0001822911-20-000001.txt : 20210524
0001822911-20-000001.hdr.sgml : 20210524
20200828182520
ACCESSION NUMBER: 0001822911-20-000001
CONFORMED SUBMISSION TYPE: 1-A
PUBLIC DOCUMENT COUNT: 9
FILED AS OF DATE: 20200831
DATE AS OF CHANGE: 20210426
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: VV Markets LLC
CENTRAL INDEX KEY: 0001822911
STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-RETAIL STORES, NEC [5990]
IRS NUMBER: 851602921
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 1-A
SEC ACT: 1933 Act
SEC FILE NUMBER: 024-11306
FILM NUMBER: 201149188
BUSINESS ADDRESS:
STREET 1: 2800 PATTERSON AVENUE
CITY: RICHMOND
STATE: VA
ZIP: 23221
BUSINESS PHONE: 8048337974
MAIL ADDRESS:
STREET 1: 2800 PATTERSON AVENUE
CITY: RICHMOND
STATE: VA
ZIP: 23221
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VV Markets LLC
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2800 Patterson Avenue
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Christopher E. Gatewood
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Threshold Counsel, PC
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PART II AND III
4
VVMPreOffCirc0828202.txt
PRELIMINARY OFFERING CIRCULAR
DATED August 28, 2020
An offering statement pursuant to Regulation A relating to these
securities has been filed with the Securities and Exchange
Commission. Information contained in this Preliminary Offering
Circular is subject to completion or amendment. These securities
may not be sold nor may offers to buy be accepted before the
offering statement filed with the Commission is qualified. This
Preliminary Offering Circular shall not constitute an offer to sell or
the solicitation of an offer to buy nor may there be any sales of
these securities in any state in which such offer, solicitation or sale
would be unlawful before registration or qualification under the
laws of any such state. We may elect to satisfy our obligation to
deliver a Final Offering Circular by sending you a notice within
two business days after the completion of our sale to you that
contains the URL where the Final Offering Circular or the offering
statement in which such Final Offering Circular was filed may be
obtained.
Offering Circular
VV Markets LLC
2800 Patterson Ave Ste. 300
Richmond, VA, 23221
(804) 833-9774
Date of This Offering Circular: August 28, 2020
Securities Offered: Series LLC Membership Interests, see page 52
below, ?Description of Interests?
Price per Unit to the public, total minimum and total maximum of
each series all to be determined 1
No Underwriters, Underwriting Discounts, or Commissions 2
No Proceeds to Other Persons, all Proceeds to Issuer
See RISK FACTORS, below, including from page 9 to 27
The approximate date of commencement of proposed sale to the
public is upon qualification of this offering circular, estimated to
be January 1, 2021
Issuer is circulating a preliminary offering circular and intends to
rely on Rule 253(b). A bona fide estimate of the range of the
maximum offering price and the maximum number of securities
offered is $40 to $80 per membership unit and 1,000 to 2,000
units.
1 The Company currently does not have a broker-dealer but may
engage one at a future date. If the Company does engage a broker-dealer,
this Offering Circular will be updated accordingly with the terms of the
agreement between the broker-dealer and the Company.
2 No underwriter has been engaged in connection with the
Offering. We intend to distribute the Series Interests and any other series
of membership interests principally through the VinVesto Platform as
described in greater detail under ?Plan of Distribution and Subscription
Procedure?.
Table of Contents
Cautionary Statement Regarding Forward Looking Statements 3
Offering Summary 4
Offering Size 5
Escrow 5
Offering Period 5
Additional Investors 6
Use Of Proceeds 6
Asset Cost Of The Series 6
Operating Expenses 7
Distribution Rights 8
Fiduciary Duties 8
Indemnification 8
Transfers 9
Risk Factors 9
Risks Related To The Structure, Operation And Performance Of
Our Company 10
Risks Related To The Offering 18
Risks Specific To The Fine Wine Industry 19
Risks Relating To The Underlying Asset 21
Risks Related To Ownership Of Our Interests 24
Potential Conflicts Of Interest 27
Notice Regarding Agreement To Arbitrate 29
Dilution 29
Description Of Series Asset 31
Market Assessment 32
History 32
Depreciation 32
Insurance 32
Storage 32
Depreciation 32
Management?s Discussion And Analysis Of Financial Condition
And Results Of Operation 32
Operating Results 33
Liquidity And Capital Resources 33
Plan Of Operations 33
Plan Of Distribution And Subscription Procedure 34
Plan Of Distribution 34
Private Offerings 35
Investor Suitability Standards 35
Minimum And Maximum Investment 36
Escrow Agent 36
Fees And Expenses 37
Additional Information Regarding This Offering Circular 37
How To Subscribe 38
Description Of The Business 39
Business Of The Company 40
Manager 40
Advisory Board 41
Operating Expenses 41
Indemnification Of The Manager 42
Description Of The Series Agreement 42
Management Fee 43
Asset Selection 43
Asset Acquisition 44
Asset Liquidity 45
Facilities 45
Government Regulation 45
Legal Proceedings 45
Allocations Of Expenses 45
Market Opportunity 47
Management 47
Responsibilities Of The Manager ? 48
Executive Officers, Directors And Key Employees Of The
Manager 50
Advisory Board 50
Responsibilities Of The Advisory Board 50
Compensation Of The Advisory Board 51
Members Of The Advisory Board 51
Compensation 51
Principal Interest Holders 52
Securities Being Offered 52
Description Of Interests 52
Further Issuance Of Interests 54
Distribution Rights 54
No Redemption Provisions 55
No Registration Rights 55
Limited Voting Rights 55
Liquidation Rights 56
Transfer Restrictions 57
Agreement To Be Bound By The Operating Agreement; Power Of
Attorney 58
Duties Of Officers 58
Books And Reports 58
Exclusive Jurisdiction 58
Waiver Of Right To Trial By Jury 59
Listing 59
Material United States Tax Considerations 59
Taxation Of Distributions To Investors 60
Taxation Of Dispositions Of Interests 61
Backup Withholding And Information Reporting 61
Where To Find Additional Information 61
VV Markets LLC, a Delaware Series Limited Liability Company
(?we,? ?us,? ?our,? ?VV Markets? or the ?Company?) is offering
(the ?Offering?) Series membership interests in the Company (the
?Series Interests?, the ?Series? or the ?Interests?) on a best efforts
basis. Sale of the Interests will begin upon qualification of this
Offering Circular to qualified purchasers (a purchaser of the
Interests shall be deemed an ?Investor? or ?Interest Holder?). The
initial closing (?Closing?) of the offering of the Series Interests
will occur on the earliest to occur of (i) the date subscriptions for
the Maximum Interests have been accepted or (ii) a date
determined by the Manager (defined below) in its sole discretion,
provided that subscriptions for the Minimum Series Interests have
been accepted. If Closing has not occurred, the Offering shall be
terminated upon (i) the date which is one year from the date this
Offering Circular is qualified by the U.S. Securities and Exchange
Commission (the ?Commission?) which period may be extended
by an additional six months by the Manager in its sole discretion,
or (ii) any date on which the Manager elects to terminate the
offering in its sole discretion. No securities are being offered by
existing security-holders. This Offering is being conducted under
Regulation A (17 CFR 230.251 et. seq.) and the information
contained herein is being presented in Offering Circular format.
The Company is not offering, and does not anticipate selling,
Series Interests in any state where it is unlawful to do so. The
subscription funds advanced by prospective Investors as part of the
subscription process will be held in a non-interest bearing escrow
account with North Capital Private Securities and will not be
commingled with the operating account of the Series, until, if and
when there is a Closing with respect to that Investor. See ?Plan of
Distribution? and ?Description of Securities Offered? for
additional information.
Cautionary Statement Regarding Forward Looking Statements
The information contained in this Offering Circular includes some
statements that are not historical and that are considered ?forward-
looking statements.? Such forward-looking statements include, but
are not limited to, statements regarding our development plans for
our business; our strategies and business outlook; anticipated
development of the Company, the Manager, each series of the
Company and the VinVesto Platform (defined below); and various
other matters (including contingent liabilities and obligations and
changes in accounting policies, standards and interpretations).
These forward- looking statements express the Manager?s
expectations, hopes, beliefs, and intentions regarding the future. In
addition, without limiting the foregoing, any statements that refer
to projections, forecasts or other characterizations of future events
or circumstances, including any underlying assumptions, are
forward-looking statements. The words ?anticipates?, ?believes?,
?continue?, ?could?, ?estimates?, ?expects?, ?intends?, ?may?,
?might?, ?plans?, ?possible?, ?potential?, ?predicts?, ?projects?,
?seeks?, ?should?, ?will?, ?would? and similar expressions and
variations, or comparable terminology, or the negatives of any of
the foregoing, may identify forward-looking statements, but the
absence of these words does not mean that a statement is not
forward-looking.
The forward-looking statements contained in this Offering Circular
are based on current expectations and beliefs concerning future
developments that are difficult to predict. Neither the Company nor
the Manager can guarantee future performance, or that future
developments affecting the Company, the Manager or the
VinVesto Platform will be as currently anticipated. These forward-
looking statements involve a number of risks, uncertainties (some
of which are beyond our control) or other assumptions that may
cause actual results or performance to be materially different from
those expressed or implied by these forward- looking statements.
All forward-looking statements attributable to us are expressly
qualified in their entirety by these risks and uncertainties. These
risks and uncertainties, along with others, are also described below
under the heading ?Risk Factors.? Should one or more of these
risks or uncertainties materialize, or should any of the parties?
assumptions prove incorrect, actual results may vary in material
respects from those projected in these forward-looking statements.
You should not place undue reliance on any forward-looking
statements and should not make an investment decision based
solely on these forward- looking statements. We undertake no
obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise,
except as may be required under applicable securities laws.
Offering Summary
The following summary is qualified in its entirety by the more
detailed information appearing elsewhere herein and in the
Exhibits hereto. You should read the entire Offering Circular and
carefully consider, among other things, the matters set forth in the
section captioned ?Risk Factors.? You are encouraged to seek the
advice of your attorney, tax consultant, and business advisor with
respect to the legal, tax, and business aspects of an investment in
the Interests. All references in this Offering Circular to ?$? or
?dollars? are to United States dollars.
The Company: The Company is VV Markets, LLC, a Delaware
Series Limited Liability Company formed June 16th, 2020.
Overview: Investing in fine wine has serious barriers to
entry such as the need for a large initial investment for proper
diversification, storage challenges, logistical challenges, lack of
industry expertise, and tremendous market inefficiencies. Today,
those who are passionate about wine are limited to investing
through a wine broker, hiring a wine manager, or self-directed
investing. The current investment options do not address all of
these challenges and barriers. The Company removes these
challenges, allowing everyday investor can access the investment
benefits of fine wine.
The Company will allow investors to invest in fine wine
collections comprised of wines produced all over the world. The
primary fine wine regions include Bordeaux, Burgundy, Italy,
Australia, USA, and some emerging market countries. The
Company will work with industry leaders for each offering, to
provide diversification in its wine collections. By consulting with
experts the Company attempts to acquire top of the line wines with
strong future appreciation prospects. The Company handles
logistics, storage, and insurance with reputable partners that have a
long history of success in the industry.
The Company aims to provide any investor the ability to
invest in the best wines from all over the world.
Underlying Asset: The Series Asset will be a collection of wines.
The wines include a variety of wine vintages. It is not anticipated
that the Series would own any assets other than selected wines,
plus cash reserves for storage, insurance, and other expenses
related to each Series and amounts earned each Series. See
?Description of the ?Series ? for further details.
Securities Offered:
Investors will acquire membership interests of a Delaware Series
LLC of the Company, which will hold each collection of wine
assets. See the ?Description of Interests? section for further
details. The Interests will be non-voting except with respect to
certain matters set forth in the Limited Liability Company
Agreement of the Company (the ?Operating Agreement?). The
purchase of membership interests in Series of the Company is an
investment only in that Series and not an investment in the
Company as a whole.
Investors:
Each investor must be a ?qualified purchaser?. See ?Plan of
Distribution and Subscription Procedure ? Investor Suitability
Standards? for further details. The Manager may, in its sole
discretion, decline to admit any prospective Investor, or accept
only a portion of such Investor?s subscription, regardless of
whether such person is a ?qualified purchaser?. Furthermore, the
Manager anticipates only accepting subscriptions from prospective
Investors located in states where the Broker is registered.
Manager:
VinVesto, Inc, a Delaware corporation is the manager of the
Company and the Series Interests. VinVesto, Inc is developing a
web-based (desktop & mobile) platform using proprietary and
licensed technologies, called VinVesto (the VinVesto platform and
any successor platform used by the Company for the offer and sale
of interests, the ?VinVesto Platform?) through which the Series
Interests and other series interests are sold. The Manager will,
together with its affiliates, own a minimum of 0.5% and up to a
maximum of 10% of the Series upon the Closing of the Offering.
However, the Manager may sell some or all of the Interests
acquired pursuant to this Offering Statement from time to time
after the Closing of this Offering.
Advisory Board:
The Manager intends to assemble an expert network of advisors
with experience in our industries (an ?Advisory Board?) to assist
the Manager in sourcing, validating, and managing fine wines.
Broker:
The Company has not engaged the services of a broker-dealer as of
the date of this Offering Circular. At some time in the future, the
Company may elect to engage such a broker-dealer and will update
the Offering Circular, accordingly.
Minimum & Maximum Interest Purchase:
The minimum subscription by an Investor is one (1) Interest in the
Series and the maximum subscription by any Investor is for
Interests representing 10% of the total Interests in the Series,
although such maximum thresholds may be waived by the
Manager in its sole discretion. The Purchase Price will be payable
in cash at the time of subscription.
Offering Size:
The Company will define a minimum and a maximum number of
Series Interests for each series, pursuant to this Offering (of which
the Manager must own a minimum of 0.5% and may own a
maximum of 10% at the Closing, but which the Manager may sell
at any time after the Closing).
Escrow Agent:
North Capital Private Securities, a Pennsylvania banking
corporation
Escrow:
The subscription funds advanced by prospective Investors as part
of the subscription process will be held in a non-interest bearing
escrow account with the Escrow Agent and will not be
commingled with the operating account of the Series, until if and
when there is a Closing with respect to that Investor.
When the Escrow Agent has received instructions from the
Manager or the Broker that the Offering will close and the
Investor?s subscription is to be accepted (either in whole or part),
then the Escrow Agent shall disburse such Investor?s subscription
proceeds in its possession to the account of the Series. Amounts
paid to the Escrow Agent are categorized as Offering Expenses.
If the Offering is terminated without a Closing, or if a prospective
Investor?s subscription is not accepted or is cut back due to
oversubscription or otherwise, such amounts placed into escrow by
prospective Investors will be returned promptly to them without
interest. Any costs and expenses associated with a terminated
offering will be borne by the Manager.
Offering Period:
The Closing of the Offering will occur on the earliest to occur of
(i) the date subscriptions for the Maximum Interests have been
accepted and funded, or (ii) a date determined by the Manager in
its sole discretion, provided that subscriptions for the Minimum
Series Interests have been accepted. If the Closing has not
occurred, the Offering shall be terminated upon (i) the date which
is one year from the date this Offering Circular is qualified by the
Commission, which period may be extended by an additional six
months by the Manager in its sole discretion, or (ii) any date on
which the Manager elects to terminate the offering in its sole
discretion.
There will be a separate closing with respect to each offering. The
closing of an offering will occur on the earliest to occur of (i) the
date subscriptions for the maximum number of interests offered for
a series have been accepted or (ii) a date determined by our
manager in its sole discretion, provided that subscriptions for the
minimum number of interests offered for a series have been
accepted. If closing has not occurred, an offering shall be
terminated upon (i) the date which is one year from the date such
offering circular or amendment thereof, as applicable, is qualified
by the Commission, which period may be extended with respect to
a particular series by an additional six months by our manager in
its sole discretion, or (ii) any date on which our manager elects to
terminate the offering for a particular series in its sole discretion,
such date not to exceed the date which is 18 months from the date
such offering circular or amendment thereof, as applicable, is
qualified by the Commission. No securities are being offered by
existing security-holders.
Additional Investors:
The Manager and its affiliates must purchase a portion of the
Interests (a minimum of 0.5% and up to a maximum of 10%)
offered hereunder upon the Closing of the Offering. In addition,
the Asset Seller may purchase a portion of the Interests. The
Manager may sell its Interests pursuant to this Offering Statement
from time to time after the Closing of this Offering.
Use of Proceeds:
The proceeds received by the Series from the Offering will be
applied in the following order of priority of payment:
Asset Cost of the Series :
1. The Asset Cost of the Series has the potential to be less
than the average market value as determined by the
manager. The average market value of the wines is
determined by aggregating publicly available pricing data.
The Company has worked with the Manager to source the
wines comprising the Series. Upon completion of the
offering, the Manager will acquire the wines from the Asset
Sellers. The Company will acquire the wines at a value
respective of the market value of the wines from the
Manager. The Manager has based the market value on data
sourced from online wine retailers, wine price aggregators,
and fine wine exchanges. The Company is committed to
raising enough to acquire the wine, and have enough in
reserves for ongoing expected costs related to the Series
including transportation, storage, insurance, and other
costs.
The Company will typically acquire Underlying Assets
through the following methods:
1. Upfront purchase - the Company acquires an Underlying
Asset from an Asset Seller prior to the launch of the
Offering related to the Series
2. Purchase agreement - the Company enters into an
agreement with an Asset Seller to acquire an Underlying
Asset, which may expire prior to the Closing of the
Offering for the related Series, in which case the Company
is obligated to acquire the Underlying Asset prior to the
Closing
3. Purchase option agreement - the Company enters into a
purchase option agreement with a wine broker, which gives
the Company the right, but not the obligation, to acquire the
Underlying Asset once sourced by the wine broker.
4. Direct sourcing ? the company identifies a reputable
wine broker, wholesaler, retailer, exchange, or merchant
that currently holds the assets in Series in their inventory.
Upon the closing of the offering, the Company will acquire
the Underlying Assets from this network of Asset Sellers.
1. Offering Expenses: These costs include actual legal,
accounting, escrow, underwriting, filing and compliance costs
incurred by the company in connection with the offering of a
Series of Interests (and exclude ongoing costs described in
Operating Expenses), as applicable, paid to legal advisors,
brokerage (if the Company enlists the services of a broker-dealer),
escrow, underwriters, printing and accounting firms, as the case
may be.
1. Acquisition Expenses: In general, these include costs
associated with the evaluation, discovery, investigation of
provenance, development and acquisition of a range of fine wine
bottles and cases. In the case of the Series , these costs include
transportation and pre-purchase inspection costs; and
1. Sourcing Fee to the Manager: A sourcing fee of 0-15% of
the aggregate purchase price of the relevant assets will be paid to
the Manager as compensation for identifying and managing the
acquisition of the Series assets. This fee will be set at the higher
end of the percentage range where the Manager is successful in
acquiring assets below their average market value.
Operating Expenses:
?Operating Expenses? are costs and expenses attributable to the
activities of the Series (collectively, ?Operating Expenses?)
including:
? costs incurred in managing the Underlying Asset,
including, but not limited to storage, maintenance and
transportation costs (other than transportation costs
described in Acquisition Expenses);
? costs incurred in preparing any reports and accounts of the
Series, including any tax filings and any annual audit of the
accounts of the Series (if applicable) or costs payable to
any third party registrar or transfer agent and any reports to
be filed with the Commission including periodic reports on
Forms 1-K, 1-SA and 1-U;
? any indemnification payments; and
? any and all insurance premiums or expenses in connection
with the Underlying Asset,
? all custodial fees, costs and expenses in connection with the
holding of an underlying asset;
? the cost of the audit of the annual financial statements of
our company or a series and the preparation of tax returns
and circulation of reports to interest holders;
? the costs of any other outside appraisers, valuation firms,
accountants, attorneys or other experts or consultants
engaged by our managing member in connection with the
operations of our company or a series; and
? any similar expenses that may be determined to be
Operating Expenses, as determined by our managing
member in its reasonable discretion.
Further Issuance of Interests: A further issuance of Interests of the
Series may be made in the event the Operating Expenses exceed
the income generated from the Underlying Asset and any cash
reserves and the Company does not take out sufficient amounts
under the Operating Expenses Reimbursement Obligation to pay
such excess Operating Expenses, nor does the Manager pay such
amounts and does not seek reimbursement.
Series Manager:
VV Markets LLC has delegated responsibility and authority for
making investment decisions to VinVesto, Inc. (which is both the
?Manager? and the ?Series Manager?) for each Series Underlying
Assets, pursuant to a Management Services Agreement dated July
15, 2020.
Free Cash Flow:
The net income (as determined under U.S. generally accepted
accounting principles (?GAAP?)) generated by the Series plus any
change in net working capital and depreciation and amortization
(and any other non-cash Operating Expenses) and less any capital
expenditures related to the Underlying Asset. The Manager may
maintain Free Cash Flow funds in a deposit account or an
investment account for the benefit of the Series.
There is currently no public trading market for our Interests, and an
active market may not develop or be sustained. If an active public
trading market for our securities does not develop or is not
sustained, it may be difficult or impossible for you to resell your
Interests at any price. Even if a public market does develop, the
market price could decline below the amount you paid for your
Interests. The liquidity event would likely occur through a
transaction in the fine wine secondary market.
We do not anticipate our assets to generate free cash flow, as we
do not have a plan to monetize our assets, beyond capital
appreciation.
Distribution Rights:
The Manager has sole discretion in determining what distributions
of Free Cash Flow, if any, are made to Members of the Series of
Interests. We do not intend to generate any free cash flow from our
assets.
Timing of Distributions:
We do not intend to generate any free cash flow from our assets.
Distribution upon Liquidation
Upon the occurrence of a liquidation event relating to our company
as a whole or any series, our manager (or a liquidator selected by
our manager) is charged with winding up the affairs of the series or
our company as a whole, as applicable, and liquidating its assets.
Upon the liquidation of a series or our company as a whole, as
applicable, the underlying assets will be liquidated and any after-
tax proceeds distributed: (i) first, to any third-party creditors, (ii)
second, to any creditors that are our manager or its affiliates (e.g.,
payment of any outstanding Operating Expenses Reimbursement
Obligation), and thereafter, (iii) first, 100% to the interest holders
of the relevant series of interests, allocated pro rata based on the
number of interests held by each interest holder (which may
include our manager, any of its affiliates and asset sellers and
which distribution within a series will be made consistent with any
preferences which exist within such series) until the interest
holders receive back 100% of their capital contribution See
?Securities Being Offered?Liquidation Rights.?
The Series is composed of a wide variety of fine wines. The
Company may receive advantageous offers on parts of the
Underlying Collection. If the Company sells part of the Underlying
Collection the cash generated will be held on the balance sheet of
the Series. Upon the end of the fiscal year, the Company will
distribute the cash generated from sales of sections of the
Underlying Collection. Interest holders will receive a cash
distribution equal to their pro-rata share of the assets in the
Underlying Collection that was sold.
Fiduciary Duties:
The Manager may not be liable to the Company, any series or the
Investors for errors in judgment or other acts or omissions not
amounting to willful misconduct or gross negligence, since
provision has been made in the Operating Agreement for
exculpation of the Manager. Therefore, Investors have a more
limited right of action than they would have absent the limitation
in the Operating Agreement.
Indemnification:
None of the Manager, nor any current or former directors, officers,
employees, partners, shareholders, members, controlling persons,
agents or independent contractors of the Manager, members of the
Advisory Board, nor persons acting at the request of the Company
or any series in certain capacities with respect to other entities
(collectively, the ?Indemnified Parties?) will be liable to the
Company, the Series, or any Members for any act or omission
taken by the Indemnified Parties in connection with the business of
the Company or a Series of Interests that has not been determined
in a final, non- appealable decision of a court, arbitrator or other
tribunal of competent jurisdiction to constitute fraud, willful
misconduct or gross negligence.
The Company or, where relevant, the Series will indemnify the
Indemnified Parties out of its assets against all liabilities and losses
(including amounts paid in respect of judgments, fines, penalties or
settlement of litigation, including legal fees and expenses) to which
they become subject by virtue of serving as Indemnified Parties
with respect to any act or omission that has not been determined by
a final, non-appealable decision of a court, arbitrator or other
tribunal of competent jurisdiction to constitute fraud, willful
misconduct or gross negligence. Unless attributable to a specific
Series of Interests or a specific Underlying Asset, the costs of
meeting any indemnification will be allocated pro rata across each
of Series of Interests based on the value of each Underlying Asset.
Transfers:
The Manager may refuse a transfer by an Interest Holder of its
Interest(s) if such transfer would result in (a) there being more than
1,200 beneficial owners in the Series, (b) the assets of the Series
being deemed ?plan assets? for purposes of ERISA, (c) such
Interest Holder holding in excess of 50% of the Series, (d) result in
a change of U.S. federal income tax treatment of the Company
and/or the Series, or (e) the Company, the Series of Interests or the
Manager being subject to additional regulatory requirements.
Furthermore, as the Interests are not registered under the Securities
Act of 1933, as amended (the ?Securities Act?), transfers of
Interests may only be effected pursuant to exemptions under the
Securities Act and permitted by applicable state securities laws.
See ?Description of Interests? Transfer Restrictions? for more
information.
Governing Law:
The Company and the Operating Agreement will be governed by
Delaware law and any dispute in relation to the Company and the
Operating Agreement is subject to the exclusive jurisdiction of the
Court of Chancery of the State of Delaware. If an Interest Holder
were to bring a claim against the Company or the Manager
pursuant to the Operating Agreement, it would be required to do so
in the Delaware Court of Chancery.
By purchasing Interests, Subscribers are bound by the dispute
resolution provisions contained in our Operating Agreement which
limits your ability to bring class action lawsuits or seek remedy on
a class basis. The dispute resolution process provisions do not
apply to claims under the federal securities laws. By agreeing to
the dispute resolution process, including mandatory arbitration,
investors will not be deemed to have waived the company?s
compliance with the federal securities laws and the rules and
regulations thereunder.
Risk Factors
The Interests offered hereby are highly speculative in nature,
involve a high degree of risk and should be purchased only by
persons who can afford to lose their entire investment. There can
be no assurance that the Company?s investment objectives will be
achieved or that a secondary market would ever develop for the
Interests, whether via the VinVesto Platform, via third party
registered broker-dealers or otherwise. The risks described in this
section should not be considered an exhaustive list of the risks that
prospective Investors should consider before investing in the
Interests. Prospective Investors should obtain their own legal and
tax advice prior to making an investment in the Interests and
should be aware that an investment in the Interests may be exposed
to other risks of an exceptional nature from time to time. The
following considerations are among those that should be carefully
evaluated before making an investment in the Interests.
Risks Related to the Structure, Operation and Performance of our
Company
An investment in the Offering constitutes only an investment in the
Series and not in the Company or the Underlying Asset.
A purchase of Interests in the Series does not constitute an
investment in either the Company or the Underlying Asset directly.
This results in limited voting rights of the Investor, which are
solely related to the Series. Investors will have voting rights only
with respect to certain matters, primarily relating to amendments to
the Operating Agreement that would adversely change the rights of
the interests and removal of the Manager for ?cause?. The
Manager and the Series Manager thus retain significant control
over the management of the Company and the Underlying Asset.
Furthermore, because the Interests in the Series do not constitute
an investment in the Company as a whole, holders of the Interests
in the Series will not receive any economic benefit from, or be
subject to the liabilities of, the assets of any other Series of
Interest. In addition, the economic interest of a holder in the Series
will not be identical to owning a direct undivided interest in the
underlying Series Asset because, among other things, the Series
will be required to pay corporate taxes before distributions are
made to the holders, and the Series Manager will receive a fee in
respect of its management of the Series Asset.
An Investor in an Offering will acquire an ownership
Interest in the Series of Interests related to that Offering and not,
for the avoidance of doubt, in (i) the Company, (ii) any other
Series of Interests, (iii) the Manager, (iv) the Asset Manager, (v)
the Platform or (vi) directly in the Underlying Asset associated
with the Series or any Underlying Asset owned by any other Series
of Interests. This results in limited voting rights of the Investor,
which are solely related to a particular Series, and are further
limited by the Operating Agreement of the Company, described
further herein. Investors will have voting rights only with respect
to certain matters, primarily relating to amendments to the
Operating Agreement that would adversely change the rights of the
Interest Holders and removal of the Manager for ?cause.? The
Manager thus retains significant control over the management of
the Company and each Series and the Asset Manager thus retains
significant control over the Underlying Assets. Furthermore,
because the Interests in a Series do not constitute an investment in
the Company as a whole, holders of the Interests in a Series are not
expected to receive any economic benefit from, or be subject to the
liabilities of, the assets of any other Series. In addition, the
economic Interest of a holder in a Series will not be identical to
owning a direct undivided Interest in an Underlying Asset because,
among other things, a Series will be required to pay corporate taxes
before distributions are made to the holders, and the Asset
Manager will receive a fee in respect of its management of the
Underlying Asset.
The COVID-19 outbreak may have a material adverse impact on
our results of operations.
In December 2019, a novel strain of coronavirus, referred to as
COVID-19, was reported in Wuhan, China. COVID-19 has since
spread to other countries, including the United States, and was
declared a pandemic by the World Health Organization. Efforts to
contain the spread of COVID-19 have intensified, and the United
States and countries in Europe and Asia have implemented severe
travel and social restrictions, including social distancing and
?shelter-in-place? orders. The impacts of the outbreak are
unknown and rapidly evolving. The COVID-19 outbreak, or public
perception of the outbreak, could adversely affect the value of the
underlying assets and the financial condition of our investors or
prospective investors, resulting in reduced demand for our
offerings and alternative asset classes generally.
The continued spread of COVID-19 has also led to severe
disruption and volatility in the global financial markets, which
could increase our cost of capital and adversely affect our liquidity
and ability to access capital markets in the future. The continued
spread of COVID-19 has caused an economic slowdown and may
cause a recession or other unpredictable events, each of which
could adversely affect our business, results of operations or
financial condition. The pandemic has had, and could have a
significantly greater, material adverse effect on the United States
economy as a whole and in our industry in particular.
If the spread of COVID-19 cannot be slowed and, ideally,
contained, our business operations could be further delayed or
interrupted. We expect that government and health authorities to
announce new, or extend existing, restrictions, which could require
us to make further adjustments to our operations in order to
comply with any such restrictions. We may also experience
limitations in employee resources. In addition, our operations
could be disrupted if any employee of our manager is suspected of
having the virus, which could require quarantine of any such
employees. The duration of any business disruption cannot be
reasonably estimated at this time but may materially affect our
ability to operate our business and result in additional costs.
The extent to which COVID-19 may impact our results will
depend on future developments, which are highly uncertain and
cannot be predicted as of the date of this offering circular,
including new information that may emerge concerning the
severity of the pandemic and steps taken to contain the pandemic
or treat its impact, among others. Nevertheless, the pandemic; the
current financial, economic and capital markets environment; and
future developments in the global supply chain and other areas
present material uncertainty and risk with respect to our
performance, financial condition, results of operations and cash
flows.
Our company was recently formed, has no track record and no
operating history from which you can evaluate our company or this
investment.
Our company was recently formed, has not generated any revenues
and has no operating history upon which prospective investors may
evaluate their performance. No guarantee can be given that our
company or a series will achieve their investment objectives, the
value of the underlying assets will increase or the underlying assets
will be successfully monetized.
There is currently no public trading market for our securities.
There is currently no public trading market for our Interests, and an
active market may not develop or be sustained. If an active public
trading market for our securities does not develop or is not
sustained, it may be difficult or impossible for you to resell your
Interests at any price. Even if a public market does develop, the
market price could decline below the amount you paid for your
Interests.
Given our start-up nature, investors may not be interested in
making an investment and we may not be able to raise all of the
capital we seek, which this could have a material adverse effect
upon our company and the value of your interests.
Due to the start-up nature of our company, there can be no
guarantee that we will reach our funding targets from potential
investors. In the event we do not reach a funding target, we may
not be able to achieve our investment objectives by acquiring
additional underlying assets through the issuance of additional
interests and monetizing them together with existing assets to
generate distributions for investors. In addition, if we are unable to
raise funding for additional interests, this may impact any investors
already holding interests as they will not see the benefits which
arise from economies of scale following the acquisition by other
series of additional underlying assets and other monetization
opportunities (e.g., hosting events with the collection of underlying
assets).
There may be state law restrictions on an Investor?s ability to sell
the Interests.
Each state has its own securities laws, often called ?blue sky? laws,
which (1) limit sales of securities to a state?s residents unless the
securities are registered in that state or qualify for an exemption
from registration and (2) govern the reporting requirements for
broker-dealers and stock brokers doing business directly or
indirectly in the state. Before a security is sold in a state, there
must be a registration in place to cover the transaction, or it must
be exempt from registration. Also, the broker must be registered in
that state. We do not know whether our securities will be
registered, or exempt, under the laws of any states. A
determination regarding registration will be made by the broker-
dealers, if any, who agree to serve as the market-makers for our
Interests. There may be significant state blue sky law restrictions
on the ability of Investors to sell, and on purchasers to buy, our
Interests. Investors should consider the resale market for our
securities to be limited. Investors may be unable to resell their
securities, or they may be unable to resell them without the
significant expense of state registration or qualification.
Each state has its own securities laws, often called ?Blue
Sky? laws, which (1) limit sales of securities to a state?s residents
unless the securities are registered in that state or qualify for an
exemption from registration and (2) govern the reporting
requirements for brokers and dealers doing business directly or
indirectly in the state. Before a security is sold in a state, there
must be a registration in place to cover the transaction, or it must
be exempt from registration. Also, the broker or dealer must be
registered in that state. We do not know whether our securities
will be registered, or exempt, under the laws of any states. A
determination regarding registration will be made by the broker-
dealers, if any, who agree to serve as the market-makers for our
Interests. There may be significant state Blue Sky law restrictions
on the ability of Investors to sell, and on purchasers to buy, our
Interests. In addition, Tier 2 of Regulation A limits qualified
resales of our Interests to 30% of the aggregate Offering price of a
particular Offering. Investors should consider the resale market for
our securities to be limited. Investors may be unable to resell their
securities, or they may be unable to resell them without the
significant expense of state registration or qualification, or
opinions to our satisfaction that no such registration or
qualification is required.
The offering amounts will exceed the value of the underlying
assets, and, if the underlying assets are sold before they appreciate
or generate income, then investors will not receive the amount of
their initial investment back.
The size of an offering will exceed the purchase price of the related
underlying asset as at the date of such offering (as the proceeds of
the offering in excess of the purchase price of the underlying asset
will be used to pay fees, costs and expenses incurred in making the
offering and acquiring the underlying asset, as well as interest
payments to our manager). If the underlying asset had to be sold
and there had not been substantial appreciation of the underlying
asset prior to such sale, there may not be sufficient proceeds from
the sale of the underlying asset to repay investors the amount of
their initial investment (after first paying off any liabilities on the
underlying asset at the time of the sale, including, but not limited
to, any outstanding Operating Expenses Reimbursement
Obligation) or any additional profits in excess of this amount.
The size of each Offering will exceed the purchase price of
the related Underlying Asset as at the date of such Offering (as the
proceeds of the Offering in excess of the purchase price of the
Underlying Asset will be used to pay fees, costs and expenses
incurred in making the Offering and acquiring the Underlying
Asset). If an Underlying Asset had to be sold and there has not
been substantial appreciation of the value of the Underlying Asset
prior to such sale, there may not be sufficient proceeds from the
sale of the Underlying Asset to repay Investors the amount of their
initial investment (after first paying off any liabilities on the
Underlying Asset at the time of the sale including but not limited
to any outstanding Operating Expenses Reimbursement
Obligation) or any additional profits in excess of this amount.
Lack of operating history.
The Company and the Series of Interests were recently formed and
have not generated any revenues and have no operating history
upon which prospective Investors may evaluate their performance.
No guarantee can be given that the Company and the Series of
Interests will achieve their investment objectives, the value of the
Underlying Asset will increase or the Underlying Asset will be
successfully monetized.
The Company and each Series were recently formed in
June 17th, 2020 and have not generated any revenues and have no
operating history upon which prospective Investors may evaluate
their performance. No guarantee can be given that the Company or
any Series will achieve their investment objectives, the value of
any Underlying Asset will increase or that any Underlying Asset
will be successfully monetized.
Limited Investor appetite.
Due to the start-up nature of the Company, there can be no
guarantee that the Company will reach its funding target from
potential Investors with respect to the Series Interests or future
proposed Series of Interests. In the event the Company does not
reach a funding target, it may not be able to achieve its investment
objectives by acquiring additional Underlying Assets through the
issuance of further Series of Interests and monetizing them
together with the Series to generate distributions for Investors. In
addition, if the Company is unable to raise funding for additional
Series of Interests, this may impact any Investors already holding
interests as they will not see the benefits which arise from
economies of scale following the acquisition by other Series of
Interests of additional Underlying Assets.
There are few businesses that have pursued a strategy or
investment objective similar to ours, which may make it difficult
for our company and interests to gain market acceptance.
We believe that few other companies allow for crowd funded fine
wine collections or propose to run a platform for crowd funding of
interests in fine wines. Our company and our interests may not
gain market acceptance from potential investors, potential asset
sellers or service providers within the fine wine and spirts industry,
including insurance companies, appraisers and strategic partners.
This could result in an inability of our manager to operate the
underlying assets profitably. This could impact the issuance of
further interests and additional underlying assets being acquired by
us. This would further inhibit market acceptance of our company,
and, if we do not acquire any additional underlying assets,
investors would not receive any benefits which arise from
economies of scale.
Operating Expenses that are incurred after each closing will reduce
potential distributions, if any, and the potential return on
investment resulting from the appreciation of the underlying assets,
if any.
Operating Expenses incurred post-closing shall be the
responsibility of the applicable series. However, if the Operating
Expenses exceed the amount of revenues generated from the
underlying assets related to such series, our manager may (a) pay
such Operating Expenses and not seek reimbursement, (b) loan the
amount of the Operating Expenses to the series, on which our
manager may impose a reasonable rate of interest, and be entitled
to Operating Expenses Reimbursement Obligations, and/or (c)
cause additional interests of such series to be issued in order to
cover such additional amounts. We intend to hold cash reserves to
account for any additional operating expenses.
If there is an Operating Expenses Reimbursement Obligation, this
reimbursable amount between related parties would be taken out of
the Free Cash Flow generated by the series and could reduce the
amount of any future distributions payable to investors. If
additional series interests are issued, this would dilute the current
value of the interests held by existing investors and the amount of
any future distributions payable to such existing investors.
Our success depends in large part upon our manager and its ability
to execute our business plan.
The successful operation of our company (and therefore, the
success of each series) is in part dependent on the ability of our
manager and asset manager to source, acquire and manage the
underlying assets. As our manager has only been in existence since
June 14th, 2019 and is an early-stage startup company, it has no
significant operating history within the fine wine sector that would
evidence its ability to source, acquire, manage and utilize the
underlying assets.
The success of our company (and therefore, each series) will be
highly dependent on the expertise and performance of our manager
and its team, its expert network and other investment professionals
(which include third-party experts) to source, acquire and manage
the underlying assets. There can be no assurance that these
individuals will continue to be associated with our manager or
asset manager. The loss of the services of one or more of these
individuals could have a material adverse effect on the underlying
assets, in particular, their ongoing management and use to support
the investment of the holders of the series interests.
