AMENDMENT NO. 1
TO
OPERATING AGREEMENT
OF
INNOVATION GROWTH PARTNERS, L.L.C.
(FORMERLY, INNOVATION TECHNOLOGY PARTNERS, L.L.C.)
This Amendment No. 1 to Operating Agreement of Innovation Growth
Partners, L.L.C. (formerly Innovation Technology Partners, L.L.C.) dated as of
September 7, 2001 among Xxxxxx, Inc., a New Jersey corporation ("Xxxxxx"), WHTP,
LLC, a Delaware limited liability company ("WHTP") and Xxxxxxx Xxxx, an
individual residing in Texas ("Xxxx").
WHEREAS, the parties hereto have entered into that certain Operating
Agreement dated as of June 19, 2000 (the "Operating Agreement");
WHEREAS, Innovation Growth Partners, L.L.C. (the "Company") requires
additional capital to pursue its business plan and conduct its operations;
WHEREAS, the parties hereto wish to amend certain provisions of the
Operating Agreement;
NOW, THEREFORE, the parties hereto, in consideration of the mutual
covenants and premises contained herein, hereby agree as follows:
1. Defined Terms. Capitalized terms not otherwise defined herein shall
have the meanings ascribed in the Operating Agreement.
2. Admission of New Members; Additional Capital Contributions. Xxxxxx,
WHTP and Xxxx hereby consent to the admission of Xxxxx X. Xxxx ("West")
and Xxxxxxx Partnership 1999 LTD ($24,000) and SEP FBO Xxxxxxxxx X.
Xxxxxxx ($75,000) ("Xxxxxxx") as Members. By execution of this
Amendment No. 1 to Operating Agreement (the "Amendment"), West and
Xxxxxxx agree to be bound by the terms of the Operating Agreement and
this Amendment. Contemporaneous with the execution of this Amendment,
the Members shall make the following additional Capital Contributions
to the Company in cash:
Xxxxxx - $1,100,000
Xxxx - $ 100,000
West - $ 100,000
Xxxxxxx - $ 100,000
The Members will be issued Class B Membership Interests in consideration for the
additional Capital Contributions described above.
3. Additional Loan; Conversion of Indebtedness. Subject to the conditions
set forth in Section 4 below, Xxxxxx agrees to make an advance of
$250,000 under the Revolving Promissory Note issued by the Company to
Xxxxxx dated June 19, 2000 (the "Note"). After giving effect to the
$250,000 advance, the parties hereto acknowledge that there will be
$1,325,000 aggregate principal amount outstanding under the Note which,
effective December 1, 2001, shall be immediately and automatically
converted to a Class A Membership Interest in the Company. Upon such
conversion, the Company shall pay to Xxxxxx all accrued and unpaid
interest under the Note and the Note and all obligations to advance or
repay funds under the Note shall be cancelled.
4. MindSearch Investment. Xxxxxx will make the additional $250,000 advance
upon the delivery to it by September 15, 2001 of documents, in a form
reasonably satisfactory to it, which evidence:
(a) A third party investment in MindSearch Limited Partnership and
MindSearch Management, LLC (collectively, "MindSearch") of not
less than $750,000 (the "Third Party Investment") on terms no
more favorable to the third party investor than the terms
being provided to the Company with respect to its proposed
$250,000 investment in MindSearch (the "MindSearch
Investment").
(b) The Company owning not less than a 35% equity interest in
MindSearch (on a fully diluted basis) upon completion of the
MindSearch Investment and the Third Party Investment.
(c) MindSearch's agreement that if MindSearch raises more than
$750,000 from the Third Party Investment or future third party
funding transactions, the Company's ownership interest in
MindSearch will not be diluted below 26% (on a fully diluted
basis) and the Company will remain the largest single equity
owner, on a percentage basis, of MindSearch.
