to put Atlas in
actual possession and operating control of the Properties.
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<PAGE>
Access to Records Before Closing. Prior to the Closing Date,
--------------------------------
each of the parties agrees that it will give, or cause to be given, to the other
party and its representatives, during normal business hours upon reasonable
notice and at the other party's expense, full and unrestricted access to its
personnel, officers, agents, employees, assets, properties, titles, contracts,
books, records, files and documents with respect to, in Independence's case, the
Properties, and in Atlas' case, Atlas (including financial, tax, budget,
projections, auditors' work papers and other information) and to such party's
personnel, as is reasonably necessary to allow such other party to obtain such
information as it shall desire, and to make copies of all such materials. All
materials copied pursuant hereto shall be maintained in confidence and all such
copies shall be returned to the party providing such materials if the
transactions contemplated hereunder fail to occur.
Sales, Use, Transfer and Other Taxes. Any sales and use taxes
------------------------------------
and real property transfer taxes imposed on the transfer of the Properties by
Independence to Atlas shall be paid by Atlas. The parties shall cooperate in
obtaining any available exemptions from sales, use and transfer taxes. Prior to
Closing, Independence shall pay all expenses owed by it ordinarily paid in the
normal course of owning the Properties. All claim transfer fees assessed by the
United States, Department of the Interior, Bureau of Land Management (the
"BLM"), and all expenses of recording instruments of conveyance covering the
Properties shall be paid by Atlas.
BLM Exchange Property. Independence has entered into an exchange
---------------------
agreement with the BLM to obtain fee title to the property on which certain
unpatented mining claims held by Independence are located (the "Exchange
Property"). The Exchange Property is more particularly described in Exhibit A-
2.
Certain unpatented mining claims held by Independence and comprising a
portion of the Properties are located on and, in some instances, extend across
the exterior boundaries of the Exchange Property (the "Exchange Claims"). The
Exchange Claims are more particularly described in Exhibit A-2.
The conveyance of fee title to the Exchange Property to Atlas is not a
condition to Closing and the parties understand and agree that the consummation
of the contemplated exchange with the BLM may occur after the Closing or not at
all. Independence is in no manner obligated by this Agreement or otherwise to
complete the exchange and convey fee title to the Exchange Property to Atlas.
However, if Independence completes the contemplated exchange with the BLM and is
conveyed fee title to the Exchange Property, for no additional consideration,
Independence shall convey to Atlas all of its right, title and interest in and
to the Exchange Property and the fractions of the Exchange Claims that remain on
the public lands adjacent to the Exchange Property without any representations
and warranties of title, whatsoever.
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<PAGE>
If Independence does not complete the contemplated exchange with the
BLM and/or is not conveyed fee title to the Exchange Property, for any reason,
including, without limitation, a discretionary decision by Independence not to
complete the exchange, for no additional consideration, Independence shall
convey to Atlas all of its right, title and interest in and to the Exchange
Claims. Real property transfer taxes associated with the foregoing conveyance
to Atlas shall be paid by Atlas; all costs and expenses to complete the
contemplated exchange with the BLM shall be paid by Independence.
Notwithstanding anything in this Agreement that may appear to be to the
contrary, this Section 3.8 shall survive Closing until the conveyance to Atlas
of the Exchange Property and the fractions of the Exchange Claims or the
Exchange Claims, whichever is applicable. Unless otherwise agreed by
Independence and Atlas, if the contemplated exchange with the BLM is not
completed on or before September 30, 1998, Independence shall convey to Atlas
the Exchange Claims on or before October 31, 1998. Such conveyance will be made
subject to the same representations set forth in Section 4.1(g)(ii) hereof,
which representations shall survive for a period of 45 days from the date of
conveyance.
From the Closing through conveyance to Atlas of the Exchange Property
or the Exchange Claims, whichever is applicable, Independence grants to Atlas
non-exclusive access to and the non-exclusive right to use and occupy the
surface and subsurface of the Exchange Claims for all lawful and reasonable
purposes, including, without limitation, properly permitted exploration,
development, mining, mineral processing or related activities. During the
period from Closing through the conveyance to Atlas of the Exchange Property or
the Exchange Claims, Atlas agrees to pay all claim rental and maintenance fees
required to be paid under federal law in lieu of performance of assessment work
in order to maintain the Exchange Claims and to make such filings and record
such documents as are required to maintain those claims as valid (including,
without limitation, timely and properly making filings required under FLPMA, as
defined below). Atlas agrees to indemnify, defend and hold Independence
harmless from and against any and all Losses, as defined in Section 6.1 below,
incurred or sustained by Independence in or as a result of or in any way related
to Atlas' activities on, in or in the vicinity of the Exchange Claims.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
------------------------------
OF INDEPENDENCE
---------------
Representations and Warranties of Independence. Independence
----------------------------------------------
hereby represents and warrants to Atlas as of the date hereof as follows, and
this Agreement is made in reliance on the following representations and
warranties, each of which is deemed to be a separate representation and
warranty:
Organization and Standing. Independence is a corporation
-------------------------
duly incorporated, validly existing, and in good standing under the laws of the
State of Delaware.
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<PAGE>
Qualification. Independence is duly qualified to do
-------------
business in the State of Nevada and each additional jurisdiction in which the
nature of property owned or leased or the nature of the business conducted by it
requires such qualification, except where the failure to be so qualified would
not have a material adverse effect on the business, operation, or financial
condition of Independence.
Corporate Power. Independence has the requisite corporate
---------------
power and authority (i) to enter into this Agreement and all other agreements
contemplated hereby, and (ii) to carry out and perform its obligations under the
terms and provisions of this Agreement and all agreements contemplated hereby.
Authorization. All corporate action on the part of
-------------
Independence and its officers, directors and shareholders necessary for the
execution, delivery, and performance of this Agreement and all other agreements
of Independence contemplated hereby, has been taken. This Agreement and all
agreements and instruments contemplated hereby to which Independence is a party,
when executed and delivered by the parties thereto, will be legal, valid, and
binding obligations of Independence enforceable against Independence in
accordance with their respective terms. The execution, delivery and performance
of this Agreement by Independence will not violate any provision of law; any
order of any court or other agency of government; or any provision of any
indenture, agreement or other instrument to which Independence is a party or by
which its properties or assets are bound; or 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, in each case except for such
matters as would not have a material adverse effect on the Properties taken as a
whole. There is no law, rule or regulation, nor is there any judgment, decree or
order of any court or governmental authority binding on Independence which would
be contravened by the execution, delivery, performance or enforcement of this
Agreement or any instrument required hereunder, except for such matters as would
not have a material adverse effect on the Properties taken as a whole.
Notwithstanding the foregoing, no representation is made as to (i) the remedy of
specific performance or other equitable remedies for the enforcement of this
Agreement or any other agreement contemplated hereby or (ii) rights to indemnity
under this Agreement for securities law liability. Additionally, this
representation is limited by applicable bankruptcy, insolvency, moratorium and
other similar laws affecting generally the rights of creditors and secured
parties.
Royalties. Except as set forth on Schedule 4.1(e), to
---------
Independence's Knowledge there are no royalties or other burdens on production
affecting the Properties.
Permits and Licenses. To Independence's Knowledge,
--------------------
Independence has obtained all permits, licenses, approvals, authorizations and
qualifications from all federal, state and local authorities required for it to
carry on its operations at or on the
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<PAGE>
Properties, except for such matters as would not have a material adverse effect
on the Properties taken as a whole. A list of all currently active material
permits, licenses, consents, approvals, authorizations, and qualifications
obtained by Independence in connection with its operations on the Properties as
of the date of this Agreement, true and correct copies of each of which have
been made available to Atlas, is set forth on Schedule 4.1(f). To Independence's
Knowledge, its ownership and operation of the Properties 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 Properties, 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.
