U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB/A
General Form For Registration of Securities of
Small Business Issuers
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
BISHOP CAPITAL CORPORATION
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(Name of Small Business Issuer in its charter)
Wyoming 84-0901126
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
716 College View Drive, Riverton, WY 82501
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(Address of principal executive offices) (Zip Code)
(307) 856-3800
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(Issuer's telephone number)
Securities to be registered under Section 12(b) of the Act:
None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value
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(Title of Class)
<PAGE>
Part I
Item 1. Description of Business
-----------------------
The Company
Bishop Capital Corporation, formerly known as Bishop Cable Communications
Corporation, (the "Company") was originally incorporated under the laws of the
State of Colorado on February 22, 1983 and reincorporated under the laws of the
State of Wyoming on June 2, 1992. On November 22, 1995, the Company changed its
name. The Company is primarily engaged in the development and sale of real
estate. Since inception, the Company has been a wholly-owned subsidiary of a
public company listed on Nasdaq.
In December 1995, the Company's parent corporation, then known as Metro Capital
Corporation ("Metro"), upon approval of its shareholders, completed a
transaction with Karlton Terry Oil Company and its affiliates ("KTOC") whereby
KTOC exchanged certain oil and gas properties for 80% of the then issued and
outstanding voting securities of Metro (the "Transaction" or the "Metro/KTOC
Transaction"). Metro and KTOC previously were not affiliated. Prior to and in
connection with the Transaction, Metro transferred all of its assets to the
Company, except for $700,000 cash and an insignificant oil property. These
transferred assets, together with the Company's previously owned assets, are
being operated autonomously by the prior management of Metro who became officers
and directors of the Company pursuant to the terms of separate five-year
Operating and Voting Agreements (as discussed in Item 7). Upon completion of the
Transaction, the parent corporation's name was changed to American Rivers Oil
Company ("AROC"). Management of KTOC succeeded to the board of directors and
serve as officers of AROC operating the oil and gas properties previously owned
by KTOC.
As a result of the Transaction, AROC and the Company have separate businesses
under separate management. Pursuant to the terms of the Transaction, AROC is
distributing the shares of the Company as a partial liquidating dividend to
holders of AROC Common Stock (the "spin-off"). The spin-off record date is
November 18, 1996, and it is intended that the spin-off will occur shortly after
this Form 10-SB becomes effective.
The only class of securities of the parent corporation issued and outstanding
prior to the Transaction was Common Stock. Under the terms of the Transaction,
the parent corporation issued Class B Common Stock to KTOC in order to exclude
KTOC from participation in the spin-off. The holders of Class B Common Stock
possess the same rights as the holders of Common Stock except that the Class B
Common Stock is not entitled to participate in any distribution of shares or
assets of the Company. The Class B common stock is convertible on a one-for-one
share basis into AROC's Common Stock commencing 36 months from December 1995.
All of the Class B Common Stock was issued to KTOC in the Transaction, 95% of
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which is beneficially owned by AROC's officers and directors. The Common Stock
was beneficially owned by Metro's shareholders at the time of the Transaction
and none was owned by KTOC. The current ownership of AROC's Common Stock held by
its principal stockholders (greater than 5%) is 35%, including 11% which is
beneficially owned by a director.
In February 1997, AROC announced that it anticipated executing an agreement to
merge with Opon Development Company (ODC) in the near future. The transaction
was previously announced in November 1996. ODC's only asset is a 4.55% working
interest in and to the Opon oil and gas field in Colombia, South America which
is operated by Amoco Colombia Petroleum Corp., with Hondo Magdalena Oil & Gas
Company being the other partner. Completion of the merger would be subject to,
among other conditions, obtaining project financing for ODC's Colombian project
and shareholder approval of both companies. The companies intend to merge into a
new company whose shares are to be registered with the Securities and Exchange
Commission and issued to acquire all outstanding AROC and ODC shares. Upon
conclusion of the merger, ODC shareholders would own 90 - 95% of the new company
and ODC management would operate the company. AROC's current oil and gas
operations are expected to continue in a subsidiary of the new company. The
merger is expected to be completed in the second quarter of 1997 but there is no
assurance that the transaction will be completed. This transaction, which is
unrelated to the Metro/KTOC Transaction, will have no effect on the spin-off nor
will any assets of AROC be contributed to the Company.
The Company's operations, prior to the transfer of assets from Metro, were
primarily related to real estate development and sales (see Item 1 "Real
Estate"). In connection with the Metro/KTOC Transaction, Metro transferred
assets of $1,731,000 (excluding $700,000 cash from the sale of marketable
securities and an insignificant oil property) and related liabilities of $41,000
to the Company. The assets transferred included $1,055,000 in cash and
marketable securities, net property and equipment of $200,000 and net gas
royalty interests of $400,000.
The success of the Company depends, among other factors, upon the trends of the
economy, including interest rates, construction costs, governmental regulations
and legislation, including environmental requirements, real estate fluctuations,
retailing trends, population trends, zoning laws, availability of financing and
capital on satisfactory terms and the ability of the Company to compete with
other owners and developers with greater resources and whose management may have
more experience than the Company's officers.
Under various federal, state and local laws, ordinances and regulations relating
to the protection of the environment, a current or previous owner of real estate
may be liable for the cost of removal or remediation of certain hazardous or
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toxic substances disposed, stored, released, generated, manufactured or
discharged from, on, at, onto, under or in such property. Environmental laws
often impose such liability without regard to whether the owner knew of, or was
responsible for, the presence or release of such hazardous or toxic substances.
The Company engaged an independent environmental engineer to complete a Phase I
Environmental Assessment ("Assessment") on the 20 acre parcel being developed in
Colorado Springs, Colorado. The Assessment did not reveal any non-compliance
with environmental laws. The Company is not aware of any non-compliance with
environmental laws, environmental liability or other environmental claims on its
real estate properties that the Company believes would likely have a material
adverse effect on the Company.
The Company also has a royalty interest in a natural gas property. As such, the
Company receives a specified portion of the gas produced less related state
severance or production taxes.
The Company had four full-time employees as of February 28, 1997.
Real Estate
In October 1993, the Company entered into two limited partnership agreements to
purchase approximately 90 contiguous acres of land in Colorado Springs,
Colorado. The property surrounding the acreage is primarily retail development
(restaurants, major grocery chains, gas stations, convenience stores and small
retailers) to serve nearby residential developments. A summary of the Company's
participation in each partnership is as follows:
(1) The Company contributed $250,000 cash to the first partnership (Bishop
Powers, Ltd.) which purchased approximately 55 acres of land for commercial
development. The Company, as general partner, has an 81% interest with the
remaining 19% interest held by the limited partner (Powers Golf LLC) who is the
general partner in the second partnership discussed below. The Company will be
allocated 100% of the income and losses until it has been paid $600,000 plus
interest thereon at 8% per annum (not to exceed $100,000) after which the income
and losses will be allocated 81% to the Company and 19% to the limited partner.
The Company, as general partner, has exclusive management of the partnership.
Any transfer of a limited partner's interest requires the written consent of the
general partner. The Company is planning a three phase development of commercial
pad sites for the 20 acre parcel as discussed in Item 3. The remaining 35 of the
55 acres is not being developed at the present time.
(2) The Company contributed $100,000 cash to the second partnership (Z-H,
Ltd.) which purchased approximately 35 acres of land on which Z-H Ltd.
constructed a recreational facility consisting of a 60 station golf driving
range, 36 holes of miniature golf, 9 baseball/softball batting machines, and a
1,200 square foot clubhouse. This facility, which encompasses all of the acreage
purchased, commenced operations in July 1994. The Company, as the limited
partner, has a
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19% interest with the remaining 81% interest held by the general partner (Powers
Golf LLC). There is no affiliation between the Company and Powers Golf LLC. The
Company contributed an additional $250,000 when certain financing requirements
in the partnership consisting of $800,000 of debt financing were fulfilled by
the general partner. The Company is not a guarantor of any debt in this
partnership and the general partner cannot incur additional debt without the
prior written consent of the Company. The Company is not required to make any
further capital contributions to the partnership. The Company also has the right
of first refusal relating to the sale of partnership assets. The general partner
is having preliminary discussions with an unrelated third-party who has
expressed an interest in leasing the facility. The partnership has incurred
losses from operations since inception. There is no assurance that the
operations will become profitable in the near future. At December 31, 1996, the
net carrying value of the Company's 19% interest is $224,000.
The undeveloped real estate is subject to local zoning laws and regulations. The
undeveloped real estate must be surveyed, designed and platted and then
submitted to the appropriate governmental authorities for approval, permits and
agreements before it can commence development. The ability of the Company to
obtain necessary approvals and permits for its planned development is often
beyond the Company's control. The length of time necessary to obtain permits and
approvals increases the carrying costs of unimproved land acquired for the
purpose of development. The western boundary of the undeveloped real estate
borders a drainage channel and appropriate governmental authorities will require
that certain improvements be made along the drainage channel as sections of the
undeveloped land are platted for development. The Company estimates that the
total drainage channel improvement costs will approximate $400,000.
The Company entered into Purchase Agreements to sell the following tracts of
land: (i) 1.14 acre to Diamond Shamrock Refining and Marketing Company for
$388,850 for a combination gasoline sales, convenience store and car wash
facility; (ii) 1.04 acre to a Taco Bell franchisee for not less than $350,000
(purchase price to be adjusted up if actual size of platted lot is greater than
size stated in Purchase Agreement) for a fast-food facility; and (iii) .92 acre
to State Bank & Trust for $330,627 (purchase price to be adjusted if actual size
of platted lot exceeds or is less than size stated in Purchase Agreement) for a
branch bank facility. The Company has submitted the concept plan for Phase I of
the development to the appropriate governmental authorities for review and
approval. Upon approval of this concept plan, a final plat will be submitted for
approval and recordation. The Company expects the approvals and recordation to
be completed on or before April 30, 1997. The Taco Bell closing will occur 20
days after final approval of the plat by the appropriate governmental
authorities. The State Bank & Trust closing will occur 10 days following notice
from the Company that the final plat has been recorded; however, State Bank &
Trust can extend the closing for a period of 45 days by giving written notice to
the Company on or before the date set for closing and providing an additional
$25,000 earnest money deposit. The Diamond Shamrock closing will occur when the
purchaser has obtained all required permits necessary to construct the facility
on the property; however, if purchaser has not closed within 180 days after plat
recordation, the contract will terminate.
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In October 1995 the Company acquired approximately 5 acres of undeveloped real
estate in Riverton, Wyoming for $80,000 and developed the parcel into a 15 lot
subdivision. The improvements (utilities, drainage, roadway, etc.) which were
completed in September 1996 cost approximately $154,000. In June 1996 the
Company entered into a one year listing agreement with a real estate brokerage
company to market at a 6% commission rate the improved lots.
Natural Gas Royalty Interest
In December 1990, the Company purchased a royalty interest in certain natural
gas properties located in Wyoming from an unrelated third-party for
approximately $1,050,000. At December 31, 1996, the net carrying value of this
interest, which is being amortized over 8 years, is $267,000. In connection with
the purchase, the Company formed a tax partnership (Bridger Creek Partnership)
which allocates to the Company, as general partner, the first $40,000 of annual
net income (as defined) from the partnership and 80% of annual net income in
excess of $40,000. After the Company has received cumulative net income of
$1,050,000, plus interest at prime adjusted semi-annually, the Company will
receive 60% of the annual net income thereafter.
The royalty interests are in the Madden Unit which produces natural gas from
producing horizons between 5,500 and 24,000 feet. A gas processing plant in
which the Company has no ownership interest treats the "sour gas" produced from
the Madison formation (24,000 feet). The plant processes 50 MMCFD (million cubic
feet per day) from two completed Madison wells. The plant products include
methane, sulfur and carbon dioxide. The Company's royalty interests are only
subject to plant processing costs and severance and ad valorem taxes. The
Company and other royalty owners are currently negotiating with the plant
operator to eliminate the deduction of certain processing costs which may not be
in accordance with applicable state rules and regulations.
Reserve information relating to the natural gas royalty interests owned is not
included because the information is not made available to royalty interest
owners by Louisiana Land and Exploration Company, the operator of the
properties.
Item 2. Management Discussion and Analysis of Financial Condition and Results of
Operations
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In connection with the Metro/KTOC Transaction discussed in Item 1, the Company
is being operated autonomously by the prior management of Metro pursuant to the
terms of separate five-year Operating and Voting Agreements. (Please refer to
Item 7 for a discussion of these Agreements.) Accordingly, the accompanying
financial statements include the consolidated operating results and cash flows
of Metro until December 8, 1995 when the change of control occurred. Beginning
in December 1995, the Company's consolidated operating results include the
operations associated with the assets and liabilities transferred from Metro.
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The Company believes that this report contains certain forward-looking
statements, as defined in the Private Securities Litigation Reform Act of 1995,
including, without limitation, statements containing the words "believes,"
"anticipates," "estimates," "expects," "may" and words of similar import, or
statements of management's opinion. Such forward-looking statements involve
known and unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of the Company to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements.
The following discussion and analysis should be read in conjunction with the
Company's Consolidated Financial Statements and Notes thereto.
Results of Operations for the Years Ended March 31, 1996 and 1995
The fiscal 1996 net loss of $144,000 decreased by $442,000 or 79% over the net
loss for fiscal 1995 primarily due to a gain on the sale of marketable
securities of $688,400 offset by $150,000 of professional fees relating to the
Metro/KTOC Transaction.
Revenue
Gas royalty revenue increased by $1,800 or 3% from fiscal 1995 to fiscal 1996.
Natural gas production was 49,148 mcf in fiscal 1996, or a 25% increase compared
to 1995 (39,383 mcf) and was primarily due to the "sour" gas treatment plant
becoming operational in March 1995. The production increase, however, was offset
by a 21% decrease in the average sales price of natural gas ($1.36/mcf in 1996
compared to $1.72/mcf in 1995).
Costs and Expenses
The only production costs incurred in connection with the Company's natural gas
royalty interests are for gas plant processing charges and severance and ad
valorem taxes. These costs increased by $9,600 or 100% in fiscal 1996 compared
to fiscal 1995 due primarily to the gas plant, which processes "sour gas",
becoming operational in March 1995. The Company and other royalty owners are
presently negotiating with the plant operator to decrease the plant processing
cost per mcf being charged to the royalty owners.
General and administrative expenses increased $234,000 or 17% in fiscal 1996
compared to fiscal 1995 resulting primarily from legal and consulting fees
incurred in connection with the December 1995 Metro/KTOC Transaction and
compensation expense being recorded in connection with the issuance of common
stock to employees from the Company's stock bonus plan and two outside directors
receiving common stock as compensation for services.
Depreciation and amortization decreased $6,500 or 4% in fiscal 1996 compared to
fiscal 1995 as a result of a decrease in depreciable assets.
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Other
Interest and dividend income decreased $19,000 or 21% in fiscal 1996 from fiscal
1995 due to the sale of marketable equity and fixed income securities.
Rental income decreased $6,000 or 32% in fiscal 1996 from fiscal 1995 due to the
nonrenewal of an office lease in fiscal 1995.
The gain on sale of marketable securities in fiscal 1996 of $688,000 resulted
primarily from the sale of equity securities with a low cost basis in connection
with the Metro/KTOC Transaction. The Company does not anticipate having a gain
of this magnitude in the near future.
The equity in limited partnership loss represents the Company's share of losses
as a 19% limited partner in a golf driving range, miniature golf and
baseball/softball batting cage recreational facility which commenced operations
in July 1994.
The discontinued operations of an oil property relates to the oil property which
was not transferred to the Company in connection with the December 1995 reverse
acquisition.
Results of Operations for the Nine Months Ended December 31, 1996 and 1995
The net loss for the nine months ended December 31, 1996 increased by $377,000
over the net loss of $27,000 for the nine months ended December 31, 1995. The
increase is primarily due to a decrease in the gain on sale of marketable
securities of $634,000 (1996 compared to 1995) offset by professional fees of
$150,000 related to the Metro/KTOC Transaction in December 1995.
Revenue
Gas royalty revenue for the nine months ended December 31, 1996 decreased $400
or less than 1% over the comparable period in 1995. The decrease in revenue
resulted from the gas processing plant incurring a shutdown in August 1996 for
normal repairs and maintenance and a mechanical breakdown in September 1996. As
a result, natural gas production decreased 10% for the nine months ended
December 31, 1996 (32,723 mcf) compared to the comparable period in 1995 (36,488
mcf). However, the average sales price per mcf increased to $1.44 for the nine
months ended December 31, 1996 compared to $1.28 in the comparable period in
1995.
Costs and Expenses
Gas processing and production taxes decreased $300 or 2% for the nine months
ended December 31, 1996 compared to the same period in 1995. Although the gas
processing plant was shut down for repairs and maintenance in 1996, the decrease
in plant processing costs was offset by the plant operator recovering from the
Company, in equal monthly amounts in 1996, the difference between the actual and
estimated annual plant processing charges for the period April 1995 through
December 1995.
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General and administrative expenses for the nine months ended December 31, 1996
decreased $241,000 or 38% compared to the comparable period in 1995. The
decrease reflects a reduction in professional fees which were higher in 1995 due
to the Metro/KTOC Transaction.
Depreciation and amortization for the nine month periods in 1996 and 1995
remained comparable.
Other
Interest and dividend income decreased $19,000 or 35% for the nine months ended
December 31, 1996 compared to 1995 due to the sale of marketable securities.
Gain on sale of marketable securities decreased $634,000 or 92% for the nine
months ended December 31, 1996 compared to 1995. In 1995, the Company sold
equity securities with a low cost basis to generate cash in connection with the
Metro/KTOC Transaction.
Equity in limited partnership loss decreased $8,000 or 21% for the nine months
ended December 31, 1996 compared to 1995. The limited partnership's operations
for the nine months ended December 31, 1996 reflected a 7% increase in revenues
with a corresponding decrease of 6% in costs and expenses when compared to the
comparable period in 1995. Although the loss in the current period decreased
compared to the prior period, there is no assurance that the operations will
continue to improve or become profitable in the near future.
Financial Condition
At December 31, 1996, the Company had working capital of $482,000.
The following summary table reflects comparative cash flows for the Company for
the nine months ended December 31, 1996 and 1995 and for the two years ended
March 31, 1996:
<TABLE>
<CAPTION>
Nine Months Ended Years Ended
December 31, March 31,
--------------------- -----------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net cash used in operating activities $(249,800) $(286,600) $(321,200) $(307,900)
Net cash provided by investing activities 216,500 396,500 262,700 439,300
Net cash used in financing activities -- -- -- (46,500)
</TABLE>
Net cash used in operating activities of $249,800 for the nine months ended
December 31, 1996 compared to $286,600 for the comparative period in 1995
reflects reduced operating expenses and the discontinued operations of an oil
property. Net cash used in operating activities increased from $307,900 in
fiscal 1995 to $321,200 in fiscal 1996 primarily due to decreased oil revenue
accompanied by increased production costs.
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Net cash provided by investing activities totaled $216,500 and $396,500 for the
nine months ended December 31, 1996 and 1995, respectively. The Company utilized
net cash proceeds of $330,500 from the sale of marketable securities for the
period ended December 31, 1996 for capital expenditures of $138,000, advancing
funds of $120,000 under notes receivable offset by $121,300 of proceeds from
notes receivable and funding of operating activities. The capital expenditures
primarily relate to improvements on undeveloped land in Wyoming. The Company
loaned $100,000 to its parent company which was subsequently repaid during the
nine months ended December 31, 1996. During the nine months ended December 31,
1995, the Company utilized net cash proceeds of $1,140,000 from the sale of
marketable securities primarily for capital expenditures of $96,000, the
transfer of $700,000 cash in the Metro/KTOC Transaction and funding of operating
activities. In fiscal 1996, net cash proceeds of $1,095,500 from the sale of
marketable securities were primarily utilized for capital expenditures of
$155,000, the transfer of $700,000 cash in the Metro/KTOC Transaction and
funding of operating activities. In fiscal 1995, net cash proceeds of $461,300
from the sale of marketable securities were utilized primarily for the funding
of operating activities.
There were no cash flows from financing activities for the nine months ended
December 31, 1996. The Company had short-term borrowings and repayments of
$60,000 in fiscal 1996 and $40,000 for the nine months ended December 31, 1995.
Net cash used in financing activities of $46,500 in fiscal 1995 related to the
acquisition of treasury stock.
The Company's material commitments for capital expenditures in the next twelve
months will be in conjunction with the development of Phase I of the real estate
located in Colorado Springs, Colorado. The Company has entered into contracts to
sell three lots. The Company has engaged outside consultants to develop
specifications and bid packages for roadway, drainage channel and on-site
(grading, utilities, etc.) improvements related to Phase I consisting of
approximately 5 acres. The amount of such commitment is estimated to be in the
range of $400,000 to $500,000. The Company expects that such expenditures will
be funded through the proceeds realized from the sale of lots, working capital
and/or letters of credit collateralized by real estate.
Item 3. Description of Property
The Company's principal properties consist of 55 acres of undeveloped real
estate in Colorado and a 15 lot subdivision and natural gas royalty interests in
Wyoming. None of the properties are held subject to any major encumbrance.
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Real Estate Investment Policies
The Company's major investment in real estate is the 55 acres of undeveloped
real estate in Colorado Springs, Colorado which was acquired in October 1993 and
consists of separate 20 acre and 35 acre parcels. The Company is presently
planning a three phase development of commercial pad sites for the 20 acre
parcel. Phase I of the development, consisting of approximately 183,000 square
feet, includes 5 lots of which the Company has entered into Purchase Agreements
on three lots. The Company has engaged outside consultants to prepare the
necessary Phase I documentation (surveys, designs and plats) for submission to
the appropriate governmental authorities for approval and permits. The Company
will be required to make improvements to the drainage channel on the western
boundary of the land in Phase I as discussed in Item 1. The Company has
submitted the Phase I concept plan for approval by the appropriate governmental
authorities after which the final plat will be submitted for approval and
recordation. The Company expects the approvals and recordation to be completed
on or before April 30, 1997. The Company is working with various consultants in
the preparation of design plans, cost estimates and bid documents for the site
development work. The Company expects the site development work to be completed
in the third quarter of 1997. The Company, which is devoting all of its efforts
to Phase I of the development, is unable to project an estimated time frame for
the commencement and completion of Phases II and III.
The Company anticipates that the costs incurred in developing the land (grading,
utility extensions, etc.) in Phase I will be funded primarily by the escrow of
the sales proceeds from the sale of lots. The Company anticipates providing a
Letter of Credit to the appropriate governmental authorities to ensure that the
necessary improvements to the drainage channel will be completed.
The Company's development plan for the remaining 35 acre parcel is presently
anticipated to be a combination of retail pad sites and an apartment complex.
The construction of an apartment complex will be based upon a variety of
factors, including (i) external demographic studies; (ii) financial review as to
the feasibility of the proposed project, including projected profit margins,
return on capital employed and the capital payback period; (iii) competition for
the proposed project, the ability to obtain financing on favorable terms and
management's judgment as to the real estate market and economic trends. The
Company would also consider various financial resources such as a partnership,
joint venture or other financing arrangements to minimize risk. The Company has
not commenced any feasibility studies or financial reviews of the contemplated
usage of this parcel.
The Company does not anticipate any major investments in real estate mortgages
or securities of or interests in persons primarily engaged in real estate
activities.
Reserves
Reserve information relating to the natural gas royalty interests owned is not
included because the information is not made available to royalty interest
owners by Louisiana Land and Exploration Company, the operator of the
properties. The Company's share of production from the royalty interests for the
nine months ended December 31, 1996 was 32,723 mcf.
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Item 4. Security Ownership of Certain Beneficial Owners and Management
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a. Security Ownership of Certain Beneficial Owners
All of the issued and outstanding securities of the Company are currently owned
by AROC. The following table gives effect, on a pro forma basis, to the spin-off
of the Company to holders of AROC common stock and shows those persons known by
the Company who will be the beneficial owners of more than 5% of the Company's
Common Stock:
<TABLE>
<CAPTION>
Amount and Nature
Name and Address of Beneficial Percent
Title of Class of Beneficial Owner Ownership of Class
-------------- ------------------- ----------------- --------
<S> <C> <C> <C>
Common Stock Haddon, Inc. 93,750 10.6%
c/o Coal Contractors
Gowen Mine
Fern Glen, PA 18241-2145
Common Stock Robert E. Thrailkill 78,720 8.9%
716 College View Drive
Riverton, WY 82501 (1)
Common Stock Consult & Assist 68,750 7.8%
P.O. Box 9856
Rancho Santa Fe, CA 92067
Common Stock Francarep, Inc. 68,750 7.8%
50 Av. des Champs-Elysees
75008 Paris, France
</TABLE>
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(1) In connection with the December 1995 Metro/KTOC Transaction, the
Company entered into a five-year Voting Agreement with AROC which appointed the
Company's president, Mr. Thrailkill, or such person he shall designate as
attorney and proxy to vote in his sole and absolute discretion, all of the
shares of all classes of the common stock of AROC and/or the Company owned by
them with respect to any matter brought before the shareholders of AROC and/or
the Company relating to or involving exclusively the Company. Accordingly, Mr.
Thrailkill may be deemed the beneficial owner of 4,500,000 shares of the
Company's common stock owned by AROC prior to the effective date of the
spin-off. Upon the effective date of the spin-off, the Voting Agreement will
terminate. (See Item 7.)
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b. Security Ownership of Management
The following table shows, on a pro forma basis giving effect to the spin-off of
the Company to holders of AROC common stock, management's expected ownership of
the Company's Common Stock:
<TABLE>
<CAPTION>
Amount and Nature
Name and Address of Beneficial Percent
Title of Class of Beneficial Owner Ownership of Class
-------------- ------------------- ----------------- --------
<S> <C> <C> <C>
Common Stock Robert E. Thrailkill 78,720 8.9%
716 College View Drive
Riverton, WY 82501
Common Stock John A. Alsko 19,563 2.2%
716 College View Drive
Riverton, WY 82501
Common Stock Robert J. Thrailkill 15,938 1.8%
716 College View Drive
Riverton, WY 82501
Common Stock All officers and directors
as a group (three persons) 114,221 12.9%
</TABLE>
c. Changes in Control
The Company is not aware of any arrangement which may, at a subsequent date,
result in a change of control of the Company.
Item 5. Directors and Executive Officers
--------------------------------
a. Identification of Directors and Executive Officers
Name Age Office
---- --- ------
Robert E. Thrailkill 65 Chairman of the Board, President
and Chief Executive Officer
John A. Alsko 55 Secretary/Treasurer and Director
Robert J. Thrailkill 37 Vice President and Director
Robert E. Thrailkill. Mr. Thrailkill has been President, Chief Executive
Officer and Director of the Company since its inception in February 1983. Mr.
Thrailkill previously served as Chairman of the Board, President and Chief
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Executive Officer of Metro Capital Corporation from February 1981 to December
1995 at which time there was a change in control. Mr. Thrailkill's business
background spans over 32 years of management responsibility in privately and
publicly-held companies. Mr. Thrailkill devotes full time to the business of the
Company.
John A. Alsko. Mr. Alsko was appointed as Secretary/Treasurer and a
Director of the Company in November 1995. Previously, Mr. Alsko served as Vice
President - Finance of Metro Capital Corporation from February 1987 to December
1995. Prior to joining Metro Capital Corporation, he was employed in various
financial positions with other privately and publicly-held companies and public
accounting firms. Mr. Alsko is a Certified Public Accountant.
Robert J. Thrailkill. Mr. Thrailkill was appointed as Vice President -
Operations and a Director of the Company in November 1995. Previously, Mr.
Thrailkill served as Director of Operations of Metro Capital Corporation from
January 1989 to December 1995. Prior to joining Metro Capital Corporation, he
was employed in various supervisory and managerial positions with other
companies.
The directors of the Company are elected to hold office until the next annual
meeting of shareholders or until a successor has been elected and qualified.
Officers of the Company are elected annually by the Board of Directors and hold
office until their successors are duly elected and qualified.
No arrangement or understanding exists between any of the above directors and
officers pursuant to which any one of those persons were selected to such office
or position. None of the directors hold positions with American Rivers Oil
Company or directorships in other companies.
b. Identification of Certain Significant Employees
Not applicable.
c. Family Relationships
Robert J. Thrailkill is the son of Robert E. Thrailkill.
d. Involvement in Certain Legal Proceedings
Not Applicable.
Item 6. Executive Compensation
-----------------------
a. Summary Compensation Table
The following table sets forth the compensation received by the Chief
Executive Officer for the years ended March 31, 1996, 1995 and 1994. No other
executive officer had total annual salary and bonus exceeding $100,000 for the
year ended March 31, 1996.
-14-
<PAGE>
<TABLE>
<CAPTION>
Long Term
Name Annual Compensation Compensation Awards
and ------------------------------------------- ------------------------------
Principal Other Annual Restricted Options
Position Year Salary Bonus Compensation Stock Award ($) SARS (#)
-------- ---- ------ ----- ------------ --------------- --------
<S> <C> <C> <C> <C> <C> <C>
Robert E. Thrailkill 1996 $145,000 $ -- $ -- $ 22,500 (2) 25,000 (3)
President, Chief 1995 145,000 -- -- 15,500 (4) 50,000 (5)
Executive Officer 1994 145,000 3,000 -- -- --
and Director (1)
</TABLE>
- --------------
(1) Robert E. Thrailkill was the Chief Executive Officer of Metro Capital
Corporation ("Metro") from February 1981 to December 1995 when a change in
control occurred. In December 1995, Mr. Thrailkill became Chief Executive
Officer of Bishop Capital Corporation, a wholly-owned subsidiary of Metro,
into which the majority of assets of Metro were transferred when the change
in control occurred. Metro subsequently changed its name to American Rivers
Oil Company ("AROC").
(2) Consists of 15,000 shares allocated and issued from AROC's 1987 Stock Bonus
Plan with a fair market value of $1.50 per share on the award date.
(3) Consists of AROC's securities underlying options exercisable on date of
grant (October 11, 1995) at a per share exercise price of $1.65 and expires
five years thereafter.
(4) Consists of 25,000 shares allocated and issued from AROC's 1987 Stock Bonus
Plan with a fair market value of $.62 per share on the award date.
(5) Consists of AROC's securities underlying options exercisable on date of
grant (September 6, 1994) at a per share exercise price of $.68 and expires
five years thereafter.
The columns for "Long-Term Incentive Plan Payouts" and "All Other Compensation"
were omitted from the Summary Compensation Table since there was no information
reportable for the three years ended March 31, 1996.
b. Option/SAR Grants Table
The following table provides information with respect to the grant of stock
options pursuant to American Rivers Oil Company's ("AROC") 1992 Stock Option
Plan to the Chief Executive Officer in fiscal 1996 (See footnote (1) under Item
6(a)). There are no outstanding Stock Appreciation Rights ("SARs").
-15-
<PAGE>
<TABLE>
<CAPTION>
Potential Realizable
Number of % of Total Value at Assumed
Securities Options Exercise Annual Rates of Stock
Underlying Granted to or Base Price Appreciation for
Options Employees Price Expiration Option Term (1)
Name Granted (#) in Fiscal 1996 ($/Share) Date 5% 10%
---- ----------- -------------- --------- ----------- -- ---
<S> <C> <C> <C> <C> <C> <C>
Robert E. Thrailkill 25,000 50.0% $ 1.65 10/11/2000 $11,500 $25,250
</TABLE>
- ------------
(1) The dollar amounts under these columns represent the potential realizable
value of the grant of option assuming that the market price of AROC's
common stock appreciates in value from the date of grant at the 5% and 10%
annual rates prescribed by the SEC and therefore are not intended to
forecast possible future appreciation, if any, of the price of AROC's
common stock.
c. Aggregated Option Exercise and Fiscal Year-End Option Value Table
There were no exercises of AROC stock options by the Chief Executive
Officer in fiscal 1996 (See footnote (1) under Item 6(a)). The following table
shows the number of shares covered by both exercisable and non-exercisable AROC
stock options as of March 31, 1996 and their values at such date. There are no
AROC SARs outstanding at March 31, 1996.
<TABLE>
<CAPTION>
Number of Securities Value of
Underlying Unexercised Unexercised In-the-Money
Options at FY-End (#) Options at FY-End ($)(1)
--------------------- ------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Robert E. Thrailkill 120,000 -- $43,700 --
</TABLE>
- -------------
(1) On March 31, 1996, the last reported bid price of AROC's common stock as
quoted on NASDAQ was $1.50 per share. Value is calculated on the basis of
the difference between the option price and $1.50 multiplied by the number
of shares of Common Stock granted at that option price. The exercise prices
for the various options granted are $1.65 (25,000 options), $.68 (50,000
options) and $1.44 (45,000 options). At March 31, 1996, the last reported
bid price was lower than the exercise price of $1.65 for the 25,000 options
and, therefore, no value is ascribed to those options in the above table.
Subsequent to March 31, 1996, the 45,000 options with an exercise price of
$1.44 expired and Mr. Thrailkill was granted 45,000 options at an exercise
price of $1.38 from AROC's 1995 Stock Option and Stock Compensation Plan.
d. Compensation of Directors
There are no current arrangements for the compensation of directors for
services rendered since the current directors are employees of the Company.
During fiscal 1996, two prior non-employee directors were each paid $3,300 for
services as directors and reimbursed for their travel expenses in connection
-16-
<PAGE>
with meetings. There are no other arrangements whereby any of the Company's
directors received compensation for services as a director during fiscal 1996 in
addition to or in lieu of the amounts stated above.
e. Employment Contracts and Termination of Employment and Change-in-Control
Arrangements.
In November 1995, a Management Agreement (the "Agreement") was entered into
between the Company, Robert E. Thrailkill, the Company's President, and the
Company's previous parent company. The Agreement is for a five year term and is
renewable from year to year thereafter unless terminated previously by either
party. Under the Agreement, Mr. Thrailkill is paid an annual salary of $145,000,
which salary may be increased by the Board of Directors from time to time in
accordance with normal business practices of the Company; his expenses are
reimbursed in accordance with the Company's policies and procedures; he
participates in and receives established employee benefits and he is entitled to
participate in any future benefit made available by the Company to its
executives. The Agreement terminates upon death or disability and may be
terminated by the Company for cause (as defined in the Agreement). The Agreement
may also be terminated upon a breach of the Agreement, and in the event there is
a change in control of the Company (as defined in the Agreement). If the
Agreement is terminated because of a breach of the Agreement by the Company or a
change in control, the Company shall pay severance pay equal to the product of
(a) the annual salary rate in effect multiplied by (b) the greater of the number
of years (including partial years) remaining in the term of employment or the
number three. The Agreement provides that upon death, the Company shall pay an
amount equal to the annual salary; upon disability, the Company shall pay salary
for the balance of the term of the Agreement (less amounts paid by insurance) or
until the executive becomes gainfully employed, whichever is sooner; and, upon
termination for cause, the Company shall pay any salary due up to the
termination date.
Item 7. Certain Relationships and Related Transactions
----------------------------------------------
a. Certain Relationships
There were no transactions during the last two fiscal years, or proposed
transactions, in which the Company was or is to be a party with any director,
executive officer or any member of the immediate family of any director or
executive officer having a direct or indirect material interest of more than 10%
in any business or professional entity involved in such transactions.
b. Parent of Issuer
In connection with the Metro/KTOC Transaction in December 1995, the assets
of Metro which were transferred to the Company are being operated autonomously
by the prior management of Metro pursuant to the terms of separate five-year
Operating and Voting Agreements.
-17-
<PAGE>
The Operating Agreement provides that the Company's management will have
sole authority and discretion with respect to the business, operations and
assets of the Company. American Rivers Oil Company ("AROC") shall not take any
action with respect to the business, operation or assets of the Company without
first obtaining the written consent of the Board of Directors of the Company.
AROC shall not incur any indebtedness on behalf of the Company 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 Company. The Company shall not incur
any indebtedness 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 AROC.
The Company agrees to indemnify and hold harmless AROC, its officers, directors,
employees and agents from any and all liabilities, actions and suits incurred by
any such party by reason of or arising out of any actions or omissions by the
Company's management. AROC agrees at all times during the term of this Operating
Agreement to be bound by the terms of the Voting Agreement.
The Voting Agreement appoints the Company's president or such person as he
shall designate ("Designated Attorney-In-Fact") as attorney and proxy to vote
all of the shares of all classes of the common stock of AROC and/or the Company
owned by them with respect to any matter brought before the shareholders of AROC
and/or the Company relating to or involving exclusively the Company. The Company
shall indemnify and hold harmless AROC, its officers, directors, employees and
agents from any and all liabilities, actions and suits incurred by any such
party by reason of or arising out of any actions or omissions by the Designated
Attorney-In-Fact, including without limitation any liability arising from a suit
by the holders of common stock of AROC based upon allegations of improper
behavior by the Designated Attorney-In-Fact or the management of the Company.
