<PAGE>
 
                                                                   EXHIBIT 10.13



                               DEPOSIT AGREEMENT



                                    BETWEEN


                           SEVEN PEAKS MINING, INC.


                                      AND


                               ATLAS CORPORATION




                                October 2, 1998
<PAGE>
 
                               DEPOSIT AGREEMENT

     THIS AGREEMENT is entered into on the 2nd day of October, 1998, by and
between Seven Peaks Mining, Inc., a Kentucky corporation ("Seven Peaks"), and
Atlas Corporation, a Delaware corporation ("Atlas").

     This agreement (the "Agreement") sets out the terms and conditions upon
which Seven Peaks will make or will cause a direct or indirect wholly-owned
subsidiary to make an offer (the "Offer") on substantially the terms summarized
in Schedule "A" forming part of this Agreement, for all of the issued and
outstanding common shares (the "Cornerstone Shares") of Cornerstone Industrial
Minerals Corporation, an Ontario corporation ("Cornerstone") (Atlas is the
majority shareholder and Manager of Cornerstone).

     This Agreement also sets out the terms and conditions of the agreement by
Atlas not to solicit expressions of interest for or encourage competing offers
for the Cornerstone Shares presently owned beneficially and of record by Atlas
(the "Atlas Securities") and to deposit irrevocably and unconditionally under
the Offer all of the Atlas Securities, and sets out the obligations and
commitments of Atlas in connection therewith.

     This Agreement also sets out the understanding and acknowledgment of Seven
Peaks that Atlas filed on September 22, 1998, a petition seeking protection
under Chapter 11 of the United States Bankruptcy Code, and that all agreements,
promises and provisions contained in this Agreement are subject to the
requirements of the Bankruptcy Code and Orders of the Bankruptcy Court having
jurisdiction over Atlas' petition in bankruptcy.

     NOW THEREFORE, in consideration of the foregoing premises and the promises
and covenants herein made, together with other good and valuable consideration
the receipt and sufficiency of which are hereby acknowledged, the Parties agree
as follows:

1.   Definitions.

     "Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
     promulgated under the U.S. Securities Exchange Act of 1934, as amended.

     "Cornerstone Financial Statements" means the audited financial statements
     of Cornerstone as at and for the year ended December 31, 1997 and the
     unaudited interim financial statements of Cornerstone as at and for the six
     months ended June 30, 1998;

     "Cornerstone Debt" means that certain indebtedness from Cornerstone to
     Atlas as evidenced by that certain Stock Purchase Agreement between Atlas
     and Cornerstone dated December 13, 1996, and the Cornerstone Financial
     Statements.
<PAGE>
 
     "Cornerstone Shares" means all of the issued and outstanding common shares
     of Cornerstone Industrial Minerals Corporation, an Ontario corporation.

     "Bankruptcy Code" means the United States Bankruptcy Code, as amended.

     "Bankruptcy Case" means the case to be established in the United States
     Bankruptcy Court for the District of Colorado upon the filing of Atlas'
     petition for protection under chapter 11 of the Bankruptcy Code.

     "Confidential Information" has the meaning set forth in paragraph 13 below.

     "CUSA" means Cornerstone Industrial Minerals Corporation, U.S.A., an Oregon
     corporation formerly known as Atlas Perlite, Inc..  CUSA is a wholly-owned
     subsidiary of Cornerstone.

     "DIP Agreement" means the Agreement for Debtor In Possession Financing
     filed in the Bankruptcy Case.

     "Environmental Costs" means any clean-up costs, remediation, removal, or
     other response costs, legal expenses (including reasonable attorneys'
     fees), investigation costs (including reasonable fees of consultants,
     counsel and other experts in connection with any environmental
     investigation or testing), losses, liabilities, obligations, payments,
     fines, penalties (civil and criminal) and damages.

     "Environmental Law" means any federal, state, provincial, regional,
     territorial, municipal, local or foreign statute, code, ordinance, rule,
     regulation, policy, guideline, permit, consent, approval, license,
     judgment, order, writ, decree, injunction or other authorization, relating
     to:

     (1)  emissions, discharges, releases or threatened releases of Hazardous
          Substances into the natural or human environment, including, without
          limitation, air, soil, sediments, land surface or subsurface, surface
          water, ground water, buildings or facilities, treatment works,
          drainage systems or septic systems; or

     (2)  the generation, treatment, storage, disposal, use, handling,
          manufacturing, transportation or shipment of Hazardous Substances; or

     (3)  mining or mined land reclamation; or

     (4)  otherwise relating to the pollution or protection of health or safety
          or the environment, solid waste
<PAGE>
 
          handling, treatment or disposal or operation or reclamation of mines.

     "Hazardous Substances" means (i) hazardous materials, pollutants,
     contaminants, constituents, toxic substances, hazardous wastes and
     hazardous substances as those terms are defined in the following statutes
     and their implementing regulations: the Hazardous Materials Transportation
     Act, 49 U.S.C. (S) 1801 et seq., the Resource Conservation and Recovery
                             ------                                         
     Act, 42 U.S.C. (S) 6901 et seq., the Comprehensive Environmental Response,
                             ------                                            
     Compensation and Liability Act, as amended by the Superfund Amendments and
     Reauthorization Act 42 U.S.C. (S) 1906 et seq., the Clean Water Act, 333
                                            ------                           
     U.S.C. (S) 1251 et seq., the Toxic Substances Control Act, 15 U.S.C. (S)
                     ------                                                  
     2601 et seq., and the Clean Air Act, 42 U.S.C. (S) 7401 et seq., (ii)
          ------                                             -------      
     petroleum, including crude oil and any fractions thereof, (iii) natural
     gas, synthetic gas and any mixtures thereof, (iv) asbestos and/or asbestos-
     containing materials, (v) PCBs, or PCB-containing materials or fluids, (vi)
     any other substance with respect to which any federal, state or local
     agency or other governmental entity may require either an environmental
     investigation or an environmental remediation, and (vii) any other
     hazardous or noxious substance, material, pollutant or solid or liquid
     waste that is required by, or forms the basis of liability under, any
     environmental law.

     "Henley Facility" means that facility for storing and shipping perlite
     located in Henley, Oregon, on land leased by CUSA.

     "Operating Permits" means all permits necessary for mining and processing
     operations for the Project.

     "Person" means an individual, a partnership, a corporation, an association,
     a joint stock company, a trust, a joint venture, an unincorporated
     organization, or a governmental entity (or any department, agency, or
     political subdivision thereof).

     "Process Plant" means the plant for processing perlite ore located on the
     Process Plant Land.

     "Process Plant Land" means the land described in Schedule "B" covering
     approximately 26 acres in the northern outskirts of Lakeview, Oregon which
     includes approximately 700 feet of dedicated rail siding upon which a
     process plant is located for processing perlite ore mined from the Tucker
     Hill Property.

                                       3
<PAGE>
 
     "Project" means, collectively, the Process Plant, the Process Plant Land,
     the Henley Facility,  and the Tucker Hill Property.

     "Subsidiary" means any corporation with respect to which a specified Person
     (or a Subsidiary thereof) owns a majority of the common stock or has the
     power to vote or direct the voting of sufficient securities to elect a
     majority of the directors.

     "Tucker Hill Property" means the land described in Schedule "B" consisting
     of 45 unpatented lode mining claims located in Lake County, Oregon.

2.   The Offer, Purchase and Sale of Cornerstone Shares.

     (1)  Offer. Seven Peaks shall make the Offer for 100% of the Cornerstone
          Shares as soon as possible after all regulatory and court approvals
          are obtained, including the approval of the U.S. Bankruptcy Court and
          in any event, within [10] days of receipt of approval of the U.S.
          Bankruptcy Court. Seven Peaks covenants and agrees to use all
          reasonable efforts and to fully cooperate with Atlas to obtain the
          requisite regulatory and court approvals in order for the Offer to be
          made as provided for herein.

