EXHIBIT 3.4
SECOND AMENDMENT
TO
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF
SARDY HOUSE, LLC
This Second Amendment to Limited Liability Company Agreement of Sardy
House, LLC (this "Amendment") is executed this 15th day of July, 2003, by Block
66, LLC ("Manager"), as manager of the Sardy House, LLC (the "Company"), and by
North and South Aspen, LLC ("Member"), as sole member of the Company.
RECITALS
A. The Member formed the Company by filing Articles of Organization on
February 4, 2003 with the Colorado Secretary of State, and by executing the
Limited Liability Company Agreement as of March 21, 2003, as amended by that
certain First Amendment dated May 20, 2003 (the "Agreement"). Terms defined in
the Agreement shall have the same meaning in this Amendment unless otherwise
defined herein.
B. Member and Manager now desire to amend the Agreement as set forth
below.
C. In accordance with sections 14.2 and 7.7 of the Agreement, Member
hereby waives notice of any meeting, and consents to and approves the action
taken in this Amendment.
AGREEMENT
Now, therefore, in consideration of the mutual promises and other
valuable consideration, the parties agree as follows:
1. Amendments.
a. In Section 4.3(iii), "Rights of Holders of Units,"
subsection (iii) is deleted and replaced in its entirety with the
following:
"The net proceeds available for distribution to the Member
attributable to the leasing of a Residence during the Member's
confirmed Exclusive Week after deduction for the expenses of
such rental activity which may include leasing commissions,
management fees and a proportionate share of other expenses
such as general operating expenses for the Residences."
b. Section 4.9, "Legend," is deleted and replaced in its
entirety with the following:
"Section 4.9 Legend.
(i) In the event that certificates representing Units in the
Company are issued, such certificates shall bear, in addition to any
other legend or legends required by applicable securities laws, a
legend in substantially the following form:
THE UNIT REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE
TERMS AND CONDITIONS SPECIFIED IN A LIMITED LIABILITY COMPANY
OPERATING AGREEMENT, AS AMENDED, GOVERNING THE COMPANY BY AND
AMONG THE MEMBERS THERETO. SUCH TERMS AND CONDITIONS INCLUDE
PROVISIONS FOR ASSESSMENTS OF REQUIRED CAPITAL CONTRIBUTIONS
FROM THE HOLDER OF THE UNIT REPRESENTED HEREBY AND PROVISIONS
TO WHICH THE TRANSFER OF THE UNIT REPRESENTED HEREBY IS
SUBJECT. A COPY OF SUCH LIMITED LIABILITY COMPANY OPERATING
AGREEMENT IS AVAILABLE AT THE COMPANY'S PRINCIPAL OFFICE.
(ii) In the event that certificates representing Units in the
Company which constitute "restricted securities" under applicable
securities laws are issued, such certificates shall bear, in addition
to the legend set forth in subsection (i) above, a legend in
substantially the following form:
THE UNIT REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR UNDER ANY OTHER APPLICABLE SECURITIES
LAWS, AND IS A "RESTRICTED SECURITY" AS THAT TERM IS DEFINED
IN RULE 144 UNDER THE SECURITIES ACT. SUCH UNIT IS SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND SALE AND MAY NOT BE
OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND ANY OTHER APPLICABLE SECURITIES LAWS, OR
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT AND ANY OTHER APPLICABLE SECURITIES LAWS, THE
AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION
OF THE COMPANY."
c. In Section 5.5 "Quorum, Manner of Acting, Etc.," the
second-to-last sentence is deleted and replaced in its entirety with
the following, and the remainder of the Section shall remain unaltered
and unchanged:
2
"By resolution of the Committee Members and if provided for in
an approved and ratified budget, any Committee Member may be
paid any one or more of the following: his expenses, if any,
for attendance at meetings; a fixed sum for attendance at each
meeting; a stated salary as Committee Member; or such other
compensation as the Committee Member and the remaining
Committee Members may reasonably agree upon."
d. In Section 6.12(i), "Officers," the last sentence in
subsection (i) is deleted and replaced in its entirety with the
following, and the remainder of the Section shall remain unaltered and
unchanged:
"So long as individuals who are principals of the Manager are
designated as officers of the Company, such individuals shall
receive no additional salary or compensation for their service
as officers. Any other compensation to officers designated
under any other circumstances shall be fixed as a specific
item of the Company's operations budget to be approved by the
Advisory Committee and ratified by the Members in accordance
with this Operating Agreement."
e. Section 9.3, "Income Allocation for Tax Purposes," is
deleted in its entirety and replaced in its entirety to read as
follows:
"9.3 Income and Loss Allocation for Tax Purposes. The Income
and Loss of the Company shall be accounted for separately with
respect to the Residences ("Residence Income" and "Residence
Loss") and the activities of the Company in connection with
the rental of lodging units (the "Lodging Income" and "Lodging
Loss"). Lodging Income and Lodging Loss shall be allocated to
the Members in accordance with the number of Units held by
each. Each Member shall be allocated net Residence Income
equal to the gross amount received by the Company with respect
to the Member's Exclusive Weeks for which the Main Residence
or Carriage House Residence, as the case may be, is rented by
the Company less that portion of the expenses, including any
depreciation, attribute to the rental the Main Residence or
Carriage House Residence during the Member's Exclusive Weeks
as determined by the Manager. The Manager shall make
appropriate further allocations to account for the differences
in the operational costs and other items between the Main
Residence and the Carriage House Residence. In making the
allocations of Income and Loss, the Company shall follow the
rules in Exhibit B, "Regulatory Allocations."
f. In Section 10.2, "Fiscal Year," is deleted and replaced in
its entirety with the following:
"This fiscal year of the Company shall commence April 1 and
end on March 31."
