SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
American Rivers Oil Company
- ----------------------------------------------------------------------
(Name of Issuer)
Common Stock, par value $.01 per share
- ----------------------------------------------------------------------
(Title of Class of Securities)
02932810
- ----------------------------------------------------------------------
(CUSIP Number)
Karlton Terry
American Rivers Oil Company
700 East 9th Avenue
Denver CO 80203
(303) 832-1117
- ----------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
October 9, 1998
- ----------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a Statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box / /.
1
<PAGE>
1 NAME OF REPORTING PERSON
Karlton Terry Oil Company
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (entities only)
84-1016453
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / / (b) / /
3 SEC USE ONLY
4 SOURCE OF FUNDS
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Colorado
NUMBER OF 7 SOLE VOTING POWER
SHARES 3,749,565
BENEFICIALLY 8 SHARED VOTING POWER
OWNED -0-
BY 9 SOLE DISPOSITIVE POWER
EACH 3,749,565
REPORTING 10 SHARED DISPOSITIVE POWER
PERSON 605,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,354,565
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES / X /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
54.6%
14 TYPE OF REPORTING PERSON
CO
2
<PAGE>
1 NAME OF REPORTING PERSON
Karlton Terry
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (entities only)
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / / (b) / /
3 SEC USE ONLY
4 SOURCE OF FUNDS
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION United States of America
NUMBER OF 7 SOLE VOTING POWER
SHARES 1,228,457
BENEFICIALLY 8 SHARED VOTING POWER
OWNED 4,354,565
BY 9 SOLE DISPOSITIVE POWER
EACH 1,228,457
REPORTING 10 SHARED DISPOSITIVE POWER
PERSON 4,354,565
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,583,022
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES / X /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
60.3%
14 TYPE OF REPORTING PERSON
IN
3
<PAGE>
1 NAME OF REPORTING PERSON
Jubal Terry
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (entities only)
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / / (b) / /
3 SEC USE ONLY
4 SOURCE OF FUNDS
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION United States of America
NUMBER OF 7 SOLE VOTING POWER
SHARES 1,034,353
BENEFICIALLY 8 SHARED VOTING POWER
OWNED -0-
BY 9 SOLE DISPOSITIVE POWER
EACH 1,034,353
REPORTING 10 SHARED DISPOSITIVE POWER
PERSON -0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,034,353
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES / X /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
22.2%
14 TYPE OF REPORTING PERSON
IN
4
<PAGE>
ITEM 1. SECURITY AND ISSUER.
The class of equity securities to which this Schedule 13D relates is
Common Stock, par value $.01 (the "Common Stock"), of American Rivers Oil
Company (the "Issuer"), whose principal executive offices are located at 700
East 9th Avenue, Denver, Colorado 80203.
ITEM 2. IDENTITY AND BACKGROUND.
(a) This statement is being made by Karlton Terry Oil Company ("KTOC"),
Mr. Karlton Terry and Mr. Jubal Terry (each a "Reporting Person" and
collectively, the "Reporting Persons"). Karlton Terry owns 100% of the
outstanding capital stock of KTOC and is the President and the sole director of
KTOC and Jubal Terry is the Vice President of KTOC. This statement on Schedule
13D is being filed on behalf of all of the Reporting Persons pursuant to the
Joint Filing Agreement, dated October 19, 1998, attached hereto as an exhibit.
(b) The address of each Reporting Person is:
Karlton Terry Oil Company
700 East Ninth Avenue, Suite 106
Denver, CO 80203
(c) KTOC's principal business is oil and gas exploration and production
and related activities. Karlton Terry's present principal occupation is to serve
as the sole director and the President of Karlton Terry Oil Company and as the
Chairman of the Board of Directors and President of the Issuer. Jubal Terry's
present principal occupation is providing independent oil and gas geology and
consulting services and serving as Vice President of Karlton Terry Oil Company.
(d) No Reporting Person has, during the past five years, been convicted
in a criminal proceeding (excluding traffic violations or similar misdemeanors).
(e) No Reporting Person has, during the past five years, been party to
any civil proceeding of a judicial or administrative body of competent
jurisdiction as the result of which such person was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to federal or state securities laws or finding any
violation with respect to such laws.
(f) KTOC is a Colorado corporation. Karlton Terry and Jubal Terry are
citizens of the United States of America.
5
<PAGE>
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Of the Common Stock of the Issuer specified as beneficially owned by
the Reporting Persons in Item 5, (a) 605,000 shares represent the right of KTOC
to purchase 275,000 shares of Common Stock and 330,000 shares of Class B Common
Stock, par value $.01 per share (the "Class B Stock"), of the Issuer pursuant to
the Second Francarep Option described in Item 4, and (b) the remaining shares
represent the right to receive shares Common Stock upon conversion of
outstanding shares of Class B Stock held by the Reporting Persons as described
in Item 4 and Item 5. None of such shares of Common Stock have been acquired by
the Reporting Persons. All of the Class B Stock owned by the Reporting Persons
was acquired in exchange for certain oil and gas exploration and development
assets in the Asset Purchase Transaction described in Item 4 and no additional
payment is required to be made in connection with the conversion of the Class B
Stock into Common Stock. KTOC expects to use a portion of the proceeds of the
exercise of the KTOC/Royal Scot Option described in Item 4 to pay the exercise
price of the Second Francarep Option. If the Second Francarep Option is not
exercised prior to its expiration, KTOC has not determined what source of funds
it will use to purchase the Francarep Common Stock subject to the Francarep
Option described in Item 4.
ITEM 4. PURPOSE OF TRANSACTION.
Asset Purchase Transaction.
Pursuant to the Asset Purchase Agreement, dated October 19, 1995 (the
"Purchase Agreement"), among the Issuer (which at the time was named Metro
Capital Corporation), KTOC, Karlton Terry and Jubal Terry, KTOC was issued
4,064,565 shares of Class B Stock, Karlton Terry was issued 1,490,957 shares of
Class B Stock and Jubal Terry was issued 1,159,353 shares of Class B Stock in
exchange for certain oil and gas exploration and production properties
transferred to the Issuer (the "Asset Purchase Transaction"). As a result of the
Asset Purchase Transaction, KTOC gained voting control of the Issuer and Karlton
Terry became the Chairman of the Board of Directors and President of the Issuer.
As set forth in Article II(c) of the Articles of Incorporation of the Issuer,
commencing 36 months from the closing of the transactions contemplated by the
Purchase Agreement, which occurred December 8, 1995, the Class B Stock will be
convertible on a one-for-one share basis into shares of Common Stock.
Consequently, on December 8, 1998, the Reporting Persons will be entitled to
convert all of their shares of Class B Stock into Common Stock of the Issuer.
Francarep Option.
In October 1995, KTOC entered into an Option Agreement, dated October
16, 1995, as amended (the "Francarep Option"), between KTOC
6
<PAGE>
and Francarep, Inc., a Wyoming Corporation ("Francarep"), in order to induce
Francarep to participate in the Asset Purchase Transaction by selling certain
properties to the Issuer. The Francarep Option requires KTOC to purchase 275,000
shares of Common Stock (the "Francarep Common Stock") of the Issuer, at a price
of $1.50 per share for a total purchase price of $412,500. Francarep also owns
330,000 shares of the Issuer's Class B Stock that are not subject to the
Francarep Option.
In November 1996, the Issuer declared a partial liquidating dividend
consisting of one share of common stock of Bishop Capital Corporation (the
"Bishop Stock"), a subsidiary of the Issuer, for each four shares of Common
Stock outstanding (the "Distribution"). The holders of Class B Stock were not
entitled to participate in the Distribution. The Distribution was declared in
November 1996 and paid on or about June 20, 1997. As a result of the
Distribution, Francarep received 68,750 shares of the Bishop Stock.
In March 1998, in connection with the execution of the Royal Scot Options
described below, KTOC entered into an Option to Purchase, dated March 20, 1998
(the "Second Francarep Option"), between KTOC and Francarep, pursuant to which
Francarep granted to KTOC an option to purchase all of the 275,000 shares of
Class B Stock, the 330,000 shares of Common Stock and the 68,750 shares of
Bishop Stock owned by Francarep (collectively, the "Francarep Shares") for an
aggregate purchase price of $250,000. Of such amount, KTOC has paid $100,000,
which it received upon the execution of the KTOC/Royal Scot Option described
below. In the event that the Second Francarep Option is not exercised prior to
its expiration, the obligations of KTOC to purchase the Francarep Common Stock
pursuant to the Francarep Option will continue, except that the aggregate
purchase price of $412,500 will be reduced by the amount of any payments made in
respect of the purchase price of the Francarep Shares under the Second Francarep
Option. In connection with the extension of the expiration of the Royal Scot
Options described below, the expiration of the Second Francarep Option has been
extended to March 31, 1999. The foregoing description of the terms of the
Francarep Option and the Second Francarep Option are qualified in their entirety
by reference to the terms of such Agreements, which are attached hereto as
Exhibits and incorporated herein by reference.
Royal Scot Options.
In March 1998, pursuant to (a) an Option to Purchase, dated March 20, 1998
(the "KTOC/Royal Scot Option"), among Royal Scot Minerals , Inc., a Delaware
corporation ("RSMI"), Karlton Terry, KTOC and Art and Music Outreach for Kids, a
Colorado nonprofit corporation, and (b) an Option to Purchase, dated March 20,
1998 (the "Jubal Terry/Royal Scot Option" and, together with the KTOC/Royal Scot
Option, the "Royal Scot Options"), between RSMI and Jubal Terry, the Reporting
Persons
7
<PAGE>
agreed to sell to Royal Scot all of the Class B Stock (and all of the Common
Stock into which such Class B Stock may be converted) held by them, together
with the Francarep Shares to be purchased by KTOC pursuant to the Second
Francarep Option. RSMI paid an option premium of $200,000 for KTOC/Royal Scot
Option and an option premium of $25,000 for the Jubal Terry/Royal Scot Option.