The Operating and Voting Agreements will terminate on the effective date of
the spin-off.
c. Transactions with Promoters
Not applicable
Item 8. Description of Securities
-------------------------
General
The Company is authorized to issue 15,000,000 shares of common stock, par value
$.01 per share, and 5,000,000 shares of preferred stock, no par value per share.
The Company will distribute 885,443 shares of the Company's common stock
pro-ratably (one share of Bishop for every four shares of American Rivers) to
American Rivers Oil Company's common shareholders of record at November 18,
1996. American Rivers Oil Company's Class B common shareholders will not
participate in the distribution.
-18-
<PAGE>
Company Common Stock
Each share of the Company's common stock entitles the holder to one vote on each
matter to be voted upon by the holders of the Company's common stock. The
holders of the Company's common stock are not entitled to any preemptive rights.
The holders of the Company's common stock are entitled to receive such dividends
of cash or assets, if any, as are declared by the Company's Board of Directors
out of funds legally available for that purpose, subject to the preferential
rights, if any, of the holders of preferred stock. The Board of Directors of the
Company will determine its dividend policy with respect to the Company's common
stock based on the Company's results of operations, financial condition, capital
requirements and other circumstances. It is the Board of Directors' present
intention to retain cash for the operations of the Company and it is not
anticipated that cash dividends will be paid on the Company's common stock in
the foreseeable future.
-19-
<PAGE>
Part II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
Other Shareholder Matters
--------------------------------------------------------------------
a. Market Information
The common shares to be issued under this registration statement have no
established public trading market. None of the common shares will be listed on a
national securities exchange or NASDAQ. The common shares will likely be traded
in the over-the-counter market by certain dealers who from time to time may make
a market in such securities.
There are no outstanding options or warrants to purchase, or securities
convertible into, common stock of the Company. There are no common shares that
could be sold pursuant to Rule 144 under the Securities Act or that the Company
has agreed to register under the Securities Act for sale by security holders.
b. Holders
Upon distribution of the shares, there will be approximately 2,000 holders
of record of the Company's common stock (which amount does not include the
number of shareholders whose shares are held of record by brokerage firms).
c. Dividends
There have been no cash dividends declared on the common stock for the last
two fiscal years or for the nine months ended December 31, 1996. Payment of cash
dividends, if any, in the future, will be determined by the Company's Board of
Directors in light of the Company's earnings, financial condition and other
relevant considerations. There are no restrictions on the Company's present or
future ability to pay dividends.
Item 2. Legal Proceedings
-----------------
There are no pending legal proceedings to which the Company is a party or
to which any of its property is subject.
Item 3. Changes in and Disagreements with Accountants
----------------------------------------------
None.
-20-
<PAGE>
Item 4. Recent Sales of Unregistered Securities
---------------------------------------
None.
Item 5. Indemnification of Directors and Executive Officers
---------------------------------------------------
The Company's Articles of Incorporation provide that the Company shall
indemnify any person who is or was a director to the maximum extent provided by
statute. Pursuant to Wyoming Business Corporation Act ("WBCA") Section
17-16-851, a corporation may indemnify a person made a party to a proceeding
because he is or was a director against liability incurred in the proceeding if:
(i) he conducted himself in good faith and reasonably believed that his conduct
was in or at least not opposed to the corporation's best interests; and, (ii) in
the case of a criminal proceeding, he had no reasonable cause to believe his
conduct was unlawful. A corporation may not indemnify a director: (i) in
connection with a proceeding by or in the right of the corporation in which the
director was adjudged liable to the corporation; or, (ii) in connection with any
other proceeding charging improper personal benefit to him, whether or not
involving action in his official capacity, in which he was adjudged liable on
the basis that personal benefit was improperly received by him.
The Company's Articles of Incorporation provide that the Company shall
indemnify any person who is or was an officer and not a director to the maximum
extent provided by law, or to a greater extent if consistent with law and if
provided by resolution of the Company's shareholders or directors, or in a
contract. Pursuant to WBCA Section 17-16-856, a corporation may indemnify a
current or former officer who is not a director to the extent, consistent with
public policy, that may be provided by its articles of incorporation, bylaws,
general or specific action of its board of directors or contract.
-21-
<PAGE>
Part III
Item 1. Index to Exhibits Attachment
----------------- ----------
3.1 Articles of Incorporation A
3.2 By-laws B
10.1 Management Agreement C
10.2 Purchase Option Agreement D
10.3 Contract to Sell Real Estate E
10.4 Agreement for the Purchase and
Sale of Commercial Real Estate F
10.5 Operating Agreement G
10.6 Voting Agreement H
10.7 Limited Partnership Agreement of
Bishop Powers, Ltd. I
10.8 Limited Partnership Agreement of Z-H, Ltd. J
10.9 Bridger Creek Partnership K
21 Subsidiaries of the Registrant L
27 Financial Data Schedule (submitted only in electronic format).
Item 2. Description of Exhibits
-------------------------
3.1 Articles of Incorporation dated May 27, 1992 and Amendment
thereto dated November 20, 1995.
3.2 By-laws.
10.1 Management Agreement dated December 8, 1995 between American
Rivers Oil Company (formerly Metro Capital Corporation), Bishop
Capital Corporation (formerly Bishop Cable Communications
Corporation) and Robert E. Thrailkill.
-22-
<PAGE>
10.2 Purchase Option Agreement dated August 28, 1996 between Bishop
Powers, Ltd., a Colorado Limited Partnership, Bishop Capital
Corporation as General Partner and Diamond Shamrock Refining and
Marketing Company.
10.3 Contract to Sell Real Estate dated November 14, 1996 between
Bishop Powers, Ltd., a Colorado Limited Partnership, Bishop
Capital Corporation as General Partner and 123 Cascade Associates
LLC.
10.4 Agreement for the Purchase and Sale of Commercial Real Estate
dated March 3, 1997 between Bishop Powers, Ltd., a Colorado
Limited Partnership, Bishop Capital Corporation as General
Partner and State Bank & Trust of Colorado Springs.
10.5 Operating Agreement dated December 8, 1995 between American
Rivers Oil Company (formerly Metro Capital Corporation), Karlton
Terry Oil Company and Bishop Capital Corporation (formerly Bishop
Cable Communications Corporation.
10.6 Voting Agreement dated December 8, 1995 between American Rivers
Oil Company (formerly Metro Capital Corporation), Karlton Terry
Oil Company and Bishop Capital Corporation (formerly Bishop Cable
Communications Corporation.
10.7 Bishop Powers, Ltd. Limited Partnership Agreement dated October
15, 1993 between Bishop Capital Corporation (formerly Bishop
Cable Communications Corporation) as General Partner and Powers
Golf LLC as Limited Partner.
10.8 Z-H, Ltd. Limited Partnership Agreement dated October 15, 1993
between Powers Golf LLC as General Partner and Bishop Capital
Corporation (formerly Bishop Cable Communications Corporation) as
Limited Partner.
10.9 Agreement of Bridger Creek Partnership dated December 31, 1990
between Bishop Capital Corporation (successor to interest of
Metro Capital Corporation) and Mr. and Mrs. William N. Spratt.
21 Subsidiaries of the Registrant.
-23-
<PAGE>
Signatures
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
BISHOP CAPITAL CORPORATION
(Registrant)
Date: March 10, 1997 By: /s/ Robert E. Thrailkill
----------------------------------
Robert E. Thrailkill
President
-24-
<PAGE>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
PAGE
Independent Auditor's Report F-2
Consolidated Balance Sheets - December 31, 1996 (Unaudited)
and March 31, 1996 F-3
Consolidated Statements of Operations - For the Nine Months
Ended December 31, 1996 and 1995 (Unaudited), and the
Years Ended March 31, 1996 and 1995 F-4
Consolidated Statement of Changes in Stockholder's Equity -
For the Years Ended March 31, 1995 and 1996, and the
Nine Months Ended December 31, 1996 (Unaudited) F-5
Consolidated Statements of Cash Flows - For the Nine Months
Ended December 31, 1996 and 1995 (Unaudited), and the
Years Ended March 31, 1996 and 1995 F-6
Notes to Consolidated Financial Statements F-7
F-1
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Stockholders and
Board of Directors
Bishop Capital Corporation
We have audited the accompanying consolidated balance sheet of Bishop Capital
Corporation and subsidiaries as of March 31, 1996 and the related consolidated
statements of operations, changes in stockholder's equity and cash flows for the
years ended March 31, 1996. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Bishop Capital
Corporation and subsidiaries as of March 31, 1996, and the results of their
operations and their cash flows for the years ended March 31, 1996 and 1995, in
conformity with generally accepted accounting principles.
HEIN + ASSOCIATES LLP
Denver, Colorado
May 23, 1996, except for the last two paragraphs
of Note 1 as to which the date is November 18, 1996
F-2
<PAGE>
<TABLE>
<CAPTION>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of American Rivers Oil Company)
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, MARCH 31,
1996 1996
----------- -----------
(Unaudited)
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and equivalents $ 33,425 $ 66,770
Marketable securities 641,133 844,734
Receivables:
Gas royalties 12,433 9,399
Interest and other 6,513 13,258
Receivables from parent:
Note -- 17,522
Other 1,770 23,579
Notes receivable - officers 25,000 25,000
Prepaid expenses 7,500 17,960
----------- -----------
Total current assets 727,774 1,018,222
PROPERTY AND EQUIPMENT:
Building 212,157 212,157
Furniture and fixtures 63,162 63,969
Vehicles and equipment 41,846 38,581
----------- -----------
317,165 314,707
Less accumulated depreciation (117,264) (111,045)
----------- -----------
Net property and equipment 199,901 203,662
----------- -----------
OTHER ASSETS:
Undeveloped land 540,134 411,709
Investment in limited partnership 224,366 254,112
Gas royalty interest, net of accumulated
amortization of $800,280 (unaudited)
and $700,245, respectively 266,771 366,806
Notes receivable 63,049 46,836
Other assets, net 4,433 3,860
----------- -----------
Total other assets 1,098,753 1,083,323
----------- -----------
TOTAL ASSETS $ 2,026,428 $ 2,305,207
=========== ===========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 80,687 $ 103,541
Payable to broker 165,009 --
----------- -----------
Total current liabilities 245,696 103,541
COMMITMENTS (Note 7)
STOCKHOLDER'S EQUITY:
Preferred stock, no par value; 5,000,000 shares
authorized, no shares issued -- --
Common stock, $.01 par value; 15,000,000 shares
authorized; 885,443 shares issued and outstanding 8,854 8,854
Capital in excess of par value 2,216,198 2,166,025
Unrealized holding gain -- 66,884
Accumulated deficit (444,320) (40,097)
----------- -----------
Total stockholder's equity 1,780,732 2,201,666
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 2,026,428 $ 2,305,207
=========== ===========
See accompanying notes to these consolidated financial statements.
F-3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of American Rivers Oil Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS
ENDED FOR THE YEARS ENDED
DECEMBER 31, MARCH 31,
-------------------- --------------------
1996 1995 1996 1995
---- ---- ---- ----
(Unaudited)
<S> <C> <C> <C> <C>
REVENUE -
Gas royalties $ 48,497 $ 48,881 $ 69,931 $ 68,176
COSTS AND EXPENSES:
Gas processing and production taxes 14,142 14,480 19,192 9,549
General and administrative 392,476 633,926 731,936 497,694
Depreciation and amortization 113,689 114,621 152,718 159,181
--------- --------- --------- ---------
520,307 763,027 903,846 666,424
--------- --------- --------- ---------
LOSS FROM OPERATIONS (471,810) (714,146) (833,915) (598,248)
OTHER INCOME (EXPENSE):
Interest income 27,383 39,132 51,094 61,010
Dividend income 8,382 15,652 20,061 29,229
Rental income 10,228 10,151 12,686 18,692
Gain (loss) on sale of marketable securities 51,340 685,632 688,400 (3,222)
Equity in limited partnership loss (29,746) (37,840) (54,606) (41,282)
Discontinued operations of oil property -- (25,850) (25,850) (24,720)
Other -- -- (1,745) 1,588
--------- --------- --------- ---------
NET LOSS $(404,223) $ (27,269) $(143,875) $(556,953)
========= ========= ========= =========
NET LOSS PER COMMON SHARE $ (.46) $ (.03) $ (.17) $ (.65)
========= ========= ========= =========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 885,000 859,000 867,000 856,000
========= ========= ========= =========
See accompanying notes to these consolidated financial statements.
F-4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of American Rivers Oil Company)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
FOR THE YEARS ENDED MARCH 31, 1995 AND 1996 AND THE
NINE MONTHS ENDED DECEMBER 31, 1996 (UNAUDITED)
COMMON SHARES TREASURY STOCK
----------------- ------------------- CAPITAL IN UNREALIZED RETAINED
NUMBER OF EXCESS OF HOLDING EARNINGS
SHARES AMOUNT SHARES AMOUNT PAR VALUE GAIN (DEFICIT) TOTAL
------ ------- ------ ------ --------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCES, April 1, 1994 523,530 $ 5,235 206,707 $(1,689,583) $3,027,683 $ 572,841 $2,141,451 $4,057,627
Net change in unrealized
holding gain -- -- -- -- -- (43,905) -- (43,905)
Stock bonus 7,871 79 -- -- 24,721 -- -- 24,800
Purchase of treasury stock -- -- 9,977 (46,479) -- -- -- (46,479)
Net loss -- -- -- -- -- -- (556,953) (556,953)
------ ------- ------- ----------- --------- -------- ---------- ----------
BALANCES, March 31, 1995 531,401 5,314 216,684 (1,736,062) 3,052,404 528,936 1,584,498 3,435,090
Commitment to issue common
stock for services 29,515 295 -- -- 224,705 -- -- 225,000
Net change in unrealized
holding gain -- -- -- -- -- (462,052) -- (462,052)
Consummation of reverse
acquisition and reflect capital
structure of Bishop 324,527 3,245 (216,684) 1,736,062 (1,111,084) -- (1,480,720) (852,497)
Net loss -- -- -- -- -- -- (143,875) (143,875)
------- ------- ------- ----------- ---------- -------- ----------- --------
BALANCES, March 31, 1996 885,443 8,854 -- -- 2,166,025 66,884 (40,097) 2,201,666
Net change in unrealized holding
gain (unaudited) -- -- -- -- -- (66,884) -- (66,884)
Stock bonus (unaudited) -- -- -- -- 50,173 -- -- 50,173
Net loss (unaudited) -- -- -- -- -- -- (404,223) (404,223)
------- ------- ------- ----------- ---------- -------- ---------- --------
(Unaudited) 885,443 $8,854 -- $ -- $2,216,198 $ -- $ (444,320)$1,780,732
======= ====== ======= =========== ========== ======== ========== ==========
See accompanying notes to these consolidated financial statements.
F-5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of American Rivers Oil Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE
MONTHS ENDED FOR THE YEARS ENDED
DECEMBER 31, MARCH 31,
-------------------- --------------------
1996 1995 1996 1995
----- ----- ----- ----
(Unaudited)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (404,223) $ (27,269) $ (143,875) $ (556,953)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 113,689 114,621 155,185 164,041
Issuance of common stock for services -- 225,000 225,000 --
Stock bonus compensation 50,173 -- -- 24,800
Equity in partnership losses 29,746 37,840 54,606 41,282
Write-down of investment -- 25,000 25,000 --
Abandoned leases -- -- -- 13,576
Loss (gain) on sale of
marketable securities (51,340) (685,632) (688,400) 3,222
Gain on sale of property
and equipment -- -- -- (917)
Changes in operating assets
and liabilities:
(Increase) decrease in:
Trade receivables (3,034) 11,636 3,655 (5,732)
Interest and other
receivables 6,745 (4,586) 8,003 15,239
Receivable from parent 21,809 -- (23,579) --
Prepaid expenses 10,460 6,518 (1,680) 2,432
Other assets (1,000) -- 14,126 --
Increase (decrease) in
accounts payable and
accrued expenses (22,856) 10,294 50,770 (8,917)
----------- ----------- ----------- -----------
Net cash used in
operating activities (249,831) (286,578) (321,189) (307,927)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of marketable securities (312,828) (122,716) (169,979) (335,830)
Proceeds from sale of
marketable securities 665,894 1,262,744 1,265,512 797,108
Funds advanced under
notes receivable (120,000) (11,681) (42,522) (7,000)
Proceeds from notes receivable 121,309 64,165 64,461 8,104
Additions to undeveloped land (128,425) (96,051) (133,473) --
Proceeds from sale of propert
and equipment -- -- -- 2,000
Purchase of property and equipment (9,464) -- (21,274) (25,129)
Transfer of cash in reverse
acquisition -- (700,000) (700,000) --
----------- ----------- ----------- -----------
Net cash provided by
investing activities 216,486 396,461 262,725 439,253
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings -- 40,000 60,000 10,000
Principal payments on borrowings -- (40,000) (60,000) (10,000)
Treasury stock acquired -- -- -- (46,479)
----------- ----------- ----------- -----------
Net cash used in financing
activities -- -- -- (46,479)
----------- ----------- ----------- -----------
INCREASE (DECREASE) IN CASH AND EQUIVALENTS (33,345) 109,883 (58,464) 84,847
CASH AND EQUIVALENTS, beginning of period 66,770 125,234 125,234 40,387
----------- ----------- ----------- -----------
CASH AND EQUIVALENTS, end of period $ 33,425 $ 235,117 $ 66,770 $ 125,234
=========== =========== =========== ===========
SUPPLEMENTAL INFORMATION:
Cash paid for interest $ 8,551 $ 722 $ 830 $ --
=========== =========== =========== ===========
Non-cash equipment purchases $ -- $ -- $ -- $ 13,500
=========== =========== =========== ===========
Payable for purchase of
marketable securities $ 165,009 $ -- $ -- $ --
=========== =========== =========== ===========
See accompanying notes to these consolidated financial statements.
F-6
</TABLE>
<PAGE>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of American Rivers Oil Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information Subsequent to March 31, 1996 is Unaudited)
1. BASIS OF PRESENTATION:
---------------------
Reverse Acquisition - In October 1995, Metro Capital Corporation (Metro)
and Karlton Terry Oil Company (KTOC) entered into an Asset Purchase
Agreement whereby KTOC agreed to exchange certain oil and gas properties
(the "Contributed Properties") for a total of 7,717,820 shares of Class B
common stock of Metro, which represented 80% of the issued and outstanding
voting securities of Metro. On November 29, 1995, the shareholders of Metro
approved this transaction and the closing occurred on December 8, 1995. The
shareholders also approved changing the name of the Company from Metro to
American Rivers Oil Company (AROC).
Metro's assets, except for $700,000 cash and an insignificant oil property,
were transferred at their historical carrying value to a wholly-owned
subsidiary, Bishop Capital Corporation, formerly Bishop Cable
Communications Corporation ("Bishop" or the "Company"), where they are
being operated autonomously by the prior management of Metro pursuant to
the terms of separate five-year Operating and Voting Agreements. The
Operating Agreement provides that Bishop's management will have sole
authority and discretion with respect to the business, operations, and
assets of Bishop. The Voting Agreement appoints Bishop's president as
attorney and proxy to vote in his sole and absolute discretion, all of the
shares of all classes of the common stock of AROC and/or Bishop owned by
them with respect to any matter brought before the shareholders of AROC
and/or Bishop relating to or involving exclusively Bishop.
Accordingly, the accompanying financial statements include the consolidated
operating results and cash flows of Metro until December 8, 1995 when the
change of control occurred. Beginning in December 1995, the accompanying
financial statements reflect only the operations of Bishop.
Bishop's subsidiaries consist of Bishop Powers, Ltd. and Bridger Creek
Partnership in which the Company holds general partner interests of 81% and
80%, respectively.
Unaudited Information - The balance sheet as of December 31, 1996 and the
statements of operations and cash flows for the nine-month periods ended
December 31, 1996 and 1995 were taken from the Company's books and records
without audit. However, in the opinion of management, such information
includes all adjustments (consisting only of normal accruals), which are
necessary to properly reflect the financial position of the Company as of
December 31, 1996 and the results of operations and cash flows for the nine
months ended December 31, 1996 and 1995. The results of operations for the
interim periods presented are not necessarily indicative of those to be
expected for the year.
Change in Capital Structure and Spinoff - In November 1996, the Board of
Directors of AROC (the Company's sole stockholder) agreed to make a pro
rata distribution of 885,443 shares of the Company's common stock to AROC's
common stockholders of record on November 18, 1996. The remaining 3,614,557
shares of the Company's common stock owned by AROC were canceled on the
record date. AROC's Class B common stockholders did not participate in the
distribution. Accordingly, this change in capital structure has been given
retroactive effect in the accompanying financial statements as if it
occurred at the beginning of the earliest period presented.
F-7
<PAGE>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of American Rivers Oil Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information Subsequent to March 31, 1996 is Unaudited)
Net Loss Per Share - Net loss per share has been computed based on the
weighted average number of common shares outstanding for each period
presented. The weighted average shares have been retroactively restated for
the effects of the reverse acquisition and the spinoff discussed above.
2. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
--------------------------------------------------------------------
Nature of Operations - The Company is primarily engaged in the development
and/or sale of real estate and also has a royalty interest in a natural gas
property.
Principles of Consolidation - The accompanying financial statements include
the accounts of the Company and both majority-owned partnerships discussed
in Note 1. All material intercompany transactions and accounts have been
eliminated in consolidation.
Property, Equipment and Depreciation - Property and equipment are stated at
cost. Depreciation is being provided by the straight-line method over
estimated useful lives of three to thirty-one years.
Maintenance and repairs are charged to expense as incurred, and
expenditures for major improvements are capitalized. When assets are
retired or otherwise disposed of, the property accounts are relieved of
costs and accumulated depreciation.
Undeveloped Land - Undeveloped land is stated at cost and consists solely
of acquisition costs at March 31, 1996.
Impairment of Long-lived Assets - In the event that facts and circumstances
indicate that the cost of property and equipment or other long-lived assets
may be impaired, an evaluation of recoverability of net carrying costs will
be performed. If an evaluation is required, the estimated future
undiscounted cash flows associated with the asset will be compared to the
asset's carrying amount to determine if a write-down to estimated fair
value is required.
Gas Royalty Interests - The Company amortizes gas royalty interests on a
straight-line basis over eight years.
Cash Equivalents - The Company considers highly liquid temporary
investments with an original maturity of three months or less to be cash
equivalents.
Marketable Securities - Marketable securities are accounted for in
accordance with Statement of Financial Accounting Standard (SFAS) No. 115
"Accounting for Certain Investments in Debt and Equity Securities."
Pursuant to SFAS No. 115, the Company's securities are classified as
available-for-sale based on management's intent. Investment securities
classified as available-for-sale are stated at market value, with
unrealized gains and losses, net of applicable income taxes, reported as a
separate component of stockholder's equity. If the decline in market value
of a security is determined to be other than temporary, the loss in value
is charged to earnings. Realized gains or losses are determined on a
specific identification method.
F-8
<PAGE>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of American Rivers Oil Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information Subsequent to March 31, 1996 is Unaudited)
Investments - The Company's 19% ownership in a limited partnership (Z-H,
LTD.) is stated at cost, adjusted for its equity in undistributed earnings
since acquisition.
Income Taxes - Income taxes are provided for in accordance with SFAS No.
109, "Accounting for Income Taxes." SFAS No. 109 requires an asset and
liability approach in the recognition of deferred tax liabilities and
assets for the expected future tax consequences of temporary differences
between the carrying amounts and the tax bases of the Company's assets and
liabilities. AROC includes the Company's operations in its consolidated
income tax return. Income taxes are allocated between AROC and the Company
as if the Company was a separate taxpayer.
Accounting Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the amounts
reported in the financial statements and the accompanying notes. The actual
results could differ from those estimates.
The Company's financial statements are based on a number of significant
estimates including the amortization period for the gas royalty interest,
realizability of the carrying value of undeveloped land and the limited
partnership investment discussed in Note 5, and the determination of other
than temporary impairment of marketable securities. The Company's estimates
are expected to change as additional information becomes available and it
is reasonably possible that such estimates will materially change in the
forthcoming year.
3. MARKETABLE SECURITIES:
----------------------
The cost and estimated fair market value of available-for-sale securities
at March 31, 1996 were as follows:
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED FAIR
HOLDING HOLDING MARKET
COST GAINS LOSSES VALUE
---- ---------- ---------- ---------
<S> <C> <C> <C> <C>
U.S. Treasury securities $466,357 $ 6,078 $ (11,427) $ 461,008
Redeemable preferred
securities 136,955 8,297 - 145,252
Equity securities 174,538 89,057 (25,121) 238,474
-------- --------- --------- ---------
$777,850 $ 103,432 $ (36,548) $ 844,734
======== ========= ========= =========
</TABLE>
F-9
<PAGE>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of American Rivers Oil Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information Subsequent to March 31, 1996 is Unaudited)
The cost and estimated fair market value of available-for-sale securities
with contractual maturities (U.S. Treasury and redeemable preferred) at
March 31, 1996, by contractual maturity periods, were as follows:
FAIR
MARKET
COST VALUE
---- -----
Due in one year or less $ 232,105 $ 232,029
Due after one year through five years 210,902 211,679
Due after five years through ten years 90,953 97,031
Due after ten years 69,352 65,521
---------- --------
$ 603,312 $ 606,260
========== =========
Cash proceeds from the sale of available-for-sale securities during the
years ended March 31, 1996 and 1995 were $1,265,512 and $797,108,
respectively. Net gains from available-for-sale securities sold in the year
ended March 31, 1996 amounted to $688,400 (gross gains of $701,152 and
gross losses of $12,752). Net losses from securities sold in the year ended
March 31, 1995 were $3,222 (gross gains of $23,638 and gross losses of
$26,860).
At December 31, 1996, the Company has a margin account payable to a broker
for $165,009. This account provides for interest at approximately 8% at
December 31, 1996.
4. GAS ROYALTY INTERESTS:
----------------------
In December 1990, the Company purchased a royalty interest in certain gas
properties located in Wyoming for approximately $1,067,000. At March 31,
1996, the net carrying value of this interest amounts to $367,000. Revenues
related to this royalty interest are affected by local gas transportation,
processing, and marketing arrangements. Reserve disclosures relating to the
gas royalty interest are not included because the information is
unavailable from the operator of the properties.
In connection with the purchase, the Company formed a tax partnership,
which allocates to the Company the first $40,000 of annual net income from
the partnership and 80% of annual net income in excess of $40,000. After
the Company has received cumulative net income of $1,050,000, plus interest
at prime adjusted semi-annually, the Company will receive 60% of the annual
net income in the partnership.
5. PARTNERSHIPS:
-------------
In October 1993, the Company became the general partner of a limited
partnership to develop or sell 55 acres of undeveloped real estate. The
Company contributed $250,000 cash for its 81% general partnership interest.
The remaining 19% interest is held by the limited partner who is the
general partner in the partnership described below. The Company will be
allocated 100% of the income and losses until it has been paid $600,000
plus interest at 8% per annum (not to exceed $100,000) after which the
allocation will be apportioned according to ownership.
F-10
<PAGE>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of American Rivers Oil Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information Subsequent to March 31, 1996 is Unaudited)
The Company also became a limited partner in a limited partnership, which
purchased approximately 35 acres of undeveloped land adjacent to the land
mentioned above. The partnership constructed a golf driving range,
miniature golf, and batting facility which was completed in July 1994. The
Company contributed $350,000 cash for its 19% partnership interest, which
is reported on the equity method of accounting.
Following is a summary of condensed financial information pertaining to
this limited partnership:
Balance sheet data at March 31, 1996:
Current assets $ 8,327
Noncurrent assets 1,129,394
Current liabilities 31,622
Noncurrent liabilities 1,160,774
Company's equity in net assets 254,112
YEARS ENDED MARCH 31,
-----------------------
1996 1995
---- ----
Operations data:
Revenue $ 261,526 $ 121,961
Costs and expenses 548,928 339,236
--------- ---------
Net loss $(287,402) $(217,275)
========= =========
Company's equity in limited
partnership loss $ 54,606) $ (41,282)
========== =========
The land owned by the partnerships discussed above is located in Colorado
Springs, Colorado and, accordingly, the value of these properties is directly
affected by local economic and operating conditions.
F-11
<PAGE>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of American Rivers Oil Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information Subsequent to March 31, 1996 is Unaudited)
6. INCOME TAXES:
-------------
The items that give rise to the components of the net deferred tax asset as
of March 31, 1996, are as follows:
Gas royalty interest $ 227,000
Net operating loss carryforward 231,000
----------
Deferred tax asset 458,000
Less valuation allowance (458,000)
----------
Net deferred tax asset $ -
==========
For the year ended March 31, 1996, the valuation allowance increased by
$43,000. As of March 31, 1996, AROC has net operating loss carryforwards
for Federal income tax purposes, of which approximately $500,000 is
attributable to the Company pursuant to the Asset Purchase Agreement and,
if not previously utilized, will expire in the years 2009 and 2010.
7. COMMITMENTS:
------------
Effective December 1995, a five-year management agreement (the "Agreement")
was entered into between the Company, the Company's president (the
"Executive") and the parent company. The Agreement, which supersedes a
previous employment agreement, provides for minimum annual compensation of
$145,000 plus employee benefits. On the last day of September of each year
thereafter, the term of the Agreement shall be automatically extended an
additional year unless, prior to such last day of September, the Company or
the Executive shall have delivered written notice that the term of
employment will not be extended. The Agreement may be terminated by the
Company only upon the death or disability of the Executive or for cause. If
the Executive is terminated without cause, the Company would be required to
pay as severance pay an amount equal to the Executive's salary in effect as
of the date of termination multiplied by the greater number of years
remaining in the term of employment or the number three.
The Company also entered into a three-year employment agreement in December
1995 with two other officers which provide for aggregate annual
compensation of $85,000 plus employee benefits. The agreements shall be
automatically extended an additional year on September 30 of each year
thereafter unless written notice is given by either party that the term of
employment will not be extended. The agreements may be terminated upon the
death or disability of the individual officer or for cause.
8. FINANCIAL INSTRUMENTS:
----------------------
Statement of Financial Accounting Standards No. 107 requires all entities
to disclose the fair value of certain financial instruments in their
financial statements. Accordingly, at March 31, 1996, management's best
estimate is that the carrying amount of cash and equivalents, notes and
other receivables, accounts payable and accrued expenses approximates fair
F-12
<PAGE>
BISHOP CAPITAL CORPORATION AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of American Rivers Oil Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information Subsequent to March 31, 1996 is Unaudited)
value due to the short maturity of these instruments. Due to the short
operating history of the business owned by the limited partnership
discussed in Note 5, management is unable to estimate the fair value of the
Company's 19% limited partner interest. However, management believes that
fair value exceeds the carrying value at March 31, 1996.
9. STOCKHOLDER'S EQUITY (UNAUDITED):
----------------------------------
In November 1996, certain officers and employees of the Company were
allocated 38,300 shares of AROC's common stock from AROC's 1987 Stock Bonus
Plan as additional compensation. Compensation costs recorded in connection
with the issuance of these shares were approximately $50,000 with a
corresponding credit to paid-in capital.
F-13
ATTACHMENT A
ARTICLES OF INCORPORATION
OF
BISHOP CABLE COMMUNICATIONS CORPORATION
The undersigned incorporator, being a natural person of the age of 18 years
or more, and desiring to form a corporation under the laws of the State of
Wyoming, does hereby sign, verify and deliver in duplicate to the Secretary of
State of the State of Wyoming these Articles of Incorporation.
ARTICLE I
NAME
The name of the corporation shall be:
Bishop Cable Communications Corporation
ARTICLE II
CAPITAL
The total number of shares of all classes of capital stock which the
corporation shall have authority to issue is 20,000,000 shares, of which
5,000,000 shares shall be shares of Preferred Stock, no par value per share and
15,000,000 shares shall be shares of Common Stock, $.01 par value per share.
(a) Preferred Stock. The designations and the powers, preferences and
rights, and the qualifications, limitations or restrictions of the Preferred
Stock, the establishment of different series of Preferred Stock, and variations
in the relative rights and preferences as between different series shall be
established in accordance with the Wyoming Business Corporation Act by the Board
of Directors.
(b) Common Stock. The holders of Common Stock shall have and possess all
rights as shareholders of the corporation, including such rights as may be
granted elsewhere by these Articles of Incorporation, except as such rights may
be limited by the preferences, privileges and voting powers, and the
restrictions and limitations of the Preferred Stock.
Subject to preferential dividend rights, if any, of the holders of
Preferred Stock, dividends upon the Common Stock may be declared by the Board of
Directors and paid out of any funds legally available therefor at such times and
in such amounts as the Board of Directors shall determine.
10021EOF
<PAGE>
The capital stock, after the amount of the subscription price has been paid
in, shall not be subject to assessment to pay the debts of the corporation.
Any stock of the corporation may be issued for money, property, services
rendered, labor done, cash advances for the corporation, or for any other assets
of value in accordance with the action of the Board of Directors, whose judgment
as to value received in return therefor shall be conclusive and said stock, when
issued, shall be fully paid and nonassessable.
ARTICLE III
NO PREEMPTIVE RIGHTS
A shareholder of the corporation shall not be entitled to a preemptive
right to purchase, subscribe for, or otherwise acquire any unissued or treasury
shares of stock of the corporation, or any options or warrants to purchase,
subscribe for or otherwise acquire any such unissued or treasury shares, or any
shares, bonds, notes, debentures, or other securities convertible into or
carrying options or warrants to purchase, subscribe for or otherwise acquire any
such unissued or treasury shares.
ARTICLE IV
CUMULATIVE VOTING
A shareholder of the corporation shall not be entitled to cumulative
voting.
ARTICLE V
REGISTERED OFFICE AND AGENT
The initial registered office of the corporation shall be at 716 College
View Drive, Riverton, Wyoming 82501, and the name of the initial registered
agent at such address is Robert E. Thrailkill. Either the registered office or
the registered agent may be changed in the manner provided by law.
Part or all of the business of said corporation may be carried on in the
State of Wyoming or beyond the limits of the State of Wyoming, in other states
or territories of the United States and in foreign countries.
10021EOF
--2--
<PAGE>
ARTICLE VI
BOARD OF DIRECTORS
The business and affairs of this Corporation shall be managed by a Board of
Directors which shall have all authority granted to it by the Wyoming Business
Corporation Act. The number of directors may from time to time be increased or
decreased in such manner as shall be provided by the Bylaws of this corporation.
So long as the number of directors shall be less than three, no shares of this
corporation may be issued and held of record by more shareholders than there are
directors. Any shares issued in violation of this paragraph shall be null and
void. In the event there are less than three directors, this provision shall
also constitute a restriction on the transfer of shares.
The initial board of directors of the corporation shall consist of three
directors, and the names and addresses of the persons who shall serve as
directors until the first annual meeting of shareholders or until their
successors are elected and shall qualify are:
Robert E. Thrailkill 716 College View Drive
Riverton, Wyoming 82501
Gene E. York 716 College View Drive
Riverton, Wyoming 82501
John R. Benesch 716 College View Drive
Riverton, Wyoming 82501
In the event that the Board of Directors consists of six or more members,
the Board shall be divided into three classes, as equal in number as the then
total number of members of the Board. Prior to the first annual meeting of
shareholders wherein the Board shall consist of six or more members, the Board
shall divide itself into three classes which shall be denominated as Class One,
Class Two and Class Three. At the first annual meeting of shareholders held
subsequent to the increase in the number of directors to six or more members,
the persons nominated as Class One directors shall be elected to hold office for
a term expiring at the next succeeding annual meeting and until their successors
have been duly elected or until death, resignation or removal. Persons nominated
for election as Class Two directors shall be elected to hold office for a term
expiring at the second succeeding annual meeting and until their successors have
been duly elected or until death, resignation or removal. Persons nominated for
election as Class Three directors shall be elected to hold office for a term
expiring at the third succeeding annual meeting and until their successors have
been duly elected or until death, resignation or removal. At all meetings
thereafter, directors to be elected to the class then being elected shall be
10021EOF
--3--
<PAGE>
elected to hold office for a term expiring at the third succeeding annual
meeting and until their successors have been duly elected or until death,
resignation or removal, except for directors being elected solely by a series of
preferred stock, if the resolution defining the rights of such series
specifically states that the directors being elected by the holders of that
series of preferred stock shall be elected to serve only until the next annual
meeting of shareholders and until their successors have been duly elected or
until death, resignation, or removal. Any vacancies in the Board for any reason
and any newly created directorships resulting from any increase in the number of
directors may be filled by the Board acting by a majority of the directors then
in office, although less than a quorum, and any directors so chosen shall hold
office until the next election of the class for which such directors shall have
been chosen and until their successors shall be elected or until death,
resignation or removal. No decrease in the number of directors shall shorten the
term of any incumbent director.