     (2)  Conditions Precedent. Notwithstanding Paragraph 2(a), Seven Peaks
          shall not be required to make the Offer (and Seven Peaks may, without
          prejudice to any other rights, by written notice to Atlas, terminate
          this Agreement) if:

          (1)  prior to the making of the Offer, (i) any act, action, suit or
               proceedings shall have been taken before or by any domestic or
               foreign court or tribunal or governmental agency or other
               regulatory authority or administrative agency or commission by
               any elected or appointed public official or person in Canada or
               elsewhere, whether or not having the force of law, or (ii) any
               law, regulation, rule or policy shall have been proposed,
               enacted, promulgated or applied:

               (1)  to cease trade, enjoin, prohibit or impose material
                    limitations or conditions on the purchase by or the sale to
                    Seven Peaks of 100% of the Cornerstone Shares or the right
                    of Seven Peaks to own or exercise full rights of ownership
                    of 100% of the Cornerstone Shares, or

                                       4
<PAGE>
 
               (2)  which, in the sole judgment of Seven Peaks, acting
                    reasonably in the circumstances, if the Offer were
                    consummated, would materially and adversely affect
                    Cornerstone and its subsidiaries considered on a
                    consolidated basis,

          provided, however, that Seven Peaks shall not be required to make the
          Offer as a result of any act, action, suit or proceeding taken by a
          Person only if such act, action, suit or proceeding shall have been
          resolved in favor of such Person as evidenced by an order, ruling or
          decision by any domestic or foreign court or tribunal or government
          agency or other regulatory authority or administrative agency or
          commission in Canada or elsewhere having jurisdiction in respect of
          Seven Peaks or the Offer, or if, in the opinion of counsel to Seven
          Peaks, acting reasonably, there is a reasonable risk that such act,
          action, suit or proceeding will be so resolved in favor of such
          Person;

          (2)  at the time Seven Peaks proposes to make the Offer, there exists
               any prohibition at law against Seven Peaks making the Offer or
               taking up and paying for 100% of the Cornerstone Shares under the
               Offer;    

          (3)  except as previously disclosed in writing to Seven Peaks or
               except with the prior written approval of Seven Peaks, which
               approval will not be unreasonably withheld, subsequent to the
               date of this Agreement and prior to the making of the Offer,
               Cornerstone or any subsidiary of Cornerstone, shall have
               authorized or proposed, or shall have entered into any agreement,
               arrangement or understanding with respect to:

               (1)  any take-over bid (other than the Offer), merger,
                    amalgamation, plan of arrangement, reorganization or other
                    business combination;

               (2)  any acquisition or disposition of assets or securities in an
                    amount exceeding $50,000;

               (3)  any change in its capitalization including, but not limited
                    to, any increase in its consolidated borrowings to an amount
                    exceeding $50,000;

               (4)  any capital expenditures in an amount exceeding $50,000;

                                       5
<PAGE>
 
               (5)  declaring or paying any dividend or declaring, authorizing
                    or making any distribution of or on any of its securities
                    whether payable in cash, securities or other property other
                    than (A) regular cash dividends in amounts fixed by their
                    terms or consistent with past practice or (B) any dividend
                    or distribution by a subsidiary of Cornerstone to
                    Cornerstone;

               (6)  entering into, modifying or terminating any agreements or
                    arrangements with its officers or employees except (A) as
                    disclosed in writing to and acknowledged by Seven Peaks
                    prior to the date of this Agreement, or (B) agreements or
                    arrangements (other than agreements or arrangements in
                    respect of share options or other rights or entitlements to
                    acquire authorized and unissued Shares or relating to
                    severance or termination or other rights related to a change
                    of control) in the ordinary course of business and
                    consistent with past practice;

               (7)  any release or relinquishment not in the ordinary course of
                    business of any material contractual rights;

               (8)  the amendment of its articles or by-laws, or the issuance or
                    purchase or other acquisition of any shares of its capital
                    or any class of securities convertible into, or rights,
                    warrants or options to acquire, any such shares or other
                    convertible securities;

               (9)  agreeing or committing to the guarantee of payment of any
                    indebtedness;

               (10) instituting, canceling or modifying any pension plans or
                    other employee benefit arrangements;

               (11) any other change in the business, operations, affairs,
                    assets, capitalization, financial condition, licenses,
                    permits, rights or privileges, whether contractual or
                    otherwise, of Cornerstone or any of its subsidiaries
                    considered on a consolidated basis which, in the sole
                    judgement of Seven Peaks, acting reasonably in the
                    circumstances, could individually or in the aggregate, have
                    a material adverse effect either on the value of Cornerstone
                    and its subsidiaries considered on 

                                       6
<PAGE>
 
                         a consolidated basis or on the value of the Cornerstone
                         Shares to Seven Peaks;

               (4)  either Atlas or Cornerstone, prior to making the Offer,
                    shall not have given Seven Peaks and its authorized agents
                    reasonable ongoing access, upon reasonable notice to Atlas
                    or Cornerstone, to all of Cornerstone's and its affiliates'
                    personnel, assets, properties, books, records, agreements
                    and commitments and, on terms mutually agreed by Seven Peaks
                    and Cornerstone, to customers, and officers of Cornerstone,
                    and shall not have reasonably co-operated with Seven Peaks
                    and any such authorized agents in their due diligence
                    investigations and furnished such persons with all material
                    information with respect to Cornerstone and its subsidiaries
                    and their ongoing operations and activities as Seven Peaks
                    or such authorized agents may have reasonably requested,
                    provided that Seven Peaks shall designate an individual or
                    individuals to co-ordinate such access and further provided
                    that Seven Peaks shall not unreasonably disrupt the normal
                    business operations of Atlas or Cornerstone or its
                    subsidiaries;

               (5)  there shall have occurred or arisen (or there shall have
                    been generally disclosed or discovered, if not previously
                    disclosed in writing to Seven Peaks), any change (or any
                    condition, event or development involving a prospective
                    change) in the business, operations, affairs, assets,
                    liabilities (including any contingent liabilities that may
                    arise through outstanding, pending or threatened litigation
                    or otherwise), capitalization, financial condition,
                    licenses, permits, rights or privileges, whether contractual
                    or otherwise, or prospects of Cornerstone or any of its
                    subsidiaries considered on a consolidated basis which, in
                    the sole judgment of Seven Peaks, acting reasonably in the
                    circumstances, has or may have a material adverse effect
                    either on the value of Cornerstone and its subsidiaries
                    considered on a consolidated basis or on the value of the
                    Shares to Seven Peaks;

               (6)  in the course of its due diligence investigations, prior to
                    September 30, 1998, Seven Peaks shall have become aware of
                    any fact or facts which in the aggregate, in its sole
                    discretion, acting reasonably, have or may have a material
                    adverse effect either on the value of Cornerstone and its
                    subsidiaries considered on a consolidated basis or

                                       7
<PAGE>
 
                    on the value of the Cornerstone Shares to Seven Peaks;

               (7)  Cornerstone and its subsidiaries shall not have taken all
                    steps reasonably requested by Seven Peaks in connection with
                    the Offer, including, without limitation, any steps required
                    to meet regulatory requirements, provided that such steps
                    would not have any material adverse consequences to the
                    holders of Cornerstone Shares or to Cornerstone or any of
                    its subsidiaries if the Offer was not completed;

               (8)  any representation or warranty of Atlas in this Agreement
                    shall not have been, as of the date made, true and correct
                    in all material respects, or Atlas or Cornerstone shall not
                    have performed in all material respects any of their
                    respective covenants or complied with any of their
                    respective agreements to be performed and complied with by
                    it under this Agreement;

               (9)  at the time the Offer is made, the board of directors of
                    Cornerstone shall not have announced that they are
                    recommending that holders of the Cornerstone Shares accept
                    the Offer, it being understood that, if practicable, it
                    would be desirable for Cornerstone to mail the required
                    Directors' Circular simultaneously with the Offer, provided
                    that Seven Peaks has provided full particulars of the Offer
                    and all such additional information as is required to be
                    contained in a takeover bid circular not less than 15 days
                    prior to the date the Offer is to be made.

     The foregoing conditions are for the sole benefit of Seven Peaks and may be
     waived by Seven Peaks in whole or in part at any time and shall be deemed
     to have been waived by it by the making of the Offer.

3.   Deposit and Closing of the Atlas Securities.

     (1)  Deposit. Prior to making the Offer, the Atlas Securities will have
          been placed in a third party escrow account (subject to a reasonable
          escrow agreement to be prepared by counsel for both Parties) pursuant
          to the DIP Agreement. Atlas hereby irrevocably and unconditionally
          agrees that as soon as practicable after the Offer is made, it will
          comply immediately with the escrow instructions regarding to deposit
          under the terms of the Offer all of the Atlas Securities (the
          "Deposited

                                       8
<PAGE>
 
          Shares"), together with a duly completed and executed letter of
          transmittal (which letter shall include the instructions set forth in
          paragraph 3(c) below), and, in any event, on or before the fifth
          business day after the date of the Offer. Atlas hereby irrevocably and
          unconditionally agrees not to withdraw or take any action to withdraw
          any of the Deposited Shares deposited under the Offer notwithstanding
          any statutory rights or other rights under the terms of the Offer or
          otherwise which it might have, unless ordered otherwise in the
          Bankruptcy Case, or unless this Agreement is terminated in accordance
          with its terms prior to the taking up of the Deposited Shares under
          the Offer.