Furthermore, the success of our company and the value of each
series is dependent on there being critical mass from the market for
the interests and also our ability to acquire a number of underlying
assets in multiple series so that the investors can benefit from
economies of scale which arise from holding more than one
underlying asset. In the event that we are unable to source
additional underlying assets due to, for example, competition for
such underlying assets or lack of underlying assets available in the
marketplace, then this could materially impact our success and our
objectives of acquiring additional underlying assets through the
issuance of further series interests and monetizing them together
with existing assets through revenue-generating events and leasing
opportunities.
If our series limited liability structure is not respected, then
investors may have to share in any liabilities of our company with
all investors and not just those who hold interests of the same
series as them.
The Company is structured as a Delaware series limited liability
company that issues different series interests for each underlying
asset or group of underlying assets. Each series of interest will
merely be a separate series and not a separate legal entity. Under
the LLC Act, if certain conditions (as set forth in Section 18-
215(b) of the LLC Act) are met, the liability of investors holding
interests of one series is segregated from the liability of investors
holding interest of another series, and the assets of one series are
not available to satisfy the liabilities of other series. Although this
limitation of liability is recognized by the courts of Delaware, there
is no guarantee that if challenged in the courts of another U.S. state
or a foreign jurisdiction, such courts will uphold a similar
interpretation of Delaware corporation law, and in the past certain
jurisdictions have not honored such interpretation. If our series
limited liability company structure is not respected, then investors
may have to share any liabilities of our company with all investors
and not just those who hold interests in the same series as them.
Furthermore, while we intend to maintain separate and distinct
records for each series and account for them separately and
otherwise meet the requirements of the LLC Act, it is possible a
court could conclude that the methods used did not satisfy Section
18-215(b) of the LLC Act and thus potentially expose the assets of
a series to the liabilities of another series. The consequence of this
is that investors may have to bear higher than anticipated expenses
which would adversely affect the value of their interests or the
likelihood of any distributions being made by the series to the
investors. In addition, we are not aware of any court case that has
tested the limitations on inter-series liability provided by Section
18-215(b) in federal bankruptcy courts and it is possible that a
bankruptcy court could determine that the assets of one series
should be applied to meet the liabilities of the other series or the
liabilities of our company generally where the assets of such other
series or of our company generally are insufficient to meet our
liabilities.
If any fees, costs and expenses of our company are not allocable to
a specific series, they will be borne proportionately across all of
the series. Although our manager will allocate fees, costs and
expenses acting reasonably and in accordance with its allocation
policy (see ?Description of Business?Allocations of Expenses?),
there may be situations where it is difficult to allocate fees, costs
and expenses to a specific series, and therefore, there is a risk that
a series may bear a proportion of the fees, costs and expenses for a
service or product for which another series received a
disproportionately high benefit.
The VinVesto Platform is highly technical and may be at risk of
malfunctioning.
The VinVesto Platform is a complex system with components and
highly complex software, and our business is dependent upon our
manager?s ability to prevent system interruptions to operation of
the VinVesto Platform. The VinVesto Platform software may now,
or in the future, contain undetected errors, bugs or vulnerabilities,
which may only be discovered after the code has been released or
may never be discovered. Problems with or limitations of the
software, misconfigurations of the systems or unintended
interactions between systems may cause downtime that would
impact the availability of the VinVesto Platform. The VinVesto
Platform relies on third-party datacenters for operation. If such
datacenters fail, users of the VinVesto Platform may experience
downtime. Any errors, bugs, vulnerabilities or sustained or
repeated outages could reduce the attractiveness of the VinVesto
Platform to investors, cause a negative experience for investors or
result in negative publicity and unfavorable media coverage,
damage to our reputation, loss of VinVesto Platform users, loss of
revenue, liability for damages, regulatory inquiries or other
proceedings, any of which could adversely affect our business and
financial results.
Potential breach of the security measures of the VinVesto Platform
could have a material adverse effect on our company, each series
and the value of your investment.
The highly automated nature of the VinVesto Platform through
which potential investors acquire or transfer interests may make it
an attractive target and potentially vulnerable to cyber-attacks,
computer viruses, physical or electronic break-ins or similar
disruptions. The VinVesto Platform processes certain confidential
information about investors, asset sellers and the underlying assets.
While we intend to take commercially reasonable measures to
protect our confidential information and maintain appropriate
cybersecurity, the security measures of the VinVesto Platform, our
company, our manager or our service providers could be breached.
Any accidental or willful security breaches or other unauthorized
access to the VinVesto Platform could cause confidential
information to be stolen and used for criminal purposes or have
other harmful effects. Security breaches or unauthorized access to
confidential information could also expose us to liability related to
the loss of the information, time-consuming and expensive
litigation and negative publicity, or loss of the proprietary nature of
our manager?s and our company?s trade secrets. If security
measures are breached because of third-party action, employee
error, malfeasance or otherwise, or if design flaws in the VinVesto
Platform software are exposed and exploited, the relationships
between our company, investors, users and the asset sellers could
be severely damaged, and our company or our manager could incur
significant liability or have their attention significantly diverted
from utilization of the underlying assets, which could have a
material negative impact on the value of interests or the potential
for distributions to be made on the interests.
Because techniques used to sabotage or obtain unauthorized access
to systems change frequently and generally are not recognized
until they are launched against a target, we, the third-party hosting
used by our platform and other third-party service providers may
be unable to anticipate these techniques or to implement adequate
preventative measures. In addition, federal regulators and many
federal and state laws and regulations require companies to notify
individuals of data security breaches involving their personal data.
These mandatory disclosures regarding a security breach are costly
to implement and often lead to widespread negative publicity,
which may cause investors, the asset sellers or service providers
within the industry, including insurance companies, to lose
confidence in the effectiveness of the secure nature of our
platform. Any security breach, whether actual or perceived, would
harm our reputation and our platform, and we could lose investors
and the asset sellers. This would impair our ability to achieve our
objectives of acquiring additional underlying assets through the
issuance of interests of further series and monetizing them together
with existing assets through revenue-generating events and leasing
opportunities.
Our manager may sell its interests post-closing, which may result
in a reduction in value of your interests if there are too many series
interests available and not enough demand for those interests.
Our manager may arrange for some of the interests it holds in a
specific series to be sold by a broker pursuant to a ?10b5-1 trading
plan.? Our manager has no present intention to sell its interests,
and any future sales would be based upon our potential need for
capital, market prices of the interests at the time of a proposed sale
and other factors that a reasonable investor might consider in
connection with the sale of securities similar to our interests. There
is a risk that a sale by our manager may result in too many interests
being available for resale and the price of the relevant series
interests decreasing as supply outweighs demand.
Non-compliance with regulations may result in the abrupt
cessation of business operations, rescission of any contracts
entered into, an early termination of any interests sold or, if we
were deemed to be subject to the Investment Advisers Act, the
liquidation and winding up of any interests sold.
The Company is not registered and will not be registered as
an investment company under the Investment Company Act of
1940, as amended (the ?Investment Company Act?), and neither
the Manager nor the Asset Manager is or will be registered as an
investment adviser under the Investment Advisers Act of 1940, as
amended (the ?Investment Advisers Act?) and the Interests do not
have the benefit of the protections of the Investment Company Act
or the Investment Advisers Act. The Company, the Manager and
the Asset Manager have taken the position that the Underlying
Assets are not ?securities? within the meaning of the Investment
Company Act or the Investment Advisers Act, and thus the
Company?s assets will consist of less than 40% investment
securities under the Investment Company Act and the Manager and
the Asset Manager are not and will not be advising with respect to
securities under the Investment Advisers Act. This position,
however, is based upon applicable case law that is inherently
subject to judgments and interpretation. If the Company were to be
required to register under the Investment Company Act or the
Manager or the Asset Manager were to be required to register
under the Investment Advisers Act, it could have a material and
adverse impact on the results of operations and expenses of each
Series and the Manager and the Asset Manager may be forced to
liquidate and wind up each Series of Interests or rescind the
Offerings for any of the Series or the Offering for any other Series
of Interests.
The Company may not launch enough Series or have enough
Underlying Assets to realize economies of scale.
It is the intention of the Company to launch approximately 10 to 15
additional offerings in the next twelve months. It is the hope that
through the scale of offerings, the Company may reduce Operating
Expenses for each Series through economies of scale. However, it
is possible, and very likely, that the Company may not be able to
launch as many offerings as it intends and thus, will not be able to
realize reduced Operating Expenses per Series through economies
of scale.
Liability of Investors between Series of Interests.
The Company is structured as a Delaware series limited liability
company that issues different Series of Interests for each
Underlying Asset. Each Series of Interests, including the Series
Interest, will merely be a separate series and not a separate legal
entity. Under the Delaware Limited Liability Company Act (the
?LLC Act?), if certain conditions (as set forth in Section 18-
215(b) of the LLC Act) are met, the liability of Investors holding
one Series of Interests is segregated from the liability of Investors
holding another Series of Interests and the assets of one Series of
Interests are not available to satisfy the liabilities of other Series of
Interests. Although this limitation of liability is recognized by the
courts of Delaware, there is no guarantee that if challenged in the
courts of another U.S. State or a foreign jurisdiction, such courts
will uphold a similar interpretation of Delaware corporation law,
and in the past certain jurisdictions have not honored such
interpretation. If the Company?s series limited liability company
structure is not respected, then Investors may have to share any
liabilities of the Company with all Investors and not just those who
hold the same Series of Interests as them. Furthermore, while we
intend to maintain separate and distinct records for each Series of
Interests and account for them separately and otherwise meet the
requirements of the LLC Act, it is possible a court could conclude
that the methods used did not satisfy Section 18-215(b) of the LLC
Act and thus potentially expose the assets of Series to the liabilities
of another Series of Interests. The consequence of this is that
Investors may have to bear higher than anticipated expenses which
would adversely affect the value of their Interests or the likelihood
of any distributions being made by the Series to the Investors. In
addition, we are not aware of any court case that has tested the
limitations on inter-series liability provided by Section 18-215(b)
in federal bankruptcy courts and it is possible that a bankruptcy
court could determine that the assets of one Series of Interests
should be applied to meet the liabilities of the other Series of
Interests or the liabilities of the Company generally where the
assets of such other Series of Interests or of the Company generally
are insufficient to meet our liabilities.
If any fees, costs and expenses of the Company are not allocable to
a specific Series of Interests, they will be borne proportionately
across all of the Series of Interests. Although the Manager will
allocate fees, costs and expenses acting reasonably and in
accordance with its allocation policy (see ?Description of the
Business ? Allocations of Expenses? section), there may be
situations where it is difficult to allocate fees, costs and expenses
to a specific Series of Interests and therefore, there is a risk that a
Series of Interests may bear a proportion of the fees, costs and
expenses for a service or product for which another Series of
Interests received a disproportionately high benefit.
Use of broker to facilitate liquidity
The Manager may arrange for some of the Interests it holds in a
specific Series of Interests to be sold by a broker pursuant to a
?10b5-1 trading plan?. There is a risk that this may result in too
many interests being available for resale and the price of the
relevant Series of Interests decreasing as supply outweighs
demand.
There may be deficiencies with our internal controls that require
improvements, and if we are unable to adequately evaluate internal
controls, we may be subject to sanctions.
As a Tier 2 issuer under Regulation A, we will not need to provide
a report on the effectiveness of our internal controls over financial
reporting, and we will be exempt from the auditor attestation
requirements concerning any such report so long as we are a Tier 2
issuer. We are in the process of evaluating whether our internal
control procedures are effective and therefore there is a greater
likelihood of undiscovered errors in our internal controls or
reported financial statements as compared to issuers that have
conducted such evaluations.
Unpredictable and/or uncontrollable events, such as the COVID-19
outbreak, could adversely affect our business.
Our business could be subject to unpredictable and uncontrollable
events, such as earthquakes, power shortages, telecommunications
failures, water shortages, floods, hurricanes, typhoons, fires,
extreme weather conditions, medical epidemics or pandemics, such
as the COVID-19 outbreak, and other natural or manmade disasters
or business interruptions. The occurrence of any of these business
disruptions could seriously harm our operations and financial
condition and increase our costs and expenses. The risk, or public
perception of the risk, of a pandemic, or media coverage of
infectious diseases, could adversely affect the value of the
underlying assets and the financial condition of our investors or
prospective investors, resulting in reduced demand for our
offerings and alternative asset classes generally. Moreover, an
epidemic, pandemic, outbreak or other public health crisis, such as
COVID-19, could adversely affect employees of our manager,
which serves as the asset manager and in which we rely to manage
the logistics of our business. ?Shelter-in-place? or other such
orders by governmental entities could also disrupt our operations if
employees of our manager who cannot perform their
responsibilities from home are not able to report to work or carry
out necessary actions related to the logistics of our business. Risks
related to an epidemic, pandemic or other health crisis, such as
COVID-19, could also lead to the complete or partial closure of
one or more of our facilities or the storage facility in which we
lease space, which could prevent us from accessing the
underlaying assets. Further, risks related to an epidemic, pandemic
or other health crisis, such as COVID-19, could lead to complete
or partial cessation of operations of our sourcing partners for the
underlying assets.
Abuse of our advertising or social platforms may harm our
reputation or user engagement.
The Asset Manager provides content or posts ads about the
Company and Series through various social media platforms that
may be influenced by third parties. Our reputation or user
engagement may be negatively affected by activity that is hostile
or inappropriate to other people, by users impersonating other
people or organizations, by disseminating information about us or
to us that may be viewed as misleading or intended to manipulate
the opinions of our users, or by the use of the Asset Manager?s
products or services, including the Platform, that violates our terms
of service or otherwise for objectionable or illegal ends. Preventing
these actions may require us to make substantial investments in
people and technology and these investments may not be
successful, adversely affecting our business.
Risks Related to the Offering
We are offering our Interests pursuant to recent amendments to
Regulation A promulgated pursuant to the Jumpstart Our Business
Startups Act of 2012, or the JOBS Act, and we cannot be certain if
the reduced disclosure requirements applicable to Tier 2 issuers
will make our Interests less attractive to Investors as compared to a
traditional initial public offering.
As a Tier 2 issuer, we will be subject to scaled disclosure and
reporting requirements which may make an investment in our
Interests less attractive to Investors who are accustomed to
enhanced disclosure and more frequent financial reporting. In
addition, given the relative lack of regulatory precedence regarding
the recent amendments to Regulation A, there is a significant
amount of regulatory uncertainty in regards to how the
Commission or the individual state securities regulators will
regulate both the offer and sale of our securities, as well as any
ongoing compliance that we may be subject to. If our scaled
disclosure and reporting requirements, or regulatory uncertainty
regarding Regulation A, reduces the attractiveness of the Interests,
we may be unable to raise the funds necessary to fund future
offerings, which could impair our ability to develop a diversified
portfolio of fine wine assets and create economies of scale, which
may adversely affect the value of the Interests or the ability to
make distributions to Investors.
As a Tier 2 issuer, we are subject to scaled disclosure and
reporting requirements which may make an investment in our
Interests less attractive to Investors who are accustomed to
enhanced disclosure and more frequent financial reporting. The
differences between disclosures for Tier 2 issuers versus those for
emerging growth companies include, without limitation, only
needing to file final semiannual reports as opposed to quarterly
reports and far fewer circumstances where a current disclosure
would be required. In addition, given the relative lack of
regulatory precedent regarding the recent amendments to
Regulation A, there is some regulatory uncertainty in regard to
how the Commission or the individual state securities regulators
will regulate both the offer and sale of our securities, as well as any
ongoing compliance that we may be subject to. For example, a
number of states have yet to determine the types of filings and
amount of fees that are required for such an Offering. If our scaled
disclosure and reporting requirements, or regulatory uncertainty
regarding Regulation A, reduces the attractiveness of the Interests,
we may be unable to raise the funds necessary to fund future
Offerings, which could impair our ability to develop a diversified
portfolio of Underlying Assets and create economies of scale,
which may adversely affect the value of the Interests or the ability
to make distributions to Investors.
There may be deficiencies with our internal controls that require
improvements, and if we are unable to adequately evaluate internal
controls, we may be subject to sanctions.
As a Tier 2 issuer, we will not need to provide a report on the
effectiveness of our internal controls over financial reporting, and
we will be exempt from the auditor attestation requirements
concerning any such report so long as we are a Tier 2 issuer. We
are in the process of evaluating whether our internal control
procedures are effective and therefore there is a greater likelihood
of undiscovered errors in our internal controls or reported financial
statements as compared to issuers that have conducted such
evaluations.
Impact of non- compliance with regulations.
The Series of Interests is being sold by the Company. If a
regulatory authority determines that the Manager, who is not a
registered broker-dealer under the Exchange Act or any state
securities laws, has itself engaged in brokerage activities, the
Manager may need to stop operating and therefore, the Company
will not have an entity managing the Underlying Asset. In addition,
if the Manager is required to register as a ?broker-dealer?, there is a
risk that any Series of Interests offered and sold while the Manager
was not registered may be subject to a right of rescission, which
may result in the early termination of the Series of Interests.
Furthermore, the Company is not registered and will not be
registered as an investment company under the Investment
Company Act of 1940, as amended (the ?Investment Company
Act?), and the Manager is not registered and will not be registered
as an investment adviser under the Investment Advisers Act of
1940, as amended (the ?Investment Advisers Act?) and the Series
Interests does not have the benefit of the protections of the
Investment Company Act or the Investment Advisers Act. The
Company and the Manager have taken the position that the
Underlying Assets are not ?securities? within the meaning of the of
the Investment Company Act or the Investment Advisers Act, and
thus the Company?s assets will comprise less than 40% investment
securities under the Investment Company Act and the Manager is
not advising with respect to securities under the Investment
Advisers Act. This position, however, is based upon applicable
case law that is inherently subject to judgments and interpretation.
If the Company were to be required to register under the
Investment Company Act or the Manager were to be required to
register under the Investment Advisers Act, it could have a
material and adverse impact on the results of operations and
expenses of Series or any other Series of Interests and the
Manager may be forced to liquidate and wind up Series or rescind
the Offering of the Series Interests or the offering for any other
Series of Interests.
Possible Changes in Federal Tax Laws.
The Code is subject to change by Congress, and interpretations of
the Code may be modified or affected by judicial decisions, by the
Treasury Department through changes in regulations and by the
Internal Revenue Service through its audit policy, announcements,
and published and private rulings. Although significant changes to
the tax laws historically have been given prospective application,
no assurance can be given that any changes made in the tax law
affecting an investment in any series of interest of the Company
would be limited to prospective effect. Accordingly, the ultimate
effect on an Investor?s tax situation may be governed by laws,
regulations or interpretations of laws or regulations which have not
yet been proposed, passed or made, as the case may be.
Risks Specific to the Fine Wine Industry
Potential Negative Changes within the Fine Wine Industry
The fine wine industry is subject to various risks including, but not
limited to, changes in tax rates, changes in tariffs, changes in
consumer preferences, emergence of new wine regions, and
changes in weather patterns. Future developments that may impact
tax rates, tariffs, consumer preferences, and regional performance
are uncertain and may impact to value of the Underlying
Collection.
The fine wine industry is characterized by stability, however there
have been periods of asset price dislocation to both the upside and
the downside. The 2008 Financial Crisis resulted in one of the
weakest En Primuer offerings in history. Investors were able to
acquire world class wines at a discount to their fair market value.
On the upside case, the increase in Chinese demand in the mid
2010?s led to a bubble in wines from the Burgundy region, thereby
causing a detachment in asset price and actual market value.
Other risks in the industry include, but are not limited to economic
downturns, liquidity across the market, availability in the market of
desirable Fine Wines
The Fine Wine industry has licensing challenges.
The licensing process presents may cause a delay in implementing
The Company?s business model. The Manager has been approved
for a Federal Basic Permit license to be a wine wholesaler. The
license allows the acquisition of wine at a commercial level. The
Basic Permit allows the Company to buy and sell wine at the
wholesaler level. The Basic Permit is a federal license and does not
relate to state licensure. We may acquire state licensure, or sell our
wine through registered brokers, merchants, or auction houses. The
Manager is the facilitator of the wine acquisitions and liquidations.
Each series is expected to invest only in the related underlying
assets; therefore, your investment will not be diversified and will
appreciate or depreciate based on the value of the underlying assets
regardless of market conditions.
It is not anticipated that any series would own any assets other than
its related underlying assets, plus potential cash reserves for
maintenance, storage, insurance and other expenses pertaining to
the underlying assets and amounts earned by the related series
from the monetization of the underlying assets, if any. Investors
looking for diversification will have to create their own diversified
portfolio by investing in other opportunities in addition to the
interests offered hereby.
The global economy and financial markets and political conditions
of various countries can adversely affect the supply of and demand
for fine wine, and unpredictable and/or uncontrollable events, such
as the COVID-19 outbreak, may cause a disruption in the fine wine
industry.
The fine wine industry may be influenced by the overall strength
and stability of the global economy and financial markets of
various countries, although any correlation may not be
immediately evident. In addition, global political conditions and
world events may affect our business through their effect on the
economies of various countries, as well as on the willingness of
potential buyers to purchase fine wine in the wake of economic
uncertainty. Accordingly, weakness in the global economy and
financial markets of various countries may cause a downturn in the
fine wine industry, which is likely to impact the value of the
underlying assets, and consequently the value of the interests.
The COVID-19 outbreak has caused unprecedented levels of
global uncertainty and may impact the value of fine wines. We
expect the COVID-19 outbreak will result in low transaction
volume until confidence in the global economy is restored. The
extent and duration of this disruption cannot be accurately
estimated, and the fine wine industry may a significant amount of
time to recover. Although we intend to hold and manage all of the
assets marketed on the VinVesto Platform for an average of five to
ten years, the COVID-19 outbreak and resulting economic
uncertainty may impact the value of the underlying assets, and
consequently the value of the interests.
Selling pressure in the fine wine market may result in downward
price revisions and affect our overall objectives
Demand for fine wine can be volatile. Broader economic
conditions, personal financial stress, and change in investing
preferences are all reasons that a wine collection may sell their
collection. Other reasons people may sell their wine collection
include, but are not limited to, a lack of space in their wine storage
location, change in preferences, realizing their capital gains, and
receiving an above market offer for their collection. The Company
finds it hard to predict these factors and may not be able to
liquidate the wines prior to downward price revisions.
Global factors including, but not limited to, tariffs, En Primuer
production, weather factors, and macroeconomic changes can all
influence wine demand. The Company finds it difficult to predict
macroeconomic changes.
Factors that impact demand in the wine market include, critic
scores, brand quality, outstanding supply, production quality, En
Primuer pricing, vintage quality, and customer trends. The
Company is working to predict these factors to achieve the best
returns for our Series Holders. The Company?s predictions of these
factors may not be accurate and may impact the value of the
Underlying Assets.
Fine wine is hard to value, and any valuations obtained are not
guarantees of realizable price.
As explained in the ?Description of Business,? fine wine is
difficult to value. The average market value of the wines is
determined by aggregating publicly available pricing data. The
Manager has based the market value on data sourced from online
wine retailers, wine price aggregators, and fine wine exchanges.
Our manager sources data from reputable valuation providers in
the industry; however, it may rely on the accuracy of the
underlying data without any means of detailed verification.
Consequently, valuations may be uncertain. The value of the
underlying assets can go down as well as up. Valuations are not
guarantees of realizable price and do not necessarily represent the
price at which our interests may be sold on the VinVesto Platform,
and the value of the underlying assets may be materially affected
by a number of factors outside of our control, including any
volatility in the economic markets and the condition of the
underlying assets.
Risks relating to the Underlying Asset
Potential loss of or damage to the Underlying Asset.
The Underlying Asset may be lost or damaged by causes beyond
the Company?s reasonable control when in storage or on display.
Any damage to the Underlying Asset or other liability incurred as a
result of participation in these programs could adversely impact the
value of the Underlying Asset or adversely increase the liabilities
or Operating Expenses of its related Series of Interests. Further,
when the Underlying Asset has been purchased, it will be
necessary to transport it to the Manager?s preferred storage
location. The Underlying Asset may be lost or damaged in transit,
and transportation, insurance or other expenses may be higher than
anticipated due to the locations of particular events. Although we
intend for the Underlying Asset to be insured at replacement cost
(subject to policy terms and conditions), in the event of any claims
against such insurance policies, there can be no guarantee that any
losses or costs will be reimbursed, that the Underlying Asset can
be replaced on a like-for- like basis or that any insurance proceeds
would be sufficient to pay the full market value (after paying for
any outstanding liabilities including, but not limited to any
outstanding balances under Operating Expenses Reimbursement
Obligations), if any, of the Interests. In the event that damage is
caused to the Underlying Asset, this will impact the value of the
Underlying Asset, and consequently, the Interests related to the
Underlying Asset, as well as the likelihood of any distributions
being made by the Company to the Investors.
Competition in the fine wine industry from other business models.
There is potentially significant competition for the Underlying
Assets from many different market participants. While the majority
of transactions continue to be merchant-to-consumer, auction
houses continue to play an increasing role. This competition may
impact the liquidity of the Interests, as it is dependent on the
Company acquiring attractive and desirable Underlying Assets to
ensure that there is an appetite of potential Investors for the
Interests. In addition, there are companies that are developing
crowd funding models for other alternative asset classes such as art
and collectible cars, who may decide to enter the fine wine and
spirts market as well.
Potentially high storage, maintenance and insurance costs for the
Underlying Assets.
In order to protect and care for the Underlying Assets, the Manager
must ensure adequate storage facilities and insurance coverage.
The cost of care may vary from year to year depending changes in
the insurance rates for covering the Underlying Assets and changes
in the cost of storage for the Underlying Assets. It is anticipated
that as the Company acquires more Underlying Assets, the
Manager may be able to negotiate a discount on the costs of
storage, maintenance and insurance due to economies of scale.
These reductions are dependent on the Company acquiring a
number of Underlying Assets and service providers being willing
to negotiate volume discounts and, therefore, are not guaranteed.
The Manager has initiated a relationship with Domaine Wine
Storage (?Domaine?). Domaine has storage locations in Napa,
California, Chicago, Illinois, New York City, New York,
Washington, DC, and St. Louis, Missouri. Domaine is a best in
class wine storage company that offers premium service. This
premium service includes inventory management, logistic
management, order handling, bottle pulling, and collection
maintenance. Domaine also offers a competitive wine insurance
policy. We intend to initiate a formal relationship upon the
purchase of the Underlying Assets.
If costs are higher than expected, this would negatively impact the
value of the Interests related to the Underlying Asset, the amount
of distributions made to Investors holding the Interests, on
potential proceeds from a sale of the Underlying Asset (if ever),
and any capital proceeds returned to Investors after paying for any
outstanding liabilities, including but not limited to any outstanding
balances under Operating Expenses Reimbursement Obligation.
See ?Lack of distributions and return of capital? section also for
further details of the impact of these costs on returns to Investors.
Insurance may not cover all losses.
The Company attempts to insure the entire value of the Underlying
Collection, but insurance of the Underlying Assets may not cover
all losses. There are certain types of losses, generally of a
catastrophic nature, such as earthquakes, floods, hurricanes,
terrorism or acts of war that may be uninsurable or not
economically insurable. Inflation, environmental considerations
and other factors, including terrorism or acts of war, also might
make insurance proceeds insufficient to replace an asset if it is
damaged or destroyed. Under such circumstances, the insurance
proceeds received might not be adequate to restore the Company?s
economic position with respect to any affected Underlying Assets.
Furthermore, the Series of Interests related to such affected
Underlying Assets would bear the expense of the payment of any
deductible. Any uninsured loss could result in both loss of cash
flow from and the value of the affected Underlying Assets and,
consequently, the Series of Interests that relate to such
Third party liability.
The Series of Interests will assume all of the ownership risks
attached to its Underlying Asset, including third party liability
risks. Therefore, the Series of Interests may be liable to a third
party for any loss or damages incurred by it in connection with the
Underlying Asset. This would be a loss to the Company and
therefore deductible from any income or capital proceeds payable
in respect of such Series of Interests from the Underlying Asset, in
turn adversely affecting the value of the Series of Interests to
which the Underlying Asset relates and the likelihood of any
distributions being made by the Company.
Dependence of an Underlying Asset on prior user or association.
The value of an Underlying Asset may be connected with its prior
use by, or association with, a certain person or group or in
connection with certain pop culture events or films. In the event
that such person or group loses public affection, then this may
adversely impact the value of the Underlying Asset and therefore,
the Series of Interests that relate to such Underlying Asset.
Authenticity claims on an Underlying Asset.
There is no guarantee that an Underlying Asset will be free of any
claims regarding authenticity (e.g., counterfeit or previously stolen
fine wines), or that such claims may arise after acquisition of an
Underlying Asset by a Series of Interests. The Company may not
have complete ownership history for a Underlying Asset. In
particular, the Company does not have the complete ownership
history of the Underlying Collection. In the event of an
authenticity claim against the Company, the Company may not
have recourse against the Asset Seller or the benefit of insurance
and the value of the Underlying Assets and the Series of Interests
that relate to the Underlying Assets may be diminished.
Forced sale of the Underlying Assets.
The Company may be forced to sell the Underlying Assets (e.g.,
upon the bankruptcy of the Manager) and such a sale may occur at
an inopportune time or at a lower value than when the Underlying
Asset was first acquired or at a lower price than the aggregate of
costs, fees and expenses used to purchase the Underlying Asset. In
addition there may be liabilities related to the Underlying Asset,
including, but not limited to Operating Expenses Reimbursement
Obligations on the balance sheet of the Underlying Asset at the
time of a forced sale, which would be paid off prior to Investors
receiving any distributions from a sale. In such circumstances, the
capital proceeds obtained for the Underlying Asset, and therefore,
the return available to Investors of the Series of Interests which
relate to the Underlying Asset, may be lower than could have been
obtained if the Underlying Asset continued to be held by the
Company and sold at a later date.
Lack of distributions and return of capital.
We do not intend to generate free cash flow by displaying our
assets. We expect the return of capital to come from an eventual
sale of the asset or a trade on the secondary market.
We could be exposed to losses and/or reputational harm as a result
of various claims and lawsuits incidental to the ordinary course of
our business.
We may become involved in various legal proceedings, lawsuits
and other claims incidental to the ordinary course of our business.
We are required to assess the likelihood of any adverse judgments
or outcomes in these matters, as well as potential ranges of
probable or reasonably possible losses. A determination of the
amount of losses, if any, to be recorded or disclosed as a result of
these contingencies will be based on a careful analysis of each
individual exposure with, in some cases, the assistance of outside
legal counsel. The amount of losses recorded or disclosed for such
contingencies may change in the future due to new developments
in each matter or a change in settlement strategy.
Any harm to the brand of the vineyard or producer may adversely
impact the value of the underlying assets.
The underlying assets will be comprised of fine wines. The
demand for the underlying assets and, therefore, interests in each
series may be influenced by the general perception of the wine that
vineyards are producing today. In addition, the makers? business
practices may result in damage to the image of their wines. This in
turn may have a negative impact on the value of the underlying
assets and, consequently, the value of the interests of the series that
relate to such underlying assets.
Title or authenticity claims on an underlying asset may diminish
value of the underlying asset, as well as the series that relates to
such underlying asset.
There is no guarantee that an underlying asset will be free of any
claims regarding title and authenticity (e.g., counterfeit or
previously stolen), or that such claims may arise after acquisition
of an underlying asset by a series. We may not have complete
ownership history or restoration and repair records for an
underlying asset. In the event of a title or authenticity claim against
us, we may not have recourse against the asset seller or the benefit
of insurance, and the value of the underlying asset and the series
related to such underlying asset may be diminished.
If we are unable to liquidate an underlying asset at a time when we
desire to do so or at all, investors may not receive any return on
their investment and may lose their entire investment.
Our strategy is to acquire assets, hold such assets for a period of
time (on average between five and ten years) and then sell such
assets at a premium over our acquisition price so that investors in
our company can make a return on their investment. In addition,
our plan and mission are to seek to provide liquidity to investors by
providing a platform for investors to transfer their interests for cash
or for interests in another series. However, Operating Expenses,
including fees and costs incurred in connection with the
management of an underlying asset, the preparation of reports and
accounts for each series, insurance premiums, taxes, governmental
fees, legal and accounting fees and other costs and expenses, are
the responsibility of each series. If we are unable to liquidate an
asset at a time when we desire to do so or at all, these Operating
Expenses will accumulate and reduce any return that an investor in
a series may hope to make or cause an investor to lose its entire
investment. Furthermore, if we are unable to provide investors
with liquidity through the ability to make secondary sales on our
platform and we are unable to liquidate an underlying asset, then
Operating Expenses will over time reduce the value of the interests
such investors may hold resulting in a loss to such investors.
Risks Related to Ownership of our Interests
Lack of voting rights.
The Manager has a unilateral ability to amend the Operating
Agreement and the allocation policy in certain circumstances
without the consent of the Investors, and the Investors only have
limited voting rights in respect of the Series of Interests. Investors
will therefore be subject to any amendments the Manager makes (if
any) to the Operating Agreement and allocation policy and also
any decision it takes in respect of the Company and the Series of
Interests, which the Investors do not get a right to vote upon.
Investors may not necessarily agree with such amendments or
decisions, and such amendments or decisions may not be in the
best interests of all of the Investors as a whole but only a limited
number.
Furthermore, the Manager can only be removed as manager of the
Company and each Series of Interests in a very limited
circumstance, following a non-appealable judgment of a court of
competent jurisdiction to have committed fraud in connection with
the Company or a Series of Interests. Investors would therefore not
be able to remove the Manager merely because they did not agree,
for example, with how the Manager was operating an Underlying
Asset.
The offering price for the Interests determined by us may not
necessarily bear any relationship to established valuation criteria
such as earnings, book value or assets that may be agreed to
between purchasers and sellers in private transactions or that may
prevail in the market if and when our Interests can be traded
publicly.
The price of the Interests was derived as a result of our
negotiations with Asset Seller based upon various factors including
prevailing market conditions, our future prospects and our capital
structure, as well as certain expenses incurred in connection with
the Offering and the acquisition of the Underlying Asset. These
prices do not necessarily accurately reflect the actual value of the
Interests or the price that may be realized upon disposition of the
Interests.
There is currently no public trading market for our interests.
There is currently no public trading market for any series of our
interests, and an active market may not develop or be sustained. If
an active public trading market for our interests does not develop
or is not sustained, it may be difficult or impossible for you to
resell your interests at any price. Even if a public market does
develop, the market price could decline below the amount you paid
for your interests. We intend to work with an ATS to allow for our
investors to trade their shares on a secondary market.
If a market ever develops for the Interests, the market price and
trading volume of our Interests may be volatile.
If a market develops for the Interests, the market price of the
Interests could fluctuate significantly for many reasons, including
reasons unrelated to our performance, the Underlying Asset or the
Series of Interests, such as reports by industry analysts, Investor
perceptions, or announcements by our competitors regarding their
own performance, as well as general economic and industry
conditions. For example, to the extent that other companies,
whether large or small, within our industry experience declines in
their share price, the value of Interests may decline as well.
In addition, fluctuations in operating results of a particular series of
interest or the failure of operating results to meet the expectations
of Investors may negatively impact the price of our securities.
Operating results may fluctuate in the future due to a variety of
factors that could negatively affect revenues or expenses in any
particular reporting period, including vulnerability of our business
to a general economic downturn; changes in the laws that affect
our operations; competition; compensation related expenses;
application of accounting standards; seasonality; and our ability to
obtain and maintain all necessary government certifications or
licenses to conduct our business.
Funds from purchasers accompanying subscriptions for the
Interests will not accrue interest while in escrow prior to admission
of the subscriber as an Investor in the Series of Interests, if it
occurs, in respect of such subscriptions.
The funds paid by purchasers for the Interests will be held in a
non-interest bearing escrow account until the admission of the
subscriber as an Investor in the Series of Interests, if it occurs, in
respect of the applicable subscriptions. Purchasers may not have
the use of such funds or receive interest thereon pending the
completion of the Offering. No subscriptions will be accepted or
Interests sold unless valid subscriptions for the Offering are
received and accepted prior to the termination of the Offering
Period. If we terminate the Offering prior to accepting a
subscriber?s subscription, escrowed funds will be returned, without
interest or deduction, to the proposed Investor.
The offerings are being conducted on a ?best efforts? basis, and we
may not be able to execute our growth strategy if we are unable to
raise capital.
We are offering interests in each series on a ?best efforts? basis,
and we can give no assurance that all of the offered interests will
be sold. If you invest in our interests and more than the minimum
number of offered interests of the series but less than all of the
offered interests of the series are sold, the risk of losing your entire
investment will be increased. If substantially less than the
maximum amount of interests offered for the series are sold, we
may be unable to fund all the intended uses described in this
offering circular from the net proceeds anticipated from each
offering without obtaining funds from alternative sources or using
working capital that we generate. Alternative sources of funding
may not be available to us at what we consider to be a reasonable
cost, and the working capital generated by us may not be sufficient
to fund any uses not financed by offering net proceeds.
Each offering is a fixed-price offering and the fixed offering price
may not accurately represent the current value of our company or
our assets at any particular time. Therefore, the purchase price you
pay for the interests may not be supported by the value of our
assets at the time of your purchase.
Each offering is a fixed-price offering, which means that the
offering price for interests in each series is fixed and will not vary
based on the underlying value of our assets at any time. Our
manager has determined each offering price in its sole discretion
without the input of an investment bank or other third party. The
fixed offering price for interests in each series has not been based
on appraisals of any assets we own or may own, or of our company
as a whole, nor do we intend to obtain such appraisals. Therefore,
the fixed offering price established for interests in each series may
not be supported by the current value of our company or our assets
at any particular time.
We are subject to ongoing public reporting requirements that are
less rigorous than rules for more mature public companies, and our
investors receive less information.
We are required to report on an ongoing basis under the reporting
rules set forth in Regulation A for Tier 2 issuers. The ongoing
reporting requirements under Regulation A are more relaxed than
for public companies reporting under the Exchange Act. The
differences include, but are not limited to, being required to file
only annual and semiannual reports, rather than annual and
quarterly reports. Annual reports are due within 120 calendar days
after the end of our fiscal year, and semiannual reports are due
within 90 calendar days after the end of the first six months of our
fiscal year.
We also may elect to become a public reporting company under
the Exchange Act. If we elect to do so, we will be required to
publicly report on an ongoing basis as an emerging growth
company, as defined in the JOBS Act, under the reporting rules set
forth under the Exchange Act. For so long as we remain an
emerging growth company, we may take advantage of certain
exemptions from various reporting requirements that are applicable
to other Exchange Act reporting companies that are not emerging
growth companies, including, but not limited to:
- not being required to comply with the auditor attestation
requirements of Section 404 of the Sarbanes-Oxley Act;
- being permitted to comply with reduced disclosure
obligations regarding executive compensation in our
periodic reports and proxy statements; and
- being exempt from the requirement to hold a non-binding
advisory vote on executive compensation and stockholder
approval of any golden parachute payments not previously
approved.
In addition, Section 107 of the JOBS Act also provides that an
emerging growth company can take advantage of the extended
transition period provided in Section 7(a)(2)(B) of the Securities
Act for complying with new or revised accounting standards. In
other words, an emerging growth company can delay the adoption
of certain accounting standards until those standards would
otherwise apply to private companies. We have elected to take
advantage of the benefits of this extended transition period. Our
financial statements may therefore not be comparable to those of
companies that comply with such new or revised accounting
standards.