Notwithstanding any other provisions of these Articles of Incorporation or
the Bylaws of the corporation (and notwithstanding the fact that some lesser
percentage may be specified by law, these Articles of Incorporation or the
Bylaws of the corporation), the affirmative vote of the holders of 75% or more
of the total votes of the shares entitled to vote generally in the election of
directors (considered for this purpose as one class) shall be required to amend,
alter, change or repeal this Article VI of the Articles of Incorporation.
ARTICLE VII
INDEMNIFICATION
The corporation shall indemnify any person who is or was a director to the
maximum extent provided by statute.
The corporation shall indemnify any person who is or was an officer,
employee or agent of the corporation who is not a director to the maximum extent
provided by law, or to a greater extent if consistent with law and if provided
by resolution of the corporation's shareholders or directors, or in a contract.
The corporation may purchase and maintain insurance on behalf of any person
who is or was a director, officer, employee, fiduciary or agent of the
corporation and who while a director, officer, employee, fiduciary or agent of
the corporation, is or was serving at the request of the corporation as a
director, officer, partner, trustee, employee, fiduciary or agent of any other
foreign or domestic corporation, partnership, joint venture, trust, other
enterprise or employee benefit plan against any liability asserted against or
incurred by him in any such capacity or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under provisions of the statute.
lOO2lEOF
--4--
<PAGE>
ARTICLE VIII
LIMITATION OF DIRECTOR LIABILITY
A director of the corporation shall not be personally liable to the
corporation or its shareholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the corporation or to its shareholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) for acts specified under Section 17-16-833 of the
Wyoming Business Corporation Act or any amended or successor provision thereof,
or (iv) for any transaction from which the director derived an improper personal
benefit. If the Wyoming Business Corporation Act is amended after this Article
is adopted to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of the
corporation shall be eliminated or limited to the fullest extent permitted by
the Wyoming Business Corporation Act as so amended.
Any repeal or modification of the foregoing paragraph by the shareholders
of the corporation shall not adversely affect any right or protection of a
director of the corporation existing at the time of such repeal or modification.
ARTICLE IX
CORPORATE OPPORTUNITIES
The officers, directors and other members of management of this corporation
shall be subject to the doctrine of corporate opportunities only insofar as it
applies to business opportunities in which this corporation has expressed an
interest as determined from time to time by the corporation's Board of Directors
as evidenced by resolutions appearing in the corporation's minutes. When such
areas of interest are delineated, all such business opportunities within such
areas of interest which come to the attention of the officers, directors and
other members of management of this corporation shall be disclosed promptly to
this corporation and made available to it. The Board of Directors may reject any
business opportunity presented to it and thereafter any officer, director or
other member of management may avail himself of such opportunity. Until such
time as this corporation, through its Board of Directors, has designated an area
of interest, the officers, directors and other members of management of this
corporation shall be free to engage in such areas of interest on their own and
the provisions hereof shall not limit the rights of any officer, director or
other member of management of this corporation to continue a business existing
10021EOF
--5--
<PAGE>
prior to the time that such area of interest is designated by this corporation.
This provision shall not be construed to release any employee of the corporation
(other than an officer, director or member of management) from any duties which
he may have to the corporation.
ARTICLE X
COMPROMISES WITH CREDITORS
Whenever a compromise or arrangement is proposed by the corporation between
it and its creditors or any class of them, and/or between said corporation and
its shareholders or any class of them, any court of equitable jurisdiction may,
on the application in a summary way by said corporation, or by a majority of its
stock, or on the application of any receiver or receivers appointed for said
corporation, or on the application of trustees in dissolution, order a meeting
of the creditors or class of creditors and/or of the shareholders or class of
shareholders of said corporation, as the case may be, to be notified in such
manner as the said court decides. If a majority in number, representing at least
three-fourths in amount of the creditors or class of creditors, and/or the
holders of the majority of the stock or class of stock of said corporation, as
the case may be, agree to any compromise or arrangement and/or to any
reorganization of said corporation, as a consequence of such compromise or
arrangement, the said compromise or arrangement and/or the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding upon all the creditors or class of creditors, and/or on all the
shareholders or class of shareholders of said corporation, as the case may be,
and also on said corporation.
ARTICLE XI
MEETINGS OF SHAREHOLDERS
Meetings of shareholders shall be held at such time and place as provided
in the Bylaws of the corporation. At all meetings of the shareholders, one-third
of all shares entitled to vote at the meeting shall constitute a quorum.
ARTICLE XII
VOTING OF SHAREHOLDERS
With respect to any action to be taken by shareholders of this corporation
which pursuant to statute requires the vote of two-thirds of the outstanding
shares entitled to vote thereon, a vote or concurrence of the holders of a
majority of the outstanding shares of the shares entitled to vote thereon, or of
any class or series, shall be required.
10021EOF
--6--
<PAGE>
ARTICLE XIII
INCORPORATOR
The name and address of the incorporator are as follows:
John A. Alsko
716 College View Drive
Riverton, Wyoming 82501
IN WITNESS WHEREOF, the undersigned certifies under penalty of perjury that
the execution of this instrument is the undersigned's act and deed, that the
undersigned has read these Articles of Incorporation and all attachments thereto
and knows the contents thereof and the facts stated therein are true.
Date: 5/27/92 /s/ JOHN A. ALSKO
--------------------- ---------------------------------------
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ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
BISHOP CABLE COMMUNICATIONS CORPORATION
Article I shall be revised as follows:
ARTICLE I
NAME
The name of the corporation shall be:
Bishop Capital Corporation
This amendment was approved by written consent of all of the directors and
the sole shareholder of Bishop Cable Communications Corporation (the "Company")
on November 20, 1995. As of November 20, 1995, the Company's only authorized
class of voting securities was its Common Stock, $.01 par value, of which
15,000,000 shares were authorized and 4,500,000 shares were outstanding, all of
which are owned by the Company's sole shareholder, Metro Capital Corporation and
all of which shares were voted in favor of the Amendment.
IN WITNESS WHEREOF, the undersigned certifies under penalty of perjury that
the execution of this instrument is the undersigned's act and deed, that the
undersigned has read these Articles of Incorporation and all attachments thereto
and knows the contents thereof and the facts stated therein are true
Date: November 20, 1995
/s/ John R Benesch
-------------------------------
John R Benesch, Secretary
ATTACHMENT B
BISHOP CABLE COMMUNICATIONS CORPORATION
BYLAWS
ARTICLE I
OFFICES
The principal office of Bishop Cable Communications Corporation (the
"Corporation") shall be located in the State of Wyoming. The Corporation may
have such other offices or relocate its principal office either within or
without the State of Wyoming as the Board of Directors of the Corporation (the
"Board") may designate or as the business of the Corporation may require.
The registered office of the Corporation in the Articles of Incorporation
(the "Articles") need not be identical with the principal office in the State of
Wyoming.
ARTICLE II
SHAREHOLDERS
Section 1. Annual Meeting. The annual meeting of the shareholders shall be
held each year on a date and at a time and place to be determined by resolution
of the Board, for the purpose of electing directors and for the transaction of
such other business as may come before the meeting. If the election of directors
shall not be held on the day designated for the annual meeting of the
shareholders, or at any adjournment thereof, the Board shall cause the election
to be held at a special meeting of the shareholders.
Section 2. Special Meetings. Special meetings of the shareholders for any
purpose, unless otherwise provided for by statute, may be called by the
President, the Board or by the President at the request of the holders of not
less than one-tenth of all the shares of the Corporation entitled to vote at the
meeting.
Section 3. Place of Meeting. The Board may designate any place, either
within or without the State of Wyoming, as the place of meeting for any annual
or special meeting. If no designation is made, the place of meeting shall be the
registered office of the Corporation in the State of Wyoming.
Section 4. Notice of Meeting. Written notice, stating the place, day and
hour of the meeting and, in case of a special meeting, the purpose or purposes
for which the meeting is called, shall be delivered as the laws of the State of
Wyoming shall provide.
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Section 5. Fixing of Record Date. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof, or shareholders entitled to receive payment of any
dividend, or in order to make a determination of shareholders for any other
proper purpose, the Board may fix in advance a date (the "Record Date") for any
such determination of shareholders, which date shall be not more than 50 days
prior to the date on which the particular action requiring such determination of
shareholders is to be taken. If no Record Date is fixed by the Board, the Record
Date for any such purpose shall be ten days before the date of such meeting or
action. The Record Date determined for the purpose of ascertaining the number of
shareholders entitled to notice of or to vote at a meeting may not be less than
ten days prior to the meeting. When a Record Date has been determined for the
purpose of a meeting, the determination shall apply to any adjournment thereof.
Section 6. Quorum. If less than a quorum of the outstanding shares as
provided for in the Articles are represented at a meeting, such meeting may be
adjourned without further notice for a period which shall not exceed 60 days. At
such adjourned meeting, at which a quorum shall be present, any business may be
transacted which might have been transacted at the original meeting. Once a
quorum is present at a duly organized meeting, the shareholders present may
continue to transact business until adjournment, notwithstanding any departures
of shareholders during the meeting which leave less than a quorum.
Section 7. Voting of Shares. Each outstanding share entitled to vote shall
be entitled to one vote upon each matter submitted to a vote at a meeting of
shareholders.
Section 8. Proxies. At all meetings of shareholders, a shareholder may vote
by proxy executed in writing by the shareholder or by his duly authorized
attorney-in-fact. Such proxy shall be filed with the Secretary of the
Corporation before or at the time of the meeting. No proxy shall be valid after
11 months from the date of its execution, unless otherwise provided in the
proxy. Proxies shall be in such form as shall be required by the Board and as
set forth in the notice of meeting and/or proxy or information statement
concerning such meeting.
Section 9. Voting of Shares by Certain Holders. Shares standing in the name
of another corporation may be voted by agent or proxy as the bylaws of such
corporation may prescribe or, in the absence of such provision, as the Board of
Directors of such corporation may determine as evidenced by a duly certified
copy of either the bylaws or corporate resolution.
Neither treasury shares nor shares held by another corporation, if the
majority of the shares entitled to vote for the election of directors of such
other corporation is held by the Corporation, shall be voted at any meeting or
counted in determining the total number of outstanding shares at any given time.
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Shares held by an administrator, executor, guardian or conservator may be
voted by such fiduciary, either in person or by proxy, without a transfer of
such shares into the name of such fiduciary. Shares standing in the name of a
trustee may be voted by such trustee, either in person or by proxy, but no
trustee shall be entitled to vote shares held by a trustee without a transfer of
the shares into such trust.
Shares standing in the name of a receiver may be voted by such receiver and
shares held by or under the control of a receiver may be voted by such receiver,
without the transfer thereof into the name of such receiver if authority so to
do is contained in an appropriate order of the court by which the receiver was
appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred on the books of the Corporation
into the name of the pledgee, and there after the pledgee shall be entitled to
vote the shares so transferred.
Section 10. Action by Consent of all Shareholders. Any action required to
be taken, or which may be taken at a meeting of the shareholders may be taken
without a meeting, if a consent in writing, setting forth the action so taken,
shall be signed by all of the shareholders entitled to vote with respect to the
subject matter thereof. Such written consent or consents shall be filed with the
minutes of the Corporation. Such action by written consent of all entitled to
vote shall have the same force and effect as a unanimous vote of such
shareholders.
Section 11. Inspectors. The Board may, in advance of any meeting of
shareholders, appoint one or more inspectors to act at such meeting or any
adjournment thereof. If the inspectors shall not be so appointed or if any of
them shall fail to appear or act, the chairman of the meeting may appoint
inspectors. Each inspector, before entering upon the discharge of his duties,
shall take and sign an oath faithfully to execute the duties of inspector at
such meeting with strict impartiality and according to the best of his ability.
The inspectors shall determine the number of shares outstanding and the voting
power of each, the number of shares represented at the meeting, the existence of
a quorum, the validity and effect of proxies and shall receive votes, ballots or
consents, hear and determine all challenges and questions arising in connection
with the right to vote, count and tabulate all votes, ballots or consents,
determine the result and do such acts as are proper to conduct the election or
vote with fairness to all shareholders. On request of the chairman of the
meeting or any shareholder entitled to vote thereat, the inspectors shall make a
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report in writing of any challenge, request or matter determined by them and
shall execute a certificate of any fact found by them.
ARTICLE III
BOARD OF DIRECTORS
Section 1. General Powers. The Board shall have the power to manage the
business and affairs of the Corporation in such manner as it sees fit. In
addition to the powers and authorities expressly conferred upon it, the Board
may do all lawful acts which are not directed to be done by the shareholders by
statute, by the Articles or by these Bylaws.
Section 2. Number, Tenure and Qualifications. The number of directors of
the Corporation shall be three. Each director shall hold office until the next
annual meeting of shareholders and until a successor director has been elected
and qualified, or until the death, resignation or removal of such director.
Directors need not be residents of the State of Wyoming or shareholders of the
Corporation.
Section 3. Regular Meetings. A regular meeting of the Board shall be held,
without other notice than this Bylaw, immediately after and at the same place as
the annual meeting of shareholders. The Board may provide, by resolution, the
time and place, either within or without the State of Wyoming, for the holding
of additional regular meetings, without other notice than such resolution.
Section 4. Special Meetings. Special meetings of the Board may be called by
or at the request of the President or any two directors. The person or persons
authorized to call special meetings of the Board may fix any place, either
within or without the State of Wyoming, as the place for holding any special
meeting of the Board called by them.
Section 5. Telephonic Meetings. Members of the Board and committees thereof
may participate and be deemed present at a meeting by means of conference
telephone or similar communications equipment by which all persons participating
in the meeting can hear each other at the same time.
Section 6. Notice. Notice of any special meeting of the Board shall be
given by telephone, telegraph or written notice sent by mail. Notice shall be
delivered at least one day prior to the meeting (five days before the meeting if
the meeting is held outside the State of Wyoming) if given by telephone,
telegram or if,delivered personally. If notice is given by telegram, such notice
shall be deemed to be delivered when the telegram is delivered to the telegraph
company. Written notice may be delivered by mail to each director at such
director's business or home address and if mailed shall be delivered at least
five days prior to the meeting.
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If mailed, such notice shall be deemed to be delivered when deposited in the
United States mail so addressed with postage thereon prepaid. Any director may
waive notice of any meeting. The attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where a director attends a
meeting for the express purpose of objecting to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of the
Board need be specified in the notice or waiver of notice of such meeting.
Section 7. Quorum. A majority of the total membership of the Board shall
constitute a quorum for the transaction of business at any meeting of the Board,
but if a quorum shall not be present at any meeting or adjournment thereof, a
majority of the directors present may adjourn the meeting without further
notice.
Section 8. Action by Consent of All Directors. Any action required to be
taken, or which may be taken at a meeting of the Board may be taken without a
meeting, if a consent in writing, setting forth the action so taken, shall be
signed by all of the directors entitled to vote with respect to the subject
matter thereof. Such written consent or consents shall be filed with the minutes
of the Corporation. Such action by written consent of all entitled to vote shall
have the same force and effect as a unanimous vote of such directors at a
meeting of directors at which a quorum is present.
Section 9. Manner of Acting. The act of a majority of the directors present
at a meeting at which a quorum is present shall be an act of the Board.
The order of business at any regular or special meeting of the Board shall
be:
1. Record of those present.
2. Secretary's proof of notice of meeting, if notice is not waived.
3. Reading and disposal of unapproved minutes, if any.
4. Reports of officers, if any.
5. Unfinished business, if any.
6. New business.
7. Adjournment.
Section 10. Vacancies. Any vacancy occurring in the Board by reason of an
increase in the number specified in these Bylaws, or for any other reason, may
be filled by the affirmative vote of a majority of the remaining directors,
though less than a quorum of the Board may remain at the time such meeting
considering filling such vacancies is held.
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Section 11. Compensation. By resolution of the Board, the directors may be
paid their expenses, if any, for attendance at each meeting of the Board and may
be paid a fixed sum for attendance at each meeting of the Board and a stated
salary as director. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor or from
receiving compensation for any extraordinary or unusual services as a director.
Section 12. Presumption of Assent. A director of the Corporation who is
present at a meeting of the Board at which action on any corporate matter is
taken shall be presumed to have assented to the action taken unless the dissent
of such director shall be entered in the minutes of the meeting, filed in
writing with the person acting as the Secretary of the meeting before the
adjournment thereof or forwarded by registered mail to the Secretary of the
Corporation immediately after the meeting. Such right to dissent shall not apply
to a director who voted in favor of such action.
Section 13. Executive or Other Committees. The Board, by resolution adopted
by a majority of the entire Board, may designate among its members an executive
committee and one or more other committees, each of which, to the extent
provided in the resolution, shall have all of the authority of the Board, but no
such committee shall have the authority of the Board in reference to amending
the Articles, adopting a plan of merger or consolidation, recommending to the
shareholders the sale, lease, exchange or other disposition of all or
substantially all of the property and assets of the Corporation otherwise than
in the usual and regular course of its business, recommending to the
shareholders a voluntary dissolution of the Corporation or a revocation thereof,
or amending the Bylaws. The designation of such committees and the delegation
thereto of authority shall not operate to relieve the Board, or any member
thereof, of any responsibility imposed by law.
Any action required to be taken, or which may be taken at a meeting of a
committee designated in accordance with this Section of the Bylaws, may be taken
without a meeting, if a consent in writing setting forth the action so taken
shall be signed by all those entitled to vote with respect to the subject matter
thereof. Such written consent or consents shall be filed with the minutes of the
Corporation. Such action by written consent of all entitled to vote shall have
the same force and effect as a unanimous vote of such persons.
Section 14. Resignation of Officers and Directors. Any director or officer
may resign at any time by submitting a resignation in writing. Such resignation
takes effect from the time of its receipt by the Corporation unless a date or
time is fixed in the resignation, in which case it will take effect from that
time. Acceptance of the resignation shall not be required to make it effective.
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ARTICLE IV
OFFICERS
Section 1. Number. The officers of the Corporation shall be a President, a
Secretary and a Treasurer, all of whom shall be executive officers and each of
whom shall be elected by the Board, and such other officers as the Board may
designate from time to time. A Chairman of the Board, Chairman of the
Board/Chief Executive Officer and one or more Vice Presidents shall be executive
officers if the Board so determines by resolution. Such other officers and
assistant officers, as may be deemed necessary, shall be designated
administrative assistant officers and may be appointed and removed as the Chief
Executive Officer decides. Any two or more offices may be held by the same
person.
Section 2. Election and Term of Office. The executive officers of the
Corporation, to be elected by the Board, shall be elected annually by the Board
at its first meeting held after each annual meeting of the shareholders or at a
convenient time soon thereafter. Each executive officer shall hold office until
the resignation of such officer or a successor shall be duly elected and
qualified, until the death of such executive officer, or until removal of such
officer in the manner herein provided.
Section 3. Removal. Any officer or agent elected or appointed by the Board
may be removed by the Board whenever, in its judgment, the best interests of the
Corporation would be served thereby, but such removal shall be without prejudice
to the contract rights, if any, of the person so removed.
Section 4. Vacancies. A vacancy in any executive office because of death,
resignation, removal, disqualification or otherwise may be filled by the Board
for the unexpired portion of the term.
Section 5. The Chairman of the Board. If a Chairman of the Board (the
"Chairman") shall be elected by the Board, the Chairman shall preside at all
meetings of the shareholders and of the Board. The Chairman may sign, with the
officers authorized by the Chief Executive Officer or the Board, certificates
for the shares of the Corporation and shall perform such other duties as from
time to time are assigned by the Chief Executive Officer or the Board. The
Chairman of the Board may be elected as the Chief Executive Officer, in which
case the Chairman shall perform the duties hereinafter set forth in Article IV,
Section 7, of these Bylaws.
Section 6. The President. The President may sign, with the officers
authorized by the Chief Executive Officer or the Board, certirficates for shares
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of the Corporation and shall perform such other duties as from time to time are
assigned by the Chief Executive Officer or the Board. The President may be
elected as the Chief Executive Officer of the Corporation, in which case, the
President shall perform the duties hereinafter set forth in Article IV, Section
7, of these Bylaws.
Section 7. The Chief Executive Officer. If no Chairman shall be elected by
the Board, the President shall be the Chief Executive Officer of the
Corporation. If a Chairman is elected by the Board, the Board shall designate,
as between the Chairman and the President, who shall be the Chief Executive
Officer. The Chief Executive Officer shall be, subject to the control of the
Board, in general charge of the affairs of the Corporation. The Chief Executive
Officer may sign, with the other officers of the Corporation authorized by the
Board, deeds, mortgages, bonds, contracts or other instruments whose execution
the Board has authorized, except in cases where the signing and execution
thereof shall be expressly delegated by the Board or these Bylaws to some
officer or agent of the Corporation, or shall be required by law to be otherwise
signed or executed.
Section 8. The Vice President. In the absence of the President or in the
event of the death or inability to act of the President, the Vice President
shall perform the duties of the President, and when so acting shall have all the
powers of and be subject to all the restrictions upon the President. In the
event there is more than one Vice President, the Vice Presidents in the order
designated at the time of their election, or in the absence of any designation,
then in the order of their election, shall perform the duties of the President
and, when so acting, shall have all the powers of and shall be subject to all
the restrictions upon the President. Any Vice President may sign, with the other
officers authorized by the Chief Executive Officer or the Board certificates for
shares of the Corporation and shall perform such other duties as from time to
time may be assigned by the Chief Executive Officer or the Board.
Section 9. The Secretary. Unless the Board otherwise directs, the Secretary
shall keep the minutes of the shareholders' and directors' meetings in one or
more books provided for that purpose. The Secretary shall also see that all
notices are duly given in accordance with the law and the provisions of the
Bylaws; be custodian of the corporate records and the seal of the Corporation;
affix the seal or direct its affixing to all documents, the execution of which
on behalf of the Corporation is duly authorized; keep a list of the address of
each shareholder; sign, with the other officers authorized by the Chief
Executive Officer or the Board, certificates for shares of the Corporation; have
charge of the stock transfer books of the Corporation and perform all duties
incident to the office of Secretary and such other duties as from time to time
may be assigned by the Chief Executive Officer or by the Board.
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Section 10. The Treasurer. If required by the Board, the Treasurer shall
give a bond for the faithful discharge of his duties in such sum and with such
surety or sureties as the Board shall determine. The Treasurer shall have charge
and custody of and be responsible for all funds and securities of the
Corporation, receive and give receipts for monies due and payable to the
Corporation from any source whatsoever and deposit all such monies in the name
of the Corporation in such banks, trust companies or other depositories as shall
be selected in accordance with the provisions of the Bylaws. The Treasurer may
sign, with the other officers authorized by the Chief Executive Officer or the
Board, certificates for shares of the Corporation and shall perform all duties
incident to the office of Treasurer and such other duties as from time to time
may be assigned by the Chief Executive Officer or the Board.
Section 11. Assistant Officers. The Chief Executive Officer may appoint
such other officers and agents as may be necessary or desirable for the business
of the Corporation. Such other officers shall include one or more Assistant
Secretaries and Treasurers who shall have the power and authority to act in
place of the officer for whom they are elected or appointed as an assistant in
the event of the officer's inability or unavailability to act in his official
capacity. The Assistant Secretary or Secretaries or Assistant Treasurer or
Treasurers may sign, with the other officers authorized by the Chief Executive
Officer or the Board, certificates for shares of the Corporation. The Assistant
Treasurer or Treasurers shall, if required by the Board, give bonds for the
faithful discharge of their duties in such sums and with such sureties as the
Board shall determine. The Assistant Secretaries and Assistant Treasurers, in
general, shall perform such duties as shall be assigned to them by the Secretary
or the Treasurer, respectively, or by the Chief Executive Officer or the Board.
Section 12. Salaries. The salaries of the executive officers shall be fixed
by the Board and no officer shall be prevented from receiving such salary by
reason of the fact that such officer is also a director of the Corporation. The
salaries of the administrative assistant officers shall be fixed by the
President.
ARTICLE V
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. Contracts. The Board may authorize any officer or officers,
agent or agents, to enter into any contract on behalf of the Corporation and
such authority may be general or confined to specific instances.
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Section 2. Checks, Drafts, Etc. All checks, drafts or other orders for the
payment of money, notes or other evidence of indebtedness, issued in the name of
the Corporation, shall be signed by such officer or officers, agent or agents,
of the Corporation and in such manner as shall from time to time be determined
by resolution of the Board.
Section 3. Deposits. All funds of the Corporation not otherwise employed
shall be deposited from time to time to the credit of the Corporation in such
banks, trust companies or other depositories as the Board may select.
ARTICLE VI
CERTIFICATES FOR SECURITIES
AND THEIR TRANSFER
Section 1. Certificates for Securities. Certificates representing
securities of the Corporation (the "Securities") shall be in such form as shall
be determined by the Board. To be effective, such certificates for Securities
(the "Certificates") shall be signed by the President or a Vice President and
the Secretary or an Assistant Secretary of the Corporation. Any or all of the
signatures may be facsimiles if the Certificate is either countersigned by the
transfer agent, or countersigned by the facsimile signature of the transfer
agent and registered by the written signature of an officer of any company
designated by the Board as registrar of transfers so long as that officer is not
an employee of the Corporation.
A Certificate signed or impressed with the facsimile signature of an
officer, who ceases by death, resignation or otherwise to be an officer of the
Corporation before the Certificate is delivered by the Corporation, is valid as
though signed by a duly elected, qualified and authorized officer, provided that
such Certificate is countersigned by the signature of the transfer agent or
facsimile signature of the transfer agent of the Corporation and registered as
aforesaid.
All Certificates shall be consecutively numbered or otherwise identified.
Certificates shall state the jurisdiction in which the Corporation is organized,
the name of the person to whom the Securities are issued, the designation of the
series, if any, and the par value of each share represented by the Certificate,
or a statement that the shares are without par value. The name and address of
the person to whom the Securities represented thereby are issued, the number of
Securities, and date of issue, shall be entered on the security transfer books
of the Corporation. All Certificates surrendered to the Corporation for transfer
shall be canceled and no new Certificate shall be issued until the former
Certificate for a like number of shares shall have been surrendered and
canceled, except that, in case of a lost, destroyed or mutilated Certificate, a
new one may be issued therefor upon such terms and indemnity to the Corporation
as the Board may prescribe.
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Section 2. Transfer of Securities. Transfer of Securities shall be made
only on the security transfer books of the Corporation by the holder of record
thereof, by the legal representative of the holder who shall furnish proper
evidence of authority to transfer, or by an attorney authorized by a power of
attorney which was duly executed and filed with the Secretary of the Corporation
and a surrender for cancellation of the Certificate for such shares. The person
in whose name Securities stand on the books of the Corporation shall be deemed
by the Corporation to be the owner thereof for all purposes.
ARTICLE VII
FISCAL YEAR
The fiscal year of the Corporation shall be determined by resolution of the
Board.
ARTICLE VIII
DIVIDENDS
The Board may declare, and the Corporation may pay in cash, stock or other
property, dividends on its outstanding shares in the manner and upon the terms
and conditions provided by law and its Articles.
ARTICLE IX
SEAL
The Board shall provide a corporate seal, circular in form, having
inscribed thereon the corporate name, the state of incorporation and the word
"Seal." The seal on Securities, any corporate obligation to pay money or any
other document may be by facsimile, or engraved, embossed or printed.
ARTICLE X
WAIVER OF NOTICE
Whenever any notice is required to be given to any shareholder or director
of the Corporation under the provisions of these Bylaws or under the provisions
of the Articles or under the provisions of the applicable laws of the State of
Wyoming, a waiver thereof in writing, signed by the person or persons entitled
to such notice, whether before, at or after the time stated therein, shall be
deemed equivalent to the giving of such notice.
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ARTICLE XI
INDEMNIFICATION
The Corporation shall have the power to indemnify any director, officer,
employee or agent of the Corporation or any person serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise to the fullest extent
permitted by the Wyoming Business Corporation Act.
ARTICLE XII
AMENDMENTS
These Bylaws may be altered, amended, repealed or replaced by new bylaws by
the Board at any regular or special meeting of the Board.
ARTICLE XIII
UNIFORMITY OF INTERPRETATION
AND SEVERABILITY
These Bylaws shall be so interpreted and construed as to conform to the
Articles and the statutes of the State of Wyoming or of any other state in which
conformity may become necessary by reason of the qualification of the
Corporation to do business in such foreign state, and where conflict between
these Bylaws and the Articles or a statute has arisen or shall arise, the Bylaws
shall be considered to be modified to the extent, but only to the extent,
conformity shall require. If any Bylaw provision or its application shall be
deemed invalid by reason of the said nonconformity, the remainder of the Bylaws
shall remain operable in that the provisions set forth in the Bylaws are
severable.
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ATTACHMENT C
MANAGEMENT AGREEMENT
THIS AGREEMENT is made as of this 8th day of December 1995, by and among
METRO CAPITAL CORPORATION, a Wyoming corporation (the "Company"), BISHOP CABLE
COMMUNICATIONS CORPORATION, a Wyoming corporation and wholly-owned subsidiary of
the Company (the "Subsidiary") and ROBERT E. THRAILKILL ("R. E. Thrailkill")
(the " Executive").
R. E. Thrailkill is presently employed by the Company as President and
Chief Executive Officer and has previously entered into an Executive Employment
Agreement, dated April 1, 1993, whereby he is to be employed as the President of
the Company until March 31, 1998. This Agreement supersedes and constitutes a
novation of the Executive Employment Agreement between the Company and R. E.
Thrailkill.
Pursuant to an Asset Purchase Agreement, dated October 19, 1995, between
the Company and Karlton Terry Oil Company, Karlton Terry and Jubal Terry
(collectively "KTOC"), 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 until the Company effects a distribution of the Common Stock of
the Subsidiary to the holders of the Company's Common Stock, but in no event for
more than five (5) years.
The Company and the Subsidiary recognize (i) that the Executive's
contribution to the growth and success of the Company since its inception has
been substantial, (ii) the Executive has extensive experience in the management
of the Company's business, and (iii) KTOC has extensive experience in the
management of KTOC's oil and gas business. The Company and the Subsidiary desire
to provide for the continued employment of the Executive by the Subsidiary and
to make certain changes in the Executive's employment arrangements with the
Company which the Company and the Subsidiary have determined will reinforce and
encourage the Executive's continued attention and dedication to the Subsidiary
as members of the Subsidiary's management. The Executive is willing to commit
himself to serve the Subsidiary, on the terms and conditions herein provided.
In order to effect the foregoing, the Company, the Subsidiary and the
Executive wish to enter into a management employment 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. Employment. The Subsidiary hereby agrees to employ the Executive, and
the Executive hereby agrees to serve the Subsidiary, on the terms and conditions
set forth herein.
<PAGE>
2. Term. The employment of the Executive by the Subsidiary as provided in
Section I will commence on the date hereof and continue for five (5) years from
the date hereof, unless sooner terminated as hereinafter provided. On September
30, 1996, and on tile last day of September of each year thereafter, the term of
each Executive's employment shall be automatically extended an additional year
unless, prior to such last day of September, the Subsidiary shall have delivered
to the Executive or the Executive shall have delivered to the Subsidiary written
notice that the term of the Executive's employment hereunder will not be
extended.
3. Positions and Duties. R. E. Thrailkill shall serve as President of the
Subsidiary, his powers and duties in that capacity to be such as may be
determined from time to time by the Board of Directors of the Subsidiary. During
the period of this Agreement, R. E. Thrailkill shall serve also, without
additional compensation, as Chairman of the Board, Chief Executive Officer and a
director of the Subsidiary. and to any other such office as he may be elected or
appointed by the Board of Directors of the Subsidiary, provided such other
duties will not interfere with R. E. Trailkill's duties as President of the
Subsidiary. His curies in those capacities shall be as set forth in the Bylaws
of the Subsidiary.
The Subsidiary agrees to headquarter the Executive in the Riverton, Wyoming
area except for required travel on the Subsidiary's business.
4. Extent of Services. The Executive shall devote his entire time,
attention and energies to the business of the Subsidiary and shall not, during
the term of this Agreement, be engaged in any other business activity, whether
or not such business activity is pursued for gain, profit or other pecuniary
advantage, unless prior approval therefor has been obtained from the Board of
Directors of the Subsidiary. This provision shall not be construed as preventing
the Executive from investing his assets in such form or manner as will not
require any services on the part of the Executive in the operation of the
affairs of the companies in which such investments are made.
5. Compensation and Related Matters. The Executive's compensation, as set
forth below, is to be self-funded by the Subsidiary with no liability to pay
such compensation by the Company.
(a) Salary. During the period of R. E. Thrailkill's employment
hereunder, the Subsidiary shall pay to R. E. Thrailkill a salary at a rate of
not less than $145,000 per annum.
The Executive's salary shall be paid in equal installments as nearly as
practicable on the 15th and the last days of each month in arrears. The
Executive's salary may be increased from time to time (i) in accordance with
normal business practices of the Subsidiary, (ii) based upon the Executive's
performance and/or (iii) to reflect increases in the cost of living. The
Executive's salary, if so increased, shall not thereafter during the term of
this Agreement be decreased. Compensation of the Executive by salary payments
shall not be deemed exclusive and shall not prevent the Executive from
participating in any other compensation or benefit plan of the Subsidiary or the
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<PAGE>
Company. The salary payments (including any increased salary payments) hereunder
shall not in any way limit or reduce any other obligation of the Company or the
Subsidiary hereunder, and no other compensation, benefit or payment hereunder
shall in any way limit or reduce the obligation of tile Subsidiary to pay the
Executive's salary hereunder.
(b) Expenses. During the term of the Executive's employment hereunder,
the Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive in performing services hereunder,
including all expenses of travel and living expenses while away from home on
business or at the request of and in the service of the Subsidiary, provided
that such expenses are incurred and accounted for in accordance with the
policies and procedures presently established by the Company.
(c) Other Benefits. The Company and the Subsidiary shall maintain in
full force and effect, and the Executive shall be entitled to continue to
participate in, all of its employee benefit plans and arrangements in effect on
the date hereof in which the Executive participates or plans or arrangements
providing the Executive with at least equivalent benefits thereunder (including
without limitation each stock option plan, stock bonus plan, life insurance and
health and-accident plan and arrangement, medical insurance plan, disability
plan and vacation plan). The Company and the Subsidiary shall not make any
changes in such plans or arrangements which would adversely affect the
Executive's rights or benefits thereunder, unless such change occurs pursuant to
a program applicable to all executives of the Company and the Subsidiary and
does not result in a proportionately greater reduction in the rights of or
benefits to the Executive as compared with any other of the executives of the
Company. The Executive shall be entitled to participate in or receive benefits
under any employee benefit plan or arrangement made available by the Company or
the Subsidiary in the future to executives and key management employees, subject
to and on a basis consistent with the terms, conditions and overall
administration of such plans and arrangements. Nothing paid to the Executive
under any plan or arrangements presently in effect or made available in the
future shall be deemed to be in lieu of the salaries payable to the Executive
pursuant to paragraph (a) of this Section. Any payments or benefits payable to
the Executive hereunder in respect of any calendar year during which the
Executive is employed by the Subsidiary for less than the entire such year
shall, unless otherwise provided in the applicable plan or arrangement, be
prorated in accordance with the number of days in such calendar year during
which the Executive is so employed.
(d) Vacations. The Executive shall be entitled to the number of
vacation days in each calendar year, and to compensation in respect of earned
but unused vacation days, determined in accordance with the Subsidiary's
vacation plan. The Executive shall also be entitled to all paid holidays given
by the Subsidiary to its executives.
(e) Services Furnished. The Subsidiary shall furnish the Executive
with office space and such other facilities and services as shall be suitable to
the individual Executive's positions and adequate for the performance of their
respective duties as set forth in Section 3 hereof.
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<PAGE>
6. Disclosure of Information. The Executive recognizes and acknowledges
that the operation of the Company and the Subsidiary's businesses and know how
as it may exist from time to time, and the Company and the Subsidiary's trade
secrets are valuable, special and unique assets of the Company and the
Subsidiary's businesses. The Executive will not, during or after the term of his
employment. disclose such information and know how or any part thereof, or any
trade secrets, to any person, firm, corporation, association or other entity for
any reason or purpose whatsoever. In the event of a breach or threatened breach
by an Executive of the provisions of this paragraph, the Company and/or the
Subsidiary shall be entitled to an injunction restraining the Executive from
disclosing in whole or in part such information or any trade secrets or from
rendering any services to any person, firm, corporation, association or other
entity to whom such information in whole or in part has been disclosed or is
threatened to be disclosed. Nothing herein shall be construed as prohibiting the
Company or the Subsidiary from pursuing any other remedies available to the
Company or the Subsidiary for such breach or threatened breach, including the
recovery of damages from the Executive.
7. Termination. The Company may not terminate the Executive's employment
for any reason. The individual Executive's employment hereunder may be
terminated only by the Subsidiary without any breach of this Agreement only
under the following circumstances:
(a) Death. The Executive's employment hereunder shall terminate upon
his death.