Title to Claims. Except as disclosed in Exhibit A, to
---------------
Independence's Knowledge:
Leased Claims. Each of the leases set forth in Exhibit A-1
-------------
(the "Leases") is in full force and effect in accordance with its terms, free
from material default by Independence; and Independence has received no written
or other notice from any lessor under any Lease asserting a default by
Independence in the performance of the terms of any Lease. As to the Leased
Claims, subject to the paramount title of the United States, to Independence's
Knowledge: (A) Independence is in exclusive possession thereof, free and clear
of all liens, encumbrances or other burdens on production (except as set forth
on Schedule 4.1(e)) or claims of third parties arising by, through or under
Independence; (B) since Independence acquired a leasehold interest in the
unpatented Leased 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 those Leased Claims and affidavits evidencing such work were timely
recorded; (C) since Independence acquired a leasehold interest in the unpatented
Leased 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
those Leased 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 Independence acquired a
leasehold interest in the unpatented Leased Claims, all filings with the BLM
with respect to those Leased Claims which are required under the Federal Land
Policy and Management Act of 1976, as amended ("FLPMA") have been timely and
properly made, and (E) there are no actions or administrative or other
proceedings pending or threatened against or affecting the Leased Claims.
Nothing herein shall be deemed a representation that any of the unpatented
Leased Claims contains a discovery of valuable minerals.
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<PAGE>
Acquired Claims. As to the Acquired Claims, subject to the
---------------
paramount title of the United States, to Independence's Knowledge: (A)
Independence is in exclusive possession thereof; free and clear of all liens,
encumbrances or other burdens on production (except as set forth on Schedule
4.1(e)) or claims of third parties arising by, through or under Independence;
(B) since Independence acquired the Acquired 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 Acquired Claims and
affidavits evidencing such work were timely recorded; (C) since Independence
acquired the Acquired 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 Acquired 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 Independence acquired the
Acquired Claims, all filings with the BLM with respect to the Acquired Claims
which are required under the FLPMA have been timely and properly made, and (E)
there are no actions or administrative or other proceedings pending or
threatened against or affecting the Acquired Claims. Nothing herein shall be
deemed a representation that any of the Acquired Claims contains a discovery of
valuable minerals.
Located Claims. As to the Located Claims, to Independence's
--------------
Knowledge: (A) Independence is in exclusive possession thereof; free and clear
of all liens, encumbrances or other burdens on production (except as set forth
on Schedule 4.1(e)) or claims of third parties arising by, through or under
Independence; (B) the Located Claims were located, staked, filed and recorded on
available public domain land in compliance with all applicable state and federal
laws and regulations; (C) 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 Located Claims and affidavits evidencing such work were timely
recorded; (D) 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 Located 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; (E) all filings with the BLM with respect
to the Located Claims which are required under the FLPMA have been timely and
properly made, and (F) there are no actions or administrative or other
proceedings pending or to the knowledge of Independence threatened against or
affecting the Located Claims. Nothing herein shall be deemed a representation
that any of the Located Claims contains a discovery of valuable minerals.
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<PAGE>
Claim Remonumentation. With respect to each of the
---------------------
unpatented mining claims comprising a portion of the Properties, Independence
represents that they have been remonumented as necessary, and that evidence of
such remonumentation has been timely and properly recorded, all in compliance
with the provisions of N.R.S. (S) 517.030.
Water Rights. Set forth on Schedule 4.1(h) is a list that,
------------
to Independence's Knowledge, correctly and completely describes all water
rights, whether surface, underground, direct flow, reservoir, storage, or
otherwise held or utilized by Independence in connection with its operations at
the Properties.
Environmental Compliance. To the Knowledge of Independence,
------------------------
there are no conditions or activities at or on the Properties 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 Properties taken
as a whole. To the Knowledge of Independence, there have been issued under
applicable Environmental Laws no notices of violation or consent orders to which
Independence (with respect to its operations at the Properties) or the
Properties are subject, except for such matters as would not have a material
adverse effect on the Properties taken as a whole. There are no pending or, to
the Knowledge of Independence, threatened proceedings by or before any court or
other governmental authority against Independence with respect to its operation
or ownership of the Properties 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 Properties taken as a whole.
Material Contracts and Commitments. Independence has
----------------------------------
performed all material obligations required to be performed by it under all
contracts and commitments affecting the Properties to which it is a party, a
complete list of which is set forth on Exhibit A-1, Schedule 4.1(e), Schedule
4.1(f) and Schedule 4.1(h), and true and correct copies of each of which have
been made available to Atlas, 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, agreement, mortgage, indenture, loan agreement, lease, license,
judgment, injunction, decree, order, determination, award, restriction, or other
instrument to which it is a party in connection with the Properties, except for
such matters as would not have a material adverse effect on the Properties taken
as a whole.
Legality. To the Knowledge of Independence, Independence's
--------
operations on the Properties 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 regulations, except for such violations
as would not materially adversely affect the Properties.
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<PAGE>
Litigation and Claims. To the Knowledge of Independence,
---------------------
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
Properties, 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 Independence, Independence 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
Properties.
Consents. Independence has obtained all consents,
--------
approvals, authorizations, declarations, or filings required by any federal,
state, local, or other authority, or any lenders, lessors, creditors, and other
third parties in connection with the valid execution, delivery, and performance
by it of this Agreement and the consummation by it of the transactions
contemplated hereby, except such consents which are customarily obtained
following an assignment or conveyance of mining properties as contemplated
hereby.
Taxes. Independence, so long as it has been in possession
-----
of the Properties, 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 Properties 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 Properties taken as a whole.
Brokerage or Finder's Fee. All negotiations relative to
-------------------------
this Agreement and the transactions contemplated hereby have been carried on by
Independence in such manner as not to give rise to any valid claim against Atlas
for a brokerage commission, finder's fee, or other fee or commission arising by
reason of the transactions contemplated by this Agreement.
Investment Intent. Independence is acquiring the Shares
-----------------
solely for the purpose of investment, and not with a view to the distribution or
sale of any part thereof. Independence acknowledges that the Shares have not
been registered under the Securities Act or any state securities law, and are
being issued and sold in reliance on exemptions from such registration
requirements that are available only if the Shares are not being offered to the
public and are being acquired for investment and not with a present view to
their distribution or sale.
Private Placement Representations.
---------------------------------
(A) Independence can bear the economic risk of losing its
entire investment in the Shares and can afford to hold the Shares for an
indefinite period of time; and
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<PAGE>
Independence is an Accredited Investor as
defined in Rule 501(a) of Regulation D of the Securities Act.
Independence has received, read and reviewed and is familiar
with Atlas's Form 10-K for the year ended June 30, 1995, and its Annual Report
to Stockholders for 1995 and its Form 8-K dated October 4, 1995 (collectively,
the "Reports"), and confirms that all requested documents, records and books
pertaining to its investment in Atlas have been made available or delivered to
it.
Independence has had the opportunity to ask questions of,
and receive answers from, officers of Atlas concerning its investment in the
Shares and additional information necessary to verify the accuracy of the
information contained in the Reports.
Disclaimer of Warranties. EXCEPT AS PROVIDED IN THIS
------------------------
AGREEMENT, INDEPENDENCE MAKES NO WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO
THE PROPERTIES AS TO TITLE, OWNERSHIP, USE, POSSESSION, MERCHANTABILITY, FITNESS
FOR A PARTICULAR PURPOSE, MINERAL QUANTITY, MINERAL RESERVES, MINERAL RESOURCES,
ORE GRADES, RECOVERABILITY, VALUE, MINEABILITY, CONDITION, OPERATION, DESIGN,
CAPACITY OR OTHERWISE.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ATLAS
---------------------------------------
Representations and Warranties of Atlas. Atlas hereby represents
---------------------------------------
and warrants to Independence as of the date hereof as follows, and this
Agreement is made in reliance on the following representations and warranties,
each of which is deemed to be a separate representation and warranty:
Organization and Standing. Atlas is a corporation duly
-------------------------
incorporated, validly existing, and in good standing under the laws of the State
of Delaware.
Qualification. Atlas is duly qualified to do business in
-------------
each jurisdiction in which the nature of property owned or leased or the nature
of the business conducted by it requires such qualification, except where the
failure to be so qualified would not have a material adverse effect on the
business, operation, or financial condition of Atlas.