3
g. Section 12.7, "Admission of New Members," is deleted in its
entirety.
2. New Exhibit B. The Agreement shall be amended to include a new
Exhibit B, "Regulatory Allocations," as set forth and attached to this Amendment
as Exhibit B.
3. Incorporation. The terms and provisions of Paragraphs 1 and 2 of
this Amendment are hereby incorporated into the Agreement and, except for the
amendment herein contained, all of the terms and provisions of the Agreement
shall remain in full force and effect, unaltered and unchanged by this
Amendment. To the extent that the terms and provisions of this Amendment
conflict with the terms and provisions of the Agreement, the terms and
provisions of this Amendment shall control.
4. Counterparts. This Amendment may be executed in any number of
counterparts, and each such counterpart shall be deemed for all purposes to be
an original, and all counterparts shall together constitute but one and the same
Amendment.
IN WITNESS WHEREOF, the parties hereto, intending legally to
be bound hereby, have executed this Second Amendment to Limited Liability
Company Agreement of Sardy House, LLC as of the date first above written.
MEMBER:
NORTH AND SOUTH ASPEN, LLC, a Colorado
limited liability company
By: /S/ XXXXX X. XXXXXX
------------------------
Xxxxx X. Xxxxxx, Manager
MANAGER:
BLOCK 66, LLC, a Colorado limited liability
company
By: /S/ XXXXXX X. XXXXXX
-------------------------
Xxxxxx X. Xxxxxx, Manager
4
SARDY HOUSE, LLC
EXHIBIT B
REGULATORY ALLOCATIONS
1. Special Allocations. The following special allocations shall be made
in the following order (references to sections are to the Federal Income Tax
Regulations):
(a) Minimum Gain Chargeback. Except as otherwise provided in
Section 1.704-2(f), notwithstanding any other provision of this Section, if
there is a net decrease in Minimum Gain (as defined in Section 1.704-2(d))
during any accounting period, each Member shall be specially allocated items of
Income for such accounting period (and, if necessary, subsequent accounting
periods) in an amount equal to such Member's share of the net decrease in
Minimum Gain, determined in accordance with Section 1.704-2(g). Allocations
pursuant to the previous sentence shall be made in proportion to the respective
amounts required to be allocated to each Member pursuant thereto. The items to
be so allocated shall be determined in accordance with Sections 1.704-2(f)(6)
and 1.704-2(j)(2). This Subsection is intended to comply with the minimum gain
chargeback requirement in Section 1.704-2(f) and shall be interpreted
consistently therewith.
(b) Member Minimum Gain Chargeback. Except as otherwise
provided in Section 1.704-2(i)(4), notwithstanding any other provision of this
Section, if there is a net decrease in Member nonrecourse debt Minimum Gain
attributable to Member nonrecourse debt during any accounting period, each
Person who has a share of the Member nonrecourse debt Minimum Gain attributable
to such Member nonrecourse debt, determined in accordance with Section
1.704-2(i)(5), shall be specially allocated items of Company income and gain for
such accounting period (and, if necessary, subsequent accounting periods) in an
amount equal to such Person's share of the net decrease in Member nonrecourse
debt Minimum Gain attributable to such Member nonrecourse debt, determined in
accordance with Section 1.704-2(i)(4). Allocations pursuant to the previous
sentence shall be made in proportion to the respective amounts required to be
allocated to each such Person pursuant thereto. The items to be so allocated
shall be determined in accordance with Sections 1.704-2(i)(4) and 1.704-(j)(2).
This subsection is intended to comply with the Minimum Gain chargeback
requirement in Section 1.704-2(i)(4) and shall be interpreted consistently
therewith.
(c) Qualified Income Offset. In the event any Member
unexpectedly receives any adjustments, allocations or distributions described in
Section 1.704-1(b)(2)(ii)(d)(4), Section 1.704-1(b)(2)(ii)(d)(5), or Section
1.704-1(b)(2)(ii)(d)(6), items of Income shall be specially allocated to each
such Person in an amount and manner sufficient to eliminate, to the extent
required by the Regulations, the adjusted Capital Account deficit of such Person
as quickly as possible, provided that an allocation pursuant to this subsection
shall be made if and only to the extent that such Person would have an adjusted
Capital Account deficit after all other allocations provided for in this section
have been tentatively made as if this subsection were not in the Agreement.