(b) Disability. If, as a result of the Executive's incapacity due to
physical or mental illness, the Executive shall have been absent from his duties
hereunder on a full-time basis for the entire period of six consecutive months,
and within thirty (30) days after written notice of termination is given (which
may occur before or after the end of such six-month periods) shall not have
returned to the performance of his duties hereunder on a full-time basis, the
Subsidiary may terminate the Executive's employment hereunder.
(c) Cause. The Subsidiary may terminate the Executive's employment
hereunder for Cause. For purposes of this Agreement, the Subsidiary shall have
"Cause" to terminate the Executive's employment hereunder upon (A) the willful
and continued failure by the Executive to substantially perform his duties
hereunder (other than any such failure resulting from the executive's incapacity
due to physical or mental illness), after demand for substantial performance is
delivered by the Subsidiary that specifically identifies the manner in which the
Subsidiary believes the Executive has not substantially performed his duties, or
(B) the willful engaging by the Executive in misconduct which is materially
injurious to the Subsidiary, monetarily or otherwise. For purposes of this
paragraph, no act, or failure to act, on the Executive's part shall be
considered "willful" unless done, or omitted to be done, by him not in good
faith and without reasonable belief that his action or omission was in the best
interest of the Subsidiary. Notwithstanding the foregoing, the Executive shall
not be deemed to have been terminated for Cause without (i) reasonable notice to
the Executive setting forth the reasons for the Subsidiary's intention to
terminate for Cause; (ii) an opportunity for the Executive, together with his
counsel, to be heard before the Board of Directors of the Subsidiary, and (iii)
delivery to the Executive of a Notice of termination as defined in subsection
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<PAGE>
(e) hereof from the Board of Directors of the Subsidiary finding that in the
good faith opinion of such Board the Executive was guilty of conduct set forth
above in clause (A) or (B) of the preceding sentence, and specifying the
particulars thereof in detail.
(d) Termination by the Executive. The Executive may terminate his
employment hereunder (i) for Good Reason or (ii) if his health should become
impaired to an extent that makes his continued performance of his duties
hereunder hazardous to his physical or
mental health or his life, provided that the Executive shall have furnished the
Subsidiary with a written statement from a qualified doctor to such effect.
For purposes of this Agreement, "Good Reason" shall mean (A) a change in
control of the Subsidiary (as defined below) which is not approved by the
Executive, (B) a failure by the Company or the Subsidiary to comply with any
material provision of this Agreement which has not been cured within ten days
after notice of such noncompliance has been given by the Executive to the
Company and Subsidiary as the case may be, or (C) any purported termination of
the Executive's employment which is not effected pursuant to a Notice of
Termination satisfying the requirements of paragraph (e) hereof (and for
purposes of this Agreement no such purported termination shall be effective).
For purposes of this Agreement, a "change in control of the Subsidiary"
shall mean a change in control of a nature that would be required to be reported
in response to Item 5(f) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934 (the "Exchange Act"); provided that, without
limitation, such a change in control shall be deemed to have occurred if (i) any
"person" (as that term is used in Sections 13(d) and 14(d) of the Exchange Act),
other than the Subsidiary or any "person" who on the date hereof is a director
or officer of the Subsidiary, is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
the Company or the Subsidiary representing 20% or more of the combined voting
power of the Subsidiary's then outstanding securities, or (ii) during any period
of two consecutive years during the term of this Agreement, individuals who at
the beginning of such period constitute the Board of the Subsidiary cease for
any reason to constitute at least a majority thereof, unless the election of
each director who was not a director at the beginning of such period has been
approved in advance by directors representing at least two-thirds of the
directors then in office who were directors at the beginning of the period.
The Company shall consult with the Executive regarding any proposed change
in control of the Company. For purposes hereof, "change in control" shall have
the same meaning as set forth in the preceding paragraph.
(e) Any termination of the Executive's employment by the Subsidiary or
by the Executive (other than termination pursuant to subsection (a) above) shall
be communicated by written Notice of Termination to the other parties hereto.
For purposes of this Agreement, a "Notice of Termination" shall mean a notice
which shall indicate the specific termination provision in this Agreement relied
upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment under
the provision so indicated.
-5-
<PAGE>
(f) "Date of Termination" shall mean (i) if the Executive's employment
is terminated by his death, the date of his death, (ii) if the Executive's
employment is terminated pursuant to subsection (b) above, 30 days after Notice
of Termination is given (provided that the Executive shall not have returned to
the performance of his duties on a full-time basis during such 30 days period),
(iii) if the Executive's employment is terminated pursuant to subsection (e)
above, the date specified in the Notice of Termination, and (iv) if the
Executive's employment is terminated for any other reason, the date on which a
Notice of Termination is given; provided that if within 30 days after any Notice
of Termination is given the party receiving such Notice of Termination notifies
the other party that a dispute exists concerning the termination, the Date of
Termination shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties, by a binding and final arbitration
award or by a final judgment order or decree of a court of competent
jurisdiction (the time for appeal therefrom having expired and no appeal having
been perfected).
8. Compensation Upon Termination or During Disability.
(a) If the Executive is unable to perform his services by reason of
illness or incapacity for a period of more than six months, the compensation
otherwise payable to him during the continued period of such illness or
incapacity shall be reduced by the amount of any insurance benefits provided by
the Company or the Subsidiary. The Subsidiary may terminate this Agreement at
any time after Executive shall be absent from his employment for whatever cause,
for a continuous period of more than six months and all obligations of the
Subsidiary and shareholders hereunder shall cease upon such termination,
provided, however, that in the event that such absence is due to illness or
incapacity, the Subsidiary shall be obligated to pay the full amount of
Executive's salary for the balance of the term of this Agreement or until
Executive becomes gainfully employed, whichever is sooner.
(b) If the Executive's employment is terminated by his death, the
Subsidiary shall pay to the Executive's spouse, or if he leaves no spouse, to
his estate, commencing on the next succeeding day which is the 15th day or last
day of the month, as the case may be, and semimonthly thereafter on the 15th and
last days of each month, until a total of 24 payments has been made, an amount
on each payment date equal to the semi-monthly salary payment payable to the
Executive pursuant to Section 5(a) hereof at the time of his death.
(c) If the Executive's employment shall be terminated for Cause, the
Subsidiary shall pay the Executive his full salary through the Date of
Termination at the rate in effect at the time Notice of Termination is given and
the Subsidiary shall have no further obligations to the Executive under this
Agreement.
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<PAGE>
(d) If (A) in breach of this Agreement, the Company or the Subsidiary
shall terminate an Executive's employment other than pursuant to Section 7(b) or
7(c) hereof (it being understood that a purported termination pursuant to
Section 7(b) or 7(c) hereof which is disputed and finally determined not to have
been proper shall be a termination by the Company and/or the Subsidiary in
breach of this Agreement) or (B) the Executive shall terminate his employment
for Good Reason, then
(i) the Company and the Subsidiary shall pay the Executive his
full salary through the Date of Termination at the rate in effect at the time
Notice of Termination is given;
(ii) in lieu of any further salary payments to the Executive for
periods subsequent to the Date of Termination, the Subsidiary shall pay as
severance pay to the Executive an amount equal to the product of (A) the
Executive's annual salary rate in effect as of the Date of termination,
multiplied by (B) the greater of the number of years (including partial years)
remaining in the term of employment hereunder or the number three, such payments
to be made in a lump sum on or before the 5th day following the Date of
Termination;
(iii) if termination of the Executive's employment arises out of
a breach by the Subsidiary of this Agreement, the Subsidiary shall pay all other
damages to which the Executive may be entitled as a result of such breach,
including damages for any and al' loss of benefits to the Executive under the
Company and the Subsidiary's employee benefit plans (other than the Subsidiary's
Incentive Compensation Plan) which the Executive would have received if the
Subsidiary had not breached this Agreement and had the Executive's employment
continued for the full term provided in Section 2 hereof, and including all
legal fees and expenses incurred by him as a result of such termination; and
(iv) if termination of the Executive's employment arises out of a
breach by the Company of this Agreement, the Company shall pay all other damages
to which the Executive may be entitled as a result of such breach, including
damages for any and all loss of benefits to the Executive under the Company and
the Subsidiary's employee benefit plan~ (other than the Company's Incentive
Compensation Plan) which the Executive would have received if the Company had
not breached this Agreement and had the Executive's employment continued for the
full term provided in Section 2 hereof, and including all legal fees and
expenses incurred by him as a result of such termination.
(e) If the Executive shall terminate his employment under clause (ii)
of Section 7(d) hereof, the Subsidiary shall pay the Executive his full salary
through the Date of Termination at the rate in effect at the time Notice of
Termination is given together with such reasonable severance payment, if any, or
the Subsidiary's Board of Directors may determine.
(f) Unless the Executive is terminated for Cause, the Company and the
Subsidiary shall maintain in full force and effect, for the continued benefit of
the Executive for the greater of the number of years (including partial years)
remaining in the term of employment hereunder
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<PAGE>
or the number three, all employee benefit plans and programs in which the
Executive was entitled to participate immediately prior to the Date of
Termination provided that the Executive's continued participation is possible
under the general terms and provisions of such plans and programs. In the event
that the Executive's participation in any such plan or program is barred, the
Company and the Subsidiary shall arrange to provide the Executive with benefits
substantially similar to those which the Executive would otherwise have been
entitle to receive under such plans and programs from which his continued
participation is barred.
(g) The Executive shall not be required to mitigate the amount of any
payment provided for in this Section 8 by seeking other employment or otherwise.
9. Successors: Binding Agreement.
(a) The Company and the Subsidiary will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company or the
Subsidiary, by agreement in form and substance satisfactory to the Executive, to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company and the Subsidiary would be required to perform
it if no such succession had taken place. Failure by the Company or the
Subsidiary to obtain such agreement prior to the effectiveness of any such
succession shall be a breach of the Agreement and shall entitle the Executive to
compensate on from the Company and the Subsidiary in the same amount and on the
same terms as they would be entitled to hereunder if they terminated their
employment for Good Reason, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in this Agreement, "Subsidiary" shall
mean the Subsidiary as hereinbefore defined and any successor to its business
and/or assets as aforesaid which executes and delivers the agreement provided
for in this Section 9 or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law. As used in this Agreement,
"Company" shall mean the Company as hereinbefore defined and any successor to
its business and/or assets as aforesaid which executes and delivers the
agreement provided for in this Section 9 or which otherwise becomes bound by all
the terms and provisions of this Agreement by operation of law.
(b) This Agreement and all rights of the Executive hereunder shall
inure to the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If an Executive should die while any amounts would still
be payable to him hereunder if he had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to the Executive's devisee, legatee or other designee or, if
there be no such designee, to the Executive's estate.
10. Indemnification. The Subsidiary shall indemnify and hold the Company
harmless for all actions of the Executive.
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<PAGE>
11. 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 bee~ duly given when delivered or (unless otherwise specified)
mailed by United States registered mail, return receipt requested, postage
prepaid, addressed to the Company, the Subsidiary and the Executive at the
following addresses:
(i) If to the Company:
Karlton Terry, President
Metro Capital Corporation
700 E. 9th Ave., Suite 106
Denver, Colorado 80203
(ii) If to the Subsidiary:
Robert E. Thrailkill, President
Bishop Cable Communications Corporation
716 College View Drive
Riverton, Wyoming 80501
(iii) If to the Executive:
Robert E. Thrailkill
716 College View Drive
Riverton, Wyoming 82501
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.
12. 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 Executives and such officers as may be specifically
designated by the Company and the Subsidiary. 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.
13. 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.
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<PAGE>
14. 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.
15. Governing Law. This interpretation and construction of this Agreement,
and all matters relating hereto, shall be governed by the internal laws of the
State of Wyoming.
16. Arbitration. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration, conducted
before a panel of three arbitrators, in Riverton, Wyoming, in accordance with
the rules of the American Arbitration Association then in effect. Judgment may
be entered on the arbitrator's award in any court having jurisdiction. The
expense of such arbitration shall be borne by the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
and year first above written.
METRO CAPITAL Corporation
By /S/ KARLTON TERRY
----------------------------------------
Karlton Terry, President
BISHOP CABLE COMMUNICATIONS CORPORATION
By /S/ ROBERT E. THRAILKILL
----------------------------------------
Robert E. Thrailkill, President
/S/ ROBERT E. THRAILKILL
----------------------------------------
Robert E. Thrailkill
A:\MNGNTAGR.THR
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ATTACHMENT D
PURCHASE OPTION AGREEMENT
Bishop Powers, Ltd., A Colorado Limited Partnership, Managing Partner;
Bishop Capital Corp., A Wyoming Corp., c/o Robert E. Thrailkill (Owner)
whose address is
716 College View Dr., Riverton, WY 82561
c/o Highlands Commercial Group LLC, 800 Holly Sugar Bldg.,
Colorado Springs, CO 80903 J. Spittler,
in consideration of Diamond Shamrock Refining and Marketing Company, whose
address is P.O. Box 696000, San Antonio, Texas 78269-6000 (Buyer), paying to
Owner within ten (10) days from receipt of this agreement signed by both parties
One Thousand and No/100-----Dollars ($1,000.00), called option money.
Owner hereby grants to Buyer for a period of sixty (60) days from the date of
this agreement, the exclusive option of purchasing from Owner for the total
purchase price of Three Hundred Fifty Thousand and No/100----Dollars
($350,000.00) and upon the provisions hereinafter set out, the following
described tract of land located in Colorado Springs, El Paso County, Colorado:
A tract of land having a minimum of 43,000 square feet exclusive of
any present or proposed rights-of-way or dedications to a public
authority and said tract of land located 530 feet west of the
northwest corner of the intersection of Powers Blvd. and Palmer Park
Blvd. shall have a minimum frontage of 200 feet along, adjoining and
adjacent to Palmer Park Blvd. with a depth of 220 feet therefrom and a
minimum frontage of 220 feet along, adjoining and adjacent to the
proposed right-in, right-out Palmer Park Access with a depth of 200
feet therefrom.
Owner hereby grants to Buyer and its employees and representatives, at
anytime, and from time to time, the right to enter upon the land and make, at
Buyer's expense, a survey of said land containing the type of information shown
on attached Exhibit "A" and such engineering, soil, or other tests it may
desire. At the closing, the cost of the survey made by Buyer will be credited
against the payment of the purchase price. Upon Buyer giving Owner written
notice of its election to purchase the land, the following provisions shall
apply:
1. Buyer shall tender to Commonwealth Land Title Insurance Co. Attn:
whose address is 121 E. Vermijo Ave. Colorado Springs, Colorado 80903
(Escrow Agent), its check in the amount of Three Thousand Five Hundred and
no/100 Dollars ($3,500.00), as earnest money, and a signed copy of this
agreement for acceptance by Escrow Agent.
<PAGE>
2. For purposes of this agreement, the term "Buyer's Purpose" shall mean
the construction and operations of a self-service retail gasoline service
station, car wash and convenience store (including the sale of beer and wine) of
the type and size desired by Buyer with approaches, curb cuts and free standing
signs in accordance with Buyer's design.
3. Within thirty (30) days from the date Buyer's notice of election to
purchase is given, Owner shall, at its expense, furnish to Buyer the following:
a) evidence satisfactory to Buyer that water, sewer, telephone, gas and
electricity are available to the land from public utility companies
and located in public easements adjacent to the land.
b) an interim title insurance binder and sample form of title policy
covering the land, prepared and issued by a title insurance company
acceptable to Buyer with copies of all documents shown on said title
insurance binder as an exception to title; and
c) certificates from all appropriate governmental authorities reflecting
that a search has been made for, and there are no chattel mortgages,
conditional sales contracts, financing statements and other similar
instruments creating liens of any kind affecting the land or personal
property located thereon.
4. If any engineering, soil or other tests are made by Buyer and do not
show to Buyer's satisfaction the land is suitable for use for Buyer's Purpose,
notwithstanding anything contained herein to the contrary, Buyer may terminate
this agreement at any time thereafter by giving Owner written notice of
termination.
5. If required in order for Buyer to obtain a building permit or other
governmental authorizations to use or improve the land for Buyer's Purpose,
Owner shall prior to closing and at Owner's expense, subdivide and plat the land
in accordance with all applicable governmental ordinances, regulations, rules
and laws. Before Owner delivers said plat to the governmental authorities for
approval and recording, Owner shall deliver said plat to Buyer for Buyer's
approval. Buyer reserves the right to raise objections to any matters contained
in said plan.
6. Buyer shall have thirty (30) days after receipt of the survey and all
data to be provided hereunder to approve same. If, in the opinion of Buyer: (i)
the form of title insurance policy and issuing company are acceptable; (ii) the
policy does not contain any exception on account of, and the land is free and
clear of, any and all restrictions, reservations, covenants, laws, zoning or
other ordinances or regulations, easements, rights-of-way or other circumstances
of any kind which would prevent, hinder or impede ingress to or egress from the
<PAGE>
land, the improvement or use of the land for Buyer's Purpose, or the issuance to
Buyer of a building permit and any other permits required or deemed necessary by
the applicable governmental authority in order for Buyer to improve and use the
land for Buyer's Purpose; (iii) water, sewer, telephone, gas and electricity are
available to the land from public utility companies and located in public
easements adjacent to the land; (iv) there are no exceptions which constitute an
objection to marketable title; (v) Owner will be able to deliver to Buyer at the
closing good, marketable and unencumbered title to, and immediate and exclusive
possession of the land; and (vi) all other requirements set forth in this
agreement have been satisfied to Buyer's satisfaction, then this sale shall be
closed promptly. If, in the opinion of Buyer, any requirement set forth in this
agreement has not been satisfied to Buyer's satisfaction, Buyer shall give Owner
written notice pointing out any objections or defects. Owner shall within thirty
(30) days after receipt of such notice cure such objections and defects to the
satisfaction of Buyer. If such objections and defects are so cured and no
additional objections or defects have arisen, then this sale shall be closed
promptly. If such objections and defects are not so timely cured, Buyer may, at
its option, waive same by giving written notice to Owner of such waiver within
fifteen (15) days after the expiration of said thirty (30) day period, and then
this sale shall be closed promptly. If Buyer does not notify Owner of such
waiver within said time period, this agreement shall terminate.
OPTION #245
<PAGE>
7. At the closing of this sale, Buyer will deliver to Escrow Agent a check
in an amount equal to the difference between (i) the option money plus the
earnest money, plus the cost of a survey of the land obtained by Buyer and (ii)
the total purchase price set forth herein. Owner shall deliver to Buyer a duly
executed and acknowledged general warranty deed covering the land, in a form
acceptable to Buyer. Owner shall deliver to Buyer an Owner's title insurance
policy issued in favor of Buyer for an amount equal to the total purchase price.
If Buyer so directs, Owner agrees that the general warranty deed and Owner's
title insurance policy required under this Agreement will be delivered in the
name of and in favor of Buyer's nominee or designee. All ad valorem and personal
property taxes assessed, or to be assessed against the land for the then current
year shall be prorated between Owner and Buyer as of the closing date. All
sales, use, transfer and similar taxes relating to said transaction shall be
borne by and shall be the responsibility of Owner, and if Buyer is obligated or
required to pay any such taxes, the amount Buyer so pays or is required to pay
shall be credited toward the payment of the total purchase price hereunder The
Escrow Agent's fees, and fees or commissions due any real estate agent, or
agents, shall be paid by Owner. Each party shall be responsible for its own
closing costs over and above those enumerated above.
8. At the closing of this transaction Owner will deliver to Buyer. in a
form acceptable to Buyer, dated as of the date of the closing, a statement
declaring, under penalty of perjury, Owner is not a "Foreign Person" as defined
in Section 1445(f)(3) of the Internal Revenue Code, and that Section 1445(a) of
the Internal Revenue Code is not applicable to this transaction. If such
statement is not delivered at closing, Buyer shall have the right to withhold
from the total price payable to Owner under this agreement, such amount as Buyer
deems necessary to satisfy the obligation imposed upon Buyer by Section 1445(a)
of the Internal Revenue Code, not to exceed ten percent (10%) of the total
purchase price.
9. Owner represents and warrants to Buyer as of the date of this sale the
following: 1) to the best of Owner's knowledge, the land is free and clear of
all restrictions, covenants, reservations, ordinances or other circumstances
which would prevent, hinder or impede (a) the improvement or use of the land,
(b) ingress to or egress from the land, or (c) the issuance of permits for
construction of the improvements Buyer deems necessary for Buyer's Purpose; 2)
the land has the frontage along, adjacent to and adjoining the public highways
or streets represented above; and 3) water, sewer, gas and electricity are
available to the land from public companies and located in public easements
adjacent to the land. Owner's representations and warranties shall survive the
closing of this sale and the execution and delivery of the deed contemplated
herein.
10. Upon the termination of this agreement, Escrow Agent will return any
earnest money to Buyer and, any deed delivered by Owner to Escrow Agent; to
Owner, and neither Owner nor Buyer shall be obligated to perform further
hereunder. If, after approval of said title, deed, title policy, title company,
and other data to be provided hereunder, and the satisfaction of all other
requirements of this agreement. Buyer defaults in its obligation to purchase
said land, Escrow Agent shall deliver to Owner the earnest money and any deed
delivered by Owner to Escrow Agent, and Owner shall retain the earnest money and
option money as liquidated damages and its sole remedy. If Buyer terminates this
agreement because Owner fails to fulfill Owner's obligations hereunder, Escrow
Agent will return to Buyer all earnest money, and Owner shall return to Buyer,
all option money paid by Buyer to Owner.
11. Notices or data required to be delivered to Owner by Buyer shall be
deemed delivered when delivered to Owner in person, or deposited in the U.S.
Mail, duly stamped and addressed to Owner at its address set forth above. All
documents and data to be delivered to Buyer shall be deemed given when delivered
to Buyer at its address set forth above.
12. If Escrow Agent shall decline to accept this escrow, this agreement
nevertheless shall remain binding, and Buyer shall not be required to make any
earnest money deposit. Waiver of any representation or warranty contained herein
to be binding on Buyer must be in writing, and signed by an authorized
<PAGE>
representative of Buyer. This agreement constitutes the entire agreement between
the parties and shall be binding upon and inure to the benefit of their heirs,
devisees, legal representatives, successors and assigns and may be amended or
altered only by written instrument duly signed by the parties. Buyer may assign
this agreement to a third party without the consent of Owner.
13. Special Provisions:
See attached addendum.
If not signed by Owner and returned to Buyer within fifteen (15) days from
the date hereof, Buyer may consider this agreement null and void.
DATED this day of 19 TAX ID or SSN: 83-0306089
-------- ------- --- ------------------
DIAMOND SHAMROCK REFINING Bishop Powers, Ltd. A CO ltd. partnership
AND MARKETING COMPANY Bishop Capital Corp., a WY corp.
------------------------------------------
(Company Name)
By: /S/ N.T. AUSTIN By: SEE ATTACHED COUNTERPROPOSAL
- -------------------------------- -----------------------------------------
Manager, Real Estate N.T. Austin Title Managing Partner (Owner)
(Buyer)
By: /S/ ROBERT THRAILKILL
-------------------------------------
Robert Thrailkill (Owner)
The foregoing escrow is accepted by, and Escrow Agent acknowledges receipt of
the earnest money deposit described above and agrees to disperse said earnest
money and any other funds and documents received by it hereunder in accordance
with the provisions of this agreement.
---------------------------------------
(Title Company Name)
By: By:
------------------------------ -----------------------------------
Title: Title:
(Escrow Agent)
<PAGE>
ADDENDUM TO PURCHASE OPTION AGREEMENT #245
SPECIAL PROVISIONS
1) Actual size and dimensions of tract shall be determined by survey; however,
the tract shall not be less than 43,000 SF.
2) No less than the proposed right-in, right-out access along tracts easterly
boundary and the full motion access along tract's westerly boundary shall
be acceptable to Buyer.
3) Buyer shall install the proposed right-in, right-out access road at its
expense with the second user reimbursing Buyer 1/2 the cost.
4) Owner shall install the proposed full motion access and subsequent service
road and remove trees along Sand Creek at its sole expense prior to
closing.
5) All other required offsite public improvements shall be installed by Owner
at its sole expense prior to closing.
6) Owner shall be obligated to receive all necessary approvals for the
development of the PBC-2 tract.
7) Owner shall furnish Buyer a "finished pad" ready to develop with all
utilities, including 3-phase electrical, to property line and pad
elevations to Buyers satisfaction prior to closing.
8) Buyer shall have the perpetual use of the top 33.3% (50 SF) of one of the
two authorized PBC-2 District signs to be installed along Powers Blvd.
R.O.W. to Buyers satisfaction. Said sign shall be 30 feet high, 150 SF
total signage each side per city code. Buyer shall participate in the cost
of said sign after entering into a sign agreement and agreeing to design of
sign with owner prior to closing.
9) The balance of the 22+ acre PBC-2 tract shall be restricted against
gasoline sales, c-stores sales and car wash.
10) Closing shall not occur until Buyer has obtained all required permits
necessary to construct the facility for Buyer's Purpose on the property.
a:\Add245.doc32 07/05/96
<PAGE>
REALTOR
=================
HIGHLAND
COMMERCIAL GROUP
=================
The printed portions of this
form, except (italicized)
(differentiated) additions,
have been approved by the
Colorado Real Estate
Commission (CBS 3-9-95)
THIS FORM HAS IMPORTANT LEGAL CONSEQUENCES AND THE PARTIES SHOULD CONSULT LEGAL
AND TAX OR OTHER COUNSEL BEFORE SIGNING.
COUNTERPROPOSAL
August 6, 1996
----------------
RE: Proposed contract to buy and sell the following described real estate
in the County of El Paso, Colorado, to wit:
Approximately 49,200 square feet, to be platted, approximately 535, west of the
northwest intersection of Palmer Park Blvd. and Powers Blvd as shown on attached
drawing.
known as No. na
- --------------------------------------------------------------------------------
Street Address City
dated undated 19
------------------------- --------------
between Bishop Powers Ltd. Colorado Limited Partnership, Seller
- --------------------------------------------------------------------------------
and Diamond Shamrock Refining and Marketing Company, Buyer.
- --------------------------------------------------------------------------------
The undersigned accepts the proposed contract, subject to the following
amendments:
See Attached Addendum A, attached hereto, and by this reference
incorporated herein.
1. Buyer and Seller hereby acknowledge that the attached Addendum A was
prepared by James E. Spittler, Jr., of Highland Commercial Group, LLC, and
has not been approved by the Colorado Real Estate Commission. Both Buyer
and Seller should consult their respective legal counsels with respect to
this Agreement.
2. Seller will deliver a special warranty deed.
3. If Buyer has not closed within 180 days after the later of final plat
approval and final development plan approval and recordation, this contract
shall terminate.
<PAGE>
All other terms and conditions shall remain the same. This counterproposal shall
expire unless accepted in writing, by Buyer and Seller, as evidenced by their
signatures below, and the offering party to this document receives notice of
such acceptance on or before August 21, 1996. If accepted, the proposed
contract, as amended hereby, shall become a contract between Seller and Buyer.
/S/ ROBERT E. THRAILKILL /S/ ROBERT E. THRAILKILL
- ----------------------------------- ---------------------------------------
Seller Bishop Powers, Ltd. Seller
Date of Seller's Signature 8-6-1996 Date of Seller's Signature 8-28-1996
--------- ----------
Seller's Address: 716 College View Dr., Riverton, WY 82561
- --------------------------------------------------------------------------------
/S/ N. T. AUSTIN
- ------------------------------------ ---------------------------------------
Buyer Diamond Shamrock Refining Buyer
and Marketing Company
Date of Buyer's Signature Aug 21, 1996 Date of Buyer's Signature 19
-------------- ----------
Buyer's Address: PO Box 696000, San Antonio, TX 78269-6000
- --------------------------------------------------------------------------------
N.B. When this counterproposal form is used, the proposed contract is not to be
signed by the party initiating this counterproposal. This counterproposal must
be securely attached to the proposed contract.
Counterproposal
ISG-McAllister Publishing (800) 336-1027 Prepared at Highland Commercial Group,
Colorado Springs, CO (719) 577-0044
<PAGE>
ADDENDUM A
Addendum to the Counterproposal to the Purchase Option Agreement, "AGREEMENT",
between Diamond Shamrock Refining and Marketing Company, as "Buyer" and Bishop
Powers Ltd, a Colorado Limited Partnership as "Seller".
ADDITIONAL PROVISIONS
a. The tract of land shall be 205', west to east, from the centerline of the
full access driveway to the centerline of the right-in/right-out driveway, by
240 feet, south to north, from the north right of way line of Palmer Park Blvd
to the centerline of the west to east access easement. The total square footage
conveyed to Diamond Shamrock shall be 49,200 sf.
b. The Seller shall be responsible for installation of the access roads and
utilities to the site.
c. The Purchase price shall be $388,850.00
d. Buyer shall supply Seller with its develofpment plan for the site so that
Seller can prepare a site development plan and plat for the City of Colorado
Springs. This Agreement is specifically contingent upon Seller getting the
necessary approvals from the City of Colorado Springs for the development plan
and plat, on terms and conditions that are acceptable to Seller at its sole
discretion.
e. Buyer and Seller to agree upon the site rough grading plan.
f. Signage agreement in the Agreement is agreed upon, subject to signage
ordinances continuing to allow two 150 sf project pole signs.
g. Previous contract conditions notwithstanding, Buyer shall have sixty (60)
days from the date of mutual execution of the "Agreement" to determine at its
sole discretion that the property is suitable for his intended use as provided
hereinbelow. Seller represents and warrants the Property is vacant, is not now,
and to Seller's knowledge has never been used in violation of any of the laws
set out in this paragraph.Purchaser acknowledges and agrees that Seller has not
made, does not make and specifically negates and disclaims any representations,
warranties, promises, covenants, agreements or guaranties of any kind or
character whatsoever, whether express or implied, oral or written, past, present
or future, of, as to, concerning or with respect to (i) the value, nature,
quality or condition of the Property, including, without limitation, the water,
soil and geology; (ii) the income to be derived from the Property; (iii) the
suitability of the Property for any and all activities and uses which Purchaser
may conduct thereon; (iv) the compliance of or by the Property or its operation
with any laws, rules, ordinances or regulations of any applicable governmental
<PAGE>
authority or body; (v) the habitability, merchantability, marketability,
profitability or fitness for a particular purpose of the Property, or (vi) any
other matter with respect to the Property; and Seller specifically disclaims any
representations regarding compliance with any environmental protection,
pollution or land use laws, rules, regulations, orders or requirements,
including solid waste, as defined by the U.S. Environmental Protection Agency
regulations at 40 C.F.R., Part 261, or the disposal or existence, in or on the
Property, of asbestos or any hazardous substance, as defined by the
Comprehensive Environmental Response Compensation and Liability Act of 1980, as
amended, and regulations promulgated thereunder. Except as set out herein,
Purchaser further acknowledges and agrees that having been given the opportunity
to inspect the Property, Purchaser is relying solely on its own investigation of
the Property and not on any information provided or to be provided by Seller or
Broker other than as is stated in this Contract. Purchaser further acknowledges
and agrees that any information provided or to be provided by or on behalf of
Seller with respect to the Property was obtained from a variety of sources and
that Seller has not made any independent investigation or verification of such
information and makes no representations as to the accuracy of such information
and makes no representations as to the accuracy or completeness of such
information. Seller is not liable or bound in any manner by any oral or written
statements, representations or information pertaining to the Property, or the
operation thereof, furnished by any real estate broker, agent, employee, servant
or other person. Purchaser further acknowledges and agrees that to the maximum
extent permitted by law, the sale of the Property as provided for herein is made
on an "AS IS" condition and basis with all faults. Purchaser and anyone claiming
by, through or under Purchaser hereby fully and irrevocably releases Seller, his
employees, representatives and agents, from any and all claims that may now or
hereafter acquire against Seller, his employees, representatives and agents for
any cost, loss, liability, damage, expense, demand, action or cause of action
arising from or related to any defects, errors, omissions or other conditions,
including environmental matters, affecting the Property, or any portion thereof
on and after the closing. It is understood and agreed that the purchase price
has been adjusted by prior negotiation to reflect that all of the Property is
sold by Seller and purchased by Purchaser subject to the foregoing. In the event
that Purchaser does not notify Seller in writing, during the above 60 day period
that the property is not acceptable, "Notification," then this contract shall be
deemed to be in full force and effect, subject to the other provisions of the
Agreement.
i. Purchaser acknowledges timely disclosure by James E. Spittler Jr., and
Highland Commercial Group that they are acting as Listing Broker in this
transaction, and as such have a fiduciary responsibility to the Seller.
thrds2
<PAGE>
FIRST AMENDMENT OF PURCHASE OPTION:AGREEMENT #245
BY AND BETWEEN BISHOP POWERS, LTD. AND
DIAMOND SHAMROCK REFINING AND MARKETING COMPANY
Bishop Powers, Ltd. ("Owner") and Diamond Shamrock Refining and Marketing
Company ("Buyer") having executed that certain Purchase Option Agreement Number
245 dated August 28, 1996 for property located west of the northwest corner of
Powers and Palmer Park Blvd., do hereby amend said Agreement as follows:
Buyer's option period shall be extended through November 13, 1996
Except as specifically amended herein, all other provisions of said Purchase
Option Agreement shall remain in full force and effect.
DATED this the 3rd day of October, 1996
DIAMOND SHAMROCK REFINING BISHOP POWERS, LTD.
AND MARKETING COMPANY
BISHOP CAPITAL CORP.
MANAGING PARTNER
By: /S/ N. T. Austin By: /S/ ROBERT THRAILKILL
- ----------------------------------- ----------------------------------
Real Estate Manager Robert Thrailkill
A:\3rd245.doc35
da 10/03/96
<PAGE>
M. L. Cloin
General Manager
Real Estate/Acquisitions
Diamond Shamrock
November 13, 1996
CERTIFIED MAIL
RETURN RECEIPT REQUESTED
Bishop Powers, Ltd.
Attn: Robert Thrailkill
716 College View Dr.
Riverton, Wyoming 82561
RE: Purchase Option Agreement No. 245 dated August 28, 1996, by Bishop Powers,
Ltd. et.al. and between Diamond Shamrock Refining and Marketing Company
covering property located west of the northwest corner of Powers and Palmer
Park Blvd., Colorado Springs, El Paso County, Colorado
Dear Sirs:
In accordance with the above referenced agreement covering the subject property,
this letter constitutes notice from Diamond Shamrock of election to purchase the
subject property.
We are immediately tendering our earnest money funds in the amount of $3,500 as
well as a copy of the Purchase Agreement to Commonwealth Land Title Insurance
Company for acceptance into
escrow.
If you have any questions, do not hesitate to contact us.
Sincerely,
/S/ M. L. CLOIN
- ------------------------------
M. L. Cloin
MLC/da
cc: K. Eaton V. M. Calderon
D. Miller T. Austin
J. McAlister K. King
B. Beadle D. Thurmond
H. Green
a:ern245.doc
Diamond Shamrock PO.Box 696000.San Antonio, Texas 78269-6000.
Phone: 210 641-6800
ATTACHMENT E
REALTOR
=================
HIGHLAND
COMMERCIAL GROUP
=================
The printed portions of this
form, except (italicized)
(differentiated) additions,
have been approved by the
Colorado Real Estate
Commission. (CBS 3-9-95)
THIS FORM HAS IMPORTANT LEGAL CONSEQUENCES AND THE PARTIES SHOULD CONSULT LEGAL
AND TAX OR OTHER COUNSEL BEFORE SIGNING.
VACANT LAND/FARM AND RANCH
CONTRACT TO BUY AND SELL REAL ESTATE
November 14, 1996
-----------------
1. PARTIES AND PROPERTY. 123 Cascade Associates, LLC
-----------------------------------------------------
buyer(s) [Buyer], (as joint tenants/tenants in common) agrees to buy, and the
undersigned seller(s) [Seller], agrees to sell, on the terms and conditions set
forth in this contract, the following described real estate in the County of El
Paso , Colorado, to wit:
A to be platted lot at the northwest corner of Powers Blvd
and Palmer Park Blvd consisting of approximately 40,000 sq
ft. The size and configuration of the parcel to be confirmed
and approved during the inspection period.
known as No. To be determined
------------------------------------------------------------------
Street Address City State Zip
together with all interest of Seller in vacated streets and alleys adjacent
thereto, all easements and other appurtenances thereto, all improvements thereon
and all attached fixtures thereon, except as herein excluded (collectively the
Property).