Corporate Power. Atlas has the requisite corporate power
---------------
and authority (i) to enter into this Agreement and all other agreements
contemplated hereby, and
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<PAGE>
(ii) to carry out and perform its obligations under the terms and provisions of
this Agreement and all agreements contemplated hereby.
Authorization. The requisite corporate action on the part
-------------
of Atlas necessary for the execution, delivery, and performance of this
Agreement and all other agreements of Atlas contemplated hereby has been taken.
This Agreement and all agreements and instruments contemplated hereby to which
Atlas is a party, when executed and delivered by the parties thereto, will be
the legal, valid, and binding obligations of Atlas enforceable against Atlas in
accordance with their respective terms. The execution, delivery, and performance
of this Agreement by Atlas will not violate any provision of law; any order of
any court or other agency of government; or any provision of any indenture,
agreement or other instrument to which Atlas is a party or by which its
properties or assets are bound; or 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. There is no law, rule or regulation,
nor is there any judgment, decree or order of any court or governmental
authority binding on Atlas which would be contravened by the execution, delivery
performance or enforcement of this Agreement or any instrument required
hereunder, except for such matters as would not, individually or in the
aggregate, have a material adverse effect on the business, assets, liabilities
(actual or contingent), results of operations, prospects, financial or other
condition or operations of Atlas. Notwithstanding the foregoing, no
representation is made as to (i) the remedy of specific performance or other
equitable remedies for the enforcement of this Agreement or any other agreement
contemplated hereby or (ii) rights to indemnity under this Agreement for
securities law liability. Additionally, this representation is limited by
applicable bankruptcy, insolvency, moratorium and other similar laws affecting
generally the rights of creditors and secured parties.
Brokerage or Finder's Fee. All negotiations relative to
-------------------------
this Agreement and the transactions contemplated hereby have been carried on by
Atlas in such manner as not to give rise to any valid claim against Independence
for a brokerage commission, finder's fee or other fee or commission arising by
reason of the transactions contemplated by this Agreement.
The Shares. On the date of this Agreement, the authorized
----------
capital stock of Atlas consists of 50,000,000 shares of Common Stock, 18,634,743
shares of which are issued and outstanding, none of which are held in Atlas's
treasury, and 1,000,000 shares of preferred stock, par value $1.00 per share.
The preferred stock is issuable in series, with designations, rights and
preferences to be fixed by Atlas' Board of Directors. The Board of Directors has
established a series of 150,000 shares of Series Preferred Stock designates
Series A Junior Participating Preferred Stock, no shares of which have been
issued. Except as set forth on Schedule 5.1(f), Atlas does not have outstanding
any stock or securities convertible or exchangeable for any shares of its
capital stock. The Shares have been duly authorized for issuance and reserved
therefor and, when issued, all of the Shares shall be
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<PAGE>
validly issued, fully paid and nonassessable shares of capital stock of Atlas,
free and clear of all liens, charges and encumbrances. There does not exist any
preemptive right in favor of any person with respect to the Shares. Except as
set forth on Schedule 5.1(f), there does not exist any agreement by Atlas to
register any stock or securities of Atlas for sale under the Securities Act.
Financial Statements and Reports.
--------------------------------
Since July 1, 1994, and through the Closing Date, Atlas has
filed all required forms, reports and documents with the U.S. Securities and
Exchange Commission (the "SEC") required to be filed by it pursuant to the
federal securities laws and the SEC rules and regulations thereunder, all of
which have complied as of their respective filing dates and, if applicable,
effective dates in all material respects with all applicable requirements of the
Securities Act of 1933, as amended (the "Securities Act") and the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules promulgated
thereunder. None of such forms, reports or documents, including, without
limitation, any financial statements or schedules included therein, at the time
filed or at the time effective, contained any untrue statement of a material
fact or omitted 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.
As of the Closing Date, the audited consolidated balance
sheets and the related consolidated statements of net earnings and of changes in
financial position or cash flows, as the case may be (including the related
notes thereto), of Atlas included in Atlas's Annual Reports on Form 10-K for the
fiscal years or periods ended June 30, 1995 and 1994, respectively, present
fairly the consolidated financial position of Atlas as of their respective
dates, and the results of consolidated operations and changes in consolidated
financial position or cash flows, as the case may be, for the periods presented
therein, all in conformity with generally accepted accounting principles
consistently applied, except as otherwise noted therein.
As of the Closing Date, except as and to the extent set
forth on the consolidated balance sheet of Atlas as at June 30, 1995, including
the notes thereto, neither Atlas nor any of its subsidiaries has any liabilities
or obligations of any nature (whether accrued, absolute, contingent or
otherwise) which would be required to be reflected on a balance sheet, or in the
notes thereto, prepared in accordance with generally accepted accounting
principles, except for liabilities or obligations incurred in the ordinary
course of business since June 30, 1995 which would not, individually or in the
aggregate, have a material adverse effect on the business, assets, liabilities
(actual or contingent), results of operations, prospects, financial or other
condition or operations of Atlas.
-14-
<PAGE>
Absence of Certain Changes. Except as set forth on Section
--------------------------
5.1(h), since June 30, 1995 and through the Closing Date, there has not been:
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 Atlas;
any change in Atlas's authorized or actual equity
capitalization;
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 Atlas, whether or not insured;
any incurrence 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;
entry into, or agreement or commitment to enter into, any
agreement, commitment or transaction (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;
acquisition or disposition of, or entry into any agreement
with respect to the acquisition or disposition of a significant amount of
assets; or
any agreement with respect to any of the foregoing.
Disclaimer of Warranties. EXCEPT AS PROVIDED IN THIS
------------------------
AGREEMENT, ATLAS MAKES NO WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE
SHARES.
Investigation. Atlas has conducted its own investigation
-------------
and made its own evaluation of the Properties, and is relying solely on such
investigation and the specific representations of Independence in Article IV
hereof in determining to proceed with the transaction contemplated by this
Agreement. The scope of Atlas' investigation was determined by Atlas in its sole
discretion. From its business, Atlas is familiar with properties and property
acquisitions similar to the Properties and the transactions contemplated hereby.
-15-
<PAGE>
ARTICLE VI
INDEMNIFICATION
---------------
Indemnification of Independence. Except as provided in Section
-------------------------------
6.3, Atlas hereby agrees to indemnify, defend and hold Independence, 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
Independence in or as a result of or arising out of any breach or inaccuracy of
the specific representations and warranties made by Atlas herein, or the breach
by Atlas of any of the agreements, covenants, conditions, and obligations of
Atlas contained in this Agreement, including but not limited to those set forth
in the Assumption of Obligations. In addition, Atlas fully releases and
discharges Independence and agrees to save, defend and indemnify Independence
against and hold it harmless from any and all Losses directly or indirectly
relating to (i) any release or threat of release of any Hazardous Materials (as
hereinafter defined) in, on, under or from any of the Properties whenever
occurring or (ii) any violation of any Environmental Law (as hereinafter
defined) relating to the Properties whenever occurring.
Indemnification of Atlas. Except as provided in Section 6.3,
------------------------
Independence hereby agrees to indemnify, defend and hold Atlas, its successors
and assigns, harmless from and against any and all Losses incurred or sustained
by Atlas in or as a result of or arising out of (a) any breach or inaccuracy of
the specific representations and warranties made by Independence in (i) Sections
4.1(a), 4.1(b), 4.1(c), 4.1(d), 4.1(o), 4.1(p) and 4.1(q) hereof, and (ii)
Section 4.1(g) hereof, and (b) the breach by Independence of any of the post-
Closing agreements, covenants and obligations of Independence contained in this
Agreement.