The Huttner Members hereby represent and warrant that (i) the
MindSearch Ownership Chart annexed hereto as Schedule I is
accurate and complete, (ii) except as set forth on Schedule II
hereto there are no outstanding convertible securities,
options, rights or warrants to acquire any ownership interests
in any of MindSearch, MindSearch, Inc., MindSearch Limited
Partners, LLC or MindSearch Management LLC. The Xxxxxxx
Members hereby agree and covenant that they shall take no
action nor permit the taking of any action which would dilute
the aggregate direct and indirect ownership of the Company in
MindSearch, MindSearch, Inc., MindSearch Limited Partners, LLC
or MindSearch Management LLC below 26% on a fully diluted
basis without the written consent of Xxxxxx, Inc.
5. Amendment of Employment Agreements. Contemporaneous with the execution
of this Amendment No. 1 to Operating Agreement, the Company will enter
into an Amendment to Employment Agreement with each of Xxxxxxx Xxxx,
Xxxxxxxxx Xxxxxxx and Xxxxx Xxxx in the form annexed hereto as Exhibit
A (each an "Employment Agreement Amendment").
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6. Amendment of Warrants. Contemporaneous with the execution of this
Amendment No. 1, the Company shall execute and deliver an Amended and
Restated Warrant to each of Xxxxxxx Xxxx, Xxxxxxxxx X. Xxxxxxx and
Xxxxx Xxxx in the form annexed hereto as Exhibit B.
7. Additional Definitions. The following definitions are hereby added to
Section I of the Operating Agreement:
(a) "Bonus Amount" means $150,000.
(b) "Bonus Return" means an amount equal to the lesser of (a) the
Prime Rate plus one percent (1%) per annum or (b) ten percent
(10%) per annum, calculated on a calendar year basis, for the
actual number of days for which the Bonus Return is being
determined, of the unpaid Bonus Amount, cumulative but not
compounded, commencing on the date that each holder of a Class
B Membership Interest has received (i) distributions pursuant
to Section 4.1(c) in an amount equal to such Members'
Undistributed Class B Return and (ii) distributions pursuant
to Section 4.1(d) in an amount equal to the Members' Class B
Invested Capital.
(c) "Cash Receipts" means the sum of cash receipts of the Company
from all sources, including, without limitation, all cash
funds derived from operations of the Company, including
dividends and distributions received by the Company from
entities in which the Company has made investments and the
proceeds from the sale, transfer or other disposition of a
security or an interest in any entity in which the Company has
made an investment, or insurance proceeds derived from the
destruction of assets used in the trade or business of the
Company, but excluding Capital Contributions, loans made to
the Company, cash receipts from expense reimbursements,
interest and fifty percent (50%) of any cash advisory fees
received by the Company.
(d) "Change of Control" means (i) a merger or consolidation of
Xxxxxx, Inc. into another corporation or a merger of another
corporation with or into Xxxxxx, Inc.; or (ii) a sale by
Xxxxxx, Inc. of all or substantially all of its assets, which,
in the case of either (i) or (ii) above results in the
shareholders of Xxxxxx, Inc. (as they existed immediately
prior to the effectiveness of the merger, consolidation or
sale) owning less than 50% of the surviving entity or new
corporation or entity that has acquired all or substantially
all of Xxxxxx, Inc.'s assets after the effectiveness thereof;
or (iii) a reorganization of Xxxxxx, Inc., which results in
either Xxxxxx, Inc. becoming a subsidiary of another
corporation or Xxxxxx, Inc. not being the surviving entity
(other than a merger, consolidation (a) with a wholly owned
subsidiary of Xxxxxx, Inc.; (b) to effect a change in
domicile; or (c) of Xxxxxx, Inc. into a corporation that does
not result in the shareholders of Xxxxxx, Inc., as they
existed immediately prior to the effectiveness of such merger
or consolidation, owning less than 50% of the surviving
corporation); (iv) the acquisition by any person, entity or
group of persons or entities acting in concert (other than
Xxxxxxx X. Xxxxxxxxx, an entity controlled by Xxxxxxx X.