No part of such option premium for the Royal Scot Options is attributed to the
option exercise price. The option exercise price with respect to the Shares of
Class B Stock held by Karlton Terry and KTOC, together with the Francarep Shares
to be purchased by KTOC pursuant to the Second Francarep Option is $650,000. The
option exercise price with respect to the Shares of Class B Stock held by Jubal
Terry is $75,000. The initial terms of the Royal Scot Options expired on
September 15, 1998, but have been extended to March 31, 1998 in exchange for
extension payments of $25,000, in the case of the KTOC/Royal Scot Option, and
$10,000, in the case of the Jubal Terry/Royal Scot Option, both of which
extension payments are credited against the exercise price. The foregoing
description of the Royal Scot Options is qualified in its entirety by reference
to the terms of such Agreements, which are attached hereto as Exhibits and
incorporated herein by reference.
Upon the exercise of the Royal Scot Options, RSMI would own Class B
Stock, or Common Stock issued upon the conversion of Class B Stock, sufficient
to confer upon RSMI voting control of the Issuer. RSMI has been engaged in
discussions with the Issuer and the Reporting Persons regarding a possible
business combination transaction and entered into the Royal Scot options in
connection with such discussions, but no agreement has been reached regarding
the terms of any such transaction.
Except as expressly described above, no Reporting Person has any plans
or proposals that relate to or would result in any of the actions described in
subitems (a) through (j) of Item 4 of Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) The Reporting Persons beneficially own the following securities:
(i) KTOC beneficially owns 4,354,565 shares, or 54.6%, of the
outstanding Common Stock, including:
(A) 3,749,565 shares which KTOC has the right to acquire on or
after December 8, 1998 upon conversion of an equal number of
shares of Class B Stock;
(B) 330,000 shares which KTOC has the right to acquire on or after
December 8, 1998 upon conversion of an equal number of
8
<PAGE>
shares of Class B Stock that are indirectly beneficially owned
by KTOC as the result of its right to purchase the Francarep
Shares under the Second Francarep Option; and
(C) 275,000 shares of Common Stock that are indirectly
beneficially owned by KTOC as the result of its obligation to
purchase the Francarep Shares under the Second Francarep
Option.
(ii) Karlton Terry beneficially owns 5,583,022 shares, or 60.3%, of the
outstanding Common Stock, including:
(A) 1,228,457 shares which Karlton Terry has the right to acquire
on or after December 8, 1998 upon conversion of an equal
number of shares of Class B Stock; and
(B) 4,354,565 shares owned by KTOC as specified in Item 5(a)(i)
and the beneficial ownership of which may be attributed to
Karlton Terry as the sole stockholder and director of KTOC.
(iii) Jubal Terry beneficially owns 1,034,353 shares, or 22.2%, of the
outstanding Common Stock, all of which represent shares which Jubal Terry has
the right to acquire on or after December 8, 1998 upon conversion of an equal
number of shares of Class B Stock.
(iv) None of the Reporting Persons or any of the Related Parties has
any right to acquire any other Common Stock.
(v) KTOC and Karlton Terry expressly disclaim beneficial ownership of
any securities indicated as owned directly or indirectly by Jubal Terry in Item
5(a)(iii). Jubal Terry expressly disclaims beneficial ownership of any
securities indicated as directly or indirectly beneficially owned by KTOC in
Item 5(a)(i) or by Karlton Terry in Item 5(a)(ii).
(b) KTOC has no power to vote or to direct the voting of any of the
Francarep Shares prior to their purchase by the Reporting Person from Francarep.
Shared power to dispose or direct the disposition of the Francarep Shares
specified in Item 5(a) may be attributed to KTOC by virtue of KTOC's option to
purchase such securities under the Second Francarep Option. Beneficial ownership
and shared voting and dispositive power of the 4,354,565 shares of Common Stock
owned by KTOC may be attributed to Karlton Terry by virtue of his ownership of
100% of KTOC's outstanding capital stock and his position as sole director and
president of KTOC. The Reporting Persons have sole power to vote and to dispose
or direct the disposition of all of the other Securities indicated as being
beneficially owned by them in Item 5(a).
(c) The Reporting Persons effected no transactions in the Common Stock in
the past 60 days, other than the acquisition of beneficial
9
<PAGE>
ownership of the Common Stock specified in Item 5(a) resulting from the Class B
Common Stock becoming convertible into Common Stock on December 8, 1998. No
Reporting Person paid any consideration in respect of its acquisition of
beneficial ownership of such Common Stock.
(d) Francarep is the direct and beneficial owner of the Francarep Shares.
To the best knowledge of the Reporting Person, Francarep has the right to
receive and the power to direct the receipt of dividends from, or the proceeds
of the sale of such securities.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
The description of the Francarep Option, the Second Francarep Option
and the Royal Scot Options set forth in Item 4 are incorporated herein by
reference.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit
Number Description
1 Joint Filing Agreement, dated as of October 19, 1998, among
Karlton Terry Oil Company, Karlton Terry and Jubal Terry.
2 Option Agreement, dated October 16, 1995, as amended (the
"Francarep Option"), between KTOC and Francarep.
3 Option to Purchase, dated March 20, 1998 (the "Second
Francarep Option"), between KTOC and Francarep.
4 Option to Purchase, dated March 20, 1998 (the "KTOC/Royal
Scot Option"), between KTOC, Karlton Terry, Art and Music
Outreach for Kids, a Colorado nonprofit corporation founded
by Karlton Terry, and RSMI.
5 Option to Purchase, dated March 20, 1998 (the "Jubal
Terry/Royal Scot Option"), between Jubal Terry and RSMI.
10
<PAGE>
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, the
undersigned each certifies that the information set forth in this Statement is
true, complete and correct.
Date: October 19, 1998
Karlton Terry Oil Company
By: /s/ Karlton Terry
Karlton Terry
President
/S/ Karlton Terry
Karlton Terry
/S/ Jubal Terry
Jubal Terry
11
<PAGE>
EXHIBIT 1
JOINT FILING AGREEMENT
The undersigned hereby agree that the statement on Schedule 13D dated
October 19, 1997, with respect to the Common Stock of American Rivers Oil
Company is, and any amendments thereto signed by each of the undersigned shall
be, filed on behalf of each of us pursuant to and in accordance with the
provisions of Rule 13d-1(f) under the Securities Exchange Act of 1934.
This Agreement may be executed in counterparts, each of which shall for
all purposes be deemed to be an original, but all of which shall constitute one
and the same instrument.
IN WITNESS WHEREOF, the undersigned have each executed this Joint
Filing Agreement as of October 19, 1998.
SIGNATURES
Karlton Terry Oil Company
By:/s/ Karlton Terry
Karlton Terry
President
/S/ Karlton Terry
Karlton Terry
/S/ Jubal Terry
Jubal Terry
Ex. 1-1
<PAGE>
EXHIBIT 2
OPTION AGREEMENT
THIS AGREEMENT, made and entered into this 16th day of October, 1995, by and
between Francarep, Inc., 50 Av. des Champs-Elysees, 75008 Paris, France
("Francarep") and Karlton Terry Oil Company, 700 E. 9th Avenue #106, Denver, CO
80203 ("KTOC").
WHEREAS, Francarep owns working interests in oil and gas properties as described
and set forth on Exhibit A hereto, which is expressly made a part hereof (the
"Interests"); and
WHEREAS, KTOC is a party to an Asset Purchase Agreement with Metro Capital
Corporation, a NASDAQ listed company ("Metro"), which among other things,
requires that KTOC obtain and transfer the Interests to Metro and pursuant to
which, KTOC is to receive shares of Metro common stock (the "Stock"); and
WHEREAS, Francarep desires to sell the Interests to KTOC for a purchase price
which includes the Stock.
NOW, THEREFORE, for and in consideration of the premises and mutual covenants
contained herein and other good and valuable consideration, the receipt,
adequacy and sufficiency of which are hereby acknowledge, the parties hereto
covenant and agree as follows:
1. OPTION. Francarep hereby grants KTOC an exclusive option to purchase the
interests (the "Option"). This Option Agreement will be effective only upon
completion of the merger between KTOC and Metro Capital and the transfer of
Francarep's assets to KTOC will be effective only when the purchase price (as
defined below) has been delivered to Francarep.
2. TERM. The Option shall be exercisable until January 1, 1996. Prior to such
date, Francarep shall make no disposition of the Interests.
3. PURCHASE PRICE. The purchase price for the Interests is: (a) $350,000 cash;
(b) 275,000 shares of Stock; and, (c) 330,000 shares of Metro Class B Common
Stock issued at closing of the Asset Purchase Agreement (the "Closing"). The
275,000 shares of Stock shall be subject to (i) a mandatory purchase by KTOC as
set forth in Paragraph 4; and (ii) a one time demand registration right to be
exercised by Francarep 6 months from Closing.
4. MANDATORY REPURCHASE. KTOC (or its assigns) is required to purchase all of
the Stock set forth in Paragraph 3.(b) hereof at any time within but no later
than 18 months after Closing (the "Repurchase Period") for a purchase price of
$1.50 per share. Such purchase may be completed in one or more transactions over
the Repurchase Period. KTOC shall provide as collateral for its repurchase
obligation as many shares of Metro Class B Common Stock (the "Collateral") as
necessary to match, when sold on the market, the repurchase price of $412,500
and Francarep shall have recourse solely against the Collateral as follows:
To the extent that KTOC does not repurchase all of the Stock, then Francarep
shall take title to that number of shares of Class B Common Stock which, when
converted to Stock and sold on the market, equals the balance of that purchase
price amount due from KTOC.