Notification; Defense of Third-Party Claims. An indemnified
-------------------------------------------
person or entity shall give written notice to the indemnifying person or entity
promptly of any claim, suit, action, the commencement of any proceeding or
demand of which such indemnified person or entity has received written notice
from a third party (that is, a party other than a party to this Agreement) and
as to which such indemnified person or entity believes it may be entitled to
indemnification or contribution hereunder or under this Agreement (provided,
that failure to give such notice which does not materially disadvantage the
indemnifying person or entity shall not relieve the indemnifying person or
entity from liability hereunder). The indemnifying person or entity will not
settle or compromise any such pending claim, action or suit, without (i) the
prior written consent of the indemnified person or entity, which consent shall
not be unreasonably withheld, and (ii) obtaining a release of the indemnified
person or entity from all liability in respect thereof. The indemnifying person
or entity shall have the right to participate in or assume and direct the
defense at its own expense against any such claim, suit or demand, in its name
or in the name of the indemnified person, as the case may
-16-
<PAGE>
be, and with counsel selected by the indemnifying person; provided, that if (i)
such claim, suit or demand seeks an order, injunction or other equitable relief
against the indemnified person or entity or (ii) the indemnified person or
entity shall have reasonably concluded that there is a substantial conflict of
interest between the indemnifying person or entity and the indemnified person or
entity in the conduct of the defense of such claim, suit or demand, then the
indemnified party may employ separate counsel and participate in and direct the
defense of such claim, suit or demand to the extent necessary to protect its
interest and the indemnifying person or entity will pay the reasonable fees and
disbursements of such separate counsel; provided, however, that the indemnifying
person or entity shall not be responsible for the fees and disbursements of more
than one separate counsel for all indemnified persons or entities in any
jurisdiction or in any single proceeding. Except as provided in the preceding
sentence, after notice from the indemnifying party of its election to assume the
defense thereof, the indemnifying person or entity shall not be liable to the
indemnified party for any legal or other expense incurred by the indemnified
party in connection with such claim. Such assumed defense shall be conducted
expeditiously (but with regard to obtaining the most favorable outcome
reasonably likely under the circumstances, taking into account costs) and the
indemnified person or entity shall be advised promptly of all significant
developments. The indemnified person or entity shall have the right to
participate fully in the defense of any claim, suit or demand so assumed, with
separate counsel selected by it and at its own expense. The indemnified person
or entity shall cooperate with the indemnifying person or entity, and keep the
indemnifying person or entity reasonably informed, in its participation or
defense of any such claim, suit or demand.
Notice; Defense of Non-Third-Party Claims. An indemnified person
-----------------------------------------
or entity shall give written notice to an indemnifying person or entity promptly
of any other claim it may have for indemnification under this Article 6;
provided, that failure to give such notice which does not materially
disadvantage the indemnifying person or entity shall not relieve the
indemnifying person or entity from liability hereunder. No indemnified person or
entity shall be entitled to make any claim for indemnification under this
Article 6 with respect to any breach of any particular representation or
warranty, after the date on which such representation and warranty ceases to
survive pursuant to Article 9; provided, however, that, if prior to the close of
-------- -------
business on the date any representation or warranty ceases to survive, the
indemnifying party shall have received written notification of a claim for
indemnity hereunder containing the basis of any such claim and a brief statement
of the relevant facts to the extent known, and such claim shall not have been
finally resolved or disposed of on that date, such claim shall continue as a
basis for indemnity until finally resolved or disposed of.
Threshold. No claim may be made for indemnification pursuant to
---------
this Article 6 with respect to any individual item of liability or damage
arising out of the breach or inaccuracy of any representation or warranty unless
such item or any series of items arising out of the related or similar facts
exceeds $1,000 and unless and until the aggregate of all such
-17-
<PAGE>
liabilities and damages shall exceed $50,000, in which case the indemnifying
party shall then be liable for all Losses, including the original $50,000.
Affiliate Indemnitees. Rights of indemnity (or rights to be held
---------------------
harmless) created in this Agreement stated as in favor of either of the parties
hereto shall also be in favor of the officers and directors of each respective
party and its Affiliates (as hereinafter defined).
Reliance Upon Representations and Warranties. Unless any officer
--------------------------------------------
or other managerial personnel of any of the parties has actual Knowledge or
notice of any facts or circumstances which would contravene any of the
representations, warranties and covenants set forth herein, the parties hereto
shall be entitled to rely upon the representations, warranties, and covenants
set forth herein. Any provision herein to the contrary notwithstanding, neither
party shall have any liability or obligation to the other for any liability,
claim, damage, loss or expense arising out of any fact, inaccuracy or breach
concerning any representation or warranty, if the fact, inaccuracy or breach was
actually known on the date hereof by an officer or managerial employee of the
party in whose favor the representation or warranty runs.
ARTICLE VII
CONDITIONS PRECEDENT TO CLOSING
-------------------------------
Mutual Conditions. The respective obligations of each party to
-----------------
be bound by the terms and provisions of this Agreement shall be subject to the
fulfillment at or prior to Closing of the following condition:
Litigation. As of the Closing Date, no claim, litigation,
----------
proceeding, order, investigation, or inquiry shall be pending against a party or
threatened to enjoin or prevent the consummation of the transactions
contemplated by this Agreement.
Conditions to Independence's Obligations. The obligation of
----------------------------------------
Independence to be bound by the terms and provisions of this Agreement and to
consummate the transactions contemplated hereby shall be subject to the
fulfillment at or prior to Closing of the following conditions, unless such
performance and compliance shall have been waived in writing by Independence:
Representations and Warranties True. All representations
-----------------------------------
and warranties of Atlas contained in Article V shall be true on and as of the
Closing Date with the same force and effect as though made on and as of such
date.
No Material Event. No casualty, claim, or other event,
-----------------
fact, or condition shall have occurred which could materially adversely affect
Atlas.
-18-
<PAGE>
Consents and Waivers. At or prior to Closing, the parties
--------------------
hereto shall have obtained all consents and waivers to be obtained by it
necessary for the consummation of the transactions contemplated by this
Agreement.
Performance of Obligations. At or prior to Closing, Atlas
--------------------------
shall have performed all of the obligations to be performed by it under this
Agreement prior to Closing, and under any exhibit, schedule, list, agreement, or
other instrument relating hereto.
Conditions to Atlas' Obligations. The obligation of Atlas to be
--------------------------------
bound by the terms and provisions of this Agreement and to consummate the
transactions contemplated hereby shall be subject to the fulfillment at or prior
to Closing of the following conditions, unless such performance and compliance
shall have been waived in writing by Atlas:
Representations and Warranties True. All representations
-----------------------------------
and warranties of Independence contained in Article IV shall be true on and as
of the Closing Date with the same force and effect as though made on and as of
such date.
No Material Event. No casualty, claim, or other event,
-----------------
fact, or condition shall have occurred which could materially adversely affect
the Properties.
Consents and Waivers. At or prior to Closing, Independence
--------------------
shall have obtained all consents and waivers to be obtained by it necessary for
the consummation of the transactions contemplated by this Agreement.
Performance of Obligations. At or prior to Closing,
--------------------------
Independence shall have performed all of the obligations to be performed by it
under this Agreement prior to Closing, and under any exhibit, schedule, list,
agreement, or other instrument relating hereto.
ARTICLE VIII
[intentionally omitted]
-19-
<PAGE>
ARTICLE IX
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
Survival. All statements, representations, warranties,
--------
indemnities, covenants and agreements made by Atlas shall survive the Closing
Date for a period of twenty-four months. Except for the representations of
Independence set forth in Sections 4.1(a), 4.1(b), 4.1(c), 4.1(d), 4.1(o),
4.1(p), 4.1(q) and 4.1(r), and the agreement of Independence set forth in
Section 6.2(a)(i), which shall survive the Closing for a period of twenty-four
months, and for the representations of Independence set forth in Section 4.1(g)
and the agreement of Independence set forth in Section 6.2(a)(ii), which shall
survive the Closing Date for a period of forty-five days, the statements,
representations, warranties, covenants and agreements made by Independence
herein shall not survive the Closing Date. The foregoing limitations shall not
apply to any right of action based on the parties' obligations set forth in the
Deed, the Assignment, the Bill of Sale or the Assumption Agreement, and in the
second sentence of Section 6.1, or on the fraud, bad faith or intentional
misrepresentation of any party hereto; any such right shall survive the Closing
Date until the expiration of the applicable statute of limitations.