We would expect to take advantage of these reporting exemptions
until we are no longer an emerging growth company. We would
remain an emerging growth company for up to five years, or until
the earliest of (i) the last day of the first fiscal year in which our
total annual gross revenues exceed $1 billion; (ii) the date that we
become a large accelerated filer as defined in Rule 12b-2 under the
Exchange Act, which would occur if the market value of our
interests that is held by non-affiliates exceeds $700 million as of
the last business day of our most recently completed second fiscal
quarter; or (iii) the date on which we have issued more than $1
billion in non-convertible debt during the preceding three-year
period.
In either case, we will be subject to ongoing public reporting
requirements that are less rigorous than Exchange Act rules for
companies that are not emerging growth companies, and investors
could receive less information than they might expect to receive
from more mature public companies.
POTENTIAL CONFLICTS OF INTEREST
We have identified the following conflicts of interest that may
arise in connection with the Interests, in particular, in relation to
the Company, the Manager and the Underlying Assets. The
conflicts of interest described in this section should not be
considered as an exhaustive list of the conflicts of interest that
prospective Investors should consider before investing in the
Interests.
Our Operating Agreement contains provisions that reduce or
eliminate duties (including fiduciary duties) of the Manager.
Our Operating Agreement provides that the Manager, in exercising
its rights in its capacity as the Manager, will be entitled to consider
only such interests and factors as it desires, including its own
interests, and will have no duty or obligation (fiduciary or
otherwise) to give any consideration to any interest of or factors
affecting us or any of our Investors and will not be subject to any
different standards imposed by our operating agreement, the
Delaware Limited Liability Company Act or under any other law,
rule or regulation or in equity. These modifications of fiduciary
duties are expressly permitted by Delaware law.
We do not have a conflicts of interest policy.
The Company, the Manager and their affiliates will try to balance
the Company?s interests with their own. However, to the extent
that such parties take actions that are more favorable to other
entities than the Company, these actions could have a negative
impact on the Company?s financial performance and,
consequently, on distributions to Investors and the value of the
Interests. The Company has not adopted, and does not intend to
adopt in the future, either a conflicts of interest policy or a
conflicts resolution policy.
Payments from the Company to the Manager, the Series Manager
and their respective employees or affiliates.
The Manager and the Series Manager will engage with, on behalf
of the Company, a number of brokers, dealers, Asset Sellers,
insurance companies, storage and maintenance providers and other
service providers and thus may receive in-kind discounts, for
example, free shipping or storage. In such circumstances, it is
likely that these in-kind discounts may be retained for the benefit
of the Manager or the Series Manager and not the Company, or
may apply disproportionately to other Series of Interests. The
Manager or the Series Manager may be incentivized to choose a
broker, dealer or Asset Seller based on the benefits they are to
receive or all Series of Interests collectively are to receive rather
than that which is best for the Series of Interests.
Members of the expert network and the Advisory Board may also
be Investors, in particular, if they are holding Interests acquired as
part of a sale of an Underlying Asset (i.e., as they were the Asset
Seller). They may therefore promote their own self- interests when
providing advice to the Manager or the Series Manager regarding
an Underlying Asset (e.g., by encouraging the liquidation of such
Underlying Asset so they can receive a return in their capacity as
an Investor).
Potential future brokerage activity.
Either the Manager or one of its affiliates may in the future register
with the Commission as a broker- dealer in order to be able to
facilitate liquidity in the Interests via the VinVesto Platform. The
Manager, or its affiliates, may be entitled to receive fees based on
volume of trading and volatility of the Interests on the VinVesto
Platform, and such fees may be in excess of what the Series
Manager receives via the Management Fee or the appreciation in
the interests it holds in each Series of Interests. Although an
increased volume of trading and volatility will benefit Investors as
it will assist in creating a market for those wishing to transfer their
Interests, there is the potential that there is a divergence of interests
between the Manager and those Investors; for instance, if the
Underlying Asset does not appreciate in value, this will impact the
price of the Interests but may not adversely affect the profitability
related to the brokerage activities of the Manager (i.e., the
Manager would collect brokerage fees whether the price of the
Underlying Asset increases or decreases).
Ownership of multiple Series of Interests.
The Manager or its affiliates will acquire interests in each Series of
Interests for their own accounts and may transfer these interests,
either directly or through brokers, via the VinVesto Platform.
Depending on the timing of the transfers, this could impact the
interests held by the Investors (e.g., driving price down because of
supply and demand and over availability of interests). This
ownership in each of the Series of Interests may result in a
divergence of interests between the Manager and the Investors who
only hold one or certain Series of Interests (e.g., the Manager or its
affiliates, once registered as a broker-dealer with the Commission,
may disproportionately market or promote a certain Series of
Interests, in particular, where they are a significant owner, so that
there will be more demand and an increase in the price of such
Series of Interests).
Allocations of income and expenses as between Series of Interests.
The Manager may appoint a service provider to service the entire
collection of fine wines that comprise the Underlying Assets (e.g.,
for insurance, storage, maintenance or media material creation).
Although appointing one service provider may reduce cost due to
economies of scale, such service provider may not necessarily be
the most appropriate for the Underlying Assets (e.g., it may have
more experience in maintaining certain types of wines whereas, the
collection may comprise of a number of different types). In such
circumstances, the Manager would be conflicted from acting in the
best interests of the Underlying Assets as a whole or the individual
Underlying Asset.
There may be situations when it is challenging or impossible to
accurately allocate income, costs and expenses to a specific Series
of Interests, and certain Series of Interests may get a
disproportionate percentage of the cost or income, as applicable. In
such circumstances, the Manager would be conflicted from acting
in the best interests of the Company as a whole or the individual
Series of Interests. While we presently intend to allocate expenses
as described in ?Description of the Business ? Allocations of
Expenses?, the Manager has the right to change this allocation
policy at any time without further notice to Investors.
Conflicting interests of the Manager, the Series Manager and the
Investors.
The Manager will determine whether or not to liquidate the
Underlying Asset, should an offer to acquire the whole Underlying
Asset be received. As the Manager or its affiliates, if registered as
a broker-dealer with the Commission, will receive fees on the
trading volume in the Interests connected with an Underlying
Asset, they may be incentivized not to realize such Underlying
Asset even though Investors may prefer to receive the gains from
any appreciation in value of such Underlying Asset. Furthermore,
when determining to liquidate an Underlying Asset, the Manager
will do so considering all of the circumstances at the time, which
may include obtaining a price for an Underlying Asset that is in the
best interests of a substantial majority but not all of the Investors.
The Manager has the ability to unilaterally amend the Operating
Agreement and allocation policy. As the Manager is party, or
subject, to these documents, it may be incentivized to amend them
in a manner that is beneficial to it as manager of the Company or
the Series or may amend it in a way that is not beneficial for all
Investors. In addition, the Operating Agreement seeks to limit the
fiduciary duties that the Manager owes to its Investors. Therefore,
the Manager is permitted to act in its own best interests rather than
the best interests of the Investors. See ?Description of the Interests
Offered? for more information.
Conflicts between the Advisory Board and the Company.
The Operating Agreement of the Company provides that the
resolution of any conflict of interest approved by the Advisory
Board shall be deemed fair and reasonable to the Company and the
Members and not a breach of any duty at law, in equity or
otherwise. As part of the remuneration package for Advisory
Board members, they may receive an ownership stake in the
Manager. This may incentivize the Advisory Board members to
make decisions in relation to the Underlying Assets that benefit the
Manager rather than the Company.
As a number of the Advisory Board members are in the fine wine
industry, they may seek to sell fine wine to, or acquire fine wine
from, the Company.
NOTICE REGARDING AGREEMENT TO ARBITRATE
Dilution
Dilution means a reduction in value, control or earnings of the
Interests the Investor owns. There will be no dilution to any
Investors associated with the Offering. However, from time to
time, additional Series Interests may be issued in order to raise
capital to cover the Series? ongoing Operating Expenses. See
?Description of the Business ? Operating Expenses? for further
details.
The Manager must acquire a minimum of 0.5% and may acquire a
maximum of 10% of the Interests in connection with this Offering
(of which the Manager may sell all or any portion from time to
time following the Closing of the Offering). The Manager will pay
the price per Interest offered to all other potential Investors
hereunder.
Example Use of Proceeds for a given Series, for illustration
purposes:
(1) Consists of the estimated acquisition price based on our
sourcing efforts. Upon the close of the offering, the
Manager will acquire the Underlying Assets from the Asset
Sellers. After the Manager has sourced and acquired the
Underlying Assets, the Company will acquire the
Collection from the Manager, using the cash proceeds from
the offering.
(2) To the extent that Acquisition Expenses are lower than
anticipated, any overage would be maintained in an
operating account for future Operating Expenses
In addition to the costs of acquiring the Underlying Asset,
proceeds from the Series Offering will be used to pay the
following, listed in the Series Detail Table and the Use of Proceeds
Table above (i) the Offering Expenses related to the anticipated
Custody Fee, (ii) the Acquisition Expenses, including but not
limited to the items described in the Use of Proceeds Table above,
except as to the extent that Acquisition Expenses are lower than
anticipated, any overage will be maintained in an operating
account for future Operating Expenses, and (iii) the Sourcing Fee
to the Manager as consideration for assisting in the sourcing of the
Underlying Asset. Of the proceeds of the Offering, the Cash on
Series Balance Sheet listed in the Use of Proceeds Table will
remain in the operating account of the Series for future Operating
Expenses.
The allocation of the net proceeds of this Series Offering set forth
above, represents our intentions based upon our current plans and
assumptions regarding industry and general economic conditions,
our future revenues and expenditures. The amounts and timing of
our actual expenditures will depend upon numerous factors,
including market conditions, cash generated by our operations,
business developments, and related rate of growth. The Manager
reserves the right to modify the use of proceeds based on the
factors set forth above. The Series is expected to keep Cash on the
Series Balance Sheet in the amount listed in the Use of Proceeds
Table from the proceeds of the Series Offering for future Operating
Expenses. In the event that less than the Maximum Series Interests
are sold in connection with the Series Offering, the Manager may
pay, and not seek reimbursement for, the Brokerage Fee, Offering
Expenses and Acquisition Expenses and may waive the Sourcing
Fee.
The manager may maintain 0.5% to 10% of the Series.
?Asset Seller(s)? means an individual(s), merchant, dealer or
auction company, which owns an Underlying Asset prior to i) a
purchase of an Underlying Asset by the Company in advance of a
potential offering or ii) the closing of an offering from which
proceeds are used to acquire the Underlying Asset
Our Manager plans to acquire the wine through a network of
licensed wine merchants, wholesalers, distributors, brokers,
auction houses, and exchanges. Our Manager has built
relationships with many Asset Sellers, that carry extensive fine
wine inventories. Prior to the release of the Offering, the Manager
has used online price lists, www.winesearcher.com, auction house
offerings, and exchange data to ensure the outstanding supply of
the Underlying Assets in the Offering. The company uses this
sourcing process to determine the most advantageous price to
acquire the Underlying Assets, the outstanding supply in the
broader market, and the most logistically efficient method of
acquisition.
The Manager will identify current market pricing for the wines in
the Underlying Collection. Through the Manager?s relationships
with the Asset Sellers the Company intends to source the wines
below their average market price.
Upon the completion of the Offering, the Company acquire the
Underlying Assets that had been identified through the sourcing
process. Our sourcing process attempts to ensure we can acquire
the Underlying Assets at a fair price. The Company performs a
thorough sourcing process, however there may be changes in the
fine wine market that may affect outstanding supply. In the event
that any of the fine wines in the Underlying Collection are no
longer available on the market, or the price has increased to one
that the Company believes is not advantageous to the Interest
Holder, the Company may acquire a wine that is viewed as similar
value with similar investment merits.
Upon the acquisition of the Underlying Assets from the Asset
Sellers, the Underlying Assets will be transported to one of our
warehousing partners. For Assets acquired in the United States,
The Company has a relationship with Domaine Wine Storage.
Domaine Wine Storage is a best in class wine storage company.
Domaine has locations in Napa, California, Chicago, Illinois, St.
Louis, Missouri, New York City, New York, and Washington,
D.C. Domaine provide premium service including inventory
management, logistic management, order handling, bottle pulling,
and collection maintenance. Domaine also offers a competitive
wine insurance policy. The Company intends to keep the
Underlying Assets in the Domaine storage facilities. The Company
may construct a facility to store the Underlying Assets.
Description of Series Asset
Summary Overview:
? Upon the identification of the underlying assets we will
provide information about:
o Where the wines were produced;
o What is the estimated production quantity;
o Who are the producers;
o Information about the vineyard;
o Quality of the assets;
o Other information pertaining to the underlying
assets.
Asset Description
Ownership and Pricing History
Through the sourcing process we will perform reasonable due
diligence into the provenance of the Underlying Assets.
Wine Characteristics
Upon the identification of the underlying assets we will provide
information about the production of the wines, including; the
grapes used in production, what type of wine, region, and other
qualitative factors.
Wine Scoring
We refer to the Global Wine System (GWS) scoring system as
well as a proprietary scoring system for our wines. The GWS
scoring system is derived from a mathematical calculation based
on the aggregation of fine wine critic scores. The GWS scoring for
our wines are as follows
Bottle Condition
All bottles are considered to be in good condition, as qualified by
the Asset Seller.
Market Assessment
Upon the sourcing of the underlying assets we will provide a
market assessment about the region of the world where the wines
were produced.
History
Upon the sourcing of the Underlying Assets we will provide the
history of the Underlying Assets.
Depreciation
The Company treats assets as collectible and therefore will not
depreciate or amortize the Series going forward.
Insurance
We intend to work with Domaine Wine Storage to provide
insurance for all of the Underlying Assets. We insure all assets
during storage.
Storage
The Manager intends to work with Domaine Wine Storage
(?Domaine?). Domaine has storage locations in Napa, California,
Chicago, Illinois, New York City, New York, Washington, DC,
and St. Louis, Missouri. Domaine is a best in class wine storage
company that offers premium service. This premium service
includes inventory management, logistic management, order
handling, bottle pulling, and collection maintenance. Domaine also
offers a competitive wine insurance policy.
If the Manager is unable to work with Domaine, they will work
with another licensed wine storage facility.
Depreciation
We treat fine wine as collectibles, and therefore, we will not
depreciate or amortize the underlying assets going forward. We
may depreciate or amortize any hardware or other equipment used
in connection with the display or maintenance of the underlying
assets.
MANAGEMENT?S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
The Company was formed June 16th, 2020 with the intention to
acquire investment grade fine wine. These fine wine collections are
highly stable assets with low historic volatility. The low historic
volatility has not limited the upside returns in the fine wine market.
Over the long term fine wine has shown strong annual returns. The
Company currently does not own any assets, but intends to
perform on a purchase agreement entered into with the Manager of
the Company and the Asset Sellers. This is not and was not an
arms? length transaction. We are considered to be a development
stage company, since we are devoting substantially all of our
efforts to establishing our business and planned principal
operations have only recently commenced.
We will launch an offering of interests, through the VinVesto
Platform, in Series as soon as we are declared qualified by the
Securities Exchange Commission and are in the process of
launching subsequent offerings for other series.
Operating Results
Revenues are generated at the series level. As of June 30, 2020, no
series of the Company has generated any revenues. Series is not
expected to generate any revenues.
The Company incurred no Operating Expenses in the period ended
June 30, 2020 related to storage, transportation, insurance,
maintenance and professional services fees associated with the
series assets we acquired. We expect to incur these expenses, and
thus, have set a minimum amount for which we believe we will
need in order to cover these costs. Once the Company has raised a
sufficient amount to cover such costs, the Company, on behalf of
the Company will obtain such services (such as insurance) and
perform on the purchase and sale agreement with the Manager.
The Operating Expenses incurred pre-closing related to the
Underlying Asset are being paid by the Manager and will not be
reimbursed by the series. Each series of the Company will be
responsible for its own Operating Expenses, such as storage,
insurance or maintenance beginning on the closing date of the
offering for such Series of Interests.
Liquidity and Capital Resources
As of June 30, 2020, the Company nor any Series of Interests in
the Company, had any cash or cash equivalents and the Company
had no financial obligations. Each series will enter into a purchase
agreement, obtain a loan, or both to acquire its Underlying Asset
with proceeds generated from the closing of the offering of such
series. No series will have any obligation to repay a loan incurred
by the Company or to perform on a purchase and sale agreement to
purchase an Underlying Asset for another series.
Plan of Operations
At the time of the qualification of this offering statement, Series
has not commenced operations, is not capitalized and has no assets
or liabilities. We intend for Series to start operations at the time of
the Closing of the Offering. All assets and liabilities related to the
Series that have been incurred to date and will be incurred until
the Closing are the responsibility of the Company or the Manager
and responsibility for any assets or liabilities related to the Series
will not transfer to each Series until such time as a Closing for
each series has occurred.
The Company plans to launch approximately 5 to 15 additional
offerings in the next 12 months. The proceeds from any offerings
closed during the next 12 months will be used to fund business
operations, and acquire additional investment grade fine wine,
which we anticipate will enable the Company to reduce Operating
Expenses for each series as we negotiate better contracts for
storage, insurance and other Operating Expenses with a larger
collection of assets. However, it should be noted that the Company
may not launch enough Series or have enough Underlying Assets
to realize economies of scale. Despite the Company?s best
intentions, it is possible, and very likely, that the Company may
not be able to launch as many offerings as it intends and thus, will
not be able to realize reduced Operating Expenses per Series
through economies of scale. If the Company, through, multiple
Series, is able to purchase additional assets, then it is expected that
for the next 12 months and beyond, such Series, collectively, will
be able to manage the costs associated with maintaining the
individual Series and their individual assets. We believe the Series
will incur costs related to the storage and insurance of the assets.
We believe, collectively, we will have sufficient cash through
offerings to cover such costs until such time as individual assets
are able to generate revenue. To this end, if the individual Series
are unable to pay such costs, the Series and their assets may be
exposed to liabilities such as not being insured and not being in a
secured location. Through the Manager, the principals of the
Manager are committed to providing capital to the individual
Series in the event such a shortfall were to occur and to covering
the costs of insurance and otherwise as may be necessary to secure
and protect the assets of such Series. This commitment is not in
writing.
PLAN OF DISTRIBUTION AND SUBSCRIPTION
PROCEDURE
Plan of Distribution
We are managed by VinVesto, Inc. (?VinVesto? or the
?Manager?), a Delaware corporation incorporated in June 2020.
VinVesto owns and operates a web-based (desktop & mobile)
investment platform called VinVesto (the VinVesto platform and
any successor platform used by the Company for the offer and sale
of interests, the ?VinVesto Platform?), through which Investors
may indirectly invest, through a series of the Company?s interests,
in fine wine opportunities that have been historically limited to
high net worth individuals. Through the use of the VinVesto
Platform, Investors can browse and screen the potential
investments and sign legal documents electronically. We intend to
distribute the Interests primarily through the VinVesto Platform.
The VinVesto Platform is operated by our individual officers.
None of our officers involved in the platform and involved in the
offer and sale of the Interests is a member firm of the Financial
Industry Regulatory Authority, Inc., or FINRA, and no person
associated with us will be deemed to be a broker solely by reason
of his or her participation in the sale of the Interests.
The VinVesto platform refers to both the investment platform and
potential future trading platform. The investment platform is in
development and will launch in conjunction with the Series
offering. To participate, investors must complete an application on
the VinVesto platform to subscribe.
This Offering of Series Interests is being conducted under
Regulation A under the Securities Act of 1933, as amended (the
?Securities Act?) and therefore, only offered and sold to ?qualified
purchasers.? For further details on the suitability requirements an
Investor must meet in order to participate in this Offering, see
?Plan of Distribution and Subscription Procedure ? Investor
Suitability Standards?. As a Tier 2 offering pursuant to Regulation
A under the Securities Act, this offering will be exempt from state
law ?Blue Sky? review, subject to meeting certain state filing
requirements and complying with certain antifraud provisions, to
the extent that our Interests are offered and sold only to ?qualified
purchasers? or at a time when our Interests are listed on a national
securities exchange.
The Interests discussed herein will be offered by the Company for
each individual Series. The Company is managed by our Manager.
We expect that the officers or our Manager will sell the Interests
and will not receive any compensation for the sale of Interests in
individual Series. It is expected that the Manager, through its
individual officers, as a representative of the Company and the
Series, will promote the VinVesto Platform (website), the
individual assets of the Series, and will over all represent the
Company. We are relying on Rule 3a4-1 of the Securities
Exchange Act of 1934, Associated Persons of an Issuer Deemed
not to be Brokers. The applicable portions of the rule state that
associated persons (including companies) of an issuer shall not be
deemed brokers if they (a) perform substantial duties at the end of
the offering for the issuer; (b) are not broker dealers; and (c) do not
participate in selling securities more than once every 12 months,
except for any of the following activities: (i) preparing written
communication, but no oral solicitation; or (ii) responding to
inquiries provided that the content is contained in the applicable
registration statement; or (iii) performing clerical work in effecting
any transaction. The officers that will be selling the securities via
the platform conduct any activities that fall outside of Rule 3a4-1
and are therefore not brokers nor are they dealers. All subscription
funds which are accepted will be deposited directly into the
Company?s account. This account is not held by an escrow agent.
Subscription funds placed in the segregate, Company account may
only be released if the Minimum Offering Amount is raised within
the Offering Period.
The initial offering price for each series (the ?Purchase Price?) will
be determined by the Manager in consideration of the aggregate of
(i) the purchase price of the Series , (ii) the Transfer Agent Fee,
(iii) Offering Expenses, (iv) the Acquisition Expenses, and (v) the
Sourcing Fee (in each case as described below). The Closing of an
offering of the Series Interests will occur on the earliest to occur of
(i) the date subscriptions for the Maximum Interests have been
accepted or (ii) a date determined by the Manager in its sole
discretion, provided that subscriptions for the Minimum Interests
have been accepted. If Closing has not occurred, the Offering shall
be terminated upon (i) the date which is one year from the date this
Offering Circular is qualified by the U.S. Securities and Exchange
Commission (the ?Commission?) which period may be extended
by an additional six months by the Manager in its sole discretion,
or (ii) any date on which the Manager elects to terminate the
offering in its sole discretion. The Series Interests are being offered
by subscription only in the U.S. and to residents of those states in
which the offer and sale is not prohibited. This Offering Circular
does not constitute an offer or sale of Series Interests outside of the
U.S.
Those persons who want to invest in the Interests must sign a
Subscription Agreement, which will contain representations,
warranties, covenants, and conditions customary for private
placement investments in limited liability companies; see ?How to
Subscribe? below for further details. A copy of the form of
Subscription Agreement is attached as Exhibit 4.1.
The Series Interests will be issued in book-entry form without
certificates.
The Manager, and not the Company, will pay all of the expenses
incurred in this Offering the Sourcing Fee, Offering Expenses or
Acquisition Expenses, including fees to legal counsel, but
excluding fees for counsel or other advisors to the Investors and
fees associated with the filing of periodic reports with the
Commission and future blue sky filings with state securities
departments, as applicable. Any Investor desiring to engage
separate legal counsel or other professional advisors in connection
with this Offering will be responsible for the fees and costs of such
separate representation.
Private Offerings
Certain offerings may be made available through the VinVesto
Platform to only a limited number of prospective investors (we
refer to these as private drops). With respect to these private drops,
our manager may increase the minimum subscription by an
investor to an amount that it determines in its sole discretion,
which higher minimum amount will not exceed $10,000 per
investor.
Investor Suitability Standards
Our interests are being offered and sold only to ?qualified
purchasers? (as defined in Regulation A under the Securities Act).
For this Tier 2 offering, a ?qualified purchaser? includes all
offerees and purchasers in this offering.
Our interests will not be offered or sold to prospective investors
subject to ERISA.
If you live outside the United States, it is your
responsibility to fully observe the laws of any relevant territory or
jurisdiction outside the United States in connection with any
purchase, including obtaining required governmental or other
consent and observing any other required legal or other formalities.
Our manager and the Broker, in its capacity as broker of record for
each offering, will be permitted to make a determination that the
subscribers of our interests in any offering are qualified purchasers
in reliance on the information and representations provided by the
subscriber regarding the subscriber?s financial situation. Before
making any representation that your investment does not exceed
applicable federal thresholds, we encourage you to review Rule
251(d)(2)(i)(C) of Regulation A. For general information on
investing, we encourage you to refer to http://www.investor.gov.
An investment in our interests may involve significant risks. Only
investors who can bear the economic risk of the investment for an
indefinite period of time and the loss of their entire investment
should invest in our interests. See ?Risk Factors.?
The Interests will not be offered or sold to prospective Investors
subject to the Employee Retirement Income Security Act of 1974
and regulations thereunder, as amended (?ERISA?).
If you live outside the United States, it is your responsibility to
fully observe the laws of any relevant territory or jurisdiction
outside the United States in connection with any purchase,
including obtaining required governmental or other consent and
observing any other required legal or other formalities.
Our Manager will be permitted to make a determination that the
subscribers of Interests in this offering are qualified purchasers in
reliance on the information and representations provided by the
subscriber regarding the subscriber?s financial situation. Before
making any representation that your investment does not exceed
applicable federal thresholds, we encourage you to review Rule
251(d)(2)(i)(C) of Regulation A. For general information on
investing, we encourage you to refer to www.investor.gov.
An investment in our Interests may involve significant risks. Only
Investors who can bear the economic risk of the investment for an
indefinite period of time and the loss of their entire investment
should invest in the Interests. See ?Risk Factors.?
Minimum and Maximum Investment
The minimum subscription by an investor is one (1) interest and
the maximum subscription by any investor is for interests
representing 19.99% of the total interests of a particular series,
although such maximum threshold may be waived or modified by
our manager in its sole discretion, and our manager may set higher
minimum subscription amounts in its sole discretion in connection
with private drops, which higher minimum amounts will not
exceed $10,000 per investor. See ?Plan of Distribution and Selling
Securityholders? for additional information.
Escrow Agent
The escrow agent is North Capital Private Securities, a
Pennsylvania banking corporation (the ?Escrow Agent?) who will
be appointed pursuant to an escrow agreement among the Escrow
Agent and the Company, on behalf of the Series (the ?Escrow
Agreement?). A copy of the Escrow Agreement is attached hereto
as Exhibit 8.1. Each series will generally be responsible for fees
due to the Escrow Agent, which are categorized as part of the
Offering Expenses described in the ?Fees and Expenses? section
below; however, the Manager has agreed to pay and not be
reimbursed for fees due to the Escrow Agent incurred in the case
of the Offering for Series Interests.
The Company must indemnify the Escrow Agent and each of its
officers, directors, employees and agents against any losses that are
incurred in connection with providing the services under the
Escrow Agreement other than losses that arise out of the Escrow
Agent?s gross negligence or willful misconduct.
Fees and Expenses
Offering Expenses
Each Series of Interests will generally be responsible for certain
fees, costs and expenses incurred in connection with the offering of
the interests associated with that series (the ?Offering Expenses?).
Offering Expenses consist of legal, accounting, escrow,
underwriting, filing and compliance costs, as applicable, related to
a specific offering (and exclude ongoing costs described in
Operating Expenses). The Manager has agreed to pay and not be
reimbursed for Offering Expenses incurred with respect to this
Offering.
Acquisition Expenses
Each Series of Interests will be responsible for any and all fees,
costs and expenses incurred in connection with the evaluation,
discovery, investigation, development and acquisition of the
Underlying Asset related to such series incurred prior to the
Closing, including brokerage and sales fees and commissions,
appraisal fees, research fees, transfer taxes, third party industry and
due diligence experts, bank fees and interest (if the Underlying
Asset was acquired using debt prior to completion of an offering),
auction house fees, travel and lodging for inspection purposes,
transportation costs to transfer the Underlying Asset from the
Asset Seller?s possession to the storage facility or to locations for
creation of photography and videography materials (including any
insurance required in connection with such transportation) and
photography and videography expenses in order to prepare the
profile for the Underlying Asset on the VinVesto Platform (the
?Acquisition Expenses?). The Acquisition Expenses will be
payable from the proceeds of each offering. As it related to the
Series, the seller is not seeking reimbursement for such costs. This
may change for future assets acquired by individual Series.
Sourcing Fee
The Manager will be paid a fee as compensation for sourcing each
Underlying Asset (the ?Sourcing Fee?), such amount as
determined by the Manager at the time of such offering.
Additional Information Regarding this Offering Circular
We have not authorized anyone to provide you with information
other than as set forth in this Offering Circular. Except as
otherwise indicated, all information contained in this Offering
Circular is given as of the date of this Offering Circular. Neither
the delivery of this Offering Circular nor any sale made hereunder
shall under any circumstances create any implication that there has
been no change in our affairs since the date hereof.
From time to time, we may provide an ?Offering Circular
Supplement? that may add, update or change information
contained in this Offering Circular. Any statement that we make in
this Offering Circular will be modified or superseded by any
inconsistent statement made by us in a subsequent Offering
Circular Supplement. The Offering Statement we filed with the
Commission includes exhibits that provide more detailed
descriptions of the matters discussed in this Offering Circular. You
should read this Offering Circular and the related exhibits filed
with the Commission and any Offering Circular Supplement
together with additional information contained in our annual
reports, semiannual reports and other reports and information
statements that we will file periodically with the Commission.
The Offering Statement and all supplements and reports that we
have filed or will file in the future can be read on the Commission
website at www.sec.gov or in the legal section for the Series on the
VinVesto Platform. The contents of the VinVesto Platform (other
than the Offering Statement, this Offering Circular and the
Appendices and Exhibits thereto) are not incorporated by reference
in or otherwise a part of this Offering Circular.
How to Subscribe
Potential Investors who are ?qualified purchasers? may subscribe
to purchase Series Interests. Any potential Investor wishing to
acquire Series Interests must:
1.
Carefully read this Offering Circular, and any current supplement,
as well as any documents described in the Offering Circular and
attached hereto or which you have requested. Consult with your
tax, legal and financial advisors to determine whether an
investment in the Series Interests is suitable for you.
2.
Review the Subscription Agreement (including the Investor
Qualification and Attestation attached thereto), which was pre-
populated following your completion of certain questions on the
VinVesto Platform application and if the responses remain
accurate and correct, sign the completed Subscription Agreement
using electronic signature. Except as otherwise required by law,
subscriptions may not be withdrawn or cancelled by subscribers.
3.
Once the completed Subscription Agreement is signed, an
integrated online payment provider will transfer funds in an
amount equal to the purchase price for the Series Interests you
have applied to subscribe for (as set out on the front page of your
Subscription Agreement) into the escrow account for the series.
The Escrow Agent will hold such subscription monies in escrow
until such time as your Subscription Agreement is either accepted
or rejected by the Manager and, if accepted, such further time until
you are issued Series Interests.
4.
The Manager will review the subscription documentation
completed and signed by you. You may be asked to provide
additional information. The Manager will contact you directly if
required. We reserve the right to reject any subscriptions, in whole
or in part, for any or no reason, and to withdraw the Offering at
any time prior to Closing.
5.
Once the review is complete, the Manager will inform you whether
or not your application to subscribe for Series Interests is approved
or denied and if approved, the number of Series Interests you are
entitled to subscribe for. If your subscription is rejected in whole or
in part, then your subscription payments (being the entire amount
if your application is rejected in whole or the payments associated
with those subscriptions rejected in part) will be refunded
promptly, without interest or deduction. The Manager accepts
subscriptions on a first-come, first served basis subject to the right
to reject or reduce subscriptions.
6.
If all or a part of your subscription is approved, then the number of
Series Interests you are entitled to subscribe for will be issued to
you upon the Closing. Simultaneously with the issuance of the
Series Interests, the subscription monies held by the Escrow Agent
in escrow on your behalf will be transferred to the account of the
Series as consideration for such Series Interests.
By executing the Subscription Agreement, you agree to be bound
by the terms of the Subscription Agreement and the Limited
Liability Company Agreement of the Company (the ?Operating
Agreement?). The Company, the Manager will rely on the
information you provide in the Subscription Agreement, including
the ?Investor Qualification and Attestation? attached thereto and
the supplemental information you provide in order for the Manager
to verify your status as a ?qualified purchaser?. If any information
about your ?qualified purchaser? status changes prior to you being
issued the Series Interests, please notify the Manager immediately
using the contact details set out in the Subscription Agreement.
For further information on the subscription process, please contact
the Manager using the contact details set out in the ?Where to Find
Additional Information? section.
The subscription funds advanced by prospective Investors as part
of the subscription process will be held in a non-interest bearing
account with the Escrow Agent and will not be commingled with
the Series of Interests? operating account, until if and when there is
a Closing with respect to that Investor. When the Escrow Agent
has received instructions from the Manager that the Offering will
close and the Investor?s subscription is to be accepted (either in
whole or part), then the Escrow Agent shall disburse such
Investor?s subscription proceeds in its possession to the account of
the Series. If the Offering is terminated without a Closing, or if a
prospective Investor?s subscription is not accepted or is cut back
due to oversubscription or otherwise, such amounts placed into
escrow by prospective Investors will be returned promptly to them
without interest or deductions. Any costs and expenses associated
with a terminated offering will be borne by the Manager.
Description of the Business
Overview
The fine wine market is a global industry valued over $7 billion
(based on Cult Wine estimates). There is no true definition of a
?fine wine.? A general rule of thumb is bottles over $100.00 upon
release are investment grade. There may be investment grade fine
wines that retail below the $100.00 price. This market was
previously controlled by the Bordeaux and Burgundy regions of
France. These regions of France have been producing high-quality,
investment grade wines for hundreds of years. As the world has
globalized and fine wine production has improved, regions from all
over the world now compete in the fine wine industry. We look to
source fine wine from regions including, but not limited to, the
United States, France, Italy, Australia, and Argentina. By
extrapolating this current trend the Company believes that the fine
wine market will continue to expand as its global participants
increase. Current market participants are limited to (i) personal
wine collectors, (ii) fine wine retailers and (iii) fine wine managers
who manage retail investor?s capital in wine investments. These
market participants have limited outside participants through high
initial investments, logistical challenges, and the need for industry
expertise.
Our mission is to expand these market participants to all investors.
We believe that all investors deserve the diversification benefits,
downside protection, and low correlation to traditional financial
assets that fine wine provides. Regulatory advancements have
made it possible for the Company to offer all investors the ability
to invest in fine wine. We think that both wine enthusiasts as well
as savvy investors will be able to benefit from our offerings. Both
types of investors will benefit from our diversified collections.
It is expected the majority of the value for the investors will come
in the form of long-term capital appreciation. The Company does
not anticipate to generate ?Free Cash Flow? from the underlying
assets.
There are numerous methods to buy and sell wine. The primary
buying methods are, (i) both global and domestic fine wine
merchants, (ii) both global and domestic fine wine auction houses,
such as Sotheby?s, K&L, and WineBid, and (iii) fine wine
exchanges, such as the London International Vintner?s Exchange.
The Company only works with licensed fine wine merchants.
Although, we currently do not operate on international exchanges,
we do believe that we may need to source wines from international
merchants. In the event of an international purchase, we intend to
store the wines in a bonded warehouse within the country of
purchase. This limits the taxes and tariffs paid on the assets.
When our wine collection reaches its peak value, we intend to sell
the collection. Methods to sell the collections include, but are not
limited to, (i) both global and domestic fine wine merchants, (ii)
both global and domestic fine wine auction houses, such as
Sotheby?s, K&L, and WineBid, and (iii) fine wine exchanges, such
as the London International Vintner?s Exchange. Although we
currently do not operate an auction house or retailer, the Company
may explore this option to recognize the best price for our Interest
Holders.
Business of the Company
We anticipate that the Company?s core competency will be the
identification, acquisition, marketing and management of
investment grade fine wines for the benefit of the Investors. In
addition, through the use of the VinVesto Platform, the Company
aspires to offer innovative digital products that support a seamless,
transparent and unassuming investment process as well as unique
and enjoyable experiences that enhance the utility value of
investing in passion assets. The Company, with the support of the
Manager and through the use of the VinVesto Platform, aims to
provide:
- Investors with the highest quality fine wine for investment
and portfolio diversification
- Asset Sellers with greater market transparency and insights,
lower transaction costs, increased liquidity, a seamless and
convenient sale process, portfolio diversification and the
ability to build equity positions in assets via the Interests
issued to Asset Sellers in Offerings for Series Interests
conducted through the Platform, as part of total purchase
consideration to the Asset Sellers.
- All platform users with unique wine insights, research, and
experiences.
Our objective is to become the leading marketplace for investing in
investment grade fine wine and, through the VinVesto Platform, to
provide Investors with financial returns commensurate with returns
in the fine wine market, to enable deeper and more meaningful
participation by fine wine enthusiasts in the hobby, to provide
experiential and social benefits comparable to those of a world-
class fine wine collector, and to manage the collection in a manner
that provides exemplary care to the assets and offers potential
returns for Investors.
Manager
The Operating Agreement designates the Manager as the managing
member of the Company. The Manager will generally not be
entitled to vote on matters submitted to the Members. The
Manager will not have any distribution, redemption, conversion or
liquidation rights by virtue of its status as the Manager.
The Operating Agreement further provides that the Manager, in
exercising its rights in its capacity as the managing member, will
be entitled to consider only such interests and factors as it desires,
including its own interests, and will have no duty or obligation
(fiduciary or otherwise) to give any consideration to any interest of
or factors affecting the Company, any Series of Interests or any of
the interest holders and will not be subject to any different
standards imposed by the Operating Agreement, the LLC Act or
under any other law, rule or regulation or in equity. In addition, the
Operating Agreement provides that the Manager will not have any
duty (including any fiduciary duty) to the Company, any series or
any of the interest holders.
In the event the Manager resigns as managing member of the
Company, the holders of a majority of all interests of the Company
may elect a successor managing member. Holders of interests in
each series of the Company have the right to remove the Manager
as manager of the Company, by a vote of two-thirds of the holders
of all interests in each series of the Company (excluding the
Manager), in the event the Manager is found by a non-appealable
judgment of a court of competent jurisdiction to have committed
fraud in connection with a Series of Interests or the Company. If so
convicted, the Manager shall call a meeting of all of the holders of
every Series of Interests within 30 calendar days of such non-
appealable judgment at which the holders may vote to remove the
Manager as manager of the Company and each series. If the
Manager fails to call such a meeting, any interest holder will have
the authority to call such a meeting. In the event of its removal, the
Manager shall be entitled to receive all amounts that have accrued
and are due and payable to it. If the holders vote to terminate and
dissolve the Company (and therefore the series), the liquidation
provisions of the Operating Agreement shall apply (as described in
?Description of the Interests Offered ? Liquidation Rights?). In the
event the Manager is removed as manager of the Company, it shall
also immediately cease to be manager of any series.
See ?Management? for additional information regarding the
Manager.
Advisory Board
The Manager intends to assemble an expert network of advisors
with experience in relevant industries (the ?Advisory Board?) to
assist the Manager in identifying and acquiring the fine wines, to
assist the Series Manager in managing the fine wines and to advise
the Manager and certain other matters associated with the business
of the Company and the various Series of Interests.
The members of the Advisory Board are not managers or officers
of the Company or any series and do not have any fiduciary or
other duties to the interest holders of any series.