Ex. 2-1
<PAGE>
5. NOTICE OF EXERCISE. KTOC shall have the right to exercise this option at any
time prior to expiration of its term by notifying Francarep in writing at its
above stated address, Attention: Bernard PETITFILS.
6. CLOSING. The closing shall be handled through Brenman, Key & Bromberg, P.C.,
1775 Sherman Street, Suite 1001, Denver, CO 80203 ("BKB"), as follows: Francarep
shall cause appropriate Assignments to be delivered to BKB. KTOC shall deliver
the purchase price to BKB. Once the Assignments are properly prepared and
executed for recording purposes, BKB will deliver the purchase price to
Francarep.
7. WARRANTIES. Francarep, for itself, its successors and assigns, represents,
warrants and agrees to and with KTOC, its successors and assigns, that the
Interests are not burdened by liens, encumbrances, burdens or defects of title
arising by, through or under Francarep.
8. AUTHORIZATION. The execution and performance of this agreement has been
authorized by the Board of Directors of Francarep; Francarep has taken all
required and appropriate action for the performance of this agreement; and, this
agreement is a binding and enforceable obligation of Francarep.
9. DEVELOPMENTS. KTOC agrees to keep Francarep advised of developments with
regard to the transaction with Metro.
10. NOTICE. Any notice shall be in writing, mailed or delivered to the parties
at its respective address as above set forth.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, as of the
date set forth above.
FRANCAREP
By: /s/ Georges Babinet(*)
Georges Babinet, an Officer
KARLTON TERRY OIL COMPANY
By: /s/ Karlton Terry
Karlton Terry, President
(*) Subject to the approval of the wording of Paragraph 4 by Metro Capital
and Brenman Key & Bromberg, P.C.
Ex. 2-2
<PAGE>
EXHIBIT 3
OPTION TO PURCHASE
THIS OPTION TO PURCHASE (the "Agreement") is dated as of the 20th day
of March, 1998, by and among Karlton Terry 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 Bishop Capital
Corporation common stock. The 275,000 Class A shares, 330,000 Class B shares,
and 68,750 Bishop 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 Scot 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, Karlton Terry, 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, Karlton Terry, 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
<PAGE>
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 Bishop
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
Roberts & Owen, 1401 Pearl Street, Suite 400, Boulder, Colorado, 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
<PAGE>
(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: Georges Babinet
50 Av. des Champs-Elysees 75008
Paris, France
To KTOC at:
Mr. Karlton Terry
700 East 9th Street; Suite 106
Denver, CO 80203
Facsimile: (303) 832-2404
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
<PAGE>
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.
KARLTON TERRY OIL COMPANY, a
Colorado corporation
By: /s/ Karlton Terry
Karlton Terry, President
FRANCAREP, INC., a Wyoming corporation
By: /s/ Georges Babinet
Print Name: Georges Babinet
Title: President
Ex. 3-4
<PAGE>
EXHIBIT A
[Option Agreement and Extension Agreement to be attached]
Ex. 3-5
<PAGE>
EXHIBIT 4
OPTION TO PURCHASE
THIS OPTION TO PURCHASE is dated as of the 20th day of March, 1998, by
and among Royal Scot Minerals, Inc., a Delaware corporation ("RSMI"); and
Karlton Terry ("KT"), Karlton Terry Oil Company, a Colorado corporation
("KTOC"), and Art and Music Outreach for Kids, a Colorado nonprofit corporation
("AMOK") (KT, KTOC, and AMOK are each a "Stockholder" and collectively, the
"Stockholders").
Recitals
A. The authorized capital stock of American Rivers Oil Company (the
"Company"), a Wyoming corporation consists of 33,000,000 shares of capital
stock, of which 20,000,000 shares are designated as Class A common, 8,000,000
shares are designated as Class B common, and 5,000,000 are designated as
preferred stock. The total issued and outstanding Class A shares as of September
30, 1997 was 3,615,770, and the total issued and outstanding Class B shares is
7,267,820. There are no shares of preferred stock issued and outstanding. There
are no outstanding options, warrants, or rights to acquire the capital stock of
the Company, except as provided in Exhibit A.
B. KT owns 1,228,457 Class B shares of the issued and outstanding
shares of the capital stock of the Company (the "KT Shares"). KT desires to
grant an option to RSMI to purchase the KT Shares.
C. KTOC owns 3,749,565 Class B shares of the issued and outstanding
shares of the capital stock of the Company ("KTOC Shares"). KTOC desires to
grant an option to RSMI to purchase the KTOC Shares, provided any such purchase
would be subject to the obligation burdening the KTOC shares pursuant to the
Francarep Agreement (as defined below).
D. AMOK owns 250,000 Class B shares of the issued and outstanding
shares of the capital stock of the Company (individually the "AMOK Shares" and
collectively with the KT Shares and KTOC Shares, the "Shares"). AMOK desires to
grant RSMI an option to purchase the AMOK Shares.
E. KTOC is a party to that certain Option Agreement dated as of October
16, 1995, by and between Francarep, Inc., a Delaware corporation ("Francarep")
and KTOC, as amended by that certain Option Agreement dated as of June 6, 1997
(collectively the "Francarep Agreement") which is included as Exhibit F. KTOC is
obligated to purchase 275,000 shares of Class A common stock of the Company from
Francarep pursuant to the terms of the Francarep Agreement. In addition, KTOC
has the right to purchase 330,000 shares of Class B common stock and 68,750
shares of Bishop Capital Corporation common stock from Francarep (the 275,000
Class A shares, 330,000 Class B shares, and 68,750 shares of Bishop common stock
are collectively, the "Francarep Shares"). KTOC desires to grant RSMI an option
to purchase the Francarep Shares
Ex. 4-1
<PAGE>
F. As consideration for the Options (as defined below) RSMI will pay
the Stockholders $200,000.00. The Options to purchase the KT Shares, KTOC
Shares, AMOK Shares and Francarep Shares (collectively, the "Shares") will have
an exercise price of $650,000.00.
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. RSMI agrees to pay the Stockholders and the Escrow
Agent (as defined below) a total of $200,000.00 in cash or other immediately
available funds on or before March 31, 1998 (the "Option Premium") in exchange
for the Options (as defined below). RSMI agrees to pay the Option Premium as
follows:
(a) One hundred thousand dollars to the Stockholders, whereby
each Stockholder will be entitled to the portion of the Option Premium as
specified in Exhibit B; and
(b) One hundred thousand dollars to the Escrow Agent (as
defined below).
1.02 Grant of Option. The Stockholders hereby grant to RSMI irrevocable
and exclusive options (the "Options") to purchase the Shares on the terms and
conditions set forth below.
1.03 Term of Option. The term of the Options shall be until 5:00 p.m.
September 15, 1998 (the "Expiration Date").
1.04 Exercise of Option. The Options may be exercised by RSMI at any
time prior to the Expiration Date by executing and delivering to the
Stockholders written notice of such exercise.
1.05 Francarep Shares. Upon the payment of the $100,000.00 to the
Escrow Agent pursuant to Section 1.01(b) above, Karlton Terry agrees to take all
necessary actions to have Francarep transfer the Francarep Shares to the Escrow
Agent in exchange for the $100,000.00.
1.06 Definitions. The term "Escrow Agreement" shall mean an escrow
agreement that is substantially in the form attached hereto as Exhibit E. The
term "Escrow Agent" shall mean the escrow agent that serves under the Escrow
Agreement.
ARTICLE II: EXERCISE
2.01 Exercise Price. The purchase price for the Shares shall be
$650,000.00 (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.
Ex. 4-2
<PAGE>
ARTICLE III: REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS
3.01 Stock. The Stockholders own a total of 5,228,022 of the issued and
outstanding shares of the capital stock of the Company free and clear of all
liens, encumbrances, restrictions, claims, options, warrants, calls and
commitments of every kind, except that the KTOC Shares are pledged pursuant to
the Francarep Agreement.
3.02 Rights to Stock. KTOC is obligated to purchase the Francarep Shares.
3.03 Power and Authority. The Stockholders have full legal right, power and
authority to enter into this Option to Purchase and to exchange, assign, and
transfer the Shares to RSMI.
ARTICLE IV: CLOSING
4.01 Closing. The closing shall take place at the offices of Holme Roberts
& Owen, 1401 Pearl Street, Suite 400, Boulder, Colorado, no later than 30 days
after receipt by the Stockholders 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 Stockholders. The events described in this Section 4.02
shall be a condition precedent to the Closing:
(a) The Stockholders agree to (i) deliver to RSMI stock
certificates representing their ownership of the KT Shares, KTOC Shares, and
AMOK 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 KT Shares, KTOC Shares, and AMOK Shares; and
(b) Karlton Terry agrees to take all necessary actions to
assure that the Francarep Shares are transferred from the Escrow Agent to RSMI.
4.03 Obligations of RSMI. The events described in this Section 4.03 shall
be a condition precedent to the Closing.
(a) RSMI agrees to (i) pay the Stockholders a total of
$100,000.00 in cash or other immediately available funds and (ii) deliver to the
Stockholders a duly executed promissory note in the amount of $300,000.00,
payable over three years in accordance with terms of a promissory note
substantially in the form attached hereto as Exhibit C. Each Stockholder will be
entitled to the portion of the proceeds as specified in Exhibit B;
(b) RSMI agrees to deliver to the Escrow Agent a total of
$250,000.00 in cash or other immediately available funds; and
(c) RSMI agrees to execute a stock pledge and security
agreement substantially in the form attached hereto as Exhibit D.
ARTICLE V: NOTICES
Ex. 4-3
<PAGE>
5.01 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 Stockholders at:
Mr. Karlton Terry
700 East 9th Street; Suite 106
Denver, CO 80203
Facsimile: (303) 832-2404
To RSMI at:
Mr. CR Lloyd
The Gowen Mine
Fern Glen, PA 18241
Facsimile: (717) 384-2494
ARTICLE VI: MISCELLANEOUS
6.01 Entire Agreement. This Option to Purchase embodies the entire
understanding and agreement among the parties and supersedes any and all prior
negotiations, understandings or agreements in regard thereto.
