Exhibit G
OPERATING AGREEMENT
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THIS AGREEMENT is made as of this 8th day of December, 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; change the
business 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: /S/ XXXXXXX XXXXX
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Xxxxxxx Xxxxx, President
XXXXXXX XXXXX OIL COMPANY
By: /S/ XXXXXXX XXXXX
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Xxxxxxx Xxxxx, President
/S/ XXXXXXX XXXXX
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XXXXXXX XXXXX
/S/ XXXXX XXXXX
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XXXXX XXXXX
XXXXXX CABLE COMMUNICATIONS CORPORATION
By: /S/ XXXXXX X. XXXXXXXXXX
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Xxxxxx X. Xxxxxxxxxx, President
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