Exhibit 10.12
OPTION TO PURCHASE
THIS OPTION TO PURCHASE (this "Agreement"), dated effective as of June 15,
1997, is between American Rivers Oil Company ("AROC"), a Wyoming corporation,
and Creston Explorations ("Creston"), a Cayman Islands corporation.
Recitals
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A. Opon Development Company ("Opon") has entered into a $12,5 million
borrowing base revolving credit facility from N.M. Rothschild & Sons, Ltd.
("Rothschild") through Rothschild Denver, Inc. (the "Rothschild Credit Line"),
which credit facility required a pledge of all of the outstanding capital stock
of Opon (the "Opon Stock").
B. Creston is the owner of 21.950885 shares of Opon Stock (being 21.950885%
of the outstanding equity of Opon), and has benefited as a result of the
Rothschild Credit Line. Creston's Opon Stock is currently pledged (the "Stock
Pledge") to Rothschild as partial security for the Rothschild Credit Line.
C. AROC desires to obtain an option from Creston, and Creston desires to
grant an option to AROC to purchase Creston's Opon Stock, subject to the terms
of (i) the Stock Pledge, (ii) the revolving credit agreement and all related
documents between Opon and Rothschild, and (iii) that certain Shareholder
Agreement (the "Shareholder Agreement") dated June 14, 1996 among Opon. Creston
and Chase Opon, Ltd. (collectively the "Prior Documents").
IN CONSIDERATION of he foregoing, the mutual agreements contained herein,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, AROC and Creston agree as follows:
ARTICLE I: OPTION
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1.01 Grant of Option. Creston hereby grants to AROC an irrevocable and
exclusive option (the "Option") to purchase the Opon Stock on the terms and
conditions set forth below. AROC's services in connection with the Rothschild
Credit Line shall serve as consideration for Creston's granting of the Option.
1.02 Term of Option. The term of the Option shall be until 5:00 p.m.
September 15, 1997 (the "Expiration Date").
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1.03 Exercise of Option. AROC may elect to exercise the Option at any time
prior to the Expiration Date by executing and delivering to Creston written
notice of such election and payment of the Exercise Price (as defined below).
There shall be no penalty for early exercise of the Option. Upon exercise of the
Option, the parties shall have 30 days in which to close (the "Closing") the
purchase of the Opon Stock by AROC.
1.04 Exercise Price. The exercise price for the Opon Stock (the "Exercise
Price") shall be $5,000,000 cash and $3,500,000 in AROC common stock or another
publicly traded equity security, with the number of shares to be determined by
the average closing price of such security for the five business days prior to
the day before Closing.
1.05 Adjustment to Purchase Price. The parties hereto acknowledge and agree
that the Exercise Price payable by AROC is based on the Creston's percentage
ownership of Opon as of the date of this Agreement. If, prior to the date upon
which AROC delivers the Exercise Price, Opon issues additional capital stock or
grants options or warrants which permit the holder thereof to purchase addition
capital stock, the parties shall adjust the Exercise Price to reflect the
corresponding decrease in Creston's percentage ownership of Opon.
ARTICLE II: REPRESENTATIONS AND WARRANTIES OF CRESTON
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Creston represents and warrants to AROC that as of the date hereof:
(a) Creston has received no notice of, and has no other knowledge of, any
litigation, claim or proceeding, pending or currently threatened, which affects
the Opon Stock;
(b) Except with respect to consents required under the Prior Documents,
Creston has taken all action necessary for (i) the authorization, execution,
delivery, and performance of all its obligations under this Agreement and the
consummation of the transactions contemplated herein, and (ii) the
authorization, execution, and delivery of the Opon Stock being sold upon
exercise of the Option. This Agreement constitutes a valid and binding
obligation of Creston, enforceable against Creston in accordance with its terms,
subject to obtaining the consent of Rothschild and to applicable bankruptcy,
insolvency, reorganization, and moratorium laws and other laws of general
application affecting enforcement of creditors' rights generally and to general
equitable principles.
(c) Creston holds the Opon Stock free and clear of any mortgage, lien,
security interest, security agreement, conditional sale or other title retention
agreement, limitation, pledge, option, charge, assessment, restrictive
agreement, restriction, encumbrance, adverse interest, restriction on transfer
or any exception to or defect in title or other ownership interests other than
those contained in the Prior Documents.
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(d) Except with respect to consent required under the Prior Documents,
Creston has obtained all consents, approvals, or authorizations of, or
registrations, qualifications, designations, declarations' or filings with any
federal or state governmental authority, and all consents, approvals or
authorizations of any third party, required in connection with the execution of
this Agreement and the transactions contemplated hereby.
(e) Assuming that the consents under the Prior Documents are obtained, the
execution and delivery of this Agreement and the performance or all of the
obligations of Creston hereunder will not result in a breach of or constitute a
default under any agreement entered into by Creston or under any covenant or
restriction affecting Creston's Opon Stock.
ARTICLE III: REPRESENTATIONS AND WARRANTIES OF AROC
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AROC represents and warrants to Creston that as of the date hereof:
(a) AROC is a corporation that is duly organized, validly existing, and in
good standing under the laws of the State of Wyoming, has all necessary
corporate power and authority to own properties owned by it and carry on its
business as now owned and operated by it, and is duly qualified to do business
as a foreign corporation and is in good standing in all jurisdictions in which
failure to so qualify would have a materially adverse effect upon its operations
or financial condition.