     (2)  Taking Up and Closing. If the conditions precedent set forth in
          paragraph 2(b) of this Agreement are satisfied or waived by Seven
          Peaks such that the Offer is made, and the conditions contained in the
          Offer are satisfied or waived, then within 10 days after the expiry of
          the Offer, Seven Peaks will take up and pay for all of the Cornerstone
          Shares under the Offer (the "Closing").

     (3)  Distribution to Atlas.

          (1)  Atlas shall direct the transfer agent that the amount payable to
               Atlas under the Offer for the Atlas Securities (the "Purchase
               Price") shall be distributed as follows:

               (A)  The sum of US$350,000.00 of the Purchase Price will be
                    placed in an interest bearing third party escrow account
                    (subject to a reasonable escrow agreement to be prepared by
                    counsel for both Parties) pending resolution of the
                    litigation between Cornerstone and Wyant Machinery. Seven
                    Peaks will cause Cornerstone to assign to Atlas as of the
                    Closing all of Cornerstone's rights and obligations in the
                    Wyant litigation. Atlas will use its reasonable best efforts
                    to either litigate toward judgment or dismissal, or to
                    negotiate a settlement of that litigation, but will not
                    execute any settlement agreement until obtaining the written
                    approval of Seven Peaks (which will not be unreasonably
                    withheld). Seven Peaks will cooperate with Atlas in this
                    process as reasonably requested by Atlas, pursuant to
                    paragraph 10(c) hereof. Upon judgment, dismissal or
                    settlement, the escrowed funds shall first be used to
                    satisfy obligations to Wyant, and the balance shall be

                                       9
<PAGE>
 
                    distributed to Atlas, provided that if Wyant is entitled to
                    more than US $350,000 the excess shall be paid by Atlas, and
                    if Wyant is required to pay damages all such damages shall
                    be for Atlas' account.

               (B)  The sum of US$84,000.00 of the Purchase Price will be placed
                    in an interest bearing third party escrow account (subject
                    to a reasonable escrow agreement to be prepared by counsel
                    for both Parties) pending resolution of the Canadian goods
                    and services tax audit. Atlas will use its best efforts to
                    negotiate a reduction of that liability, but will not
                    execute any settlement agreement until obtaining the written
                    approval of Seven Peaks (which will not be unreasonably
                    withheld). Upon resolution, the escrowed funds shall first
                    be used to satisfy the tax obligations, and the balance
                    shall be distributed to Atlas.

               (C)  The outstanding balance of financing provided by Seven Peaks
                    to Atlas, including principal and interest, under the DIP
                    Agreement shall be deducted from the amount of the Purchase
                    Price payable to Atlas and such deduction shall be paid to
                    Seven Peaks.

               (D)  The following portions of the Purchase Price will be placed
                    in a third party escrow account unless previously paid
                    (subject to a reasonable escrow agreement to be prepared by
                    counsel for both Parties):

                    the sum of US$107,029.00 to pay the then existing penalties
                    under the agreement between CUSA and Armstrong World
                    Industries,

                    the sum of US$30,000.00 to pay the existing debt owed by
                    Cornerstone to C&C Logging, Inc. under its Perlite Haulage
                    Contract with Cornerstone,

                    the sum of US$129,000.00 of the Purchase Price to pay the
                    commission due to Monarch Financial Corporation, and

                    the sum of US$37,500 of the Purchase Price to pay Julian
                    Garcia's severance pay if he does not remain an employee of
                    CUSA after Closing.


 

                                       10
<PAGE>
 
               If Seven Peaks is able to negotiate a lesser amount payable to
               either Armstrong or C&C, one half of the savings will be
               distributed to Atlas and one half to Seven Peaks.  If the amount
               payable to Monarch is less than $129,000, the balance will be
               distributed to Atlas.  If Mr. Garcia remains an employee of CUSA
               after Closing the amount escrowed for his severance shall be
               distributed to Atlas.

          (2)  Atlas shall direct the transfer agent that disbursement of the
               Purchase Price under 3(c)(i) above shall not occur until:

               (A)  Atlas and Seven Peaks certify to the transfer agent that
                    they have adjusted the amount of Cornerstone's debt to Atlas
                    (the "Cornerstone Debt") such that the total amount paid by
                    Seven Peaks for acquiring all of the Cornerstone Shares,
                    plus the Cornerstone Debt, equals Four Million Dollars
                    (U.S.); and that after such adjustment, the Cornerstone Debt
                    has been further credited or debited as follows:

                    Atlas and Seven Peaks will review the amount of the accounts
                    payable (except those set out in subparagraph 3(c)(i) above
                    and except expenses incurred by Cornerstone in connection
                    with the Offer) and accounts receivable plus cash of CUSA
                    (without regard, however to any recoupable royalty accounts,
                    which shall remain the property of CUSA)--if the liabilities
                    (other than those hereinbefore excluded) exceed the
                    receivables and cash, the excess will be credited against
                    (subtracted from) the amount of the adjusted Cornerstone
                    Debt, if the opposite occurs (receivables and cash exceed
                    liabilities), the difference will be debited against (added
                    to) the amount of the adjusted Cornerstone Debt.  All
                    inventory at the Process Plant and the Henley Facility shall
                    remain the property of CUSA; and

               (B)  Seven Peaks has certified that Atlas has delivered to Seven
                    Peaks the written resignations of the officers and directors
                    of Cornerstone either nominated by Atlas or securing a dual
                    role as either an officer or director of Cornerstone and
                    Atlas, and a written quitclaim deed conveying to Seven Peaks
                    the gross proceeds royalty previously 

                                       11
<PAGE>
 
                    reserved by Atlas in Atlas' December 13, 1996 Stock Purchase
                    Agreement with Cornerstone.

4.   Representations of and Warranties Concerning the Transaction.

     (1)  Representations and Warranties of Atlas. Atlas represents and warrants
          to Seven Peaks, subject to confirmation of this Agreement and any
          orders entered in the Bankruptcy Case, that the statements contained
          in this subparagraph 4(a) are correct and complete as of the date of
          this Agreement and will be correct and complete as of the Closing (as
          though made then and as though the Closing were substituted for the
          date of this Agreement throughout this subparagraph 4(a)):

          (1)  Organization of Atlas. Atlas is a corporation duly organized,
               validly existing, and in good standing under the laws of the
               State of Delaware.

          (2)  Authorization of Transaction. Atlas has full corporate power and
               authority to execute and deliver this Agreement and to perform
               its obligations hereunder. This Agreement has been duty
               authorized, executed and delivered by Atlas and constitutes the
               valid and legally binding obligation of Atlas, enforceable in
               accordance with its terms and conditions, subject to: (A)
               bankruptcy, insolvency, reorganization, moratorium and other laws
               relating to or affecting creditors' rights generally; (B) the
               qualification that equitable remedies, including without
               limitation, specific performance and injunction, may be granted
               only in the discretion of a court of competent jurisdiction; and
               (C) the qualification that rights to indemnity may be limited by
               applicable law.

          (3)  Noncontravention. Neither the execution and the delivery of this
               Agreement, nor the consummation of the transactions contemplated
               hereby, will violate (A) any provision of the Articles of
               Incorporation or Bylaws of Atlas; (B) any provision of law; (C)
               any order of any court or other agency of government; (D) any
               provision of any indenture, agreement or other instrument to
               which Atlas, Cornerstone or CUSA is a party or by which the
               Project is bound; or (E) be in conflict with, result in a breach
               of or constitute (with due notice and lapse of time) a default
               under any such indenture, agreement or other instrument. To the
               knowledge of Atlas, there is no law, rule or regulation, nor is
               there any judgment, decree or

                                       12
<PAGE>
 
               order of any court or governmental authority binding on Atlas,
               Cornerstone or CUSA which would be contravened by the execution,
               delivery, performance or enforcement of this Agreement or any
               instrument or agreement required hereunder.

          (4)  Brokers' Fees. Atlas has no liability or obligation to pay any
               fees or commissions to any broker, finder, or agent with respect
               to the transactions contemplated by this Agreement for which
               Seven Peaks could become liable or obligated except as set forth
               in subparagraph 3(c)(i), above.