Operating Expenses
Upon the Closing, the Series will be responsible for the following
costs and expenses attributable to the activities of the Company
related to the Series (together, the ?Operating Expenses?):
I. any and all ongoing fees, costs and expenses incurred in
connection with the management of the Underlying Asset,
including import taxes, income taxes, transportation (other than
transportation costs described in Acquisition Expenses), storage
(including its allocable portion of property rental fees should the
Manager decide to rent a property to store a number of Underlying
Assets), security, valuation, custodial, marketing, maintenance and
utilization of the Underlying Asset;
II. fees, costs and expenses incurred in connection with preparing
any reports and accounts of the Series of Interests, including any
blue sky filings required in certain states and any annual audit of
the accounts of such Series of Interests (if applicable);
III. fees, costs and expenses of a third party registrar and transfer
agent appointed in connection with the Series of Interests;
IV. fees, costs and expenses incurred in connection with making
any tax filings on behalf of the Series of Interests;
V. any indemnification payments;
VI. any and all insurance premiums or expenses incurred in
connection with the Underlying Asset,
VII. any similar expenses that may be determined to be Operating
Expenses, as determined by the Manager in its reasonable
discretion.
The Manager has agreed to pay and not be reimbursed for
Operating Expenses incurred prior to the Closing. The Manager
will bear its own expenses of an ordinary nature, including all costs
and expenses on account of rent (other than for storage of the
Underlying Asset), supplies, secretarial expenses, stationery,
charges for furniture, fixtures and equipment, payroll taxes,
remuneration and expenses paid to employees and utilities
expenditures (excluding utilities expenditures in connection with
the storage of the Underlying Asset).
If the Operating Expenses exceed the amount of revenues
generated from the Underlying Asset and cannot be covered by any
Operating Expense reserves on the balance sheet of the Underlying
Asset, the Manager may (a) pay such Operating Expenses and not
seek reimbursement, (b) loan the amount of the Operating
Expenses to the Series, on which the Manager may impose a
reasonable rate of interest, and be entitled to reimbursement of
such amount from future revenues generated by the Series (an
?Operating Expenses Reimbursement Obligation(s)?), and/or (c)
issue additional Interests in the Series in order to cover such
additional amounts.
Indemnification of the Manager
The Operating Agreement provides that none of the Manager, nor
any current or former directors, officers, employees, partners,
shareholders, members, controlling persons, agents or independent
contractors of the Manager, members of the Advisory Board, nor
persons acting at the request of the Company in certain capacities
with respect to other entities (collectively, the ?Indemnified
Parties?) will be liable to the Company, any series or any interest
holders for any act or omission taken by the Indemnified Parties in
connection with the business of the Company or any Series that
has not been determined in a final, non-appealable decision of a
court, arbitrator or other tribunal of competent jurisdiction to
constitute fraud, willful misconduct or gross negligence.
The Series will indemnify the Indemnified Parties out of its assets
against all liabilities and losses (including amounts paid in respect
of judgments, fines, penalties or settlement of litigation, including
legal fees and expenses) to which they become subject by virtue of
serving as Indemnified Parties with respect to the Company or the
Series and with respect to any act or omission that has not been
determined by a final, non-appealable decision of a court,
arbitrator or other tribunal of competent jurisdiction to constitute
fraud, willful misconduct or gross negligence.
Description of the Series Agreement
The Series will appoint the Manager to serve as Series Manager
(the ?Series Manager?) to manage the Underlying Asset pursuant
to a Series Agreement (the ?Series Agreement?).
The services provided by the Series Manager will include:
- Together with members of the Advisory Board, creating the
asset maintenance policies for the collection of assets;
- Investigating, selecting, and, on behalf of the applicable
series, engaging and conducting business with such persons
as the Series Manager deems necessary to ensure the proper
performance of its obligations under the Series Agreement,
including but not limited to consultants, insurers, insurance
agents, maintenance providers, storage providers and
transportation providers and any and all persons acting in
any other capacity deemed by the Series Manager
necessary or desirable for the performance of any of the
services under the Series Agreement; and
- Developing standards for the transportation and care of the
Underlying Assets.
The Series Agreement will terminate on the earlier of: (i) one year
after the date on which the relevant Underlying Asset has been
liquidated and the obligations connected to the Underlying Asset
(including, contingent obligations) have been terminated, (ii) the
removal of VinVesto, Inc. as managing member of the Company
(and thus all Series of Interests), (iii) upon notice by one party to
the other party of a party?s material breach of the Series
Agreement or (iv) such other date as agreed between the parties to
the Series Agreement.
Each series will indemnify the Series Manager out of its assets
against all liabilities and losses (including amounts paid in respect
of judgments, fines, penalties or settlement of litigation, including
legal fees and expenses) to which they become subject by virtue of
serving as Series Manager under the Series Agreement with
respect to any act or omission that has not been determined by a
final, non-appealable decision of a court, arbitrator or other
tribunal of competent jurisdiction to constitute fraud, willful
misconduct or gross negligence.
Management Fee
As consideration for managing the Underlying Asset, the Series
Manager will be paid a semi-annual fee pursuant to the Series
Agreement equal to 50% of any available Free Cash Flow
generated by the Series for such six-month time period (the
?Management Fee?). However, the company does not intend to
generate Free Cash Flow by using the underlying asset.
Asset selection
The Company targets a broad spectrum of assets globally in order
to cater to a wide variety of tastes and investment strategies across
the fine wine market. We source our wine using historic trends,
projected trends, and a large database of fine wine metrics. We will
pursue acquisitions opportunistically on a global basis whenever
we can leverage our industry specific knowledge, data analysis
skills, or relationships to bring compelling investment
opportunities to Investors. It is our objective to acquire only the
highest caliber assets (and to appropriately maintain, monitor and
manage the collection to support its continued value appreciation
and to enable respectful enjoyment and utilization by the Investors.
We anticipate that our Advisory Board will assist in the
identification of fine wine and in finding and identifying fine wine
related service providers. This will give the Company access to the
highest quality assets and balanced information and decision
making from information collected across a diverse set of
constituents in the fine wine market, as well as a network of
partners to ensure the highest standards of care for the Underlying
Assets.
Our asset selection criteria were established by the Manager in
consultation with members of our Advisory Board and are
continually influenced by Investor demand and current industry
trends. The criteria are subject to change from time to time in the
sole discretion of the Manager. Although we cannot guarantee
positive investment returns on the assets we acquire, we endeavor
to select assets that are projected to generate positive return on
investment, primarily based upon the asset?s value appreciation
potential. The Manager, along with our Advisory Board, will
attempt to only select assets with known ownership history, pre-
purchase inspections, and other related records. The Manager,
along with our Advisory Board, also considers the condition and
grading of the assets, historical significance, provenance, the
historical valuation of the specific asset or comparable assets and
our ability to relocate the asset to our storage facilities. The
Manager, together with the Advisory Board, will review asset
selection criteria at least annually. The Manager will seek approval
from the Advisory Board for any major deviations from these
criteria.
Through the Company?s network and Advisory Board, we believe
that we will be able to identify and acquire fine wines of the
highest quality and known provenance, with the intent of driving
returns for Investors in the Series of Interests that owns the
applicable asset. Concurrently, through the VinVesto Platform, we
aim to bring together a significantly larger number of potential
buyers with Asset Sellers than traditional auction houses or brokers
are able to achieve. Through this process, we believe we can
source and syndicate assets more efficiently than the traditional
markets and with significantly lower transaction and holding costs.
Asset acquisition
From time to time, the Company or its Affiliates may elect to
acquire an asset opportunistically prior to the offering process. In
such cases, the proceeds from the associated offering, Offering
Expenses or other Acquisition Expenses or Sourcing Fee, will be
used to reimburse the Company for the acquisition of the asset or
repay any loans made to the Company, plus applicable interest, to
acquire such assets.
Rather than pre-purchasing assets before the closing of an offering,
the Company plans to work with the Manager to source and
identify outstanding supply and inventory at the Asset Sellers. The
company will list and market a collection of assets on the
VinVesto Platform to Investors. The Company is able to estimate
the average market value of the Underlying Assets through the
network of price lists, www.winesearcher.com, auction houses, and
fine wine exchanges. The Manager?s thorough sourcing process
ensures the Underlying Assets are available in the fine wine
market, and that the Manager is able to acquire the wines at a
reasonable price. Then, upon closing a successful offering, the
Asset Sellers would be compensated by the Manager. The
Company will acquire the Underyling Assets from the Manager
with a combination of cash proceeds from the offering and, if
elected, equity ownership in the series associated with the asset (as
negotiated in the purchase for such fine wines) and the asset would
be held by, or for the benefit of, the applicable series.
Asset Liquidity
The Company intends to hold and manage all of the assets
marketed on the VinVesto Platform for an average of five to ten
years. Liquidity for Investors would be obtained by transferring
their interests in a series (although there can be no guarantee that a
secondary market for any Series of Interests will develop or that
appropriate registrations to permit secondary trading will ever be
obtained). However, should an offer to liquidate an entire asset
materialize and be in the best interest of the Investors, as
determined by the Manager, the Manager together with the
Advisory Board will consider the merits of such offers on a case-
by-case basis and potentially sell the asset. Furthermore, should an
asset become obsolete (e.g. lack Investor demand for its interests)
or suffer from a catastrophic event, the Manager may choose to sell
the asset. As a result of a sale under any circumstances, the
Manager would distribute the proceeds of such sale (together with
any insurance proceeds in the case of a catastrophic event covered
under the assets insurance contract) to the interest holders of the
applicable series (after payment of any accrued liabilities or debt,
including but not limited to balances outstanding under any
Operating Expenses Reimbursement Obligation, on the asset or of
the series at that time).
Facilities
The Manager intends to operate the Company and manage the
collection in a manner that will focus on the ongoing security of all
Underlying Assets. The Manager will store the Underlying Asset,
along with other assets in a professional facility and in accordance
with standards commonly expected when managing fine wines of
equivalent value and always as recommended by the Advisory
Board.
The Manager intends to store the Underlying Assets within the
Domaine Wine Storage network of storage locations. If unable to
store in the Domaine network the Manager will store the
Underlying Assets in a licensed wine storage facility.
The Manager and the Series Manager is located at 2800 Patterson
Ave. Ste. 300 Richmond, VA 23221 and presently has three
employees. The Company does not have any employees.
Government regulation
Regulation of the fine wine industry varies from jurisdiction to
jurisdiction and state to state. In any jurisdictions or states in which
the Company operates, it may be required to obtain licenses and
permits to conduct business and will be subject to local laws and
regulations, including, but not limited to, import and export
regulations, laws and regulations involving sales, use, value-added
and other indirect taxes.
Claims arising out of actual or alleged violations of law could be
asserted against the Company by individuals or governmental
authorities and could expose the Company or each Series of
Interests to significant damages or other penalties, including
revocation or suspension of the licenses necessary to conduct
business and fines.
Legal proceedings
None of the Company, any series, the Manager, the Series
Manager or any director or executive officer of the Manager is
presently subject to any material legal proceedings.
Allocations of expenses
To the extent relevant, Offering Expenses, Acquisition Expenses,
Operating Expenses, revenue generated from Underlying Assets
and any indemnification payments made by the Company will be
allocated amongst the various interests in accordance with the
Manager?s allocation policy, a copy of which is available to
Investors upon written request to the Manager. The allocation
policy requires the Manager to allocate items that are allocable to a
specific series to be borne by, or distributed to (as applicable), the
applicable Series of Interests. If, however, an item is not allocable
to a specific series but to the Company in general, it will be
allocated pro rata based on the value of Underlying Assets (e.g., in
respect of insurance) or the number of interests, as reasonably
determined by the Manager or as otherwise set forth in the
allocation policy. By way of example, as of the date hereof it is
anticipated that revenues and expenses will be allocated as follows:
Expense Item
Details
Allocation Policy
Offering Expenses
Filing expenses related to submission of
regulatory paperwork for a series
Allocable pro rata to the value
of each Underlying Assets
Underwriting expense incurred
Allocable pro rata to the number
of Underlying Assets
Legal expenses related to the submission
of regulatory paperwork for a series
Allocable pro rata to the number
of Underlying Assets
Audit and accounting work related to the
regulatory paperwork of a series
Allocable pro rata to the number
of Underlying Assets
Escrow agent fees for the administration
of escrow accounts related to the offering
Allocable pro rata to the number
of Underlying Assets
Compliance work including due
diligence related to the preparation of a
series
Allocable pro rata to the number
of Underlying Assets
Acquisition Expense
Transportation of Underlying Assets as at
time of acquisition
Allocable pro rata to the number
of Underlying Assets
Insurance for transportation of
Underlying Assets as at time of
acquisition
Allocable pro rata to the value
of each Underlying Assets
Preparation of marketing materials
Allocable pro rata to the number
of Underlying Assets
Interest expense if the Underlying Assets
were pre-purchased.
Allocable directly to the
applicable Underlying Assets
Operating Expense
Storage
Allocable pro rata to the number
of Underlying Assets
Security
Allocable pro rata to the number
of Underlying Assets
Custodial fees
Allocable pro rata to the number
of Underlying Assets
Insurance
Allocable pro rata to the value
of each Underlying Assets
Audit, accounting, and bookkeeping
related to the reporting requirements of
the series.
Allocable pro rata to the number
of Underlying Assets
Indemnification
Payments
Indemnification payments under the
Operating Agreement
Allocable pro rata to the value
of each Underlying Assets
Notwithstanding the foregoing, the Manager may revise and
update the allocation policy from time to time in its reasonable
discretion without further notice to the Investors.
MARKET OPPORTUNITY
The market opportunity for alternative asset classes may remain
favorable as the macroeconomic environment presently few
opportunities to generate stable yield. Treasuries and corporate
bonds do not offer a strong yield as global interest rates remain
very low. Covid-19 has exposed tremendous volatility in the public
equity markets. Transparency continues to grow in the alternative
asset industry and we believe the future for alternatives, including
fine wine is promising.
The fine wine market is experiencing secular tailwinds. The market
has emerged from a conservative past into a more accepting
present. The global share of fine wine has transitioned away from
Bordeaux and Burgundy. According to data from the London
International Vintner?s Exchange, Bordeaux?s regional trade share
on their exchange has decreased over the last 10 years. The regions
that are taking share from Bordeaux include, Italy, Rhone,
Champagne, and Rest of World.
The fine wine market is valued around $5 billion (Morgan
Stanley). Since 2003, the London International Vintner?s Exchange
1000 (a good proxy for the fine wine market) has an annualized
annual return (10 year rolling periods) of 7.61% with volatility of
1.46% (Cult Wines).
There are three primary places to buy wine. Fine wine merchants
have the largest share of the market with an estimated 70% share
of the market. Auction houses are the second largest player in the
secondary market with an estimated 25% share of the market.
Finally, wine exchanges are the smallest player in the secondary
wine market, with and estimated 5% of the market.
The secondary fine wine market lacks pricing transparency. We
utilize public pricing lists, wine price aggregators, and fine wine
exchange data to determine a fair value estimate of the average
market value. This lack of pricing transparency creates wide
spreads in the market between comparable wines. We look to
utilize these spreads to source wines at attractive valuations,
thereby maximizing the potential upside for our investors.
MANAGEMENT
Manager
The Manager of the Company is VinVesto, Inc., a Delaware
corporation formed on June 16th, 2020.
The Company operates under the direction of the Manager, which
is responsible for directing the operations of our business, directing
our day-to-day affairs, and implementing our investment strategy.
The Manager has established a Board of Directors and an Advisory
Board that will make decisions with respect to all asset acquisitions
and dispositions. The Manager and its officers and directors are not
required to devote all of their time to our business and are only
required to devote such time to our affairs as their duties require.
The Manager is responsible for determining maintenance required
in order to maintain or improve the asset?s quality, determining
how to monetize the Series and other Underlying Assets, and
evaluating potential sale offers, which may lead to the liquidation
of the Series or other series as the case may be.
The Company will follow guidelines adopted by the Manager and
implement policies set forth in the Operating Agreement unless
otherwise modified by the Manager. The Manager may establish
further written policies and will monitor our administrative
procedures, investment operations and performance to ensure that
the policies are fulfilled. The Manager may change our objectives
at any time without approval of our Members. The Manager itself
has no track record and is relying on the track record of its
individual officers, directors and advisors.
The Manager performs its duties and responsibilities pursuant to
our Operating Agreement. The Manager maintains a contractual, as
opposed to a fiduciary relationship, with us and our Members.
Furthermore, we have agreed to limit the liability of the Manager
and to indemnify the Manager against certain liabilities.
Responsibilities of the Manager
The responsibilities of the Manager include:
Asset Sourcing, Acquisition, and Disposition Services:
- Together with members of the Advisory Board, define and
oversee the overall Underlying Asset sourcing and
disposition strategy;
- Manage the Company?s asset sourcing activities, including
creating the asset acquisition policy, organizing and
evaluating due diligence for specific asset acquisition
opportunities, and structuring partnerships with collectors
and brokers who may provide opportunities to source
quality assets;
- Negotiate and structure the terms and conditions of
acquisitions of assets with Asset Sellers, and associated
brokers;
- Evaluate any potential asset takeover offers from third
parties, which may result in asset dispositions, sales or
other liquidity transactions;
- Structure and negotiate the terms and conditions of
transactions pursuant to which Underlying Assets may be
sold or otherwise disposed;
- The Manager will acquire the wines from the Asset Seller
and will be compensated by the Company with the cash
raised from the completed offering.
Services in Connection with an Offering:
- Create and manage all series of interest for offerings related
to Underlying Assets on the VinVesto Platform;
- Develop offering materials, including the determination of
its specific terms and structure and description of the
Underlying Assets;
- Create and submit all necessary regulatory filings
including, but not limited to, Commission filings and
financial audits and coordinate with the broker of record,
lawyers, accountants and escrow agents as necessary in
such processes;
- Prepare all marketing materials related to offerings and
obtain approval for such materials from the broker of
record;
- Together with the broker of record, coordinate the receipt,
collection, processing and acceptance of subscription
agreements and other administrative support functions;
- Create and implement various technology services,
transactional services, and electronic communications
related to any offerings;
- All other necessary offering related services;
Asset Monetization Services:
- Create and manage all revenue-generating events and
determine participation in such programs by any underlying
assets;
- evaluate and enter into service provider contracts related to
the operation of revenue-generating events;
- allocate revenues and costs related to revenue-generating
events to the appropriate series in accordance with our
allocation policy;
- approve potential joint ventures, limited partnerships and
other such relationships with third parties related to asset
monetization and revenue-generating events;
Interest Holder Relationship Services:
- Provide any appropriate updates related to Underlying
Assets or offerings electronically or through the VinVesto
Platform;
- Manage communications with Members, including
answering emails, preparing and sending written and
electronic reports and other communications;
- Establish technology infrastructure to assist in providing
Interest Holder support and services;
- Determine our distribution policy and determine amounts
of and authorize Free Cash Flow distributions from time to
time;
- Maintain Free Cash Flow funds in deposit accounts or
investment accounts for the benefit of a Series;
Administrative Services:
- Manage and perform the various administrative functions
necessary for our day-to-day operations;
- Provide financial and operational planning services and
collection management functions including determination,
administration and servicing of any Operating Expenses
Reimbursement Obligation made to the Company or any
series by the Manager to cover any Operating Expense
shortfalls;
- Administer the potential issuance of additional Interests to
cover any potential Operating Expense shortfalls;
- Maintain accounting data and any other information
concerning our activities as will be required to prepare and
to file all periodic financial reports and required to be filed
with the Commission and any other regulatory agency,
including annual and semi-annual financial statements;
- Maintain all appropriate books and records for the
Company and all the Series of Interests;
- Obtain and update market research and economic and
statistical data in connection with the Underlying Assets
and the general fine wine market;
- Oversee tax and compliance services and risk management
services and coordinate with appropriate third parties,
including independent accountants and other consultants,
on related tax matters;
- Supervise the performance of such ministerial and
administrative functions as may be necessary in connection
with our daily operations;
- Provide all necessary cash management services;
- Manage and coordinate with the transfer agent, if any, the
process of making distributions and payments to Members
or the transfer or re-sale of securities as may be permitted
by law;
- Evaluate and obtain adequate insurance coverage for the
Underlying Assets based upon risk management
determinations;
- Provide timely updates related to the overall regulatory
environment affecting the Company, as well as managing
compliance with regulatory matters;
- Evaluate our corporate governance structure and
appropriate policies and procedures related thereto? and
- Oversee all reporting, record keeping, internal controls and
similar matters in a manner to allow us to comply with
applicable law.
Executive Officers, Directors and Key Employees of the Manager
Name
- Nicholas King
o Age: 23
o Chief Executive Officer
- Patrick Sanders
o Age: 23
o Chief Technology Officer
Background of Officers and Directors of the Manager
The following is a brief summary of the background of each
director and executive officer.
Nicholas King, Chief Executive Officer
Nick is an entrepreneur with experience in the fintech, financial
services, and startup space. Prior to founding VinVesto, Nick was
an associate analyst at Thompson, Siegel, and Walmsley, an
investment firm specializing in value investing. There he
sharpened his business analysis, fundamental research, financial
modeling, and investing abilities.
Before Thompson, Siegel, and Walmsley he held a role at Taylor
Hoffman Wealth Management as an Investment Analyst.
Prior to Taylor Hoffman, Nick held positions at Slice Capital, a
crowdfunding startup, as well as K&A Affiliates, a private equity
company.
Patrick Sanders, Chief Technology Officer
Advisory Board
Responsibilities of the Advisory Board
The Advisory Board will support the Company, the Series
Manager and the Manager and consists of members of our expert
network and additional advisors to the Manager. It is anticipated
that the Advisory Board will review the Company?s relationship
with, and the performance of, the Manager, and generally approve
the terms of any material or related-party transactions. In addition,
it is anticipated that the Advisory Board will be responsible for the
following:
I. Approving, permitting deviations from, making changes to, and
annually reviewing the asset acquisition policy;
II. Evaluating all asset acquisitions;
III. Evaluating any third party offers for asset acquisitions and
approving asset dispositions that are in the best interest of the
Company and the Members;
IV. Providing guidance with respect to the appropriate levels of
annual insurance costs and maintenance costs specific to each
individual asset and/or collection of assets;
V. Reviewing material conflicts of interest that arise, or are
reasonably likely to arise with the managing member, on the one
hand, and the Company, a series or the Economic Members, on the
other hand, or the Company or a series, on the one hand, and
another series, on the other hand;
VI. Approving any material transaction between the Company or a
series, on the one hand, and the Manager or any of its affiliates,
another series or an interest holder, on the other hand, other than
for the purchase of interests;
VII. Reviewing the total fees, expenses, assets, revenues, and
availability of funds for distributions to Members at least annually
or with sufficient frequency to determine that the expenses
incurred are reasonable in light of the investment performance of
the assets, and that funds available for distributions to Members
are in accordance with our policies; and
VIII. Approving any service providers appointed by the Manager
in respect of the Underlying Assets.
The resolution of any conflict of interest approved by the Advisory
Board shall be conclusively deemed fair and reasonable to the
Company and the Members and not a breach of any duty at law, in
equity or otherwise. The Members of the Advisory Board are not
managers or officers of the Company or any series and do not have
fiduciary or other duties to the interest holders of any series.
Compensation of the Advisory Board
The Manager will compensate the Advisory Board or their
nominees (as so directed by an Advisory Board member) for their
service by issuing to them shares of common stock in the Manager
subject to traditional vesting terms. As such, it is anticipated that
the members of the Advisory Board will be compensated by the
Manager and that their costs will not be borne by any given Series
of Interests, although members of the Advisory Board may be
reimbursed by a series for out-of-pocket expenses incurred by such
Advisory Board member in connection with a Series of Interests
(e.g. travel related to evaluation of an asset).
Members of the Advisory Board
We plan to continue to build the Advisory Board over time and are
in advanced discussions with various experts in the fine wine
market. We have already established an informal network of expert
advisors who support the Company in asset acquisitions,
valuations and negotiations. To date one individual has formally
joined the Manager?s Advisory Board:
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COMPENSATION
Compensation of Executive Officers
We do not currently have any employees nor do we currently
intend to hire any employees who will be compensated directly by
the Company. Each of the executive officers of the Manager
manage our day-to-day affairs, oversee the review, selection and
recommendation of investment opportunities, service acquired
investments and monitor the performance of these investments to
ensure that they are consistent with our investment objectives.
Each of these individuals receives compensation for his or her
services, including services performed for us on behalf of the
Manager, from VinVesto, Inc. Although we will indirectly bear
some of the costs of the compensation paid to these individuals,
through fees we pay to the Manager, we do not intend to pay any
compensation directly to these individuals.
Compensation of Manager
The Manager may receive Sourcing Fees and reimbursement for
costs incurred relating to this and other offerings (e.g., Offering
Expenses and Acquisition Expenses) and, in its capacity as Series
Manager, a Management Fee. Neither the Manager nor its affiliates
will receive any selling commissions or broker fees in connection
with the offer and sale of the Interests. However, please review our
Use of Proceeds for complete details on how proceeds will be
utilized for each Series.
The annual compensation of the Manager for Fiscal Year 2019 was
as follows:
- Cash Comp: $0
- Other Comp: $0
- Total Comp: $0
The Manager will receive Sourcing Fees for each subsequent
offering for Series of Interests in the Company that Closes.
In addition, should a series revenue exceed its ongoing Operating
Expenses and various other potential financial obligations of the
series, the Manager in its capacity as the Series Manager may
receive a Management Fee as described in ?Description of the
Business ?Management Fee.? To date, no Management Fees have
been paid by any series and we do not expect to pay any
Management Fees in Fiscal Year 2019.
A more complete description of Management of the Company is
included in ?Description of the Business? and ?Management?.
PRINCIPAL INTEREST HOLDERS
The Company is managed by VinVesto, Inc. At the Closing of this
Offering, VinVesto, Inc. or an affiliate will own at least 0.5% of
the Interests in the Series, acquired on the same terms as the other
Investors.. Throughout the Offering, VinVesto, Inc. or an affiliate,
has the right to purchase up to an additional 9.5% of the Interests,
capped at 10% in total of Series. VinVesto, Inc. or an affiliate may
sell some or all of the Interests acquired pursuant to this Offering
from time to time after the Closing. The address of VinVesto, Inc.
is 2800 Patterson Ave, Richmond, VA 23221.
Securities Being Offered
The following is a summary of the principal terms of, and is
qualified by reference to, the operating agreement and the
subscription agreements relating to the purchase of the interests
offered hereby, which are attached as exhibits to the offering
statement of which this offering circular forms a part. This
summary is qualified in its entirety by reference to the detailed
provisions of those agreements, which should be reviewed in their
entirety by each prospective investor. In the event that the
provisions of this summary differ from the provisions of the
operating agreement or the subscription agreements (as
applicable), the provisions of the operating agreement or the
subscription agreements (as applicable) shall apply. Capitalized
terms used in this summary that are not defined shall have the
meanings ascribed thereto in the operating agreement.
Description of Interests
Our company is a series limited liability company formed pursuant
to Section 18-215 of the LLC Act. The purchase of the interests
offered hereby is an investment only in the particular series and not
an investment in our company as a whole. In accordance with the
LLC Act, any series of interests established by our company will
be a separate series of limited liability company interests of our
company and not in a separate legal entity. We have not issued,
and will not issue, any class of interests entitled to any preemptive,
preferential or other rights that are not otherwise available to the
holders purchasing interests in connection with the offerings.
Title to the underlying assets will be held by, or for the benefit of,
the applicable series. We intend that each series will own its own
underlying assets, which will be bottles and/or cases of wine. We
do not anticipate that any series will acquire any other wine other
than the underlying assets related to that series. An investor who
invests in an offering will not have any indirect interest in any
asset other than the underlying asset related to the applicable series
unless the investor also participates in a separate offering
associated with that other underlying asset.
Section 18-215(b) of the LLC Act provides that, if certain
conditions are met (including that certain provisions are in the
formation and governing documents of the series limited liability
company, and if the records maintained for any such series account
for the assets associated with such series separately from the assets
of the limited liability company, or any other series), then the
debts, liabilities, obligations and expenses incurred, contracted for
or otherwise existing with respect to a particular series shall be
enforceable only against the assets of such series and not against
the assets of the limited liability company generally or any other
series. Accordingly, our company expects our manager to
maintain separate, distinct records for each series and its associated
assets and liabilities. As such, the assets of a series include only
the wines associated with that series and other related assets (e.g.,
cash reserves). As noted in the ?Risk Factors? section, the
limitations on inter-series liability provided by Section 18-215(b)
have never been tested in federal bankruptcy courts and it is
possible that a bankruptcy court could determine that the assets of
one series should be applied to meet the liabilities of the other
series or the liabilities of our company generally where the assets
of such other series or of our company generally are insufficient to
meet our company?s liabilities.
Section 18-215(c) of the LLC Act provides that a series established
in accordance with Section 18-215(b) may carry on any lawful
business, purpose or activity, other than the business of banking,
and has the power and capacity to, in its own name, contract, hold
title to assets (including real, personal and intangible property),
grant liens and security interests, and sue and be sued. We intend
for each series to conduct its business and enter into contracts in its
own name to the extent such activities are undertaken with respect
to a particular series and title to the relevant underlying assets will
be held by, or for the benefit of, the relevant series.
All of the interests offered by this offering circular will be duly
authorized and validly issued. Upon payment in full of the
consideration payable with respect to the interests, as determined
by our manager, the holders of the interests will not be liable to our
company to make any additional capital contributions (except for
the return of distributions under certain circumstances as required
by Sections 18-215, 18-607 and 18-804 of the LLC Act). Holders
of the interests offered hereby have no conversion, exchange,
sinking fund, redemption or appraisal rights, no pre-emptive rights
to subscribe for any interests and no preferential rights to
distributions.
In general, the holders of each series of our interests (which may
include our manager, its affiliates or asset sellers) will participate
in the available Free Cash Flow derived from the underlying assets
related to the series, less expenses (as described in ??Distribution
rights? below). Our manager, an affiliate of our company, will
own a minimum of 2% and a maximum of 19.99% of each series
of interests, although such minimum and maximum thresholds may
be waived or modified by our manager in its sole discretion. Our
manager may sell its interests from time to time. Our manager has
no present intention to sell its interests, and any future sales would
be based upon our potential need for capital, market prices of the
interests at the time of a proposed sale and other factors that a
reasonable investor might consider in connection with the sale of
securities similar to our interests. Our manager has the authority
under the operating agreement to cause our company to issue
interests of a series to investors as well as to other persons for such
cost (or no cost) and on such terms as our manager may determine,
subject to the terms set forth in the designation for each series.
Each series will use the proceeds of its offerings to pay certain fees
and expenses related to the acquisition and the offering, including
to repay any loans taken to acquire the underlying assets (please
see the ?Use of Proceeds to Issuer? section for further details
regarding the use of proceeds for each offering). An investor in
each offering will acquire an ownership interest only in the
applicable series and not, for the avoidance of doubt, in (i) our
company, (ii) any other series of interests, (iii) our manager, (iv)
our management and messaging portal or platform or (v) any
underlying asset owned by any series. Although our interests will
not immediately be listed on a stock exchange and a liquid market
in our interests cannot be guaranteed, we plan to create our own
trading market or partner with an existing platform to allow for
trading of our interests (please review additional risks related to
liquidity in the ?Risk Factors? section).
Further Issuance of Interests
Our manager has the option to issue additional interests in any
series offered hereby on the same terms as the interests offered
hereunder as is required from time to time in order to pay any
Operating Expenses which exceed revenue generated from the
underlying assets.
Distribution Rights
Our manager has sole discretion in determining what distributions
of Free Cash Flow, if any, are made to holders of each series of
interests except as otherwise limited by law or the operating
agreement.
Free Cash Flow consists of the net income (as determined under
GAAP) generated by such series plus any change in net working
capital and depreciation and amortization (and any other non-cash
Operating Expenses) and less any capital expenditures related to
the underlying assets related to such series. Our manager may
maintain Free Cash Flow funds in a deposit account or an
investment account for the benefit of the series.
We expect our manager to distribute any Free Cash Flow on a
semi-annual basis as set forth below. However, our manager may
change the timing of distributions or determine that no
distributions shall be made in its sole discretion.
Any Free Cash Flow generated by a series from the utilization of
the underlying assets related to such series shall be applied within
the series in the following order of priority:
- repay any amounts outstanding under Operating Expenses
Reimbursement Obligations plus accrued interest;
- thereafter to create such reserves as our manager deems
necessary, in its sole discretion, to meet future Operating
Expenses; and
- thereafter by way of distribution to holders of the interests
of such series (net of corporate income taxes applicable to
the series), which may include asset sellers of the
underlying assets related to such series or our manager or
any of its affiliates.
No series will distribute an underlying asset in kind to its interest
holders.
The LLC Act (Section 18-607) provides that a member who
receives a distribution with respect to a series and knew at the time
of the distribution that the distribution was in violation of the LLC
Act shall be liable to the series for the amount of the distribution
for three years. Under the LLC Act, a series limited liability
company may not make a distribution with respect to a series to a
member if, after the distribution, all liabilities of such series, other
than liabilities to members on account of their limited liability
company interests with respect to such series and liabilities for
which the recourse of creditors is limited to specific property of
such series, would exceed the fair value of the assets of such series.
For the purpose of determining the fair value of the assets of the
series, the LLC Act provides that the fair value of property of the
series subject to liability for which recourse of creditors is limited
shall be included in the assets of such series only to the extent that
the fair value of that property exceeds the nonrecourse liability.
Under the LLC Act, an assignee who becomes a substituted
member of a company is liable for the obligations of his assignor
to make contributions to the company, except the assignee is not
obligated for liabilities unknown to it at the time the assignee
became a member and that could not be ascertained from the
operating agreement.
No Redemption Provisions
No series of our interests are redeemable.
No Registration Rights
There are no registration rights in respect of any series of our
interests.
Limited Voting Rights
Our manager is not required to hold an annual meeting of interest
holders. The operating agreement provides that meetings of
interest holders may be called by our manager and a designee of
our manager shall act as chairman at such meetings. Interest
holders do not have any voting rights as an interest holder in our
company or a series except with respect to:
- the removal of our manager for cause as described below;
- the dissolution of our company upon the for-cause removal
of our manager; and
- an amendment to the operating agreement that would:
o adversely affect the rights of an interest holder in
any material respect;
o reduce the voting percentage required for any action
to be taken by the holders of interests in our
company under the operating agreement;
o change the situations in which our company and any
series can be dissolved or terminated;
o change the term of our company (other than the
circumstances provided in the operating
agreement); or
o give any person the right to dissolve our company.
Our manager can only be removed as manager of our company and
each series in the event our manager is found by a non-appealable
judgment of a court of competent jurisdiction to have committed
fraud in connection with a series or our company which has a
material adverse effect on our company.
When entitled to vote on a matter, each interest holder will be
entitled to one vote per interest held by it on all matters submitted
to a vote of the interest holders of an applicable series or of the
interest holders of all series of our company, as applicable. The
removal of our manager as manager of our company and all series
must be approved by two-thirds of the votes that may be cast by all
interest holders in any series of our company. All other matters to
be voted on by the interest holders must be approved by a majority
of the votes cast by all interest holders in any series of our
company present in person or represented by proxy.
Our manager or its affiliates (if they hold interests) may not vote as
an interest holder in respect of any matter put to the interest
holders. However, the submission of any action of our company or
a series for a vote of the interest holders shall first be approved by
our manager and no amendment to the operating agreement may be
made without the prior approval of our manager that would
decrease the rights of our manager or increase the obligations of
our manager thereunder.
Our manager has broad authority to take action with respect to our
company and any series. See ?Directors, Executive Officers and
Significant Employees?The Manager? for more information.
Except as set forth above, our manager may amend the operating
agreement without the approval of the interest holders to, among
other things, reflect the following:
- the merger of our company, or the conveyance of all of the
assets to, a newly-formed entity if the sole purpose of that
merger or conveyance is to effect a mere change in the
legal form into another limited liability entity;
- a change that our manager determines to be necessary or
appropriate to implement any state or federal statute, rule,
guidance or opinion;
- a change that our manager determines to be necessary,
desirable or appropriate to facilitate the trading of interests;
- a change that our manager determines to be necessary or
appropriate for our company to qualify as a limited liability
company under the laws of any state or to ensure that each
series will continue to qualify as a corporation for U.S.
federal income tax purposes;
- an amendment that our manager determines, based upon
the advice of counsel, to be necessary or appropriate to
prevent our company, our manager, or the officers, agents
or trustees from in any manner being subjected to the
provisions of the Investment Company Act, the Investment
Advisers Act or ?plan asset? regulations adopted under
ERISA, whether or not substantially similar to plan asset
regulations currently applied or proposed;
- any amendment that our manager determines to be
necessary or appropriate for the authorization,
establishment, creation or issuance of any additional series;
- an amendment effected, necessitated or contemplated by a
merger agreement that has been approved under the terms
of the operating agreement;
- any amendment that our manager determines to be
necessary or appropriate for the formation by our company
of, or its investment in, any corporation, partnership or
other entity, as otherwise permitted by the operating
agreement;
- a change in the fiscal year or taxable year and related
changes; and
- any other amendments which our manager deems necessary
or appropriate to enable our manager to exercise its
authority under the Agreement.
In each case, our manager may make such amendments to the
operating agreement provided our manager determines that those
amendments:
- do not adversely affect the interest holders (including any
particular series of interests as compared to other series of
interests) in any material respect;
- are necessary or appropriate to satisfy any requirements,
conditions or guidelines contained in any opinion,
directive, order, ruling or regulation of any federal or state
agency or judicial authority or contained in any federal or
state statute;
- are necessary or appropriate to facilitate the trading of
interests or to comply with any rule, regulation, guideline
or requirement of any securities exchange on which the
interests may be listed for trading, compliance with any of
which our manager deems to be in the best interests of our
company and the interest holders;
- are necessary or appropriate for any action taken by our
manager relating to splits or combinations of interests
under the provisions of the operating agreement; or
- are required to effect the intent expressed in this prospectus
or the intent of the provisions of the operating agreement or
are otherwise contemplated by the operating agreement.
Furthermore, our manager retains sole discretion to create and set
the terms of any new series and will have the sole power to
acquire, manage and dispose of underlying asset of each series.
Liquidation Rights
The operating agreement provides that our company shall remain
in existence until the earlier of the following: (i) the election of our
manager to dissolve it; (ii) the sale, exchange or other disposition
of substantially all of the assets of our company; (iii) the entry of a
decree of judicial dissolution of our company; (iv) at any time that
our company no longer has any members, unless the business is
continued in accordance with the LLC Act; and (v) a vote by a
majority of all interest holders of our company following the for-
cause removal of our manager. Under no circumstances may our
company be wound up in accordance with Section 18-801(a)(3) of
the LLC Act (i.e., the vote of members who hold more than two-
thirds of the interests in the profits of our company).
A series shall remain in existence until the earlier of the following:
(i) the dissolution of our company, (ii) the election of our manager
to dissolve such series; (iii) the sale, exchange or other disposition
of substantially all of the assets of the series; or (iv) at any time
that the series no longer has any members, unless the business is
continued in accordance with the LLC Act. Under no
circumstances may a series of interests be wound up in accordance
with Section 18-801(a)(3) of the LLC Act (i.e., the vote of
members holding more than two-thirds of the interests in the
profits of the series).
