FIRST AMENDMENT TO THE OPERATING AGREEMENT OF
THREE FORKS NO 1 LLC
(A Colorado Limited Liability Company)
This First Amendment to the Operating Agreement for Three Forks No 1 LLC
(hereinafter "Company or LLC") is made and entered into this 1st day of January,
2013, by and between all Members of the LLC who have affixed their signature
hereto as of this date.
WHEREAS,
A. The Initial Owners entered into an operating agreement governing the
operations of the LLC on November 8, 2012, copy attached as Exhibit 1
(hereinafter "Original Operating Agreement") and;
B. Pursuant with Article V of the Operating Agreement, it is the desire
of the Members of the LLC that the Managers of the LLC be compensated
for their services and that the Managers have full, complete and
unilateral power to acquire whatever equipment or other assets
necessary to carry out the PERMITTED BUSINESS of the LLC and;
C. Pursuant with Article VIII of the Operating Agreement, it is the
intent of the LLC to acquire the rights and obligations owned by the
Manager in a certain Farmout Agreement located in Archer County TX in
an effort to develop and produce an 87% working interest in such
property and;
D. Pursuant with Article VIII of the Operating Agreement, it is the
desire of the LLC that Additional Owners are granted the right to
purchase an Economic Interest in the LLC at the same consideration
granted to the Initial Owners and;
E. Pursuant with Article XIII of the Original Operating Agreement, it is
the desire of the Members of the LLC that the Managers are granted
sole authority to admit Additional Owners to the LLC subject to the
terms and conditions of this Operating Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
contained herein, and intending to be legally bound, the members agree and
contract as follows:
1. Amendments to Original Operating Agreement:
ARTICLE I -- DEFINITIONS -- OF THE ORIGINAL OPERATING AGREEMENT IS HEREBY
AMENDED TO READ AS FOLLOWS PURSUANT TO THOSE DEFINITIONS AS STATED BELOW:
"Capital Contribution".". The last sentence is hereby changed to read in
its entirety as follows: "ADDITIONAL CAPITAL CONTRIBUTIONS" shall mean any
additional capital contribution to the capital of the Company pursuant to
this Operating Agreement and that is included in and apart of Exhibit B.
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"Company". This Definition is hereby changed to read in its entirety as
follows: "COMPANY OR LLC" shall refer to this Colorado limited liability
company.
"Economic Interest Owner". This Definition is hereby changed to read in its
entirety as follows: "ECONOMIC INTEREST OWNER" shall mean the owner of an
economic interest.
ARTICLE IV -- NAMES AND ADDRESSES OF OWNERS -- OF THE ORIGINAL OPERATING
AGREEMENT IS HEREBY CHANGED TO READ IN ITS ENTIRETY AS FOLLOWS:
The names and addresses of the initial Owners are as set forth in EXHIBIT
"A" hereto which will be amended from time to time and set forth in EXHIBIT
"B" as Additional Owners are admitted.
SECTION 5.12 OF THE ORIGINAL OPERATING AGREEMENT IS HEREBY CHANGED TO READ IN
ITS ENTIRETY AS FOLLOWS:
SALARIES. The salaries and other compensation of Manager shall be fixed
from time to time by the Members holding a super-majority of two-thirds
(2/3) of the Voting Interests in a duly constituted meeting of such, and no
Manager shall be prevented from receiving such salary by reason of the fact
that he is also a Member of the Company. As compensation for acting as
Manager, the Company shall pay from operations Three Forks, Inc. the sum of
$16,000 per month.
SECTION 5.4 OF THE ORIGINAL OPERATING AGREEMENT IS HEREBY AMENDED TO DELETE IN
ITS ENTIRETY SECTION 5.4(C).
SECTION 6.4 OF THE ORIGINAL OPERATING AGREEMENT IS HEREBY CHANGED TO READ IN ITS
ENTIRETY AS FOLLOWS:
APPROVAL OF SALE OF ASSETS. The Members holding a super-majority of
two-thirds (2/3) of the Voting Interests shall have the right, voting in a
duly constituted meeting of such, to approve the sale, exchange, or other
disposition of all, or substantially all, of the Company's assets.