(b) All corporate action on the part of the Company necessary for (i) the
authorization, execution, delivery, and performance of all the obligations of
the Company under this Agreement and the consummation of the transactions
contemplated herein, and (ii) the authorization, issuance, execution, and
delivery of the AROC Common Stock being delivered by AROC hereunder has been
duly and validly completed. This Agreement constitutes a valid and binding
obligation of AROC enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, and moratorium laws and other
laws of general application affecting enforcement of creditors' rights generally
and to general equitable principles.
(c) The AROC Common Stock, when delivered by AROC in accordance with the
terms of this Agreement, shall be duly and validly issued, fully paid, and
non-assessable and will be free of any liens or encumbrances.
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ARTICLE IV: COVENANTS OF AROC RELATING TO INSPECTION
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AROC shall permit Creston at Creston's expense to visit and inspect its
financial and accounting records, and corporate books and documents relating to
the AROC Common Stock at such reasonable times as may be requested by Creston.
At AROC's request, Creston shall enter into AROC's standard-form confidentiality
agreements in order to maintain the confidentiality of any confidential
information may be acquired in the course of any such inspection.
ARTICLE V: COVENANTS OF CRESTON
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5.1 Inspection. Creston shall permit AROC at AROC's expense to visit and
inspect its financial and accounting records, and corporate books and documents
relating to the Opon Stock at such reasonable times as may be requested by AROC.
At Creston's request, AROC shall enter into Creston's standard-form
confidentiality agreements in order to maintain the confidentially of any
confidential information may be acquired in the course of any such inspection.
5.2 Information. From the date hereof through Closing, Creston shall give
prompt notice to AROC of the occurrence, or failure to occur, of any event which
occurrence or failure would likely cause a material change in the business,
financial position, assets or affairs of Opon, including without limitation, the
sale or further encumbrance by Opon of any assets of Opon.
5.3 No Encumbrances on or Changes in Opon Stock. From the date hereof
through Closing, Creston shall not individually or as a voting shareholder of
Opon (i) take any action which will create an additional encumbrance on its Opon
Stock, (ii) pledge or sell any of its Opon Stock other than pursuant to this
Agreement and the Prior Documents, or (iii) vote its Opon Stock in any manner
the effect of which will have a material change in the rights, preferences,
designations, amount or value of its Opon Stock, without the prior written
consent of AROC.
ARTICLE VI: SURVIVAL OF REPRESENTATIONS AND WARRANTIES
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No representations or warranties whatever are made by any party to this
Agreement except as specifically set forth in this Agreement or in an instrument
delivered pursuant to this Agreement. The representations and warranties made by
the parties to this Agreement and the covenants and agreements to be performed
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or complied with by the respective parties under this Agreement before the
Closing shall be deemed to be continuing and shall survive the Closing for a
period of one year from the Closing but shall terminate on the Expiration Date
unless the Option has been timely exercised. Nothing in this paragraph shall
affect the obligations of the parties with respect to covenants and agreements
contained in this Agreement that are permitted or required to be performed in
whole or in part after the Closing and such obligations, covenants and
agreements shall survive Closing.
ARTICLE VII: MISCELLANEOUS
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7.01 Effect of Headings. The subject headings of paragraphs and
subparagraphs of this Agreement are included for purposes of convenience only,
and shall not affect the construction or interpretation of any of its
provisions.
7.02 Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior and contemporaneous
agreements, representations and understandings of the parties regarding the
subject matter of this Agreement. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by the parties
hereto.
7.03 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.04 Assignment. This Agreement shall be binding on and shall inure to the
benefit of the parties to it and their respective successors and assigns.
Neither party may assign this Agreement or any of its rights or obligations
under this Agreement without the prior written consent of the other party
hereto.
7.05 Notices. All notices and other communications under this Agreement
shall be in writing and shall be deemed to have been duly given on the date of
service, if served personally on the party to whom notice is given, or on the
third day after mailing, if mailed to the party to whom notice is to be given by
first class mail, registered or certified, postage prepaid and properly
addressed as follows:
To Creston at:
Creston Explorations
0000 Xxxxxxxxxx, Xxxxx #000,
Xxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx Xxxxx
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with copy to:
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To AROC at:
American Rivers Oil Company
000 Xxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx Xxxxx
with copy to:
Holme Xxxxxxx & Xxxx LLP
0000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Any party may change its address for the giving of notice by giving notice in
the manner provided hereunder.
7.06 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Colorado.
7.07 Expenses. Each party shall bear its own costs, including attorneys'
fees, incurred in connection with this Agreement and the transactions
contemplated hereby.
7.08 Further Assurances. After the Closing, each party shall execute and
deliver all additional instruments and documents and take all other action as
necessary to effectively carry out the sale of the Property and the other
agreements and transactions contemplated hereby.
7.9 Time of the Essence: Default. With regard to all of the provisions
contained in this Agreement, time is of the essence. If any of the conditions in
this Agreement are not timely met by AROC or Creston (including but not limited
to tendering funds and signing of closing documents on or before the Closing),
then AROC or Creston, as the case may be, shall be deemed to be in default
hereunder, and the non-defaulting party may exercise its rights under law or
equity, including the right to specific performance.
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IN WITNESS WHEREOF, the parties to this Agreement have duly executed it as
of the day and year first above written.
CRESTON:
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CRESTON EXPLORATIONS, a Cayman Islands
corporation
By: /s/ XXXXX XXXXX
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Name: Xxxxx Xxxxx
Title: President
AROC:
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AMERICAN RIVERS OIL COMPANY, a Wyoming
corporation
By: /s/ XXXXXXX XXXXX
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Xxxxxxx Xxxxx, President
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