          (5)  Atlas Securities. Atlas holds of record and owns beneficially all
               of the Atlas Securities, free and clear of any restrictions on
               transfer (other than restrictions under applicable securities
               laws), taxes, security interests, options, warrants, purchase
               rights, contracts, commitments, equities, claims or demands
               (except as contemplated by the DIP Agreement) and no voting
               trust, proxy, or other agreement or understanding exists with
               respect to the voting of the Atlas Securities.

     (2)  Representations and Warranties of Seven Peaks. Seven Peaks represents
          and warrants to Atlas that the statements contained in this paragraph
          4(b) are correct and complete as of the date of this Agreement and
          will be correct and complete as of the Closing (as though made then
          and as though the Closing were substituted for the date of this
          Agreement throughout this paragraph 4(b)) and will remain correct and
          complete until such time as Atlas has received all of the
          consideration to which it is entitled hereunder as set forth in
          paragraph 3:

          (1)  Organization of Seven Peaks. Seven Peaks is a corporation duly
               organized, validly existing, and in good standing under the laws
               of the State of Kentucky.

          (2)  Authorization of Transaction. Seven Peaks has full corporate
               power and authority to execute and deliver this Agreement and to
               perform its obligations hereunder. This Agreement has been duly
               authorized, executed and delivered by Seven Peaks and constitutes
               the valid and legally binding obligation of Seven Peaks,
               enforceable in accordance with its terms and conditions, subject
               to: (A) bankruptcy, insolvency, reorganization, moratorium and
               other laws relating to or affecting creditors' rights generally
               (B) the qualification 

                                       13
<PAGE>
 
               that equitable remedies, including, without limitation, specific
               performance and injunction, may be granted only in the discretion
               of a court of competent jurisdiction; and (C) the qualification
               that rights to indemnity may be limited by applicable law.

          (3)  Noncontravention. Neither the execution and the delivery of this
               Agreement, nor the consummation of the transactions contemplated
               hereby, will violate (A) the charter or bylaws of Seven Peaks;
               (B) any provision of law; (C) any order of any court or other
               agency of government; (D) any provision of any indenture,
               agreement or other instrument to which Seven Peaks is a party or
               by which its properties or assets are bound; or (E) be in
               conflict with, result in a breach of or constitute (with due
               notice and lapse of time) a default under any such indenture,
               agreement or other instrument. To the knowledge of Seven Peaks,
               there is no law, rule or regulation, nor is there any judgment,
               decree or order of any court or governmental authority binding on
               Seven Peaks which would be contravened by the execution,
               delivery, performance or enforcement of this Agreement or any
               instrument or agreement required hereunder.

          (4)  Brokers' Fees. Seven Peaks has no liability or obligation to pay
               any fees or commissions to any broker, finder, or agent with
               respect to the transactions contemplated by this Agreement for
               which Atlas could become liable or obligated.

5.   Pre-Offer Representations and Warranties Concerning Cornerstone. Atlas, in
     its capacity as a 61% shareholder of Cornerstone, represents and warrants
     to Seven Peaks that the statements contained in this paragraph 5 are
     correct and complete as of the date of this Agreement and will be correct
     and complete as of the date of the Offer (as though made then and as though
     the date of the Offer were substituted for the date of this Agreement
     throughout this paragraph 5):

     (1)  Employees. Cornerstone has no employees.

     (2)  Subsidiaries. Cornerstone has no Subsidiaries except CUSA.

     (3)  Business Activities. Cornerstone has conducted no business activity
          other than the ownership of CUSA since November 1995.

                                       14
<PAGE>
 
     (4)  Cornerstone Financial Statements. The Cornerstone Financial
          Statements:

               (1)  have been prepared in accordance with Canadian generally
                    accepted accounting principles, applied on a basis
                    consistent with that of the preceding periods;

               (2)  are complete and accurate in all material respects;

               (3)  accurately disclose the assets, liabilities (whether
                    accrued, absolute, contingent or otherwise) and financial
                    condition of Cornerstone and the results of the operations
                    of Cornerstone, as at the dates thereof and for the periods
                    covered thereby;

               (4)  reflect all proper accruals as at the dates thereof and for
                    the periods covered thereby of all amounts which, though not
                    payable until a time after the end of the relevant period,
                    are attributable to activities undertaken during, that
                    period; and

               (5)  contain or reflect adequate reserves for all liabilities and
                    obligations of Cornerstone of any nature, whether absolute,
                    contingent or otherwise, matured or unmatured, as at the
                    date thereof

          No information has become available to Cornerstone that would render
          the Cornerstone Financial Statements incomplete or inaccurate.  There
          have been no significant changes in Cornerstone's financial condition
          since June 30, 1998 as reflected in the Cornerstone Financial
          Statements.

     (5)  Consents, Approvals. No consent, approval, license, order,
          authorization, regulation or declaration of, or filing with, any
          governmental authority or other Person is required by Atlas,
          Cornerstone or CUSA, in connection with (a) the Closing or (b) the
          execution and delivery by Atlas of this Agreement or the other
          documents to be delivered by Atlas to Seven Peaks hereunder or (c) the
          observance and performance by Atlas of its obligations under this
          Agreement or such other documents.

     (6)  Non-Arm's Length Transaction. There does not exist any agreement,
          understanding or commitment giving rise to any

                                       15
<PAGE>
 
          material obligations, financial or otherwise, on the part of
          Cornerstone to Atlas or any of its affiliates (or any associates or
          insiders of any of the foregoing), other than the Cornerstone Debt.

     (7)  Absence of Certain Changes or Events. To the best knowledge of Atlas,
          since September 15, 1998 and except as publicly disclosed, Cornerstone
          has conducted its business only in, and has not taken any actions
          except in, the ordinary course of business and in a manner consistent
          with past practice and has preserved substantially intact the business
          organization and relationships of Cornerstone and, since such date,
          there has not been any change in the working capital, assets,
          financial condition, results of operation, cash flows, business,
          liabilities or prospects of Cornerstone and its subsidiaries, taken as
          a whole, having a material adverse effect.

6.   Closing Representations and Warranties Concerning Cornerstone. Atlas, in
     its capacity as a 61% shareholder of Cornerstone, represents and warrants
     to Seven Peaks that the statements contained in this paragraph 6 are
     correct and complete as of the date of this Agreement and will be correct
     and complete as of the Closing (as though made then and as though the
     Closing were substituted for the date of this Agreement throughout this
     paragraph 6):

     (1)  Organization, Qualification, and Corporate Power. Cornerstone is a
          corporation duly organized, validly existing, and in good standing
          under the laws of the Province of Ontario. Cornerstone is duly
          authorized to conduct business and is in good standing under the laws
          of the Province of Ontario. Cornerstone has the corporate power and
          authority to carry on the businesses in which it is engaged and to own
          and use the properties owned and used by it. No proceedings have been
          taken or authorized by Cornerstone or, to the best of Atlas's
          knowledge, any other Person, with respect to the bankruptcy,
          insolvency, liquidation, dissolution or winding up of Cornerstone or
          with respect to any amalgamation, merger, consolidation, arrangement
          or reorganization relating to Cornerstone.

     (2)  Capitalization. The Cornerstone Shares are the only issued and
          outstanding equity securities of Cornerstone and the Cornerstone
          Shares have been duly authorized, are validly issued, fully paid, and
          nonassessable. No Person has any agreement or any option, right or
          privilege capable of becoming an agreement for the purchase,

                                       16
<PAGE>
 
          subscription or issuance of any securities of Cornerstone or any
          securities convertible into or exchangeable for securities of
          Cornerstone, except (as disclosed on Schedule 5(b)) for options to
          directors and officers of Cornerstone to purchase 475,200 shares at
          C$0.15, however, Atlas shall request of each holder of such options
          that they voluntarily cancel and return their options to Atlas prior
          to Closing.

     (3)  Brokers' Fees. Cornerstone does not have any liability or obligation
          to pay any fees or commissions to any broker, finder, or agent with
          respect to the transactions contemplated by this Agreement.