Xxxxxxxxx or a group in which
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Xxxxxxx X. Xxxxxxxxx or any entity controlled by Xxxxxxx X.
Xxxxxxxxx is a part) of 50% or more of Xxxxxx, Inc.'s issued
and outstanding voting securities.
(e) "Class A Invested Capital" means the aggregate principal
amount of indebtedness which was converted to a Capital
Contribution by Xxxxxx, Inc. pursuant to Section 3, reduced by
any distributions previously made to Xxxxxx Inc. pursuant to
Section 4.1(b) of the Operating Agreement.
(f) "Class A Membership Interest" means the Interest issued to
Xxxxxx, Inc. in consideration of the conversion of the
indebtedness owed to it pursuant to Section 3 of this
Amendment.
(g) "Class A Return" means an amount equal to the lesser of (a)
the Prime Rate plus one percent (1%) per annum or (b) ten
percent (10%) per annum, calculated on a calendar year basis,
for the actual number of days for which the Class A Return is
being determined, of the Class A Invested Capital, cumulative
but not compounded, commencing on the date that the date that
the indebtedness owed to Xxxxxx, Inc. was converted to a Class
A Membership Interest.
(h) "Class B Invested Capital" means, with respect to each Member,
the Capital Contribution made by such Member pursuant to
Section 2, reduced by any distributions previously made to
such Member pursuant to Section 4.1(d) of the Operating
Agreement.
(i) "Class B Membership Interest" means an Interest issued to a
Member in consideration of the Capital Contribution made by
such Member pursuant to Section 2 of this Amendment.
(j) "Class B Return" means an amount equal to the lesser of (a)
the Prime Rate plus one percent (1%) per annum or (b) ten
percent (10%) per annum, calculated on a calendar year basis,
for the actual number of days for which the Class B Return is
being determined, of the Class B Invested Capital of each of
the Members, cumulative but not compounded, commencing on the
date that the Member's Capital Contribution pursuant to
Section 2 of this Amendment was made.
(k) "Deadlock" means a situation in which the vote of the Board of
Managers is required on any matter, and there are neither
sufficient votes to approve nor disapprove the matter.
(l) "Prime Rate" means the prime rate as published in the "Money
Rates" column of the Wall Street Journal, as adjusted monthly
based upon the last Prime Rate published for each month.
(m) "Undistributed Class A Return" means an amount equal to the
Class A Return accrued for periods to the date the
Undistributed Class A Return is being determined, less all
distribution made to the holder of the Class A Membership
Interest pursuant to the first sentence of Section 4.1 and
Section 4.1(a).
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(n) "Undistributed Class B Return" means an amount equal to the
Class B Return of each Member accrued for all periods to the
date the Class B Return is being determined, less all
distributions made to such Member pursuant to Section 4.1(c).
(o) "Unpaid Bonus Return" means an amount equal to the Bonus
Return of each of Xxxxxxx Xxxx, Xxxxx Xxxx and Xxxxxxxxx
Xxxxxxx accrued for all periods to the date the Bonus Return
is being determined, less all payments made, to such
individual pursuant to Section 4.1(e).
(p) "Working Capital" means, as of any date, the excess of the
Company's current assets over current liabilities, as
determined in accordance with GAAP.
