CALTON INC
CALTON,INC.-A#1 OPERATING AGREEMENT PRIVILEGEONE
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<TYPE>EX-10.14
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<FILENAME>g67239ex10-14.txt
<DESCRIPTION>CALTON,INC.-A#1 OPERATING AGREEMENT PRIVILEGEONE
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                                                                   EXHIBIT 10.14


                                 AMENDMENT NO. 1

                                       TO

                               OPERATING AGREEMENT

                                       OF

                          PRIVILEGEONE NETWORKS, L.L.C.

         This Amendment No. 1 to Operating Agreement of PrivilegeOne Networks,
L.L.C. dated as of February 9 , 2001 among Calton, Inc., a New Jersey
corporation, Taytrowe Van Fechtmann World Companies, LLC, a Delaware limited
liability company ("TVF") and 3D Think, Inc., a Delaware corporation ("3D").

         WHEREAS, the parties hereto have entered into or succeeded to the
interest of a member under that certain Operating Agreement of PrivilegeOne
Networks, L.L.C. dated as of February 2, 2000;

         WHEREAS, PrivilegeOne Networks, L.L.C. (the "Company") requires
additional capital to pursue its business plan and conduct its operations;

         WHEREAS, in connection with the contribution of additional capital by
Calton, Inc. it is necessary to amend certain provisions of the Operating
Agreement and to increase Calton, Inc.'s percentage interest in the Company;

         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.       CAPITAL CONTRIBUTION. Contemporaneous with the execution of this
         Amendment No. 1 to Operating Agreement, Calton shall make an additional
         equity contribution to the Company of $50,000.

3.       ADDITIONAL LOAN. Contemporaneously with the execution of this Amendment
         No. 1 to Operating Agreement, the Company shall execute and deliver to
         Calton, Inc. the Second Promissory Note.

4.       CLAWBACK OPTION. Contemporaneously with the execution of this Amendment
         No. 1 to Operating Agreement, Calton, Inc. shall execute and deliver to
         each of TVF and 3D the Clawback Option.


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5.       AMENDMENT OF PROMISSORY NOTE. The parties hereby agree that
         contemporaneously with the execution of this Agreement, the Company and
         the parties hereto shall amend the Promissory Note pursuant to an
         Amendment No. 1 to Promissory Note in the form annexed hereto as Annex
         III.

6.       AMENDMENTS TO OPERATING AGREEMENT.

         (a)      The following definitions are hereby added to Section 1.1 of
                  the Operating Agreement:

                  "Claw Back Option" means the option granted to TVF and 3D
                  pursuant to the Claw Back Option Agreement annexed hereto as
                  Annex I.

                  "Second Promissory Note" means the promissory note of even
                  date herewith issued to Calton, Inc. by the Company in the
                  form annexed hereto as Annex II.

         (b)      Section 3.1 of the Operating Agreement is hereby amended to
                  read in its entirety as follows:

                  "3.1 CAPITAL CONTRIBUTIONS. The Members hereby acknowledge
                  that the Corporation made a contribution of its business and
                  assets, which had an agreed value of $92,337.46 as of February
                  2, 2000, to the Company. In addition, Calton, Inc. made a
                  $50,000 equity contribution to the Company as of February 6 ,
                  2001. The Capital Contributions to which each Member has
                  succeeded and/or made and the Percentages applicable to each
                  Member are set forth on Exhibit A hereto."

         (c)      Section 5.1.2 is hereby amended to read in its entirety as
                  follows:

                  "5.1.2 ELECTION AND REMOVAL OF REPRESENTATIVES.
                  Representatives shall be elected by Members by a plurality
                  vote (based upon Percentages voted by Members) at the annual
                  meeting of Members to be held each year pursuant to Section
                  5.2.1; provided, however, that notwithstanding any change in
                  the Percentages which may occur after the date hereof (i)
                  until the later of (x) the payment in full of the Promissory
                  Note and the Second Promissory Note and (z) December 31, 2004
                  (the "Control Termination Date"), Calton, Inc. shall have the
                  right to nominate for election a majority of the
                  Representatives, (ii) after the Control Termination Date,
                  Calton, Inc. shall have the right to nominate a number of
                  Representatives in proportion to its Percentage and (iii) all
                  of the Members hereby agree to vote in favor of the election
                  of the Calton, Inc. nominees as Representatives. Calton, Inc.
                  agrees that the other Members of the Company (the "Non-Calton
                  Members") shall collectively have the right to nominate the
                  remaining Representatives in each election of Representatives
                  and agrees that it shall vote in favor of the election of such
                  nominees. Representatives who are nominees of Calton, Inc. may
                  only be removed by Calton, Inc. Representatives who are
                  nominees of the Non-Calton Members may be removed only a vote
                  of the Non-Calton Members holding a majority of the
                  Percentages held by the Non-Calton Members. Any vacancy in the
                  Board of Directors may be filled by the Member(s) who
                  nominated the Representative whose absence has caused the
                  vacancy."