ARTICLE X
GENERAL PROVISIONS
------------------
Notices. Any notice or communication hereunder shall be in
-------
writing, and shall be mailed by registered or certified mail, return receipt
requested, or otherwise sent by facsimile or other similar form of rapid
transmission, confirmed by mailing (in the manner stated above) at substantially
the same time as such rapid transmission, or personally delivered to the
receiving party or an officer thereof. If notice is given by registered or
certified mail, it shall be deemed to have been given and received when
deposited in the United States mail, return receipt requested, properly
addressed, with postage prepaid; and if given otherwise than by registered or
certified mail, it shall be deemed to have been given when delivered to and
received by the party to whom it is addressed at the time received. The
addresses of the parties for the purposes of this Section are as follows:
Independence Mining Company Inc.
5251 DTC Parkway, Suite 700
Englewood, Colorado 80111
Attention: Robert W. Micsak
Vice President
Telecopy: (303) 889-0707
-20-
<PAGE>
with a copy to:
Davis, Graham & Stubbs, L.L.C.
370 Seventeenth
Street
Suite 4700
Denver, Colorado 80202
Telecopy: (303) 893-1379
Attention: Ronald R. Levine, II
Atlas Corporation
370 Seventeenth Street
Suite 3150
Denver, Colorado 80202
Attention: Gregg B. Shafter
Vice President
Telecopy: (303) 892-8808
with a copy to:
Morrison & Foerster
370 Seventeenth Street, Suite 5200
Denver, Colorado 80202
Telecopy: (303) 592-1510
Attention: Randy Hubbard
Any party hereto, by written notice to the other party, may change the address
for notices to be sent to it.
Governing Law. This Agreement, and the rights and liabilities of
-------------
the parties hereunder, shall be governed by and construed in accordance with the
laws of the State of Colorado governing contracts to be performed wholly within
Colorado, without regard to laws that might govern under principles of conflicts
of laws applicable thereto.
Parties in Interest; Assignment. All of the terms and provisions
-------------------------------
of this Agreement shall be binding upon and inure to the benefit of and be
enforceable by the respective parties hereto and their successors and permitted
assigns, whether hereinabove so expressed or not. The rights, powers,
privileges, and interests hereunder shall be assignable by either party, except
as specifically limited by this Agreement.
Entire Agreement. This Agreement contains the entire agreement
----------------
and understanding of the parties hereto and supersedes all prior written or oral
agreements and understanding between them concerning or relating to the subject
matter contained herein.
-21-
<PAGE>
There are no representations, agreements, arrangements, or understandings, oral
or written, between the parties hereto relating to the subject matter contained
in this Agreement which are not fully expressed herein.
Modifications; Waiver. Any amendment, change or modification of
---------------------
this Agreement shall be void unless in writing and signed by all parties hereto.
No failure or delay by any party hereto in exercising any right, power or
privilege hereunder (and no course of dealing between or among any of the
parties) shall operate as a waiver of any such right, power or privilege. No
waiver of any default on any one occasion shall constitute a waiver of any
subsequent or other default. No single or partial exercise of any such right,
power or privilege shall preclude the further or full exercise thereof.
Severability. In the event that any one or more of the
------------
provisions contained in this Agreement or in any other instrument or agreement
contemplated hereby shall, for any reason, be held to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provision of this Agreement or any such other
instrument or agreement.
Remedies Cumulative. The remedies of the parties under this
-------------------
Agreement are cumulative and shall not exclude any other remedies to which any
party may be lawfully entitled.
Attorneys' Fees. In the event of any controversy, claim, or
---------------
dispute between the parties hereto, arising out of or relating to this Agreement
or the breach thereof, the prevailing party shall be entitled to recover from
the losing party reasonable expenses and attorneys' fees.
Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument.
Further Assurances. At the request of either Independence or
------------------
Atlas, the parties shall execute and deliver any further instruments,
agreements, documents or other papers and take such other action as may be
reasonably requested by the other party to effect the purposes of this Agreement
and the transactions contemplated hereby; provided, that Atlas' and
Independence's obligations in connection with registration of the Shares shall
be set forth in the Registration Rights Agreement.
Headings. The Article and Section headings contained in this
--------
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. References to Articles, Sections,
Exhibits, and Schedules are to such hereof.
-22-
<PAGE>
Public Announcements. Prior to the Closing Date, Independence
--------------------
shall obtain Atlas' written consent before making, and Atlas shall obtain
Independence's written consent before making, any public announcements with
respect to this Agreement, any related agreement or the transactions
contemplated hereunder or thereunder, unless such public announcement is
required under applicable laws or securities exchange regulations. The consent
requirements of this Section 10.12 shall also apply to any public announcements
made by either party concerning the Closing.
Confidentiality. Except as otherwise provided in Section 10.12,
---------------
the parties hereto and their collective representatives shall forever treat
confidentially all information concerning the terms and conditions of this
Agreement, all related agreements, and of the transactions contemplated
hereunder or thereunder (collectively, "Confidential Information"); provided,
however, that Confidential Information shall not include information which
concerns the Properties or Atlas' operations thereon following the Closing or
which is or becomes generally known to the public not as a result of any breach
of this provision by any party or its representatives. The obligation to treat
the Confidential Information confidentially shall not apply to the extent that
any party or its representatives shall be required to disclose any such
information in connection with an investigation or legal proceeding where the
failure to disclose such information could result in liability for contempt or
other censure or penalty; provided, however, that such party and/or its
representatives shall notify the other party as soon as possible and in any
event prior to such disclosure and shall cooperate with the other party in the
event that the other party elects to legally contest such disclosure.
Certain Definitions. As used in this Agreement, the terms set
-------------------
forth below, when capitalized, have the following meanings:
"$" shall mean U.S. dollars.
"Affiliate" means any person or entity related to a party in such
a way that either the party or such person or entity directly or
indirectly controls or is controlled by or is under common
control with the other. For this purpose, "control" means the
power, direct or indirect, to direct or cause direction of
management and policies through ownership of voting securities,
contract, voting interest or otherwise.
-23-
<PAGE>
"Environmental Laws" means any federal, state, local or foreign
statute, law, ordinance, regulation, rule, code, order,
requirement or rule of common law, now or previously in effect,
and any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent decree or
judgment, relating to the environment, health, safety or
Hazardous Materials, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended ("CERCLA"); the Resource Conservation and
Recovery Act, 42 U.S.C. (S)(S) 6901 et seq.; the Hazardous
-- ---
Materials Transportation Act, 49 U.S.C. (S)(S) 6901 et seq.; the
-- ---
Clean Water Act, 33 U.S.C. (S)(S) 1251 et seq.; the Toxic
-- ---
Substances Control Act, 15 U.S.C. (S)(S) 2601 et seq.; the Clean
-- ---
Air Act, 42 U.S.C. (S)(S) 7401 et seq.; the Safe Drinking Water
-- ---
Act, 42 U.S.C. (S)(S) 300f et seq.; the Atomic Energy Act, 42
-- ---
U.S.C. (S)(S) 2011 et seq.; the Federal Insecticide, Fungicide
-- ---
and Rodenticide Act, 7 U.S.C. (S)(S) 136 et seq.; and the Federal
-- ---
Food, Drug and Cosmetic Act, 21 U.S.C. (S)(S) 301 et seq.