8. Cash Flow. Section 4.1 of the Operating Agreement is hereby amended and
restated to read in its entirety as follows:
"4.1 Distribution of Cash Flow. The Company shall, within
fifteen (15) days of the first day of each calendar quarter,
distribute to Xxxxxx, Inc. an amount equal to its
Undistributed Class A Return as calculated through the last
day of the prior calendar quarter. The first such distribution
shall be calculated as of December 31, 2001 and paid no later
than January 15, 2002. In addition, if and to the extent that
the Company is earning income which will result in a Member
being subject to income tax for income not distributed by the
Company but deemed to have been received by the Member for
federal or state tax purposes, a minimum distribution shall be
made to the Members in such an amount and at such time (but in
no event later than seventy-five (75) days after the end of
the Company's taxable year) as shall be sufficient to enable
each Member to meet the income tax liability arising or
incurred as a result of participation in the Company. Further,
in the event that the Company receives Cash Receipts, or the
Board of Managers determines that there is Cash Flow available
for distribution, the Company, subject to Section 4.2 below,
shall reserve 25% of any Cash Receipts for working capital
purposes and then make cash distributions as follows:
(a) First, to Xxxxxx, Inc. until Xxxxxx, Inc. has received
distributions pursuant to this Section 4.1(a) in an amount
equal to its Undistributed Class A Return;
(b) Next to Xxxxxx, Inc. until Xxxxxx, Inc. has received
distributions pursuant to this Section 4.1(b) in an amount
equal to its Class A Invested Capital;
(c) Next, to the Members pro rata in proportion to their
respective Undistributed Class B Returns until each Member has
received distributions pursuant to this Section 4.1(c) in an
amount equal to its Undistributed Class B Return;
(d) Next to the Members until each Member has received
distributions pursuant to this Section 4.1(d) in an amount
equal to its Class B Invested Capital;
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(e) Next, to each of Xxxxxxx Xxxx, Xxxxx Xxxx and Xxxxxxxxx
Xxxxxxx on a pro rata basis in an amount equal to their
respective Undistributed Bonus Returns; provided, however,
that no such distribution shall be made (i) if the Company,
immediately prior to such distribution, does not have Working
Capital of at least $500,000 and (ii) no such distribution
shall be made to an individual who has forfeited his right to
the Bonus Amount pursuant to the terms of his Employment
Agreement Amendment;
(f) Next to each of Xxxxxxx Xxxx, Xxxxx Xxxx and Xxxxxxxxx Xxxxxxx
on a pro rata basis until each of such individuals has
received the Bonus Amount; provided, however, that no such
distribution shall be made (i) if the Company, immediately
prior to such distribution, does not have Working Capital of
at least $500,000 and (ii) no such distribution shall be made
to an individual who has forfeited his right to the Bonus
Amount pursuant to the terms of his Employment Agreement
Amendment;
(g) Next, to the Unit Holders in proportion to their Adjusted
Capital Contributions, until their remaining Adjusted Capital
Contributions have been paid in full;
(h) Then, the balance to Unit Holders in accordance with their
respective Percentages."
Distribution of Cash Receipts by the Company shall be made by the
Company within five (5) business days of the receipt of the Cash
Receipts by the Company.
9. Adjustment of Cash Distributions. Section 4.2 of the Operating
Agreement is hereby amended to read in its entirety as follows:
"4.2 Adjustment of Distributions. Notwithstanding anything to
the contrary set forth in Section 4.1, if Xxxxxx, Inc. has not
received distributions in an amount equal to the amount of its
entire Undistributed Class A Return and its Class A Invested
Capital by June 16, 2004, Xxxxxx, Inc. shall be entitled to
receive 100% of the Company's Cash Receipts (without any
retention of funds by the Company for working capital needs)
until such time as it has received it entire Undistributed
Class A Return and its Class A Invested Capital. After receipt
of said amounts by Xxxxxx, Inc., Section 4.1 shall again
become controlling."
10. Adjustment of Profit and Loss Allocations. Section 4.3 of the Operating
Agreement is hereby amended and restated to read in its entirety as
follows:
"4.3 Allocation of Profits and Losses.
4.3.1 Profits. After giving effect to the special
allocations set forth in Section 4.4, Profits shall be
allocated to the Members as follows:
4.3.1.1 First, until the Undistributed
Class A Return is reduced to zero, to the holder of
the Class A Membership Interest an amount equal to
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the excess of the distributions previously and
currently made pursuant to the first sentence of
Section 4.1 and Section 4.1(a) over allocations
previously made under this Section 4.3.1.1.
