Amendment No. 3 – Strengthening Distribution Safeguards

This Amendment No. 3 (the “Amendment”) to the Limited Liability Company Agreement of Pleasant Valley Property, LLC, dated January 1, 2024 (the “Agreement”), is adopted by Members holding a Majority in Interest pursuant to Section 13.10 of the Agreement.  All capitalized terms used but not defined herein shall have the meanings set forth in the Agreement.


## 1. Mandatory Quarterly Cash Distributions (Amend Section 6.01)


**Replace** Section 6.01(a) with:


“(a) **Mandatory Quarterly Distributions.**  Within thirty (30) days after the end of each Fiscal Quarter, the Company shall distribute to each Member, pro rata in accordance with their respective Membership Interests, a cash distribution equal to at least seventy-five percent (75%) of “Available Cash” for such quarter.  ‘Available Cash’ means, for any Fiscal Quarter, all cash on the Company’s balance sheet at the end of such quarter, less:

  1. amounts required to satisfy operating expenses and routine capital expenditures for the next two fiscal quarters as reasonably determined by the Managers;  

  2. amounts required to satisfy debt service and reserve accounts under the Company’s financing documents; and  

  3. amounts distributed pursuant to Section 6.02 or withheld pursuant to Section 6.03.

  

**Add** at the end of Section 6.01:


“(d) **Penalty on Late Distributions.**  Any distribution under this Section 6.01 not paid within thirty (30) days after the due date shall bear interest at one and one-half percent (1.5%) per month (18% per annum) until paid in full.”


## 2. Firm Tax Advance Obligations (Amend Section 6.02)


**Replace** “the Company shall use commercially reasonable efforts to distribute…” with:


“(a) **Tax Advances.**  Subject to Section 6.01 and any debt-financing covenants, within ten (10) Business Days before each quarterly tax installment due date under the Code, the Company **shall** distribute cash to each Member in an amount equal to such Member’s Quarterly Estimated Tax Amount.  Such distribution is mandatory and not subject to Manager discretion.


**Amend** Section 6.02(b) to add at end:


“If any Tax Advance is not distributed by the due date, the Company shall pay interest on the shortfall at one percent (1%) per month (12% per annum) until the shortfall is cured.”


## 3. Tighten Withholding Advances (Amend Section 6.03)


**Amend** Section 6.03(b) by inserting:


“Each Withholding Advance shall be made no later than five (5) Business Days after the end of the calendar quarter in which the taxable income was allocated.  If the Member fails to reimburse any Withholding Advance within thirty (30) days of written demand, the advance shall bear interest at the penalty rate of one and one-half percent (1.5%) per month.”


## 4. Independent Valuation for In-Kind Distributions (Amend Section 6.04)


**Replace** Section 6.04(a) with:


“(a) **Distributions in Kind.**  The Members may authorize the Company to distribute property or securities in lieu of cash.  Such distribution may occur only with the unanimous consent of all Members and only after an independent appraisal by a nationally recognized valuation firm whose fee is paid from Company funds.  The appraised value determined by such firm shall be conclusive for distribution purposes.”


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Why These Amendments Work

Removes discretion: Mandatory quarterly distributions and firm tax-advance obligations eliminate PV Legacy’s ability to stall.
Defines “Available Cash”: Creates transparency on how much can flow out without endangering operations or covenants.
Penalizes delay: Interest on late distributions and advances aligns incentives.
Safeguards in-kind valuations: Prevents self-serving asset distributions by requiring unanimous consent and independent appraisal.

With these in place, you’ll transform Article VI from a discretionary free-for-all into a rock-solid, enforceable distribution framework—ensuring you get your cash when it’s due. Let me know if you’d like to adjust percentages, timelines, or carve-outs next.