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         (d)      Section 5.1.10 is hereby amended to read in its entirety as
                  follows:

                  "5.1.10 POWERS OF MEMBERS. Without limiting the generality of
                  Section 5.1.1 until such time as (i) the Promissory Note and
                  the Second Promissory Note have been repaid in full and (ii)
                  the Clawback Option has been exercised in full, the unanimous
                  approval of the Members shall be required before any of the
                  following acts involving the Company:

                  (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;

                  (e)      submitting any application for the entry of a decree
                           of judicial dissolution of the Company under the Act;

                  (f)      amendment of this Agreement;

                  After such time as the Promissory Note and the Second
                  Promissory Note is paid in full and the Clawback Option is
                  exercised, the unanimous approval of the Members shall be
                  required before any of the acts specified in paragraphs (a)
                  through (f) above and any of the following acts involving the
                  Company may be taken:

                  (1)      exercising any purchase option pursuant to Section
                           6.1.4.3.;

                  (2)      borrowing any principal amount in excess of U.S.
                           $10,000, incurring any contingent liability
                           whatsoever in excess of U.S. $10,000, 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;

                  (3)      approving of the Company's annual operating budget,
                           and any material deviations therefrom, including
                           setting or amending the compensation level of any




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                           officer or other similarly compensated person to the
                           extent that any such compensation level is not in
                           accordance with the Executive Incentive Pay Schedule
                           developed by the Company and annexed hereto as
                           Exhibit C;

                  (4)      incurring any lien on any assets of the Company,
                           other than purchase money liens on items the purchase
                           of which is not otherwise subject to approval
                           hereunder;

                  (5)      executing or otherwise entering into, or amending,
                           modifying or the terminating any contract with an
                           officer, employee or Representative of the Company or
                           a Member, an Affiliate of a Member or a person
                           related by blood or marriage to an officer, employee
                           or Representative of the Company or a Member
                           involving aggregate consideration (including assumed
                           actual and contingent liabilities) or fair market
                           value or actual or contingent liability in excess of
                           U.S. $10,000;

                  (6)      approving of Member loans to or from the Company;

                  (7)      amending the Company's certificate of formation;

                  (8)      the adoption or modification of financial accounting
                           methods or principles (except those required by
                           changes in accounting industry standards or approved
                           as consistent with GAAP as applied by such accounting
                           firm), or any decision not to audit the financial
                           statements of the Company; or

                  (9)      any material change in the business of the Company."

                  Neither the execution of this Amendment nor anything contained
                  herein shall constitute a waiver by any individual or Member
                  of rights they may have pursuant to contracts with the Company
                  that pre-date and exist as of the date of this Amendment.

         (e)      Section 6.1.1.4 is hereby amended to read in its entirety as
                  follows:

                  "6.1.1.4 the Transfer will not result in the Company or
                  Calton, Inc. being subject to the Investment Company Act of
                  1940, as amended."

         (f)      Exhibit A to the Operating Agreement is hereby amended to read
                  in its entirety as set forth in Annex III hereto.

                  Nothing contained herein shall be deemed to require the
                  approval of Calton, Inc. as a Member to repay and/or terminate
                  the Promissory Note or the Second Promissory Note.

7.       WEB DEVELOPMENT WORK. Website development and hosting work will be
         offered by the Company to eCalton.com, Inc. as the preferred vendor
         based upon competitive bids for all work having a cost in excess of
         $5,000.



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8.       INFORMATION SYSTEMS. Each of the Members hereby acknowledges and agrees
         that notwithstanding anything to the contrary set forth above, until
         such time as the Promissory Note and the Second Promissory Note are
         paid in full and the Clawback Option is exercised, the Company shall
         make no expenditures for items related to computers, software, computer
         systems or information technology which have a cost in excess of $1,500
         without the prior written approval of Calton, Inc.

9.       CALTON, INC. APPROVAL RIGHTS. Each of the Members hereby acknowledges
         and agrees that notwithstanding anything to the contrary set forth
         above, until such time as the Promissory Note and Second Promissory
         Note are paid in full and the Clawback Option is exercised, the Company
         shall make no expenditure or contractual commitment in an amount in
         excess of $2,500 without the prior written approval of Calton, Inc.

10.      COUNTERPARTS. This Amendment No. 1 to Operating Agreement may be
         executed in two or more counterparts, each of which shall be deemed an
         original, but all of which, when taken together, shall constitute one
         and the same document. The signature of any party to any counterpart
         shall be deemed a signature to and may be appended to, any other
         counterpart.

         IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.
1 to Operating Agreement as of the date first above written.

                                     Calton, Inc.


                                        By:
                                           ----------------------------------
                                      Name:
                                     Title:

                                     Taytrowe Van Fechtmann World
                                      Companies, LLC

                                        By:
                                           ----------------------------------
                                      Name:
                                     Title:

                                     3d Think, Inc.

                                        By:
                                           ----------------------------------
                                      Name:
                                     Title:





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                                                                       ANNEX III

                                    EXHIBIT A

                          PRIVILEGEONE NETWORKS, L.L.C.
                               OPERATING AGREEMENT

                    LIST OF MEMBERS, CAPITAL AND PERCENTAGES



Name and Address                            Capital Contribution      Percentage
----------------                            --------------------      ----------
Taytrowe Van Fechtmann World Companies, LLC       $34,179.66            18.35%
20 Fry Pond Road
West Greenwich, RI  02817
(Taxpayer I.D. No.:***)

Calton, Inc.                                      $85,103.00            69.25%
125 Half Mile Road, Suite 206
Red Bank, NJ  07701-6749
(Taxpayer I.D. No.: 22-243361)

3D THINK, INC.                                    $23,094.37            12.40%
20 Fry Pond Road
West Greenwich, RI  02817
(Taxpayer I.D. No.:05-0511869)




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