4.3.1.2 Second, after giving effect to the
allocations made pursuant to Section 4.3.1.1, to the
holder of the Class A Membership Interest as
necessary to cause the Class A Membership Interest
Capital Account to at least equal the sum of (i) the
Undistributed Class A Return plus (ii) the Class A
Invested Capital.
4.3.1.3 Third, until the Undistributed
Class B Return is reduced to zero, to the holders of
the Class B Membership Interests in an amount equal
to the excess of the distributions previously and
currently made under Section 4.1(c) over allocations
previously made under this Section 4.3.1.3.
4.3.1.4 Fourth, after giving effect to
allocations made under Section 4.3.1.3, to the
holders of the Class B Membership Interests as
necessary to cause the portion of the Class B
Membership Capital Account of each Member to at least
equal the sum of (i) the Undistributed Class B Return
plus (ii) the Class B Invested Capital.
4.3.1.5 Fifth, to Members with Negative
Capital Accounts in proportion to the ratio of the
Negative Capital Account balances until no Member has
a Negative Capital Account balance.
4.3.1.6 Sixth, after giving effect to the
allocations made above, to those Unit Holders whose
Adjusted Capital Contributions are in excess of their
Capital Accounts in accordance with the ratio of
those excesses until all excesses have been
eliminated to cause each Unit Holder's Capital
Account balance to be in proportion to the Unit
Holder's then respective Percentage.
4.3.1.7 Seventh, all other profits among
the Unit Holders in proportion to their then
respective Percentages.
4.3.2 Losses. After giving effect to the special
allocations set forth in Section 4.4, Losses shall be
allocated to the Members as follows:
4.3.2.1 First, to the holder of the Class A
Membership Interest as necessary to cause its Class A
Capital Account balance to equal the sum of (i) the
Undistributed Class A Return and (ii) the Class A
Invested Capital.
4.3.2.2 Second, to the holder of the Class
A Membership Interest as necessary to cause the Class
A Capital Account balance, determined after adjusting
the Class A Capital Account for the allocations made
pursuant to Section 4.3.2.1, to equal the Class A
Undistributed Class A Return.
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4.3.2.3 Third, to the holders of the Class
B Membership Interests as necessary to cause each
such holder's Class B Capital Account balance to
equal the sum of (i) the holder's Undistributed Class
B Return and (ii) the holder's Class B Invested
Capital.
4.3.2.4 Fourth, to the holders of the Class
B Membership Interests as necessary to cause each
such holder's Class B Capital Account balance to
equal the holder's Undistributed Class B Return.
4.3.2.5 Fifth, as necessary to cause each
Member's Capital Account balance, determined after
adjusting the Members' Capital Accounts for the
allocations made pursuant to Sections 4.3.2.1 through
4.3.2.4, to equal zero.
4.3.2.6 Sixth, among the Unit Holders in
proportion to their respective Percentages.
11. Adjustment of Board. Section 5.1 of the Operating Agreement is hereby
amended to read in its entirety as follows:
"5.1 Management.
5.1.1. Board of Managers. Subject to the Act or
this Agreement, the powers of the Company shall be exercised
by or under the authority of, and the business and affairs of
the Company shall be managed by, the Board of Managers who
shall be responsible for the management and operations of the
Company and shall have all powers necessary to manage and
control the Company, to conduct its business, and to implement
any decision of the Members adopted pursuant to this
Agreement. The initial Board of Managers shall consist of four
(4) Representatives, two (2) of whom shall be appointed by the
Huttner Members (the "Initial Xxxxxxx Designees") and two (2)
of whom shall be appointed by Xxxxxx, Inc. (the "Initial
Xxxxxx Designees"). In the event of a Deadlock, Xxxxxx, Inc.
shall be entitled to appoint one (1) additional Representative
(the "Second Xxxxxx, Inc. Designee") who shall not be (i) an
officer, employee or director of Xxxxxx, Inc., (ii) any
individual that has a material relationship with Xxxxxx, Inc.