     (4)  Environmental Compliance. To the knowledge of Atlas, there are no
          conditions or activities at or on the Project or elsewhere which would
          result in a violation of or liability under applicable Environmental
          Laws or result in Environmental Costs to Cornerstone, except for such
          matters as would not have a material adverse effect on the Project
          taken as a whole. To the knowledge of Atlas, there have been issued
          under applicable Environmental Laws no notices of violation or consent
          orders to which Cornerstone or the Project are subject, except for
          such matters as would not have a material adverse effect on the
          Project taken as a whole. There are no pending or, to the knowledge of
          Atlas, threatened proceedings by or before any court or other
          governmental authority against Cornerstone with respect to its
          operation or ownership of the Project alleged to be, or have been, in
          violation of, under, any Environmental Law, except for such matters as
          would not have a material adverse effect on the Project taken as a
          whole

7.   Pre-Offer Representations and Warranties Concerning CUSA. Atlas, in its
     capacity as a 61% shareholder in Cornerstone, represents and warrants to
     Seven Peaks that the statements contained in this paragraph 7 are correct
     and complete as of the date of this Agreement and will be correct and
     complete as of the date of the Offer (as though made then and as though the
     date of the Offer were substituted for the date of this Agreement
     throughout this paragraph 7):

     (1)  Royalties. Except as set forth in Schedule 6(a), to Atlas's knowledge
          there are no royalties or other burdens on production affecting the
          Tucker Hill Property.

     (2)  Title to Claims. Except as disclosed in the "Title Report" of February
          9, 1996 prepared for Atlas by Morrison & Foerster, LLP, to Atlas's
          knowledge, as to the unpatented mining claims comprising the Tucker
          Hill

                                       17
<PAGE>
 
          Property (the "Claims") subject to the paramount title of the United
          States:

               (1)  CUSA is in exclusive possession thereof, and except as
                    disclosed herein, the Claims are free and clear of all
                    liens, encumbrances or other burdens on production or claims
                    of third parties arising by, through or under CUSA;

               (2)  since CUSA acquired the Claims, assessment work, intended in
                    good faith to satisfy the requirements of state and federal
                    laws and regulations and generally regarded in the mining
                    industry as sufficient, for all assessment years up to and
                    including the assessment year ending September 1, 1992, was
                    timely performed on or for the benefit of the Claims and
                    affidavits evidencing such work were timely recorded;

               (3)  since CUSA acquired the Claims, claim rental and maintenance
                    fees required to be paid under federal law in lieu of the
                    performance of assessment work, in order to maintain the
                    Claims commencing with the assessment year ending on
                    September 1, 1993 and through the assessment year ending on
                    September 1, 1999, 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;

               (4)  since CUSA acquired the Claims, all filings with the Bureau
                    of Land Management with respect to the Claims which are
                    required under the Federal Land Policy and Management Act of
                    1976 have been timely and properly made, and

               (5)  there are no actions or administrative or other proceedings
                    pending or threatened against or affecting the Claims.
                    Nothing herein shall be deemed a representation that any of
                    the Claims contain a discovery of valuable minerals.

     (3)  Title to Assets. Except as otherwise set forth or contemplated in the
          Title Report, or as disclosed herein, CUSA has good and marketable
          title to all of its assets (including, without limiting the generality
          of the foregoing, the Process Plant Land), free and clear of all

                                       18
<PAGE>
 
          liens, encumbrances or claims of third parties except for taxes due
          but not yet payable.

     (4)  Material Contracts and Commitments. True and correct copies of all
          contracts, agreements, mortgages, indentures and leases (including
          equipment leases) to which CUSA is a party (collectively the
          "Contracts") have been provided by Atlas to Seven Peaks prior to the
          date hereof. To Atlas's knowledge, except as disclosed herein, CUSA
          has performed all material obligations required to be performed by it
          under the Contracts and is not in default, and will not be in default
          as a result of the consummation of the transactions contemplated
          herein, under any Contract or any license, judgment, injunction,
          decree, order, determination, restriction, or other instrument to
          which it is subject in connection with the Project, except for such
          matters as would not have a material effect on the Project taken as a
          whole.

     (5)  Litigation and Claims. To the knowledge of Atlas, other than matters
          affecting the U.S. mining industry as a whole, there are no actions,
          suits or proceedings pending or threatened against or affecting the
          Project, including any actions, suits, or proceedings being prosecuted
          by any federal, state, or local department, commission, board, bureau,
          agency, or instrumentality. To the knowledge of Atlas, CUSA is not in
          any material default with respect to, or subject to, any order, writ,
          injunction, judgment or decree of any court or any federal, state or
          local department, commission, board, bureau, agency or instrumentality
          which relates to the Project.

     (6)  Consents. CUSA has obtained all consents, approvals, authorizations,
          declarations, or filing required by any federal, state, local, or
          other authority, or any lenders, lessors, creditors, and other third
          parties in connection with the consummation of the transactions
          contemplated hereby.

     (7)  Taxes. CUSA, so long as it has been in possession of the Project, has
          duly and timely filed, in correct form, all federal, state and local
          income, excise, property and other tax returns, reports or statements
          required to be filed by it with respect to the Project and has fully
          paid all taxes, fees, assessments, penalties, and interest due in
          respect of any such returns, reports, or statements, except for such
          matters as would not have a material adverse effect on the Project
          taken as a whole.

                                       19
<PAGE>
 
     (8)  Undisclosed Liabilities. CUSA has no liabilities (whether accrued,
          absolute, contingent or otherwise, matured or unmatured) of any kind
          except:

          (1)  liabilities disclosed or provided for in the Cornerstone
               Financial Statements; and

          (2)  liabilities incurred in the ordinary course of business since
               June 30, 1998, which are consistent with past practice, are not,
               in the aggregate, material and adverse to CUSA or the Project and
               do not violate any covenant contained in this Agreement or
               constitute a breach of any representation or warranty made in or
               pursuant to this Agreement.

     (9)  Absence of Changes.  Since June 30, 1998:

          (1)  CUSA has conducted its business in the ordinary course, has not
               incurred any debt, obligation or liability out of the ordinary
               course of business or of an unusual or extraordinary nature and
               has used its best efforts to preserve its business and assets;

          (2)  there has not been any change in the condition of CUSA's business
               or assets other than changes in the ordinary course of business,
               and such changes have not, either individually or in the
               aggregate, been materially adverse and have not had nor may they
               be reasonably expected to have, either before or after Closing, a
               material adverse effect on the condition of CUSA's business or
               assets;

          (3)  to Atlas's knowledge, there has not been any change in, or
               creation of, any applicable law, any termination, amendment or
               revocation of any licence or any damage, destruction, loss, labor
               dispute or other event, development or condition of any character
               (whether or not covered by insurance) which has had, or could
               have, a material adverse affect on CUSA's business or assets; and

          (4)  there has not been any change in the accounting principles,
               policies, practices or procedures of CUSA or their application to
               CUSA.

                                       20
<PAGE>
 
     (10) Absence of Unusual Transactions.  Since June 30, 1998 CUSA has not:

               (1)  transferred, assigned, sold or otherwise disposed of any of
                    its assets or canceled any debts or claims other than in the
                    ordinary course of business;

               (2)  incurred or assumed any obligation or liability (fixed or
                    contingent) other than obligations or liabilities included
                    in the Cornerstone Financial Statements and obligations and
                    liabilities incurred since June 30, 1998 in the ordinary
                    course of business;

               (3)  settled any liability, claim, dispute, proceedings, suit or
                    appeal pending against it or against any of its assets;

               (4)  discharged or satisfied any lien or encumbrance, or paid any
                    obligation or liability (fixed or contingent) other than
                    liabilities included in the Cornerstone Financial Statements
                    and liabilities incurred since June 30, 1998;

               (5)  made any material change with respect to any method of
                    management operation or accounting in respect of its
                    business;

               (6)  waived or omitted to take any action in respect of any
                    rights of substantial value or entered into any commitment
                    or transaction if such loss, rights, commitment or
                    transaction is or would be material in relation to its
                    assets or business;

               (7)  created any encumbrance on any of its assets or suffered or
                    permitted any such encumbrance that has arisen on its assets
                    since that date to remain;

               (8)  modified, amended or terminated any contract, agreement or
                    arrangement to which it is or was a party, or waived or
                    released any right which it has or had, other than in the
                    ordinary course of its business;

               (9)  incurred any debt, liability or obligation for borrowed
                    money, or incurred any other debt,

                                       21
<PAGE>
 
                    liability or obligation except in the ordinary course of its
                    business;

               (10) issued or sold any securities or issued, granted or
                    delivered any right, option or other commitment for the
                    issuance of any securities;

               (11) declared or paid any dividend or other distribution in
                    respect of any shares in its capital or purchased or
                    redeemed any such shares;

               (12) modified, amended or terminated any contract, agreement or
                    arrangement to which it is or was a party, or waived or
                    released any right which it has or had, other than in the
                    ordinary course of its business; or

               (13) authorized or agreed or otherwise become committed to do any
                    of the foregoing.

     (11) Absence of Guarantees. CUSA has not given nor agreed to give, and is
          not a party to or bound by, any guarantee of indebtedness or other
          obligations of third parties nor any other commitment by which CUSA
          is, or is contingently, responsible for such indebtedness or other
          obligations.