-- ---
"Hazardous Materials" means (a) petroleum and petroleum products,
radioactive materials, asbestos in any form that is or could
become friable, urea formaldehyde foam insulation, and
transformers or other equipment that contain polychlorinated
biphenyls, or (b) any other chemical, material or substance
which is (i) designated as a "hazardous substance," pursuant
to Section 311 of the Clean Water Act ("CWA"), 33 U.S.C. (S)
1251, et seq. (33 U.S.C. (S) 1321) or listed pursuant to
-- ---
Section 307 of the CWA (33 U.S.C. (S) 1317, or (ii) defined as
or included in the definition of a "hazardous waste" pursuant
to Section 1004 of the Resource Conservation and Recovery Act
("RCRA"), 42 U.S.C. (S) 6901, et seq. (42 U.S.C. (S) 6903), or
-- ---
(iii) defined as or included in the definition of a "hazardous
substance" pursuant to Section 101 of the Comprehensive
Environmental Response, Compensation and Liability Act
("CERCLA"), 42 U.S.C. (S) 9601, et seq., or (iv) defined as or
-- ---
included in the definition of a "pollutant" or "contaminant"
pursuant to the CWA, RCRA, CERCLA, the Clean Air Act, 33
U.S.C. (S) 1251 et seq. , or comparable state statutes or
-- ---
regulations.
"Knowledge" or any variation thereof shall mean as to the facts
or circumstances represented: (a) actual knowledge of (i) any of
the officers of Independence or Jerry W. Bateman, Independence's
current Land Manager, with respect to matters concerning
Independence, or (ii) any of the officers of Atlas, with respect
to matters concerning Atlas; or (b) knowledge that any such
person should have obtained in conducting a reasonable inquiry as
to the relevant business, operations, properties, documents,
agreements, and records considering such person's particular
position and responsibilities with Independence, on the one hand,
or Atlas, on the other hand.
Inconsistencies with Exhibits. To the extent there are any
-----------------------------
inconsistencies between the terms and provisions of this Agreement and the terms
and provisions of any Exhibit hereto, the terms and provisions of this Agreement
shall control,
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed on the day first above written.
INDEPENDENCE MINING COMPANY INC.
By: /s/ Robert W. Micsak
---------------------------
Name: Robert W. Micsak
Title: Vice President
ATLAS CORPORATION
By: /s/ Gerald E. Davis
---------------------------
Name: Gary E. Davis
Title: President
<PAGE>
REGISTRATION RIGHTS AGREEMENT
-----------------------------
AGREEMENT made as of October 25, 1995 by and between Atlas
Corporation, a Delaware corporation ("Atlas"); and Independence Mining Company
Inc., a Delaware corporation ("Independence").
WITNESSETH:
Atlas and Independence are parties to a Purchase and Sale Agreement
dated October 25, 1995 (the "Purchase Agreement"). In order to induce
Independence to consummate the transactions under the Purchase Agreement, Atlas
has agreed to provide the registration rights set forth in this Agreement. The
execution and delivery of this Agreement is a condition to the Closing under the
Purchase Agreement. Certain capitalized terms used herein and not otherwise
defined are defined in Section 7 hereof.
The parties hereto agree as follows:
SHELF REGISTRATION. (a) Atlas shall: (i) as promptly as
------------------
possible following the date hereof file a Shelf Registration Statement providing
for resales of Registrable Securities by Independence (the "Shelf
Registration"); (ii) use its best efforts to cause such Shelf Registration
Statement to be declared effective as promptly as is possible; and (iii) use its
best efforts to keep the Shelf Registration Statement continuously effective
under the Securities Act with respect to the Registrable Securities until
October 25, 1998, or, if sooner, until the Shares no longer constitute
Registrable Securities. Atlas shall supplement or amend the Shelf Registration
Statement as necessary to comply with the Securities Act and the rules and
regulations thereunder, the rules, regulations or instructions applicable to the
registration form used by Atlas, or any other law, rule or regulation applicable
thereto. Atlas shall pay all Registration Expenses (as defined in Section 4)
incurred in connection with the Shelf Registration.
(b) In the event that Atlas becomes ineligible to file a shelf
registration statement on behalf of Independence, or the Shelf Registration
filed by Atlas on Independence's behalf becomes ineffective as a means of
registering the Registrable Securities, at any time after October 25, 1996 and
at Independence's request Atlas shall register the sale of all or part of the
Registrable Securities. Atlas shall be required to file only one registration
statement to effect the foregoing.
PIGGYBACK REGISTRATIONS.
-----------------------
<PAGE>
RIGHT TO PIGGYBACK. Whenever on or prior to October 25,
------------------
1998 Atlas proposes to register any of its securities under the Securities Act
to be issued in an underwritten public offering by Atlas (other than pursuant to
the Shelf Registration) and the registration form to be used may be used for the
registration of Registrable Securities (a "Piggyback Registration"), Atlas will
give prompt written notice to Independence of its intention to effect such a
registration and will include in such registration all Registrable Securities
requested for inclusion therein by Independence.
PIGGYBACK EXPENSES. The Registration Expenses related to
------------------
the Registrable Securities in any Piggyback Registration will be paid by Atlas.
PRIORITY ON REGISTRATIONS. If the managing underwriters of
-------------------------
a Piggyback Registration advise Atlas in writing that in their sole discretion
the number of securities requested to be included in such offering exceeds the
number which can be sold in such offering such that the offering will be
materially adversely affected, the number of securities to be offered will be
reduced as recommended in writing by the managing underwriters. Atlas will
include securities in such registration according to the following priority: (i)
the securities Atlas proposes to sell, and (ii) the Registrable Securities
requested to be included in such registration and other securities requested to
be included in such registration by holders of Parity Registration Rights,
allocated among the holders of Registrable Securities and such other holders in
proportion, as nearly as practicable, to the respective number of shares of
Common Stock proposed to be sold in such offering by them.
SELECTION OF UNDERWRITERS. Atlas may select the investment
-------------------------
banker(s) and manager(s) for any offering pursuant to a Piggyback Registration.
OTHER REGISTRATIONS. If Atlas has previously filed a
-------------------
registration statement with respect to Registrable Securities pursuant to this
Section 2, and if such previous registration has not been withdrawn or
abandoned, Atlas will not file or cause to be effected any other registration of
any of its equity securities or securities convertible or exchangeable into or
exercisable for its equity securities under the Securities Act (except on Form
S-4, Form S-8 or any successor form), whether on its own behalf or at the
request of any holder or holders of such securities, until a period of at least
three months has elapsed from the effective date of such previous registration,
unless a shorter period of time is approved by the holders of a majority of the
Registrable Securities included in such previous registration.
REGISTRATION PROCEDURES. In connection with any
-----------------------
registration pursuant to Section 1 hereof, whenever Independence has requested
that any Registrable Securities be registered pursuant to this Agreement, Atlas
will use its best efforts to effect
<PAGE>
the registration and the sale of such Registrable Securities in accordance with
the intended method of disposition thereof and pursuant thereto Atlas will as
expeditiously as possible:
furnish to each Seller of Registrable Securities such
number of copies of such registration statement, each amendment and supplement
thereto, the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such Seller may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by it;
use its best efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of such
jurisdictions as Independence reasonably requests and do any and all other acts
and things which may be reasonably necessary or advisable to enable each Seller
of Registrable Securities to consummate the disposition in such jurisdictions of
the Registrable Securities owned by such Seller, provided that Atlas will not be
required to (i) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this subsection, (ii) subject
itself to taxation in any such jurisdiction or (iii) consent to general service
of process in any such jurisdiction except to the extent required by applicable
law;
notify each Seller of Registrable Securities, at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue statement
of a material fact or omits any fact necessary to make the statements therein
not misleading, and, at the request of any such Seller, Atlas will prepare a
supplement or amendment to such prospectus so that, as thereafter delivered to
the purchasers of such Registrable Securities, such prospectus will not contain
an untrue statement of a material fact or omit to state any fact necessary to
make the statements therein not misleading;
cause all such Registrable Securities to be listed on
each securities exchange on which similar securities issued by Atlas are then
listed;
provide a transfer agent and registrar for all such
Registrable Securities;
enter into such customary agreements (including
underwriting agreements in customary form) and take all such other actions as
Independence reasonably requests in order to expedite or facilitate the
disposition of such Registrable Securities; provided, however, that in the event
of any underwritten offering, Independence will be responsible for the
reasonable fees and disbursements of one counsel to Atlas for such counsel's
review of the underwriting agreement to the extent such fees and disbursements
exceed $2,500 up to a maximum amount of $20,000;
<PAGE>
make available for inspection by any Seller of
Registrable Securities, any underwriter participating in any disposition
pursuant to such registration statement, and any attorney, accountant or other
agent retained by any such Seller or underwriter, all financial and other
records, pertinent corporate documents and properties of Atlas, and cause Atlas'
officers, directors, employees and independent accountants to supply all
information reasonably requested by any such Seller, underwriter, attorney,
accountant or agent in connection with such registration statement; and
obtain a cold comfort letter from Atlas' independent
public accountants in customary form and covering such matters of the type
customarily covered by cold comfort letters (provided that such Registrable
Securities constitute at least 10% of the securities covered by such
registration statement).