or (iii) an individual that is related by blood or marriage to
any officer, employee or director of Xxxxxx, Inc.; provided,
however, that the Second Xxxxxx Inc. Designee shall not become
a Representative unless the choice of the Designee is approved
by one (1) of the Initial Xxxxxxx Representatives (which
approval shall not be unreasonably withheld). If Xxxxxx, Inc.
and the Initial Xxxxxxx Representatives are not able to agree
upon the Second Xxxxxx, Inc. Designee within thirty days of
notice by Xxxxxx, Inc. to the Initial Xxxxxxx Members of the
proposed Second Xxxxxx, Inc. Designee, then either Xxxxxx,
Inc. or the Initial Xxxxxxx Designees may submit the matter
which is the subject of a Deadlock to the American Arbitration
Association for arbitration under the commercial arbitration
rules of that institution. The arbitration will be conducted
in Houston, Texas and the finding of the arbitrators will be
binding on all parties for all purposes. Each party will bear
its own
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expenses of any such arbitration; provided, however, that at
any time following the issuance of the final arbitration
ruling, the party prevailing in said proceeding may, at its
election and at the expense of the non-prevailing provide for
the entry of the award for enforcement purposes in any court
of competent jurisdiction. The number of Representatives
constituting the Board of Managers may be increased or
decreased from time to time by unanimous approval of the
Members. Representatives shall be elected by the Members as
provided in this Section 5.1.1 and Section 5.2.1, and each
Representative so elected shall hold office until his
successor is duly elected and qualified or until his or her
earlier death resignation, or removal. Any Representative may
resign at any time upon notice to the Company or may be
removed with or without cause, by the Member(s) having
appointed such Representative in accordance with this Section
V. A Representative need not be an employee of a Member or a
resident of the State of Delaware. Subject to the powers of
removal and replacement set forth above in this Section 5.1,
the Huttner Members hereby appoint Xxxxxxx Xxxx and Xxxxxxxxx
X. Xxxxxxx as their initial Representatives and Xxxxxx Inc.
hereby appoints Xxxxxxx X. Xxxxxxxxx and Xxxxxx X. Xxxxxxxx as
its initial Representatives."
12. Class A and Class B Voting. The following Section 5.2.6 is hereby added
to the Operating Agreement:
"5.2.6 The Class A Membership Interests and the
Class B Membership Interests shall not entitle the holders
thereof to any voting rights."
13. Major Decisions. The following Section 5.2.7 is hereby added to the
Operating Agreement:
"5.2.7 Notwithstanding anything to the contrary set
forth in this Agreement the approval of Unit Holders holding
65% or more of the outstanding Units shall be required before
any of the following acts involving the Company may be
undertaken:
(a) any determination to call for any additional Capital
Contribution, or any authorization, issuance or creation of,
or increase of any Membership Rights or other interests in the
Company;
(b) transferring all or substantially all of the assets of the
Company;
(c) any merger, consolidation or other business combination with
respect to the Company or the liquidation or dissolution of
the Company or the adoption of any plan with respect to any
such liquidation or dissolution;
(d) the Company making an assignment for the benefit of creditors,
filing a voluntary petition in bankruptcy, filing a petition
or answer seeking for itself any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar
relief under any statute, law or regulation, or seeking,
consenting to or acquiescing in the appointment by a court of
a trustee, receiver or liquidator of the Company or all or any
substantial part of its assets;
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(e) submitting any application for the entry of a decree of
judicial dissolution of the Company under the Act;
(f) amendment of this Agreement;
(g) borrowing any principal amount in excess of U.S. $50,000,
incurring any contingent liability whatsoever in excess of
U.S. $50,000, lending or guarantying any third party
indebtedness, it being understood that such limitation shall
not be a limitation on the amount or type of trade payables
that may be incurred in the ordinary course of business
consistent in all respects with past practices by the Company.