(d) Gross Income Allocation. In the event any Member has a
deficit Capital Account at the end of any Company accounting period which is in
excess of the sum of (i) the amount such Person is obligated to restore
(pursuant to the terms of such Person's promissory
B-1
note, if any, or otherwise), and (ii) the amount such Person is deemed to be
obligated to restore pursuant to the penultimate sentences of Sections
1.704-2(g)(1) and 1.704-2(i)(5), each such Person shall be specially allocated
items of Income in the amount of such excess as quickly as possible, provided
that an allocation pursuant to this subsection shall be made if and only to the
extent that such Person would have a deficit Capital Account in excess of such
sum after all other allocations provided for in this section have been
tentatively made as if this Subsection and Subsection 1(c) hereof were not in
the Agreement.
(e) Nonrecourse Deductions. Nonrecourse deductions (as defined
in Section 1.704-2(c)) for any Company accounting period shall be specially
allocated among the Members in proportion to their Units.
(f) Member Nonrecourse Deductions. Any nonrecourse deductions
for any Company accounting period shall be specially allocated to the Member who
bears the economic risk of loss with respect to the nonrecourse debt to which
such Member nonrecourse deductions are attributable in accordance with Section
1.704-2(i)(1).
(g) Section 754 Adjustment. To the extent an adjustment to the
adjusted tax basis of any Company asset pursuant to Code Section 734(b) or Code
Section 743(b) is required, pursuant to Section 1.704-1(b)(2)(iv)(m)(2) or
Section 1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital
Accounts as the result of a distribution to a Member in complete liquidation of
its interest in the Company, the amount of such adjustment to the Capital
Accounts shall (to the extent permitted by the Regulations to Code Section
704(b)) be taken into account as gain (if the adjustment increases the basis of
the asset) or loss (if the adjustment decreases such basis) from the disposition
of the asset for purposes of computing Income or Loss; otherwise, to the extent
not so permitted by the Regulations, such gain or loss shall be specially
allocated to the Members in accordance with their Units in the event that
Section 1.704-1(b)(2)(iv)(m)(2) applies, or to the Members to whom such
distribution was made in the event that Section 1.704-1(b)(2)(iv)(m)(4) applies.
2. Curative Allocations. The allocations set forth in Section 1 hereof
(the "Regulatory Allocations") are intended to comply with certain requirements
of the Regulations. It is the intent of the Members that, to the extent
possible, all Regulatory Allocations shall be offset either with other
Regulatory Allocations or with special allocations of other items of Company
income, gain, loss, or deduction pursuant to this Section. Therefore,
notwithstanding any other provision of this Exhibit (other than Section 4 hereof
and the Regulatory Allocations), the Manager shall make such offsetting special
allocations of Company income, gain, loss, or deduction in whatever manner it
determines appropriate, so that, after such offsetting allocations are made,
each Member's Capital Account balance is, to the extent possible, equal to the
Capital Account balance such Person would have had if the Regulatory Allocations
were not part of the Agreement. In exercising its discretion under this Section,
the Manager shall take into account future Regulatory Allocations under Sections
1(a) and 1(b) that, although not yet made, are likely to offset other Regulatory
Allocations previously made under Sections 1(e) and 1(f).
B-2
3. Other Allocation Rules.
(a) Generally, except as otherwise provided herein, all
Income, Loss and all other items allocated to the Members shall be allocated
among them in proportion to the Units held by each. In the event that Members
are admitted to the Company on different dates during any Company accounting
period, except as otherwise provided herein, the Income or Loss allocated to the
Members for each such accounting period shall be allocated among the Members in
proportion to the number of Units each holds from time to time during such
accounting period in accordance with Code Section 706, using any convention
permitted by law and selected by the Manager.
(b) For purposes of determining the Income, Loss or any other
items allocable to any period, Income, Loss, and any such other items shall be
determined on a daily, monthly, or other basis, as determined by the Manager
using any permissible method under Code Section 706 and the Regulations
thereunder.
(c) The "excess nonrecourse liabilities" of the Company within
the meaning of Section 1.752-3(a)(3), for any Company accounting period, shall
be specially allocated to and among the Members, in proportion to their number
of Units.
4. Manager's Discretionary Powers. The Members intend to allocate
Income and Loss in accordance with their economic interests in the Company while
complying with the requirements of Code Sections 704(b) and 752 and the Treasury
Regulations promulgated thereunder. If, in the opinion of the Manager, the
allocation of Income or Loss pursuant to the preceding provisions of this
Section does not (i) satisfy the requirements of Code Sections 704(b) and 752 or
the Treasury Regulations thereunder, (ii) comply with any other provisions of
the Code or Treasury Regulations or (iii) properly take into account any
expenditure made by the Company or the transfer of Units, then notwithstanding
anything to the contrary contained in this Agreement, Income and Loss shall be
allocated in such manner as the Manager in its sole discretion determines to be
required so as to reflect properly items (i), (ii) or (iii), as the case may be,
and the Manager shall have the right to amend this Agreement without action by
the Members to reflect any such change in the method of allocating Income and
Loss; provided, however, that any change in the method of allocating Income or
Loss shall not materially alter the economic agreement among the Members.
B-3