6.02 Amendment. This Option to Purchase 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.
6.03 Applicable Law. This Option to Purchase shall be construed in
accordance with and governed by the laws of the State of Colorado.
6.04 Counterparts. This Option to Purchase may be executed in any number of
counterparts each of which shall be considered an original.
6.05 Severability of Provisions. Any provision of this Option to Purchase
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.
6.06 Headings. The section headings used in this Option to Purchase are for
convenience of reference only and shall not affect the construction of this
Option to Purchase.
IN WITNESS WHEREOF, the parties have executed and delivered
this Option to Purchase as of the day and year first written above.
Ex. 4-4
<PAGE>
ROYAL SCOT MINERALS, INC, a
Delaware corporation
By: /s/ Denis Bell
Denis Bell, President
/s/ Karlton Terry
KARLTON TERRY
KARLTON TERRY OIL COMPANY, a
Colorado corporation
By: /s/ Karlton Terry
Karlton Terry, President
ART AND MUSIC OUTREACH FOR KIDS, a
Colorado nonprofit corporation
By: /s/ Karlton Terry
Karlton Terry, President
Ex. 4-5
<PAGE>
EXHIBIT A
OPTIONS Shares Price Expiration
Robert J. Thrailkill 20,000 $1.31 Aug-01
John A. Alsko 25,000 $1.31 Aug-01
Robert E. Thrailkill 50,000 $0.68 Sep-99
Robert E. Thrailkill 25,000 $1.65 Oct-00
John A. Alsko 15,000 $0.62 Sep-04
John A. Alsko 15,000 $1.50 Oct-05
Robert J. Thrailkill 10,000 $0.62 Sep-04
Robert J. Thrailkill 10,000 $1.50 Oct-05
Sherry Moore 5,000 $0.62 Sep-04
Mike Kennedy 60,000 $2.00
Consult & Assist 275,000 $1.10 11/14/97
LMU 400,000 $1.00 03/15/01
Robert E. Thrailkill 45,000 $1.38 07/31/98
Weston Capital Group 150,000 $1.00 2 yrs from issue
1,105,000
Ex. 4-6
<PAGE>
EXHIBIT B
ALLOCATION OF OPTION PREMIUM
Karlton Terry Oil Company $ 50,000
AMOK $ 25,000
Karlton Terry $ 25,000
---------
TOTAL $100,000
DIVISION OF EXERCISE PRICE
Karlton Terry Oil Company $280,000
AMOK $ 20,000
Karlton Terry $100,000
TOTAL $400,000
Ex. 4-7
<PAGE>
EXHIBIT C
PROMISSORY NOTE
$300,000.00 __________ __, 1998
FOR VALUE RECEIVED, the undersigned, Royal Scot Minerals, Inc., a
Delaware corporation ("Maker"), having an address of The Gowen Mine, Fern Glen,
Pennsylvania, 18241, promises to pay to the order of Karlton Terry ("KT"),
Karlton Terry Oil Company, a Colorado corporation ("KTOC"), and Art and Music
Outreach for Kids, a Colorado nonprofit corporation ("AMOK") (KT, KTOC, and AMOK
are collectively the "Payee"), each with an address 700 East 9th Street; Suite
106, Denver, CO 80203, the sum of Three Hundred Thousand DOLLARS and 00 CENTS
($300,000.00) (the "Principal Sum"), together with interest on the unpaid
Principal Sum at a rate of 6.5% per annum, compounded annually, payable as
follows:
(a) One hundred thousand dollars together with any and all
accrued and unpaid interest hereunder shall be due and
payable on or before September 15, 1999;
(b) One hundred thousand dollars together with any and all
accrued and unpaid interest hereunder shall be due and
payable on or before September 15, 2000; and
(c) One hundred thousand dollars together with any and all
accrued and unpaid interest hereunder shall be due and
payable on or before September 15, 2001 ("Maturity").
All interest hereunder shall be calculated on the basis of a 365-day
year, actual days elapsed.
This Note may be prepaid, either in whole or in part, at any time
without premium or penalty and without the consent of Payee.
Maker shall make all payments due under the terms of this Note to Payee
at the above address or at such other place as may be designated to Maker in
writing by Payee.
Whenever Payee shall sustain or incur any losses or out-of-pocket
expenses with respect to the Note in connection with (a) repayment of overdue
amounts under this Note, or (b) failure by Maker to pay all principal and
interest of this Note, when due hereunder (whether at maturity, by reason of
acceleration, or otherwise), Maker shall pay, on demand, to Payee, in addition
to any other penalties or premiums hereunder, an amount sufficient to compensate
Payee for all such losses or out-of-pocket expenses, including, without
limitation, all costs and expenses of a suit or proceeding, (or any appeal
thereof) brought for recovery of all or any part of or for protection
Ex. 4-8
<PAGE>
of the indebtedness evidenced by this Note or to enforce Payee's rights
hereunder, including reasonable attorney's fees.
Time is of the essence hereof. At the option of the Payee, payment of
the Principal Sum and any and all accrued interest thereon may be accelerated,
and such amounts shall be immediately due and payable without further notice or
demand upon the occurrence (and continuation as hereinafter specified) of any of
the following:
(1) Failure to make any payment of any and all amounts required to be
paid hereunder when due or declared due.
(2) Dissolution, termination of existence, insolvency, business failure,
appointment of a receiver of any part of the property of, assignment for the
benefit of creditors by, or commencement of any proceeding under any bankruptcy
or insolvency laws by, or against Maker which remains uncured or undismissed for
sixty (60) days after the occurrence of such event.
Unpaid principal and interest due and payable hereunder shall bear
interest at the rate of 10 percent per annum (the "Default Interest Rate") from
the due date until paid.
The remedies provided in this Note shall be cumulative, and shall be in
addition to any other rights or remedies now or hereafter provided by law or
equity. No delay, failure or omission by any holder of this Note, in respect of
any default by the Maker, to exercise any right or remedy shall constitute a
waiver of the right to exercise the right or remedy upon any such default or
subsequent default.
Makers and any endorser herein waives presentment, demand, notice of
dishonor, notice of acceleration and protest and assents to any extension of
time with respect to any payment due under this Note, to any substitution or
release of collateral and to the addition or release of any party. No waiver of
any payment or other right under this Note shall operate as a waiver of any
other payment or right.
This Note may not be changed orally, but only by an agreement in
writing, signed by the party against whom enforcement of any waiver, change,
modification or discharge is sought.
If any of the provisions of this Note shall be held to be invalid or
unenforceable, the determination of invalidity or unenforceability of any such
provision shall not affect the validity or enforceability of any other provision
or provisions hereof.
This Note shall be binding upon Maker and its successors and assigns and
shall inure to the benefit of and be enforceable by the Payee and its successors
and assigns.
At the option of the holder hereof, an action may be brought to enforce
this Note in the District Court in and for the County of Boulder, State of
Colorado, or in any other court in which venue and jurisdiction are proper.
Maker and all signers or endorsers hereof consent to
Ex. 4-9
<PAGE>
such venue and jurisdiction and to service of process under Colorado Revised
Statutes (1973) Sections 13-1-124(1)(a) and 13-1-125, in any action commenced to
enforce this Note.
This Note shall be construed and enforced in accordance with the laws of
the State of Colorado.
IN WITNESS WHEREOF, Maker has caused this instrument to be executed as
of the day and year first above written.
MAKER:
Royal Scot Minerals, Inc.,
a Delaware corporation
By: ________________________
Name: Dennis Bell
Title: President
Ex. 4-10
<PAGE>
EXHIBIT D
STOCK PLEDGE AND SECURITY AGREEMENT
THIS STOCK PLEDGE AND SECURITY AGREEMENT (this "Agreement") dated as of
_____________ __, 1998, is between Royal Scot Minerals, Inc., a Delaware
corporation ("Debtor"), and Karlton Terry ("KT"), Karlton Terry Oil Company, a
Colorado corporation ("KTOC"), and Art and Music Outreach for Kids, a Colorado
nonprofit corporation ("AMOK") (KT, KTOC, and AMOK are collectively the "Secured
Party").
RECITALS
A. Debtor owns 5,228,022 shares of the Class B common stock of American
Rivers Oil Company, Inc. ("AROC"), a Wyoming corporation (the "Shares").
B. Pursuant to that certain Promissory Note of even date herewith among
Secured Party and Debtor (the "Promissory Note"), Debtor has agreed to pay the
Secured Party $300,000.00 as set forth in the Promissory Note.
C. To secure Debtor's obligation to make the payments under the
Promissory Note, Debtor has agreed to execute and deliver this Agreement to
Secured Party in order (i) to pledge the Shares to Secured Party, and (ii) to
grant and assign to Secured Party a first priority lien on, and security
interest in, the Shares.
AGREEMENT
In consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Debtor hereby agrees as follows for the benefit of Secured Party:
1. Certain Definitions. As used herein, the following terms shall
have the following respective meanings:
"Collateral" has the meaning set forth in Section 2 below.
An "Event of Default" shall occur if (i) Debtor fails to make
any payments required by the Promissory Note or (ii) Debtor fails to perform or
observe any obligation or condition to be performed or observed by it hereunder
and such failure remains uncured or unwaived for ten days.
"Lien" means any lien, mortgage, pledge, assignment, security
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof, and any
agreement to give any security interest) and any option, trust or other
preferential arrangement having the practical effect of any of the foregoing.
Ex. 4-11
<PAGE>
"Proceeds" means all proceeds of, and all other profits, rentals or
receipts, in whatever form, arising from the collection, sale, lease, exchange,
assignment, licensing or other disposition of, or realization upon, the
Collateral, or any portion thereof.
