EXHIBIT 3
OPTION TO PURCHASE
THIS OPTION TO PURCHASE (the "Agreement") is dated as of the 20th day
of March, 1998, by and among Xxxxxxx Xxxxx Oil Company, a Colorado corporation
("KTOC") and Francarep, Inc., a Wyoming corporation (the "Stockholder"). KTOC
and the Stockholder are each a "Party" and collectively the "Parties."
Recitals
A. The Stockholder owns the following shares of the issued and
outstanding capital stock of American Rivers Oil Company, a Wyoming corporation
("AROC"): 275,000 shares of Class A common stock and 330,000 shares of Class B
common stock. The Stockholder also owns 68,750 shares of Xxxxxx Capital
Corporation common stock. The 275,000 Class A shares, 330,000 Class B shares,
and 68,750 Xxxxxx shares are collectively the "Francarep Shares."
B. KTOC is obligated to purchase the 275,000 Class A shares pursuant to
that certain Option Agreement entered into as of October 16, 1995, by and among
KTOC and the Stockholder, as amended by that certain Option Agreement entered
into as of June 6, 1997 (collectively the "Francarep Agreement"), copies of
which are attached hereto as Exhibit A.
C. Royal Xxxx Minerals, Inc., a Delaware corporation ("RSMI") desires
to acquire certain shares in AROC, including the Francarep Shares, pursuant to
(i) that certain Option to Purchase by and among RSMI, KTOC, Xxxxxxx Xxxxx, and
Art and Music Outreach for Kids, a Colorado nonprofit corporation ("AMOK"),
dated as of March 20, 1998 (the "RSMI Option"), and (ii) that certain Escrow
Agreement by and among RSMI, KTOC, Xxxxxxx Xxxxx, AMOK, the escrow agent, and
Stockholder dated as of March 20, 1998 (the "Escrow Agreement").
D. The Stockholder desires to grant and KTOC desires to obtain an
option to purchase the Francarep Shares so that KTOC could satisfy a potential
obligation to deliver the Francarep Shares to RSMI created by the RSMI Option.
IN CONSIDERATION of the mutual covenants set forth below and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows:
Agreement
ARTICLE I: OPTION
1.01 Option Premium. KTOC agrees to pay the Stockholder $10.00 in cash
or other immediately available funds on or before March 31, 1998 (the "Option
Premium") in exchange for the Option (as defined below).
Ex. 3-1
1.02 Grant of Option. The Stockholder hereby grants to KTOC an
irrevocable and exclusive option (the "Option") to purchase the Francarep Shares
on the terms and conditions set forth below.
1.03 Term of Option. The term of the Option shall be until the earlier
of the following (the "Expiration Date"):
(a) 5:00 p.m. September 15, 1998; or
(b) the date specified in Section 5.01(b) below.
1.04 Exercise of Option. The Option may be exercised by KTOC at any
time prior to the Expiration Date by executing and delivering to the Stockholder
written notice of such exercise. If the Option is not exercised by KTOC, then
all of the terms of the Francarep Agreement shall remain in effect after the
Expiration Date, except that (i) the expiration date of the Francarep Agreement
shall be extended to ________, and (ii) the mandatory repurchase price under the
Francarep Agreement ($412,500.00) shall be reduced by the amount of
consideration received by the Stockholder from RSMI should RSMI elect not to
exercise its option under the RSMI Option and the Escrow Agreement. If the
Option is exercised by KTOC, then KTOC shall have no further obligations under
the Francarep Agreement.
ARTICLE II: EXERCISE
2.01 Exercise Price. The purchase price for the Francarep Shares shall
be $250,000.00 (the "Exercise Price") payable as described in Section 4.03
below. The Option Premium shall not be considered as a payment of a portion of
the Exercise Price.
ARTICLE III: REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS
3.01 Stock. The Stockholder owns (i) 275,000 Class A shares and 330,000
Class B shares of the issued and outstanding shares of the capital stock of AROC
free and clear of all liens, encumbrances, restrictions, claims, options,
warrants, calls and commitments of every kind, and (ii) 68,750 shares of Xxxxxx
Capital Corporation common stock free and clear of all liens, encumbrances,
restrictions, claims, options, warrants, calls and commitments of every kind.
3.02 Power and Authority. The Stockholder has the full legal right,
power and authority to enter into this Agreement and to exchange, assign, and
transfer the Francarep Shares to KTOC.
ARTICLE IV: CLOSING
4.01 Closing. The closing shall take place at the offices of Holme
Xxxxxxx & Xxxx, 0000 Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx, no later than
30 days after receipt by the Stockholder of the written notice described in
Section 1.04 above, or at such other place and time as the Parties may agree.
4.02 Obligations of Parties. At the closing the following shall occur:
Ex. 3-2
(a) The Stockholder shall deliver to KTOC certificates
representing its ownership of the Francarep Shares, duly endorsed in blank or
accompanied by stock powers duly endorsed in blank, and (ii) execute,
acknowledge, and deliver any and all other documents that are necessary to
transfer the Francarep Shares; and
(b) KTOC shall pay the Stockholder a total of $250,000.00 in
cash or other immediately available funds.
ARTICLE V: TERMINATION OF OPTION
5.01 Early Termination of Option. If KTOC and RSMI enter into the RSMI
Option, then the Parties agree as follows:
(a) The Stockholder shall execute the Escrow Agreement,
thereby requiring the Stockholder to deliver the Francarep Shares to the escrow
agent pursuant to the terms thereof; and
(b) The Option shall terminate as of the date that the Escrow
Agreement is executed by all parties thereto, and the rights and obligations of
the Parties with respect to the Francarep Shares shall be governed by the terms
of the Escrow Agreement.
ARTICLE VI: NOTICES
6.01 Notices. All notices and other communications required or
permitted hereunder shall be deemed sufficiently given or served for all
purposes herein set forth when received, provided such notice is hand delivered,
mailed by first class mail, or sent via facsimile. Notices or other
communications shall be delivered as follows:
To Stockholder at:
Francarep, Inc.
Attention: Xxxxxxx Xxxxxxx
00 Xx. xxx Xxxxxx-Xxxxxxx 00000
Xxxxx, Xxxxxx
To KTOC at:
Xx. Xxxxxxx Xxxxx
000 Xxxx 0xx Xxxxxx; Xxxxx 000
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
ARTICLE VII: MISCELLANEOUS
7.01 Entire Agreement. This Agreement embodies the entire understanding
and agreement among the Parties and supersedes any and all prior negotiations,
understandings or agreements in regard thereto, except for the Francarep
Agreement.
Ex. 3-3
7.02 Amendment. This Agreement may only be amended by the written
consent of all parties. No rights hereunder may be waived except by an
instrument in writing signed by the Party sought to be charged with such waiver.
7.03 Applicable Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of Colorado.
7.04 Counterparts. This Agreement may be executed in any number of
counterparts each of which shall be considered an original.
7.05 Severability of Provisions. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforcability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
7.06 Headings. The section headings used in this Agreement are for
convenience of reference only and shall not affect the construction of this
Agreement.
IN WITNESS WHEREOF, the Parties have executed and delivered this
Agreement as of the day and year first written above.
XXXXXXX XXXXX OIL COMPANY, a
Colorado corporation
By: /s/ Xxxxxxx Xxxxx
Xxxxxxx Xxxxx, President
FRANCAREP, INC., a Wyoming corporation
By: /s/ Xxxxxxx Xxxxxxx
Print Name: Xxxxxxx Xxxxxxx
Title: President
Ex. 3-4
EXHIBIT A
[Option Agreement and Extension Agreement to be attached]
Ex. 3-5