     (12) Restrictions on Business. CUSA is not a party to any agreement, lease,
          mortgage, security document, obligation or instrument, or subject to
          any restriction in its articles, by-laws or its directors' or
          shareholders' resolutions or subject to any restriction imposed by any
          governmental authority or subject to any applicable law or order which
          could materially restrict or interfere with the conduct of its
          business or its use of assets or which could materially limit or
          restrict or otherwise adversely affect the shares or the assets or
          business of CUSA, other than statutory provisions and restrictions of
          general application to its business.

     (13) Conditions of Assets. All material tangible assets of CUSA, other than
          the Process Plant, are in good working condition and good repair,
          ordinary wear and tear excepted, and comply with all standards and
          requirements of all applicable governmental authorities. Both parties
          acknowledge that the Process Plant is not in good working condition,
          that Seven Peaks has fully inspected the Process Plant, that Seven
          Peaks accepts the Process Plant

                                       22
<PAGE>
 
          "As-is, Where-is, and with all faults," and that the foregoing
          sentence shall not apply to the Process Plant.

     (14) Insurance. CUSA is insured by reputable insurers against liability,
          loss and damage in such amounts and against such risks as are
          customarily carried and insured against by owners of comparable
          businesses, properties and assets, and such insurance coverage will be
          continued in full force and effect to and including the Closing. True
          and complete copies of all of the most recent inspection reports, if
          any, received from insurance underwriters as to the condition of the
          assets and the business have been delivered to Seven Peaks. CUSA is
          not in default with respect to any of the provisions contained in any
          such insurance policy and there are no current claims that have not
          been settled or finally determined. All such policies of insurance are
          in full force and effect and CUSA is not in default, whether as to the
          payment of premium or otherwise, under the terms of any such policy.

     (15) No Expropriation. CUSA has not received any notice of expropriation of
          all or any of its assets and CUSA is not aware of any expropriation
          proceeding pending or threatened against or affecting its assets nor
          of any discussions or negotiations which could lead to any such
          expropriation.

     (16) Government Grants. There are no contracts or agreements relating to
          grants or other forms of assistance, including loans with interest at
          below market rates, received by CUSA from any governmental authority.

     (17) Restrictive Covenants. CUSA is not a party to or bound or affected by
          any commitment, agreement or document which limits the freedom of CUSA
          to compete in any line of business, transfer or move any of its assets
          or operations or which does or could adversely affect the business
          practices, operations or conditions of CUSA after the Closing.

     (18) Books and Records. Atlas has made available to Seven Peaks all books
          and records of or relating to CUSA. Such books and records fairly and
          correctly set out and disclose in all respects the financial position
          of CUSA in accordance with good business practice and all financial
          transactions relating to CUSA have been accurately recorded in such
          books and records. The books and records,

                                       23
<PAGE>
 
               (1)  accurately reflect the basis for the financial condition of
                    CUSA shown in the Cornerstone Financial Statements; and

               (2)  together with all disclosures made in this Agreement or in
                    the schedules hereto, present fairly the financial condition
                    of CUSA as of and to the date hereof.

          No information, records or systems pertaining to the operation or
          administration of CUSA are in the possession of, recorded, stored,
          maintained by or otherwise dependent on any other person. Atlas has
          disclosed the existence of and made available for review by Seven
          Peaks all the books and records.

     (19) No Joint Venture Interests. CUSA has not nor has it agreed to become,
          a partner, member, owner, proprietor or equity investor of or in any
          partnership, joint venture co-tenancy or other similar jointly-owned
          business undertakings or to acquire or lease any other business
          operation and does not have any other significant investment interests
          in any similar business owned or controlled by any third party.

     (20) Bank Accounts. The name of each bank or other depository in which
          Cornerstone or CUSA maintains any bank account, trust account or
          safety deposit box has been delivered to Seven Peaks, along with the
          names of all persons authorized to draw thereon or who have access
          thereto.

8.   Closing Representations and Warranties Concerning CUSA. Atlas, in its
     capacity as a 61% shareholder in Cornerstone, represents and warrants to
     Seven Peaks that the statements contained in this paragraph 8 are correct
     and complete as of the date of this Agreement and will be correct and
     complete as of the Closing (as though made then and as though the Closing
     were substituted for the date of this Agreement throughout this paragraph
     8):

     (1)  Permits and Licenses. A list of all currently active material permits,
          licenses, consents, approvals, authorizations, and qualifications
          obtained by CUSA in connection with its operations on the Tucker Hill
          Property as of the date of this Agreement, true and correct copies of
          each of which have been made available to Seven Peaks, is set forth on
          Schedule 6(b)(i); the only other permits, licenses, consents,
          approvals, authorizations and qualifications required in order to
          operate the Project in the normal course of business are set forth in
          Schedule 6(b)(ii). To Atlas's knowledge, 

                                       24
<PAGE>
 
          CUSA's ownership and operation of the Tucker Hill Property is not in
          violation of and has resulted in no liability (other than liability
          for compliance with existing permits and laws, including but not
          limited to performance of reclamation) under any statute, rule or
          regulation of any governmental authority applicable to the Tucker
          Hill Property, other than violations or liability, if any, which have
          not resulted and would not be reasonably expected to result in any
          material loss or liability.

     (2)  Environmental Compliance. To the knowledge of Atlas, there are no
          conditions or activities at or on the Project which would result in a
          violation of or liability under applicable Environmental Laws or
          result in Environmental Costs to CUSA, except for such matters as
          would not have a material adverse effect on the Project taken as a
          whole. To the knowledge of Atlas, there have been issued under
          applicable Environmental Laws no notices of violation or consent
          orders to which CUSA (with respect to its operations at the Project)
          or the Project are subject, except for such matters as would not have
          a material adverse effect on the Project taken as a whole. There are
          no pending or, to the knowledge of Atlas, threatened proceedings by or
          before any court or other governmental authority against CUSA with
          respect to its operation or ownership of the Project alleged to be, or
          have been, in violation of, under, any Environmental Law, except for
          such matters as would not have a material adverse effect on the
          Project taken as a whole.

     (3)  Legality. To the knowledge of Atlas, CUSA's operations on the Project
          have been conducted in material compliance with applicable laws,
          rules, ordinances and other governmental regulations, including,
          without limitation, those relating to zoning, condemnation, mining,
          reclamation, environmental matters, equal employment, and federal.
          state, or local health and safety laws, rules, and regulations, except
          for such violations as would not materially adversely affect the
          Project.

9.   Pre-Closing Covenants. The Parties agree as follows with respect to the
     period between the execution of this Agreement and the Closing.

     (1)  General. Each of the Parties will use its reasonable best efforts to
          take all action and to do all things necessary, proper, or advisable
          in order to consummate and make effective the transactions
          contemplated by this Agreement, including obtaining approval of this
          Agreement in the Bankruptcy Case.

                                       25
<PAGE>
 
     (2)  Notices and Consents. Each of the Parties will (and Atlas will use its
          reasonable best efforts cause Cornerstone and CUSA to) give any
          notices to, make any filings with, and use its reasonable best efforts
          to obtain any required authorizations, consents, and approvals of
          governments and governmental agencies in connection with the
          transactions contemplated by this Agreement.

     (3)  Operation of Business. Atlas, in its capacity as a 61% shareholder of
          Cornerstone, will use its reasonable best efforts not to cause or
          permit Cornerstone or CUSA to engage in any practice, take any action,
          or enter into any transaction outside the ordinary course of business
          of Cornerstone or CUSA consistent with the past practice and custom of
          Cornerstone or CUSA.

     (4)  Full Access for Due Diligence. Atlas, in its capacity as a 61%
          shareholder of Cornerstone, will use its reasonable best efforts to
          cause Cornerstone and CUSA to permit Seven Peaks and its
          Representatives to have full access at all reasonable times, and in a
          manner so as not to interfere with the normal business operations of
          Cornerstone and CUSA, to all premises, properties, personnel, books,
          records (including tax records), contracts, and documents of or
          pertaining to Cornerstone and CUSA, which may relate, in the good
          faith judgment of Seven Peaks, to the titles held by Cornerstone and
          CUSA and to its properties, to the financial condition of Cornerstone
          and CUSA, to environmental matters related to Cornerstone and CUSA and
          its properties, and to the ore reserve calculations of Cornerstone and
          CUSA. Seven Peaks and Atlas hereby acknowledge and agree that Atlas
          makes no representation or warranty as to the reliability, accuracy or
          completeness of any of the information or data referred to in this
          paragraph. Seven Peaks (and its Representatives) will treat and hold
          as Confidential Information any and all information received from
          Atlas, Cornerstone and CUSA and their Representatives in the course of
          the review contemplated by this paragraph.