"Secured Obligations" has the meaning given to such term in Section 3
below.
"Security Interests" means the security interests in the Collateral granted
hereunder.
"UCC" means the Uniform Commercial Code as in effect on the date hereof in
the State of Colorado; provided that if by reason of mandatory provisions of
law, the perfection or the effect of perfection or nonperfection of the Security
Interests in any Collateral is governed by the Uniform Commercial Code as in
effect in a jurisdiction other than Colorado, "UCC" means the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the provisions
hereof relating to such perfection or effect of perfection or nonperfection.
2. The Security Interests. To secure the full and punctual payment or
other performance of the Secured Obligations in accordance with the terms
thereof, and to secure the performance of all of the obligations of Debtor
hereunder, Debtor, to the fullest extent permitted by law, hereby assigns and
pledges to Secured Party, and grants to Secured Party a continuing security
interest in and to, all of the following property of Debtor, whether now owned
or existing or hereafter acquired or arising, regardless of where located (all
being collectively referred to as the "Collateral"):
(i) the Shares and the certificates representing the
Shares and any interest of Debtor in the entries on the books of any
financial intermediary pertaining to the Shares, and all dividends,
cash, warrants, rights, instruments and other property or proceeds from
time to time received, receivable or otherwise distributed in respect of
or in exchange for any or all of the Shares;
(ii) any substitute shares of the capital stock of any
class issued by AROC to Debtor in exchange for or substitution of any of
the Shares and the certificates representing such shares and any
interest of Debtor in the entries on the books of any financial
intermediary pertaining to such shares, and all dividends, cash,
warrants, rights, instruments and other property or proceeds from time
to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of such shares;
(iii) all Proceeds of all or any of the Collateral
described in clauses (i) and (ii) above.
3. Security for Obligations. This Agreement secures, and the Collateral
is collateral security for, the prompt payment or performance in full when due
of all obligations and liabilities of Debtor to make payments existing under or
arising out of or in connection with the Promissory Note, and all obligations of
every nature of Debtor now or hereafter existing under this Agreement (all such
obligations of Debtor being the "Secured Obligations").
Ex. 4-12
<PAGE>
4. Delivery of the Collateral. Upon the execution hereof, Debtor shall
immediately deliver the stock certificates representing the Shares to Secured
Party.
5. Transfers and Other Liens. Debtor shall not, without the prior
written consent of Secured Party (which shall not be unreasonably withheld):
(a) sell, transfer, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral;
(b) create or suffer to exist at any time any Lien, security interest or
other charge or encumbrance upon or with respect to the Collateral, except for
the Security Interests; or
(c) take any other action in connection with the Collateral that would (i)
impair the interests or rights of Secured Party under this Agreement or (ii)
impair or otherwise adversely affect the value of the Collateral.
6. Further Assurances. Debtor agrees that from time to time, at the
expense of Debtor, Debtor will promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary or
desirable, or that Secured Party may request, in order to perfect and protect
the Security Interests or to enable Secured Party to exercise and enforce its
rights and remedies hereunder with respect to any Collateral.
7. Voting Rights; Dividends, Etc. (a) So long as no Event of Default
shall have occurred and be continuing:
(i) Debtor shall be entitled to exercise any and all
voting and other consensual rights pertaining to the Collateral or any
part thereof for any purpose not inconsistent with the terms of this
Agreement.
(ii) Debtor shall be entitled to receive all dividends
and interest paid in respect of the Collateral.
(b) Upon the occurrence and during the continuation of an Event
of Default, upon written notice from Secured Party to Debtor, all rights of
Debtor to exercise the voting and other consensual rights which it would
otherwise be entitled to exercise pursuant to clause 7(a) above shall cease, and
all such rights shall thereupon become vested in Secured Party who shall
thereupon have the sole right, but not the obligation, to exercise, or to
appoint any person to exercise on its behalf, such voting and other consensual
rights.
8. General Authority. To the extent permitted by law, Debtor hereby
irrevocably appoints Secured Party its true and lawful attorney, with full power
of substitution, in the name of Debtor, Secured Party or otherwise, for the sole
use and benefit of Secured Party, but at Debtor's expense, to exercise, at any
time and from time to time after an Event of Default has
Ex. 4-13
<PAGE>
first occurred and is continuing, all or any of the following powers with
respect to all or any of the Collateral:
(a) to file one or more financing or continuation statements, or
amendments thereto, relative to all or any part of the Collateral without the
signature of Debtor;
(b) to ask, demand, collect, sue for, recover, compound, receive
and give acquittance and receipts for monies due and to become due under or in
respect of any of the Collateral;
(c) to receive, endorse and collect any instruments made payable
to Debtor representing any dividend, principal or interest payment or other
distribution in respect of the Collateral or any part thereof and to give full
discharge for the same;
(d) to file any claims or take any action or institute any
proceedings that Secured Party may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of
Secured Party with respect to any of the Collateral; and
(e) to sell, transfer, assign or otherwise deal in or with the
same or the proceeds or avails thereof, as fully and effectually as if Secured
Party were the absolute owner thereof; provided that Secured Party shall give
Debtor not less than ten days' prior written notice of the time and place of any
sale or other intended disposition of any of the Collateral, except any
Collateral which is perishable or threatens to decline speedily in value or is
of a type customarily sold on a recognized market. Debtor agrees that such
notice constitutes "reasonable notification" within the meaning of Section
9-504(3) of the UCC.
9. Remedies upon an Event of Default. (a) If an Event of Default has
occurred and is continuing, Secured Party may exercise all rights of a secured
party under the UCC (whether or not in effect in the jurisdiction where such
rights are exercised) and, in addition, Secured Party may, without being
required to give any notice, except as herein provided or as may be required by
mandatory provisions of law, sell the Collateral or any part thereof at public
or private sale, for cash, upon credit or for future delivery, at such price or
prices as Secured Party may deem satisfactory. Secured Party may be the
purchaser of any or all of the Collateral so sold at any public sale or private
sale. Debtor will execute and deliver such documents and take such other action
as Secured Party deems necessary or advisable so that any such sale may be made
in compliance with law. Upon any such sale Secured Party shall have the right to
deliver, assign and transfer to the purchaser thereof the Collateral so sold.
Each purchaser at any such sale shall hold the Collateral so sold to it
absolutely and free from any claim or right of Debtor of whatsoever kind,
including any equity or right of redemption of Debtor. Debtor, to the extent
permitted by law, hereby specifically waives all rights of redemption, stay or
appraisal which it has or may have under any law now existing or hereafter
adopted. Secured Party, instead of exercising the power of sale herein conferred
upon it, may proceed by a suit or suits at law or in equity to foreclose the
Security Interests and sell the Collateral, or any portion thereof, under a
judgment or decree of a court or courts of competent jurisdiction. Provided that
if the default
Ex. 4-14
<PAGE>
has been remedied before the Secured Party has taken any action with respect to
the Collateral, all rights under this Agreement will be restored to the Debtor.
10. Application of Proceeds. Except as expressly provided elsewhere in
this Agreement, all proceeds received by Secured Party in respect of any sale
of, collection from, or other realization upon all or any part of the Collateral
may, in the discretion of Secured Party, be held by Secured Party as Collateral
for, and/or then, or at any time thereafter, applied in full or in part by
Secured Party against, the Secured Obligations in the following order of
priority:
FIRST: to the payment of all costs and expenses of such sale, collection or
other realization, including reasonable compensation to Secured Party and its
agents and counsel, and all other expenses, liabilities and advances made or
incurred by Secured Party in connection therewith, and all amounts for which
Secured Party is entitled to payment hereunder and all advances made by Secured
Party hereunder for the account of Debtor, and to the payment of all costs and
expenses paid or incurred by Secured Party in connection with the exercise of
any right or remedy hereunder, all in accordance with Section 11 below;
SECOND: to the payment of all other Secured Obligations in such order as
Secured Party shall elect; and
THIRD: to the payment to or upon the order of Debtor, or to whomsoever may
be lawfully entitled to receive the same or as a court of competent jurisdiction
may direct, of any surplus then remaining from such proceeds.
11. Expenses. Debtor shall, on demand, pay to Secured Party the amount
of any and all out-of-pocket expenses, including the fees and disbursements of
counsel and any other experts, which Secured Party may incur in connection with
(a) the administration or enforcement of this Agreement, including, but not
limited to, such expenses as Secured Party incurs to preserve the value of the
Collateral and the validity, perfection, rank and value of any Security
Interests; (b) the custody, preservation, collection, sale or other disposition
of any of the Collateral; (c) the exercise by Secured Party of any of the rights
conferred upon it hereunder; or (d) any Event of Default. All sums so paid or
incurred by Secured Party for any of the foregoing and any and all other sums
for which Debtor may become liable hereunder and all costs and expenses
(including attorneys' fees, legal expenses and court costs) reasonably incurred
by Secured Party in enforcing or protecting the Security Interests or any of its
rights or remedies under this Agreement, shall, together with interest thereon
until paid at the rate of 18 percent per annum, be additional Secured
Obligations hereunder.
12. Termination of Security Interests; Release of Collateral. Upon the
payment in full of all of the Secured Obligations, the Security Interests shall
terminate and all rights to the Collateral shall revert to Debtor. Upon any such
termination of such Security Interests and release of the Collateral, Secured
Party shall, at the expense of Debtor, (a) execute and deliver to Debtor such
documents as are reasonably necessary to evidence the termination of such
Security Interests and the release of such Collateral and (b) deliver any
certificates evidencing the Shares and any other Collateral held by Secured
Party or its nominees to Debtor.
Ex. 4-15
<PAGE>
13. Miscellaneous.
(a) Waivers; Non-Exclusive Remedies. No failure on the part of
Secured Party to exercise, and no delay in exercising and no course of dealing
with respect to, any right under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise by Secured Party of any right
under this Agreement or any other document preclude any other or further
exercise thereof or the exercise of any other right. The rights and remedies set
forth in this Agreement and the Shareholders Agreement are cumulative and are
not exclusive of any other remedies available at law or in equity.