Upon the occurrence of any such event, our manager (or a
liquidator selected by our manager) is charged with winding up the
affairs of the series or our company as a whole, as applicable, and
liquidating its assets. Upon the liquidation of a series or our
company as a whole, as applicable, the underlying assets will be
liquidated and any after-tax proceeds distributed: (i) first, to any
third-party creditors, (ii) second, to any creditors that are our
manager or its affiliates (e.g., payment of any outstanding
Operating Expenses Reimbursement Obligation), and thereafter,
(iii) first, 100% to the interest holders of the relevant series,
allocated pro rata based on the number of interests held by each
interest holder (which may include our manager, any of its
affiliates and asset sellers and which distribution within a series
will be made consistent with any preferences which exist within
such series) until the interest holders receive back 100% of their
capital contribution and second, (A) 10% to our manager and (B)
90% to the interest holders of the relevant series, allocated pro rata
based on the number of interests held by each interest holder
(which may include our manager, any of its affiliates and asset
sellers and which distribution within a series will be made
consistent with any preferences which exist within such series).
Transfer Restrictions
Each series of our interests are subject to restrictions on
transferability. A holder of interests may not transfer, assign or
pledge its interests without the consent of our manager. Our
manager may withhold consent in its sole discretion, including
when our manager determines that such transfer, assignment or
pledge would result in (a) there being more than 1,200 beneficial
owners in such series (provided that our manager may waive such
limitations), (b) the assets of such series being deemed ?plan
assets? for purposes of ERISA, (c) a change of U.S. federal income
tax treatment of our company and/or such series, or (d) our
company, such series or our manager being subject to additional
regulatory requirements. The transferring holder is responsible for
all costs and expenses arising in connection with any proposed
transfer (regardless of whether such sale is completed) including
any legal fees incurred by us or any broker or dealer, any costs or
expenses in connection with any opinion of counsel and any
transfer taxes and filing fees.
The restrictions on transferability listed above will also apply to
any resale of interests (see ?Description of the Business ? Asset
Liquidity? for additional information).
Our manager may transfer all or any portion of the interests held
by it at any time and from time to time, in accordance with
applicable securities laws, either directly or through brokers.
Additionally, unless and until the interests are listed or quoted for
trading, there are restrictions on the holder?s ability to the pledge
or transfer the interests. There can be no assurance that we will, or
will be able to, register our interests for resale. Therefore, investors
may be required to hold their interests indefinitely. Please refer to
the subscription agreement for additional information regarding
these restrictions. To the extent certificated, the interests issued in
each offering will bear a legend setting forth these restrictions on
transfer and any legends required by state securities laws.
Agreement to be Bound by the Operating Agreement; Power of
Attorney
By purchasing interests, the investor will be admitted as a member
of our company and will be bound by the provisions of, and
deemed to be a party to, the operating agreement. Pursuant to the
operating agreement, each investor grants to our manager a power
of attorney to, among other things, execute and file documents
required for our qualification, continuance or dissolution. The
power of attorney also grants our manager the authority to make
certain amendments to, and to execute and deliver such other
documents as may be necessary or appropriate to carry out the
provisions or purposes of, the operating agreement.
Duties of Officers
The operating agreement provides that, except as may otherwise be
provided by the operating agreement, the property, affairs and
business of each series of interests will be managed under the
direction of our manager. Our manager has the power to appoint
the officers and such officers have the authority and exercise the
powers and perform the duties specified in the operating agreement
or as may be specified by our manager. Our manager will be
appointed as the asset manager of each series to manage the
underlying assets.
We may decide to enter into separate indemnification agreements
with the directors and officers of our company, our manager or our
asset manager (including if our manager or asset manager
appointed is not VinVesto, Inc.). If entered into, each
indemnification agreement is likely to provide, among other things,
for indemnification to the fullest extent permitted by law and the
operating agreement against any and all expenses, judgments,
fines, penalties and amounts paid in settlement of any claim. The
indemnification agreements may also provide for the advancement
or payment of all expenses to the indemnitee and for
reimbursement to our company if it is found that such indemnitee
is not entitled to such indemnification under applicable law and the
operating agreement.
Books and Reports
We are required to keep appropriate books of the business at our
principal offices. The books will be maintained for both tax and
financial reporting purposes on a basis that permits the preparation
of financial statements in accordance with GAAP. For financial
reporting purposes and tax purposes, the fiscal year and the tax
year are the calendar year, unless otherwise determined by our
manager in accordance with the Internal Revenue Code. Our
manager will file with the Commission periodic reports as required
by applicable securities laws.
Under the Securities Act, we must update this offering circular
upon the occurrence of certain events, such as asset acquisitions.
We will file updated offering circulars and offering circular
supplements with the Commission. We are also subject to the
informational reporting requirements of the Exchange Act that are
applicable to Tier 2 companies whose securities are qualified
pursuant to Regulation A, and accordingly, we will file annual
reports, semiannual reports and other information with the
Commission. In addition, we plan to provide holders of interests
with periodic updates, including offering circulars, offering
circular supplements, pricing supplements, information statements
and other information.
We will provide such documents and periodic updates
electronically. As documents and periodic updates become
available, we will notify holders of interests of this by sending the
holders an email message or a message through our platform that
will include instructions on how to retrieve the periodic updates
and documents. If our email notification is returned to us as
?undeliverable,? we will contact the holder to obtain an updated
email address. We will provide holders with copies via email or
paper copies at any time upon request.
Exclusive Jurisdiction
Under Section 15.08 of our operating agreement, any dispute in
relation to the operating agreement is subject to the exclusive
jurisdiction of the Court of Chancery of the State of Delaware, and
each investor will covenant and agree not to bring any such claim
in any other venue. If a holder of the interests were to bring a claim
against our company or our manager pursuant to the operating
agreement, it would have to do so in the Delaware Court of
Chancery. Notwithstanding the foregoing, if, for any reason, the
Delaware Chancery Court does not have jurisdiction over an
action, then the action may be brought in other federal or state
courts located in Delaware.
We believe the provision benefits us by providing increased
consistency in the application of Delaware law in the types of
lawsuits to which it applies and in limiting our litigation costs, the
forum selection provision may limit investors? ability to bring
claims in judicial forums that they find favorable to such disputes
and may discourage lawsuits with respect to such claims. We have
adopted the provision to limit the time and expense incurred by our
management to challenge any such claims. As a company with a
small management team, this provision allows our officers to not
lose a significant amount of time travelling to any particular forum
so they may continue to focus on operations of our company.
Section 22 of the Securities Act creates concurrent jurisdiction for
federal and state courts over all suits brought to enforce any duty
or liability created by the Securities Act or the rules and
regulations thereunder. We believe that the exclusive forum
provision applies to claims arising under the Securities Act, but
there is uncertainty as to whether a court would enforce such a
provision in this context. Further, Section 27 of the Exchange Act
creates exclusive federal jurisdiction over all suits brought to
enforce any duty or liability created by the Exchange Act or the
rules and regulations thereunder. As a result, the exclusive forum
provision would require suits to enforce any duty or liability
created by the Exchange Act or any other claim for which the
federal courts have exclusive jurisdiction to be brought in federal
court located in Delaware. Investors will not be deemed to have
waived our compliance with the federal securities laws and the
rules and regulations thereunder.
Waiver of Right to Trial by Jury
Our operating agreement provides that each investor waives the
right to a jury trial for any claim they may have against us arising
out of, or relating to, the operating agreement and any transaction
arising under the operating agreement, which could include claims
under federal securities law. By subscribing to this offering and
adhering to the operating agreement, the investor warrants that the
investor has reviewed this waiver, and knowingly and voluntarily
waives his or her jury trial rights. If we opposed a jury trial
demand based on the waiver, a court would determine whether the
waiver was enforceable given the facts and circumstances of that
case in accordance with applicable case law.
Listing
The interests offered hereby are not currently listed or quoted for
trading on any national securities exchange or national quotation
system.
MATERIAL UNITED STATES TAX CONSIDERATIONS
The following is a summary of the material United States federal
income tax consequences of the ownership and disposition of the
interests offered hereby to United States holders, but does not
purport to be a complete analysis of all the potential tax
considerations relating thereto. This summary is based upon the
provisions of the Internal Revenue Code of 1986, as amended, or
the Code, Treasury regulations promulgated thereunder,
administrative rulings and judicial decisions, all as of the date
hereof. These authorities may be changed, possibly retroactively,
so as to result in United States federal income tax consequences
different from those set forth below. We have not sought any
ruling from the U.S. Internal Revenue Service, or the IRS, with
respect to the statements made and the conclusions reached in the
following summary, and there can be no assurance that the IRS
will agree with such statements and conclusions.
This summary also does not address the tax considerations arising
under the laws of any United States state or local or any non-
United States jurisdiction or under United States federal gift and
estate tax laws. In addition, this discussion does not address tax
considerations applicable to an investor?s particular circumstances
or to investors that may be subject to special tax rules, including,
without limitation:
- banks, insurance companies or other financial institutions;
- persons subject to the alternative minimum tax;
- tax-exempt organizations;
- dealers in securities or currencies;
- traders in securities that elect to use a mark-to-market
method of accounting for their securities holdings;
- persons that own, or are deemed to own, more than five
percent of the series of interests (except to the extent
specifically set forth below);
- certain former citizens or long-term residents of the United
States;
- persons who hold the interests as a position in a hedging
transaction, ?straddle,? ?conversion transaction? or other
risk reduction transaction;
- persons who do not hold the interests as a capital asset
within the meaning of Section 1221 of the Code (generally,
for investment purposes); or
- persons deemed to sell the interests under the constructive
sale provisions of the Code.
In addition, if a partnership, including any entity or arrangement,
domestic or foreign, classified as a partnership for United States
federal income tax purposes, holds interests, the tax treatment of a
partner generally will depend on the status of the partner and upon
the activities of the partnership. Accordingly, partnerships that
hold interests, and partners in such partnerships, should consult
their tax advisors.
You are urged to consult your tax advisor with respect to the
application of the United States federal income tax laws to your
particular situation, as well as any tax consequences of the
purchase, ownership and disposition of the interests arising under
the United States federal estate or gift tax rules or under the laws
of any United States state or local or any foreign taxing jurisdiction
or under any applicable tax treaty.
Taxation of Each Series of Interests is Intended to be as a ?C?
Corporation.
Proposed but not yet finalized regulations, as well as one private
ruling by the IRS, indicate that each series of a series limited
liability company such as our company should each be treated as a
separate entity formed under local law. Our company intends to
elect for each series of interests in the company to be taxed as a
?C? corporation under Subchapter C of the Code, and expects that
each series will be treated as a corporation for all federal and state
tax purposes. Thus, each series of interests will be taxed at regular
corporate rates on its income, including any gain from the sale or
exchange of the assets that will be held by each series, before
making any distributions to interest holders as described below.
Taxation of Distributions to Investors
A ?U.S. Holder? includes a beneficial owner of interests that is, for
U.S. federal income tax purposes, an individual citizen or resident
of the United States.
Distributions to U.S. Holders out of each series? current or
accumulated earnings and profits (which would include any gains
derived from the sale or exchange of the assets that will be held by
each series, net of tax paid or accrued thereon, will be taxable to
U.S. Holders as dividends. A U.S. Holder who receives a
distribution constituting ?qualified dividend income? may be
eligible for reduced federal income tax rates. U.S. Holders are
urged to consult their tax advisors as to whether any dividends paid
by a series would be ?qualified dividend income.? Distributions in
excess of the current and accumulated earnings and profits of a
series will not be taxable to a U.S. Holder to the extent that the
distributions do not exceed the adjusted tax basis of the U.S.
Holder?s interests. Rather, such distributions will reduce the
adjusted basis of such U.S. Holder?s interests. Distributions in
excess of current and accumulated earnings and profits that exceed
the U.S. Holder?s adjusted basis in its interests will be taxable as
capital gain in the amount of such excess if the interests are held as
a capital asset. In addition, a 3.8% tax applies to certain investment
income (referred to as the 3.8% NIIT). In general, in the case of an
individual, this tax is equal to 3.8% of the lesser of (i) the
taxpayer?s ?net investment income? or (ii) the excess of the
taxpayer?s adjusted gross income over the applicable threshold
amount ($250,000 for taxpayers filing a joint return, $125,000 for
married individuals filing separate returns and $200,000 for other
taxpayers). In the case of an estate or trust, the 3.8% tax will be
imposed on the lesser of (x) the undistributed net investment
income of the estate or trust for the taxable year, or (y) the excess
of the adjusted gross income of the estate or trust for such taxable
year over a beginning dollar amount (currently $7,500 of the
highest tax bracket for such year). Dividends are included as
investment income in the determination of ?net investment
income? under Section 1411(c) of the Code.
Taxation of Dispositions of Interests
Upon any taxable sale or other disposition of interests, a U.S.
Holder will recognize gain or loss for federal income tax purposes
on the disposition in an amount equal to the difference between (i)
the amount of cash and the fair market value of any property
received on such disposition and (ii) the U.S. Holder?s adjusted tax
basis in the interests. A U.S. Holder?s adjusted tax basis in the
interests generally equals his, her or its initial amount paid for the
interests and decreased by the amount of any distributions to the
investor in excess of current or accumulated earnings and profits.
In computing gain or loss, the proceeds that U.S. Holders receive
will include the amount of any cash and the fair market value of
any other property received for their interests, and the amount of
any actual or deemed relief from indebtedness encumbering their
interests. The gain or loss will be long-term capital gain or loss if
the interests are held for more than one year before disposition.
Long-term capital gains of individuals, estates and trusts currently
are taxed at a maximum rate of 20% (plus any applicable state
income taxes) plus the 3.8% NIIT. The deductibility of capital
losses may be subject to limitation and depends on the
circumstances of a particular U.S. Holder; the effect of such
limitation may be to defer or to eliminate any tax benefit that might
otherwise be available from a loss on a disposition of the interests.
Capital losses are first deducted against capital gains, and, in the
case of non-corporate taxpayers, any remaining such losses are
deductible against salaries or other income from services or
income from portfolio investments only to the extent of $3,000 per
year.
Backup Withholding and Information Reporting
Generally, we must report annually to the IRS the amount of
dividends paid to you, your name and address, and the amount of
tax withheld, if any. A similar report will be sent to you.
Payments of dividends or of proceeds on the disposition of the
interests made to you may be subject to additional information
reporting and under some circumstances to backup withholding at
a current rate of 24% unless you establish an exemption. Backup
withholding is not an additional tax; rather, the federal income tax
liability of persons subject to backup withholding is reduced by the
amount of tax withheld. If withholding results in an overpayment
of taxes, a refund or credit may generally be obtained from the
IRS, provided that the required information is furnished to the IRS
in a timely manner.
The preceding discussion of United States federal tax
considerations is for general information only. It is not tax advice.
Each prospective investor should consult its own tax advisor
regarding the particular United States federal, state and local and
foreign tax consequences, if applicable, of purchasing, holding and
disposing of the interests, including the consequences of any
proposed change in applicable laws.
WHERE TO FIND ADDITIONAL INFORMATION
The Manager will answer inquiries from potential Investors in the
Series Interests concerning the Series Interests, the Company, the
Manager and other matters relating to the offer and sale of the
Series Interests under this Offering Circular. The Company will
afford the potential Investors in the Interests the opportunity to
obtain any additional information to the extent the Company
possesses such information or can acquire such information
without unreasonable effort or expense that is necessary to verify
the information in this Offering Circular.
All potential Investors in the Interests are entitled to review copies
of any other agreements relating to the Series Interests described in
this Offering Circular, if any. In the Subscription Agreement, you
will represent that you are completely satisfied with the results of
your pre-investment due diligence activities.
Any statement contained herein or in any document incorporated
by reference herein shall be deemed to be modified or superseded
for purposes of this Offering Circular to the extent that a statement
contained herein or in any other subsequently filed document that
also is or is deemed to be incorporated by reference herein
modifies or replaces such statement. Any such statement so
modified or superseded shall not be deemed to constitute a part of
this Offering Circular, except as so modified or superseded.
Requests and inquiries regarding this Offering Circular should be
directed to:
VV Markets LLC
2800 Patterson Ave
Richmond, VA 23221
E-Mail: contact@vinvesto.org
Tel: 804-833-7974
Attention: Nicholas King
We will provide requested information to the extent that we
possess such information or can acquire it without unreasonable
effort or expense.
Index to Exhibits, by Form 1-A exhibit category number:
2. Charter documents of VV Markets LLC: articles of
organization
3. Defining the Rights of Securities Holders: Series Operating
Agreement
4. Subscription Agreement
6. Management Agreement
12. Opinion regarding legality
16. Other: Audited financial reports
1
EX1A-2A CHARTER
5
VVMDelArt0616204.txt
SERIES LLC ARTICLES
STATE of DELAWARE
CERTIFICATE of FORMATION
A LIMITED LIABILITY COMPANY
State of Delaware
Secretary of State
Division of Corporations
Delivered 07:06 PM 06/16/2020
FILED 07:06 PM 06/16/2020
SR 20205735138 - File Number 3078401
ARTICLE I.
The name of this limited liability company is VV Markets, LLC.
ARTICLE II.
Its registered office in the State of Delaware is to be
located at 651 N. B
ROAD ST., SUITE 206, MIDDLETOWN DE
19709. The registered agent in charge thereof is
LEGALINC CORPORATE
SERVICES INC..
ARTICLE III.
The period of duration of the limited liability
company shall be perpetual.
ARTICLE IV.
Series Limited Liability Company:
Notice is hereby given that the LLC Agreement,
pursuant to Section 18
-215(b) of the
Delaware Limited Liability Company Act, the Company
has or may establish one or more
designated series and that the debts, liabilities,
obligations and expens
es incurred,
contracted for or otherwise existing with respect to
a particular series o
f the Company shall
be enforceable against the assets of such series only
and not against
the assets of the
Company generally or any other series thereof, and,
unless otherwise
provided in the
limited liability company agreement of the Company,
none of the debts,
liabilities,
obligations and expenses incurred, contracted for or
otherwise existing
with respect to the
Company generally or any other series thereof shall
be enforceable ag
ainst the assets of
such series.
I, the undersigned, for the purpose of forming a
limited liability company
under the laws of the State of Delaware,
do make, file and record this Certificate, and do
certify that the facts herei
n stated are true, and I have accordingly
hereunto set my hand and executed this Certificate
of Formation on the da
te below.
Dated: June 16th, 2020
NANCY LUNA, Organizer
EX1A-3 HLDRS RTS
6
VVMSerOpAg20203.txt
SERIES OPERATING AGREEMENT
SERIES LIMITED LIABILITY COMPANY AGREEMENT
FOR
VV MARKETS, LLC,
A DELAWARE LIMITED LIABILITY COMPANY
TABLE OF CONTENTS
1.
Recitals
1
1.1
Headings & Definitions
1
2.
Formation of Company
1
2.1
Name of Company
2
2.2
Principal Place of Business
2
2.3
Registered Office and Registered Agent
2
2.4
Term
2
2.5
Founder Contributions and Compensation
2
3.
Series of the Company
3
3.1
Series Creation
3
3.2
Series Management
3
3.3
Series Membership
4
3.4
Subsidiaries of Series
4
3.5
Series Debt Liability; Books and Records
5
4.
Business Purpose
5
4.1
Business of Company, Its Series, and Their Subsidiaries
5
4.2
Affiliates of the Founder May Provide Services
6
5.
Members? Names and Addresses; Member Classes
5
5.1
Company and Series Members
5
5.2
Series Member Classes
6
6.
Rights and Duties of Management
6
6.1
Management of the Company and Series
6
6.2
Exclusive Authority of the Series Managers
7
6.3
Authority of the Series Members
8
6.4
Series Manager?s Liability for Certain Acts
9
6.5
Bank Accounts
9
6.6
Indemnity of the Series Managers, Employees and Other Agents
9
6.7
Salaries
10
6.8
Resignation
10
6.9
Removal
10
6.10
Vacancies
11
7.
Rights and Obligations of Members
11
7.1
Limitation of Liability
11
7.2
List of Members
12
7.3
Company Books
12
7.4
Priority and Return of Capital
12
7.5
Liability of a Series Member to the Company
12
8.
Meetings of Members
13
8.1
Meetings
13
8.2
Place of Meetings
13
8.3
Notice of Meetings
13
8.4
Meetings of All Voting Members
13
8.5
Record Date
13
8.6
Quorum
14
8.7
Manner of Acting
14
8.8
Proxies
14
8.9
Action by Members without a Meeting
14
8.10
Waiver of Notice
15
9.
Contributions to the Company and Capital Accounts
15
9.1
Capital Contributions
15
9.2
Voluntary Additional Capital Contributions
15
9.3
Time of Capital Contributions; Withdrawal Not Permitted
16
9.4
Loans
16
9.5
Company Interests
16
9.6
Voting Units
16
9.7
Series Ownership
17
9.8
Capital Accounts
17
10.
Distributions
17
10.1
Distributable Cash
17
10.2
Distribution Rules
17
10.3
Limitation upon Distributions
18
10.4
No Interest on Capital Contributions
18
11.
Books and Records, Bank Accounts, Tax Matters
18
11.1
Accounting Method
18
11.2
Records, Audits and Reports
18
11.3
Returns and Other Elections
19
12.
Voluntary Transfers; Additional and Substitute Members
19
12.1
Transfers Restricted
19
12.2
Percentage of Limitations or Transfers
20
12.3
Voluntary Withdrawal, Resignation or Disassociation Prohibited
20
12.4
Admission of Additional Series Members
20
12.5
Transfer Prohibited Except as Expressly Authorized Herein
20
12.6
Conditions for Permissible Voluntary Transfer
21
12.7
Substitution
21
12.8
Voluntary Transfer; Right of First Refusal
22
13.
Involuntary Transfer; Disassociation
24
13.1
Disassociation for Cause
24
13.2
Disassociation by Operation of Law
24
13.3
Effect of Disassociation
25
13.4
Sale and Valuation of a Disassociated Member?s Interest
26
13.5
Closing on a Disassociated Members? Interest
26
13.6
Payment for a Disassociated Member?s Interest
27
13.7
Transfer of Economic Interest; Rights of an Involuntary Transferee
27
14.
Dispute Resolution
28
14.1
Notice of Disputes
28
14.2
Negotiation of Disputes
28
14.3
Mandatory Alternative Dispute Resolution
29
14.4
Mediation
30
14.5
Arbitration
30
15.
Termination of Series and Company
31
15.1
Dissolution of the Company
31
15.2
Termination of a Series
32
15.3
Winding Up of a Series on Termination of Such Series
32
15.4
Winding Up On Dissolution of the Company
33
15.5
Certificate of Cancellation
33
15.6
Effect of Filing Certificate of Cancellation or Equivalent
33
15.7
Returns of Contributions Nonrecourse to Other Members
33
16.
Miscellaneous Provisions
34
16.1
Notices
34
16.2
Binding Effect
34
16.3
Governing Law
34
16.4
Waiver of Action for Partition
34
16.5
Amendments
33
16.6
Execution of Additional Instruments
35
16.7
Construction
35
16.8
Waivers
35
16.9
Severability
35
16.10
Creditors
36
16.11
Counterparts
36
16.12
Integration
36
17.
Signatures
36
Appendix A: Capital Accounts and Allocations
A-1
Appendix B: Definitions
B-1
C-1
SERIES LIMITED LIABILITY COMPANY AGREEMENT
FOR
VV MARKETS, LLC,
A DELAWARE LIMITED LIABILITY COMPANY
THIS SERIES LIMITED LIABILITY COMPANY
AGREEMENT (Company Agreement) for VV Markets, LLC, a
Delaware limited liability company (the Company) is effective as
of the date executed below, and is the governing document by and
between the Company, its Founder (VinVesto, Inc., a Delaware
corporation), its Series, and the Series Managers and Series
Members.
1. Recitals
WHEREAS, the parties hereto desire to enter into this
Agreement; and
WHEREAS, it is intended by the parties hereto that
Underlying Asset(s) or Asset(s) shall be acquired by a Series of the
Company and that the debts, liabilities and obligations incurred,
contracted for or otherwise existing with respect to a particular
Series of the Company will be enforceable against the assets of
such Series only, and not against the assets of the Company
generally or any other Series thereof, and none of the debts,
liabilities, obligations and expenses incurred, contracted for or
otherwise existing with respect to the Company generally or any
other Series thereof shall be enforceable against the assets of such
Series; and
NOW, THEREFORE, in consideration of the mutual
promises and obligations contained herein, the parties, intending to
be legally bound, hereby agree as follows:
1.1 Headings & Definitions
The headings and subheadings in this Agreement are included for
convenience and identification only and are in no way intended to
describe, interpret, define or limit the scope, extent or intent of this
Agreement, a Series Agreement or any provision hereof.
Capitalized terms in this Agreement (and any associated Series
Agreements) are defined in Appendix B hereof.
2. Formation of Company
The Founder has executed and delivered a Certificate of Formation
to the Delaware Secretary of State in accordance with and pursuant
to the Delaware Limited Liability Company Act, as codified in the
Delaware Code, Title 6, Chapter 18 (the Act). Upon execution of
this Agreement, without the need for the consent or other action of
any Person or members of any Series, the Founder shall be
admitted as the sole Member of the Company not associated with
any Series.
The Founder (as the sole Member of the Company) hereby ratifies
and approves formation of the Company as a Delaware Series
limited liability company under and pursuant to the provisions of
the Act and agrees that the rights, duties and liabilities of the
Founder, Series Managers and Series Members shall be as
provided in the Act, except as otherwise provided herein. The
Company shall not acquire assets or incur liabilities or other
obligations unless they are acquired or incurred on behalf of a
Series and not with respect to the Company generally.
2.1 Name of Company
The name of the Company shall be VV Markets, LLC, a Delaware
Series limited liability company. The business of the Company
may be conducted in compliance with all applicable laws under the
Company or its Series? name, or such assumed name as may be
designated by the Founder or a Series Manager.
2.2 Principal Place of Business
The principal place of business of the Company and the Founder
is:
VV Markets, LLC
c/o Nicholas King
2800 Patterson Ave
Richmond, VA 23221
The Company and its Series may locate its place of business and
registered office at any other place as the Founder may from time-
to-time deem advisable. The Founder or Series Managers will
convey any changes in addresses after inception of the Company
by sending correspondence to all affected Persons.
2.3 Registered Office and Registered Agent
The Company shall maintain a registered agent in Delaware at all
times during operation of the Company or any Series. The Founder
may change the registered office and registered agent of the
Company at any time by filing the address of the new registered
office and/or the name of the new registered agent with the
Secretary of State of the State of Delaware pursuant to the Act.
2.4 Term
The Company and each of its Series shall have perpetual existence
unless the Company is earlier dissolved in accordance with the
provisions of this Agreement or the terms of a Series Agreement.
2.5 Founder Contributions and Compensation
The Founder, through its members, has made such Capital
Contributions to the Company as necessary for its formation. The
Founder does not plan to collect Fees or Distributions from any of
the Series on account of its role as the Founder, but it may receive
Fees or Distributions to the extent it or an Affiliate acts as a Series
Manager as described in a Series Agreement.
The Founder (except in its capacity as a Series Manager or Series
Member) shall not acquire assets for or incur liabilities or other
obligations with respect to the Company or any Series unless the
Founder (as a Series Manager) shall be deemed admitted as a
Member of a newly created Series upon its execution of a
counterpart signature page to a Series Agreement. As its capacity
as a Series Manager, VinVesto, Inc. will acquire assets and
subsequently sell those assets to the Company.
The Founder may be reimbursed pro rata from each Series for
common expenses such as accounting, insurance, office space,
asset managers or other employees who administer services to the
Series? on behalf of the Company. Additionally, the Founder may
grant Class B Interests in its Series to others who provide services
to the Company and/or a Series. The Founder may determine and
collect a pro-rata amount from each Series after considering the
actual time spent on behalf of each Series, the relative revenue
generated by a Series, or any other means the Founder deems fair
and reasonable.
3. Series of the Company
In accordance with this Agreement, the Founder may from time to
time form such Series of the Company as may be necessary to
meet the Company?s business objectives (See Article 4.1).
3.1 Series Creation
Each Series will have the following characteristics:
- A separate business purpose or investment objective;
- Series Members who will make Capital Contributions or
Non-Capital Contributions the Series to further its separate
business objectives (see Article 4.1);
- Separate rights, powers or duties with respect to
management, control, or disposition of Underlying Asset(s)
of a Series;
- Separate obligations or rights to share in Profits and Losses
associated with Underlying Asset(s) of a Series.
Each Series Agreement and its exhibits will describe the purpose,
Underlying Asset(s), characteristics, capital requirements, and
investment strategies for a Series.
3.2 Series Management
Management of each Series will automatically be vested in the
Founder (as the Series Manager) or an Affiliate of the Founder
(owned or controlled by the Founder or its members), as
designated by the Founder in a Series Agreement. The Founder has
the exclusive authority to designate itself as the Series Manager or
to designate a Series Manager, who may be an Affiliate of the
Founder, its members, or a Series Member.
The Founder may designate a Series Manager to accommodate:
- The request of a lender to include an additional loan
guarantor for an acquisition, refinance or other loan against
Underlying Asset(s) of the Series;
- Active participants who may participate in asset
procurement, asset management, fundraising or other
needed services on behalf of a Series; or
- For any other reason that the Founder, in its sole discretion,
deems appropriate or beneficial for a Series.
A Series Manager (or its members or Affiliates) may be a manager
of one or more Series and may make Capital or Non-Capital
Contributions to such Series in exchange for its Membership
Interests, management designation, Fees and/or Distributions.
3.3 Series Membership
An Investor who makes Capital Contributions or Non-Capital
Contributions to a Series and is accepted by the Series Manager
shall become a ?Series Member? of that Series, but not of the
Company generally, or of any other Series. A Series Member may
be a Member of one or more Series. A Series Member may earn
Distributions only from the Series to which it is admitted as a
Member.
The Founder shall maintain a list of all Series, the respective Series
Members, and the Series Managers. Each Series Agreement will
each identify all Series Members and the Series Manager. The
Founder shall periodically update such lists as necessary to update
the information contained therein, including, without limitation,
the establishment of additional Series, the admission or
Disassociation of Series Members, the respective Series Managers,
and all relevant contact information.
3.4 Subsidiaries of Series
The Founder may form single purpose limited liability companies
(Subsidiaries) on behalf of a Series as necessary to:
- Take title to Underlying Asset(s);
- Borrow money to finance the usually required by a lender;
- Execute a lease on a Underlying Asset(s) on behalf of a
Series (as the lessee);
- Execute a purchase option on a Underlying Asset(s) (as an
optionee).
Where such Subsidiaries are formed, the sole Member of the
Subsidiary will be a Series, unless the Series joint ventures with
another entity or Person to acquire the Underlying Asset(s). In any
case, the Founder or a designated Series Manager shall retain
management control of the Subsidiary on behalf of the Series and
its Members.
3.5 Series Debt Liability; Books and Records
No debt, liability or obligation of a Series shall be a debt, liability
or obligation of the Company or any other Series. The debts,
liabilities and obligations incurred, contracted for or otherwise
existing with respect to a Series shall be enforceable against the
assets of such Series or its Subsidiaries only and not against any
other assets of the Company generally or any other Series.
The Founder shall cause each Series to maintain separate and
distinct records for its Subsidiaries and Property. All assets or
liabilities associated with a Series shall be accounted for separately
from the other assets or liabilities of the Company, or any other
Series.
3.6 Operating Expenses
Operating Expenses are costs and expenses attributable to the
activities of the Series (collectively, ?Operating Expenses?)
including:
- costs incurred in managing the Underlying Asset,
including, but not limited to storage, maintenance and
transportation costs (other than transportation costs
described in Acquisition Expenses);
- costs incurred in preparing any reports and accounts of the
Series, including any tax filings and any annual audit of the
accounts of the Series (if applicable) or costs payable to
any third-party registrar or transfer agent and any reports to
be filed with the Commission including periodic reports on
Forms 1-K, 1-SA and 1-U;
- any indemnification payments; and
- any and all insurance premiums or expenses in connection
with the Underlying Asset, including insurance required for
utilization at and transportation of the Underlying Asset to
events under Fan Club Experiences (as described in
?Description of the Business ? Business of the Company?)
(excluding any insurance taken out by a corporate sponsor
or individual paying to showcase an asset at an event but
including, if obtained, directors and officers insurance of
the directors and officers of the Manager or the Series
Manager).
4. Business Purpose
4.1 Business of Company, Its Series, and Their Subsidiaries
The business objectives of the Company and each of its Series, and
their Subsidiaries shall be:
- To acquire (by purchase, purchase option or installment
contract, or direct sourcing) collectible assets (wines), from
the Founder, for purposes of investment, management,
operation, and disposition by sale or lease/option to a third-
party or to an Affiliate of the Founder or its members.
- To transact any and all lawful business for which a limited
liability company may be formed under the Act in
furtherance of the business objectives stated in the
preceding paragraph; and
- To transact all business necessary, appropriate, advisable,
convenient or incidental to any of the foregoing provisions.
The Founder and each Series shall have the power to do any or all
of the acts necessary, appropriate, advisable, incidental or
convenient to or for the furtherance of the purposes and business
described herein and for the protection or benefit of the Company
and its Series. The Company and each Series shall have any or all
of the powers that may be exercised on behalf of the Company or
such Series by any Person in accordance with the Act.
4.2 Affiliates of the Founder May Provide Services
The Founder (or its members), or an Affiliate may provide or
participate in Asset-related services for the Series and their
Subsidiaries. So long as the rates a Series pays for such services
are commensurate with third-party rates, this shall not be
considered a conflict of interest, nor will contracts related to such
services require the consent of any Person other than the Series
Manager.
5. Members? Names and Addresses; Member Classes
5.1 Company and Series Members
The name and address of the Founder is provided in Article 2.2
hereof. The name of respective Series Members will be provided in
Appendices attached to the applicable Series Agreement.
5.2 Series Member Classes
On formation of a Series, the Founder will cause to be drafted a
Series Agreement, designating such Member Classes as may be
necessary, appropriate, or advantageous for operation of the Series
and meeting its specific business objectives. On creation of a
Series, the Founder may designate certain Member Classes having
preferential rights to compensation or a return of capital over other,
subordinate classes. Assignment of Series Member Classes may be
based on the amount, character (loan v. equity), or timing of an
investor?s Capital Contribution to a Series, as the Founder deems
appropriate when forming the Series.
6. Rights and Duties of Management
6.1 Management of the Company and Series
The Founder shall be vested with the authority to act as and on
behalf of the Company, and shall have the sole and exclusive
authority to appoint an initial Manager for each Series. The
business and affairs of a Series shall be vested in the Manager and
Members of that Series in accordance with its Series Agreement.
In the absence of a Series Manager, the Founder shall be vested
with the authority to act as and on behalf of the Series as its
Manager. A Series Manager need not be a member of that Series or
a member of the Company. Series Managers may receive
compensation in the form of Fees and/or Series Membership
Interests for which they may receive Distributions.
The Founder reserves the exclusive authority to enter into selling
or other agreements with FINRA registered selling agents or
brokers on behalf of the Company or its Series. The Company may
such pay finder?s fees or commissions, or issue subordinate (e.g.,
Class B Interests) in a Series to such Persons for introducing or
referring Investors who purchase Series Interests. The amount of
cash paid by the Company for finder?s fees or commissions paid to
such Persons, if any, may reduce the proceeds available for
investment in a Series, although Investors so referred will be given
full credit for the total amount of their Capital Contributions.
However, any right to Distributions granted by the Manager to
such Persons as compensation for Investor referrals will come
from the Series Manager?s allocation, and will not impact the
Distributions or dilute the Percentage Interests of Investors or their
Member Class.
6.2 Exclusive Authority of the Series Managers
A Series Manager, if one or more are designated by the Founder,
shall be vested with the authority to act as and on behalf of such
Series. The Series Manager(s) shall serve until each of its
successors are elected by the Members of that Series. Unless
otherwise specified in a Series Agreement, the Series Manager for
each Series will be VV Markets, LLC, a Delaware limited liability
company (or its Affiliates).
Without limiting the general authority of a Series Manager
provided in Article 6.2 a Series Manager shall have the sole power
and authority, on behalf of a Series to:
- Acquire title or management control of Underlying Asset(s)
(by purchase, lease, purchase option, installment contract)
from any Person as the Series Manager(s) may determine,
whether or not such Person is directly or indirectly
affiliated or connected with the Founder or any Series
Member;
- Borrow money for a Series (or their Subsidiaries) from
banks, other lending institutions, other Series Members, or
the Founder, on such terms as the Series Manager deems
appropriate, and in connection therewith, to hypothecate,
encumber and grant security Interests in the assets of a
Series to secure repayment of the borrowed sums. No debt
shall be contracted or liability incurred by or on behalf of
any Series except by the Series Manager(s), or, to the
extent permitted under the Act and this Agreement, by
agents or employees associated with a Series or the Series
Manager(s) expressly authorized by the Series Manager(s)
to contract such debt or incur such liability;
- Purchase liability and other insurance to protect the
property and business or the Company or Series, and/or
directors and officers for the assets of a Series, the Series
itself, the Series Manager, the Company, or its Founder;
- Hold, own and/or operate such assets in the name of a
Series or its Subsidiary, as appropriate;
- To joint venture with other companies to accomplish the
objectives of the Company or a Series;
- Form new, single purpose entities, e.g., limited liability
companies, limited partnerships, corporations, or trusts,
(Subsidiaries) to take title to or management control of a
specific Underlying Asset(s), so long as the Subsidiary is
managed by the Founder or an Affiliate;
- Sell or otherwise dispose of all or substantially all of the
assets of a Series as part of a single transaction or plan as
long as such disposition is not in violation of or a cause of a
default under any other agreement to which such Series
may be bound;
- Execute on behalf of a Series all instruments and
documents, including, without limitation, checks; drafts;
notes and other negotiable instruments; mortgages or deeds
of trust; security agreements; financing statements;
documents providing for the acquisition, mortgage or
disposition of such Series? property; assignments; bills of
sale; leases; and any other instruments or documents
necessary, appropriate, convenient, advisable or incidental
to the business of such Series;
- Employ accountants, legal counsel, managing agents or
other experts to perform services for the Company with
respect to a Series;
- Pay, collect, compromise, litigate, arbitrate, or otherwise
adjust or settle any and all other claims or demands of or
against such Series or to hold such proceeds against the
payment of contingent liabilities;
- Enter into any and all other agreements on behalf of the
Company with respect to a Series, as appropriate; and
- Do and perform all other acts as may be necessary,
appropriate, convenient, advisable or incidental to the
conduct of such Series? business.
Each Series Manager shall have the exclusive power and authority
to bind a Series on any matter described above, and shall be
deemed to be authorized by the Series Members to act as an agent
of the Company only with respect to such Series.
6.3 Authority of the Series Members
The Series Members shall have the authority to direct, manage and
control the business and affairs of their respective Series on such
matters, if any, on which they may be entitled to vote as described
in a Series Agreement. Such voting rights shall be exercised by the
Series Members in accordance with their Percentage Interests in
the Series (or their Member Class) as to the management and
conduct of that Series only (not generally with respect to the
Company or any other Series). Unless otherwise specified in a
Series Agreement, an affirmative vote of Series Members holding
a Majority of Interests in a Series shall control on all such matters
in which they are entitled to vote.
The affirmative vote of a Majority of Interests of all of the
Members associated with a Series shall be required for the
Company to merge or consolidate with or into, or convert into,
another entity, (but not to joint venture). Unless authorized to do so
by this Agreement or specifically by its Series Manager, no
attorney-in-fact, employee or other agent of the Company or such
Series shall have any power or authority to bind the Company or
such Series in any way, to pledge the Company?s or a Series?
credit or to render the Company or a Series liable for any purpose.