     (5)  Exclusivity. Unless and until this Agreement is terminated prior to
          the Cornerstone Shares being taken up under paragraph 3(b) or until
          Seven Peaks withdraws the Offer, Atlas will not (and will use its
          reasonable best efforts to not cause or permit Cornerstone and CUSA
          to) solicit, initiate, or encourage the submission of any proposal or
          offer from any Person relating to the acquisition of all or
          substantially all of the capital

                                       26
<PAGE>
 
          stock or assets of Cornerstone and CUSA (including any acquisition
          structured as a merger, consolidation or share exchange), unless such
          proposal or offer pertains to Atlas as a whole and is made subject to
          this Agreement.

10.  Post-Closing Covenants. The Parties agree as follows with respect to the
     period following the Closing.

     (1)  General. In case at any time after the Offer is made any further
          action is necessary to carry out the purposes of this Agreement, each
          of the Parties will take such further action (including the execution
          and delivery of such further instruments and documents) as any other
          Party reasonably may request, all at the sole cost and expense of the
          requesting Party (unless the requesting Party is entitled to
          indemnification hereunder).

     (2)  Corporate Records. As soon as practicable after the Cornerstone Shares
          are taken up, Atlas shall deliver to Seven Peaks all corporate records
          of Cornerstone and CUSA which are maintained by Atlas or its agents or
          Affiliates provided that Seven Peaks and Atlas shall coordinate and
          agree upon a mutually acceptable schedule for the assembly and
          delivery of such documents; thereafter, Seven Peaks shall afford Atlas
          reasonable access to such documents upon reasonable notice and during
          regular business hours.

     (3)  Litigation Support. In the event and for so long as any Party actively
          is contesting or defending against any third party action, suit,
          proceeding, hearing, investigation, charge, complaint, claim, or
          demand in connection with (i) any transaction contemplated under this
          Agreement or (ii) any fact, situation, circumstance, status,
          condition, activity, practice, plan, occurrence, event, incident,
          action, failure to act, or transaction on or prior to the Closing
          involving Cornerstone or CUSA, the other Party shall cooperate
          (without subpoena) with it and its counsel in the defense or contest,
          make available its personnel, and provide such testimony and access to
          its books, records and properties as shall be necessary in connection
          with the defense or contest, all at the sole cost and expense of the
          contesting or defending Party (unless the contesting or defending
          Party is entitled to indemnification therefor hereunder).

11.  Survival of Representations and Warranties. The representations and
     warranties of Seven Peaks and Atlas contained herein shall survive the
     Closing for a period of two years.

                                       27
<PAGE>
 
12.  Termination.

     (1)  Termination of Agreement by the Parties. The Parties may terminate
          this Agreement as provided below:

          (1)  Seven Peaks and Atlas may terminate this Agreement by mutual
               written consent at any time prior to the Closing; or

          (2)  Seven Peaks may terminate this Agreement by giving written notice
               to Atlas at any time prior to the Closing in the event Atlas has
               breached any material representation, warranty, or covenant
               contained in this Agreement in any material respect, Seven Peaks
               has notified Atlas of the breach, and Atlas has not disputed the
               existence or nature of such breach or such breach has not been
               cured by the Automatic Termination Date; or

          (3)  Atlas may terminate this Agreement by giving written notice to
               Seven Peaks at any time prior to the Closing in the event Seven
               Peaks has breached any material representation, warranty, or
               covenant contained in this Agreement in any material respect,
               Atlas has notified Seven Peaks of the breach, and Seven Peaks has
               not disputed the existence or nature of such breach or such
               breach has not been cured by the Automatic Termination Date.

     (2)  Automatic Termination.  This Agreement shall automatically terminate,
          without further action on the part of either Party in the event that:

          (1)  the Offer has not been made on or before December 31, 1998;

          (2)  the Offer does not substantially conform with the description in
               Schedule A;

          (3)  Cornerstone Shares deposited under the Offer (including the Atlas
               Securities) have not, for any reason whatsoever (other than that
               all the terms and conditions of the Offer have not been complied
               with or waived by Seven Peaks), been taken up and paid for on or
               before the expiry of ten days after the expiry of the Offer.

          (4)  Closing has not occurred within 90 days after the Offer is made.

                                       28
<PAGE>
 
     (3)  Effect of Termination. If either Party terminates this Agreement (or
          if it terminates automatically) pursuant to this paragraph all rights
          and obligations of the Parties hereunder shall terminate without any
          liability of either Party to the other Party except for any liability
          of any Party then in breach, and Seven Peaks shall have only the
          rights and Atlas the obligations set forth in the DIP Agreement;
          however, if Seven Peaks terminates this Agreement without cause after
          90% of the Cornerstone Shares have been deposited under the Offer,
          Atlas shall be entitled to retain the first $250,000.00 provided by
          Seven Peaks under the DIP Agreement, plus interest thereon, with any
          remaining advances under the DIP Agreement refunded to Seven Peaks as
          provided in the DIP Agreement.

13.  Confidentiality. Seven Peaks acknowledges that any and all information
     concerning the businesses, properties and affairs of Atlas which is
     disclosed to Seven Peaks or its Representatives by Atlas or its
     Representatives or by Cornerstone or its Representatives, or which is
     discovered by Seven Peaks or its Representatives in the course of its due
     diligence constitutes the unique, proprietary and confidential information
     of Atlas (collectively "Confidential Information"). Notwithstanding the
     foregoing, however, "Confidential Information" shall not include any
     information or data which is in, or becomes a part of, the public domain by
     any means other than the breach by Seven Peaks or its Representatives of
     the obligations hereunder. Until the earlier to occur of the Closing or the
     second anniversary of the Termination of this Agreement pursuant to
     paragraph 12 hereof Seven Peaks shall maintain all Confidential Information
     disclosed to or received by it pursuant to this Agreement in confidence and
     shall not disclose the same to any third party unless required to do so by
     court order or by law, in which case Seven Peaks shall notify Atlas, in
     writing, prior to making such disclosure and shall cooperate with Atlas to
     preserve and protect the confidentiality of the Confidential Information to
     the fullest extent possible. Additionally, except as specifically
     contemplated by this Agreement, Seven Peaks shall not utilize any
     Confidential Information for its own benefit or for the benefit of any
     other party. If this Agreement is terminated, for any reason whatsoever,
     Seven Peaks and its Representatives will return to Atlas all tangible
     embodiments (and all copies) of the Confidential Information which are in
     their possession.

14.  Miscellaneous.

                                       29
<PAGE>
 
     (1)  Disclosure of Information Concerning Cornerstone and CUSA. Atlas has
          instructed its representatives, and to the extent it is able to do so
          the representatives of Cornerstone and CUSA to answer questions
          concerning the businesses, affairs, operations and properties of CUSA
          which are addressed to them by Seven Peaks and its Representatives
          during the course of the due diligence conducted by Seven Peaks.
          Additionally, Atlas has instructed its Representatives and the
          Representatives of Cornerstone and CUSA to provide to Seven Peaks and
          its Representatives copies of documents requested by Seven Peaks and
          its Representatives in the course of the due diligence conducted by
          Seven Peaks and to otherwise cooperate with and assist Seven Peaks and
          its Representatives in such due diligence efforts. The Parties
          acknowledge and agree that all such information and documents are
          Confidential Information.

     (2)  Press Releases and Public Announcements. Neither Party shall issue any
          press release or make any public announcement relating to the subject
          matter of this Agreement prior to the Closing without the prior
          written approval of the other Party; provided, however, that either
          Party may make any public disclosure it believes in good faith is
          required by applicable law or any listing or trading agreement
          concerning its publicly-traded securities (in which case the
          disclosing Party will use its best efforts to advise the other Party
          prior to making the disclosure) or if such disclosure is made pursuant
          to the requirements of the U.S. Bankruptcy Code or a court order in
          the Bankruptcy Case.

     (3)  Entire Agreement. This Agreement (including the DIP Agreement and the
          Schedules referred to herein) constitutes the entire agreement among
          the Parties and their Affiliates in regard to the subject matter
          hereof and supersedes any prior understandings, agreements, or
          representations (specifically including the Confidentiality Agreement
          of August 26, 1998) by or among the Parties or their Affiliates,
          written or oral, to the extent they relate in any way to the subject
          matter hereof.