(b) Successors and Assigns. This Agreement is for the benefit of
Secured Party and its successors and assigns. This Agreement shall be binding on
Debtor and its successors and assigns.
(c) Changes in Writing. Neither this Agreement nor any provision
hereof may be changed, waived, discharged or terminated, except by a written
agreement signed by Debtor and Secured Party.
(d) Severability. If any provision hereof is invalid or
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(a) the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be construed to carry out the intentions of the parties
hereto as nearly as may be possible and (b) the invalidity or unenforceability
of any provision hereof in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction.
(e) Headings. Section and subsection headings in this Agreement
are included for convenience of reference only and shall not constitute a part
of this Agreement for any other purpose or be given any substantive effect.
(f) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF COLORADO, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
(g) Counterparts. This Agreement may be executed in one or more
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
IN WITNESS WHEREOF, Debtor and Secured Party have caused this Agreement
to be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
Ex. 4-16
<PAGE>
DEBTOR:
ROYAL SCOT MINERALS, INC., a Delaware
corporation
By: ______________________________
Dennis Bell, President
SECURED PARTY:
----------------------------------
KARLTON TERRY
KARLTON TERRY OIL COMPANY, a
Colorado corporation
By: ______________________________
Karlton Terry, President
ART AND MUSIC OUTREACH FOR KIDS, a
Colorado nonprofit corporation
By: _________________________________
Karlton Terry, President
Ex. 4-17
<PAGE>
EXHIBIT E
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (the "Agreement") is dated this 20th day of March,
1998, by and among Karlton Terry Oil Company, a Colorado corporation ("KTOC"),
Royal Scot Minerals, Inc., a Delaware corporation ("RSMI"), Francarep, Inc., a
Wyoming corporation ("Francarep"), and Holme Roberts & Owen, a Colorado limited
liability partnership (the "Escrow Agent").
Recitals
A. Francarep is the owner of (i) 275,000 shares of Class A common stock
and 330,000 shares of Class B common stock of American Rivers Oil Company, and
(ii) 68,750 shares of Bishop common stock (the 275,000 Class A shares, 330,000
Class B Shares, and 68,750 shares of Bishop are collectively, the "Francarep
Shares").
B. KTOC and RSMI are parties to that certain Option to Purchase dated
March 20, 1998 (the "Option to Purchase (KTOC)") pursuant to which KTOC granted
RSMI an option to purchase the Francarep Shares. The Option to Purchase (KTOC)
requires RSMI to place in escrow $100,000.00 upon the grant of the option and
$250,000.00 upon the exercise of the option.
C. KTOC and Francarep are parties to that certain Option to Purchase
Agreement dated March 20, 1998, pursuant to which KTOC has the right to acquire
the Francarep Shares.
D. The parties wish to place the $100,000.00 and the Francarep Shares in
escrow until the time specified herein.
E. If RSMI exercises its option under the Option to Purchase (KTOC), the
parties wish to place the $250,000.00 in escrow until the time specified herein.
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
1. Appointment of Escrow Agent. The parties hereby appoint the Escrow Agent
to act as escrow agent under this Agreement.
2. Deposits. The parties agree to make deposits with the Escrow Agent as
follows:
Ex. 4-18
<PAGE>
(a) RSMI agrees to deposit $100,000.00 in cash or other immediately
available funds;
(b) Francarep agrees to deposit the Francarep Shares; and
(c) If RSMI elects to exercise its option under the Option to Purchase
(KTOC), RSMI agrees to deposit $250,000.00 in cash or other immediately
available funds.
3. Release of the $100,000.00. The Escrow Agent shall release the
$100,000.00 to Francarep after being furnished with the Francarep Shares. The
Escrow Agent shall release the $100,000.00 to KTOC after ___________ ___, 1998,
if Francarep has not deposited the Francarep Shares on or before ___________
___, 1998, unless the Escrow Agent receives notice from KTOC, RSMI, and
Francarep to extend the terms of this Agreement.
4. Release of the Francarep Shares. The Escrow Agent shall release the
Francarep Shares to RSMI after being furnished with the $250,000.00. The Escrow
Agent shall release the Francarep Shares to Francarep after ___________ ___,
1998, if RSMI has not deposited the $250,000.00 on or before ___________ ___,
1998, unless the Escrow Agent receives notice from KTOC, RSMI, and Francarep to
extend the terms of this Agreement.
5. Release of the $250,000.00. The Escrow Agent shall release the
$250,000.00 to Francarep after the release of the Francarep Shares to RSMI. The
Escrow Agent shall release the $250,000.00 to RSMI after ___________ ___, 1998,
if Francarep has not deposited the Francarep Shares on or before ___________
___, 1998, unless the Escrow Agent receives notice from KTOC, RSMI, and
Francarep to extend the terms of this Agreement.
6. Release Notice. The Escrow Agent shall provide each party hereto with
five days' written notice prior to any release from escrow under Section 3, 4,
and 5. In the event any party objects in writing to any such release prior to
the expiration of such five-day notice, the Escrow Agent shall interplead the
asset or assets in accordance with Section 7(b) below.
7. No Liability. The Escrow Agent shall have no liability for the
performance of its duties hereunder except in the case of its gross negligence
or willful misconduct. The Escrow Agent shall have no duty to determine the
merits of any dispute between the parties. In the event of a dispute between the
parties regarding the release of the assets or the meaning of any term of this
Agreement:
(a) The Escrow Agent shall be under no obligation to act, except
under court order; and
(b) Upon receipt of conflicting notices for the release of the
assets, the Escrow Agent shall interplead the assets with a court of competent
jurisdiction in the State of Colorado. Upon filing of its complaint in
interpleader, the Escrow Agent shall have no further obligations hereunder.
Ex. 4-19
<PAGE>
8. Term. This Agreement shall terminate upon the earlier to occur of (i)
the release of the $100,000.00, Francarep Shares, and $250,000.00; (ii) the
deposit of any of the $100,000.00, Francarep Shares, or $250,000.00 with a court
pursuant to Section 7(b) above; or (iii) ____________ ___, 1998.
9. Notices. All notices and other communications called for hereunder shall
be given in writing and shall be deemed given two days after deposit in the
United States mail, postage prepaid, to the parties at the following addresses:
To KTOC:
Mr. Karlton Terry
700 East 9th Street; Suite 106
Denver, CO 80203
To RSMI:
Mr. CR Lloyd
The Gowen Mine
Fern Glen, PA 18241
To Francarep:
Francarep Inc.
Attention: Georges Babinet
50 Av. des Champs-Elysees 75008
Paris, France
To Escrow Agent:
Holme Roberts & Owen
Attention: William R. Roberts
1401 Pearl Street; Suite 400
Boulder, CO 80302
10. Governing Law. This Agreement shall be construed under and governed by
the laws of the State of Colorado.
11. Amendments. All amendments hereto shall be in writing and signed by all
of the parties.
Ex. 4-20
<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the day and year first written above.
ROYAL SCOT MINERALS, INC., a Delaware
corporation
By: __________________________________
Dennis Bell, President
KARLTON TERRY OIL COMPANY, a Colorado
corporation
By: ____________________________________
Karlton Terry, President
FRANCAREP, INC., a Wyoming corporation
By: ___________________________________
Print Name: ____________________________
Title: __________________________________
HOLME ROBERTS & OWEN, a Colorado limited
liability partnership
By: ___________________________________
William R. Roberts, Partner
Ex. 4-21
<PAGE>
EXHIBIT F
[Attach copies of the Francarep Agreements as amended]
Ex. 4-22
<PAGE>
EXHIBIT 5
OPTION TO PURCHASE
THIS OPTION TO PURCHASE is dated as of the 20th day of March, 1998, by
and among Royal Scot Minerals, Inc., a Delaware corporation ("RSMI") and Jubal
Terry (the "Stockholder").
Recitals
A. The Stockholder owns 1,034,353 Class B shares of the issued and
outstanding shares of the capital stock of American Rivers Oil Company (the
"Company"), a Wyoming corporation (the "Shares"). The Stockholder desires to
grant an option to RSMI to purchase the Shares.
. B. As consideration for the Option (as defined below) RSMI will pay the
Stockholder $25,000.00. The Option to purchase the Shares will have an exercise
price of $75,000.00.
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. RSMI agrees to pay the Stockholder $25,000.00 in
cash or other immediately available funds on or before March 31, 1998 (the
"Option Premium") in exchange for the Option (as defined below).
1.02 Grant of Option. The Stockholder hereby grants to RSMI an
irrevocable and exclusive option (the "Option") to purchase the Shares on the
terms and conditions set forth below.
1.03 Term of Option. The term of the Option shall be until 5:00 p.m.
September 15, 1998 (the "Expiration Date").
1.04 Exercise of Option. The Option may be exercised by RSMI at any time
prior to the Expiration Date by executing and delivering to the Stockholder
written notice of such exercise.
Ex. 5-1
<PAGE>
ARTICLE II: EXERCISE
2.01 Exercise Price. The purchase price for the Shares shall be
$75,000.00 (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 a total of 1,034,353 Class B shares of
the issued and outstanding shares of the capital stock of the Company 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 full legal right, power
and authority to enter into this Option to Purchase and to exchange, assign, and
transfer the Shares to RSMI.
ARTICLE IV: CLOSING
4.01 Closing. The closing shall take place at the offices of Holme
Roberts & Owen, 1401 Pearl Street, Suite 400, Boulder, Colorado, 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 Stockholder. The events described in this Section
4.02 shall be a condition precedent to the Closing.
(a) The Stockholder agrees to (i) deliver to RSMI stock
certificates representing his ownership of the 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 Shares.