6.4 Series Manager?s Liability for Certain Acts
Each Series Manager shall perform its duties in good faith, in a
manner it reasonably believes to be in the best interests of the
Company and such Series, and with such care as an ordinarily
prudent person in a like position would use under similar
circumstances. A Series Manager shall not be liable to the
Company, the Series with which it is associated, or to any other
Series Member or Series for any loss or damage sustained by such
Series or Series Member, unless the loss or damage shall have been
the result of fraud, deceit, gross negligence, willful misconduct or
a wrongful taking by the Series Manager.
6.5 Bank Accounts
A Series Manager or the Founder may from time to time open bank
accounts in the name of the Company or such Series, or in the
name of a Subsidiary, as appropriate, and the Founder and Series
Manager shall be the only signatories thereon, unless such Series
Manager determines otherwise.
6.6 Indemnity of the Series Managers, Employees and Other
Agents
To the fullest extent permitted by applicable law, subject to
approval of each Series Manager or the Founder, all officers,
directors, shareholders, partners, members, employees,
representatives or agents of the Founder or a Series Manager, or
their respective affiliates, employees or agents (each, a ?Covered
Person?) shall be entitled to indemnification from such Series (and
the Company generally) for any loss, damage or claim incurred by
such Covered Person by reason of any act or omission performed
or omitted by such Covered Person in good faith on behalf of the
Founder or such Series and in a manner reasonably believed to be
within the scope of authority conferred on such Covered Person by
this Agreement and any Series Agreement, except that no Covered
Person shall be entitled to be indemnified for any loss, damage or
claim incurred by such Covered Person by reason of fraud, deceit,
gross negligence, willful misconduct or a wrongful taking with
respect to such acts or omissions; provided, however, that any
indemnity under this Article 6.6 shall be provided out of and to the
extent of the assets of the such Series only, and no other Covered
Person or any other Series or the Company or the Founder shall
have any liability on account thereof. Such Covered Persons will
have no duty or obligation (fiduciary or otherwise) to give any
consideration to any interest of or factors affecting us or any of our
Members and will not be subject to any different standards
imposed by our operating agreement, the Delaware Limited
Liability Company Act or under any other law, rule or regulation
or in equity. These modifications of fiduciary duties are expressly
permitted by Delaware law.
To the fullest extent permitted by applicable law, subject to
approval of the Founder or a Series Manager, all expenses
(including legal fees) incurred by a Covered Person in defending
any claim, demand, action, suit or proceeding shall, from time to
time, be advanced by such Series prior to the final disposition of
such claim, demand, action, suit or proceeding upon receipt by
such Series of an undertaking by or on behalf of the Covered
Person to repay such amount if it shall be determined that the
Covered Person is not entitled to be indemnified as authorized in
this Article 6.6.
The Founder (on behalf of the Company as a whole) or a Series
may purchase and maintain insurance, to the extent and in such
amounts as its Series Manager(s) and/or the Founder shall deem
reasonable, on behalf of Covered Persons and such other Persons
as the Founder or Series Manager(s) shall determine, against any
liability that may be asserted against or expenses that may be
incurred by any such Person in connection with the activities of the
Company or a Series, or such indemnities in general, regardless of
whether a Series would have the power to indemnify such Person
against such liability under the provisions of this Agreement or a
Series Agreement.
The Founder (on behalf of the Company as a whole) or a Series
may enter into indemnity contracts with Covered Persons and such
other Persons as the Founder or a Series Manager shall determine
and may, but are not required to, adopt written procedures pursuant
to which arrangements are made for the advancement of expenses
and the funding of obligations under this Article 6.6 and containing
such other procedures regarding indemnification as are
appropriate.
6.7 Salaries
Neither the Founder nor any Series Manager is expected to earn a
salary. However, salaries, fees or other compensation (such as
Distributions on account of its Series Membership Interest) of a
Series Manager may be fixed from time to time, as specified in a
Series Agreement or other relevant agreement, or subsequently by
an affirmative vote of the Series Members holding at least a
Majority of Interests of such Series. This provision is expected to
accommodate the Series Members? need to hire a replacement
Series Manager (who may not be a Series Member or an Affiliate
of the Founder), in the unlikely event that the initial Series
Manager is removed or has resigned or is no longer able to serve as
the Series Manager and the Founder is unable or unwilling to serve
in its stead (see Articles 6.8 and 6.9 below).
6.8 Resignation
Any Series Manager may resign at any time by giving written
notice to the Series Members and the Founder. The resignation of a
Series Manager shall take effect upon receipt of notice thereof or at
such later time as shall be specified in such notice; and, unless
otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective. The resignation of a
Series Manager who is also a Member of a Series shall not affect
its Series Membership Interests and shall not constitute its
withdrawal as a Series Member.
6.9 Removal
At a meeting called expressly for that purpose, a Series Manager
may be removed at any time, for Good Cause, by the decision of
such Series Members owning more than seventy-five percent
(75%) of the Percentage Interests in that Series. Good Cause shall
include only the following:
- Committing any of the acts described in Article 6.4 hereof
(including fraud, deceit, gross negligence, willful
misconduct or a wrongful taking);
- A breach of a Series Manager?s duties or authority
hereunder;
- Bad faith;
- Death or disability wherein the Series Manager (or each of
the members of the Manager with authority to Manage the
Series) dies or becomes physically, mentally, or legally
incapacitated such that it can no longer effectively function
as the Series Manager or the dissolution, liquidation or
termination of any entity serving as a Series Manager and
no other member of the Series Manager is willing or able to
effectively perform the Series Manager?s duties;
- Disappearance wherein the Series Manager (or each of the
its members) fails to return phone calls and/or written
correspondence (including email) for more than thirty days
(30) without prior notice, or failure to provide the Series
Members with new contact information; or
- Issuance of a legal charging order and/or judgment by any
judgment creditor against the Manager?s Interest in Cash
Distributions or Fees from the Company.
6.10 Vacancies
A Series Manager?s vacancy shall be filled by:
- The Founder or its designee, unless the Founder is the
Series Manager is the subject of the removal action.
- In that event the replacement Series Manager will be
elected by a vote of a Majority of Interests of such Series
Members at either a special meeting or by written consent.
A Series Manager elected to fill a vacancy shall be elected for the
un-expired term of its predecessor in office and shall hold office
until expiration of such term and until its successor shall be elected
and shall qualify or until its, resignation or removal.
7. Rights and Obligations of Members
7.1 Limitation of Liability
7.1.1 Limitation of Liability of the Company
Except as otherwise provided in this Agreement, or the Act, the
debts, obligations and liabilities of the Company where such
liabilities are incurred in its own name and not with respect to a
Series, whether arising in contract, torts or otherwise, shall be
solely the debts, obligations and liabilities only of the Company,
and no Series, Series Member or Series Manager shall be obligated
personally for any such debt, obligation or liability of the
Company solely by reason of being a Series Member or Series
Manager.
7.1.2 Limitation of Liability of a Series
Except as otherwise provided in its Series Agreement, or the Act,
the debts, obligations and liabilities of a Series, where such
liabilities are incurred in its own name and not generally with
respect to the Company, whether arising in contract, torts or
otherwise, shall be solely the debts, obligations and liabilities only
of that Series, and neither the Members or Manager of that Series
(nor any other Series or its Members or Manager), shall be
obligated personally for any such debt, obligation or liability solely
by reason of being a Member or Manager of either the Series that
is the subject of the liability or another Series of the Company.
Each Series Member shall nevertheless be liable for its obligations
to make Capital Contributions pursuant to Articles 9.1 and 9.2.
7.2 List of Members
Upon the written request of any Series Member for any purpose
reasonably related to such Member?s Interest in such Series, the
Series Manager shall provide to such Member a list showing the
names, and Membership Interests of all Series Members. The
Series Manager will maintain as confidential all Members? contact
information to the extent provided by the Act and other applicable
law.
7.3 Company Books
The Founder shall maintain and preserve, during the existence of
such Series, the accounts, books and other relevant Series
documents described in Article 11 at the Founder?s place of
business. Notwithstanding anything in this Agreement to the
contrary, the Founder, in concert with each Series Manager will be
responsible for maintaining separate and distinct records for each
and every Series, and the assets associated with each Series shall
be held and accounted for separately from the other assets of the
Company or of any other Series.
Upon reasonable written request stating the reason for the request,
a Series Member shall have the right, at a time during ordinary
business hours, as reasonably determined by such Series
Manager(s), to inspect and copy, at the requesting Series
Member?s expense, the books and records for such Series and its
Subsidiaries for a business purpose reasonably related to such
Series Member?s Interest with respect to such Series. The Series
Manager may choose to provide the requested information
electronically, at its option.
No Series Member or Series Manager will have the right to inspect
and copy the books and records of any other Series of which it is
not a Member or a Manager, nor of the Company generally, unless
specifically required by the Act.
The Company, Founder, and Series Managers will maintain
confidentiality of the Series Members contact information to the
extent allowed under the Act.
7.4 Priority and Return of Capital
No Series Member shall have priority over any other Series
Member either as to the return of Capital Contributions or as to
allocation of Profits, Losses or Distributions; provided that this
Article 7.4 shall not apply to loans made to the Company by the
Founder, a Series Manager or Series Member with respect to a
Series, unless Member Classes specifically having such priority are
provided in a Series Agreement.
7.5 Liability of a Series Member to the Company
A Series Member who receives a Distribution from the Company
with respect to a Series is liable to the Company with respect to
such Series or to others only to the extent provided by the Act and
other applicable law.
8. Meetings of Members
8.1 Meetings
Meetings of Series Members, for any purpose or purposes, may be
called by any Series Manager, or by the Series Members holding at
least twenty-five percent (25%) of the Percentage Interests of such
Series on notice to the Series Manager, but there shall be no
requirement that there be an annual meeting.
8.2 Place of Meetings
A Series Manager may designate any place, either within or
outside the State of Delaware, as the place of meeting for any
meeting of the Series Members. If a designation is not made, or if a
special meeting is otherwise called, the place of meeting shall be
the principal place of business of the Company. Any meeting of
Series Members may also take place by teleconferencing as long as
a quorum (as defined in Article 8.6 below) participate in the same.
8.3 Notice of Meetings
Except as provided in Article 8.4, written notice stating the place,
day and hour of the meeting and the purpose or purposes for which
the meeting is called shall be delivered not less than three (3) nor
more than thirty (30) days before the date of the meeting, either
personally, by email, or by mail, by or at the direction of a Series
Manager or Person calling the meeting, to each Member entitled to
vote at such meeting. If email, such notice shall be deemed
delivered one (1) business day after being sent, and if mailed, such
notice shall be deemed to be delivered two (2) business days after
being deposited in the United States mail, addressed to the
Member at its address as it appears on the books of the Company,
with postage thereon prepaid.
8.4 Meetings of All Voting Members
If all Members of a Series shall meet at any time and place, either
within or outside the State of Delaware, or participate in a
teleconference meeting, and consent to the holding of a meeting at
such time and place or by teleconference, such meeting shall be
valid without call or notice, and at such meeting lawful action may
be taken.
8.5 Record Date
Unless otherwise stated in a Series Agreement, for the purpose of
determining Series Members entitled to notice of or to vote at any
meeting of Series Members or any adjournment thereof, or Series
Members entitled to receive payment of any Distribution, or in
order to make a determination of Series Members on a specific
date for any other purpose, the day immediately prior to the date
on which notice of the meeting is mailed or the day immediately
prior to the latest date on which the such Distribution will be
calculated (i.e., the day before the Distribution is made), as the
case may be, shall be the record date for such determination of
Series Members. When a determination of Series Members entitled
to vote at any meeting of Series Members has been made as
provided in this Article 8.5, such determination shall apply to any
adjournment thereof.
8.6 Quorum
Series Members holding at least two-thirds (2/3) of all Percentage
Interests of such Series, represented in person or by proxy, shall
constitute a quorum at any meeting of Series Members. In the
absence of a quorum at any such meeting, Series Members holding
a majority of the Percentage Interests so represented may adjourn
the meeting from time to time for a period not to exceed sixty (60)
days without further notice. However, if the adjournment is for
more than sixty (60) days, or if after the adjournment a new record
date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each Series Member of record entitled to
vote at the meeting. If a quorum is present or represented at such
adjourned meeting, any business may be transacted which might
have been transacted at the meeting as originally noticed. The
Series Members present at a duly noticed meeting may continue to
transact business until adjournment, notwithstanding the
withdrawal during such meeting of that number of Percentage
Interests whose absence would cause less than a quorum.
8.7 Manner of Acting
If a quorum is present, the affirmative vote of Series Members
holding a Majority Interest in a Series shall be the act of the Series
Members, unless the vote of a greater or lesser proportion or
number is otherwise required by the Act or expressly by this
Agreement or a Series Agreement. Only the Series Members of
each specific Series may vote or consent upon any matter
concerning that Series, and their vote or consent, as the case may
be, shall be counted in the determination of whether the matter was
approved by the Series Members.
8.8 Proxies
At all meetings of Series Members, a Series Member may vote in
person or by proxy executed in writing by the Member or by a duly
authorized attorney-in-fact. Such proxy shall be filed with the
Manager before or at the time of the meeting. No proxy shall be
valid after eleven months from the date of its execution, unless
otherwise provided in the proxy. A proxy may only be given
verbally during a meeting taking place by teleconferencing and
shall expire at the termination of said teleconference.
8.9 Action by Members without a Meeting
Action required or permitted to be taken at a meeting of Series
Members may be taken without a meeting and without prior notice
if consents, whether oral or written, of Series Members are
received in writing (by email originating from a Members? email
account, or mail) representing the minimum number of votes that
would be necessary to authorize or take such action at a meeting at
which all Members of such Series were present and voted, and all
Series Members entitled to vote were notified of the meeting.
8.10 Waiver of Notice
When any notice is required to be given to any Member, a waiver
thereof in writing signed by the Member entitled to such notice,
whether before, at, or after the time stated therein, or the
participation in a teleconference meeting, shall be equivalent to the
giving of such notice.
9. Contributions to the Company and Capital Accounts
9.1 Capital Contributions
The Founder may raise Capital Contributions for each Series by
the sale of Units in each Series via the Company?s Private
Placement Memorandum. The Founder will determine the
minimum or maximum number of Units to be sold on behalf of a
Series, and the minimum investment amount required of an
individual Investor in a Series. Each Series Member shall
contribute to such Series in the amount set forth in a Series
Agreement as its Initial Capital Contribution to the Company with
respect to such Series. The Founder will accept or reject the
Subscription after making a determination of whether the Investor
meets the suitability standards established by the Founder to invest
in the Company. Each Series Member?s holdings of Units may but
are not required to be evidenced by a certificate or receipt in a
form approved by the Founder.
9.2 Voluntary Additional Capital Contributions
No Series Member will be required to make Additional Capital
Contributions. If a Series? funds are insufficient to meet the needs
of the Series, the Series Manager shall notify the Series Members
of the need for additional capital and the Series Members may be
permitted, but not required, to make Additional Capital
Contributions to the Series on a pro-rata basis. In the event all
Series Members do not make Additional Capital Contributions
proportionate to their previous Series Percentage Interests, the
Series Manager will recalculate the Percentage Interests of the
Series Members after collection of the Additional Capital
Contributions by: a) calculating the sum of each Series Member?s
initial Capital Contributions plus their Additional Capital
Contributions, and b) dividing this amount by the sum of the total
Capital Contributions and Additional Capital Contributions of all
Series Members. If the Series Members make disproportionate
Additional Capital Contributions, the Percentage Interests of the
Series Members who made Additional Capital Contributions will
be increased and the Percentage Interests of the Series Members
who did not make Additional Capital Contributions will be
decreased.
In the event the existing Series Members do not voluntarily make
Additional Capital Contributions in amounts sufficient to meet a
Series? need; the Series Manager may request that the Founder
seek the needed capital from other sources, which may include a
loan from the Founder, a Series Manager, a Series Member,
another Series (or its Members or Manager), a third-party; or the
sale of additional Interests in such Series to new Series Members.
The Series Members hereby acknowledge and agree that
noncontributing Members? Percentage Interests in a Series may be
reduced: a) as a result of Additional Capital Contributions made by
contributing Series Members, or b) by the sale of additional
Interests to new Series Members, and that the Series Manager or
Founder, as applicable, is authorized to take either action on behalf
of a Series if additional funds are needed to meet the Series?
business objectives.
9.3 Time of Capital Contributions; Withdrawal Not Permitted
Capital Contributions shall be made by Series Members in full on
admission to a Series. No portion of the capital of a Series may be
withdrawn until dissolution of a Series or the Company, except as
otherwise expressly provided in this Agreement or a Series
Agreement.
9.4 Loans
Nothing in this Agreement shall prevent any Series Member from
making secured or unsecured loans to a Series or its Subsidiary by
agreement approved by such Series Manager, as the case may be.
9.5 Company Interests
Subject to the other provisions of this Agreement or a Series
Agreement, each Series Interest shall have the rights, and be
subject to the obligations, identical to those of every other Interest
of the same Member Class in a Series.
The Founder retains the sole and exclusive right to establish Series,
Series Member Classes, the quantity and value of Units in a Series
to be sold in exchange for Capital Contributions to each Series as
may be necessary to accomplish the objectives of the Series or the
Company. The voting rights, if any associated with the Units will
be specified in a Series Agreement.
If any non-voting Interests are issued by a Series, the non-voting
Interest holders although Series Members, shall be passive, shall
not have any power to vote, except as otherwise provided in such
Series Agreement or by law, and shall only obtain a purely
Economic Interest in the particular Series.
Initial Interest Allocation for Interests Issued by the Company to
its Founder:
VinVesto, Inc.: 100%
9.6 Voting Units
Subject to the other provisions of this Agreement, each voting Unit
in a Series shall have the rights, and be subject to the obligations,
identical to those of each other voting Unit of the same Member
Class in the Series. The holders of voting Units shall be entitled to
one vote for each voting Unit held at all meetings of voting Series
Members (and written actions in lieu of meetings), with no right to
cumulative voting.
9.7 Series Ownership
Membership Interests sold by the Company on behalf of a Series
may be denominated in Units where one Unit equals an investment
of One Thousand Dollars ($1,000), or such other increments or
amounts as may be described in the Series Agreement. Each Unit
shall have the rights, and be subject to the obligations, identical to
those of other Units of the same Member Class within such Series.
9.8 Capital Accounts
See Appendix A for Capital Accounts and Allocations.
10. Distributions
This Article 10 pertains to Cash Distributions made to Series
Members only. The Founder of the Company does not expect to
receive any Distributions from the Company, and will only share
in Distributions in accordance with its membership in a Series, or
for management of a Series, in accordance with the Series
Agreement for each such Series.
10.1 Distributable Cash
Except as otherwise provided in Article 15 hereof (relating to the
dissolution of the Company), any Distribution of the Distributable
Cash of a Series during any Fiscal Year shall: (a) be made to the
Series Members in proportion to such Series Members? respective
Percentage Interests in a Series, prioritized by Member Class, if
applicable, or (b) in any other manner described in an applicable
Series Agreement.
10.2 Distribution Rules
All Distributions to Series Members pursuant to Article 10.1 shall
made be at such times and in such amounts as shall be determined
solely by the Series Manager; provided, however, that the Series
Manager shall use its best efforts to cause the Series to distribute to
such Series Members an amount of Distributable Cash sufficient to
enable the Series Members to pay their federal and state income-
tax liabilities attributable to their respective distributive Interests of
the taxable income of a Series, as applicable.
All amounts withheld pursuant to the Code or any provision of any
state or local tax law with respect to any payment, Distribution or
allocation to Series Members shall be treated as amounts
distributed to the Series Members pursuant to this Article 10 for all
purposes of this Agreement and the Series Agreements.
A Series Manager is authorized to withhold from Distributions, or
with respect to allocations, to the respective Series Members and to
pay over to any federal, state or local government any amounts
required to be so withheld pursuant to the Code or any provision of
any other federal, state or local law and shall allocate such amounts
to those Series Members with respect to which such amounts were
withheld.
10.3 Limitation upon Distributions
Notwithstanding any provision to the contrary contained in this
Agreement, a Series shall not make any Distribution to any Person
on account of its Interest in the Company with respect to such
Series if such Distribution would violate the Act or other
applicable law.
The Series Manager may base a determination that a Distribution
or return of a Series Member?s Capital Contribution may be made
under Article 10.1 in good-faith reliance upon a balance sheet and
profit and loss statement of such Series represented to be correct
by the Person having charge of its books of account or by an
independent public or certified public accountant or firm of
accountants to fairly reflect the financial condition of such Series.
10.4 No Interest on Capital Contributions
No Series Member shall be entitled to interest on its Capital
Contributions or to return of their Capital Contributions.
11. Books and Records, Bank Accounts, Tax Matters
11.1 Accounting Method
11.2 The Company, for accounting and income tax purposes, shall
operate on a Fiscal Year ending December 31 of each year, and
shall make such income tax elections and use such methods of
depreciation as shall be determined by the Manager. The books
and records of the Company will be kept on a GAAP basis in
accordance with sound accounting practices to reflect all income
and expenses of the Company. Records, Audits and Reports
At the expense of the Company or the relevant Series, each Series
Manager shall maintain separate and distinct records and accounts
of the operations and expenditures of the Company and each Series
during the term of the Company or each such Series, and for seven
(7) years thereafter. At a minimum, the Company and each Series
shall keep at the principal place of business of the Company the
following records:
- True and full information regarding the status of the
business and financial condition of such Series and the
Company;
- Promptly after becoming available, a copy of the
Company?s federal, state and local income tax returns for
each year;
- The current list of the name and last known business,
residence or mailing address of each Series Member;
- A copy of this Agreement, Series Agreements, and the
Certificate of Formation of the Company;
- True and full information regarding the amount of cash and
a description and statement of the Gross Asset Value of any
other property or services contributed by each Series
Member to the Company with respect to such Series and
which each Series Member has agreed to contribute in the
future, and the date on which each became a Series
Member;
- Minutes of every meeting held, if any;
- Any written consents obtained from Series Members for
actions taken by such Members without a meeting; and
- Unless contained in the Certificate of Formation or this
Agreement, a writing prepared by each Series Manager
setting out the following:
- The times at which or events on the happening of which
any Additional Capital Contributions agreed to be made by
each Series Member are to be made; and
- Any right of a Series Member to receive Distributions that
include a return of all or any part of the Series Member?s
contributions.
11.3 Returns and Other Elections
The Founder and/or Series Managers, as applicable, shall cause the
preparation and timely filing of all tax returns required to be filed
by the Company or its Series, pursuant to the Code and all other
tax returns deemed necessary and required in each jurisdiction in
which the Company does business. Copies of such returns, or
pertinent information therefrom, shall be furnished to the
respective Series Members within a reasonable time after the end
of the Company?s Fiscal Year. All elections permitted to be made
by the Company under federal or state laws shall be made by the
Series Managers and/or Founder in its sole discretion.
12. Voluntary Transfers; Additional and Substitute Members
The Founder, as the issuer of Interests in the Company and its
Series, shall have the sole and exclusive authority to grant, convey,
sell, transfer, hypothecate, disassociate or otherwise dispose of all
or a portion of the Series? Interests without input or vote of the
Series Members or Series Managers consistent with the Series
Agreement.
Once interests in a Series have been sold, the Series Manager may
only affect a change in the Membership Interests of a Series
Member by following the procedures described below:
12.1 Transfers Restricted
No Series Member shall voluntarily transfer all or any part of its
Economic Interest in a Series, except as provided in this Article 12.
In the event a Series Member or a Transferee of a Series Member
violates any of the provisions of this Article, such transfer shall be
null and void and of no force or effect.
12.2 Percentage of Limitations or Transfers
Notwithstanding any other provision of this Agreement to the
contrary, the Company or a Series Manager shall not be required to
recognize any transfer of an Interest in a Series if the transfer,
when considered with other transfers of the Interests in a Series
made within the period of twelve (12) consecutive calendar months
prior thereto, would constitute a sale or exchange of fifty percent
(50%) or more of the total Series? Interest and result in the tax
termination of the Company under article 708(b) of the Internal
Revenue Code of 1986, as amended.
12.3 Voluntary Withdrawal, Resignation or Disassociation
Prohibited
No Series Member may withdraw, resign or voluntarily
disassociate from a Series, unless such Series Member complies
with the transfer provisions set forth in this Article. The provisions
of this Article shall apply to all Voluntary Transfers of a Series
Member?s Interests in a Series. Involuntary Transfers are
addressed in Article 13.
Unless otherwise approved by a Series Manager, a Series Member
who resigns as a Series Member (a ?Resigning Member?),
regardless of whether such termination was the result of a
voluntary act by such Series Member, shall not be entitled to
receive any further Distributions from the Company with respect to
such Series. Damages for breach of this Article 12.3 shall be
monetary damages only (and not specific performance), and such
damages may be offset against Distributions by such Series to
which the Resigning Member would otherwise be entitled.
12.4 Admission of Additional Series Members
Only the Founder may sell Interests in a Series or admit Series
Members. Once the Company closes the offering period for the
sale of Interests in a Series, no additional Interests in the Series
may be sold, or any Additional Series Members admitted, unless:
a) the admission of an Additional Series Member is approved by
the Founder. The Founder reserves the exclusive right to sell
additional Interests in a Series to new or existing Series Members,
and to admit new Series Members whose Interests may be equal or
senior to the existing Interests in a Series as necessary to raise
needed capital for a Series.
12.5 Transfer Prohibited Except as Expressly Authorized Herein
No Series Member may voluntarily, involuntarily, or by operation
of law assign, transfer, sell, pledge, hypothecate, or otherwise
dispose of (collectively transfer) all or part of its Interest in the
Company or a Series, except as is specifically permitted by this
Agreement or a Series Agreement. In no event shall any Voluntary
Transfer be made to a trust (including grantor trusts), a partnership,
a disregarder entity, or any other Person whose Membership would
preclude the Company from continuing to operate under the opt-
out provisions of the BBA audit procedures pursuant to section of
6221(b) of the Code. Any Voluntary Transfer made in violation of
this Article shall be void and of no legal effect.
Further, in no event shall any Voluntary Transfer be made within
one (1) year of the initial sale of the Interests proposed for transfer
unless the Transferor provides a letter from an attorney, acceptable
to the Series Manager, stating that in the opinion of such attorney,
the proposed transfer is exempt from registration under the
Securities Act and under all applicable state securities laws or is
otherwise compliant with Rule 144 under the Securities Act of
1933. The Series Manager is legally obligated to refuse to honor
any transfer made in violation of this provision.
12.6 Conditions for Permissible Voluntary Transfer
Notwithstanding anything contained in this Agreement or a Series
Agreement to the contrary, Series Manager shall,
- On written request of a Series Member, transfer all or any
part of its Interest with respect to a Series to another Series
Member or to a transferee that bears one of the following
relationships to the transferring Series Member: a spouse, a
lineal descendant or a trust created for the exclusive benefit
of the transferring Series Member, the transferring Series
Member's spouse and/or the transferring Series Member's
lineal descendant(s), or an Affiliate as a Substitute
Member, or
- At the request of an IRA custodian or the Series Member,
transfer all or any part of a Company or Series interest to
the Series Member or another IRA Custodian.
Approval of Substitute Membership shall not be unreasonably
withheld on delivery of all requested documents to the Series
Manager necessary to accomplish such transfer. However, any
subsequent conveyance or transfer of ownership Interests within
the Affiliate so that it no longer meets the definition of an Affiliate
with respect to the original Series Member, shall make its
membership in a Series subject to revocation or Disassociation (per
Article 13) by the Series Manager. Unless the Affiliate requests
and is approved by the Series Manager as a Substitute Member, an
unauthorized Affiliate shall have only the Economic Interest of the
former Series Member.
12.7 Substitution
A permitted transfer of any Series Member?s Interest shall only be
granted as to that Member?s Economic Interest unless the Series
Manager accepts a permitted transferee (Transferee) as a Substitute
Member. A permitted Transferee shall become a Substitute
Member only on satisfaction of all of the following conditions:
- Filing of a duly executed and acknowledged written
instrument of assignment in a form approved by the Series
Manager specifying the Member?s Percentage Interest
being assigned and setting forth the intention of the
assignor that the permitted assignee succeed to the
assignor?s Economic Interest (or the portion thereof) and/or
its Interest as a Series Member;
- Execution, acknowledgment and delivery by the assignor
and assignee of any other instruments reasonably required
by the Series Manager including an agreement of the
permitted assignee to be bound by the provisions of this
Agreement and the Series Agreement; and
- The Series Manager?s approval of the Transferee?s or
assignee?s admission to the Series as a Substitute Member
and concurrent and complete Disassociation of all of the
Membership and Economic Interests of the Transferor with
respect to such Series.
12.8 Voluntary Transfer; Right of First Refusal
- Notice of Sale. In the event any Series Member (a Selling
Member) wishes to sell its Interest a Series, it must first
present its offer to sell and proposed price (terms and
conditions) in a Notice of Sale submitted in writing to the
Series Manager. The Series Manager and/or the Series
Members (Purchasing Members) shall have thirty (30) days
to elect to purchase the entire Selling Member?s Interest,
which shall be offered to each in the order of priority
described below:
- First, the Series Manager (or its members) may elect to
purchase the entire Interest proposed for sale on the same
terms and conditions as contained in the Notice of Sale, but
if they don?t; then
- Second, all or part of the Series Members may purchase the
entire Selling Member?s Interest on the same terms and
conditions as contained in the Notice of Sale; the
Purchasing Members will be given priority to purchase in
the same ratio as their existing Percentage Interest before
allowing existing Series Members to purchase
disproportionate amounts;
- Third, if the Series Members elect to purchase less than the
entire Interest proposed for sale, the Series Manager (or its
members) and/or Founder may combine in any ratio to
purchase the remaining Interest, providing the overall
purchase is of the entire Selling Member?s Interest and on
the same terms and conditions as contained in the Notice of
Sale; and
- Fourth, in the event the Series Members and/or Series
Manager or the Founder fail to respond within thirty (30)
days of the Selling Member?s Notice of Sale, or if the
Series Manager and/or Members expressly elect not to
purchase the entire Selling Member?s Interest, the Selling
Member shall have the right to sell its Interest to the third-
party on the same terms and conditions contained in the
original Notice of Sale.
- Fifth, in the event the Selling Member receives or obtains a
bona fide offer from a third-party to purchase all or any
portion of its Interest in the Company or a Series, which
offer it desires to accept, then prior to accepting such offer,
the Selling Member shall give written notice (the Notice of
Sale) of such offer to the Series Manager. The Notice of
Sale shall set forth the material terms of such offer,
including without limitation the identity of the third-party,
and the purchase price and terms of payment.
- Sixth, if the terms are different than the original Notice of
Sale offered to the Series Manager, the Selling Member
must comply again with the terms of this Article (giving the
Series Manager, the Series Members and/or the Founder
the first right to purchase its Interest on the same terms and
conditions offered by the third-party) with respect to the
existing offer and all subsequent third-party offers.
- If a Series Manager and the Founder approves the sale to
the third-party, it must be completed within three (3)
months. If the sale to the third-party is not consummated on
the terms contained in the approved Notice of Sale within
three (3) months following the date of the Notice of Sale,
then the Selling Member must seek a renewed approval
from the Series Manager and Founder, who may require
that the Selling Member again comply with the first right of
refusal provisions of this Article.
In any purchase by the Series Members, Series Manager, or
Founder as described above, the Series Manager will automatically
adjust the Membership Interests of the Purchasing Members and
Selling Members to reflect the respective number and class of
Units or Interests transferred, and the Series Manager shall update
the list of Series Members and their Percentage Interests in the
Series Agreement as appropriate to reflect such transfer.
- Costs of Conveyance for Voluntary Transfer. In the event
that the Series Manager, the Series Members, and/or the
Founder elect to purchase as provided this Article, the cost
of such transaction, including without limitation, recording
fees, escrow fees, if any, and other fees, (excluding
attorneys? fees which shall be the sole expense of the party
who retained them) shall be borne by the Selling Member.
The Selling Member shall deliver all appropriate
documents of transfer for approval by the Series Manager
at least three (3) days prior to the closing of such sale for its
review and approval. The Series Manager may deduct its
costs of sale from the Capital Account of the Transferring
Member, unless other reimbursement is received.
- Indemnification of Parties. From and after the date of such
closing, whether the sale is made to the Series Manager, the
Series Members, the Founder, or the third-party, the Selling
Member shall have no further Interest in the Assets or
income of the Series or the Company and, as a condition of
the sale, the Person(s) or entities purchasing the Interests
shall indemnify and hold harmless the Selling Member
from and against any claim, demand, loss, liability, damage
or expense, including without limitation, attorney?s fees
arising from the subsequent operation of the Company or
Series, and the Selling Member shall indemnify and hold
harmless the Purchasing Members from and against any
claim, demand, loss, liability, damage or expense, including
without limitation, attorney?s fees arising from the
subsequent operation of the Company or Series.
- Indemnification by Transferring Member. Any Member
that Transfers all or any portion of its Membership Interest
shall in each case as Indemnitor indemnify, defend, and
hold harmless the Company and each other Member as
Indemnitees to the fullest extent permitted by applicable
law against all Losses of those Indemnitees caused by,
resulting from, or arising out of (i) any failure by the
Indemnitor to comply with any federal, state, local, or
foreign securities, antitrust, or other laws or regulations
applicable to such transfer (including those relating to
payment of transfer taxes), (ii) any breach, default, or
violation of any existing financing or future financing
caused by or attributable to such transfer, or (iii) any
federal or state income or other tax obligations attributable
to such transferring Member (whether due to non-payment
of taxes by the Member, deficiency determined upon audit
or others) or to such Transfer.
- Rights and Interests of Voluntary Transferee; Adjustment of
Voting Rights. If a Series Member transfers its Interest to a
third-party Transferee pursuant to this Article, such
Transferee shall only succeed to the Series Member?s
Economic Interest unless and until it complies with the
provisions of Article 12.4 and is approved by the Series
Manager as a Substitute Member. Until such time, if ever,
that the third-party Transferee becomes a Substitute
Member, the voting Interests of the Remaining Members
(i.e., all Members, other than the Selling Member) will be
increased proportionate with their Percentage Interests in
the Series as if they had purchased the Selling Member?s
Interest.
The obligations, rights and Interests of the Selling, purchasing, and
any Substitute Members shall inure to and be binding upon the
heirs, successors and permitted assignees of such Transferee
subject to the restrictions of this Article. A third-party Transferee
shall have no right of action against the Company, a Series (its
Manager or Members), or the Founder for not being accepted as a
Substitute Member.
13. Involuntary Transfer; Disassociation
13.1 Disassociation for Cause
A Series Member may be disassociated (i.e., expelled) from the
Series: a) pursuant to a judicial determination, or b) on application
by the Series Manager, another Member of the same Series, or c)
the Founder, for Cause (defined in the bullets below); upon a
written finding by the Series Manager or applicable judicial body
that such Series Member:
- Engaged in wrongful conduct that adversely and materially
affected the business of a Series and/or the Company;
- Willfully or persistently committed a material breach of
this Agreement;
- Engaged in conduct relating to the Series? business, which
makes it not reasonably practicable to carry on the business
with the Series Member; or
- Engaged in willful misconduct related to its Membership in
the Series.
13.2 Disassociation by Operation of Law
Additionally, a Series Member may be disassociated by operation
of law, affected solely by action of the Series Manager or Founder,
upon the occurrence of any of the following triggering events:
- Upon Voluntary or Involuntary Transfer of all or part of a
Member's Economic Interest with respect to a Series;
- Dissolution, suspension, or failure to maintain the legal
operating status of a corporation, partnership or limited
liability company that is a Member of a Series; or
- Any Series Member who meets the definition of a "covered
person" and becomes subject to a "disqualifying event" at
any time during operation of the Company (as those terms
are defined in Regulation D, Rule 506(d)) may
automatically, by action of the Founder: a) be
disassociated, or b) be stripped of its voting rights, if any,
as appropriate and necessary to preserve the Company's
securities exemption under Regulation D, Rule 506.
- In the case of a Series Member that is a legal entity, the
Member's:
o Becoming a debtor in Bankruptcy;
o Executing an assignment of all or substantially all
of its Economic Interest for the benefit of creditors;
o The appointment of a trustee, receiver, or liquidator
of the Member or of all or substantially all of the
Member's property including its Interest in the
Company pursuant to an action related to the
Member?s insolvency; or
o
- In the case of a Member who is an individual:
o The Member's death;
o Becoming a debtor in Bankruptcy;
o The appointment of a guardian or conservator of the
property of the Member; or
o A judicial determination of incapacity or other such
determination indicating that the Member has
become incapable of performing its duties under
this Agreement or the Series Agreement;
- In the case of a Member that is a trust or trustee of a trust,
distribution of the trust's entire rights to receive
Distributions from a Series, but not merely by reason of the
substitution of a successor trustee;
- In the case of a Member that is an estate or personal
representative of an estate, distribution of the estate's entire
rights to receive Distributions from a Series, but not merely
the substitution of a successor personal representative; or
- Termination of the existence of a Member if the Member is
not an individual, estate, or trust, other than a business
trust.
13.3 Effect of Disassociation
Immediately on mailing of a notice of Disassociation sent by the
Series Manager to a Series Member?s last known address, unless
the reason for Disassociation can be and is cured within sixty (60)
days, a Person will cease to be a Member of the Series and shall
henceforth be known as a Disassociated Member. Any successor in
Interest who succeeds to a Series Member?s Interest by operation
of law (per Article 13.2) shall henceforth be known as an
Involuntary Transferee.
Subsequently, the Disassociated Member?s right to vote or
participate in management decisions will be automatically
terminated. A Disassociated Member (or its legal successor) will
continue to receive only the Disassociated Member?s Economic
Interest in the Series, unless the Disassociated Member/Involuntary
Transferee elects to sell its Interest following the procedures
described in Article 12.8; and/or a Voluntary or Involuntary
Transferee seeks admission and is approved by the Series Manager
as a Substitute Member (per Article 12.7).
Until such time, if ever, that the Series Manager approves the
transfer of the entire Disassociated Member?s Interest to the
Purchasing Members or a Substitute Member, the voting Interests
of the Remaining Members will be proportionately increased as
necessary to absorb the Disassociated Member?s voting Interests.
If a Member objects to Disassociation, they will be bound to
resolve the dispute in accordance with the Internal Dispute
Resolution Procedure described in Article 14, unless the reason for
the Disassociation can be resolved within sixty (60) days to the
satisfaction of the Series Manager, in which case their full
Membership Interest will be reinstated. If there is no Involuntary
Transferee, and no third-party buyer is found and the Series
Manager or Remaining Members do not wish to purchase the
Disassociated Member?s Interest, the Disassociated Member will
only be entitled to receive its Economic Interest (no voting rights),
indefinitely, until such time as the Company or such Series is
dissolved.
13.4 Sale and Valuation of a Disassociated Member?s Interest
If no outside buyers can be found and the Disassociated Member
still desires to sell its Interest, which the Remaining Members
and/or Series Manager or Founder (Purchasing Members) wish to
purchase, the buyout price for the Disassociated Member?s Interest
may be determined using one of the following methods:
- Negotiated Price: If the Purchasing Members or legal
representative of the Disassociated Member can agree on a
negotiated price for the Interest, then that price will be
used; if not,
- Estimated Market Value within 3 Months: The Series
Manager may quarterly determine the Estimated Market
Value of the Company and/or its Series and report it to the
Series Members. An Estimated Market Value calculated by
the Series Manager in any commercially accepted manner
within the last three (3) months shall conclusively be used
to determine the value of a Disassociated Member?s
Interest. The purchase price of shall be the product of the
Disassociated Member?s Percentage Interest in a Series and
the Estimated Market Value of the Series adjusted for the
Member Class, if applicable.