Independence agrees that, upon receipt of any notice from Atlas of the
happening of any event of the kind described in Section 3.1(c) hereof,
Independence will forthwith discontinue disposition of Registrable Securities
pursuant to the registration statement covering such Registrable Securities
until Independence's receipt of written notice that sales may continue with the
existing prospectus or the supplemented or amended prospectus contemplated by
Section 3(c) hereof. In the event Independence is not able to commence sales of
Shares pursuant to an effective registration statement not later than 60 days
after the date of a notice pursuant to Section 3(c) (the "Notice Date"), Atlas
shall pay to Independence an amount per share equal to the difference (but only
if the price in (ii) is less than the price in (i)), if any, between (i) the
actual sales price subsequently received from any sales by Independence during a
number of days following the date on which such sales become permissible which
is equal to the number of days over 60 during which such sales were not allowed
and (ii) the average of (A) the closing sales prices on any national securities
exchange or the NASDAQ National Market System on which the Common Stock is
listed or included, or (B) the average of the bid and asked prices on NASDAQ if
not so listed or included for the days in excess of 60 from the Notice Date
(such average closing sales prices or average bid and asked price, as the case
may be, being referred to as the "Deemed Sales Price"), plus interest calculated
on the Deemed Sales Price from the 61st day after the Notice Date to the date of
any actual sale at the rate of 12% per annum.
<PAGE>
REGISTRATION EXPENSES.
---------------------
All expenses incident to Atlas' performance of or
compliance with this Agreement, including, without limitation, all registration
and filing fees, fees and expenses of compliance with securities or blue sky
laws, printing expenses, messenger and delivery expenses, and fees and
disbursements of counsel for Atlas and all independent certified public
accountants, underwriters (excluding discounts and commissions) and other
Persons retained by Atlas (all such expenses being herein called "Registration
Expenses"), will be borne as provided in this Agreement, except that Atlas will,
in any event, pay its internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit or quarterly review, the
expense of any liability insurance and the expenses and fees for listing the
securities to be registered on each securities exchange on which similar
securities issued by Atlas are then listed.
In connection with each registration of Registrable
Securities, Atlas will reimburse Independence for the reasonable fees and
disbursements of one counsel chosen by Independence to the extent such fees and
disbursements exceed $2,500 up to a maximum of $25,000.
INDEMNIFICATION.
---------------
Atlas agrees to indemnify Independence, its officers
and directors and any person who controls Independence within the meaning of the
Securities Act against all losses, claims, damages, liabilities and expenses
(including legal fees and other expenses incurred in defending any such claim or
action) caused by any untrue or alleged untrue statement of material fact
contained in any registration statement, prospectus or preliminary prospectus or
any amendment thereof or supplement thereto or any omission or alleged omission
of a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided that Atlas shall not be liable in
any such case to the extent that any such loss, claim, damage, liability (or
action or proceeding in respect thereof) or expense arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, any such preliminary prospectus,
prospectus, amendment or supplement in reliance upon and in conformity with
information furnished to Atlas in writing by Independence specifically for use
therein. If the indemnification provided for in this Section 5 is unavailable to
or insufficient to hold harmless Independence in respect of any losses, claims,
damages, or liabilities (or actions in respect thereof) referred to therein,
then Atlas shall contribute to the amount paid or payable to Independence as a
result of such losses, claims, damages, or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect the relative fault of
Atlas and Independence in connection with the statements or omissions which
resulted in such losses, claims, damages, or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
fault shall be determined
<PAGE>
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by Atlas or Independence and the
parties' relative intent, knowledge, access to information, and opportunity to
correct or prevent such statement or omission.
Independence agrees to indemnify and hold Atlas and any
person who controls Atlas within the meaning of the Securities Act harmless (in
the same manner and to the same extent as set forth in Section 5(a)) with
respect to any statement or alleged statement in or omission or alleged omission
from such registration statement, any preliminary prospectus, prospectus, or any
amendment or supplement thereto, if such statement or alleged statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to Atlas by Independence specifically for use
therein.
PARTICIPATION IN REGISTRATIONS. No Person may
------------------------------
participate in any registration hereunder unless such Person:
in the case of a registration which is
underwritten, agrees to sell such Person's Registrable Securities on the basis
provided in any underwriting arrangements approved by Atlas;
as expeditiously as possible, notifies Atlas, at
any time when a prospectus relating to such Person's Registrable Securities is
required to be delivered under the Securities Act, of the happening of any event
involving such Person as a result of which such prospectus contains an untrue
statement of a material fact or omits any fact necessary to make the statements
therein not misleading;
complies with all reasonable requests made by
Atlas or its counsel with respect to the registration of such Person's
Registrable Securities, including, without limitation, providing access to all
relevant books and records; and
completes, executes and delivers all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other usual and customary documents necessary or appropriate with respect to the
offering of such Person's Registrable Securities, and in the case of a
registration which is underwritten, necessary or appropriate under the terms of
such underwriting arrangements.
<PAGE>
DEFINITIONS.
-----------
"Affiliate" shall have the meaning ascribed to
---------
it in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations of the SEC as in effect on the
date hereof.
"Parity Registration Rights" means the right to
--------------------------
register securities of Atlas which, by the terms of the agreement or instrument
granting such rights, are on a parity with the rights of Independence under this
Agreement.
"Person" shall mean any individual, firm,
------
corporation, trust, partnership, or other entity and, with respect to Persons
holding Registrable Securities, shall include any group comprised of any Person
and any other Person with whom such Person or an Affiliate of such Person has
any agreement, arrangement or understanding, directly or indirectly, for the
purpose of acquiring, holding, voting or disposing of any Common Stock.
"Common Stock" means collectively, Atlas' common
------------
stock, par value $1.00 per share.
"Registrable Securities" means (i) the Shares,
----------------------
and (ii) any securities issued or issuable with respect to the Shares by way of
a stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. As to any
particular Registrable Securities, such securities will cease to be Registrable
Securities when they have ceased to be "restricted securities" as that term is
defined by Rule 144 of the Securities Act. For purposes of this Agreement, a
Person will be deemed to be a holder of Registrable Securities whenever such
Person has the right to acquire such Registrable Securities (by conversion or
otherwise, but disregarding any legal restrictions upon the exercise of such
right), whether or not such acquisition has actually been effected.
"Seller" means any Person whose Registrable
------
Securities are included in a Shelf or Piggyback Registration.
"Shares" means 1,400,000 shares of unregistered
------
Common Stock issued to Independence by Atlas pursuant to the Purchase Agreement.
"Shelf Registration Statement" shall mean a
----------------------------
"shelf" registration statement of Atlas pursuant to the provisions of Section 1
of this Agreement which covers any of the Registrable Securities, on an
appropriate form under Rule 415 under the Securities Act, or any similar rule
that may be adopted by the Commission, and all amendments and supplements to
such registration statement, including post-effective
<PAGE>
amendments, in each case including the prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.
Unless otherwise stated, other capitalized terms
contained herein have the meanings set forth in the Purchase Agreement.
MISCELLANEOUS.
-------------
NO INCONSISTENT AGREEMENTS. Atlas will not
--------------------------
hereafter enter into any agreement with respect to its securities which is
inconsistent with the rights granted to Independence in this Agreement.
REMEDIES. Any Person having rights under any
--------
provision of this Agreement will be entitled to enforce such rights
specifically, to recover damages caused by reason of any breach of any provision
of this Agreement and to exercise all other rights granted by law.