4.03 Obligations of RSMI. The events described in this Section 4.03
shall be a condition precedent to the Closing.
(a) RSMI agrees to (i) pay the Stockholder a total of $25,000.00
in cash or other immediately available funds, and (ii) deliver to the
Stockholder a duly executed promissory note in the amount of $50,000.00, payable
over two years in accordance with terms of a promissory note substantially in
the form attached hereto as Exhibit A.
(b) RSMI agrees to execute a stock pledge and security agreement
substantially in the form attached hereto as Exhibit B.
Ex. 5-2
<PAGE>
ARTICLE V: NOTICES
5.01 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 Stockholders at:
Mr. Jubal Terry
18 Skyline Drive
Wheat Ridge, CO 80215
Facsimile: (303) 832-2404
To RSMI at:
Mr. C.R. Lloyd
The Gowen Mine
Fern Glen, PA 18241
Facsimile: (717) 384-2494
ARTICLE VI: MISCELLANEOUS
6.01 Entire Agreement. This Option to Purchase embodies the entire
understanding and agreement among the parties and supersedes any and all prior
negotiations, understandings or agreements in regard thereto.
6.02 Amendment. This Option to Purchase 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.
6.03 Applicable Law. This Option to Purchase shall be construed in
accordance with and governed by the laws of the State of Colorado.
6.04 Counterparts. This Option to Purchase may be executed in any number
of counterparts each of which shall be considered an original.
6.05 Severability of Provisions. Any provision of this Option to
Purchase 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.
6.06 Headings. The section headings used in this Option to Purchase are
for convenience of reference only and shall not affect the construction of this
Option to Purchase.
Ex. 5-3
<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this Option
to Purchase as of the day and year first written above.
ROYAL SCOT MINERALS, INC, a
Delaware corporation
By: /s/ Denis Bell
Print Name: Denis Bell
Title: President
/s/ Jubal Terry
JUBAL TERRY
Ex. 5-4
<PAGE>
EXHIBIT A
PROMISSORY NOTE
$50,000.00 __________ __, 1998
FOR VALUE RECEIVED, the undersigned, Royal Scot Minerals, Inc., a
Delaware corporation ("Maker"), having an address of The Gowen Mine, Fern Glen,
Pennsylvania 18241, promises to pay to the order of Jubal Terry ("Payee"), with
an address 18 Skyline Drive, Wheat Ridge, CO 80215, the sum of Fifty Thousand
DOLLARS and 00 CENTS ($50,000.00) (the "Principal Sum"), together with interest
on the unpaid Principal Sum at a rate of 6.50% per annum, compounded annually,
payable as follows:
(a) Twenty-five thousand dollars together with any and all
accrued and unpaid interest hereunder shall be due and
payable on or before September 15, 1999; and
(b) Twenty-five thousand dollars together with any and all
accrued and unpaid interest hereunder shall be due and
payable on or before September 15, 2000 ("Maturity").
All interest hereunder shall be calculated on the basis of a 365-day
year, actual days elapsed.
This Note may be prepaid, either in whole or in part, at any time
without premium or penalty and without the consent of Payee.
Maker shall make all payments due under the terms of this Note to Payee
at the above address or at such other place as may be designated to Maker in
writing by Payee.
Whenever Payee shall sustain or incur any losses or out-of-pocket
expenses with respect to the Note in connection with (a) repayment of overdue
amounts under this Note, or (b) failure by Maker to pay all principal and
interest of this Note, when due hereunder (whether at maturity, by reason of
acceleration, or otherwise), Maker shall pay, on demand, to Payee, in addition
to any other penalties or premiums hereunder, an amount sufficient to compensate
Payee for all such losses or out-of-pocket expenses, including, without
limitation, all costs and expenses of a suit or proceeding, (or any appeal
thereof) brought for recovery of all or any part of or for protection of the
indebtedness evidenced by this Note or to enforce Payee's rights hereunder,
including reasonable attorney's fees.
Time is of the essence hereof. At the option of the Payee, payment of
the Principal Sum and any and all accrued interest thereon may be accelerated,
and such amounts shall be immediately due and payable without further notice or
demand upon the occurrence (and continuation as hereinafter specified) of any of
the following:
Ex. 5-5
<PAGE>
(1) Failure to make any payment of any and all amounts required to be
paid hereunder when due or declared due.
(2) Dissolution, termination of existence, insolvency, business failure,
appointment of a receiver of any part of the property of, assignment for the
benefit of creditors by, or commencement of any proceeding under any bankruptcy
or insolvency laws by, or against Maker which remains uncured or undismissed for
sixty (60) days after the occurrence of such event.
Unpaid principal and interest due and payable hereunder shall bear
interest at the rate of 10 percent per annum (the "Default Interest Rate") from
the due date until paid.
The remedies provided in this Note shall be cumulative, and shall be in
addition to any other rights or remedies now or hereafter provided by law or
equity. No delay, failure or omission by any holder of this Note, in respect of
any default by the Maker, to exercise any right or remedy shall constitute a
waiver of the right to exercise the right or remedy upon any such default or
subsequent default.
Makers and any endorser herein waives presentment, demand, notice of
dishonor, notice of acceleration and protest and assents to any extension of
time with respect to any payment due under this Note, to any substitution or
release of collateral and to the addition or release of any party. No waiver of
any payment or other right under this Note shall operate as a waiver of any
other payment or right.
This Note may not be changed orally, but only by an agreement in
writing, signed by the party against whom enforcement of any waiver, change,
modification or discharge is sought.
If any of the provisions of this Note shall be held to be invalid or
unenforceable, the determination of invalidity or unenforceability of any such
provision shall not affect the validity or enforceability of any other provision
or provisions hereof.
This Note shall be binding upon Maker and its successors and assigns and
shall inure to the benefit of and be enforceable by the Payee and its successors
and assigns.
At the option of the holder hereof, an action may be brought to enforce
this Note in the District Court in and for the County of Boulder, State of
Colorado, or in any other court in which venue and jurisdiction are proper.
Maker and all signers or endorsers hereof consent to such venue and jurisdiction
and to service of process under Colorado Revised Statutes (1973) Sections
13-1-124(1)(a) and 13-1-125, in any action commenced to enforce this Note.
This Note shall be construed and enforced in accordance with the laws of
the State of Colorado.
IN WITNESS WHEREOF, Maker has caused this instrument to be executed as
of the day and year first above written.
Ex. 5-6
<PAGE>
MAKER:
Royal Scot Minerals, Inc.,
a Delaware corporation
By: ________________________
Name: Dennis Bell
Title: President
Ex. 5-7
<PAGE>
EXHIBIT B
STOCK PLEDGE AND SECURITY AGREEMENT
THIS STOCK PLEDGE AND SECURITY AGREEMENT (this "Agreement") dated as of
_____________ __, 1998, is between Royal Scot Minerals, Inc., a Delaware
corporation ("Debtor"), and Jubal Terry ("Secured Party").
RECITALS
A. Debtor owns 1,034,353 shares of the Class B common stock of American
Rivers Oil Company, Inc. ("AROC"), a Wyoming corporation (the "Shares").
B. Pursuant to that certain Promissory Note of even date herewith among
Secured Party and Debtor (the "Promissory Note"), Debtor has agreed to pay the
Secured Party $50,000.00 as set forth in the Promissory Note.
C. To secure Debtor's obligation to make the payments under the
Promissory Note, Debtor has agreed to execute and deliver this Agreement to
Secured Party in order (i) to pledge the Shares to Secured Party, and (ii) to
grant and assign to Secured Party a first priority lien on, and security
interest in, the Shares.
AGREEMENT
In consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Debtor hereby agrees as follows for the benefit of Secured Party:
1. Certain Definitions. As used herein, the following terms shall have the
following respective meanings:
"Collateral" has the meaning set forth in Section 2 below.
An "Event of Default" shall occur if (i) Debtor fails to make
any payments required by the Promissory Note or (ii) Debtor fails to perform or
observe any obligation or condition to be performed or observed by it hereunder
and such failure remains uncured or unwaived for ten days.
"Lien" means any lien, mortgage, pledge, assignment, security
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof, and any
agreement to give any security interest) and any option, trust or other
preferential arrangement having the practical effect of any of the foregoing.
Ex. 5-8
<PAGE>
"Proceeds" means all proceeds of, and all other profits, rentals or
receipts, in whatever form, arising from the collection, sale, lease, exchange,
assignment, licensing or other disposition of, or realization upon, the
Collateral, or any portion thereof.
"Secured Obligations" has the meaning given to such term in Section 3
below.
"Security Interests" means the security interests in the Collateral granted
hereunder.
"UCC" means the Uniform Commercial Code as in effect on the date hereof in
the State of Colorado; provided that if by reason of mandatory provisions of
law, the perfection or the effect of perfection or nonperfection of the Security
Interests in any Collateral is governed by the Uniform Commercial Code as in
effect in a jurisdiction other than Colorado, "UCC" means the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the provisions
hereof relating to such perfection or effect of perfection or nonperfection.
2. The Security Interests. To secure the full and punctual payment or
other performance of the Secured Obligations in accordance with the terms
thereof, and to secure the performance of all of the obligations of Debtor
hereunder, Debtor, to the fullest extent permitted by law, hereby assigns and
pledges to Secured Party, and grants to Secured Party a continuing security
interest in and to, all of the following property of Debtor, whether now owned
or existing or hereafter acquired or arising, regardless of where located (all
being collectively referred to as the "Collateral"):
(i) the Shares and the certificates representing the
Shares and any interest of Debtor in the entries on the books of any
financial intermediary pertaining to the Shares, and all dividends,
cash, warrants, rights, instruments and other property or proceeds from
time to time received, receivable or otherwise distributed in respect of
or in exchange for any or all of the Shares;
(ii) any substitute shares of the capital stock of any
class issued by AROC to Debtor in exchange for or substitution of any of
the Shares and the certificates representing such shares and any
interest of Debtor in the entries on the books of any financial
intermediary pertaining to such shares, and all dividends, cash,
warrants, rights, instruments and other property or proceeds from time
to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of such shares;
(iii) all Proceeds of all or any of the Collateral
described in clauses (i) and (ii) above.