- Appraisal Method: If both of the above methods fail, the
price for a Disassociated Member?s Interest shall be
determined by appraisal of the Disassociated Member?s
Interests by one or more independent, certified commercial
business appraisers currently operating in the business of
the Underlying Asset(s), as follows:
- The Disassociated Member shall hire and pay the first
appraiser, who shall provide an Estimated Market Value for
the Series. If acceptable to the parties, this Estimated
Market Value will be used to calculate the value of the
Disassociated Member?s Interest.
- If the first appraiser?s valuation is unacceptable, the
Purchasing Members may hire their own appraiser and the
average of the two appraisals (if within twenty percent
(20%)) may be used to determine the value of the Series on
which the purchase price will be based. If the two
appraisals differ by more than twenty percent (20%) and
the parties still cannot agree on the value, then,
- A third appraisal may be obtained (at the option of either
party), the cost of which will be split between the
Purchasing Members and the Disassociated Member. The
average of the two appraisals closest in value will be
conclusively used to establish the Estimated Market Value
of the Series on which the value of the Interest will be
based.
13.5 Closing on a Disassociated Members? Interest
Unless other terms have been agreed between the Disassociated
and Purchasing Members, the following terms shall apply to
closing of a Disassociated Member?s Interest. After determining
value (per Article 12.8 or 13.4 above), the Purchasing Members
shall give written notice fixing the time and date for the closing.
The closing shall be conducted at the principal office of the
Company or other agreed location on the date not less than thirty
(30) days nor more than sixty (60) days after the date of such
notice, or in the event of Bankruptcy, any request for an extension
by any Bankruptcy Court having jurisdiction.
13.6 Payment for a Disassociated Member?s Interest
At closing, the Purchasing Members shall pay to the Disassociated
Member by certified or bank check an amount equal to the
determined value of the Disassociated Member?s Interest, or, if
such value shall be determined to be zero or another amount
pursuant to an agreement of the Members, shall deliver an
executed copy of such agreement or a copy of such appraisal
report(s), or a memorandum of the negotiated value (per Article
12.8 above) as applicable.
Notwithstanding the foregoing, at the option of the Purchasing
Members, the purchase price may be paid by the delivery of its
promissory note in the principal amount of the purchase price,
bearing interest at eight percent (8%), repayable early without
penalty, in eight (8) equal quarterly installments, or other
agreement between the parties. Simultaneously therewith the
Disassociated Member shall execute, acknowledge and deliver to
the Purchasing Members such instruments of conveyance,
assignment and releases as shall be necessary or reasonably
desirable to convey all of the right, title and Interest of the Member
and the Assets thereof.
Because of the unique and distinct nature of an Interest in a Series
of the Company, it is agreed that the Purchasing Members?
damages would not be readily ascertainable if they elect to
purchase the Disassociated Member?s Interest as aforesaid and the
conveyance thereof were not consummated, and, therefore, in such
case the Purchasing Members shall be entitled to the remedy of
specific performance in addition to any other remedies that may be
available to them in law or in equity.
13.7 Transfer of Economic Interest; Rights of an Involuntary
Transferee
If the Purchasing Members do not elect to purchase the Interest of
a Disassociated Member as provided in Articles 13.4 through 13.6,
or if by operation of law the Economic Interest of the
Disassociated Member transfers to an Involuntary Transferee, the
Series Manager shall hereby be granted power of attorney by the
Disassociated Member to execute such documents as may be
necessary and requisite to evidence and cause the transfer only of
the Disassociated Member?s Economic Interest to the Involuntary
Transferee, as applicable and appropriate for the circumstances.
An Involuntary Transferee shall not be deemed a Series Member
until such time if ever, that they seek admission and are approved
as a Substitute Member(s) of a Series. Until then, they shall only
succeed to the Economic Interest of the Disassociated Member,
including the right to any Distributions and a return of the
Disassociated Member?s Unreturned Capital Contributions, if
applicable, which shall be distributed only if and when such
Distributions or return of Capital Contributions shall become due
per the terms of the applicable Series Agreement. Any
Distributions that may be due a Disassociated Member shall be
held in trust by the Series Manager and no Distributions shall be
made to an Involuntary Transferee until it produces and executes
such documentation as the Series Manager deems necessary to
evidence the Transfer of the Disassociated Member?s Economic
Interest, and to indemnify the Company, the Series Manager or
Members for any liability related to making Distributions directly
to the holder of the Economic Interest.
Any further assignment of the Disassociated Member?s Economic
or Membership Interest, or any request of an Involuntary
Transferee to succeed to the Disassociated Member?s full
Membership Interest (i.e., to become a Substituted Member in a
Series of the Company), shall be subject to approval of the Series
Manager.
14. Dispute Resolution
The dispute resolution process provisions do not apply to claims
under the federal securities laws. By agreeing to the dispute
resolution process, including mandatory arbitration, investors will
not be deemed to have waived the Company?s or Series?
compliance with the federal securities laws and the rules and
regulations thereunder. Further, the waiver of jury trial provision
does not apply to claims under the federal securities laws.
Because the nature of the Company and its Series is to generate
Profits that it can share with its Series Members, it is imperative
that one Series Member?s dispute with the Company, a Series
Manager and/or other Series Members is not allowed to diminish
the Profits available to other Series Members or resources
necessary to operate the Company or assets of such Series.
Litigation could require diversion of Company or Series Profits to
pay attorney?s fees or could tie up Company funds necessary for
operation of the Company or the affected Series, its Subsidiary or
its assets, impacting the profitability of the investment for all such
Series Members. The only way to prevent such needless expense is
to have a comprehensive Internal Dispute Resolution Procedure
(Procedure) in place, to which each of the Series Members have
specifically agreed in advance of membership in the Company or
in a Series. The Procedure described below requires an aggrieved
party to take a series of steps designed to amicably resolve a
dispute on terms that will preserve the interests of the Company or
Series, and the other non-disputing Series Members, before
invoking a costly remedy, such as arbitration.
In the event of a dispute, claim, question, or disagreement between
Series Members or between a Series Manager or the Founder
and/or one or more Series Members arising from or relating to this
Agreement, the Series Agreement, the breach thereof, or any
associated transaction, or to interpret or enforce any rights or
duties under the Act (hereinafter Dispute), all Series Managers and
Series Members hereby agree to resolve such Dispute by strictly
adhering to the Procedure provided below. The following
Procedure has been adapted for purposes of this Agreement from
guidelines and rules published by the American Arbitration
Association (AAA):
14.1 Notice of Disputes
Written notice of a Dispute must be sent to the Series Manager or
Series Member by the aggrieved party as described in the notice
requirements of Article 16.1 below.
14.2 Negotiation of Disputes
The parties hereto shall use their best efforts to settle any Dispute
through negotiation before resorting to any other means of
resolution. To this effect, they shall consult and negotiate with
each other in good faith and, recognizing their mutual Interests,
attempt to reach a just and equitable solution satisfactory to all
parties. If, within a period of sixty (60) days after written notice of
such Dispute has been served by either party on the other, the
parties have not reached a negotiated solution, then upon further
notice by either party, the Dispute shall be submitted to mediation
administered by the AAA in accordance with the provisions of its
Commercial Mediation Rules. The onus is on the complaining
party to initiate each next step in this Procedure as provided below.
14.3 Mandatory Alternative Dispute Resolution
On failure of negotiation provided above; mediation, and as a last
resort, binding arbitration shall be used to ultimately settle the
Dispute. The following provisions of this Article 14 shall apply to
any subsequent mediation or arbitration.
Exception: On unanimous consent of all parties to a Dispute, the
disputing party may initiate a small claims action or litigation in
lieu of mandatory mediation and arbitration provided the parties
shall further unanimously determine jurisdiction and venue. In any
small claims action or litigation, the local rules of court shall apply
in lieu of the remaining provisions of this Article.
- Preliminary Relief. Any party to the Dispute may seek
preliminary relief at any time after negotiation has failed,
but prior to arbitration, in accordance with the Optional
Rules for Emergency Measures of Protection of the AAA
Commercial Arbitration Rules and Mediation Procedures.
The AAA case manager may appoint an arbitrator who will
hear only the preliminary relief issues without going
through the arbitrator selection process described in Article
14.5.1.
- Consolidation. Identical or sufficiently similar Disputes
presented by more than one Series Member may, at the
option of the Series Manager or Founder, be consolidated
into a single Procedure.
- Location of Mediation or Arbitration. Any mediation or
arbitration shall be in State of Delaware and each party to
such mediation or arbitration must attend in person.
- Attorney?s Fees and Costs. Each party shall bear its own
costs and expenses (including their own attorney?s fees)
and an equal share of the mediator or arbitrators? fees and
any administrative fees, regardless of the outcome;
however, if a Series Manager or the Founder is a party,
their legal fees shall be paid by the Series (per the
indemnification provision described in Article 6.6).
Exception: A Series may reimburse a Series Member for
attorney?s fees and costs in any legal action against the Series
Manager or the Company in which the Series Member is awarded
such fees and costs as part of a legal action.
- Maximum Award. The maximum amount a party may seek
during mediation or be awarded by an arbitrator is the
amount equal to the party?s Unreturned Capital
Contributions and any Cash Distributions or Interest to
which the party may be entitled. An arbitrator will have no
authority to award punitive or other damages.
- AAA Commercial Mediation or Arbitration Rules. Any
Dispute submitted for mediation or arbitration shall be
subject to the AAA?s Commercial Mediation or Arbitration
Rules. If there is a conflict between the Rules and this
Article, the Article shall be controlling.
14.4 Mediation
Any Dispute that cannot be settled through negotiation as
described in Article 14.2, may proceed to mediation. The parties
shall try in good faith to settle the Dispute by mediation, which
each of the parties to the Dispute must attend in person, before
resorting to arbitration. If, after no less than three (3) face-to-face
mediation sessions, mediation proves unsuccessful at resolving the
Dispute, the parties may then, and only then, resort to binding
arbitration as described in Article 14.5.
- Selection of Mediator. The complaining party shall submit
a Request for Mediation to the AAA. The AAA will
appoint a qualified mediator to serve on the case. The
preferred mediator shall have specialized knowledge of
securities law, unless the Dispute pertains to financial
accounting issues, in which case the arbitrator shall be a
C.P.A., or if no such person is available, shall be generally
familiar with the subject matter involved in the Dispute. If
the parties are unable to agree on the mediator within thirty
(30) days of the Request for Mediation, the AAA case
manager will make an appointment.
If the initial mediation(s) does not completely resolve the Dispute,
any party may request a different mediator for subsequent
mediation(s) by serving notice of the request to the other party(ies)
for approval, and subject to qualification per the requirements
stated above.
14.5 Arbitration
Any Dispute that remains unresolved after good faith negotiation
and three (3) failed mediation sessions shall be settled by binding
arbitration. Judgment on the award rendered by the arbitrator(s)
shall be final and may be entered in any court having jurisdiction
thereof.
14.5.1 Selection of Arbitrator.
Prior to arbitration, the complaining party shall cause the
appointment of an AAA case manager by filing of a claim with the
AAA along with the appropriate filing fee, and serving it on the
defending party. The AAA case manager shall provide each party
with a list of proposed arbitrators who meet the qualifications
described below, or if no such person is available, who are
generally familiar with the subject matter involved in the Dispute.
Each side will have fourteen (14) days to strike any unacceptable
names, number the remaining names in order of preference, and
return the list to the AAA. The case manager shall then invite
persons to serve from the names remaining on the list, in the
designated order of mutual preference. Should this selection
procedure fail for any reason, the AAA case manager shall appoint
an arbitrator as provided in the applicable AAA Commercial
Arbitration Rules.
14.5.2 Qualifications of Arbitrator.
The selected or appointed arbitrator shall be selected from
available candidates in Delaware and shall have specialized
knowledge of securities law, unless the Dispute pertains to
financial accounting issues, in which case the arbitrator shall be a
C.P.A. Further, the selected arbitrator must agree to sign a
certification stating that they have read all of the documents
relevant to the Member?s subscription to the Series, including the
Private Placement Memorandum, the Agreement, the subject
Series Agreement, and the Subscription Booklet in their entirety,
including and any relevant Appendices or Exhibits.
14.5.3 Limited Discovery.
Discovery shall be limited to only those documents pertaining to
the Member?s Subscription to the Series (and any relevant
Appendices or Exhibits), the Subscription Booklet, any written
correspondence between the parties, and any other documents
specifically requested by the Arbitrator as necessary to facilitate
his/her understanding of the Dispute. The parties may produce
witnesses for live testimony at the arbitration hearing at their own
expense. A list of all such witnesses and complete copies of any
documents to be submitted to the arbitrator shall be served on the
arbitrator and all other parties within forty-five (45) days of the
arbitration hearing, at the submitting party?s expense.
14.5.4 Findings of Arbitrator
If, in any action against a Series Manager, the Company, or the
Founder, the selected or appointed arbitrator, or judge (if
applicable) makes a specific finding that the Series Manager,
Founder or Company has violated Securities laws, or has otherwise
engaged in any of the actions described in Article 6.4 for which the
Series Manager or Company will not be indemnified, the Series
Manager, Founder, or Company must bear the cost of its own legal
defense. In such case, the Series Manager must reimburse the
Company for any such costs previously paid by the Company.
Until the Company has been fully reimbursed, the Series Manager
will not be entitled to receive any fees or Distributions it may
otherwise be due.
15. Termination of Series and Company
15.1 Dissolution of the Company
The Company shall be dissolved upon the occurrence of either of
the following events:
- By sale of all or substantially of the Series? Underlying
Asset(s) and dissolution of all Subsidiaries;
- By the unanimous written agreement of all Series Managers
and the Founder; or
- Upon the entry of decree of judicial dissolution.
The death, retirement, resignation, expulsion, bankruptcy or
dissolution of any Series Manager or Series Member or the
occurrence of any event that terminates the continued membership
of any Series Member in a Series shall not in and of itself cause the
dissolution of the Company.
If a Series Member who is an individual dies or a court of
competent jurisdiction adjudges him to be incompetent to manage
its person or property. The Series Member?s executor,
administrator, guardian, conservator, or other legal representative
may exercise all of the Series Member?s rights for the purpose of
settling the Member?s estate or administering its property. If a
Series Member is an entity and is dissolved or terminated, the
powers of that Series Member may be exercised by its legal
representative or successor.
15.2 Termination of a Series
A Series shall be terminated upon the occurrence of any of the
following events:
- Upon dissolution of the Company;
- On sale or disposition of all of the Underlying Asset(s) and
dissolution of its Subsidiaries; or
- At the time in which there are no Series Members in a
Series;
- Upon the entry of a decree of judicial termination.
Other than in connection with a transfer of Membership Interests in
accordance with this Agreement, a Series Member shall not take
any voluntary action (including, without limitation, resignation)
that directly causes it to cease to be a Series Member.
The termination and winding up of a Series shall not cause the
dissolution of the Company (even if there are no remaining Series
so long as the Founder is still a Member); nor shall it cause the
termination of any other Series. The termination of a Series shall
not affect the limitation on liabilities of such Series or any other
Series formed by the Founder as provided in this Agreement and
consistent with the Act.
15.3 Winding Up of a Series on Termination of Such Series
Upon termination of a Series, an accounting shall be made of the
accounts of the Company with respect to such Series and of the
assets, liabilities and operations associated with such Series and its
Subsidiaries, from the date of the last previous accounting until the
date of termination. The Series Manager(s) shall immediately
proceed to wind up the affairs of such Series.
If a Series is terminated and its affairs are to be wound up, the
Series Manager shall:
- Sell or otherwise liquidate all of the assets of such Series as
promptly as practicable (except to the extent such Series
Manager(s) may determine to distribute any assets to the
Series Members in kind);
- Dissolve its Subsidiaries in accordance with the limited
liability act of the state in which the Subsidiaries are
formed;
- Allocate any Profits or Losses resulting from such sales to
the respective Capital Accounts of the Series Members in
accordance with Article 10 and Appendix A hereof;
- Satisfy (whether by payment or reasonable provision for
payment thereof) all liabilities of the Company with respect
to such Series, including liabilities to the Founder, Series
Managers, or Series Members who are creditors to the
Series, to the extent otherwise permitted by law, other than
liabilities to Series Members for Distributions (for purposes
of determining the Capital Accounts of the Series
Members, the amounts of any Reserves created in
connection with the liquidation of such Series shall be
deemed to be an expense of the Company with respect to
such Series); and
- Distribute the remaining assets of such Series to the Series
Members in accordance with their Capital Account
balances after giving effect to all contributions,
Distributions, and allocations for all periods, as further
specified in the Series Agreement associated with such
Series.
Notwithstanding anything to the contrary in this Agreement, if
upon the termination and liquidation of any Series, any Series
Member has a deficit balance in its Capital Account with respect to
with such Series (after giving effect to all contributions,
Distributions, allocations and other Capital Account adjustments
for all taxable years, including the year during which such
termination and liquidation occurs), such Series Member shall
have no obligation to make any Capital Contribution, or otherwise
restore the deficit balance in such Series Member?s Capital
Account, and such deficit Capital Account balance shall not be
considered a debt owed by such Series Member to the Company
with respect to such Series or otherwise, to any other Series
Member or to any other Person for any purpose whatsoever.
The Founder, Series Managers and Series Members, as applicable,
shall comply with all requirements of applicable law pertaining to
the winding up of the affairs of the Company with respect to such
Series and the final disposition of its assets.
15.4 Winding Up On Dissolution of the Company
Upon the dissolution of the Company pursuant to Article 15.1, the
Company shall be wound up by winding up each Series in the
manner contemplated by Article 15.3, except that, for purposes of
Article 15.3, paragraph 3, the separate Capital Accounts of each
Member associated with more than one Series shall be combined
into a single Capital Account of such Member.
15.5 Certificate of Cancellation
If a dissolution of the Company occurs and all debts, liabilities and
obligations of the Company, whether or not associated with any
Series, have been satisfied (whether by payment or reasonable
provision for payment) and all of the remaining property and assets
of the Company, whether or not associated with any Series, have
been distributed, a certificate of cancellation as required by the Act
shall be jointly executed and filed by the members of the
Company, as authorized persons, within the meaning of the Act,
with the Delaware Secretary of State.
15.6 Effect of Filing Certificate of Cancellation or Equivalent
Upon the filing of a certificate of cancellation or equivalent with
the Delaware Secretary of State, pursuant to Article 15.5, the
existence of the Company shall cease.
15.7 Returns of Contributions Nonrecourse to Other Members
Except as otherwise provided by applicable laws, upon termination
of a Series, the Series Member shall look solely to the assets of
such Series for the return of their Capital Contributions to such
Series, and if the assets of such Series remaining after payment of
or due provision for the debts and liabilities of the Company with
respect to such Series are insufficient to return such Capital
Contributions, such Series Members shall have no recourse against
any other Series, the Company or any other Series Member, except
as otherwise provided by law.
16. Miscellaneous Provisions
16.1 Notices
All notices provided for by this Agreement shall be made in
writing and deemed received (i) twenty-four (24) hours after
emailing to the party entitled thereto, or (ii) on the mailing of the
notice in the U.S. mail at the last known address of the party
entitled thereto, certified mail, return receipt requested.
16.2 Binding Effect
This Agreement and the Series Agreements are binding upon and
inure to the benefit of the Series Members, and, to the extent
permitted by this Agreement, their respective legal representatives,
successors and assigns.
16.3 Governing Law
This Agreement, Series Agreements, and the rights of the parties
hereunder, shall be construed pursuant to the laws of the State of
Delaware (without regard to conflict of laws principles).
16.4 Waiver of Action for Partition
Each Member irrevocably waives during the term of the Company
and any Series for which it is a Member, any right that it may have
to maintain any action for partition with respect to the property of
the Company or any Series.
16.5 Amendments
This Agreement may not be amended except in writing except by
unanimous consent of all Series Managers. A Series Agreement
may only be modified by an affirmative vote of Series Members
holding a Majority of Interests in the affected Series.
However, notwithstanding anything to the contrary herein, the
Founder may amend this Agreement, a Series Agreement, or a
Subsidiary Company Agreement in a manner not materially
inconsistent with the principles set forth in this Agreement, without
the approval or vote of the Series Members, including without
limitation:
- To issue non-substantive amendment to this Agreement or
a Series Agreement to correct minor technical errors;
- To accommodate a lender?s request with respect to a Series
Agreement or a Subsidiary Company Agreement;
- To cure any ambiguity or to correct or supplement any
provision therein which may be inconsistent with any other
provision therein or in any associated document, or to add
any other provisions with respect to matters or questions
arising under this Agreement which will not be materially
inconsistent with the provisions of this Agreement; and
- To take such steps as the Founder or a Series Manager
deems advisable to preserve the tax status of the Company
or a Series or to otherwise specify the tax status of a Series
or the Company;
- To delete or add any provisions to this Agreement, a Series
Agreement, or a Subsidiary Company Agreement as
requested by the Securities and Exchange Commission,
state securities officials which is deemed by such
regulatory agency or official to be for the benefit or
protection Company, its Members or the Series Members;
or
- To make amendments similar to the foregoing so long as
such action shall not materially and adversely affect the
Interests or returns to the Series Members.
16.6 Execution of Additional Instruments
Each Series Member hereby agrees to execute such other and
further statements of Interest and holdings, designations and other
instruments necessary to comply with any laws, rules or
regulations, or reasonable requests of the Company, the Founder,
or a Series Manager.
16.7 Construction
Whenever the singular number is used in this Agreement or a
Series Agreement and when required by the context, the same shall
include the plural and vice versa, and the masculine gender shall
include the feminine and neuter genders and vice versa.
16.8 Waivers
The failure of any party hereto to seek redress for default of or to
insist upon the strict performance of any covenant or condition of
this Agreement or a Series Agreement shall not prevent a
subsequent act, which would have originally constituted a default,
from having the effect of an original default.
16.9 Severability
Every provision of this Agreement and the Series Agreements are
intended to be severable. If any phrase, sentence, paragraph, or
provision of this Agreement or a Series Agreement or its
application thereof to any Person or circumstance is unenforceable,
invalid, the affected phrase, sentence, paragraph, or provision shall
be limited, construed, and applied in a manner that is valid and
enforceable. If the conflict was with a non-waivable provision of
the Act, phrase, sentence, paragraph, or provision, it shall be
modified to conform to the Act. In any event, the remaining
provisions of this Agreement, the Series Agreement, or Subsidiary
Agreement shall be given their full effect without the invalid
provision or application. If any term or provision hereof is illegal
or invalid for any reason whatsoever, such legality or invalidity
shall not affect the validity or legality of the remainder of this
Agreement, the Series Agreement or the Subsidiary Agreement.
16.10 Creditors
None of the provisions of this Agreement or a Series Agreement
shall be for the benefit of or enforceable by any creditors of (i) the
Company, (ii) any Series of the Company, (iii) any Series Member,
(iv) any Series Manager, or (v) the Founder.
16.11 Counterparts
This Agreement and any associated Series Agreements may be
signed in multiple counterparts, all of which should be deemed an
original and shall constitute one instrument.
16.12 Integration
This Series Limited Liability Agreement constitutes the entire
agreement between the parties hereto pertaining to the subject
matter hereof and supersedes all prior agreements and
understandings pertaining thereto.
17. Signatures
IN WITNESS WHEREOF, the parties hereto, whose names
and contact information follows, have caused their signatures or
the signatures of their duly authorized representatives and seals to
be set forth below as of the day and year first above written.
Dated: August 12, 2020 By: VV Markets, LLC
A Delaware Series Limited liability company
By: Its Manager,
VinVesto, Inc.,
A Delaware Corporation
_______/s/ Nicholas King________________
By: Its CEO,
Nicholas King
Appendix A: Capital Accounts and Allocations
1. Capital Accounts
An individual Capital Account shall be maintained solely for the
convenience of the Manager. Since the Company is treated as a
corporation for U.S. federal and state tax purposes, the earnings
and profits of the corporation are paid solely in conjunction with
the Member?s Interests, and Capital Accounts do not serve a
purpose for U.S. federal or state tax purposes.
2. Division of Profits and Losses for Income Tax Purposes
As an entity electing to be treated as a corporation for U.S. federal
and state tax purposes, the Company will be responsible for
accounting for its profit and loss in accordance with U.S. tax law
prior to the distribution of cash.
3. Treatment of Distributions of Cash for Tax Purposes
3.1 Distributions of Cash
In the event that the Company generates Distributable Cash from
Capital Transactions, the Company will make Cash Distributions
to the Members as described in Article 4 of the Agreement.
3.2 In-Kind Distribution
Except as otherwise expressly provided herein, without the prior
approval of the Manager, Assets of the Company, other than cash,
shall not be distributed in-kind to the Members. If any Assets of
the Company are distributed to the Members in-kind for purposes
of this Agreement, such Assets shall be valued on the basis of the
Gross Asset Value thereof (without taking into account section
7701(g) of the Code) on the date of Distribution; and any Member
entitled to any Interest in such Assets shall receive such Interest as
a tenant-in-common with the other Member(s) so entitled with an
undivided Interest in such Assets in the amount and to the extent
provided for in Articles 4 and 2.2 of the Agreement.
Upon such Distribution, the earnings and profits of the
Company shall be
adjusted for any gain or loss pursuant to section 311(b) of the
Code.
3.3 Prohibited Distribution; Duty to Return
A Distribution to any Member may not be made if it would cause
the Company?s total liabilities to exceed the fair value of the
Company?s total Assets. A Member receiving a Distribution in
violation of this provision is required to return it, if the Member
had knowledge of the violation.
4. Other Tax Matters
4.1 Company Tax Returns and Payment
The Manager shall use its best efforts to cause the Company?s tax
return to be prepared prior to March 1 of each year. As an entity
electing to be treated as a Corporation, the Company will be
required to account for items of profit and loss on its own account
and remit corporate tax due resulting from such calculation. This
corporate tax will be viewed as an expense of the Company which
will reduce Distributable Cash.
5. Tax Matters Related to Foreign Investors
5.1 Non-U.S. Investors
The discussion below is applicable solely to Non-U.S. Persons
investing directly with the Company.
The Company will be required to withhold U.S. Federal income
tax at the rate of up to thirty percent (30%), or lower treaty rate, if
applicable on payments of fixed, determinable and periodic income
to shareholders and debt obligation holders (including but not
limited to dividends, interest, rents, royalties, etc.) to a Non-U.S.
Person. Documentation is required by the Manager before the
Company can apply a lower tax treaty rate.
The Company is authorized to withhold and pay over any such
withholding taxes and treat such withholding as a payment to the
Non-U.S. Person if the withholding was required. Such payment
will be treated as a Distribution to the extent that the Non-U.S.
Person is then entitled to receive a Distribution. To the extent that
the aggregate of such payments to a Non-U.S. Person for any
period exceeds the Distributions to which they are entitled for such
period, the Company will notify the Non-U.S. Person as to the
amount of such excess and the amount of such excess will be
treated as a loan by the Company to the Non-U.S. Person. If a
Non-U.S. Person owns a Membership Interest directly on the date
of death, its estate could be further subject to U.S. estate tax with
respect to such Interest.
It is intended that the holders of the Company?s debt obligations
will qualify for the portfolio interest exemption contained in
section 871(h) of the Code so long as their voting interest in the
Company is less than 10 percent.
5.2 Foreign Person Withholding
The Company shall comply with all reporting and withholding
requirements imposed with respect to Non-U.S. Persons, as
defined in the Code, and any Member that is a Non-U.S. Person
shall be obligated to contribute to the Company any funds
necessary to enable the Company (to the extent not available out of
such Member?s share of Distributable Cash or Net Proceeds of
Capital Transactions) to satisfy any such withholding obligations.
In the event any Member shall fail to contribute to the Company
any funds necessary to enable the Company to satisfy any
withholding obligation, the Manager shall have the right to offset
against any payments due and owing to such Member, or its
Affiliates, the amounts necessary to satisfy such withholding
obligation, or, in the event the Company shall be required to
borrow funds to satisfy any withholding obligation by reason of a
Member?s failure to contribute such funds to the Company, the
Manager shall have the right to offset against said Member?s
present and future Distributions, an amount equal to the amount so
borrowed plus the greater of (i) the Company?s actual cost of
borrowing such funds, or (ii) the amount borrowed, multiplied by
fifteen percent (15%).
5.3 Non-U.S. Taxes
The Company may be subject to withholding and other taxes
imposed by, and the Non-U.S. Person might be subject to, taxation
and reporting requirements in non-U.S. jurisdictions. It is possible
that tax conventions between such countries and the U.S. (or
another jurisdiction in which a non-U.S. Member is a resident)
might reduce or eliminate certain of such taxes. It is also possible
that in some cases, if the Non-U.S. Person is a taxable Member, it
might be entitled to claim U.S. tax credits or deductions with
respect to such taxes, subject to certain limitations under applicable
law. The Company will treat any such tax withheld from or
otherwise payable with respect to income allocated to the
Company as cash the Company received and will treat the Non-
U.S. Person as receiving a payment equal to the portion of such tax
that is attributable to it. Similar provisions would apply in the case
of taxes the Company is required to withhold.
Appendix B: Definitions
Defined terms are capitalized in this Agreement and may also
appear in the Series Agreement. The singular form of any term
defined below shall include the plural form and the plural form
shall include the singular. Whenever they appear capitalized in this
Agreement, the following terms shall have the meanings set forth
below unless the context clearly requires a different interpretation:
Act shall mean the Delaware Limited Liability Company Act, as
codified in the Delaware Code, Title 6, Chapter 18, as may be
amended from time to time, unless a superseding Act governing
limited liability companies is enacted by the state legislature and
given retroactive effect or repeals this Act in such a manner that it
can no longer be applied to interpret the Agreement or Series
Agreement, in which case ?Act? shall automatically refer to the
new Act, where applicable, to the extent such re-interpretation is
not contrary to the express provisions of the Agreement or a Series
Agreement.
Additional Capital Contribution shall mean any voluntary
contribution to the capital of a Series in cash, property, or services
by a Member made subsequent to the Member?s initial Capital
Contribution in response to a Series Manager?s requires for
voluntary Additional Capital Contributions.
Additional Member shall mean any Person admitted to the
Company or a Series as a new or additional member, subsequent to
the sale of Units or Interests in a Series in exchange for initial
Capital Contributions of the Series Members.
Affiliate or Affiliated shall mean any Person controlling or
controlled by or under common control with the Founder (or its
members), a Member of the Company or a Series wherein the
Manager or Member retains greater than fifty percent (50%)
control of the Affiliate if an entity.
Article when capitalized and followed by a number refers the
provision of this Company Agreement and its Appendices or to
provisions of a Series Agreement.
Capital Account shall mean the capital account maintained for
each Member in accordance with the provisions of Article 9.8 and
in Appendix A hereto. A separate Capital Account shall be
maintained for each Series Member's Interest in a Series.
Capital Contribution shall mean, with respect to any Member, any
contribution to the Company or a Series in cash or other property
(at such other property's initial Gross Asset Value) by such
Member whenever made. ?Initial Capital Contribution? shall
mean, with respect to any Member, the initial contribution by such
Member to the Company or a Series pursuant to this Agreement.
?Unreturned Capital Contribution? shall mean, with respect to any
Member, the initial contribution by such Member to the Company
or a Series pursuant to this Agreement, less any returned capital
specified as such, that is not classified by the Manager as a return
on investment.
Certificate of Formation shall mean the Certificate of Formation of
the Company and any and all amendments thereto and restatements
thereof filed on behalf of the Company with the office of the
Secretary of State of the State of Delaware pursuant to the Act.
Code shall mean the Internal Revenue Code of 1986, as amended
from time to time, or any superseding federal tax law. A reference
herein to a specific Code section refers, not only to such specific
section, but also to any corresponding provision of any superseding
federal tax statute, as such specific section or such corresponding
provision is in effect on the date of application of the provisions of
this Agreement containing such reference.
Company shall refer to VV Markets, LLC, formed and continued
under and pursuant to the Act and this Agreement.
Company Agreement or Agreement shall mean the Series Limited
liability company Agreement, as amended, modified,
supplemented or restated from time to time.
Company Minimum Gain has the meaning set forth in sections
1.704-2(b)(2) and 1.704-2(d) of the Treasury Regulations.
Covered Person, when capitalized, shall have the meaning as set
forth in Article 6.6 hereof.
Depreciation shall mean, with respect to a Series, and for each
Fiscal Year or other period, an amount equal to the depreciation,
amortization or other cost recovery deduction allowable with
respect to an asset associated with such Series for such Fiscal Year
or other period; provided, however, that if the Gross Asset Value
of an asset associated with such Series differs from its adjusted
basis for federal income-tax purposes at the beginning of such
Fiscal Year or other period, Depreciation shall be an amount that
bears the same ratio to such beginning Gross Asset Value as the
federal income-tax depreciation, amortization or other cost
recovery deduction with respect to such asset for such Fiscal Year
or other period bears to such beginning adjusted tax basis; and
provided further, that if the federal income-tax depreciation,
amortization or other cost recovery deduction for such Fiscal Year
or other period is zero, Depreciation shall be determined with
reference to such beginning Gross Asset Value using any
reasonable method selected by the Series Manager or Founder.
Disassociated Member shall mean a Member who has been
involuntarily disassociated from the Company or a Series by one of
the actions described in Article 13.1 or 13.2, or by Voluntary
Transfer of its Membership Interest to a Voluntary Transferee as
described in Articles 12.3 through 12.8.
Disassociation shall mean an action of the Series Manager of a
Series to remove a Series Member?s right to participate in
management of the Series (i.e., removal of its voting Interest) for
cause (per Article 13.1) or by operation of law (per Article 13.2).
Dispute, when capitalized, shall have the meaning set forth in
Article 14 hereof
Distributable Cash shall mean all cash, revenues and funds
received by a Series from operation of its Subsidiaries and its
Underlying Asset(s), less the sum of the following to the extent
paid or set aside by the Series: (i) all principal and interest
payments on indebtedness of the Subsidiary of the Series and all
other sums paid to lenders with respect to the Series; (ii) all cash
expenditures incurred in the normal operation of the Series
business; and (iii) such Reserves as the Founder deem reasonably
necessary for the proper operation of the Series? business.
Distribution or Distributions shall mean the cash paid to Series
Members on account of their Series Membership Interests.
Economic Interest shall mean a Person?s right to share in the
income, gains, losses, deductions, credit, or similar items of, and to
receive Distributions from a Series, but does not include any other
rights of a Series Member, including, without limitation, the right
to vote or to participate in management, and any right to
information concerning the business and affairs of the Series in
which it is a Member.
Estimated Market Value shall mean the estimated market value of
the Underlying Asset(s) owned by a Subsidiary of a Series, which
shall be determined annually by the Manager of such Series and
reported to the Members of such Series.
Fees refers to compensation received by a Series Manager for
services provided to Series as a Series Manager.
Fiscal Year shall mean (i) the period commencing upon the
formation of the Company and ending on December 31, (ii) any
subsequent twelve (12) month period commencing on May 15 and
ending on December 31, or (iii) any portion of the period described
in Clause (ii) of this sentence for which the Company is required to
allocate Profits, Losses and other items of a Series? income, gain,
loss or deduction pursuant to Article 9 and Appendix A hereof.
Founder shall initially mean VinVesto, Inc. a Delaware
corporation, which is the initial and sole Member of the Company
not associated with any Series.
Free Cash Flow is the net income (as determined under U.S.
generally accepted accounting principles (?GAAP?)) generated by
the Series plus any change in net working capital and depreciation
and amortization (and any other non-cash Operating Expenses) and
less any capital expenditures related to the Underlying Asset
(?Free Cash Flow.?) The Manager may maintain Free Cash Flow
funds in a deposit account or an investment account for the benefit
of the Series.
Gross Asset Value shall mean, with respect to any asset associated
with a Series, such asset's adjusted basis for federal income-tax
purposes, except as follows:
- The initial Gross Asset Value of any asset contributed by a
Member to a Series shall be the gross fair market value of
such asset, as agreed to by the manager of such Series;
- The Gross Asset Value of all assets of a Series shall be
adjusted to equal their respective gross fair market values,
as determined by the Series Manager, as of the following
times: (a) the acquisition of an additional Interest in such
Series by any new or existing Member in exchange for
more than a de minimis Capital Contribution; (b) the
distribution to a Member of such Series of more than a de
minimis amount of Series assets as consideration for an
Interest in the Series; and (c) the liquidation of the assets of
a Series within the meaning of Treasury Regulation ?1.704-
1(b)(2)(ii)(g); provided, however, that adjustments pursuant
to Clause (a) and Clause (b) of this sentence shall be made
only if the Series Manager of such Series reasonably
determines that such adjustments are necessary or
appropriate to reflect the relative Economic Interests of the
Members in such Series; and
- The Gross Asset Value of any Series asset that is
distributed to any Series Member shall be the gross fair
market value of such asset on the date of Distribution, as
determined by the Manager of such Series, which shall be
determined by any commercially reasonable method.
- If the Gross Asset Value of an asset has been determined or
adjusted pursuant to Paragraph (a) or Paragraph (b) above,
such Gross Asset Value shall thereafter be adjusted by the
Depreciation taken into account with respect to such asset
for purposes of computing Series Profits and Losses.
Interest or Membership Interest shall mean a Member?s rights in
the Company (with respect to the Founder), or a Series (with
respect to Series Members), including the Member?s Economic
Interest in the Company of a Series, plus any additional right to
vote or participate in management of the Company or Series, and
any right to information concerning the business and affairs of the
Company or Series provided by the Act and/or described in the
Company Agreement or a Series Agreement.
Investor shall mean Persons who make Capital Contributions to a
Series of the Company in exchange for Membership Interests in
such Series.
Involuntary Transfer shall mean any transfer not specifically
authorized under Article 12.
Involuntary Transferee shall mean a Series Member?s heirs, estate,
or creditors that have taken by foreclosure, receivership, or
inheritance and not as a result of a Voluntary Transfer.
Majority of Interests shall mean, with respect to a Series, the vote
of Membership Interests of one or more Series Members that in the
aggregate exceed fifty percent (50%) of all voting Percentage
Interests owned by Members of that Series entitled to vote. Except
as otherwise provided in a Series Agreement; non-voting Series
Members, if applicable, shall have no voting rights.
Member Class shall mean a separate class of interests in a Series as
described in Article 5.2 whose rights and duties are separate and
distinct from other Members in a Series.
Member or Company Member, with respect to the Company, shall
include VinVesto, Inc. a Delaware corporation, as the Founder of
the Company. Member or Series Member shall include Persons
later admitted as Members of a Series, who shall be admitted in
accordance with this Agreement. Upon being admitted as a
Member of a Series, unless otherwise specified such Series
Agreement, such Series Member shall not be considered admitted
as a Member of the Company or any other Series.
Member Nonrecourse Debt has the meaning set forth in section
1.704-2(b)(4) of the Treasury Regulations.
Member Nonrecourse Debt Minimum Gain means an amount, with
respect to each Member Nonrecourse Debt, equal to the Company
Minimum Gain that would result if such Member Nonrecourse
Debt were treated as a Nonrecourse Liability, determined in
accordance with section 1.704-2(i)(3) of the Treasury Regulations.