2. INCLUSIONS / EXCLUSIONS. The purchase price includes the following items (a)
if attached to the Property on the date of this contract: lighting, heating,
plumbing, ventilating, and air conditioning fixtures, TV antennas, water
softeners, smoke/fire/burglar alarms, security devices, inside telephone wiring
and connecting blocks/jacks, plants, mirrors, floor coverings, intercom systems,
built-in kitchen appliances, sprinkler systems and controls, built-in vacuum
systems (including accessories), and garage door openers including na remote
controls, (b) if on the Property whether attached or not on the date of this
contract: storm windows, storm doors, window and porch shades, awnings, blinds,
screens, curtain rods, drapery rods, fireplace inserts, fireplace screens,
fireplace grates, heating stoves, storage sheds, all keys and
(c) none other. Vacant land only.
- ---------------------------------
(d) Water Rights. Purchase price to include the following water rights: none
-----
<PAGE>
(e) Growing Crops. With respect to the growing crops Seller and buyer agree as
follows: na
---
The above-described included items (Inclusions) are to be conveyed to Buyer by
Seller by bill of sale, na deed or other applicable legal instrument(s) at the
closing, free end clear of all taxes, liens and encumbrances, except as provided
in Section 12. The following attached fixtures are excluded from this sale: na
3. PURCHASE PRICE AND TERMS. The purchase price shall be $ See Para 2le, payable
in U.S. dollars by Buyer as follows: (Complete the applicable terms below.)
(a) EARNEST MONEY.
$10,000.00 in the form of a promissory note, as earnest money deposit and part
payment of the purchase price, payable to and held by Lawyers Title Insurance
Co. in its trust account on behalf of both Seller and Buyer. Broker is
authorized to deliver the earnest money deposit to the closing agent, if any, at
or before closing.
The balance of $ See Para 2le (purchase price less earnest money) shall be paid
as follows:
(b) CASH AT CLOSING.
$ See Para 2le, plus closing costs, to be paid by Buyer at closing in funds
which comply with all applicable Colorado laws,which include cash, electronic
transfer funds, certified check, savings and loan teller's check, and cashier's
check, (Good Funds). Subject to the provisions of Section 4, if the existing
loan balance at the time of closing shall be different from the loan balance in
Section 3, the adjustment shall be made in Good Funds at closing or paid as
follows: na
---
<PAGE>
[The printed portions of this form, except (italicized) (differentiated)
additions, have been approved by the Colorado Real Estate Commission
(CBS3-9-95)]
7. ASSIGNABLE. This contract shall be assignable by Buyer without Seller's prior
written consent. Except as so restricted, this contract shall inure to the
benefit of and be binding upon the heirs, personal representatives, successors
and assigns of the parties. *
* Controlled by Buyer
8. EVIDENCE OF TITLE. Seller shall furnish to Buyer, at Seller's expense, a
current commitment for owner's title insurance policy in an amount equal to the
purchase price certified to a current date,on or before 20 days from mutual
execution 19----- (Title Deadline). If a title insurance commitment is
furnished, Buyer requires Seller that copies of instruments (or abstracts of
instruments) listed in the schedule of exceptions (Exceptions) in the title
insurance commitment also be furnished to Buyer at Seller's expense. This
requirement shall pertain only to instruments shown of record in the office of
the clerk and recorder of the designated county or counties. The title insurance
commitment, together with any copies or abstracts of instruments furnished
pursuant to this Section 8, constitute the title documents (Title Documents).
Buyer, or Buyer's designee, must request Seller, in writing, to furnish copies
or abstracts of instruments listed in the schedule of exceptions no later than
na calendar days after Title Deadline. If Seller furnishes a title insurance
commitment, Seller will pay the premium at closing and have the title insurance
policy delivered to Buyer as soon as practical after closing.
9. TITLE.
(a) TITLE REVIEW. Buyer shall have the right to inspect the Title
Documents. Written notice by Buyer of unmerchantability of title or of any other
unsatisfactory title condition shown by the Title Documents shall be signed by
or on behalf of Buyer and given to Seller on or before 30 calendar days after
Title Deadline, or within five (5) calendar days after receipt by Buyer of any
Title Document(s) or endorsement(s) adding new Exception(s) to the title
commitment together with a copy of the Title Document adding new Exception(s) to
title. If Seller does not receive Buyer's notice by the date(s) specified above,
Buyer accepts the condition of title as disclosed by the Title Documents as
satisfactory.
(b) MATTERS NOT SHOWN BY THE PUBLIC RECORDS. Seller shall deliver to Buyer,
on or before the Title Deadline set forth in Section 8, true copies of all
lease(s) and survey(s) in Seller's possession pertaining to the Property and
shall disclose to Buyer all easements, liens or other title matters not shown by
the public records of which Seller has actual knowledge. Buyer shall have the
right to inspect the Property to determine if any third party(s) has any right
in the Property not shown by the public records (such as an unrecorded easement,
unrecorded lease, or boundary line discrepancy). Written notice of any
unsatisfactory condition(s) disclosed by Seller or revealed by such inspection
shall be signed by or on behalf of Buyer and given to Seller on or before
December 15, 1996. If Seller does not receive Buyer's notice by said date, Buyer
accepts title subject to such rights, if any, of third parties of which Buyer
has actual knowledge.
(c) SPECIAL TAXING DISTRICTS. SPECIAL TAXING DISTRICTS MAY BE SUBJECT TO
GENERAL OBLIGATION INDEBTEDNESS THAT IS PAID BY REVENUES PRODUCED FROM ANNUAL
TAX LEVIES ON THE TAXABLE PROPERTY WITHIN SUCH DISTRICTS. PROPERTY OWNERS IN
SUCH DISTRICTS MAY BE PLACED AT RISK FOR INCREASED MILL LEVIES AND EXCESSIVE TAX
BURDENS TO SUPPORT THE SERVICING OF SUCH DEBT WHERE CIRCUMSTANCES ARISE
RESULTING IN THE INABILITY OF SUCH A DISTRICT TO DISCHARGE SUCH INDEBTEDNESS
WITHOUT SUCH AN INCREASE IN MILL LEVIES. BUYER SHOULD INVESTIGATE THE DEBT
<PAGE>
[The printed portions of this form, except (italicized) (differentiated)
additions, have been approved by the Colorado Real Estate Commission
(CBS3-9-95)]
LPI-8
FINANCING REQUIREMENTS OF THE AUTHORIZED GENERAL OBLIGATION INDEBTEDNESS OF SUCH
DISTRICTS, EXISTING MILL LEVIES OF SUCH DISTRICT SERVICING SUCH INDEBTEDNESS,
AND THE POTENTIAL FOR AN INCREASE IN SUCH MILL LEVIES.
In the event the Property is located within a special taxing district and
Buyer desires to terminate this contract as a result, if written notice is given
to Seller on or before the date set forth in subsection 9 (b), this contract
shall then terminate. If Seller does not receive Buyer's notice by the date
specified above, Buyer accepts the effect of the Property's inclusion in such
special taxing district(s) and waives the right to so terminate.
(d) RIGHT TO CURE. If Seller receives notice of unmerchantability of title
or any other unsatisfactory title condition(s) as provided in subsection (a) or
(b) above, Seller shall use reasonable effort to correct said unsatisfactory
title condition(s) prior to the date of closing. If Seller fails to correct said
unsatisfactory title condition(s) on or before the date of closing, this
contract shall then terminate; provided, however, Buyer may, by written notice
received by Seller, on or before closing, waive objection to said unsatisfactory
title condition(s).
10. INSPECTION. Seller agrees to provide Buyer on or before See paragraph
21a,19--- with a Seller's Property Disclosure form completed by Seller to the
best of Seller's current actual knowledge. Buyer or any designee shall have the
right to have inspection(s) of the physical condition of the Property and
Inclusions at Buyer's expense. If written notice of any unsatisfactory
condition, signed by or on behalf of Buyer, is not received by Seller on or
before See paragraph 21a, 19--- (Objection Deadline), the physical condition of
the Property and Inclusions shall be deemed to be satisfactory to Buyer. If such
notice is received by Seller as set forth above, and if Buyer and Seller have
not agreed, in writing, to a settlement thereof on or before see paragraph 21a ,
19 (Resolution Deadline), this contract shall terminate three calendar days
following the Resolution Deadline unless, within the three calendar days, Seller
receives written notice from Buyer waiving objection to any unsatisfactory
condition. Buyer is responsible for and shall pay for any damage which occurs to
the Property and Inclusion as a result of such inspection.
11. DATE OF CLOSING. The date of closing shall be see paragraph 2lb , 19--- , or
by mutual agreement at an earlier date. The hour and place of closing shall be
as designated by mutual consent in Colorado Springs.
<PAGE>
12. TRANSFER OF TITLE. Subject to tender or payment at closing as required
herein and compliance by Buyer with the other terms and provisions hereof,
Seller shall execute and deliver a good and sufficient special warranty deed to
Buyer, on closing, conveying the Property free and clear of all taxes except the
general taxes for the year of closing, and except none other. Title shall be
conveyed free and clear of all liens for special improvements installed as of
the date of Buyer's signature hereon, whether assessed or not; except (i)
distribution utility easements (including cable TV), (ii) those matters
reflected by the Title Documents accepted by Buyer in accordance with subsection
9(a), (iii) those rights, if any, of third parties in the Property not shown by
the public records in accordance with subsection 9(b), (iv) inclusion of the
Property within any special taxing district, and (v)subject to building and
zoning regulations.
13. PAYMENT OP ENCUMBRANCES. Any encumbrance required to be paid shall be paid
at or before closing from the proceeds of this transaction or from any other
source.
14. CLOSING COSTS, DOCUMENTS AND SERVICES. Buyer and Seller shall pay, in Good
Funds, their respective closing costs and all other items required to be paid at
closing, except as otherwise provided herein. Buyer and Seller shall sign and
complete all customary or required documents at or before closing. Fees for real
estate closing services shall not exceed S 200.00 and shall be paid at closing
by 1/2 by Buyer and 1/2 by Seller. The local transfer tax of na% of the purchase
price shall be paid at closing by na. Any sales and use tax that may accrue
because of this transaction shall be paid when due by Buyer.
15. PRORATIONS. General taxes for the year of closing, based on the taxes for
the calendar year immediately preceding closing, rents, water and sewer charges,
homeowner's association dues, and interest on continuing loan(s), if any, and
none other shall be prorated to date of closing.
16. POSSESSION. Possession of the Property shall be delivered to Buyer as
follows: upon delivery of deed
- --------------------------------------------------------------------------------
subject to the following lease(s) or tenancy(s):
none . If Seller, after closing, fails to deliver possession on the date herein
specified, Seller shall be subject to eviction and shall be additionally liable
to Buyer for payment of $200.00 per day from the date of agreed possession until
possession is delivered.
17. CONDITION OF AND DAMAGE TO PROPERTY. Except as otherwise provided in this
contract, the Property and Inclusions shall be delivered in the condition
existing as of the date of this contract, ordinary wear and tear excepted. In
the event the Property shall be damaged by fire or other casualty prior to time
of closing, in an amount of not more than ten percent of the total purchase
price, Seller shall be obligated to repair the same before the date of closing.
In the event such damage is not repaired within said tim eor if the damages
<PAGE>
exceed such sum, this contract may be terminated at the option of Buyer. Should
Buyer elect to carry out this contract despite such damage, Buyer shaH be
entitled to credit for all the insurance proceeds resulting from such damage to
the Property and Inclusions, not exceeding, however, the total purchase price.
Should any Inclusion(s) or service(s) fail or be damaged between the date of
this contract and the date of closing or the date of possession, whichever shall
be earlier, then Seller shall be liable for the repair or replacement of such
Inclusion(s) or service(s) with a unit of similar size, age and quality, or an
equivalent credit, less any insurance proceeds received by Buyer covering such
repair or replacement. The risk of loss for any damage to growing crops, by fire
or other casualty, shall be borne by the party entitled to the growing crops, if
any, as provided in Section 2 and such party shall be entitled to such insurance
proceeds or benefits for the growing crops, if any.
18. TIME OF ESSENCE/REMEDIES. Time is of the essence hereof. If any note or
check received as earnest money hereunder or any other payment due hereunder is
not paid, honored or tendered when due, or if any other obligation hereunder is
not performed or waived as herein provided, there shall be the following
remedies:
(a) IF BUYER IS IN DEFAULT:
[Check one box only.]
[ ] (1) SPECIFIC PERFORMANCE. Seller may elect to treat this contract as
canceled, in which case all payments and things of value received hereunder
shall be forfeited and retained on behalf of Seller, and Seller may recover such
damages as may be proper, or Seller may elect to treat this contract as being in
full force and effect and Seller shall have the right to specific performance or
damages, or both.
[ X ] (2) LIQUIDATED DAMAGES. All payments and things of value received
hereunder shall be forfeited by Buyer and retained on behalf of Seller and both
parties shall thereafter be released from all obligations hereunder. It is
agreed that such payments and things of value are LIQUIDATED DAMAGES and (except
as provided in subsection (c) are SELLER'S SOLE AND ONLY REMEDY for Buyer's
failure to perform the obligations of this contract. Seller expressly waives the
remedies of specific performance and additional damages.
(b) IF SELLER IS IN DEFAULT:
Buyer may elect to treat this contract as canceled, in which case all
payments and things of value received hereunder shall be returned and Buyer may
recover such damages as may be proper, or Buyer may elect to treat this contract
as being in full force and effect and Buyer shall have the right to specific
performance or damages, or both.
<PAGE>
(c) COSTS AND EXPENSES. Anything to the contrary herein notwithstanding, in
t he event of any arbitration or litigation arising out of this contract, the
arbitrator or court shall award to the prevailing party all reasonable costs and
expenses, including attorney fees.
19. EARNEST MONEY DISPUTES. Notwithstanding any termination of this contract,
Buyer and Seller agree that, in the event of any controversy regarding the
earnest money and things of value held by broker or closing agent, unless mutual
written instructions are received by the holder of the earnest money and things
of value, broker or closing agent shall not be required to take any action but
may await any proceeding, or at broker's or closing agent's option and sole
discretion, may interplead all parties and deposit any moneys or things of value
into a court of competent jurisdiction and shall recover court costs and
reasonable attorney fees.
<PAGE>
[The printed portions of this form except (italicized) (differentiated)
additions, have been approved by the Colorado Real Estate Commission (CBS3
9-95)].
21. ADDITIONAL PROVISIONS: (The language of these additional provisions has not
been approved by the Colorado Real Estate Commission).
See Addendum A attached hereto and by this reference incorporated herein.
22. RECOMMENDATION OF LEGAL COUNSEL. By signing this document, Buyer and Seller
acknowledge that the Selling Company or the Listing Company has advised that
this document has important legal consequences and has recommended the
examination of title and consultation with legal and tax or other counsel before
signing this contract.
23. TERMINATION. In the event this contract is terminated, all payments and
things of value received hereunder shall be returned and the parties shall be
relieved of all obligations hereunder, subject to Section 19.
24. SELLING COMPANY BROKER RELATIONSHIP. The selling broker, Highland Commercial
Group, LLC, and its sales persons have been engaged as transaction brokers.
Selling Company has previously disclosed in writing to the Buyer that different
relationships are available which include buyer agency, seller agency,
subagency, or transaction-broker.
25. NOTICE TO BUYER Any notice to Buyer shall be effective when received by
Buyer, or, if this box is checked [ ] when received by Selling Company.
26. NOTICE TO SELLER Any notice to Seller shall be effective when received by
Seller or Listing Company.
27. MODIFICATION OP THIS CONTRACT. No subsequent modification of any of the
terms of this contract shall be valid, binding upon the parties or enforceable
unless made in writing and signed by the parties.
28. ENTIRE AGREEMENT. This contract constitutes the entire contract between the
parties relating to the subject hereof, and any prior agreements pertaining
thereto, whether oral or written, have been merged and integrated into this
contract.
29. NOTICE OF ACCEPTANCE: COUNTERPARTS. This proposal shall expire unless
accepted in writing, by Buyer and Seller, as evidenced by their signatures
below, and the offering party receives notice of such acceptance on or before
November 19, 1996 (Acceptance Deadline). If accepted, this document shall become
a contract between Seller and Buyer. A copy of this document may be executed by
each party, separately, and when each party has
<PAGE>
executed a copy thereof, such copies taken together shall be deemed to be a full
and complete contract between the parties.
/S/ MARVIN E. KORF
- --------------------------------- --------------------------------
Buyer 123 Cascade Associates LLC Buyer
E.V. President
Date of Buyer's signature 11/15, 1996 Date of Buyer's signature , 19
----------- -------------
Buyer's Address 717 North Tejon Street, Colorado Springs, CO 80903
----------------------------------------------------------------
/S/ ROBERT E. THRAILKILL /S/ ROBERT E.THRAILKILL
- ---------------------------------- --------------------------------
Seller Bishop Powers, Ltd Seller By: Bishop Capital
Corp, Managing Ptr
Date of Seller's signature 11/19, 1996 Date of Seller's signature , 19
------------ ----------
Sellers Address 716 College View, Riverton, WY 82501
----------------------------------------------------------------
The undersigned Broker(s) acknowledges receipt of the earnest money deposit
specified in Section 3, and Selling Company confirms its Broker Relationship as
set forth in Section 24.
Selling Company
Highland Commercial Group, LLC, 2 N Cascade Ave, #800, Colo Spgs, CO 80903
--------------------------------------------------------------------------
Name and Address
By:
----------------------------------- -------------------------------19----
James E. Spittler, Jr. Date
Listing Company
Highland Commercial Group, LLC, 2 N Cascade Ave, #800, Colo Spgs,CO 80903
-------------------------------------------------------------------------
Name and Address
By:
----------------------------------- -------------------------------19---
James E. Spittler, Jr. Date
Note: Closing Instructions should be signed at the time this
contract is signed.
<PAGE>
ADDENDUM A
Addendum to the Vacant Land Contract
to Buy and Sell Real Estate, Dated
November 14, 1996 between 123 Cascade
Associates, LLC., as "Buyer" and Bishop
Powers Ltd, a Colorado Limited
Partnership as "Seller".
ADDITIONAL PROVISIONS
a. To the best of Seller's knowledge, there is not a Vacant Land Property
Disclosure form, and therefore Seller is not providing one to Buyer. Buyer shall
have sixty (60) days from the date of mutual acceptance hereof to determine at
its sole discretion that the property is suitable for its intended use with
respect to, but not limited to, soils, ingress and egress, environmental and
hazardous material issues, traffic, zoning, and any other matter it determines,
in its sole discretion to be pertinent. If Buyer gives Seller written notice of
unsatisfactory conditions prior to the expiration of the inspection period, and
said objections have not been mutually settled within 14 days of the Objection
(Resolution Deadline), then this contract shall terminate, earnest money
returned to Buyer and parties hereto released from all obligations hereunder. If
Buyer does not give Seller written objections prior to the end of the inspection
period, (objection Deadline), then this contract shall be deemed to be in full
force and effect and Buyer shall redeem the earnest money promissory note.
b. The closing shall take place within 20 days of final approval of the plat by
the City of Colorado Springs.
c. The tract of land shall be the southeast corner of the northwest corner of
Palmer Park Blvd, and Powers Blvd, and shall be approximately 45,632 sf, with
the final size to be determined via the preliminary plat, and mutually agreed
upon during the inspection period.
d. The Seller shall be responsible for delivering to Buyer a platted lot,
including required offsite public improvements and for the installation of the
interior access roads and utilities, including water, gas, sewer and electric,
to the site.
e. The Purchase price shall be not less than $350,000 or $7.67 psf times the
actual size of the platted lot, with the purchase price to be adjusted up based
upon any difference in size of the final configuration versus the 45,632 sf
outlined above.
f. Buyer shall supply Seller with its development plan for the site so that
Seller can prepare a project development plan and plats for the City of Colorado
Springs. This Agreement is specifically contingent upon Seller getting the
necessary approvals from the City of Colorado Springs for the project
development plan and plats, on terms and conditions that are acceptable to
Seller at its sole discretion. Any changes to the Buyer's site development
<PAGE>
plan requested by Seller or the City must be approved by the buyer. Buyer and
Seller must agree upon a mutually agreeable project landscape plan into which
Buyer will integrate its landscape plan.
g. Buyer and Seller to agree upon the site rough grading plan during the
inspection period.
h. Purchaser acknowledges and agrees that Seller has not made, does not make and
specifically negates and disclaims any representations, warranties, promises,
covenants, agreements or guaranties of any kind or character whatsoever, whether
express or implied, oral or written, past, present or future, of, as to,
concerning or with respect to (i) the value, nature, quality or condition of the
Property, including, without limitation, the water, soil and geology; (ii) the
income to be derived from the Property; (iii) the suitability of the Property
for any and all activities and uses which Purchaser may conduct thereon; (iv)
the compliance of or by the Property or its operation with any laws, rules,
ordinances or regulations of any applicable governmental authority or body; (v)
the habitability, merchantability, marketability, profitability or fitness for a
particular purpose of the Property, or (vi) any other matter with respect to the
Property; and Seller specifically disclaims any representations regarding
compliance with any environmental protection, pollution or land use laws, rules,
regulations, orders or requirements, including solid waste, as defined by the
U.S. Environmental Protection Agency regulations at 40 C.F.R., Part 261, or the
disposal or existence, in or on the Property, of asbestos or any hazardous
substance, as defined by the Comprehensive Environmental Response Compensation
and Liability Act of 1980, as amended, and regulations promulgated thereunder.
Purchaser further acknowledges and agrees that having been given the opportunity
to inspect the Property, Purchaser is relying solely on its own investigation of
the Property and not on any information provided or to be provided by Seller or
Broker other than as is stated in this Contract. Purchaser further acknowledges
and agrees that any information provided or to be provided by or on behalf of
Seller with respect to the Property was obtained from a variety of sources and
that Seller has not made any independent investigation or verification of such
information and makes no representations as to the accuracy or completeness of
such information. Seller is not liable or bound in any manner by any oral or
written statements, representations or information pertaining to the Property,
or the operation thereof, furnished by any real estate broker, agent, employee,
servant or other person. Purchaser further acknowledges and agrees that to the
maximum extent permitted by law, the sale of the Property as provided for herein
is made on an "AS IS" condition and basis with all faults. Purchaser and anyone
<PAGE>
claiming by, through or under Purchaser hereby fully and irrevocably releases
Seller, his employees, representatives and agents, from any and all claims that
it may now or hereafter acquire against Seller, his employees, representatives
and agents for any cost, loss, liability, damage, expense, demand, action or
cause of action arising from or related to any defects, errors, omissions or
other conditions, including environmental matters, affecting the Property, or
any portion thereof. It is understood and agreed that the purchase price has
been adjusted by prior negotiation to reflect that all of the Property is sold
by Seller and purchased by Purchaser subject to the foregoing. In the event that
Purchaser does not notify Seller in writing, during the above 60 day period that
the property is not acceptable, "Notification," then this contract shall be
deemed to be in full force and effect, subject to the other provisions of the
Agreement.
i. Purchaser acknowledges timely disclosure by James E. Spittler, Jr., and
Highland Commercial Group that they are acting as Transaction Broker in this
transaction.
j. Marvin Korf, a member of the purchasing entity hereby discloses that he is a
licensed real estate broker in the State of Colorado.
k. Seller will supply an ALTA survey of the property to Buyer.
l. Seller shall provide to Buyer a Reciprocal Easement Agreement to be used
throughout the project, a Common Area Maintenance Agreement to be used within
the project, and a reciprocal easement agreement between the subject property
and the adjacent property to the north, said Agreements to mutually agreed upon
prior to expiration of the inspection period.
m. Seller agrees to provide an irrevocable letter of credit, on a bank and in a
form that is approved by Buyer, said approval not to be unreasonably withheld,
to provide surety to Buyer that the on and off-site improvements will be made in
a timely manner. Said surety to be based upon signed engineering and
construction contracts that are approved by buyer and Seller. With this letter
of credit in place, Buyer will close per paragraph b above.
n. This contract is specifically contingent upon the necessary approvals from
the city for the plat and for the use of the site as a fast food restaurant. In
the event said approvals are not received on or before March 31, 1997, then
either party may extend this contract until April 30, 1997. If neither party
extends the contract then it shall be deemed terminated, earnest money shall be
returned to Buyer, and parties hereto released from obligations hereunder. Buyer
shall have the right to extend the contract, unilaterally, if the plat has not
<PAGE>
been approved by April 30, 1997 until May 31st, 1997. In the event the plat is
not approved by May 31, 1997 then this contract shall terminate, earnest money
shall be returned to Buyer and parties hereto released from obligations
hereunder.
o. Buyer shall be entitled to a pro rata share of signage on one of the two
proposed project signs. The parties shall agree to the signage during the
inspection period.
Exhibit F
AGREEMENT FOR THE PURCHASE AND
SALE OF COMMERCIAL REAL ESTATE
THIS AGREEMENT FOR THE PURCHASE AND SALE OF COMMERCIAL REAL ESTATE
("Agreement") is entered into as of March 3, 1997 ("Effective Date") between
Bishop Powers, Ltd., a Colorado limited partnership ("Seller") and State Bank &
Trust of Colorado Springs. a Colorado State Chartered Bank ("Purchaser"), upon
the basis of the following facts:
RECITALS
--------
Seller is the owner of the real property described in Exhibit A attached
hereto and incorporated herein by reference (the "Center"). Seller proposes to
develop the Center for commercial uses, and in furtherance thereof, proposes to
subdivide a portion of the Center ("Phase 1") substantially as shown on the
concept plan ("Concept Plan") attached hereto as Exhibit B.
Seller has entered into contracts with third parties for the sale of Lots 1
and 4 as shown on the Concept Plan. Purchaser desires to purchase from Seller
the property identified on the Concept Plan as Lot 2, for development by
Purchaser as a facility for a branch bank ("Purchaser's Intended Use").
Subject to the terms of this Agreement, Seller has agreed to sell the
"Property", as hereinafter described, to Purchaser.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which the parties hereby acknowledge, the parties hereby agree as follows:
SECTION 1. SALE OF PROPERTY. Subject to the terms and conditions provided
in this Agreement, Seller agrees to sell and Purchaser agrees to purchase all of
Seller's right, title and interest in and to the real property described in
Exhibit C and incorporated herein by reference (the "Property").
SECTION 2. PURCHASE PRICE. The purchase price to be paid by Purchaser to
Seller for the Property is $330,627.00 (the "Purchase Price"), adjusted as
provided in Section 3.2(c). The Purchase Price will be paid by Purchaser in the
following manner
2.1 Earnest Money Deposit. Purchaser has deposited the sum of $10,000.00
with Lawyers Title Insurance Company, 555 East Pikes Peak, Suite 120, Colorado
Springs, Colorado 80903 (the "Title Company") as earnest money and as a deposit
towards payment of the Purchase Price (together with any additions to such
deposit, herein the "Earnest Money Deposit"). The Earnest Money Deposit shall be
credited against the Purchase Price at Closing (as defined below). The Earnest
Money Deposit shall earn interest at the highest available rate, and any
interest accrual shall belong to the party entitled to the Earnest Money Deposit
in accordance with this Agreement.
2.2 Funds at Closing. At Closing, Purchaser shall pay to Seller the balance
of the Purchase Price, which balance shall be paid in immediately available good
funds.
SECTION 3. TITLE MATTERS.
3.1 Permitted Exceptions. Seller shall transfer and convey its right, title
and interest in the Property to Purchaser, subject only to such matters as
Purchaser may waive or consent to pursuant to Section 3.3, the CC&R's referred
to in Section 11 hereinafter, and the matters shown on the Plat referred to in
Section 10.6 (the "Permitted Exceptions").
3.2 Title Documents On or before fourteen (14) days after the Effective
Date [March 17, 1997], Seller shall deliver to Purchaser at Seller's expense the
following title evidence covering the Property (collectively, the"Title
Documents"):
<PAGE>
(a) Title Commitment. A title insurance commitment (the "Title
Commitment") issued by the Title Company showing the status of record title to
the Property, together with copies of all recorded documents referred to in the
Title Commitment The Title Commitment must commit to insure title to the
Property in Purchaser in the full amount of the Purchase Price, subject only to
the Permitted Exceptions The Title Commitment shall further commit to delete the
standard printed exceptions. Seller shall, at its expense and immediately after
Closing, cause the owner's policy of title insurance to be issued to Purchaser
pursuant to the Title Commitment.
(b) Tax Certificate. A certificate of taxes due covering the Property
prepared by the Treasurer of El Paso County, Colorado.
(c) Survey. A land survey plat (as defined in Section 38-51-102,
Colorado Revised Statutes) of the Property, prepared by a licensed Colorado
surveyor, which shall comply with ALTA 1992 Standards for an Urban Class survey
(the "Survey"). The Survey shall contain a legal description of the Property and
shall show the bearing and distances of all boundary lines of the Property, all
improvements to the Property, all easements and other title matters encumbering
or appurtenant to the Property, the location of all dedicated public
rights-of-way adjacent to the Property, any encroachments onto or off of the
Property, the Federal flood zone designation and any other matters that would be
disclosed by an accurate survey of the Property, including the square footage of
the Property. The Survey shall also contain the certification of the surveyor
sufficient for deletion of the standard survey exception from the Title
Commitment. If the square footage of the Property as determined by the Survey is
different than 40,076 square feet, then the Purchase Price shall be increased or
decreased at the rate of $8.25 per square foot for every square foot by which
the area of the Property exceeds or is less than 40,076 square feet.
3.3 Defects of Title. Purchaser shall have the right to object to any
defect of title which appears in the Title Documents and which renders title to
the Property unmerchantable or which makes the Property unsuitable for
Purchaser's intended use or development (a "defect of title") Any objection to a
defect of title must be in writing and must be received by Seller no later than
the expiration of the Inspection Period (as defined in Section 4.2). Purchaser's
failure to provide Seller with written notice of an objection to any title
matter appearing in the Title Documents within the Inspection Period shall be
deemed to be a waiver by Purchaser of any objection it might otherwise have; and
all such title matters shall become additional "Permitted Exceptions."
Notwithstanding the foregoing, if a defect of title is not revealed in the Title
Documents and is discovered by Purchaser after the close of the Inspection
Period, Purchaser shall have until five (5) days after the date of its discovery
of the defect of title or the date of Closing, whichever is earlier, to provide
Seller with notice of its objection to the defect of title, provided, however,
that Purchaser shall be deemed to have approved and accepted any matters that
are shown on the Plat as described in Section 10.6. If Seller receives timely
written notice from Purchaser of a defect of title. Seller shall have the right,
in its sole discretion, to (a) correct or cure the defect of title, (b) obtain
title insurance over the defect of title through title policy endorsement or
otherwise, or (c) notify Purchaser that Seller does not intend to cure or insure
over the defect of title. If Seller is unable or unwilling to cure or insure
over a defect of title, Purchaser shall have the right to either (a) terminate
this Agreement and its obligations hereunder, or (b) waive its objection to the
defect of title. If Purchaser elects to terminate this Agreement, the Title
Company shall return the Earnest Money Deposit to Purchaser and neither party
shall have any further obligation hereunder. If Purchaser elects to waive its
objection to the defect of title, the title matter objected to shall thereafter
be considered a "Permitted Exception." A defect of title, regardless of its
disposition under this Section, shall not result in a reduction of the Purchase
Price.
SECTION 4. INSPECTION OF PROPERTY.
4.1 Inspection Items. Seller has, prior to the Effective Date, delivered to
Purchaser a phase 1 environmental assessment, dated December 12, 1997, and
prepared by E-Quest Corporation (the "Environmental Audit").
(m:bp-state.co3/2-28-97)
2
<PAGE>
4.2 Inspection Period. Purchaser shall have from the Effective Date through
fifty (50) days after the date on which Purchaser receives the last of the Title
Documents, but in any event not later than April 22, 1997 (the "Inspection
Period"), in which to determine whether or not the Property is suitable for
Purchaser's Intended Use, which determination shall be in Purchaser's sole
discretion. At anytime during the Inspection Period, Purchaser shall have the
right to terminate this Agreement and all of its obligations hereunder by
providing written notice to Seller of its election to terminate. Upon receipt of
such a notice of termination by Seller, this Agreement shall be automatically
terminated without further action by either party. Upon termination, the Title
Company shall immediately return the Earnest Money Deposit to Purchaser.
4.3 Access to Property. During the Inspection Period, Purchaser and its
agents and representatives shall have access to the Property to conduct a
physical inspection and to conduct such testing, including core drilling and
soils reports, as Purchaser deems appropriate. Until the Closing, Purchaser
shall not materially alter the existing condition of the Property. Purchaser
hereby indemnifies and holds Seller harmless from any and all losses, costs or
expenses (including lien and personal injury claims, settlement and reasonable
attorneys' fees) which arise from such entry and work, and which may be asserted
against either Seller or the Property.
SECTION 5. REPRESENTATIONS AND WARRANTIES.
5.1 Seller's Representations and Warranties. As of the Effective Date and
as of the date of Closing, Seller hereby represents and warrants to Purchaser
that:
(a) Seller is the owner and has full right, power and authority to
sell, convey and transfer the Property to Buyer as provided in this Agreement
and to carry out Seller's obligations under this Agreement. This Agreement and
all documents executed by Seller that are to be delivered prior to or at Closing
have been duly authorized and have been (or, when executed and delivered, will
be) duly executed and delivered by Seller and are (or, when executed and
delivered will be) legal, valid and binding obligations of Seller.
(b) The execution, delivery and performance of this Agreement, and the
consummation of the transaction contemplated hereby, will not result in any
breach of or constitute any default under or result in the imposition of any
lien or encumbrance against any part of the Property under any agreement or
other instrument to which Seller is a party or by which Seller or any part of
the Property might be bound.
(c) Seller is aware of the provisions of the Deficit Reduction Act of
1984, 26 U.S.C. Section 1445, et seq., and the Internal Revenue Service
regulations implementing said Act referring to the withholding tax on the
disposition of United States real property interests by foreign persons and
foreign corporations, and Seller is not a foreign person or corporation as
defined by said Act and regulations.
(d) In the event any claim is made by any party for the payment of
sums due for the furnishing of labor, materials, equipment or fuel to Seller or
to the Property at the request of Seller prior to Closing, or in the event any
lien is filed against the Property subsequent to Closing as a result of the
furnishing of such materials, labor, equipment or fuel at the request of Seller,
Seller shall immediately cause said lien to be released of record or otherwise
satisfy Buyer, to Buyer's reasonable satisfaction, that such lien will be
immediately released.
5.2 Purchaser's Representations and Warranties. As of the
Effective Date and as of the date of Closing, Purchaser hereby
represents and warrants to Seller that:
(a) Neither the entering into of this Agreement nor the consummation
or the transaction contemplated hereby will constitute a violation or breach by
Purchaser of any contract or other instrument to which Purchaser is a party, or
to which it is subject or by which any of its assets or properties may be
affected, or of any judgment, order, writ, injunction or decree issued against
or imposed
(m:bp-state.co3/2/28/97)
3
<PAGE>
upon it, or will result in a violation of any applicable law, order, rule or
regulation of any governmental authority affecting Purchaser.
(b) To the best of Purchaser's knowledge, there is no action, suit or
proceeding pending or threatened against Purchaser which would affect
Purchaser's ability to enter into or consummate this Agreement.
SECTION 6. CONDITION OF PROPERTY; DISCLAIMER OF WARRANTIES.
6.1 As Is. Except as specifically set forth in Sections 5,10, 11 and 16 of
this Agreement:
(a) Purchaser acknowledges and agrees that Seller has not made, does
not make and specifically negates and disclaims any representations, warranties,
promises, covenants, agreements or guaranties of any kind or character
whatsoever, whether express or implied, oral or written, past, present or
future, of, as to, concerning or with respect to (i) the value, nature, quality
or condition of the Property, including, without limitation, the water, soil and
geology; (ii) the income to be derived from the Property; (iii) the suitability
of the Property for any and all activities and uses which Purchaser may conduct
thereon; or, (iv) the habitability, merchantability, marketability,
profitability or fitness for a particular purpose of the Property; and Seller
specifically disclaims any representations regarding compliance with any
environmental protection, pollution or land use laws, rules, regulations, orders
or requirements, including solid waste, as defined by the U.S. Environmental
Protection Agency regulations at 40 C.F.R., Part 261, or the disposal or
existence, in or on the Property, of asbestos or any hazardous substance, as
defined by the Comprehensive Environmental Response Compensation and Liability
Act of 1980, as amended, and regulations promulgated thereunder.
(b) Purchaser further acknowledges and agrees that having been given
the opportunity to inspect the Property, Purchaser is relying solely on its own
investigation of the Property and not on any information provided or to be
provided by Seller or Broker other than information referred to in this
Agreement.
(c) Purchaser further acknowledges and agrees that any information
provided or to be provided by or on behalf of Seller with respect to the
Property was obtained from a variety of sources and that Seller has not made any
independent investigation or verification of such information and makes no
representations as to the accuracy or completeness of such information.
(d) Seller is not liable or bound in any manner by any oral or written
statements, representations or information pertaining to the Property, or the
operation thereof, furnished by any real estate broker, agent, employee, servant
or other person.