AMENDMENTS AND WAIVERS. Except as otherwise
----------------------
provided herein, the provisions of this Agreement may be amended and Atlas may
take any action herein prohibited, or omit to perform any act herein required to
be performed by it, only if Atlas has obtained the written consent of
Independence, for so long as Independence is a holder of Registrable Securities,
and, at any other time, of the holders of 60% of the Registrable Securities.
SUCCESSORS AND ASSIGNS. All covenants and
----------------------
agreements in this Agreement by or on behalf of any of the parties hereto will
bind and inure to the benefit of the respective successors and assigns of the
parties hereto whether so expressed or not. In addition, whether or not any
express assignment has been made, the provisions of this Agreement which are for
the benefit of purchasers or holders of Registrable Securities are also for the
benefit of, and enforceable by, any subsequent holder of Registrable Securities.
INCORPORATION OF PURCHASE AGREEMENT PROVISIONS.
----------------------------------------------
The Sections entitled "Notices", "Severability," "Counterparts," "Headings,"
"Entire Agreement," and "Governing Law" in the Purchase Agreement are hereby
incorporated in this Agreement by reference and made a part hereof.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
ATLAS CORPORATION
By: ________________________________
Name: Gary E. Davis
Title: President
INDEPENDENCE MINING COMPANY INC.
By: ________________________________
Name: Robert W. Micsak
Title: Vice President
<PAGE>
AGREEMENT
This Agreement ("Agreement") is entered into on this the 23th day of October,
1995, by and between Brown & Root, Inc., a Delaware corporation, having its
principal place of business in Houston, Texas (hereinafter "B&R") and Atlas
Corporation, a Delaware corporation, having its principal place of business in
Denver, Colorado (hereinafter "Atlas").
RECITALS
WHEREAS, Atlas desires that B&R provide contract mining services (the "Work") at
its Gold Pick and Gold Ridge mineral deposits situated in Eureka County,
Nevada as set forth in the contract mining bid package dated August 1995 as
transmitted to B&R, as later amended by a facsimile transmission from John
Leahy ( Atlas' consulting project engineer) to B&R on August 28, 1995 (the
"Project");
WHEREAS, B&R is willing, able and desires to perform the Work; and
WHEREAS, in connection with obtaining the contract to perform the Work, B&R has
expressed a willingness to satisfy Atlas' request to guarantee a loan for the
Project subject to the terms and conditions as set forth herein.
NOW, THEREFORE, in consideration of the mutual promises and agreements contained
herein, the value of which is hereby acknowledged, the Parties hereto agree as
follows:
I. Negotiation of Definitive Agreement Required. This Agreement is not, in
---------------------------------------------
itself, intended to be the definitive agreement between the Parties, but
rather is intended by the Parties to serve as the framework of subsequent
negotiations and documentation. The Parties agree to use their best
efforts to reach a definitive agreement for performing the Work at the
Project (the "Definitive Agreement") on or before November 30, 1995, which
is of a similar nature to previous mining contracts
<PAGE>
between Atlas and B&R and incorporates the terms and conditions set forth
in this Agreement.
II.Conditions precedent to negotiation of the Definitive Agreement.
----------------------------------------------------------------
(1) Atlas hereby acknowledges that the obligation of B&R to negotiate
the Definitive Agreement is expressly contingent upon the satisfactory
completion of a due diligence review (the "Review") by B&R. Such Review
will include, but not necessarily be limited to the following:
(a) an independent evaluation to confirm the reasonableness of
the assumptions used to develop Atlas' projected cash flows for
the Project as presented to B&R at its Houston offices by Atlas on
October 12, 1995 (the "Meeting").
(b) a valuation of the proposed security that allows B&R to
reasonably conclude that there is sufficient value in the
collateral to satisfy Atlas' obligations to B&R under this
Agreement.
In the event that B&R is not satisfied (in its sole discretion) with the
results of its Review, B&R may provide Atlas with written notice that it
does not wish to proceed with the negotiation of the Definitive Agreement
an d B&R will be relieved of any continuing obligations under this
Agreement. The Review to be conducted by B&R shall be at its sole cost and
shall be completed not later than November 15, 1995. Atlas agrees to
provide or make available to B&R and/or its consultants all available
information currently in Atlas' possession (including that maintained by
consultants to Atlas) which B&R reasonably requests in order to complete
the Review.
(2) B&R hereby acknowledges that the obligation of Atlas to negotiate
the Definitive Agreement is expressly contingent upon Atlas
<PAGE>
completing, in its sole opinion, a satisfactory hedging program for the
Project.
III.Contract Price and Unit Costs. B & R has agreed to perform the Work at
------------------------------
the Project for a fee not to exceed Thirty One Million Five Hundred
Thousand ($31,500,000.00) Dollars. The unit costs comprising such amount
to perform the Work shall be apportioned approximately as set forth in the
letter from B & R to Atlas dated September 11, 1995, attached hereto and
incorporated herein by reference, and including revised mine plan
assumptions specifically regarding a modified 40 foot drilling depth and
adjustments as necessary to eliminate a third spread of mining equipment
for intermittent mining of the Gold Ridge deposit, as discussed at the
Meeting.
IV. Loan Guarantee. B&R will provide a guarantee, in a form reasonably
---------------
satisfactory to the lender, for Project financing to Atlas of $5.0 Million
Dollars. This financing will be available to Atlas at that point in time
during the Project after which Atlas has expended approximately $5.5
Million Dollars. Repayment of such financing shall commence not sooner
than twenty-four months after commencement of the Work; provided that the
full amount financed shall be repaid prior to completion of the Project.
V. Security for the Guarantee. Atlas will give B&R a security interest on
--------------------------
all of Atlas' interest in tangible real and personal property which
constitutes the Gold Bar Properties and the Gold Bar mill, subject only to
restrictions set forth in the Mining Venture Agreement dated July 26,
1994, between Atlas and Rayrock Mines, Inc. and the rights to a percentage
of throughput at the Atlas Gold Bar Mill granted to Granges Inc. pursuant
to the Letter Agreement dated October 4, 1995, between Atlas and Granges
Inc. B&R will exercise its rights in these properties only in the event of
default under the terms of the Definitive Agreement and only to the extent
reasonably necessary to satisfy the amount of such default. Upon complete
satisfaction of all
<PAGE>
outstanding obligations owed B&R under the guarantee, B&R will release its
lien on the collateral. Upon completion of the Review, B&R reserves the
right to require additional security to reasonably satisfy collateral
requirements of the guarantee.
VI.Net Profits Interest. B&R, as additional compensation and incentive to
---------------------
perform the Work in an efficient manner and in consideration of the $5.0
Million loan guarantee, shall be entitled to receive a twenty (20%)
percent net profit (non-operating) royalty interest in the after tax cash
flows (net of any principal and interest on financing for the Project)
from the Project. Such royalty payments to B&R shall be paid monthly as a
percentage of revenue from the Project less mining, milling, site specific
general and administrative costs, capital depreciation, and any financing
costs associated with the loan guarantee as set forth in Section IV above.
The aggregate of royalty payments hereunder shall not be less than
$500,000 nor exceed $1,500,000.
VII. Miscellaneous Provisions. The Parties agree that this Agreement may be
-------------------------
executed simultaneously in any number of counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and
the same instrument. The Parties further agree that this agreement shall
bind and inure to the benefit of the successors and assigns of the
Parties; provided, however, that the Parties may not make any assignment,
transfer, pledge or other disposition of this Agreement or any of their
obligations, rights or interest hereunder without the prior written
consent of the other Party and any such disposition not so consented to
shall be void.
Each Party represents and warrants that it has the requisite authority to
execute this Agreement and that this Agreement is valid, binding and
enforceable against it in accordance with its terms.
<PAGE>
Executed on this the 23rd day of October, 1995.
ATLAS CORPORATION BROWN & ROOT, INC.
BY: /s/ Gerald E. Davis BY: /s/ John E. Sole
------------------------------ --------------------
Gary E. Davis John E. Sole
President Vice President