In the event that a vote shall be taken on a matter specified in
paragraphs (a) through (g) above, the Units held by WHTP, LLC ("WHTP)
shall be voted in accordance with the instructions of the holders of
units in WHTP in accordance with their respective percentage ownership
interests in WHTP, so that, for example, some Units owned by WHTP may
be voted in favor of a matter and other Units owned by WHTP may be
voted against such matter. Contemporaneous with the execution of this
Amendment No. 1 to Operating Agreement, WHTP, West, Huttner, Xxxx and
Xx Xxxxxx, being all of the members of WHTP, shall execute a document
in a form reasonably satisfactory to Xxxxxx, Inc. acknowledging and
confirming the voting arrangement described above."
14. Change of Control of Xxxxxx. The following is hereby added as Section
6.6 of the operating Agreement:
"6.6 Xxxxxx, Inc. Change of Control. In the event
of a Change of Control of Xxxxxx, Inc., Xxxxxx, Inc. shall,
within ten (10) days of the Change of Control, notify the
other Members of such occurrence in writing (the "Change of
Control Notice") and the other Members shall have the right to
purchase all, but not less than all, of the Class A Membership
Interest, Class B Membership Interest and Units then held by
Xxxxxx, Inc. This purchase right will expire forty five (45)
days after the delivery of the Change of Control Notice. The
purchase price for such Interests and Units shall be equal to
the sum of (i) Xxxxxx, Inc.'s Undistributed Class A Return,
(ii) Xxxxxx, Inc.'s Class A Invested Capital, (iii) Xxxxxx,
Inc.'s Undistributed Class B Return, (iv) Xxxxxx, Inc.'s Class
B Invested Capital and (v) the appraised value of the Units
held by Xxxxxx, Inc., as determined through the appraisal
procedure set forth in Section 6.5 of the Operating Agreement.
The percentage of the Class A Membership Interest and the
Class B Membership Interests and the number of Units which may
be purchased by the other Unit Holders shall be determined
using procedures substantially similar to those set forth in
Sections 6.1.4.2 through 6.1.4.4. The closing of any purchase
under this Section 6.6 shall take place within forty-five (45)
days after delivery of the Change of Control Notice."
15. Elimination of Audit Requirement.
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(a) The last sentence of Section 8.3 of the Operating Agreement is
hereby amended to read in its entirety as follows:
"The Company's independent auditors, if any, shall be selected
by the Board of Managers."
(b) Section 8.4.1 of the Operating Agreement is hereby amended to
read in its entirety as follows:
"8.4.1. Annual Reports. The Company shall cause to be
delivered to each Member, within 30 days after the end of each
fiscal year, an annual report containing a balance sheet as of
the end of the Company's fiscal year and statements of income,
Member's equity and cash flows for the year then ended, each
of which may be unaudited but which shall be certified by an
officer of the Company as fairly presenting the financial
position of the Company at the end of such fiscal year and
results of operations of the Company for such year and as
having been prepared in accordance with the accounting methods
followed by the Company for federal income tax purposes and
otherwise in accordance with GAAP. The Company shall prepare
its financial statements and keep its records so as to
facilitate the audit of Xxxxxx, Inc. on a consolidated basis.
16. Conflicts. The parties hereto agree that this Amendment No. 1 to
Operating Agreement amends, supplements and supercedes the prior
agreements among such parties and in the event of a conflict between
any of such prior agreements, this Amendment No. 1 to Operating
Agreement shall control; provided, however, that nothing contained
herein shall impair the rights of Xxxxxx, Inc. under the Note prior to
the conversion of indebtedness contemplated by Section 3 of this
Amendment.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.
1 to Operating Agreement as of the date first above written.
Xxxxxx, Inc.
By:
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Name:
Title:
WHTP, LLC
By:
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Name:
Title:
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Xxxxxxx Xxxx
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Xxxxx X. Xxxx
Xxxxxxx Partnership 1999 LTD
By:
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Its General Partner
By:
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Name:
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Title
-------------------------------------
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SEP FBO Xxxxxxxxx X. Xxxxxxx
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