(e) Purchaser further acknowledges and agrees that to the maximum
extent permitted by law, the sale of the Property as provided for herein is made
on an "AS IS" condition and basis with all faults.
It is understood and agreed that the Purchase Price has been adjusted by prior
negotiation to reflect that all of the Property is sold by Seller and purchased
by Purchaser subject to the foregoing.
6.2 Radon. The Colorado Department of Health and the United States
Environmental Protection Agency ("EPA") have detected elevated levels of
naturally occurring radon in structures in the Colorado Springs area. EPA has
raised concerns with respect to adverse effects on human health of long-term
exposure to high levels of radon. Purchaser may conduct radon tests to determine
the possible presence of radon in the Property and may conduct such other
investigations and consult such experts as Purchaser deems appropriate to
evaluate radon mitigation measures that can be employed in the design and
construction of improvements on the Property Purchaser shall rely solely upon
such investigations and consultations and acknowledges that Seller has made no
representation, express or
(m:bp-state.co3/2-28-97)
4
<PAGE>
implied, concerning the presence or absence of radon in the Property, the
suitability of the Property for development or the design or construction
techniques, if any, that can be employed to reduce any radon levels in
improvements built on the Property; and Purchaser, for itself and its successors
and assigns, releases Seller from any liability whatsoever with respect to the
foregoing matters.
SECTION 7. CONDITIONS PRECEDENT TO PURCHASE AND SALE.
7.1 Conditions Precedent to Purchaser's Obligations. The following matters
shall constitute absolute conditions precedent to Purchaser's obligations to
purchase the Property:
(a) Seller's representations and warranties set forth in Section 5.1
of this Agreement shall be true and correct as of the closing date.
(b) The Seller has received all approvals contemplated by Section 10
of this Agreement.
(c) The Plat referenced in Section 10.6 has been recorded.
(d) Seller has provided Purchaser with a copy of the Letter of Credit
referenced in Section 10.3.
Section 10.3.
In the event that the conditions set forth above are not met or satisfied
on or before Closing, then Purchaser may either obtain a refund of the Earnest
Money Deposit following which neither party shall thereafter have any further
liability to the other hereunder or Purchaser may waive in writing the
nonfulfillment of any portion of these conditions and purchase the Property
pursuant to the terms and provisions hereof without any reduction in the
Purchase Price.
7.2 Condition Precedent to Seller's Obligation. The following matters shall
constitute absolute conditions precedent to Seller's obligations to sell the
Property:
(a) Purchaser's representations and warranties set forth in Section
5.2 of this Agreement shall be true and correct as of the closing date.
(b) Seller has determined that the Development Budget referenced in
Section 10.1 does not reflect a total cost thatexceeds $365,000.00.
(c) The Seller has received all approvals contemplated by Section 10
of this Agreement.
(d) The Plat referenced in Section 10.6 has been recorded (and Seller
shall use its best efforts to cause the Plat to be recorded after approved and
executed by the City).
In the event the condition set forth above is not met or satisfied on
or before Closing, then Seller may terminate this Agreement by giving written
notice of termination to Purchaser in which event the Earnest Money Deposit
shall be refunded to Purchaser following which neither party shall thereafter
have any further liability to the other hereunder, or Seller may waive in
writing the nonfulfillment of the condition and sell the Property to the
Purchaser pursuant to the terms and provisions hereof.
SECTION 8. CLOSING.
8.1 Closing Date. The closing of the purchase and sale of the Property (the
"Closing") shall occur ten (10) days following notice from Seller that the Plat
referred to in Section 10.6 has been recorded, unless extended by Purchaser in
accordance with Section 8.4. The Closing shall occur at the offices of the Title
Company.
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8.2 Purchaser's Obligations at Closing. In addition to delivery of the
balance of the Purchase Price as described in Section 2.2., the net amount of
which (shown as the amount due Seller on the Settlement Statements executed at
Closing) shall be deposited into escrow pursuant to the provisions of the Escrow
Agreement described in Section 10.2 hereinafter, Purchaser shall execute and
deliver the following to Seller at Closing:
(a) Such affidavits, instruments or agreements that may be required by
the Title Company in its issuance of the policy of title insurance pursuant to
the Title Commitment.
(b) A statement which reflects the settlements and prorations provided
for in Section 9.
(c) The Escrow Agreement.
(d) Such other documents that may be necessary to carry out the
purposes of this Agreement.
8.3 Seller's Obligations at Closing. Seller shall execute and deliver the
following to Purchaser at Closing:
(a) A Special Warranty Deed conveying the Property to Purchaser,
subject only to the Permitted Exceptions.
(b) A FIRPTA Affidavit.
(c) Such affidavits, instruments or agreements that may be required by
the Title Company in its issuance of the policy of title insurance pursuant to
the Title Commitment.
(d) A statement which reflects the settlements and prorations provided
for in Section 9.
(e) The Escrow Agreement.
(f) Such other documents that may be necessary to carry out the
purposes of this Agreement.
8.4 Purchaser's Right to Extend Closing. In the event Purchaser has not
received approval of the City of Colorado Springs ("City") of Purchaser's
Development Plan (as hereinafter defined), Purchaser shall have the right to
extend the Closing for a period of 45 days by giving written notice to Seller on
or before the date then set for Closing, and depositing with the Title Company
prior to the giving of such notice to extend the Closing, the additional sum of
$25,000.00, which, together with the initial deposit of $10,000.00, shall be the
Earnest Money Deposit hereunder.
SECTION 9. SETTLEMENT AND PRORATIONS. The following items shall be prorated
or settled between Purchaser and Seller at Closing:
9.1 Taxes and Assessments. Prior to Closing, Seller shall pay the amount of
any unpaid real and personal property taxes allocable to the Property for tax
years prior to the year of Closing and any special assessments for improvements
installed prior to Closing. If Seller fails to pay the entire amount of such
taxes and assessments by Closing, Seller shall be debited on its settlement
sheets with the unpaid amount of such taxes and assessments and any resulting
penalties. Real property taxes and assessments for the Property for the year of
Closing, payable in the following calendar year, shall be apportioned between
Seller and Purchaser as of the date of Closing. Such apportionment shall be
computed on the basis of the most recent assessed valuation and mill levy
information, and shall be final.
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9.2 Miscellaneous Closing Costs. Seller shall pay the costs associated with
providing Purchaser with the title insurance policy described in Section 3 2.
All real estate recording and documentary fees payable in connection with the
purchase and sale of the Property shall be paid by Purchaser. Any fee for
closing services which is charged by the Title Company shall be shared equally
by Seller and Purchaser. Except as otherwise expressly provided in this
Agreement, Purchaser and Seller shall pay their own fees and expenses incurred
in the preparation, execution and performance of their respective obligations
under this Agreement.
SECTION 10. APPROVALS, PLANNING, PLATTING AND DEVELOPMENT.
10.1 Seller's Development Obligations - Generally. The Seller shall be
responsible for subdividing, platting and the Off Site and On Site Development
Work (as hereinafter defined) of Phase 1, including the Property. On or before
forty (40) days after the Effective Date [April 12, 1997], Seller shall furnish
Purchaser with a development budget for all on and off site development work for
Phase 1 (including both "hard" and "soft" costs), with a time line for
completion of such work. Prior to the end of the Inspection Period, Seller and
Purchaser shall have agreed upon the development budget and the time line for
completion of such work. In the event the parties are unable to agree on the
development budget and the time line on or before the end of the Inspection
Period, then upon notice by either party to the other, this Agreement shall
terminate, and the Title Company shall immediately return the Earnest Money
Deposit to Purchaser. In the event the parties are able to agree, then three
copies of the agreed upon development budget ("Development Budget"), showing a
line item breakdown of all on and off site development work (the "Development
Work"), and time line for the completion of such work ("Time Line") shall be
signed by both parties, each shall retain one copy and one copy shall be
delivered to the Title Company.
10.2 Timing of Seller's Development Obligations. Prior to Closing, Seller
shall complete and attempt to obtain the City's approval of the Concept Plan and
the Plat (as hereinafter defined) of the Phase 1 property. It is anticipated
that none of the Development Work will be completed by Closing. As a
consequence, and to assure the Purchaser that the Development Work will be
completed in a timely manner following the Closing, the parties have agreed that
at Closing, they will place the net amount of the Purchase Price payable to
Seller at Closing in an escrow, the terms of which will be substantially as set
forth in the Escrow Agreement ("Escrow Agreement") attached hereto as Exhibit D.
10.3 Off Site Development Work. For purposes of this Agreement, "Off Site
Development Work" shall mean all of the off site development work required to be
completed by the City as a condition of the City's approval of the Concept Plan
and the Plat, which the parties anticipate shall include the following:
(a) Dedication of land for the interchange of Palmer Park Boulevard
and Powers Boulevard and for the widening of Palmer Park Boulevard.
(b) Construction of the adjacent strip to the north of Palmer Park
Boulevard which widens Palmer Park Boulevard pursuant to City specifications.
(c) Construction of curb and gutter on the north side of widened
Palmer Park Boulevard.
(d) Construction of raised median on Palmer Park Boulevard and the
construction of a traffic signal at the entry road of the Center.
(e) Construction of all drainage improvements required for Phase I of
the Center.
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In accordance with the City's procedures, the parties acknowledge that the City,
as a condition of the approval of the Concept Plan and the Plat, will require
Seller agree to complete the Off Site Development Work, and to post with the
City a letter of credit ("Letter of Credit") to assure the City of the
completion of the Off Site Development Work.
10.4 On Site Development Work. For purposes of this Agreement, "On Site
Development Work" shall mean all of the on site development work required to be
completed by the City as a condition of the City's approval of the Concept Plan
and the Plat, and the following:
(a) Rough grading of the Phase I in accordance with the City approved
grading plan (the "Grading Plan").
(b) Construction of interior roadway system per Concept Plan attached
hereto as Exhibit B.
(c) Utility loop construction, stubbing all utilities to the Property
Pursuant to City Utility Department specifications.
10.5 Purchaser's Development Plan. Purchaser acknowledges that the City
will require a development plan or development plans ("Purchaser's Development
Plan") for the Property to be approved in accordance with applicable zoning laws
and City subdivision ordinances prior to the issuance of any building permit for
construction of improvements on the Property. In addition, Purchaser
acknowledges that in accordance with the provisions of the CC&R's (as
hereinafter defined) Seller will have certain approval rights, including the
right to approve development plans prior to their submission to the City. Before
submitting any Purchaser's Development Plan for the Property to the City,
Purchaser shall submit Purchaser's Development Plan to Seller for approval in
accordance with the CC&R's. Purchaser shall not permit any development plan to
become final and binding on the Property or Seller until after Closing.
Purchaser shall be solely responsible for obtaining the City's approval of
Purchaser's Development Plan, and Seller will cooperate with Purchaser's efforts
to obtain the City's approval of Purchaser's Development Plan as approved by
Seller.
10.6 Platting. Purchaser has been provided with a preliminary plat of the
Property, which Purchaser hereby acknowledges it has approved. Purchaser
acknowledges that the Property must be platted and that governmental authorities
will require a plat ("Plat") of Phase 1 (including the Property), to be approved
in accordance with applicable zoning laws and City subdivision ordinances and
recorded prior to the issuance of any building permit for construction of
improvements on the Property. Purchaser acknowledges that the Plat will have to
provide for landscaping, utility and drainage easements as required by the City.
Seller shall be responsible for obtaining the City's approval of the Plat.
10.7 Seller's Plat Responsibilities. Contingent upon Closing, Seller shall
be responsible for all improvements, fees and agreements with the City
concerning either installation of improvements or provisions for public
facilities that are required pursuant to approval and recording of the Plat
affecting the Property. Purchaser shall be responsible for all fees and charges
payable in connection with building permits or otherwise payable with respect to
the Property, except for the specific obligations of Seller identified in this
Agreement.
10.8 Utility Service. Seller shall be responsible for extending water,
natural gas, electric and sewer utility lines from their current locations to
the Property boundary, for repairing streets damaged by such extensions.
Purchaser shall be responsible for extending such utility services to the
improvements it constructs on the Property and for paying all tap, line
extension and other City imposed charges and fees in connection with the
extension of such utility services to the improvements. Purchaser acknowledges
that the City installs all electric lines and that Purchaser will be solely
responsible for making arrangements
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with the City's Department of Utilities to extend electric lines and to provide
electrical service to meet the particular needs of the improvements to be
constructed on the Property. Purchaser will also be responsible for obtaining
telephone and cable television lines and service for the Property. Purchaser
acknowledges that the Plat will have to provide for utility easements as
required by the City.
10.9 Streets. Access to the Property will be provided via public and
private streets. Seller shall be solely responsible for providing permanent
access to the Center from Palmer Park Boulevard and for construction of all
private streets shown on the Concept Plan. Purchaser shall be solely responsible
for constructing all driveways within the boundaries of the Property and all
curbs and sidewalks on or adjacent to the Property required by governmental
authorities.
10.10 Drainage. Seller shall be responsible for installing, or causing to
be installed, all drainage facilities required by the City outside of Phase 1
that relate to development on the Property. Purchaser will be solely responsible
for providing all drainage facilities required within the boundaries of the
Property in accordance with the Purchaser's Development Plan, the Plat and any
applicable drainage plans approved by the City. Purchaser acknowledges the Plat
will have to provide for drainage easements as required by the City.
10.11 Park and Drainage Fees. Seller will hold Purchaser harmless from all
requirements and obligations to the City for park fees and drainage fees with
respect to the Property that are required to be paid in conjunction with the
filing and approval of the Plat under ordinances in effect at the time of this
Agreement.
10.12 Purchaser's Approval Rights. On or before fourteen (14) days after
the Effective Date [March 17, 1997], Seller shall deliver to Purchaser at
Seller's expense the following:
(a) The Grading Plan;
(b) The proposed final Concept Plan;
(c) The proposed final Plat;
(d) Plans and Specifications for the private roads.
In addition, Seller shall submit the CC&R's to Purchaser in accordance with
Section 11.1. Purchaser shall have fourteen (14) days after it receives any of
the foregoing to approve or disapprove the same by giving written notice to
Seller, and if it disapproves (a "Disapproval"), stating specifically the
reasons therefor. In the event Purchaser does not give such notice within the
time period allowed, it shall conclusively be deemed to have given its approval.
If Seller receives timely written notice from Purchaser of a Disapproval, Seller
shall have the right, in its sole discretion, to (a) correct or cure the
Disapproval, or (b) notify Purchaser that Seller does not intend to cure the
Disapproval. If Seller is unable or unwilling to cure the Disapproval, Purchaser
shall have the right to either (a) terminate this Agreement and its obligations
hereunder, or (b) waive its Disapproval. If Purchaser elects to terminate this
Agreement, the Title Company shall return the Earnest Money Deposit to Purchaser
and neither party shall have any further obligation hereunder. If Purchaser
elects to waive its Disapproval, the matter objected to shall thereafter be
considered approved.
10.13 Cooperation. The Seller and Purchaser shall cooperate with one
another in a reasonable manner to the end that the Closing occurs as
contemplated by this Agreement. All approvals required to be obtained by either
party pursuant to this Agreement shall be sought in a reasonable manner and
acted upon diligently and expeditiously. Whenever the provisions of this
Agreement require one party to obtain
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the other party's approval, such approval shall not be unreasonably withheld or
delayed. Each party shall use its good faith efforts to satisfy all the
conditions to its performance of this Agreement.
SECTION 11. THE COVENANTS FOR THE CENTER.
11.1 Covenants. On or before twenty-one (21 ) days after the Effective Date
[March 24, 1997], Seller shall deliver to Purchaser at Seller's expense, the
covenants ("CC&R's") Seller intends to place on the Center and Phase 1,
including the Property. Purchaser acknowledges that the Property will be
conveyed subject to the CC&R's. In addition to other matters, the CC&R's shall:
(a) Contain a prohibition against the use of any property in the
Center, other than the Property, for a financial institution (an organization
that makes loans and collects deposits), including any federal or state
chartered commercial bank or saving and loan association, any commercial and
noncommercial credit union.
(b) Provide that any private roadways shall be governed by the CC&R's
and each property owner within the Center shall pay it's proportionate share of
expenses which shall be allocated among those property owners owning platted
lots within any phase of the development that has been incorporated in the
CC&R's currently being served by the roads and services.
(c) Contain provisions allowing the Seller to "phase" the development
of the property within the Center.
(d) Contain provisions allowing the Seller to approve all plans and
specifications for any improvements to be constructed on any property within the
Center, and development plan for or plat of any property within the Center.
(e) Shall permit Purchaser use of 20% of the signage space on the
southerly of two Center signs.
Purchaser shall have the right to approve the CC&R's in accordance with the
procedures set forth in Section 10.12.
11.2 Other Development. Purchaser acknowledges that Seller has made no
representations or warranties to Purchaser concerning the development of any
other property adjacent to or in the vicinity of the Property on which Purchaser
has relied.
SECTION 12. RESERVED.
SECTION 13. NAME AND LOGO. Except for directional and location
identification purposes, neither the name "The Crossing at Palmer Park Center,"
any derivatives thereof, nor the logos associated with such name may be used in
any way in connection with the Property or any promotion of it, unless Seller
has given its prior written approval to such use.
SECTION 14. CONDEMNATION. If, between the Effective Date and Closing, any
portion of the Property is taken in condemnation, Purchaser shall have the
option to terminate this Agreement and its obligations hereunder. The option to
terminate contained in this Section must be exercised by written notice to
Seller no later than ten (10) business days after Purchaser is notified by
Seller or others of the condemnation. If Purchaser exercises its option to
terminate in accordance with this Section, the Title Company shall return the
Earnest Money Deposit to Purchaser and neither party shall have any further
obligation hereunder. If Purchaser does not exercise its option to terminate as
provided in this Section,
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the Agreement shall continue in full force and effect. In such event, the
Purchase Price shall be paid by Purchaser at Closing without reduction, but
Seller shall remit to Purchaser all awards received by Seller as a result of the
condemnation.
SECTION 15. DEFAULT AND REMEDIES. In the event of default by either party
under this Agreement, Purchaser and Seller agree as follows:
15.1 Default by Purchaser. If Purchaser shall default in the performance of
its obligations hereunder, Seller's sole and only remedy shall be to terminate
this Agreement and to retain the Earnest Money Deposit as liquidated damages.
15.2 Default by Seller If Seller shall default in the performance of its
obligations hereunder, Purchaser shall have the right to either (a) terminate
this Agreement and to obtain the return of the Earnest Money Deposit, or (b)
enforce this Agreement through an action for specific performance. Purchaser
hereby waives its right to recover damages from Seller, including without
limitation any loss of profits, consequential damages, punitive damages or any
other damages or losses suffered by Purchaser in connection with this Agreement.
SECTION 16. BROKERS. Seller represents and warrants to Purchaser that,
other than Highland Commercial Group, LLC, and Price Properties, Inc., f/k/a
Paragon-Price Commercial, Inc. (collectively, "Broker"), no broker or finder has
been engaged by Seller in connection with any of the transactions contemplated
by this Agreement. Seller further represents and warrants that no person or
entity, other than Broker, now claims or will claim any commission, finder's fee
or other amounts by, through, under or as a result of any relationship with
Seller because of such transactions. Seller agrees to pay Broker a commission
equal to ten percent (10%) of the Purchase Price, which commission shall not be
earned or payable until the occurrence of the Closing and Seller's receipt of
the Purchase Price. In the event of a termination of this Agreement, Broker
shall have no right to share in the Earnest Money Deposit if retained by Seller
Purchaser represents and warrants to Seller that no broker or finder has been
engaged by Purchaser in connection with any of the transactions contemplated by
this Agreement. Purchaser further represents that no person or entity claims or
will claim any commission, finder's fee or other amounts by, through, under or
as a result of any relationship with Purchaser because of such transactions.
Each party agrees to hold the other party harmless from and against any and all
costs, expenses, claims, losses or damages, including reasonable attorneys'
fees, resulting from any breach of the representations and warranties contained
in this Section.
SECTION 17. ASSIGNMENT. Purchaser shall not have the right to assign all or
any part of its interest or rights under this Agreement without the prior
written consent of Seller, except for an assignment to an affiliate. For
purposes hereof, "affiliate" means any person or entity which controls, is
controlled by, or is under common control with, the Purchaser. A person or
entity shall be deemed to have control of another person or entity if such
person or entity directly or indirectly or acting in concert with one or more
persons and/or entities, or through one or more subsidiaries, owns, controls or
holds with power to vote more than 15 percent of the voting shares or rights of
such other entity, or controls in any manner the election or appointment of a
majority of the directors. trustees or managers of another entity, or is the
general partner in or has contributed more than 25 percent of the capital of
such other entity.
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SECTION 18. MISCELLANEOUS.
18.1 Notices. All notices required or permitted under this Agreement shall
be given by nationally recognized overnight courier, for "next day" delivery,
with all delivery costs paid, or by hand delivery, directed as follows:
If intended for Seller, to:
Bishop Powers, Ltd.
c/o Bishop Capital Corporation
716 College View Drive
Riverton, WY 82501
Attn: Robert Thrailkill
Phone: (307) 856-3800
If intended for Purchaser, to:
State Bank & Trust of Colorado Springs
111 South Tejon
Colorado Springs, CO 80903
Attn: John G. Jackson, President
with a copy in each case to:
Flynn McKenna Wright & Karsh, llc
Plaza of the Rockies, Suite 202
111 South Tejon
Colorado Springs, Co 80903
Attn: R. Tim McKenna
and to:
Berniger, Berg, Diver, Noecker & Wood-Ellis, LLC
Suite 310
90 South Cascade Avenue
Colorado Springs, CO 80903
Attn: Thomas E. Berg
Any notice delivered by overnight carrier in accordance with this paragraph
shall be deemed to have been duly given when delivered. Any notice which is hand
delivered shall be effective upon receipt by the party to whom it is addressed.
Either party, by notice given as above, may change the address to which future
notices should be sent.
18.2 Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective heirs,
executors, personal representatives, successors and permitted assigns.
18.3 Entire Agreement. This Agreement, together with the exhibits attached
hereto, constitutes the entire agreement between Seller and Purchaser, and may
not be modified in any manner except by an instrument in writing signed by both
parties.
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18.4 Headings. The section and subsection headings contained in this
Agreement are inserted only for convenient reference and do not define, limit or
proscribe the scope of this Agreement or any exhibit attached hereto.
18.5 Counterparts. This Agreement may be executed in any number of
counterparts which together shall constitute one and the same instrument.
18.6 Unenforceable Provisions. If any provision of this Agreement, or the
application thereof to any person or situation shall be held invalid or
unenforceable, the remainder of this Agreement, and the application of such
provision to persons or situations other than those to which it shall have been
held invalid or unenforceable, shall continue to be valid and enforceable to the
fullest extent permitted by law.
18.7 Time of the Essence. Time is strictly of the essence with respect to
each and every term, condition, obligation and provision of this Agreement, and
the failure to timely perform any of the terms, conditions, obligations or
provisions hereunder by either party shall constitute a breach of and a default
under this Agreement by the party so failing to perform. In calculating any
period of time provided for in this Agreement, the number of days allowed shall
refer to calendar and not business days If any day scheduled for performance of
any obligation hereunder shall occur on a weekend or holiday, the time period
allowed and day for performance shall be continued to the next business day.
18.8 Waivers. No waiver by either party of any provision hereof shall be
effective unless in writing or shall be deemed to be a waiver of any other
provision hereof or of any subsequent breach by either party of the same or any
other provision.
18.9 Attorneys' Fees and Costs. In the event of litigation between Seller
and Purchaser arising out of the enforcement of or a default under this
Agreement, the prevailing party shall be entitled to judgment for court costs
and reasonable attorneys' fees in an amount to be determined by the court.
18.10 Governing Law; Construction of Agreement. This Agreement shall be
governed by and construed in accordance with the laws of the State of Colorado.
Seller and Purchaser and their respective counsel have reviewed, revised and
approved this Agreement. Accordingly, the normal rule of construction that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of this Agreement or any amendments or exhibits hereto.
18.11 Duration of Offer. Purchaser has executed and submitted this
Agreement to Seller as an offer for acceptance by Seller to be evidenced by
Seller s execution of this Agreement. Purchaser's offer as represented by this
Agreement shall continue in effect only until March 7, 1997. If Purchaser has
not received a copy of this Agreement executed by Seller on or before that date,
Purchaser's offer and this Agreement shall immediately terminate and shall no
longer be of any force or effect.
18.12 Purchaser's Board of Director's Approval. The purchase of the
Property shall remain subject to, and contingent upon, review and approval by
State Bank's Board of Directors and outside Legal Counsel, which shall be
obtained within three (3) business days of the Effective Date [March 6, 1997].
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This Agreement for the Purchase and Sale of Commercial Real Estate has been
executed as of the date first written above.
SELLER:
Bishop Powers., Ltd.
By: Bishop Capital Corporation, its general partner
By: /s/ Robert E. Thrailkill
---------------------------
Its: President
---------------------------
PURCHASER:
State Bank & Trust of Colorado Springs
By: /s/ John G. Jackson
----------------------------
Its: President
----------------------------
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AGREEMENT OF BROKER
The undersigned, as Broker hereunder, acknowledges and agrees that Section 16 of
the foregoing Agreement correctly sets forth the understanding and agreement
between Broker and Seller relating to the payment of a commission resulting from
the sale of the Property.
BROKER:
Highland Commercial Group, LLC
By:
---------------------------------
Its:
---------------------------------
Paragon Properties, Inc., f/k/a
Paragon-Price Commercial, Inc.
By:
----------------------------------
Its:
----------------------------------
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EXHIBITS
to
Agreement for the Purchase
and Sale of Commercial Real Estate
Exhibit A Legal Description of Center
Exhibit B Concept Plan
Exhibit C Legal Description of Property
Exhibit D Escrow Agreement
(m:bp-state.co3/2-28-97)
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EXHIBIT A
to
Agreement for the Purchase and
Sale of Commercial Real Estate
Legal Description of Center
A PORTION OF THE NE1/4 SE1/4 OF SECTION 1, TOWNSHIP 14 SOUTH, RANGE 66 WEST OF
THE 6TH P.M., CITY OF COLORADO SPRINGS, COUNTY OF EL PASO, STATE OF COLORADO,
BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS: ASSUMING THE EASTERLY LINE OF THE
SE1/4 OF SAID SECTION 1 BEARS N 00 DEGREES 01'42" W, WITH THE NORTHEAST CORNER
AND THE SOUTHEAST CORNER OF SAID SE1/4 BEING 3/4 INCH ROD WITH NO CAPS
(APPROXIMATELY ONE FOOT BELOW ASPHALT); COMMENCING AT THE NORTHEAST CORNER OF
SAID SE1/4 OF SECTION 1; THENCE N 86 DEGREES 28'07" W, ALONG THE NORTHERLY LINE
OF SAID SE1/4, A DISTANCE OF 57.11 FEET TO THE WESTERLY RIGHT-OF-WAY LINE OF
POWERS BOULEVARD AS DESCRIBED IN BOOK 5256 AT PAGE 39 OF THE RECORDS OF EL PASO
COUNTY, COLORADO, POINT ALSO BEING THE TRUE POINT OF BEGINNING; THENCE ALONG
SAID WESTERLY RIGHT-OF-WAY LINE, THE FOLLOWING FOUR (4) COURSES: (1) S 02
DEGREES 18'11" W, A DISTANCE OF 297.98 FEET; (2) S 00 DEGREES 00'17" E, A
DISTANCE OF 826.60 FEET; (3) ALONG THE ARC OF A CURVE TO THE RIGHT, HAVING A
CENTRAL ANGLE OF 89 DEGREES 30'40", A RADIUS OF 100.00 FEET, A DISTANCE OF
156.23 FEET (CHORD BEARS S 44 DEGREES 45'03" W); (4) S 00 DEGREES 38'51" W, A
DISTANCE OF 43.87 FEET TO THE NORTHERLY RIGHT-OF-WAY LINE OF PALMER PARK
BOULEVARD (100' R.O.W.) AS DESCRIBED IN BOOK 2501 AT PAGE 158 AND IN BOOK 2517
AT PAGE 730 OF SAID RECORDS; THENCE ALONG SAID NORTHERLY RIGHT-OF-WAY LINE OF
PALMER PARK BOULEVARD, THE FOLLOWING TWO (2) COURSES: (1) N 88 DEGREES 24'44" W,
A DISTANCE OF 814.03 FEET; (2) N 86 DEGREES 26'21" W, A DISTANCE OF 335.45 FEET
TO THE WESTERLY LINE OF PARCEL R AS DESCRIBED IN BOOK 3267 AT PAGE 406 OF SAID
RECORDS; THENCE ALONG SAID WESTERLY LINE AND NORTHERLY LINE OF SAID PARCEL R,
THE FOLLOWING NINE (9) COURSES: (1) N 00 DEGREES 05'34' W, A DISTANCE OF 54.41
FEET; (2) N 49 DEGREES 30'30" E, A DISTANCE OF 152.93 FEET; (3) ALONG THE ARC OF
A CURVE TO THE LEFT, HAVING A CENTRAL ANGLE OF 64 DEGREES 55'00", A RADIUS OF
171.50 FEET, A DISTANCE OF 194.31 FEET (CHORD BEARS N 17 DEGREES 03'00" E); (4)
N 15 DEGREES 24'30" W, A DISTANCE OF 123.42 FEET; (5) ALONG THE ARC OF A CURVE
TO THE RIGHT, HAVING A CENTRAL ANGLE OF 83 DEGREES 18' 25", A RADIUS OF 44.00
FEET, A DISTANCE OF 63.98 FEET (CHORD BEARS N 26 DEGREES 14' 42" E);' (6) N 67
DEGREES 53' 55" E, A DISTANCE OF 197.69 FEET; (7) ALONG THE ARC OF A CURVE TO
THE LEFT, HAVING A CENTRAL ANGLE OF 26 DEGREES 48' 16", A RADIUS OF 923.00 FEET,
A DISTANCE OF 431.80 FEET (CHORD BEARS N 54 DEGREES 29' 47" E); (8) N 41 DEGREES
05' 39" E, A DISTANCE OF 548.59 FEET TO THE NORTHERLY LINE OF SAID SE1/4 OF
SECTION 1; (9) S 86 DEGREES 28' 07" E, ALONG SAID NORTHERLY LINE, A DISTANCE OF
205.11 FEET TO THE POINT OF BEGINNING, EXCEPT THOSE PORTIONS THEREOF CONVEYED TO
THE CITY OF COLORADO SPRINGS IN DEED RECORDED IN BOOK 5545 AT PAGE 89 AND IN
BOOK 5842 AT PAGE 386.
17
<PAGE>
[GRAPHIC
CONCEPT PLAN - PROPOSED COMMERCIAL CENTER
THE CROSSING AT PALMER PARK
OMITTED]
18
<PAGE>
EXHIBIT C
to
Agreement for the Purchase and
Sale of Commercial Real Estate
Legal Description of Property
Lot 2 as shown on the Concept Plan attached hereto as Exhibit A. Once
determined by the Survey, the legal description shall be attached hereto as
Exhibit C-1.
(m:bp-state.co3/2-28-97)
19
<PAGE>
EXHIBIT D
to
Agreement for the Purchase and
Sale of Commercial Real Estate
Escrow Agreement
THIS ESCROW AGREEMENT is executed this day of , 1997, by and among Bishop
Powers, Ltd., a Colorado limited partnership ("Bishop"), State Bank & Trust of
Colorado Springs ("State") and Lawyers Title Insurance Company ("Escrow Agent").
RECITALS
A. State and Bishop entered into a certain Vacant Land/Farm and Ranch
Contract to Buy and Sell Real Estate dated March , 1997 (the "Contract"),
whereby Bishop agreed to sell to State, and State agreed to buy, certain real
property located in El Paso County, Colorado, as more particularly described on
Exhibit A attached hereto (the "Property").
B. As partial consideration for State's purchase of the Property, Bishop
agreed to install certain on site improvements and off site improvements.
C. Some or all of the on site improvements listed on Exhibit B have not
been completed or paid to dale ("On Sites") and some or all of the off site
improvements listed on Exhibit C have not been completed to date ("Off Sites").
However, the parties nonetheless desire to close the transaction provided for in
the Contract.
D. To ensure that the On Sites and Off sites will be completed and paid in
a timely manner, State and Bishop have agreed to close on the date hereof and
Bishop has agreed to deposit with Escrow Agent, pursuant to the terms of this
Escrow Agreement, the net amount of the Purchase Price payable to it at closing
("Funds").
E. The Closing shall be completed today, yet the Escrow Agent shall hold
the Funds to disburse the Funds post-closing pursuant to the terms of this
Escrow Agreement.
NOW THEREFORE, in consideration for their mutual covenants herein and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Closing; The Account. The Closing shall be completed forthwith and
immediately thereafter Escrow Agent shall deposit the Funds in an account at a
federally chartered financial institution, the deposits of which are insured by
the Federal Deposit Insurance Corporation, which should be designated as
"Lawyers Title Insurance Company on behalf of Bishop Powers, Ltd." (the
"Account").
2. Disbursements to Bishop.
a. The parties acknowledge that disbursements from the Account to
Bishop shall be made with respect to the line items in Exhibit B. Thus, Bishop
will only be entitled to receive the amount set forth in Exhibit B for a given
On Site, subject to Subparagraph f. below, and any greater costs incurred for
that On Site shall be Bishop's sole responsibility;
(m:bp-state.co3/2-28-97)
20
<PAGE>
b. Prior to any disbursements being made to Bishop, Bishop shall
designate in writing a development manager, and such development manager, or any
successor development manager designated by Bishop shall submit a certificate
and demand for payment ("Certificate") to Escrow Agent at the address set forth
on the signature page of this Escrow Agreement. The Certificate shall set forth
the type of On Sites for which work has been done, the extent to which each On
Site has been completed, the amount of payment (based on Exhibit B) that is
being demanded for each On Site, the total disbursement amount being requested
and whether the Certificate is a final disbursement request;
c. If during the term of this Escrow Agreement the amount requested by
Bishop for an On Site exceeds the amount shown on Exhibit B, Escrow Agent shall
only disburse to Bishop the amount designated on Exhibit B for that On Site;
d. After confirming that payments for any particular On Site have not
exceeded the amount provided in Exhibit B, Escrow Agent shall promptly disburse
the requested amount from the Account. Each disbursement shall be in the form of
a check from Escrow Agent and shall be made payable to Bishop;
e. Bishop shall only submit disbursement Certificates to Escrow Agent
on a bimonthly basis, but shall be permitted to submit one final Certificate at
any time to handle any previously unsubmitted On Site costs. Each Certificate
shall contain all previously unsubmitted On Site costs which have been incurred
by Bishop to date;
f. If State delivers an affidavit to Escrow Agent asserting that one
or more of the Off Sites have not been completed by the date for completion set
forth in Exhibit C, then Escrow Agent shall immediately cease making On Site
disbursements to Bishop. Disbursements for On Sites shall not recommence until
Escrow Agent shall have received a Certificate from the development manager,
stating that the delinquent Off Sites have been completed and that no other Off
Sites have become delinquent in the interim; and
g. If Bishop installs all of the On Sites (rather than State) and
funds are remaining in the Account following Bishop's final Certificate amounts,
Escrow Agent shall then disburse all remaining amounts to Bishop.
3. Default by Bishop - State's Completion. If all On Sites and Off Sites
have not been completed by , 1997, State may notify Escrow Agent, and following
the giving of such notice, may itself complete the On Site improvements, and
draw on the remaining Funds held by the Escrow Agent in accordance with the
procedures set forth in Section 2 hereinabove.
4. Termination of Escrow. This Escrow shall terminate upon completion of
all the On Site and Off Site Improvements, or by written agreement of Bishop and
State.
5. Amendments. No changes or modifications shall be effected in the terms
of this Escrow Agreement except by written instrument signed by Bishop and
State. Escrow Agent shall not be obligated to honor or act upon any
communications or notices received from Bishop or State unless such
communications are in writing.
6. Governing Law. This Escrow Agreement shall be construed and interpreted
in accordance with the laws of the State of Colorado.
7. Escrow Protection. If, at any time, Escrow Agent shall be uncertain as
to any performance required of Escrow Agent hereunder, Escrow Agent shall
attempt to obtain the written understanding of Bishop and State as to such
performance. If Escrow Agent is unable to obtain such understanding, it may
(m:bp-state.co3/2-28-97)
21
<PAGE>
bring an interpleader or declaratory judgment action in the District Court of El
Paso County to resolve the questions as to which it is uncertain. Bishop and
State hereby agree for themselves to the jurisdiction of the District Court of
El Paso County, for the purposes of such an action.
8. Indemnification. State and Bishop shall defend, indemnify and hold
Escrow Agent harmless from and against all claims brought against Escrow Agent
as a consequence of its actions hereunder, provided that Escrow Agent has acted
in good faith and in compliance with the terms of this Escrow Agreement. The
indemnification includes reasonable attorneys' fees, together with all
additional costs incurred by Escrow Agent in defending against any such claim.
