OPERATING AGREEMENT
THIS AGREEMENT is made as of this 30th day of November, 1995, by and
among METRO CAPITAL CORPORATION, a Wyoming corporation (the "Company"),
XXXXXXX XXXXX OIL COMPANY, a Colorado corporation, XXXXXXX XXXXX and XXXXX
XXXXX (collectively, "KTOC"), and XXXXXX CABLE COMMUNICATIONS CORPORATION, a
Wyoming corporation and wholly-owned subsidiary of the Company (the
"Subsidiary").
Pursuant to an Asset Purchase Agreement, dated as of October 19, 1995,
between the Company and KTOC (the "Asset Purchase Agreement"), KTOC will be
obtaining control of the Company. KTOC is transferring certain assets to the
Company and the Company is transferring to the Subsidiary all of its assets
except for (i) the amount of cash and marketable securities in excess of $1.2
million, which amount in any event shall be at least $700,000; and (ii) the
Company's working interest in, and its operating agreement with respect to,
the property known as Twenty Mile Hill, which is held by Metro Minerals
Corporation, a wholly-owned subsidiary of the Company. The Subsidiary is to
be operated autonomously by the current management of the Company pursuant to
the terms hereof. The Company and the Subsidiary recognize that such
management has extensive experience in the management of the Company's
business.
In order to effect, ensure and preserve the autonomous operation of the
Subsidiary by the current management of the Company, the Company, KTOC and
the Subsidiary wish to enter into an operating agreement on the terms and
conditions set forth below. Accordingly, in consideration of the promises
and the respective covenants and agreements of the parties herein contained,
and intending to be legally bound hereby, the parties hereto agree as follows:
1. MANAGEMENT. The Company, KTOC and the Subsidiary hereby agree that
the Subsidiary is to be operated by the current management of the Company as
set forth in management agreement to be executed as of the Closing under the
Asset Purchase Agreement (the "Management Agreement") among the Subsidiary
and Xxxxxx X. Xxxxxxxxxx and such other persons, including Xxxx X. Xxxxx and
Xxxxxx X. Xxxxxxxxxx, who may be appointed to management positions by the
Board of Directors of the Subsidiary (collectively, the "Management").
2. TERM. The operation of the Subsidiary by the Management as
provided in Section 1. will commence on the date hereof and continue for five
years from the date hereof.
3. BOARD OF DIRECTORS OF THE SUBSIDIARY. Any determination by the
Board of Directors of the Subsidiary with respect to the business, operations
and assets of the Subsidiary shall be final, conclusive and binding and shall
not be subject to any modification whatsoever by the Board of Directors or
management of the Company for any reason; provided, however, that in no event
shall any member of the Board of Directors or any other officer of the
Company be required to breach his or her fiduciary duty to the Company or its
shareholders.
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4. RELATIONS BETWEEN THE COMPANY AND THE SUBSIDIARY. The Board of
Directors of the Subsidiary shall make the officers and directors of the
Subsidiary available to discuss the business and operations of the Subsidiary
with the Company and its management at reasonable times. The Management
shall cooperate with the Company in the preparation and filing of all
materials to be filed with the Securities and Exchange Commission, the
Internal Revenue Service and other applicable governmental authorities. Each
party shall pay all costs and expenses relating to its respective business
operations. Each party agrees to pay its proportionate share of costs and
expenses attributable to it in connection with the preparation of
consolidated financial statements and consolidated income tax returns. Each
party shall pay the other party, on terms to be agreed upon in advance, for
any services performed by personnel of the other party (and costs associated
therewith) as such party may request. The Subsidiary shall bear the costs
and expenses incurred in connection with the preparation and filing of
materials to be filed with the Securities and Exchange Commission that it
requests that the Company file on its behalf; and, each party shall cooperate
with the other party in the preparation and filing of any such materials.
5. BUSINESS, OPERATIONS AND ASSETS OF THE SUBSIDIARY. The Board of
Directors of the Subsidiary shall have sole authority and discretion with
respect to the business, operations and assets of the Subsidiary, except as
provided in Section 3 above. The Company shall not take any action with
respect to the business, operation or assets of the Subsidiary without first
obtaining the written consent of the Board of Directors of the Subsidiary.
Without limiting the generality of the foregoing, and provided that it
complies with all applicable laws, the Board of Directors of the Subsidiary
may take any or all of the following actions in its sole and absolute
discretion to:
(a) dispose of, encumber or otherwise hypothecate any, all or
substantially all of the assets of the Subsidiary, whether
owned as of the date hereof or hereafter acquired;
(b) acquire additional assets on behalf of the Subsidiary;
(c) change the business of the Subsidiary;
(d) merge or consolidate the Subsidiary with any entity;
(e) incur any indebtedness on behalf of the Subsidiary;
(f) declare any legal dividends on behalf of the Subsidiary; or
(g) liquidate and dissolve the Subsidiary.