     (4)  Succession anti Assignment. This Agreement shall be binding upon and
          inure to the benefit of the Parties named herein and their respective
          successors and permitted assigns. No Party may assign either this
          Agreement or any of its rights, interests, or obligations hereunder
          without the prior written approval of the other Party.

                                       30
<PAGE>
 
     (5)  Counterparts. This Agreement may be executed in one or more
          counterparts, each of which shall be deemed an original but all of
          which together will constitute one and the same instrument.

     (6)  Headings. The paragraph headings contained in this Agreement are
          inserted for convenience only and shall not affect in any way the
          meaning or interpretation of this Agreement.

     (7)  Notices. All notices, requests, demands, claims, and other
          communications hereunder shall be in writing. Any notice, request,
          demand, claim, or other communication hereunder shall be deemed duly
          given if sent by prepaid overnight courier or transmitted by
          telecopier addressed to the intended recipient as set forth below:

If to Atlas:
     Atlas Corporation
     Republic Plaza, Suite 3050
     370 17/th/ Street
     Denver, Colorado 80202
     Attention: Gregg Shafter, President
     Telecopier No.: (303) 629-2445

     with a copy to :

     Harvey Sender, Esq.
     John B. Wasserman, Esq.
     Sender & Wasserman, P.C.
     1999 Broadway, Suite 2305
     Denver, Colorado 80202
     Telecopier No.: (303) 296-7600

If to Seven Peaks:

     Seven Peaks Mining, Inc.
     1500 North Big Run Road
     Ashland, Kentucky 41102
     Attention: Michael Stanley, President
     Telecopier No.: (606) 928-0450

     with a copy to:

     Robert A. Bassett
     Dorsey & Whitney LLP
     Republic Plaza, Suite 4400
     370 17/th/ Street
     Denver, Colorado 80202
     Telecopier No.: (303) 629-3450

                                       31
<PAGE>
 
Any notice, request, demand, claim, or other communication hereunder sent to the
intended recipient at the address set forth above shall be deemed to have been
duly given on the business day following the day upon which it is given to the
courier or on the day (or the next business day if such day is not a business
day) upon which it is telecopied. Any Party may change the address to which
notices, requests, demands, claims, and other communications hereunder are to be
delivered by giving the other Party notice in the manner herein set forth.

     (8)  Governing Law. This Agreement shall be governed by and construed in
          accordance with the domestic laws of the State of Colorado without
          giving effect to any choice or conflict of law provision or rule
          (whether of the State of Colorado or any other jurisdiction) that
          would cause the application of the laws of any jurisdiction other than
          the State of Colorado.

     (9)  Amendments and Waivers. No amendment of any provision of this
          Agreement shall be valid unless the same shall be in writing and
          signed by Seven Peaks and Atlas. No waiver by either Party of any
          default, misrepresentation, or breach of warranty or covenant
          hereunder, whether intentional or not, shall be deemed to extend to
          any prior or subsequent default, misrepresentation, or breach of
          warranty or covenant hereunder or affect in any way any rights arising
          by virtue of any prior or subsequent such occurrence.

     (10) Severability. Any term or provision of this Agreement that is invalid
          or unenforceable in any situation in any jurisdiction shall not affect
          the validity or enforceability of the remaining terms and provisions
          hereof or the validity or enforceability of the offending term or
          provision in any other situation or in any other jurisdiction.

     (11) Expenses. Each of Seven Peaks and Atlas will bear its own costs and
          expenses (including legal fees and expenses) incurred in connection
          with this Agreement and the transactions contemplated hereby.

     (12) Currency. All dollar amounts contained herein are expressed in lawful
          currency of the United States of America except as specifically set
          forth herein.

     (13) Construction. The Parties have participated jointly in the negotiation
          and drafting of this Agreement in the event an ambiguity or question
          of intent or interpretation arises, this Agreement shall be construed

                                       32
<PAGE>
 
          as if drafted jointly by the Parties and no presumption or burden of
          proof shall arise favoring or disfavoring any Party by virtue of the
          authorship of any of the provisions of this Agreement. Any reference
          to any federal, state, local or foreign statute or law shall be deemed
          also to refer to all rules and regulations promulgated thereunder,
          unless the context requires otherwise. The word "Including" shall mean
          including without limitation.

     (14) Incorporation of Schedules. The Schedules identified in this Agreement
          are incorporated herein by reference and made a part hereof.

     (15) Arbitration of Disputes.

          (1)  Unresolved Disputes. Any disagreement or dispute arising out of
               or relating to this Agreement, its existence, interpretation,
               performance or enforcement (including but not limited to the
               existence of a default) not resolved by the Parties within fifty
               (50) days after the date on which one party notifies the other of
               any such disagreement or dispute shall be settled by arbitration
               in accordance with this paragraph.

          (2)       Rules. Matters subject to arbitration shall be settled by
                    arbitration before one disinterested person who shall
                    arbitrate the dispute in Denver, Colorado, in accordance
                    with the commercial arbitration rules of the American
                    Arbitration Association in effect at the time of
                    arbitration. In the event of a conflict between those
                    commercial arbitration rules and this paragraph, this
                    paragraph shall control. The judgment of the arbitrator as
                    to such matters shall be binding upon the parties to this
                    Agreement, and judgment upon any award rendered by the
                    arbitrator may be entered in any court having jurisdiction
                    under the provision of the Colorado Revised Statutes
                    pertaining to arbitration and award as they may be amended
                    from time to time.

          (3)       Demand. To demand arbitration any party (the "demanding
                    party") shall give written notice to the other party (the
                    "responding party"). Such notice shall specify the nature of
                    the issues in dispute, the amount involved, and the remedy
                    requested. Within twenty (20) days of the receipt of the
                    notice, the responding

                                       33
<PAGE>
 
                    party shall answer the demand in writing, specifying the
                    issues that party disputes. The parties shall thereupon each
                    select one arbitrator, who shall be qualified by skill and
                    experience in the subject matter under dispute. Within
                    fifteen (15) days thereafter, the two party appointed
                    arbitrators shall jointly select the disinterested person
                    arbitrator who shall be similarly qualified.

          (4)  Proceedings. Within twenty (20) days after the third arbitrator
               has been selected or appointed, each party to the dispute shall
               submit to the arbitrator a written statement of its position as
               to the matter being arbitrated, including its position on the
               necessity for discovery or a formal hearing. The arbitrator
               shall, within fifteen (15) days after submission of statements,
               establish a schedule for the arbitration proceedings and issues
               orders relating to the conduct of such proceedings, governing,
               among other matters, the extent and nature of any discovery to be
               allowed and the necessity of a formal hearing. If a hearing is
               held, the arbitrator shall issue a decision as to the resolution
               of the dispute within fifteen (15) days after the hearing. All
               costs, expenses and fees, plus reasonable attorneys' fees, shall
               be recoverable by or paid to the substantially prevailing party
               in any dispute resolved by arbitration.

15.  Nothing contained in this Agreement shall require Atlas to request any
     director or officer of Cornerstone to take any action or to refrain from
     taking any action as a director or officer of Cornerstone or to act
     otherwise than in accordance with such person's fiduciary duties as a
     director and/or officer of Cornerstone. For greater certainty, nothing
     contained herein will prevent Cornerstone from: (i) responding as required
     by applicable law to any unsolicited expression of interest, proposal or
     offer, (ii) making such disclosure which in the judgment of the board of
     directors of Cornerstone upon the advice of counsel is required by law to
     the extent required to satisfy the fiduciary obligations of the members of
     such board of directors, or (iii) withdrawing or modifying any
     recommendation or otherwise fulfilling the fiduciary duties of the members
     of the board of directors of Cornerstone (including the Atlas
     representatives thereon) to Cornerstone and its shareholders in relation to
     the transaction if to do so would, in the opinion of the board of directors
     of Cornerstone (upon the advice of counsel), be a proper exercise of such
     directors' fiduciary duties.

                                       34
<PAGE>
 
16.  THIS AGREEMENT AND ATLAS' CONSUMMATION OF THE TRANSACTION CONTEMPLATED
     HEREIN ARE SUBJECT TO APPROVAL OF THE U.S. BANKRUPTCY COURT FOR THE
     DISTRICT OF COLORADO

     IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed by their duly authorized representatives upon the date first herein
written.


                                   SEVEN PEAKS MINING, INC.


                                   By:   ___________________________________
                                         Michael Stanley, President


                                   ATLAS CORPORATION


                                   By:   ___________________________________
                                         Gregg Shafter, President

                                       35