SECTION 7.8 OF THE ORIGINAL OPERATING AGREEMENT IS HEREBY AMENDED TO CHANGE
EXHIBIT "A" TO EXHIBIT "B".
SECTION 8.1 OF THE ORIGINAL OPERATING AGREEMENT IS HEREBY CHANGED TO READ IN ITS
ENTIRETY AS FOLLOWS:
MANAGERS INITIAL CAPITAL CONTRIBUTIONS.
Three Forks, Inc. will serve as Manager but will not make any Capital
Contributions to the LLC and will not participate in the revenues of the
LLC. The LLC will enter into a Purchase and Sale Agreement with Three
Forks, Inc. to acquire eighty-seven percent (87%) of the working interest
held by the Manager in the Archer County TX Farmout of nine (9) wells, at
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the Manager's cost. As such, Three Forks, Inc. and its related parties will
pay its costs to drill and complete the wells related to its remaining and
separate working interest in the Farmout.
SECTION 8.2 OF THE ORIGINAL OPERATING AGREEMENT IS HEREBY CHANGED TO READ IN ITS
ENTIRETY AS FOLLOWS:
CAPITAL CONTRIBUTIONS. The Owners shall make Capital Contributions of
$25,000 per unit in accordance with the terms of this Operating Agreement
to capitalize the business of the Company. Each Member shall sign a Joinder
Agreement as evidence of agreeing to the terms of this Operating Agreement.
ARTICLE XIII -- ADDITIONAL OWNERS -- OF THE ORIGINAL OPERATING AGREEMENT IS
HEREBY CHANGED TO READ IN ITS ENTIRETY AS FOLLOWS:
13.1 ADMISSION OF ADDITIONAL OWNERS. From January 1, 2013 and thereafter
and with the written consent of the Managers, any Person acceptable to such
Managers may, subject to the terms and conditions of this Operating
Agreement: (i) become an Additional Owner in this Company by the sale of an
Economic Interest for such consideration pursuant to section 8.2 hereof in
this Operating Agreement or (ii) become a Substitute Owner as a transferee
of an Owner's Economic Interest or any portion thereof in accordance with
the provisions of Article X.
13.2 ALLOCATIONS TO ADDITIONAL OWNERS. No Additional or Substitute Owner
shall be entitled to any retroactive allocation of income, losses or
deductions incurred by the Company. The Manager may, at his option, at the
time an Additional or Substitute Owner is admitted, close the Company's
books (as though the Company's tax year had ended) or make pro rata
allocations of income, losses and deductions to an Additional or Substitute
Owner for that portion of the Company's tax year in which an Additional or
Substitute Owner for that portion of the Company's tax year in which an
Additional or Substitute Owner was admitted, in accordance with the
provisions of Section 706(d) and the Treasury Regulations promulgated
thereunder.
13.3 ADDITIONAL MEMBERS. Notwithstanding anything contained in this
Agreement to the contrary, an Additional Owner may become a Member with the
written consent of the Managers. Upon such approval, the Voting Interests
shall be reallocated among the existing Members and such additional Members
in order to equal one hundred percent (100%).
2. All capitalized terms not defined in this First Amendment will have the
meaning ascribed to in the Original Operating Agreement.
3. Except as otherwise provided herein, all other terms and conditions of the
Original Operating Agreement remain in full force and affect.
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4. All LLC Members hereby agree and consent to be bound by the terms of the
entire Operating Agreement encompassed by the original as modified by this First
Amendment.
IN WITNESS WHEREOF, the Members of Three Forks No 1 LLC have duly executed this
First Amendment to the Original Operating Agreement pursuant with the terms of
section 15.5 hereof in the Original Operating Agreement as of the date first
written above by executing that certain Approval Agreement attached hereto as
Exhibit I.
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EXHIBIT I
APPROVAL OF THIS FIRST AMENDMENT TO THE OPERATING AGREEMENT OF
THREE FORKS NO 1 LLC
I (We) hereby attest that I (we) am (are) a Member of Three Forks No 1 LLC as of
January 1, 2013 and that by the below signature have approved the First
Amendment to the Original Operating Agreement of Three Forks No 1 LLC effective
January 1, 2013.
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(Name of Member) Number of Units