6. CONTROL OF SUBSIDIARY BY THE MANAGEMENT. The Subsidiary is to be
controlled and operated exclusively by the Management and not by the Company.
The Company and KTOC represent and warrant that they will maintain the
Management Agreement and this Operating Agreement in full force and effect
during the term of this Agreement and will not take any action whatsoever
which interferes, intervenes or disrupts the control and operation of the
Subsidiary by the Management, except as provided in Section 3.
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7. VOTING AGREEMENT. The Company and KTOC agree at all times during
the term of this Agreement to be bound by the terms of the voting agreement
(the "Voting Agreement"), in the form attached hereto as Exhibit A.
8. INDEBTEDNESS. The Company shall not incur any indebtedness on
behalf of the Subsidiary or take any action, directly or indirectly, to
encumber, or cause any claims to be made with respect to, any or all of the
assets of the Subsidiary. The Subsidiary shall not incur any indebtedness or
take any other action, directly or indirectly, to encumber, or cause any
claims to be made with respect to, any or all of the assets of the Company.
The subsidiary agrees to timely pay, or establish appropriate reserves, for
any and all taxes and assessments against it or its assets.
9. TERMINATION. Except as otherwise provided in Section 2 hereof,
neither the Company nor KTOC may terminate this Agreement for any reason
without the written consent of the Board of Directors of the Subsidiary.
10. SUCCESSORS; BINDING AGREEMENT. The Company and KTOC will require
any successor by purchase, merger, consolidation or otherwise to all or a
controlling interest in the Company, by agreement in form and substance
satisfactory to the Board of Directors of the Subsidiary, to expressly assume
and agree to perform this Agreement. Failure by the Company or KTOC to
obtain such agreement prior to the effectiveness of any such succession shall
be a breach of this Agreement. As used in this Agreement, "Company" shall
mean the Company as hereinbefore defined or which otherwise becomes bound by
all the terms and provisions of this Agreement by operation of law and
"control" shall have the same meaning given to it in the Management Agreement.
11. INDEMNIFICATION. The Subsidiary agrees to indemnify and hold
harmless the Company, its officers, directors, employees and agents, from any
and all liabilities, losses, costs, claims, actions, suits, proceedings,
damages, penalties and expenses (including attorneys' fees and expenses and
costs of investigation and litigation, and including any such attorneys' fees
and expenses incurred in connection with enforcing this Section) suffered or
incurred by any such party by reason of or arising out of any actions or
omissions by the Management.
12. BREACH. Any breach of any provisions of this Agreement shall be
deemed a breach of the Asset Purchase Agreement and of the Management
Agreements and all rights and remedies under such agreements shall be
available hereunder. There shall be full recourse against the Company by the
parties to the Management Agreements for any action by the Company that
impairs any of the parties' rights legally and validly asserted under the
Management Agreements.
13. NOTICE. For purposes of this Agreement, notices, demands and all
other communications provided for in the agreement shall be in writing and
shall be deemed to have been duly given when delivered or (unless otherwise
specified) mailed by United States registered mail, return receipt requested,
postage prepaid, addressed to the Company, KTOC and the Subsidiary at the
following addresses:
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(i) If to the Company:
Xxxxxxx Xxxxx, President
Metro Capital Corporation
000 Xxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
(ii) If to KTOC:
Xxxxxxx Xxxxx, President
Xxxxxxx Xxxxx Oil Company
000 Xxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
(iii) If to the Subsidiary:
Xxxxxx X. Xxxxxxxxxx, President
Xxxxxx Cable Communications Corporation
000 Xxxxxxx Xxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
Any party to this Agreement may change the address for giving notices by
written notice to the other parties in conformity with the foregoing, except
that notices of change of address shall be effective only upon receipt.
14. MISCELLANEOUS. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed
to in writing signed by the parties. No waiver by any party hereto at any
time of any breach by any other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by any party which are not set forth
expressly in this Agreement. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Wyoming.
15. VALIDITY. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not effect the validity or enforceability
of any other provision of this Agreement, which shall remain in full force
and effect.
16. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of
which together will constitute one and the same instrument.
17. GOVERNING LAW. The interpretation and construction of this
Agreement, and all matters relating hereto, shall be governed by the internal
laws of the State of Wyoming.
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18. ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration,
which shall be conducted according to the terms of Section 10.11 of the Asset
Purchase Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
and year first above written.
METRO CAPITAL CORPORATION
By:___________________________________
Xxxxxxx Xxxxx, President
XXXXXXX XXXXX OIL COMPANY
By:___________________________________
Xxxxxxx Xxxxx, President
______________________________________
XXXXXXX XXXXX
______________________________________
XXXXX XXXXX
XXXXXX CABLE COMMUNICATIONS CORPORATION
By:___________________________________
Xxxxxx X. Xxxxxxxxxx, President
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