9. Notices. All notices required or permitted to be given or delivered
hereunder shall be in writing and be hand delivered or sent by a nationally
recognized overnight courier for "next day" delivery, with all delivery costs
paid, addressed to the party intended at its address as set forth in the Escrow
Agreement or such other address as it may designate by notice given to the other
party in the manner aforesaid. All such notices shall be deemed to have been
given and delivered when hand delivered, or when delivered by Federal Express,
UPS, Airborne or any other overnight delivery service.
IN WITNESS WHEREOF, the parties have executed this Escrow Agreement on the
date first set forth above.
BISHOP POWERS, LTD.
c/o Bishop Capital Corporation
716 College View Drive
Riverton, WY 82501
By: Bishop Capital Corporation, its General Partner
By:
------------------------------------------------
STATE BANK & TRUST OF COLORADO SPRINGS
111 South Tejon Street
Colorado Springs, CO 80903
By:
------------------------------------------------
LAWYERS TITLE INSURANCE COMPANY
555 East Pikes Peak Avenue
Colorado Springs, CO 80903
By:
------------------------------------------------
(m:bp-state.co3/2-28-97)
22
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION
LOT 2 AS SHOWN ON THE CONCEPT PLAN ATTACHED TO THE VACANT LAND/FARM AND RANCH
CONTRACT TO BUY AND SELL REAL ESTATE AND INCORPORATED HEREIN, CONTAINING 40,000
SQUARE FEET.
(m:bp-state. co3/2-28-97)
23
<PAGE>
EXHIBIT B
ON SITE IMPROVEMENTS
ITEM AMOUNT
---- ------
(m:bp-state. co3/2-28-97)
24
<PAGE>
EXHIBIT C
OFF SITE IMPROVEMENTS
ITEM COMPLETION DATE
---- ---------------
(m:bp-state.co3/2-28-97)
25
Exhibit G
OPERATING AGREEMENT
-------------------
THIS AGREEMENT is made as of this 8th day of December, 1995, by and among
METRO CAPITAL CORPORATION, a Wyoming corporation (the "Company"), KARLTON TERRY
OIL COMPANY, a Colorado corporation, KARLTON TERRY and JUBAL TERRY
(collectively, "KTOC"), and BISHOP 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 Robert
E. Thrailkill and such other persons, including John A. Alsko and Robert J.
Thrailkill, 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.
#13156B- V7-101995
1
<PAGE>
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.
#13156B-V7-101995
2
<PAGE>
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:
#13156B-V7-101995
3
<PAGE>
(i) If to the Company:
Karlton Terry, President
Metro Capital Corporation
700 East Ninth Avenue, Suite 106
Denver, Colorado 80203
(ii) If to KTOC:
Karlton Terry, President
Karlton Terry Oil Company
700 East Ninth Avenue, Suite 106
Denver, Colorado 80203
(iii) If to the Subsidiary:
Robert E. Thrailkill, President
Bishop Cable Communications Corporation
716 College View Drive
Riverton, Wyoming 82501
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.
#13156B-V7-101995
4
<PAGE>
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/ KARLTON TERRY
-----------------------------------------
Karlton Terry, President
KARLTON TERRY OIL COMPANY
By: /S/ KARLTON TERRY
-----------------------------------------
Karlton Terry, President
/S/ KARLTON TERRY
-----------------------------------------
KARLTON TERRY
/S/ JUBAL TERRY
-----------------------------------------
JUBAL TERRY
BISHOP CABLE COMMUNICATIONS CORPORATION
By: /S/ ROBERT E. THRAILKILL
-------------------------------------
Robert E. Thrailkill, President
#13156B-V7-101995
5
Exhibit H
VOTING AGREEMENT
----------------
THIS VOTING AGREEMENT is made as of this 8th day of December, 1995, by
and among METRO CAPITAL CORPORATION, a Wyoming corporation (the "Company"),
KARLTON TERRY OIL COMPANY, a Colorado corporation, KARLTON TERRY and JUBAL TERRY
(collectively, "KTOC"), and BISHOP CABLE COMMUNICATIONS CORPORATION, a Wyoming
corporation and wholly-owned subsidiary of the Company (the "Subsidiary").
Pursuant to an Asset Purchase Agreement, dated 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 of
an Operating Agreement dated as of , 1995 among the Company, KTOC and the
Subsidiary (the "Operating Agreement"). The Company and the Subsidiary recognize
that such management has extensive experience in the management of the Company's
business.
Agreement
---------
1. The parties to this agreement, intending to legally bind
themselves, their successors, executors, administrators, heirs and assigns,
agree that they will at all times during the term of this Agreement be bound by
the following terms. With respect to any maker brought before the shareholders
of the Company and/or the Subsidiary relating to or involving exclusively the
Subsidiary ( including, without limitation, the election of directors, and those
other matters listed in Section 5(a)-(g) of the Operating Agreement), the
Company and KTOC hereby appoint Robert E. Thrailkill or such person as he shall
designate (as applicable, the "Designated Attorney-In-Fact") as their attorney
and proxy to appear, attend and vote all of the shares of all classes of the
Common Stock of the Company and/or the Subsidiary with respect to such matters
in his sole and absolute discretion.
2. The Subsidiary shall 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 paragraph) suffered or incurred by any such party
by reason of or arising out of any actions or omissions by the Designated
Attorney-In-Fact, including without limitation any liability arising from a suit
by the holders of common stock of the Company based upon allegations of improper
behavior by the Designated Attorney-In-Fact or the management of the Subsidiary.
.
#13171B-V5-101995
<PAGE>
3. This Voting Agreement shall terminate five years from the date
hereof unless terminated sooner by mutual consent Of the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date and year first above written.
METRO CAPITAL CORPORATION
By: /S/ KARLTON TERRY
------------------------------------------
Karlton Terry, President
KARLTON TERRY OIL COMPANY
By: /S/ KARLTON TERRY
------------------------------------------
Karlton Terry, President
/S/ KARLTON TERRY
------------------------------------------
KARLTON TERRY
/S/ JUBAL TERRY
------------------------------------------
JUBAL TERRY
BISHOP CABLE COMMUNICATIONS CORPORATION
By: /S/ Robert E. Thrailkill
--------------------------------------
Robert E. Thrailkill, President
2
Exhibit I
LIMITED PARTNERSHIP AGREEMENT
OF
BISHOP POWERS, LTD.
<PAGE>
LIMITED PARTNERSHIP AGREEMENT
-----------------------------
BISHOP POWERS, LTD
------------------
This Limited Partnership Agreement is executed this 15th day of October,
1993, by and between Bishop Cable Communications, Inc. a Wyoming corporation
(the "General Partner") as genera] partner and the persons executing this
Agreement as Limited Partners. The General Partner and Limited Partners are
collectively referred to as the "Partners."
ARTICLE I
FORMATION OF LIMITED PARTNERSHIP;
NAME; PRINCIPAL PLACE OF BUSINESS
Section 1.1 Formation. The parties hereby form a limited partnership
pursuant to the provisions of the Colorado Uniform Limited Partnership Act of
1981 (the "Act"). The parties shall execute and cause to be recorded a
Certificate of Limited Partnership and any additional documents as may be
necessary or appropriate to form a limited partnership pursuant to the laws of
the State of Colorado. The Partnership need not deliver a copy of the
Certificate of Limited Partnership to any Partner.
Section 1.2 Name. The Partnership shall operate under the name of Bishop
Powers, Ltd.
Section 1.3 Principal Place of Business. The principal place of business of
the Partnership shall be at 716 College View Drive, Riverton, Wyoming, 82501.
The business of the Partnership may also be conducted at such other or
additional place or places as may be designated by the General Partner.
ARTICLE II
PURPOSE OF THE PARTNERSHIP
The Partnership is one of two Colorado limited partnerships which are being
formed pursuant to a certain agreement dated October 15, 1993, between Metro
Capital Corporation, a Wyoming corporation, Scott Hart, Michael Zaremba and
Powers Golf, L.L.C., a Colorado limited liability company (the "Agreement"), for
purposes of acquiring certain real property located in the city of Colorado
Springs, Colorado, consisting of approximately 90 acres located on or near
Powers Boulevard, as specifically described in Exhibit A attached hereto (the
"Powers Boulevard Property"). This Partnership is being formed to acquire and
hold title to approximately 55 acres of the Powers Boulevard Property (the
"Metro Property"). The Partnership will hold the Metro Property for investment
and development, and may sell, hypothecate, or otherwise deal with the Metro
Property, and may take such other actions as may be necessary or appropriate to
accomplish such purposes.
-1-
<PAGE>
ARTICLE III
TERMS OF THE PARTNERSHIP
The Partnership shall commence as of the date the Certificate of Limited
Partnership is filed in the office of the Colorado Secretary of State and shall
continue until such date as all of the Metro Property is sold, unless dissolved
earlier by operation of law or as provided in this Agreement. ln any event, the
Partnership shall terminate no later than December 31, 2020.
ARTICLE IV
ACCOUNTING FOR THE PARTNERSHIP
Section 4.1 Financial Statements. The General Partner shall cause financial
statements of the operations of the Partnership to be prepared and distributed
on a periodic basis as is reasonable in accordance with the character of the
operations of the Partnership to each Limited Partner. Such financial statements
need not be audited, however, upon the request of any Partner such financial
statements shall be audited.
Section 4.2 Access to Accounting Records. Any Limited Partner shall have
reasonable access to the accounting records of the Partnership during regular
business hours of the Partnership.
Section 4.3 Income Tax Information. The General Partner shall provide to
each Limited Partner information on the Partnership's taxable income or loss and
each item of income, gain, loss, deduction or credit that is relevant to
reporting Partnership income. The information shall also show each Partner's
distributive share of each item of income, gain, loss, deduction or credit. This
information shall be furnished to the Limited Partners within 75 days of the
close of the Partnership's taxable year.
ARTICLE V
CAPITAL CONTRIBUTIONS
Section 5.1 Initial Capital Contributions. The initial capital
contributions to the Partnership shall be made by the Partners in the amounts
shown on Exhibit "B" attached hereto and made a part hereof. The Partners shall
not be required to make any additional capital contributions to the Partnership
in excess of the amounts shown on Exhibit "B".
Section 5.2 Additional Capita] Contributions. Any additional capital
required may be contributed by the parties pro rata in accordance with their
respective interests in the Partnership. If any party determines not to
contribute such additional capital, the other party may at its option:
(i) cause the sale of the partnership assets and the winding up and
dissolution of the partnership;
-2-
<PAGE>
(ii) purchase the partnership interest of the non-contributing party
which interest shall be valued as hereinafter provided; or
(iii) contribute the additional capital in excess of its proportionate
share on the terms hereinafter provided.
The non-contributing party's partnership interest shall be valued for
purposes of subparagraph (ii) above by each party retaining at its own expense
an appraiser qualified to value such interest. Each of the two appraisers so
retained shall submit their appraisals and the value of the partnership interest
shall be the average of the two appraisals, i.e., one-half the sum of the two
appraisals.
A party who contributes additional capital pursuant to subparagraph (iii)
above shall receive repayment of such capital from the first funds available
therefor, prior to payment of any funds (whether as distributions, fees or
otherwise) to the other party, together with interest thereon at five (5) points
above prime rate (as established by First interstate Bank of Denver, N.A.)
Section 5.3 Loans. If the Partnership requires additional capital, the
General Partner is authorized to cause the Partnership to borrow money upon such
terms as the General Partner, in its sole discretion, may determine, and to
mortgage, pledge or hypothecate the assets of the Partnership in connection with
such borrowings.
Section 5.4 No Return of Capital Contribution. Except as otherwise
expressly provided herein, no Partner shall be entitled to a return of its
capital contribution.
ARTICLE VI
PROFITS AND LOSSES
Section 6.1 Determination. All profits or net losses of the Partnership
shall be determined in accordance with generally accepted accounting principles
consistently applied.
Section 6.2 Special Allocation of Profits and Losses. Until such time as
the general partner has received distributions of profits equal to $600,000
(being the amount advanced by Bishop to purchase and develop the Powers
Boulevard Property), plus interest thereon at the rate of 85% per annum,
compounded annually from the date of purchase of the Powers Property through
payment in full of such amount but in no event to exceed $100,000), the General
Partner shall receive 100% of the profits and losses of the Partnership.
Section 6.3 Profits. Once the General Partner has received the return of
the amount specified in Section 6.2, the annual net profits of the Partnership,
if any, shall be allocated to the Partners as follows:
(a) Eighty one percent to the General Partner; and
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(b) Nineteen percent to the Limited Partners in proportion to their
capital accounts.
Section 6.4 Losses. Once the Genera] Partner has received the return of the
amount specified in Section 6.2, the annual net losses of the Partnership, if
any, shall be allocated in the proportions set forth in Section 6.3.
ARTICLE VII
CAPITAL ACCOUNTS
An individual capital account shall be maintained for each Partner. The
capital interest of a Partner shall consist of the original contribution of
capital, if any, increased by (1) any additional contributions to capital, and
(2) such Partner's share of Partnership profits, and decreased by (l)
distributions to such Partner in reduction of Partnership capital and (2) such
Partners's share of Partnership losses.
ARTICLE VII
CASH FLOW
Section 8.1 Definition of Cash F]ow. Cash flow shall be the net cash
available to the Partnership, determined on a monthly basis after the payment of
(or reserve for the payment of) all accrued expenses of the Partnership.
Section 8.2 Distributions of Cash Flow. At least once each calendar quarter
(and subject to conditions upon distributions which may be imposed by lenders)
the cash flow of the Partnership, if any, shall be distributed to the Partners
in the proportions set forth in Sections 6.2 and/or 6.3, as applicable at the
time.
ARTICLE IX
ADMINISTRATIVE PROVISIONS
Section 9.1 Management and Tax Matters Partner. All of the business of the
Partnership, including, but not limited to decisions on all tax elections, shall
be under the exclusive management of the General Partner. The Limited Partners
shall not participate in the management of the business of the partnership. The
General Partner, or any other General Partner subsequently selected, shall be
the Tax Matters Partner for purposes of Section 6~31(a)(7) of the Code, and
shall have all authority granted by the Code to the Tax Matters Partner,
including the authority, without the consent of any other Partner to do any and
all of the following:
(a) Enter into a settlement agreement with the Internal Revenue
Service which purports to bind Partners other than the Tax Matters Partner;
(b) File a petition as contemplated by Section 6226(a) or 6228 of the
Code;
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(c) Intervene in any action as contemplated in Section 6226(b)(5) of
the Code;
(d) File any request contemplated in Section 6227(b) of the Code; and
(e) Enter into an agreement extending the period of limitations as
contemplated in Section 6229(1)(b) of the Code.
Section 9.2 Time Devoted By General Partner. The parties understand that
the General Partner and its management have other business activities which over
the year take the major part of the respective total time devoted to business
matters. Accordingly, the General Partner is required to devote to the business
of the Partnership only the time and attention as it in its sole discretion
shall deem appropriate.
Section 9.3 Limitation on Liability of Genera] Partner Indemnification.
(a) The General Partner shall have no liability, responsibility or
accountability in damages or otherwise to any other partner or the
Partnership for, and the Partnership agrees to indemnify, pay, protect and
hold harmless the General Partner (on the demand of and to the satisfaction
of the General Partner) from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
proceedings, costs, expenses and disbursements of any kind or nature
whatsoever (including without limitation all costs and expenses of defense,
appeal and settlement of any and all suits, actions, or proceedings
instituted against such General Partner or the Partnership and all costs of
investigation in connection therewith) which may be imposed on, incurred by
or asserted against such General Partner or the Partnership in any way
relating to or arising out of, or alleged to relate to or arise out of, any
action or inaction on the part of the Partnership or on the part of such
General Partner; provided the General Partner shall be liable, responsible
and accountable, and the Partnership shall not be liable to the General
Partner, for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, proceedings, costs, expenses or
disbursements resulting from the General Partner's own negligence,
misconduct or other breach of fiduciary duty to the Partnership or any
Partner. If any action, suit or proceeding shall be pending or threatened
against the Partnership or the General Partner relating to or arising, or
alleged to relate to arise, out of any such action or non-action, the
General Partner shall have the right to employ, at the expense of the
Partnership, separate counsel of the General Partner's choice in such
action, to represent the General Partner in such suit or proceeding. The
satisfaction of the obligations of the Partnership under this Section shall
be from and limited to the assets of the Partnership and no Partner shall
have any personal liability on account thereof. The General Partner shall
have the right to bill the Partnership for, or otherwise request the
Partnership to pay, at any time and from time to time after the General
Partner has become obligated to make payment therefor, any and all amounts
for which the General Partner believes in good faith that such General
Partner is entitled to indemnification under this Section. The Partnership
shall pay any and all such bills and honor any and all such requests for
payment within 60 days after such bill or request is received by the
General Partner. If a final determination is made that the Partnership is
not so obligated in respect of any amount paid by it to the General
Partner, the General Partner shall refund such amount within 180 days of
such final determination.
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(b) The Partnership shall indemnify, to the extent of the Partnership
assets, each Limited Partner against any claims of liability asserted
against a Limited Partner solely because it is a Limited Partner in the
Partnership.
Section 9.4 Limited Liability of Limited Partners. No Limited Partner shall
be liable for the debts, liabilities, contracts or any other obligations of the
Partnership. Except as otherwise provided by applicable state law, a Limited
Partner shall be liable only to make its capital contribution and shall not be
required to lend any funds to the Partnership or, after the original capital
contribution shall have been paid, to make any further contributions in excess
of such original capital contribution to the Partnership. No General Partner
shall have any personal liability for the repayment of the capital contribution
of any Limited Partner. Except as otherwise provided in this Agreement, a
Limited Partner shall not take part in, or interfere in any manner with, the
conduct or control of the business of the Partnership and shall have no right or
authority to act for or bind the Partnership.
Section 9.5 Power of Attorney. Each Partner hereby irrevocably designates
and appoints the General Partner and any successor, with full power of
substitution, the partner's true and lawful attorney-in-fact and agent with full
power and authority in its name, place and stead to make, execute and
acknowledge, deliver, file and record in appropriate public offices:
(a) Any Amended Certificate of Limited Partnership pursuant to the
Act, any instrument to amend such Certificate of Limited Partnership
pursuant to the Act or any successor thereto, and any other document or
instrument deemed by any of them to be necessary or appropriate, or which
is required to establish or maintain the Partnership as a limited
partnership under the laws of the State of Colorado;
(b) All other instruments and other documents as may be required by
law or appropriate to the conduct of the Partnership's business in the
exercise by the General Partner of its authority under this Agreement;
(c) Any documents or instruments which a General Partner may deem
appropriate to: (i) evidence the dissolution or accomplish the termination
of the Partnership in accordance with this Agreement, including without
limitation, deeds or instruments of conveyance; and (ii) any instrument to
revoke the Certificate of Limited Partnership;
(d) Any amendment to this Agreement of Limited Partnership.
It is expressly agreed by each of the Partners that the foregoing power of
attorney is and shall be deemed to be coupled with an interest and shall survive
the death of a Partner or the assignment of his Partnership interest. Each
Limited Partner shall execute such instruments as the General Partner may deem
appropriate to give evidence of the granting of the foregoing power of attorney,
whether by executing a separate counterpart thereof or otherwise.
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ARTICLE X
DEATH OR WITHDRAWAL OF A PARTNER
Section 10.1 Withdrawal of a General Partner. If the General Partner
withdraws, becomes bankrupt or is dissolved, the Partnership shall dissolve
unless there is another General Partner of this Partnership at that time and the
business of the Partnership is continued by that remaining General Partner. If
no General Partner remains, the Partnership shall thereafter conduct only
activities necessary to wind up its affairs unless, within ninety (90) days
after one of the listed events, all the remaining Partners elect in writing to
continue the Partnership. If an election to continue the Partnership is made by
all the remaining Partners, then:
(a) If there is no remaining General Partner, a successor General
Partner shall be selected.
(b) The Partnership shall continue until the end of the term for which
it is formed, or until the subsequent death, withdrawal, incapacity or
bankruptcy of the General Partner, in which event all remaining Partners
shall again elect whether they wish to continue the Partnership operations.
(c) The incapacitated, withdrawn, or bankrupt General Partner or the
successor in interest of the deceased or dissolved General Partner shall
become a Limited Partner with the same share of profits or losses of the
Partnership as before the event and shall have all the rights of a Limited
Partner.
(d) All necessary steps shall be taken to amend the Certificate of
Limited Partnership.
For purposes of this Section, an individual General Partner (if there be
one) shall be deemed to be incapacitated if he or she is disabled and unable to
take an active part in the management of the Partnership business for a
continuous period of at least six (6) months.
Section 10.2 Death of a Limited Partner. The death of a Limited Partner
shall not dissolve the Partnership. If a Limited Partner dies, the personal
representative or other successor in interest of the deceased Limited Partner
shall have all the rights and privileges of a Limited Partner.
ARTICLE XI
TRANSFER OF A PARTNERSHIP INTEREST
Section 11.1 Transfer of Limited Partner's Interest. Except as provided
elsewhere in this Agreement, no assignee of the whole or any portion of a
Limited Partner's interest in the Partnership who is not already a Partner in
the Partnership shall have the right to become a substituted Limited Partner in
place of the assignor unless:
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(a) The assignor shall designate such intention in the instrument of
assignment;
(b) The written consent of the General Partner and each Limited
Partner, in each of its sole discretion, to such substitution shall be
obtained, which consent may be withheld for any reason;
(c) The instrument of assignment shall be in a form and substance
satisfactory to the General Partner;
(d) The assignor and assignee named therein shall execute and
acknowledge such other instrument or instruments as the General Partner may
deem necessary or desirable to effectuate such admission, including but not
limited to an appropriate power of attorney;
(e) The assignee shall accept, adopt and approve in writing all of the
terms and provisions of this Agreement as the same may have been amended;
(f) Such assignee shall pay or, at the election of the General
Partner, obligate himself to pay all reasonable expenses connected with
such admission; and
(g) By such transfer, the assignor does not violate the registration
provisions of the Securities Act of 1933, as amended, or the qualification
provisions of the Colorado Securities Act or other applicable state
securities laws.
Section 11.2 Further Restrictions on Transfers. No Partner shall make any
transfer or assignment of all or any part of its interest in this Partnership if
said transfer or assignment would, when considered with all other transfers
during the same applicable twelve-month period, cause a termination of this
Partnership for Federal or applicable state income tax purposes.
Section 11.3 Additional Restrictions. THE LIMITED PARTNERSHIP INTEREST
REPRESENTED BY THIS AGREEMENT HAS NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED
UNDER ANY STATE SECURITIES LAW. SUCH INTEREST MAY NOT BE OFFERED FOR SALE, SOLD,
DELIVERED AFTER SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED TO ANY PERSON IN THE
ABSENCE OF AN OPINION OF COUNSEL SATISFACTORY TO THE GENERAL PARTNER THAT SUCH
REGISTRATION OR QUALIFICATION IS NOT REQUIRED.
Section 11.4 Notice of Transfer to Internal Revenue Service. Whenever a
transfer of a Partner's interest has been effected in compliance with this
Article XI, the General Partner shall promptly report such transfer to the
internal Revenue Service if at the time of the transfer the Partnership
possessed " unrealized receivables" or "substantially appreciated inventory
items, " as those terms are used in the Code. Such notification shall include
the names of the transferror and the transferee, together with such additional
information as may be required by law. Each Partner agrees to promptly advise
the Partnership of any proposed transfers of interests in the Partnership, and
to provide such assistance to the General Partner as may be necessary to enable
it to give the notice required hereunder.
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ARTICLE XII
DISSOLUTION AND TERMINATION OF THE PARTNERSHIP
Section 12.1 Right to Dissolve the Partnership. Except as provided in
Section 10. l, no Partner shall have the right to cause dissolution of the
Partnership before the expiration of the term for which it is formed.
Section 12.2 Winding, Up the Partnership. In the event of a sale or
disposition of substantially all of the assets of the Partnership, or a
withdrawal of the sole remaining General Partner and the remaining partners do
not elect to continue the Partnership pursuant to Article X, the Partnership
shall immediately commence to wind up its affairs. The Partners shall continue
to share profits or losses during liquidation in the same proportion as before
dissolution. Nothing herein shall prohibit any partner from exercising the right
of redemption in any foreclosure action on partnership assets, provided that
such partner complies with the provisions of this Article XII. The proceeds from
liquidation of the Partnership assets shall be applied as follows:
(a) Payment to creditors of the Partnership, including Partners, in
the order of priority provided by law.
(b) Pro rata payment to the Partners of the credit balances in their
respective capital accounts.
(c) The balance, if any, shall be distributed to all Partners in the
proportions set forth in Sections 6.2 and/or 6.3, as applicable at the
time.
(d) Such distributions may be made in kind and, if so, shall be valued
at the fair market value thereof.
Section 12.3 Gains or Losses in Process of Liquidation. Any gain or loss on
disposition of Partnership properties in the process of liquidation shall be
credited or charged to the Partners in the proportions set forth in Sections 6.2
and/or 6.3. as applicable at the time. Any property distributed in kind in the
liquidation shall be valued and treated as though the property were sold and the
cash proceeds were distributed. The difference between the value of property
distributed in kind and its book value shall be treated as a gain or loss on
sale of the property and shall be credited or charged to the Partners in the
proportions of their interest in profits as specified in Section 6.2 and/or 6.3,
as applicable at the time.
Section 12.4 Waiver of Right to Decree of Dissolution. The parties hereby
agree that irreparable damage would be done to the goodwill and reputation of
the Partnership if any Partner should bring an action in court to dissolve the
Partnership. Care has been taken in this Agreement to provide a fair and just
payment in liquidation of the interest of all Partners.
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Accordingly, each party hereby waives and renounces his right to such a court
decree of dissolution or to seek the appointment by the court of a liquidator
for the Partnership.
ARTICLE III
AMENDMENTS
This Partnership Agreement may be amended by the General Partner in order
to clarify any ambiguity or in any other manner which will not effect a material
change in the rights of any Partner. This Partnership Agreement may be amended
in any other particular by a written agreement executed by the General Partner
and a majority in interest of the Limited Partners.
ARTICLE XIV
DISPUTES
Any disputes hereunder shall be submitted by the parties to binding
arbitration conducted pursuant to the rules of the American Arbitration
Association.
IN WITNESS WHEREOF the parties hereto have executed this Agreement of
Limited Partnership the day and year first above written.
GENERAL PARTNER:
BISHOP CABLE COMMUNICATIONS, INC.
By: /S/ ROBERT E. THRAILKILL
-------------------------------------------
..........................., President
LIMITED PARTNERS:
POWERS GOLF
By: /S/ MIKE ZAREMBA
-------------------------------------------
Name: MIKE ZAREMBA
Title: Co-Manager
By: /S/ SCOTT A. HART
-------------------------------------------
Name: Scott A. Hart
Title: Co-Manager
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EXHIBIT A
MAP OF POWERS BOULEVARD PROPERTY
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EXHIBIT B
LIMITED PARTNERS
Name Address Contribution
---- ------- ------------
Undivided interest in the
Purchase Agreement for the
Powers Boulevard Property.
GENERAL PARTNERS
----------------
Name Address Contribution
---- ------- ------------
Bishop Cable 716 College View Drive Cash of $250,000.
Communications, Inc. Riverton, WY 82501
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Exhibit J
LIMITED PARTNERSHIP AGREEMENT
OF
Z-H, LTD.
<PAGE>
ARTICLE I
FORMATION OF LIMITED PARTNERSHIP;
NAME; PRINCIPAL PLACE OF BUSINESS ................................... 1
Section 1.1 Formation ....................................... 1
Section 1.2 Name ............................................ 1
Section 1.3 Principal Place of Business ..................... 1
ARTICLE II
PURPOSE OF THE PARTNERSHIP .......................................... 1
ARTICLE III
TERMS OF THE PARTNERSHIP ............................................ 2
ARTICLE IV
ACCOUNTING FOR THE PARTNERSHIP ...................................... 2
Section 4.1 Annual Statements ................................ 2
Section 4.2 Access to Accounting Records ..................... 2
Section 4.3 Income Tax Information ........................... 2
ARTICLE V
CAPITAL CONTRIBUTIONS ............................................... 2
Section 5.1 Initial Capital Contributions .................... 2
Section 5.2 Additional Capital Contribution .................. 3
Section 5.3 Loans ............................................ 3
Section 5.4 No Return of Capital Contribution ................ 3
ARTICLE VI
PROFITS AND LOSSES .................................................. 3
Section 6.1 Determination .................................... 3
Section 6.2 Profits .......................................... 3
Section 6.3 Losses ........................................... 4
ARTICLE VII
CAPITAL ACCOUNTS ..................................................... 4
ARTICLE VIII
CASH FLOW ............................................................ 4
Section 8.1 Definition of Cash Flow ........................... 4
Section 8.2 Distributions of Cash Flow ........................ 4
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ARTICLE 1X
ADMISTRATIVE PROVISIONS ............................................. 4
Section 9.1 Management and Tax Matters Partner ............... 4
Section 9.2 Time Devoted By General Partner ................. 5
Section 9.3 Compensation of General Partner .................. 5
Section 9.4 Limitation on Liability of General Partner:
Indemnification .................................. 5
Section 9.5 Limited Liability of Limited Partners ............ 6
Section 9.6 Power of Attorney ................................ 6
ARTICLE X
DEATH OR WITHDRAWAL OF A PARTNER .................................... 7
Section 10.1 Withdrawal of a General Partner .................. 7
Section 10.2 Death of a Limited Partner ....................... 8
ARTICLE XI
TRANSFER OF A PARTNERSHIP INTEREST .................................. 8
Section 11.1 Transfer of Limited Partner's Interest ........... 8
Section 11.2 Further Restrictions on Transfers ................ 8
Section 11.3 Additional Restrictions .......................... 9
Section 11.4 Notice of Transfer to Internal Revenue Service ... 9
ARTICLE XII
DISSOLUTION AND TERMINATION OF THE PARINERSHIP ....................... 9
Section 12.1 Right to Dissolve the Partnership ................. 9
Section 12.2 Winding Up the Partnership ........................ 9
Section 12.3 Sale of Partnership Assets -
Right of First Refusal ............................ 9
Section 12.3 Gains or Losses in Process of Liquidation ......... 10
Section 12.4 Waiver of Right to Decree of Dissolution .......... 1O
ARTICLE XIII
AMENDMENTS ........................................................... 10
ARTICLE XIV
DISPUTES ............................................................. 10
EXHIBIT A
MAP OF POWERS BOULEVARD PROPERTY ..................................... 12
EXHIBIT B
LIMITED PARTNERS ..................................................... 13
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LIMITED PARTNERSHIP AGREEMENT
-----------------------------
Z-H. LTD.
---------
This Limited Partnership Agreement is executed this 15th day of October,
1993, by and between Z-H, Inc. a Colorado corporation (the "General Partner") as
general partner and the persons executing this Agreement as Limited Partners.
The General Partner and Limited Partners are collectively referred to as the
"Partners."
ARTICLE I
FORMATION OF LIMITED PARTNERSHIP;
NAME; PRINCIPAL PLACE OF BUSINESS
Section 1.1 Formation. The parties hereby form a limited partnership
pursuant to the provisions of the Colorado Uniform Limited Partnership Act of
1981 (the "Act"). The parties shall execute and cause to be recorded a
Certificate of Limited Partnership and any additional documents as may be
necessary or appropriate to form a limited partnership pursuant to the laws of
the State of Colorado. The Partnership need not deliver a copy of the
Certificate of Limited Partnership to any Partner.
Section 1.2 Name. The Partnership shall operate under the name of Z-H, Ltd.
Section 1.3 Principal Place of Business. The principal place of business of
the Partnership shall be at....................... The business of the
Partnership may also be conducted at such other or additional place or places as
may be designated by the General Partner.
ARTICLE II
PURPOSE OF THE PARTNERSHIP
The Partnership is one of two Colorado limited partnerships which are being
formed pursuant to a certain agreement dated October 15, 1993, between Metro
Capital Corporation, a Wyoming corporation, Scott Hart, Michael Zaremba and
Powers Golf, L.L.C., a Colorado limited liability company (the "Agreement"), for
purposes of acquiring certain real property located in the city of Colorado
Springs, Colorado, consisting of approximately 90 acres located on or near
Powers Boulevard, as specifically described in Exhibit A attached hereto (the
"Powers Boulevard Property"). This Partnership is being formed to acquire and
hold title to approximately 35 acres of the Powers Boulevard Property (the "Z-H
Property") The Partnership will hold the Z-H Property for development~ as a golf
driving range, miniature golf and batting range facility, (the "Facility") as
described in and in accordance with the Plan of Development
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set forth in Schedule 1 hereto, and may sell, hypothecate, or otherwise deal
with the Z-H Property,, and may take such other actions as may be necessary or
appropriate to accomplish such purposes subject to the terms and conditions
hereof.
In the event the Facility is not completed within two years after the date
upon which the Partnership acquires the Z-H Property, and the Limited Partner
has contributed to the Partnership the sum of $250,000 as provided in Article V
and Exhibit B hereof, then there shall be a Special Allocation of $250,000 paid
tO the Limited Partner from the first funds available therefor, prior to payment
of any funds to the General Partners (by distribution, fees or otherwise) and
the Partners shall retain their respective interests as set forth herein.
ARTICLE III
TERMS OF THE PARTNERSHIP
The Partnership shall commence as of the date the Certificate of Limited
Partnership is filed in the office of the Colorado Secretary of State and shall
continue until such date as all of the Metro Property is sold, unless dissolved
earlier by operation of law or as provided in this Agreement. In any event, the
Partnership shall terminate no later than December 31, 2020.
ARTICLE IV
ACCOUNTING FOR THE PARTNERSHIP
Section 4.1 Financial Statements. The General Partner shall cause monthly
financial statements of the operations of the Partnership to be prepared and
distributed to each Limited Partner. Such financial statements need not be
audited, however, upon the request of any Partner such financial statements
shall be audited.
Section 4.2 Access to Accounting Records. Any Limited Partner shall have
reasonable access to the accounting records of the Partnership during regular
business hours of the Partnership.
Section 4.3 Income Tax Information. The General Partner shall provide to
each Limited Partner information on the Partnership's taxable income or loss and
each item of income, gain, loss, deduction or credit that is relevant to
reporting Partnership income. The information shall also show each Partner's
distributive share of each item of income, gain, loss, deduction or credit. This
information shall be furnished to the Limited Partners within 75 days of the
close of the Partnership's taxable year.
ARTICLE V
CAPITAL CONTRIBUTIONS
Section 5.1 Initial Capital Contributions. The initial capital
contributions to the Partnership shall be made by the Partners in the amounts
shown on Exhibit "B" attached hereto and made a part hereof. The Partners shall
not be required to make any additional capital contributions to the Partnership
in excess of the amounts shown on Exhibit "B".
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Section 5.2 Additional Capital Contributions. Any additional capital
required may be contributed by the parties pro rata in accordance with their
respective interests in the Z-H Partnership. If any party determines not to
contribute such additional capital, the other party may at its option:
(i) cause the sale of the partnership assets and the winding up and
dissolution of the partnership;
(ii) purchase the partnership interest of the non-contributing party
which interest shall be valued as hereinafter provided; or
(iii) contribute the additional capital in excess of itS proportionate
share on the terms hereinafter provided.
The non-contributing party's partnership interest shall be valued for
purposes of subparagraph (ii) above by each party retaining at its own expense
an appraiser qualified to value such interest. Each of the two appraisers so
retained shall submit their appraisals and the value of the partnership interest
shall be the average of the two appraisals, i.e., one-half the sum of the two
appraisals.
A party who contributes additional capital pursuant to subparagraph (iii)
above shall receive repayment of such capital from the first funds available
therefor, prior to payment of any funds (whether as distributions, fees or
otherwise) to the other party, together with interest thereon at five (5) points
above prime rate (as established by First interstate Bank of Denver, N.A.)
Section 5.3 Loans. The General Partner is required tO obtain $800.000 of
debt financing on behalf of the partnership and to provide all security required
therefor. The General Partner is authorized to mortgage, pledge or hypothecate
the assets of the Partnership in connection with such borrowings. The General
Partner shall not incur additional debt without the prior written consent of the
Limited Partner.
Section 5.4 No Return of Capital Contribution. Except as otherwise
expressly provided herein, no Partner shall be entitled to a return of its
capital contribution.
ARTICLE VI
PROFITS AND LOSSES
Section 6.1 Determination. All profits or net losses of the Partnership
shall be determined in accordance with generally accepted accounting principles
consistently applied.
Section 6.2 Profits. Subject tO the Special Allocation set forth in Article
II hereof, the annual (?) net profits of the Partnership, if any, shall be
allocated to the Partners as follows:
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(a) Eighty one percent to the General Partner; and
(b) Nineteen percent to the Limited Partners in proportion to their
capital accounts.
