Amendment No. 4 – Strengthening Exculpation & Indemnification

This Amendment No. 4 (the “Amendment”) to the Limited Liability Company Agreement of Pleasant Valley Property, LLC, dated January 1, 2024 (the “Agreement”), is adopted by the Members owning a Majority in Interest pursuant to Section 13.10 of the Agreement. All capitalized terms not defined herein shall have the meanings set forth in the Agreement.


## 1. Narrow Exculpation to Gross Negligence and Willful Misconduct


**Amend** Section 10.01(b) to read:


> “No Covered Person shall be liable to the Company or any other Covered Person for any act or omission in such Covered Person’s capacity as a Covered Person, **except** for (i) fraud, (ii) gross negligence, or (iii) willful misconduct. The protections of this Section 10.01 shall not apply to claims arising from grossly negligent or intentional breaches of this Agreement.”


## 2. Restore Basic Duty of Care


**Amend** Section 10.02(a) by inserting:


> “Notwithstanding any waiver herein, each Manager and Member shall owe to the Company the duty of care defined in the Delaware Act (gross negligence standard) and the duty of loyalty, including an obligation to avoid self-dealing and to present corporate opportunities (see new Section 7.10). These duties may not be eliminated or limited by this Agreement.”


## 3. Mandatory Advancement and Timeline


**Replace** Section 10.03(c) with:


> “(c) **Expenses Advances.**  The Company shall advance all fees, costs and expenses (“Expenses”) incurred by a Covered Person in connection with any Proceeding within ten (10) Business Days after receipt of a written request for advancement, notwithstanding the outcome of such Proceeding. If the Company later determines the Covered Person is not entitled to indemnification, the Covered Person shall promptly repay the amount advanced.”


## 4. Mandatory D&O Insurance


**Insert** new Section immediately after 10.03:


> “10.03A Directors’ & Officers’ Insurance.  The Company shall maintain, at its expense, directors’ & officers’ liability insurance covering all Covered Persons in amounts and on terms reasonably satisfactory to the Managers, with a deductible no greater than \$50,000 per claim.”


## 5. Dispute Resolution


**Amend** Section 10.03(b) by adding:


> “Any dispute regarding a claim for indemnification or advancement shall be submitted to binding arbitration in Eau Claire County, Wisconsin, under the American Arbitration Association’s Commercial Arbitration Rules, with each party bearing its own costs except that the prevailing party shall recover reasonable attorneys’ fees and arbitration expenses.”


## 6. Priority of Indemnification


**Amend** Section 10.03(f) to clarify:


> “Notwithstanding anything to the contrary, all indemnification obligations under this Article X shall be satisfied solely from Company assets, **and such obligation shall be senior to all other distributions or payments by the Company**.”

Rationale for These Enhancements

Rebalances accountability by carving out gross negligence; you remain shielded from honest mistakes but can’t act recklessly.
Restores a basic duty-of-care floor so Managers can be held responsible for egregious mistakes or conflicts.
Guarantees prompt fee advances with a hard 10-day deadline, avoiding cash-flow logjams.
Shifts risk to an insurance carrier, preserving Company cash for operations.
Keeps disputes out of court and awards fees to the winner, speeding resolutions.
Elevates indemnity above all other Company payouts, ensuring Covered Persons aren’t left unsecured.

With these amendments, you lock in strong legal protection without surrendering accountability. Let me know if you’d like to refine any clause or pivot next to Article XI (Tax Matters) for another deep dive.