3. Security for Obligations. This Agreement secures, and the Collateral
is collateral security for, the prompt payment or performance in full when due
of all obligations and liabilities of Debtor to make payments existing under or
arising out of or in connection with the Promissory Note, and all obligations of
every nature of Debtor now or hereafter existing under this Agreement (all such
obligations of Debtor being the "Secured Obligations").
Ex. 5-9
<PAGE>
4. Delivery of the Collateral. Upon the execution hereof, Debtor shall
immediately deliver the stock certificates representing the Shares to Secured
Party.
5. Transfers and Other Liens. Debtor shall not, without the prior
written consent of Secured Party (which shall not be unreasonably withheld):
(a) sell, transfer, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral;
(b) create or suffer to exist at any time any Lien, security interest or
other charge or encumbrance upon or with respect to the Collateral, except for
the Security Interests; or
(c) take any other action in connection with the Collateral that would (i)
impair the interests or rights of Secured Party under this Agreement or (ii)
impair or otherwise adversely affect the value of the Collateral.
6. Further Assurances. Debtor agrees that from time to time, at the
expense of Debtor, Debtor will promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary or
desirable, or that Secured Party may request, in order to perfect and protect
the Security Interests or to enable Secured Party to exercise and enforce its
rights and remedies hereunder with respect to any Collateral.
7. Voting Rights; Dividends, Etc. (a) So long as no Event of Default
shall have occurred and be continuing:
(i) Debtor shall be entitled to exercise any and all
voting and other consensual rights pertaining to the Collateral or any
part thereof for any purpose not inconsistent with the terms of this
Agreement.
(ii) Debtor shall be entitled to receive all dividends
and interest paid in respect of the Collateral.
(b) Upon the occurrence and during the continuation of an Event
of Default, upon written notice from Secured Party to Debtor, all rights of
Debtor to exercise the voting and other consensual rights which it would
otherwise be entitled to exercise pursuant to clause 7(a) above shall cease, and
all such rights shall thereupon become vested in Secured Party who shall
thereupon have the sole right, but not the obligation, to exercise, or to
appoint any person to exercise on its behalf, such voting and other consensual
rights.
8. General Authority. To the extent permitted by law, Debtor hereby
irrevocably appoints Secured Party its true and lawful attorney, with full power
of substitution, in the name of Debtor, Secured Party or otherwise, for the sole
use and benefit of Secured Party, but at Debtor's expense, to exercise, at any
time and from time to time after an Event of Default has
Ex. 5-10
<PAGE>
first occurred and is continuing, all or any of the following powers with
respect to all or any of the Collateral:
(a) to file one or more financing or continuation statements, or
amendments thereto, relative to all or any part of the Collateral without the
signature of Debtor;
(b) to ask, demand, collect, sue for, recover, compound, receive
and give acquittance and receipts for monies due and to become due under or in
respect of any of the Collateral;
(c) to receive, endorse and collect any instruments made payable
to Debtor representing any dividend, principal or interest payment or other
distribution in respect of the Collateral or any part thereof and to give full
discharge for the same;
(d) to file any claims or take any action or institute any
proceedings that Secured Party may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of
Secured Party with respect to any of the Collateral; and
(e) to sell, transfer, assign or otherwise deal in or with the
same or the proceeds or avails thereof, as fully and effectually as if Secured
Party were the absolute owner thereof; provided that Secured Party shall give
Debtor not less than ten days' prior written notice of the time and place of any
sale or other intended disposition of any of the Collateral, except any
Collateral which is perishable or threatens to decline speedily in value or is
of a type customarily sold on a recognized market. Debtor agrees that such
notice constitutes "reasonable notification" within the meaning of Section
9-504(3) of the UCC.
9. Remedies upon an Event of Default. (a) If an Event of Default has
occurred and is continuing, Secured Party may exercise all rights of a secured
party under the UCC (whether or not in effect in the jurisdiction where such
rights are exercised) and, in addition, Secured Party may, without being
required to give any notice, except as herein provided or as may be required by
mandatory provisions of law, sell the Collateral or any part thereof at public
or private sale, for cash, upon credit or for future delivery, at such price or
prices as Secured Party may deem satisfactory. Secured Party may be the
purchaser of any or all of the Collateral so sold at any public sale or private
sale. Debtor will execute and deliver such documents and take such other action
as Secured Party deems necessary or advisable so that any such sale may be made
in compliance with law. Upon any such sale Secured Party shall have the right to
deliver, assign and transfer to the purchaser thereof the Collateral so sold.
Each purchaser at any such sale shall hold the Collateral so sold to it
absolutely and free from any claim or right of Debtor of whatsoever kind,
including any equity or right of redemption of Debtor. Debtor, to the extent
permitted by law, hereby specifically waives all rights of redemption, stay or
appraisal which it has or may have under any law now existing or hereafter
adopted. Secured Party, instead of exercising the power of sale herein conferred
upon it, may proceed by a suit or suits at law or in equity to foreclose the
Security Interests and sell the Collateral, or any portion thereof, under a
judgment or decree of a court or courts of competent jurisdiction. Provided that
if the default
Ex. 5-11
<PAGE>
has been remedied before the Secured Party has taken any action with respect to
the Collateral, all rights under this Agreement will be restored to the Debtor.
10. Application of Proceeds. Except as expressly provided elsewhere in
this Agreement, all proceeds received by Secured Party in respect of any sale
of, collection from, or other realization upon all or any part of the Collateral
may, in the discretion of Secured Party, be held by Secured Party as Collateral
for, and/or then, or at any time thereafter, applied in full or in part by
Secured Party against, the Secured Obligations in the following order of
priority:
FIRST: to the payment of all costs and expenses of such sale, collection or
other realization, including reasonable compensation to Secured Party and its
agents and counsel, and all other expenses, liabilities and advances made or
incurred by Secured Party in connection therewith, and all amounts for which
Secured Party is entitled to payment hereunder and all advances made by Secured
Party hereunder for the account of Debtor, and to the payment of all costs and
expenses paid or incurred by Secured Party in connection with the exercise of
any right or remedy hereunder, all in accordance with Section 11 below;
SECOND: to the payment of all other Secured Obligations in such order as
Secured Party shall elect; and
THIRD: to the payment to or upon the order of Debtor, or to whomsoever may
be lawfully entitled to receive the same or as a court of competent jurisdiction
may direct, of any surplus then remaining from such proceeds.
11. Expenses. Debtor shall, on demand, pay to Secured Party the amount
of any and all out-of-pocket expenses, including the fees and disbursements of
counsel and any other experts, which Secured Party may incur in connection with
(a) the administration or enforcement of this Agreement, including, but not
limited to, such expenses as Secured Party incurs to preserve the value of the
Collateral and the validity, perfection, rank and value of any Security
Interests; (b) the custody, preservation, collection, sale or other disposition
of any of the Collateral; (c) the exercise by Secured Party of any of the rights
conferred upon it hereunder; or (d) any Event of Default. All sums so paid or
incurred by Secured Party for any of the foregoing and any and all other sums
for which Debtor may become liable hereunder and all costs and expenses
(including attorneys' fees, legal expenses and court costs) reasonably incurred
by Secured Party in enforcing or protecting the Security Interests or any of its
rights or remedies under this Agreement, shall, together with interest thereon
until paid at the rate of 18 percent per annum, be additional Secured
Obligations hereunder.
12. Termination of Security Interests; Release of Collateral. Upon the
payment in full of all of the Secured Obligations, the Security Interests shall
terminate and all rights to the Collateral shall revert to Debtor. Upon any such
termination of such Security Interests and release of the Collateral, Secured
Party shall, at the expense of Debtor, (a) execute and deliver to Debtor such
documents as are reasonably necessary to evidence the termination of such
Security
Ex. 5-12
<PAGE>
Interests and the release of such Collateral and (b) deliver any certificates
evidencing the Shares and any other Collateral held by Secured Party or its
nominees to Debtor.
13. Miscellaneous.
(a) Waivers; Non-Exclusive Remedies. No failure on the part of
Secured Party to exercise, and no delay in exercising and no course of dealing
with respect to, any right under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise by Secured Party of any right
under this Agreement or any other document preclude any other or further
exercise thereof or the exercise of any other right. The rights and remedies set
forth in this Agreement and the Shareholders Agreement are cumulative and are
not exclusive of any other remedies available at law or in equity.
(b) Successors and Assigns. This Agreement is for the benefit of
Secured Party and its successors and assigns. This Agreement shall be binding on
Debtor and its successors and assigns.
(c) Changes in Writing. Neither this Agreement nor any provision
hereof may be changed, waived, discharged or terminated, except by a written
agreement signed by Debtor and Secured Party.
(d) Severability. If any provision hereof is invalid or
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(a) the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be construed to carry out the intentions of the parties
hereto as nearly as may be possible and (b) the invalidity or unenforceability
of any provision hereof in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction.
(e) Headings. Section and subsection headings in this Agreement
are included for convenience of reference only and shall not constitute a part
of this Agreement for any other purpose or be given any substantive effect.
(f) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF COLORADO, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
(g) Counterparts. This Agreement may be executed in one or more
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
Ex. 5-13
<PAGE>
IN WITNESS WHEREOF, Debtor and Secured Party have caused this Agreement
to be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
DEBTOR:
ROYAL SCOT MINERALS, INC., a Delaware
corporation
By: ______________________________
Dennis Bell, President
SECURED PARTY:
--------------------------------
Jubal Terry
Ex. 5-14
<PAGE>