Section 6.3 Losses Subject to the Special Allocation set forth in Article
II hereof, the annual net losses of the Partnership, if any, shall be allocated
in the proportions set forth in Section 6.2.
ARTICLE VII
CAPITAL ACCOUNTS
An individual capital account shall be maintained for each Partner. The
capital interest of a Partner shall consist of the original contribution of
capital, if any, increased by (1) any additional contributions to capital, and
(2) such Partner's share of Partnership profits, and decreased by (1)
distributions to such Partner in reduction of Partnership capital and (2) such
Partners's share of Partnership losses.
ARTICLE VIII
CASH FLOW
Section 8.1 Definition of Cash Flow. Cash flow shall be the net cash
available to the Partnership, determined on a monthly basis after the payment of
(or reserve for the payment of) all accrued expenses of the Partnership.
Section 8.2 Distributions of Cash Flow. At least once each calendar quarter
(and subject to conditions upon distributions which may be imposed by lenders)
the cash flow of the Partnership, if any, shall be distributed to the Partners
in the proportions set forth in Sections 6.2 and/or 6.3, as applicable at the
time.
ARTICLE IX
ADMINISTRATIVE PROVISIONS
Section 9.1 Management and Tax Matters Partner. All of the business of the
Partnership, including, but not limited to decisions on all tax elections, shall
be under the exclusive management of the General Partner. The development of the
Facility shall be substantially in accordance with the Plan of Development set
forth in Schedule 1 hereto. The operations of the Partnership will be conducted
substantially in accordance with the Operating Budget set forth in Schedule 2
hereto. The Limited Partners shall not participate in the management of the
business of the partnership. The General Partner, or any other General Partner
subsequently selected, shall be the Tax Matters Partner for purposes of Section
6231(a)(7) of the Code, and shall have all authority granted by the Code to the
Tax Matters Partner, including the authority, without the consent of any other
Partner to do any and all of the following:
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(a) Enter into a settlement agreement with the Internal Revenue
Service which purports to bind Partners other than the Tax Matters Partner;
(b) File a petition as contemplated by Section 6226(a) or 6228 of the
Code;
(c) Intervene in any action as contemplated in Section 6226(b)(5) of
the Code;
(d) File any request contemplated in Section 6227(b) of the Code; and
(e) Enter into an agreement extending the period of limitations as
contemplated in Section 6229(1)(b) of the Code.
Section 9.2 Time Devoted By Genera] Partner. The parties understand that
the General Partner and its management have other business activities which take
a portion of the respective total time devoted to business matters. The General
Partner is required to devote to the business of the Partnership the time and
attention to develop and operate the Facility as set forth in Schedules 1 and 2
hereto.
Section 9.3 Compensation of General Partner. For management of the
development and operation of the Facility, the General Partner shall be paid six
percent (6%) of the gross revenues, if any, from the operation of the Facility
to commence upon the generation of such revenues. There shall be no accrued
compensation. Further, such compensation is with respect to operation of the
Facility and the General Partners shall not receive any compensation in
connection with any other aspect of the business of the Partnership including
but not limited to the sale or other disposition of Partnership property or
other assets.
Section 9.4 Limitation on Liability of General Partner Indemnification.
(a) The General Partner shall have no liability, responsibility or
accountability in damages or otherwise to any other partner or the
Partnership for, and the Partnership agrees to indemnify, pay, protect and
hold harmless the General Partner (on the demand of and to the satisfaction
of the General Partner) from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, SuitS,
proceedings, costs, expenses and disbursements of any kind or nature
whatsoever (including without limitation all costs and expenses of defense,
appeal and settlement of any and all suitS, actions, or proceedings
instituted against such General Partner or the Partnership and all costs of
investigation in connection therewith) which may be imposed on, incurred by
or asserted against such General Partner or the Partnership in any way
relating to or arising out of, or alleged to relate to or arise out of, any
action or inaction on the part of the Partnership or on the part of such
General Partner; provided the General Partner shall be liable, responsible
and accountable, and the Partnership shall not be liable to the General
Partner, for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, proceedings, costs, expenses or
disbursements resulting from the General Partner's own negligence,
misconduct or other breach of fiduciary duty to the Partnership or any
Partner. If any action, suit or proceeding shall be pending or threatened
against the Partnership or the General Partner relating to or arising, or
alleged to relate to arise, out of any such action or non-action, the
General Partner shall have the right to employ, at the expense of the
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Partnership, separate counsel of the General Partner's choice in such
action, to represent the General Partner in such suit or proceeding. The
satisfaction of the obligations of the Partnership under this Section shall
be from and limited to the assets of the Partnership and no Partner shall
have any personal liability on account thereof. The General Partner shall
have the right to bill the Partnership for, or otherwise request the
Partnership to pay, at any time and from time to time after the General
Partner has become obligated to make payment therefor, any and all amounts
for which the General Partner believes in good faith that such General
Partner is entitled to indemnification under this Section. The Partnership
shall pay any and all such bills and honor any and all such requests for
payment within 60 days after such bill or request is received by the
General Partner. If a final determination is made that the Partnership is
not so obligated in respect of any amount paid by it to the General
Partner, the General Partner shall refund such amount within 180 days of
such final determination.
(b) The Partnership shall indemnify, to the extent of the Partnership
assets, each Limited Partner against any claims of liability asserted
against a Limited Partner solely because it is a Limited Partner in the
Partnership.
Section 9.5 Limited Liability of Limited Partners. No Limited Partner shall
be liable for the debts, liabilities, contracts or any other obligations of the
Partnership. Except as otherwise provided by applicable state law, a Limited
Partner shall be liable only to make its capital contribution and shall not be
required to lend any funds tO the Partnership or, after the original capital
contribution shall have been paid, to make any further contributions in excess
of such original capital contribution to the Partnership. No General Partner
shall have any personal liability for the repayment of the capital contribution
of any Limited Partner. Except as otherwise provided in this Agreement, a
Limited Partner shall not take part in, or interfere in any manner with, the
conduct or control of the business of the Partnership and shall have no right or
authority tO act for or bind the Partnership.
Section 9.6 Power of Attorney. Each Partner hereby irrevocably designates
and appoints the General Partner and any successor, with full power of
substitution, the partner's true and lawful attorney-in-fact and agent with full
power and authority in its name, place and stead to make, execute and
acknowledge, deliver, file and record in appropriate public offices:
(a) Any Amended Certificate of Limited Partnership pursuant to the
Act, any instrument to amend such Certificate of Limited Partnership
pursuant to the Act or any successor thereto, and any other document or
instrument deemed by any of them to be necessary or appropriate, or which
is required to establish or maintain the Partnership as a limited
partnership under the laws of the State of Colorado;
(b) All other instruments and other documents as may be required by
law or appropriate to the conduct of the Partnership's business in the
exercise by the General Partner of its authority under this Agreement;
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(c) Any documents or instruments which a General Partner may deem
appropriate to: (i) evidence the dissolution or accomplish the termination
of the Partnership in accordance with this Agreement, including, without
limitation, deeds or instruments of conveyance; and (ii) any instrument to
revoke the Certificate of Limited Partnership;
(d) Any amendment to this Agreement of Limited Partnership.
It is expressly agreed by each of the Partners that the foregoing power of
attorney is and shall be deemed to be coupled with an interest and shall survive
the death of a Partner or the assignment of his Partnership interest. Each
Limited Partner shall execute such instruments as the General Partner may deem
appropriate to give evidence of the granting of the foregoing power of attorney,
whether by executing a separate counterpart thereof or otherwise.
ARTICLE X
DEATH OR WITHDRAWAL OF A PARTNER
Section 10.1 Withdrawal of a General Partner. If the Genera] Partner
withdraws, becomes bankrupt or is dissolved, the Partnership shall dissolve
unless there is another General Partner of this Partnership at that time and the
business of the Partnership is continued by that remaining General Partner. If
no General Partner remains, the Partnership shall thereafter conduct only
activities necessary to wind up its affairs unless, within ninety (90) days
after one of the listed events, all the remaining Partners elect in writing to
continue the Partnership. If an election to continue the Partnership is made by
all the remaining Partners, then:
(a) If there is no remaining General Partner, a successor General
Partner shall be selected.
(b) The Partnership shall continue until the end of the term for which
it is formed, or until the subsequent death, withdrawal, incapacity or
bankruptcy of the General Partner, in which event all remaining Partners
shall again elect whether they wish to continue the Partnership operations.
(c) The incapacitated, withdrawn, or bankrupt General Partner or the
successor in interest of the deceased or dissolved General Partner shall
become a Limited Partner with the same share of profits or losses of the
Partnership as before the event and shall have all the rights of a Limited
Partner.
(d) All necessary steps shall be taken to amend the Certificate of
Limited Partnership.
For purposes of this Section, an individual General Partner (if there be
one) shall be deemed to be incapacitated if he or she is disabled and unable to
take an active part in the management of the Partnership business for a
continuous period of at least six (6) months.
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Section 10.2 Death of a Limited Partner. The death of a Limited Partner
shall not dissolve the Partnership. If a Limited Partner dies, the personal
representative or other successor in interest of the deceased Limited Partner
shall have all the rights and privileges of a Limited Partner.
ARTICLE XI
TRANSFER OF A PARTNERSHIP INTEREST
Section 11.1 Transfer of Limited Partner's Interest. Except as provided
elsewhere in this Agreement, no assignee of the whole or any portion of a
Limited Partner's interest in the Partnership who is not already a Partner in
the Partnership shall have the right to become a substituted Limited Partner in
place of the assignor unless:
(a) The assignor shall designate such intention in the instrument of
assignment;
(b) The written consent of the General Partner and each Limited
Partner, in each of its sole discretion, to such substitution shall be
obtained, which consent may be withheld for any reason;
(c) The instrument of assignment shall be in a form and substance
satisfactory to the General Partner;
(d) The assignor and assignee named therein shall execute and
acknowledge such other instrument or instruments as the General Partner may
deem necessary or desirable to effectuate such admission, including but not
limited to an appropriate power of attorney;
(e) The assignee shall accept, adopt and approve in writing all of the
terms and provisions of this Agreement as the same may have been amended;
(f) Such assignee shall pay or, at the election of the General
Partner, obligate himself to pay all reasonable expenses connected with
such admission; and
(g) By such transfer, the assignor does not violate the registration
provisions of the Securities Act of 1933, as amended, or the qualification
provisions of the Colorado Securities Act or other applicable state
securities laws.
Section 11.2 Further Restrictions on Transfers. No Partner shall make any
transfer or assignment of all or any part of its interest in this Partnership if
said transfer or assignment would, when considered with all other transfers
during the same applicable twelve-month period, cause a termination of this
Partnership for Federal or applicable state income tax purposes.
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<PAGE>
Section 11.3 Additional Restrictions. THE LIMITED PARTNERSHIP INTEREST
REPRESENTED BY THIS AGREEMENT HAS NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED
UNDER ANY STATE SECURITIES LAW. SUCH INTEREST MAY NOT BE OFFERED FOR SALE, SOLD,
DELIVERED AFTER SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED TO ANY PERSON IN THE
ABSENCE OF AN OPINION OF COUNSEL SATISFACTORY TO THE GENERAL PARTNER THAT SUCH
REGISTRATION OR QUALIFICATION IS NOT REQUIRED.
Section 11.4 Notice of Transfer to Internal Revenue Service. Whenever a
transfer of a Partner's interest has been effected in compliance with this
Article XI, the General Partner shall promptly report such transfer to the
internal Revenue Service if at the time of the transfer the Partnership
possessed "unrealized receivables" or "substantially appreciated inventory
items, " as those terms are used in the Code. Such notification shall include
the names of the transferror and the transferee, together with such additional
information as may be required by law. Each Partner agrees to promptly advise
the Partnership of any proposed transfers of interests in the Partnership, and
to provide such assistance to the General Partner as may be necessary to enable
it to give the notice required hereunder.
ARTICLE XII
DISSOLUTION AND TERMINATION OF THE PARTNERSHIP
Section 12.1 Right to Dissolve the Partnership. Except as provided in
Section 10.1, no Partner shall have the right to cause dissolution of the
Partnership before the expiration of the term for which it is formed.
Section 12.2 Winding Up the Partnership. In the event of a sale or
disposition of substantially all of the assets of the Partnership, or a
withdrawal of the sole remaining General Partner and the remaining partners do
not elect to continue the Partnership pursuant to Article X, the Partnership
shall immediately commence to wind up its affairs. The Partners shall continue
to share profits or losses during liquidation in the same proportion as before
dissolution. Nothing herein shall prohibit any partner form exercising the right
of redemption in any foreclosure action on partnership assets, provided that
such partner complies with the provisions of this Article XII. The proceeds from
liquidation of the Partnership assets shall be applied as follows:
(a) Payment to creditors of the Partnership, including Partners, in
the order of priority provided by law.
(b) Pro rata payment to the Partners of the credit balances in their
respective capital accounts.
(c) The balance. if any, shall be distributed to all Partners in the
proportions set forth in Sections 6.2 and/or 6.3. as applicable at the
time.
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(d) Such distributions may be made in kind and, if so, shall be valued
at the fair market value thereof.
Section 12.3 Sale of Partnership Assets - Right of First Refusal. The
Partnership will not offer for sale, sell or otherwise dispose of any part of
its assets including any part of the Z-H property and the Facility, when and if
completed, located thereon, without first offering the Limited Partner for a
period of at least thirty (30) days the right of first refusal to accept such
offer, or to meet the terms acceptable to a bona fide third party.
Section 12.4 Gains or Losses in Process of Liquidation. Any gain or loss on
disposition of Partnership properties in the process of liquidation shall be
credited or charged to the Partners in the proportions set forth in Sections 6.2
and/or 6.3, as applicable at the time. Any property distributed in kind in the
liquidation shall be valued and treated as though the property were sold and the
cash proceeds were distributed. The difference between the value of property
distributed in kind and its book value shall be treated as a gain or loss on
sale of the property and shall be credited or charged to the Partners in the
proportions of their interest in profits as specified in Section 6.2 and/or 6.3,
as applicable at the time.
Section 12.5 Waiver of Right to Decree of Dissolution. The panics hereby
agree that irreparable damage would be done to the goodwill and reputation of
the Partnership if any Partner should bring an action in court to dissolve the
Partnership. Care has been taken in this Agreement to provide a fair and just
payment in liquidation of the interest of all Partners. Accordingly, each party
hereby waives and renounces his right to such a court decree of dissolution or
to seek the appointment by the court of a liquidator for the Partnership.
ARTICLE XIII
AMENDMENTS
This Partnership Agreement may be amended by the General Partner in order
to clarify any ambiguity or in any other manner which will not effect a material
change in the rights of any Partner. This Partnership Agreement may be amended
in any other particular by a written agreement executed by the General Partner
and a majority in interest of the Limited Partners.
ARTICLE XIV
DISPUTES
Any disputes hereunder shall be submitted by the parties to binding
arbitration conducted pursuant to the rules of the American Arbitration
Association.
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<PAGE>
IN WITNESS WHEREOF the parties hereto have executed this Agreement of
Limited Partnership the day and year first above written.
GENERAL PARTNER:
POWERS GOLF L.L.C.
By: /s/ MIKE ZAREMBA
----------------------------------
, President
LIMITED PARTNERS:
BISHOP CABLE COMMUNICATIONS, INC.
By: /S/ ROBERT E. THRAILKILL
----------------------------------
Name: Robert E. Thrailkill
Title: President
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<PAGE>
EXHIBIT A
MAP OF POWERS BOULEVARD PROPERTY
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<PAGE>
EXHIBIT B
LIMITED PARTNERS
Name Address Contribution
---- ------- ------------
Bishop Cable 716 College View Drive 1. Cash of $100,000.
Communications, Inc. Riverton, WY 82501 2. Commitment to
contribute $250,000
upon the Partnership
obtaining debt
financing in the
amount of $800,000 as
set forth in Section
5.3 hereof.
GENERAL PARTNERS
----------------
Name Address Contribution
---- ------- ------------
1. $100,000
2. All required security
for partnership debt.
3. Know-how relating to the
development and operation of
the Facility.
4. Undivided interest in
Purchase Agreement for
Powers Boulevard Property.
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Exhibit K
AGREEMENT
OF
BRIDGER CREEK PARTNERSHIP
THIS AGREEMENT OF TAX PARTNERSHIP (the "Agreement") is made and entered
into by and among Mr. and Mrs. William N. Spratt (collectively "Spratt") and
Metro Cable Corporation, a Colorado corporation, ("Metro"). Metro and Spratt
hereinafter occasionally referred to collectively as the "Participants."
I. FORMATION
1. Tax Partnership. The parties hereto have agreed to form, and by
executing this Agreement hereby enter into, a tax partnership (the "Tax
Partnership"). Nothing contained in this Agreement shall be deemed to constitute
either Participant, the partner of the other or, except as otherwise herein
expressly provided, to constitute either Participant, agent or legal
representative of the other or to create any fiduciary relationship between
them. It is not the intention of the Participants to create, and this Agreement
shall not be interpreted or construed to create, any commercial or other
partnership, other than the Tax Partnership. Neither Participant shall have any
authority to act for or to assume any obligation or responsibility on behalf of
the other Participant, except as otherwise expressly provided herein. The
rights, duties, obligations, and liabilities of the Participants shall be
several and not joint or collective. Each Participant shall be responsible only
for its obligations as herein set out and shall be liable only for its share of
the costs and expenses as provided for herein. Each Participant shall indemnify,
defend and hold harmless the other Participant, its directors, officers,
employees, agents and attorneys from and against any and all losses, claims,
damages and liabilities arising out of or resulting from any act or any
assumption of liability by the indemnifying Participant or any of its directors,
officers, employees, agents or attorneys done or undertaking, or apparently done
or undertaking, on behalf of the other participant, except pursuant to the
authority expressly granted herein or as otherwise agreed in writing between the
Participants.
2. Name. The name of the Tax Partnership is Bridger Creek Partnership.
3. Place of Business and Agent for Service of Process. The principal place
of business of the Tax Partnership and its registered office in the State of
Wyoming shall be located at 716 College View Drive, Riverton, Wyoming 82501;
provided, however, that Metro may change the address of the principal place of
business by notice in writing to Spratt. The name of its registered agent at
that address shall be Robert Thrailkill.
4863658 page 1 of 10 pages
<PAGE>
4. Tax Partnership Election. The parties hereto agree to form a tax
partnership with a specific election to be treated under Subchapter K of the
Internal Revenue Code of 1986, as amended (the "Code"). Metro shall file all
documents necessary for the specific election under Subchapter K.
5. Term. The Tax Partnership shall commence its existence and business upon
execution of this Agreement by Metro and Spratt and shall continue until the
first of the following events occurs: dissolution by mutual agreement; or the
bankruptcy, death or dissolution of either Participant.
6. Purpose. The business and purpose of the Tax Partnership is to manage
the Royalty Interests (as hereinafter defined).
II. TAX PARTNERSHIP INTEREST AND CAPITAL
1. Capital Contribution of Participants. The capital of the Tax Partnership
shall be contributed by the Participants. Metro and Spratt each hereby
contribute all of their respective right, title and interest in and to a 0.525%
royalty on oil and gas production from all formations in the Madden Deep Unit as
it presently exists and certain lands outside said Madden Deep Unit more
particularly described on Schedule A (which Schedule includes a description of
the Royalty Interests) and Schedule B (which Schedule includes a plat of
T37-39N, R89-91W and a description of the land holdings within said Madden Deep
Unit and certain lands outside said Madden Deep Unit), which Schedules are
attached hereto and by this reference incorporated herein (which royalty
interests are hereinafter referred to as the "Royalty Interests"). Metro and
Spratt shall execute any and all further deeds, assignments, division order or
other documents necessary to make such contribution. In addition, Metro and
Spratt shall make further contributions necessary to conduct the business of the
Tax Partnership, although both Metro and Spratt expect that income generated by
the Royalty Interests will be sufficient to conduct the business of the
Partnership.
2. Capital Accounts. A Capital Account shall be established for each
Participant on the books and records of the Tax Partnership which shall be the
amount of the Participant's Capital Contributions plus or minus, as appropriate,
such Participant's share of the income or loss of the Tax Partnership and minus
cash or other distributions made by the Tax Partnership. Such opening capital
contributions shall be valued as set forth in Paragraph VI.1.d. Other
adjustments may be made to the Capital Accounts to reflect special items or
circumstances in accordance with good tax accounting principles or Treasury
Regulations promulgated under the applicable provisions of Subchapter K of the
Code, including without limitation Section 704(b).
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Fremont County Wyo. No. 1123083
Recorded
Dec 31 1990 Book 422 Page 332
2:00 o'clock pm. Alma Nicol
County Clerk
486368 PAGE 2 OF 10 PAGES
<PAGE>
III. MANAGEMENT
1. Manager. Subject to the provisions of Section III.2 and except as
otherwise expressly stated elsewhere in this Agreement, Metro shall have control
over the business of the Tax Partnership and be Manager, and in consultation
with Spratt shall have authority to manage the operations and affairs of the Tax
Partnership and to make all decisions regarding the business of the Tax
Partnership taking into consideration the tax consequences to both parties.
Without limiting the generality of the foregoing, such powers include the right:
a. To manage and operate the Tax Partnership property;
b. To employ from time to time, at the expense of the Tax Partnership,
Persons required for the operation of the Tax Partnership's business, to enter
into agreements and contracts with such Persons on such terms and for such
compensation as the Manager determines to be reasonable, and to give receipts,
releases and discharges with respect to all of the foregoing and any matters
incident thereto as the Manager may deem advisable or appropriate.
c. To maintain, at the expense of the Tax Partnership, adequate
records and accounts of all operations and expenditures and furnish the
Participants with annual statements of account as of the end of each fiscal
year, together with all tax reporting information required by the Internal
Revenue Service;
d. To execute any and all division orders, and other contracts,
agreements, documents, certificates and other instruments as are necessary or
convenient with respect to the business of the Tax Partnership;
3. To file tax returns and to make such elections under the Code as the
Manager shall deem desirable;
2. Limitations on the Manager's Authority. The Manager shall not have
authority to:
a. Do any act in contravention of this Agreement;
b. Do any act which would make it impossible to carry on the ordinary
business of the Tax Partnership or be detrimental to either Participant;
c. Confess a judgment against the Tax Partnership;
d. Charge the Tax Partnership for its own general and administrative
expenses;
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486368 PAGE 3 OF 10 PAGES
<PAGE>
e. Assign the rights of the Tax Partnership for other than a Tax
Partnership purpose;
f. Sell or encumber any portion of the Royalty Interests without the
prior consent of the other Participants.
3. Tax Controversies. Metro is hereby designated as the Tax Partnership's
"Tax Matters Partner" pursuant to the Code, and, to the extent authorized and
permitted under applicable law, Metro is authorized and required to represent
the Tax Partnership and each Partner in connection with all examinations of the
Tax Partnership's affairs by tax authorities, including resulting
administrative and judicial proceedings, and to expend Tax Partnership funds for
professional services and costs connected therewith. Spratt agrees to cooperate
with Metro and to do or refrain from doing any and all things reasonably
required by Metro to conduct such proceedings. Metro agrees to keep Spratt fully
informed to consult with Spratt on any tax controversies.
4. Election of Substitute Manager and Tax Matters Partner. If Metro
disposes of more than 50% of its interest in the Partnership, then the
Participants shall elect by vote of a majority interest of the Tax Partnership a
Substitute Manager, which person shall also become Tax Matters Partner.
5. Indemnification of Manager. The Tax Partnership shall indemnify and hold
harmless the Manager and its officers, directors and employees from any loss,
liability or damage incurred or suffered by any such Person by reason of any act
performed or omitted to be performed by it in connection with the business of
the Tax Partnership, including attorneys' fees incurred by it in connection with
the defense of any claim or action based on any such act or omission, which
attorneys' fees may be paid as incurred, except to the extent indemnification is
prohibited by law; and provided, that any such indemnification shall only be
from the assets of the Tax Partnership. Any indemnification required herein to
be made by the Tax Partnership shall be made promptly following the fixing of
the loss, liability or damage incurred or suffered by a final judgment of any
court, settlement, contract or otherwise. The Manager and its officers,
directors and employees (a) shall be entitled to the foregoing indemnification;
and (b) shall not be liable to the Tax Partnership for any loss, liability or
damage suffered or incurred by the Tax Partnership, directly or indirectly, in
connection with its activities; provided, however, that no Person whose action
or omission to act caused the loss, liability or damage incurred or suffered may
receive indemnification or avoid liability by virtue of this Section III.5
unless such Person determined in good faith that such course of conduct was in
the best interests of the Tax Partnership, and such course of conduct did not
constitute fraud, negligence or misconduct.
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486368 PAGE 4 OF 10 PAGES
<PAGE>
IV. RIGHTS OF PARTICIPANTS
1. Any Participant and their designated representatives shall have access
to all books and records of the Tax Partnership during normal business hours and
may inspect and, upon payment of a reasonable charge, copy such books and
records.
V. ACCOUNTING RECORDS, REPORTS AND MEETINGS
1. Books of Accounts and Records. The Tax Partnership's books and records
shall be maintained at the principal place of business of the Tax Partnership.
The books and records shall be kept in accordance with sound accounting
practices and principles applied in a consistent manner by the Tax Partnership
and shall reflect all transactions and be appropriate and adequate for the
business of the Tax Partnership.
2. Financial Statements and Reports. The Manager shall provide the
following reports and financial statements to the other Participants:
a. Tax Information. Within 75 days after the end of each fiscal year,
such information with respect to the Tax Partnership as is required by the
Internal Revenue Service to be supplied to the Participants for preparation of
their Federal income tax returns.
b. Other Reports. Such other reports to be sent to the Participants
from time to time as the Manager may deem advisable it being the intention that
all Participants will be kept fully informed.
3. Bank Accounts. Tax Partnership monies shall be deposited in the name of
the Tax Partnership in one or more banks or savings and loan associations to be
designated by the Manager and shall be withdrawn on the signature of the duly
authorized officers, employees or agents of the Manager.
VI. ALLOCATIONS AND DISTRIBUTIONS
1. Allocations.
a. General Allocation. The profits, gains and losses of the Tax
Partnership, and each item of gain, loss, deduction or credit entering into the
computation thereof, shall be determined in accordance with the accounting
methods followed for federal
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486368 PAGE 5 OF 10 PAGES
<PAGE>
income tax purposes and otherwise in accordance with generally accepted
accounting principles and procedures as follows:
(i) Until such time as Metro has received distribution from
partnership of an amount equal to $1,050,000 plus interest adjusted
semi-annually at the prime commercial lending rate published by the First
Interstate Bank of Denver, N.A., compounded on a semi-annual basis, commencing
on the effective date of the Partnership:
(1) Metro shall be allocated 100% of the first $40,000 of
annual net income (hereinafter defined) which shall be cumulative of the Tax
Partnership, 80% of the annual net income thereafter, and shall be liable for
80% of the expenses and allocated 80% of the net losses of the Tax Partnership;
and
(2) Spratt shall receive 20% of the annual net income of the
Tax Partnership after payment to Metro of its special allocation of the first
$40,000 of net income and shall be liable for 20% of the expenses and allocated
20% of the net losses of the Tax Partnership;
(ii) After the time that Metro has received an amount equal to
$1,050,000 plus interest adjusted semi-annually at the prime commercial lending
rate published by the First Interstate Bank of Denver, N.A., compounded on a
semi-annual basis, commencing on the effective date of the Partnership;
(1) Metro shall receive 60% of the net income and shall be
allocated 60% of the net income of the Tax Partnership, and shall be liable for
60% of the expenses and shall be allocated 60% of any net losses of the Tax
Partnership; and
(2) Spratt shall receive 40% of the net income and shall be
allocated 40% of the income of the Tax Partnership, and shall be liable for 40%
of the expenses and shall be allocated 40% of any net losses of the Tax
Partnership.
b. Defined of Annual Net Income. The term annual net income, as used
herein shall mean the income earned from the Royalty Interests, and any and all
other sources of income of the Tax Partnership minus all expenses of the Tax
Partnership except depletion which will be directly allocated to the
Participants in accordance with applicable Regulations, computed annually on a
calendar year basis through the use of generally accepted accounting practice on
a consistent cash or accrual basis as selected by the Manager.
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486368 PAGE 6 OF 10 PAGES
<PAGE>
c. Notwithstanding the general allocations described above, the Tax
Partnership shall make the following special allocations:
(i) Provisional Allocation. In the event that any amount claimed
by the Tax Partnership to constitute a deductible expense in any tax year of the
Tax Partnership is treated as a payment made to a Participant in his capacity as
a member of the Tax Partnership for income tax purposes, income and gains of the
Tax Partnership for such year shall first be allocated to such payment and no
deductions and losses of the Tax Partnership shall be allocated thereto.
(ii) Special Allocations. The Tax Partnership may make special
allocations of items of Tax Partnership income and gain in accordance with
Treasury Regulation under Code Sections 704(b) and 704(c), or if any Participant
otherwise has a deficit balance in his Capital Account, in an amount and manner
sufficient to eliminate any deficit balances in their Capital Accounts as
quickly as possible after the deficit balance in their Capital Account or other
imbalance is created. Any special allocations of items of income or gain
pursuant to this Section VI.1.c shall be taken into account in computing
subsequent allocations pursuant to this Article VI, so that the net amount of
any items so allocated and all other items allocated to each Participant
pursuant to this Article VI shall, to the extent possible, be equal to the net
amount that would have been allocated to each such Partner pursuant to the
provisions of this Article VI if such unexpected adjustments, allocations or
distributions had not occurred.
d. Contributed Property. Notwithstanding the foregoing, in accordance
with Section 704(c) of the Code, income, gain, loss, deductions, amortization
and depletion with respect to property contributed to the Tax Partnership by a
Participant shall be shared among the Participants so as to take account of the
variation between the basis of the property to the Tax Partnership and it fair
market value at the time of the contribution. The agreed upon fair market value
for Spratt is $262,500 and Spratt's adjusted tax basis is $-0-. Therefore,
Spratt's pre-contribution gain under Section 704(c) is $262,500. The agreed upon
fair market value for Metro and its tax basis are both $1,050,000.
2. Distributions. All cash in excess of the reasonably anticipated needs of
the Tax Partnership(as such may be determined in the sole discretion of the
Manger) shall be distributed to the Participants in accordance with the General
Allocations set forth in Section VI.1.a, above, as from time to time adjusted.
-7-
486363 PAGE 7 OF 10 PAGES
<PAGE>
VII. ASSIGNMENT OF INTEREST
1. Assignment. The interest of the Participants shall be assignable in
whole or in part only with the prior written approval of the other Participant
which approval will not be unreasonably withheld.
VIII. DISSOLUTION AND LIQUIDATION
1. Agreement. Upon the expiration of the term of the Tax Partnership, the
Tax Partnership shall be dissolved and accounts shall be settled as set forth in
Section 2, below To the extent that any Partner has a deficit balance in his
Capital Account upon such dissolution and liquidation and after any special
allocations are made in accordance with Section VI.1c. hereof, such Partner will
within 90 days pay the amount of such deficit balance in his Capital Account to
the Tax Partnership to increase his Capital Account to zero.
2. Settling Accounts. In settling accounts after liquidation, the assets of
the Tax Partnership shall be applied in the following order of priority:
a. payment, or adequate provision for payment, of the liabilities of
the Tax Partnership to creditors (including Participants who are creditors);
b. payment of all expenses of the liquidation;
c. the establishment of such reserves for contingencies as are deemed
necessary by the Manager (or special liquidator);
d. payment of the remaining assets to the Participants, pro rata, who
have positive Capital Accounts in an amount based upon the respective amounts of
their Capital Accounts. Distribution of Tax Partnership property shall be made
in kind to the maximum extent possible. If Tax Partnership property is
distributed in kind, the fair market value of such property shall be determined
and the Capital Accounts of the Participants adjusted as if such Tax Partnership
property had been sold for its fair market value. Upon distribution of Tax
Partnership property in kind, each Partner's Capital Account, as adjusted, shall
be debited to reflect the fair market value of such property; and
e. Any additional distributions shall be made in accordance with the
Participant's respective interests in the net income of the Tax Partnership
determined in accordance with Article VI, Section 1.a.
-8-
486368 PAGE 8 OF 10 PAGES
<PAGE>
IX MISCELLANEOUS
1. Notices. Any notice, payment, demand or communication required or
permitted to be given by any provision of this Agreement shall be deemed to have
been sufficiently given or served for all purposes of delivered personally to
the party or to an officer of the party to whom the same is directed or if sent
by registered or certified mail, postage and charges prepaid addressed as
follows:
If to Metro:
Metro Cable Corporation
716 College View Drive
Riverton, Wyoming 82501
If to Spratt:
Mr. and Mrs. William N. Spratt
Lost Cabin Route
Lysite, Wyoming 82642
Any such notice shall be deemed to be given on the date on which the same
was deposited in a regularly maintained receptacle for the deposit of United
States mail, addressed and sent as aforesaid.
2. Application of Wyoming Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Wyoming, without giving
effect to the provisions of conflict of laws thereof.
3. Execution in Counterparts. This Agreement may be executed in any number
of counterparts with the same effect as if all parties hereto had all signed the
same document. All counterparts shall be construed together and shall constitute
one agreement.
4. Assignability. Each and all of the covenants, terms, provisions and
agreements herein contained shall be binding upon and inure to the benefit of
the heirs, successors and permitted assigns of the respective parties hereto.
5. Interpretation. As used herein, the masculine includes the feminine and
the neuter and singular includes the plural.
6. Captions. Paragraph, titles or captions in no way define, limit extend
or describe the scope of this Agreement nor the intent of any of its provisions.
-9-
486368 PAGE 9 OF 10 PAGES
<PAGE>
7. Adjustment of Basis. Participants may, but are not obligated to, elect,
pursuant to Internal Revenue Code Section 754, to adjust the basis of Tax
Partnership property under the circumstances and in the manner provided in
Internal Revenue Code Sections 734 and 743. The Manager shall, in the event of
such an election, take all necessary steps to effect the election.
8. Integrated Agreement. This Agreement constitutes the entire
understanding and agreement among the parties hereto with respect to the subject
matter hereof.
IN WITNESS WHEREOF, the undersigned have executed this Agreement this 31st
day of December, 1990.
----------------------------------------
William N. Spratt by
Thomas Jay Spratt his Attorney in fact
Robert Asa Spratt his Attorney in fact
----------------------------------------
Patricia A. Spratt by
Thomas Jay Spratt her Attorney in fact
Robert Asa Spratt her Attorney in fact
METRO CABLE CORPORATION, a Colorado
corporation
BY: /S/ ROBERT E. THRAILKILL
------------------------------------
Robert E. Thrailkill, President
Subscribed and sworn before me this 31st day of December 1990, by Thomas Jay
Spratt and Robert Asa Spratt, attorneys in fact, for William N. Spratt and
Patricia A. Spratt.
/S/ NATALIE L. HARRIS
- ----------------------------------
Notary
My commission expires: 12/7/92
Subscribed and sworn before me this 31st day of December, 1990, by Robert E.
Thrailkill.
/S/ NATALIE L. HARRIS
- ----------------------------------
Notary
My commission expires: 12/7/92
-10-
486368 PAGE 10 OF 10 PAGES
ATTACHMENT L
Subsidiaries of the Registrant
State or other Jurisdiciton
of Incorporation or
Name Organization
---- ---------------------------
Bridger Creek Partnership Wyoming
Bishop Powers, Ltd. Colorado
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 9-MOS YEAR
<FISCAL-YEAR-END> MAR-31-1997 MAR-31-1996
<PERIOD-END> DEC-31-1996 MAR-31-1996
<CASH> 33,425 66,770
<SECURITIES> 641,133 844,734
<RECEIVABLES> 45,716 88,758
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 727,774 1,018,222
<PP&E> 317,165 314,707
<DEPRECIATION> 117,264 111,045
<TOTAL-ASSETS> 2,026,428 2,305,207
<CURRENT-LIABILITIES> 245,696 103,541
<BONDS> 0 0
0 0
0 0
<COMMON> 8,854 8,854
<OTHER-SE> 1,771,878 2,192,812
<TOTAL-LIABILITY-AND-EQUITY> 2,026,428 2,305,207
<SALES> 48,497 69,931
<TOTAL-REVENUES> 48,497 69,931
<CGS> 14,142 19,192
<TOTAL-COSTS> 497,614 883,824
<OTHER-EXPENSES> 29,746 56,351
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 8,551 830
<INCOME-PRETAX> (404,223) (118,025)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 (118,025)
<DISCONTINUED> 0 (25,850)
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (404,223) (143,875)
<EPS-PRIMARY> (.46) (.17)
<EPS-DILUTED> (.46) (.17)
</TABLE>