Member Nonrecourse Deductions has the meaning set forth in
Treasury Regulation section 1.704-2(i)(2). For any Fiscal Year of
the Company, the amount of Member Nonrecourse Deductions
with respect to a Member Nonrecourse Debt equals the net
increase during that Fiscal Year in Member Nonrecourse Debt
Minimum Gain attributable to such Member Nonrecourse Debt
during that Fiscal Year, reduced (but not below zero) by the
amount of any Distributions during such year to the Member
bearing the economic risk of loss for such Member Nonrecourse
Debt if such Distributions are both from the proceeds of such
Member Nonrecourse Debt and are allocable to an increase in
Member Nonrecourse Debt Minimum Gain attributable to such
Member Nonrecourse Debt, all as determined according to the
provisions of Treasury Regulation section 1.704-2(i)(2). In
determining Member Nonrecourse Deductions, the ordering rules
of Treasury Regulation section 1.704-2(j) shall be followed.
Non-Capital Contributions shall mean the contributions made by
Members of the Company or a Series other than cash.
Nonrecourse Deductions has the meaning set forth in Treasury
Regulation section 1.704-2(c). The amount of Nonrecourse
Deductions for a Company Fiscal Year equals the net increase in
the amount of Company Minimum Gain during that Fiscal Year,
reduced (but not below zero) by the aggregate amount of any
Distributions during that Fiscal Year of proceeds of a Nonrecourse
Liability that are allocable to an increase in Company Minimum
Gain.
Nonrecourse Liability has the meaning set forth in section 1.704-
2(b)(3) of the Treasury Regulations.
Notice of Sale shall have the meaning set forth in Article 12.8,
pertaining to a Voluntary Transfer of a Series Member?s Interest.
Percentage Interest or Series Percentage Interest shall mean, for
any Member associated with a Series, such Member?s Percentage
Interest in such Series, as set forth herein or in a Series Agreement.
Person or Persons shall mean any individual or legal entity, their
heirs, executors, administrators, legal representatives, successors,
and assigns of such individual or entity where the context so
permits.
Profits and Losses shall mean, with respect to a Series, and for
each Fiscal Year, an amount equal to the Series? taxable income or
loss associated with such Series for a Fiscal Year, determined in
accordance with ?703(a) of the Code (but including in taxable
income or loss, for this purpose, all items of income, gain, loss or
deduction associated with such Series that are required to be stated
separately pursuant to ?703(a)(1) of the Code), with the following
adjustments:
- Any income of a Series that is exempt from federal income
tax and not otherwise taken into account in computing
Profits or Losses pursuant to this definition shall be added
to such taxable income or loss;
- Any expenditures of such Series that are described in
?705(a)(2)(B) of the Code (or treated as expenditures
described in ?705(a)(2)(B) of the Code pursuant to
Treasury Regulation ?1.704-1(b)(2)(iv)(i)) and not
otherwise taken into account in computing Profits or Losses
pursuant to this definition shall be subtracted from such
taxable income or loss;
- In the event the Gross Asset Value of any asset associated
with such Series is adjusted in accordance with Paragraph
(ii) or Paragraph (iii) of the definition of ?Gross Asset
Value? above, the amount of such adjustment shall be taken
into account as gain or loss from the disposition of such
asset for purposes of computing Profits or Losses;
- Gain or loss resulting from any disposition of any asset of
such Series with respect to which gain or loss is recognized
for federal income-tax purposes shall be computed by
reference to the Gross Asset Value of the asset disposed of,
notwithstanding that the adjusted tax basis of such asset
differs from its Gross Asset Value; and
- In lieu of the Depreciation, amortization and other cost
recovery deductions taken into account in computing such
taxable income or loss, there shall be taken into account
Depreciation associated with such Series for such Fiscal
Year or other period, computed in accordance with the
definition of ?Depreciation? above.
Purchasing Member shall mean any current Series Member, Series
Manager or Founder that agrees to purchase a selling Series
Members Interest with respect to a Series, including the Series
Member?s Economic Interest and/or voting rights referenced in
Articles 12 and 13.
Remaining Members shall have the meaning set forth in Articles
12 and 13 hereof.
Reserves shall mean, with respect to a Series, funds set aside or
amounts allocated to reserves that shall be maintained in amounts
deemed sufficient by the Series Manager of such Series for
working capital and to pay taxes, insurance, debt service or other
costs or expenses incident to the ownership or operation of the
business of the Company with respect to such Series, or incident to
the liquidation of such Series pursuant to Article 15.3.
Section, when capitalized and followed by a number, refers the
sections of the Appendices to this Company Agreement.
Selling Member shall mean any Series Member that sells, assigns,
hypothecates, pledges, or otherwise transfers all or any portion of
its rights of membership in a Series, including its Economic
Interest and/or voting rights.
Series shall mean a designated Series with separate Members,
Managers or Interests established in accordance with this
Agreement, the Act, and a Series Agreement having separate
rights, powers or duties with respect to Underlying Asset(s) or
obligations or profits and losses associated with Underlying
Asset(s) or obligations and, to the extent provided in this
Agreement or a Series Agreement.
Series Agreement shall mean a separate, abbreviated Agreement
(including amendments) establishing a Series, and executed by the
Founder and Series Managers and adopted (via their Subscription
Booklets) by the Series Members. To the extent that a Series
Agreement conflicts with the Company Agreement, the Series
Agreement shall control.
Series Manager shall mean a Person appointed by the Founder of
the Company to manage a Series of the Company, or such Person
as may be subsequently elected by the Series Members.
Series Member shall mean a Person who has made a Capital
Contribution to the Company in exchange for Membership
Interests in a Series of the Company.
Subsidiary or Subsidiaries shall mean the single purpose limited
liability companies formed by the Founder to take title to
individual Properties.
Substitute Member shall mean any Person or entity admitted to a
Series as a Member of the Series, on approval by the Series
Manager, with all the rights of a Series Member pursuant to Article
7 of this Agreement.
Transferee when capitalized, shall have the meaning set forth in
Article 12 hereof.
Treasury Regulations shall mean the income-tax regulations,
including temporary regulations, promulgated under the Code, as
such regulations may be amended from time to time (including
corresponding provisions of superseding regulations).
Underlying Asset(s) or Asset shall mean those assets that an
individual Series acquires to advance the purpose of the Company.
The Company, via individual Series, intends to acquire assets such
as fine and vintage wines. Underlying Assets shall be specified in
separate Series Agreements.
Voluntary Transfer shall have the meaning set forth in Article 12.
1
1
EX1A-4 SUBS AGMT
7
VVMSubscrip203.txt
Form of Subscription Agreement
[Name of Series], a series of VV Markets, LLC
Interests are offered through [Broker Dealer], a Delaware corporation, a
registered broker-dealer and a member of FINRA & SIPC (?Broker?)
Form of Subscription Agreement to subscribe for [Name of Series], a
series of VV Markets, LLC
Number of [Name of Series] Interests subscribed for:
Price of [Name of Series] Interests subscribed for:
Payment Details:
- Account Number:
- Routing Number:
SUBSCRIPTION AGREEMENT
[NAME OF SERIES], A SERIES OF VV MARKETS, LLC
VV Markets, LLC
2800 Patterson Ave
Richmond, VA 23221
Ladies and Gentlemen:
1. Subscription. The person named on the front of this
subscription agreement (the ?Purchaser?) (this ?Subscription
Agreement?), intending to be legally bound, hereby irrevocably agrees
to purchase from [Name of Series], a series of VV Markets, LLC, a
Delaware series limited liability company (the ?Company?), the number
of [Name of Series] Interests (the ?[Name of Series] Interests?) set forth
on the front of this Subscription Agreement at a purchase price of
$[Insert Purchase Price] (USD) per [Name of Series] Interest and on the
terms and conditions of the Amended and Restated Limited Liability
Company Agreement governing the Company dated July 31, 2020, as
the same may be amended and restated from time to time (the
?Operating Agreement?), a copy of which the Purchaser has received
and read.
This subscription is submitted by the Purchaser in accordance with and
subject to the terms and conditions described in this Subscription
Agreement, relating to the exempt offering by the Company of up to
[2,000] [Name of Series] Interests for maximum aggregate gross
proceeds of $_______ (the ?Offering?), unless further [Name of Series]
Interests are issued by the Company in accordance with the terms of
the Operating Agreement.
Upon the basis of the representations and warranties, and subject to
the terms and conditions, set forth herein, the Company agrees to issue
and sell the [Name of Series] Interests to the Purchaser on the date the
Offering is closed (the ?Closing?) for the aggregate purchase price set
forth on the front page hereto (the ?Subscription Price?).
2. Payment. Concurrent with the execution hereof, the
Purchaser authorizes (i) North Capital Private Securities Corporation, a
Delaware corporation and a registered broker-dealer, member FINRA
and SICP (the ?Escrow Agent?) as escrow agent for the Company, to
request the Subscription Price from the Purchaser?s bank (details of
which are set out in the ?Payment Details? section above) or (ii) the
transfer of funds in an amount equal to the Subscription Price from the
Purchaser?s bank account into the escrow account. The Company shall
cause the Escrow Agent to maintain all such funds for the Purchaser?s
benefit in a segregated non-interest-bearing account in the name of
North Capital Private Securities Corporation, or its successor, for further
credit to ?Series #[Series Name], a series of VV Markets, LLC ? [Investor
Name]?, until the earliest to occur of: (i) the Closing, (ii) the rejection of
such subscription or (iii) the termination of the Offering as set forth in
Section 3.1.
3. Termination of Offering or Rejection of Subscription.
3.1. In the event that the Company does not effect a Closing,
this Offering shall terminate upon the earlier of: (a) the date which is
one year from the Offering being qualified by the U.S. Securities and
Exchange Commission (the ?SEC?), which period may be extended for an
additional six (6) months by VV Markets, LLC, a Delaware limited liability
company, the managing member of the Company (the ?Manager?) in its
sole discretion, or (b) the date that the Offering is terminated by the
Manager in its sole discretion. Upon termination of the Offering, the
Company will cause its payment services provider or the Escrow Agent,
as applicable, to refund promptly the Subscription Price paid by the
Purchaser, without deduction, offset or interest accrued thereon and
this Subscription Agreement shall thereafter be of no further force or
effect.
3.2. The Purchaser understands and agrees that the
Manager, in its sole discretion, reserves the right to accept or reject this
or any other subscription for [Name of Series] Interests, in whole or in
part, and for any reason or no reason, notwithstanding prior receipt by
the Purchaser of notice of acceptance of this subscription. If the
Manager rejects a subscription, either in whole or in part (which
decision is in its sole discretion), the Company shall cause its payment
services provider or the Escrow Agent, as applicable, to return promptly
the rejected Subscription Price or the rejected portion thereof to the
Purchaser without deduction, offset or interest accrued thereon. If this
subscription is rejected in whole this Subscription Agreement shall
thereafter be of no further force or effect. If this subscription is
rejected in part, this Subscription Agreement will continue in full force
and effect to the extent this subscription was accepted.
4. Acceptance of Subscription. At the Closing, if the
Manager accepts this subscription in whole or in part, the Company
shall execute and deliver to the Purchaser a counterpart executed copy
of this Subscription Agreement and cause the Escrow Agent to release
the Subscription Price (or applicable portion thereof if such subscription
is only accepted in part) to the Company for the benefit of [Name of
Series] (less any Offering Expenses as defined in the Offering Circular).
The Company shall have no obligation hereunder until the Company
shall execute and deliver to the Purchaser an executed copy of this
Subscription Agreement, and until the Purchaser shall have executed
and delivered to the Manager this Subscription Agreement and a
substitute Form W-9 (if applicable) and shall have deposited the
Purchase Price in accordance with this Agreement. The Purchaser
understands and agrees that this subscription is made subject to the
condition that the [Name of Series] Interests to be issued and delivered
on account of this subscription will be issued only in the name of and
delivered only to the Purchaser. Effective upon the Company?s
execution of this Subscription Agreement, the Purchaser shall be a
member of the Company, and the Purchaser agrees to adhere to and be
bound by, the terms and conditions of the Operating Agreement as if
the Purchaser were a party to it (and grants to the Manager the power
of attorney described therein).
5. Representations and Warranties, Acknowledgments,
and Agreements. The Purchaser hereby acknowledges, represents,
warrants and agrees to and with the Company, [Name of Series] and the
Manager as follows:
(a) The Purchaser is aware that an investment in the [Name of Series]
Interests involves a significant degree of risk, and has received the
Company?s Offering Circular dated ______________, 2020 (the
?Offering Circular?), which contains, in particular, the ?Risk Factors?
section therein. The Purchaser understands that the Company is
subject to all the risks applicable to early-stage companies, whether or
not set forth in such ?Risk Factors?. The Purchaser acknowledges that
no representations or warranties have been made to it or to its advisors
or representatives with respect to the business or prospects of the
Company or its financial condition.
(b) The offering and sale of the [Name of Series] Interests has not been
registered under the Securities Act of 1933, as amended (the ?Securities
Act?), or any state securities laws. The Purchaser understands that the
offering and sale of the [Name of Series] Interests is intended to be
exempt from registration under the Securities Act, by virtue of Tier 2 of
Regulation A thereof, based, in part, upon the representations,
warranties and agreements of the Purchaser contained in this
Subscription Agreement, including, without limitation, the investor
qualification (?Investor Qualification and Attestation?) immediately
following the signature page of this Subscription Agreement. The
Purchaser is purchasing the [Name of Series] Interests for its own
account for investment purposes only and not with a view to or intent
of resale or distribution thereof in violation of any applicable securities
laws, in whole or in part.
(c) The Purchaser, as set forth in the Investor Certification attached
hereto, as of the date hereof is a ?qualified purchaser? as that term is
defined in Regulation A (a ?Qualified Purchaser?). The Purchaser agrees
to promptly provide the Manager, the Broker (as defined on the first
page hereto) and their respective agents with such other information as
may be reasonably necessary for them to confirm the Qualified
Purchaser status of the Purchaser.
(d) The Purchaser acknowledges that the Purchaser?s responses to the
investor qualification questions posed and reflected in the Investor
Qualification and Attestation, are complete and accurate as of the date
hereof.
(e) The Purchaser acknowledges that neither the SEC nor any state
securities commission or other regulatory authority has passed upon or
endorsed the merits of the Offering of the [Name of Series] Interests.
(f) In evaluating the suitability of an investment in the [Name of Series]
Interests, the Purchaser has not relied upon any representation or
information (oral or written) other than as set forth in the Offering
Circular, the Operating Agreement and this Subscription Agreement.
(g) Except as previously disclosed in writing to the Company, the
Purchaser has taken no action that would give rise to any claim by any
person for brokerage commissions, finders? fees or the like relating to
this Subscription Agreement or the transactions contemplated hereby
and, in turn, to be paid to its selected dealers, and in all instances the
Purchaser shall be solely liable for any such fees and shall indemnify the
Company with respect thereto pursuant to paragraph 6 of this
Subscription Agreement.
(h) The Purchaser, together with its advisors, if any, has such knowledge
and experience in financial, tax, and business matters, and, in particular,
investments in securities, so as to enable it to utilize the Offering
Circular to evaluate the merits and risks of an investment in the [Name
of Series] Interests and the Company and to make an informed
investment decision with respect thereto.
(i) The Purchaser is not relying on the Company, the Manager, the
Broker or any of their respective employees or agents with respect to
the legal, tax, economic and related considerations of an investment in
the [Name of Series] Interests, other than with respect to the opinion of
legality of legal counsel provided at Exhibit [X] to the Offering Circular,
and the Purchaser has relied on the advice of, or has consulted with,
only its own advisors, if any, whom the Purchaser has deemed
necessary or appropriate in connection with its purchase of the [Name
of Series] Interests.
(j) No consent, approval, authorization or order of any court,
governmental agency or body or arbitrator having jurisdiction over the
Purchaser or any of the Purchaser's affiliates is required for the
execution of this Subscription Agreement or the performance of the
Purchaser's obligations hereunder, including, without limitation, the
purchase of the [Name of Series] Interests by the Purchaser.
(k) The Purchaser has adequate means of providing for such Purchaser?s
current financial needs and foreseeable contingencies and has no need
for liquidity of its investment in the [Name of Series] Interests for an
indefinite period of time.
(l) The Purchaser (i) if a natural person, represents that the Purchaser
has reached the age of 21 and has full power and authority to execute
and deliver this Subscription Agreement and all other related
agreements or certificates and to carry out the provisions hereof and
thereof; or (ii) if a corporation, partnership, or limited liability company
or other entity, represents that such entity was not formed for the
specific purpose of acquiring the [Name of Series] Interests, such entity
is duly organized, validly existing and in good standing under the laws of
the state of its organization, the consummation of the transactions
contemplated hereby is authorized by, and will not result in a violation
of state law or its charter or other organizational documents, such
entity has full power and authority to execute and deliver this
Subscription Agreement and all other related agreements or certificates
and to carry out the provisions hereof and thereof and to purchase and
hold the [Name of Series] Interests, the execution and delivery of this
Subscription Agreement has been duly authorized by all necessary
action, this Subscription Agreement has been duly executed and
delivered on behalf of such entity and is a legal, valid and binding
obligation of such entity; or (iii) if executing this Subscription Agreement
in a representative or fiduciary capacity, represents that it has full
power and authority to execute and deliver this Subscription Agreement
in such capacity and on behalf of the subscribing individual, ward,
partnership, trust, estate, corporation, or limited liability company or
partnership, or other entity for whom the Purchaser is executing this
Subscription Agreement, and such individual, partnership, ward, trust,
estate, corporation, or limited liability company or partnership, or other
entity has full right and power to perform pursuant to this Subscription
Agreement and make an investment in the Company, and represents
that this Subscription Agreement constitutes a legal, valid and binding
obligation of such entity. The execution and delivery of this
Subscription Agreement will not violate or be in conflict with any order,
judgment, injunction, agreement or controlling document to which the
Purchaser is a party or by which it is bound.
(m) Any power of attorney of the Purchaser granted in favor of the
Manager contained in the Operating Agreement has been executed by
the Purchaser in compliance with the laws of the state, province or
jurisdiction in which such agreements were executed.
(n) If an entity, the Purchaser has its principal place of business or, if a
natural person, the Purchaser has its primary residence, in the
jurisdiction (state and/or country) set forth in the ?Investor Qualification
and Attestation? section of this Subscription Agreement. The Purchaser
first learned of the offer and sale of the [Name of Series] Interests in the
state listed in the ?Investor Qualification and Attestation? section of this
Subscription Agreement, and the Purchaser intends that the securities
laws of that state shall govern the purchase of the Purchaser?s [Name of
Series] Interests.
(o) The Purchaser is either (i) a natural person resident in the United
States, (ii) a partnership, corporation or limited liability company
organized under the laws of the United States, (iii) an estate of which
any executor or administrator is a U.S. person, (iv) a trust of which any
trustee is a U.S. person, (v) an agency or branch of a foreign entity
located in the United States, (vi) a non-discretionary account or similar
account (other than an estate or trust) held by a dealer or other
fiduciary for the benefit or account of a U.S. person, or (vii) a
partnership or corporation organized or incorporated under the laws of
a foreign jurisdiction that was formed by a U.S. person principally for
the purpose of investing in securities not registered under the Securities
Act, unless it is organized or incorporated, and owned, by accredited
investors who are not natural persons, estates or trusts. The Purchaser
is not (A) a discretionary account or similar account (other than an
estate or trust) held for the benefit or account of a non-U.S. person by a
dealer or other professional fiduciary organized, incorporated, or (if an
individual) resident in the United States, (B) an estate of which any
professional fiduciary acting as executor or administrator is a U.S.
person if an executor or administrator of the estate who is not a U.S.
person has sole or shared investment discretion with respect to the
assets of the estate and the estate is governed by foreign law, (C) a trust
of which any professional fiduciary acting as trustee is a U.S. person, if a
trustee who is not a U.S. person has sole or shared investment
discretion with respect to the trust assets and no beneficiary of the trust
(and no settlor if the trust is revocable) is a U.S. person, (D) an
employee benefit plan established and administered in accordance with
the law of a country other than the United States and customary
practices and documentation of such country, or (E) an agency or
branch of a U.S. person located outside the United States that operates
for valid business reasons engaged in the business of insurance or
banking that is subject to substantive insurance or banking regulation,
respectively, in the jurisdiction where located.
(p) Any information which the Purchaser has heretofore furnished or is
furnishing herewith to the Company is true, complete and accurate and
may be relied upon by the Manager, the Company and the Broker, in
particular, in determining the availability of an exemption from
registration under federal and state securities laws in connection with
the Offering. The Purchaser further represents and warrants that it will
notify and supply corrective information to the Company immediately
upon the occurrence of any change therein occurring prior to the
Company?s issuance of the [Name of Series] Interests.
(q) The Purchaser is not, nor is it acting on behalf of, a ?benefit plan
investor? within the meaning of 29 C.F.R. ? 2510.3-101(f)(2), as
modified by Section 3(42) of the Employee Retirement Income Security
Act of 1974 (such regulation, the ?Plan Asset Regulation?, and a benefit
plan investor described in the Plan Asset Regulation, a ?Benefit Plan
Investor?). For the avoidance of doubt, the term Benefit Plan Investor
includes all employee benefit plans subject to Part 4, Subtitle B, Title I of
ERISA, any plan to which Section 4975 of the Code applies and any
entity, including any insurance company general account, whose
underlying assets constitute ?plan assets?, as defined under the Plan
Asset Regulation, by reason of a Benefit Plan Investor?s investment in
such entity.
(r) The Purchaser is satisfied that the Purchaser has received adequate
information with respect to all matters which it or its advisors, if any,
consider material to its decision to make this investment.
(s) Within five (5) days after receipt of a written request from the
Manager, the Purchaser will provide such information and deliver such
documents as may reasonably be necessary to comply with any and all
laws and ordinances to which the Company is subject.
(t) THE [NAME OF SERIES] INTERESTS OFFERED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT, OR ANY STATE SECURITIES
LAWS AND ARE BEING OFFERED AND SOLD IN RELIANCE ON
EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT
AND SUCH LAWS. THE [NAME OF SERIES] INTERESTS ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE
TRANSFERRED OR RESOLD EXCEPT AS PERMITTED BY THE OPERATING
AGREEMENT. THE [NAME OF SERIES] INTERESTS HAVE NOT BEEN
APPROVED OR DISAPPROVED BY THE SEC, ANY STATE SECURITIES
COMMISSION OR ANY OTHER REGULATORY AUTHORITY, NOR HAVE
ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED
THE MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF
THE MEMORANDUM OR THIS SUBSCRIPTION AGREEMENT. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
(u) The Purchaser should check the Office of Foreign Assets Control
(?OFAC?) website at http://www.treas.gov/ofac before making the
following representations. The Purchaser represents that the amounts
invested by it in the Company in the Offering were not and are not
directly or indirectly derived from activities that contravene federal,
state or international laws and regulations, including anti-money
laundering laws and regulations. Federal regulations and Executive
Orders administered by OFAC prohibit, among other things, the
engagement in transactions with, and the provision of services to,
certain foreign countries, territories, entities and individuals. The lists
of OFAC prohibited countries, territories, persons and entities can be
found on the OFAC website at http://www.treas.gov/ofac. In addition,
the programs administered by OFAC (the ?OFAC Programs?) prohibit
dealing with individuals, including specially designated nationals,
specially designated narcotics traffickers and other parties subject to
OFAC sanctions and embargo programs, or entities in certain countries
regardless of whether such individuals or entities appear on the OFAC
lists. Furthermore, to the best of the Purchaser?s knowledge, none of:
(1) the Purchaser; (2) any person controlling or controlled by the
Purchaser; (3) if the Purchaser is a privately-held entity, any person
having a beneficial interest in the Purchaser; or (4) any person for whom
the Purchaser is acting as agent or nominee in connection with this
investment is a country, territory, individual or entity named on an
OFAC list, or a person or entity prohibited under the OFAC Programs.
Please be advised that the Company may not accept any amounts from
a prospective investor if such prospective investor cannot make the
representation set forth in the preceding paragraph. The Purchaser
agrees to promptly notify the Company should the Purchaser become
aware of any change in the information set forth in these
representations. The Purchaser understands and acknowledges that, by
law, the Company may be obligated to ?freeze the account? of the
Purchaser, either by prohibiting additional subscriptions from the
Purchaser, declining any redemption requests and/or segregating the
assets in the account in compliance with governmental regulations, and
the Company may also be required to report such action and to disclose
the Purchaser?s identity to OFAC. The Purchaser further acknowledges
that the Company may, by written notice to the Purchaser, suspend the
redemption rights, if any, of the Purchaser if the Company reasonably
deems it necessary to do so to comply with anti-money laundering
regulations applicable to the Company or any of the Company?s other
service providers. These individuals include specially designated
nationals, specially designated narcotics traffickers and other parties
subject to OFAC sanctions and embargo programs.
(v) To the best of the Purchaser?s knowledge, none of: (1) the Purchaser;
(2) any person controlling or controlled by the Purchaser; (3) if the
Purchaser is a privately-held entity, any person having a beneficial
interest in the Purchaser; or (4) any person for whom the Purchaser is
acting as agent or nominee in connection with this investment is a
senior foreign political figure, or an immediate family member or close
associate of a senior foreign political figure. A ?senior foreign political
figure? is a senior official in the executive, legislative, administrative,
military or judicial branches of a foreign government (whether elected
or not), a senior official of a major foreign political party, or a senior
executive of a foreign government-owned corporation. In addition, a
?senior foreign political figure? includes any corporation, business or
other entity that has been formed by, or for the benefit of, a senior
foreign political figure. ?Immediate family? of a senior foreign political
figure typically includes the figure?s parents, siblings, spouse, children
and in-laws. A ?close associate? of a senior foreign political figure is a
person who is widely and publicly known to maintain an unusually close
relationship with the senior foreign political figure, and includes a
person who is in a position to conduct substantial domestic and
international financial transactions on behalf of the senior foreign
political figure.
(w) If the Purchaser is affiliated with a non-U.S. banking institution (a
?Foreign Bank?), or if the Purchaser receives deposits from, makes
payments on behalf of, or handles other financial transactions related to
a Foreign Bank, the Purchaser represents and warrants to the Company
that: (1) the Foreign Bank has a fixed address, other than solely an
electronic address, in a country in which the Foreign Bank is authorized
to conduct banking activities; (2) the Foreign Bank maintains operating
records related to its banking activities; (3) the Foreign Bank is subject
to inspection by the banking authority that licensed the Foreign Bank to
conduct banking activities; and (4) the Foreign Bank does not provide
banking services to any other Foreign Bank that does not have a
physical presence in any country and that is not a regulated affiliate.
(x) Each of the representations and warranties of the parties hereto set
forth in this Section 5 and made as of the date hereof shall be true and
accurate as of the Closing applicable to the subscription made hereby as
if made on and as of the date of such Closing.
6. Indemnification. The Purchaser agrees to indemnify
and hold harmless the Company, [Name of Series], the Manager and
their respective officers, directors, employees, agents, members,
partners, control persons and affiliates (each of which shall be deemed
third party beneficiaries hereof) from and against all losses, liabilities,
claims, damages, costs, fees and expenses whatsoever (including, but
not limited to, any and all expenses incurred in investigating, preparing
or defending against any litigation commenced or threatened) based
upon or arising out of any actual or alleged false acknowledgment,
representation or warranty, or misrepresentation or omission to state a
material fact, or breach by the Purchaser of any covenant or agreement
made by the Purchaser herein or in any other document delivered in
connection with this Subscription Agreement. Notwithstanding the
foregoing, no representation, warranty, covenant or acknowledgment
made herein by the Purchaser shall be deemed to constitute a waiver of
any rights granted to it under the Securities Act or state securities laws.
7. Irrevocability; Binding Effect. The Purchaser hereby
acknowledges and agrees that the subscription hereunder is irrevocable
by the Purchaser, except as required by applicable law, and that this
Subscription Agreement shall survive the death or disability of the
Purchaser and shall be binding upon and inure to the benefit of the
parties and their heirs, executors, administrators, successors, legal
representatives, and permitted assigns. If the Purchaser is more than
one person, the obligations of the Purchaser hereunder shall be joint
and several and the agreements, representations, warranties, and
acknowledgments herein shall be deemed to be made by and be
binding upon each such person and such person?s heirs, executors,
administrators, successors, legal representatives, and permitted assigns.
8. Modification. This Subscription Agreement shall not be
modified or waived except by an instrument in writing signed by the
party against whom any such modification or waiver is sought.
9. Assignability. This Subscription Agreement and the
rights, interests and obligations hereunder are not transferable or
assignable by the Purchaser and the transfer or assignment of the
[Name of Series] Interests shall be made only in accordance with all
applicable laws and the Operating Agreement. Any assignment contrary
to the terms hereof shall be null and void and of no force or effect.
10. Applicable Law and Jurisdiction. This Subscription
Agreement and the rights and obligations of the Purchaser arising out of
or in connection with this Subscription Agreement, the Operating
Agreement and the Offering Circular shall be construed in accordance
with and governed by the internal laws of the State of Delaware without
regard to principles of conflict of laws. The Purchaser (i) irrevocably
submits to the non-exclusive jurisdiction and venue of the Court of
Chancery of the State of Delaware in any action arising out of this
Subscription Agreement, the Operating Agreement and the Offering
Circular and (ii) consents to the service of process by mail.
11. Use of Pronouns. All pronouns and any variations
thereof used herein shall be deemed to refer to the masculine,
feminine, neuter, singular or plural as the identity of the person or
persons referred to may require.
12. Miscellaneous.
12.1 Sections regarding Addresses and Notices, and Further
Action of the Operating Agreement are deemed incorporated into this
Subscription Agreement.
12.2 This Subscription Agreement, together with the
Operating Agreement, constitutes the entire agreement between the
Purchaser and the Company with respect to the subject matter hereof
and supersedes all prior oral or written agreements and understandings,
if any, relating to the subject matter hereof. The terms and provisions
of this Subscription Agreement may be waived, or consent for the
departure therefrom granted, only by a written document executed by
the party entitled to the benefits of such terms or provisions.
12.3 The covenants, agreements, representations and
warranties of the Company and the Purchaser made, and the
indemnification rights provided for, in this Subscription Agreement shall
survive the execution and delivery hereof and delivery of the [Name of
Series] Interests, regardless of any investigation made by or on behalf of
any party, and shall survive delivery of any payment for the Subscription
Price.
12.4 Except to the extent otherwise described in the Offering
Circular, each of the parties hereto shall pay its own fees and expenses
(including the fees of any attorneys, accountants or others engaged by
such party) in connection with this Subscription Agreement and the
transactions contemplated hereby whether or not the transactions
contemplated hereby are consummated.
12.5 This Subscription Agreement may be executed in one or
more counterparts each of which shall be deemed an original (including
signatures sent by facsimile transmission or by email transmission of a
PDF scanned document or other electronic signature), but all of which
shall together constitute one and the same instrument.
12.6 Each provision of this Subscription Agreement shall be
considered separable and, if for any reason any provision or provisions
hereof are determined to be invalid or contrary to applicable law, such
invalidity or illegality shall not impair the operation of or affect the
remaining portions of this Subscription Agreement.
12.7 Paragraph titles are for descriptive purposes only and
shall not control or alter the meaning of this Subscription Agreement as
set forth in the text.
12.8 Words and expressions which are used but not defined
in this Subscription Agreement shall have the meanings given to them in
the Operating Agreement.
SIGNATURE PAGE TO THE SUBSCRIPTION AGREEMENT
VV Markets, LLC
[NAME OF SERIES] INTERESTS
The Purchaser hereby elects to subscribe under the Subscription
Agreement for the number and price of the [Name of Series] Interests
stated on the front page of this Subscription Agreement and executes
the Subscription Agreement.
If the Purchaser is an INDIVIDUAL, and if purchased as JOINT TENANTS,
as TENANTS IN COMMON, or as COMMUNITY PROPERTY:
_________________
If the Purchaser is a PARTNERSHIP, CORPORATION, LIMITED LIABILITY
COMPANY or TRUST:
_________________
SIGNATURE PAGE TO THE SUBSCRIPTION AGREEMENT
VV Markets, LLC
[NAME OF SERIES] INTERESTS
[Name of Series], A SERIES OF VV Markets, LLC
By: VinVesto, Inc, its Manager
Investor Qualification and Attestation
Investor Information
First Name
Last Name
Date of Birth
Address
Phone Number
E-mail Address
Check Box:
- I am an ?accredited investor?, and have checked the
appropriate box on the attached Certificate of Accredited
Investor Status indicating the basis of such accredited
investor status, which Certificate of Accredited Investor
Status is true and correct; or
- The amount set forth on the first page of this Subscription
Agreement, together with any previous investments in
securities pursuant to this Offering, does not exceed 10% of the
greater of my net worth1 or annual income.
o 1In calculating your net worth: (i) your primary
residence shall not be included as an asset; (ii)
indebtedness that is secured by your primary residence,
up to the estimated fair market value of the primary
residence at the time of entering into this Subscription
Agreement, shall not be included as a liability (except
that if the amount of such indebtedness outstanding at
the time of entering into this Subscription Agreement
exceeds the amount outstanding 60 days before such
time, other than as a result of the acquisition of the
primary residence, the amount of such excess shall be
included as a liability); and (iii) indebtedness that is
secured by your primary residence in excess of the
estimated fair market value of the primary residence at
the time of entering into this Subscription Agreement
shall be included as a liability.
Are you or anyone in your immediate household associated with a
FINRA member, organization, or the SEC (Y / N)
- If yes, provide name of FINRA institution
Are you or anyone in your household or immediate family a 10%
shareholder, officer, or member of the board of directors of a publicly
traded company? (Y / N)
- If yes, please list ticker symbol
Social Security #:
Attestation
I understand that an investment in private securities is very risky, that I
may lose all of my invested capital that it is an illiquid investment with
no short term exit, and for which an ownership transfer is restricted.
- The undersigned Purchaser acknowledges that the Company
will be relying upon the information provided by the Purchaser
in this Questionnaire. If such representations shall cease to be
true and accurate in any respect, the undersigned shall give
immediate notice of such fact to the Company.
Certificate of Accredited Investor Status
by Investor:
__________________________
Print Name: _______________
Title, if not an individual Investor: ________________
1
1
EX1A-6 MAT CTRCT
8
VVMmanagserv203.txt
MANAGEMENT SERVICES AGREEMENT
MANAGEMENT SERVICES AGREEMENT
This Agreement (?Agreement?) is made as of July 1, 2020 by
and between VV Markets, LLC, a Delaware limited liability company
(the ?Company?), and VinVesto, Inc., a Delaware corporation
(?Collection Manager?).
W I T N E S S E T H:
WHEREAS, the Company desires to retain Collection Manager to
furnish services to the Company, and Collection Manager wishes to be
retained to provide such services, on the terms and conditions hereinafter
set forth.
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Company
and Collection Manager hereby agree as follows:
1. Duties of Collection Manager.
(a) Employment of Collection Manager. The Company hereby engages
Collection Manager to source, acquire, sell to the Company, and manage
the storage, investment, and liquidation of the assets of the Company,
subject to the supervision of the Manager of the Company (the
?Company Manager?), during the term hereof and upon the terms and
conditions herein set forth, in accordance with:
(i) the investment objectives, policies and restrictions that are
determined by the Company Manager from time to time and disclosed to
Collection Manager, which objectives, policies and restrictions shall
initially be those set forth in the Company?s Form 1-A, filed with the
Securities and Exchange Commission (the ?SEC?), and as amended from
time to time;
(ii) all applicable federal and state laws, rules and regulations,
and the Company?s charter and bylaws.
Collection Manager hereby accepts such engagement and agrees during
the term hereof to render such services, subject to the payment of
compensation as described in the Company?s applicable offering
circular(s).
(b) Certain Services. Without limiting the generality of Section 1(a),
Collection Manager shall:
(i) determine the composition of the asset portfolio of the
Company and related series LLCs over time, including the nature and
timing of the changes thereto and the manner of implementing such
changes;
(ii) assist the Company in determining the assets that the
Company will purchase, retain, or sell;
(iii) acquire wine assets on the market and transfer those assets
to the Company;
(iv) execute, close, service and monitor the Company?s
investments;
(v) manage the transportation and storage of Company assets;
and
(vi) provide the Company with such other advisory,
management, research and related services as the Company may, from
time to time, reasonably require.
Collection Manager shall have the power and authority on behalf of the
Company to effectuate its investment decisions for the Company, to
make acquisitions and dispositions of assets, and to execute and deliver
all documents relating to the Company?s investments and the placing of
orders for other purchase or sale transactions on behalf of the Company.
In the event that the Company determines to incur debt financing,
Collection Manager shall arrange for such financing on the Company?s
behalf, subject to the oversight and any required approval of the
Company Manager. If it is necessary for Collection Manager to make
investments on behalf of the Company through a special purpose vehicle,
Collection Manager shall have authority to create or arrange for the
creation of such special purpose vehicle and to make such investments
through such special purpose vehicle in accordance with the Investment
Company Act.
(c) Advisers. Collection Manager is hereby authorized to enter into one
or more advisory agreements with other investment advisers pursuant to
which Collection Manager may obtain the services of the adviser(s) to
assist Collection Manager in providing the advisory and transactional
services required to be provided by Collection Manager under this
Agreement. At the time of this Agreement, one such advisor is
sommelier, wine investor, speaker, and author Ryan Vet.
(d) Independent Contractors. Collection Manager, and any adviser, shall
for all purposes herein each be deemed to be an independent contractor
and, except as expressly provided or authorized herein, shall have no
authority to act for or represent the Company in any way or otherwise be
deemed an agent of the Company.
(e) Books and Records. Collection Manager shall keep and preserve
books and records relevant to the provision of services to the Company
and shall specifically maintain all books and records with respect to the
Company?s portfolio transactions and shall render to the Company
Manager such periodic and special reports as the Company Manager may
reasonably request. Collection Manager agrees that all records that it
maintains for the Company are the property of the Company and shall
surrender promptly to the Company any such records upon the
Company?s request; provided that Collection Manager may retain a copy
of such records.
2. Allocation of Costs and Expenses, Company Financial Practices.
(a) Expenses Payable by Collection Manager. All investment
professionals of Collection Manager and/or its affiliates, when and to the
extent engaged in providing investment services required to be provided
by Collection Manager under this Agreement, and the compensation and
routine overhead expenses of such personnel allocable to such services,
shall be provided and paid for by Collection Manager and not by the
Company.
(b) Expenses Payable by the Company. Other than those expenses
specifically assumed by Collection Manager pursuant to Section 2(a), the
Company shall bear all costs and expenses that are incurred in its
operation, administration and transactions.
(c) Company Financial Matters Generally. Company and Collection
Manager understand and agree that Collection Manager?s services will
be performed, and Collection Manager?s compensation paid, consistently
with overall Company financial practices. The Company,
contemporaneously with this Agreement, has undergone an audit of its
finances. Company and Collection Manager are familiar with the resuts
of such audit, and agree the to the policies and procedures adopted or
documented by the Company and its auditors in connection with such
audit. Exhibit 2.C to this Agreement, below, contains certain statements
and policies which have been adopted and/or documented by the
Company during the audit process, which statements and policies are
incorporated into this Agreement.
3. Compensation of Collection Manager. The Company agrees to pay,
and Collection Manager agrees to accept, as compensation for the
services provided by Collection Manager hereunder, A sourcing fee of 0-
10% of the aggregate purchase price of the relevant assets is paid to the
Collection Manager as compensation for identifying and managing the
acquisition of the assets. This fee will be set at the higher end of the
percentage range where the Collection Manager is successful in
acquiring assets below their average market value.
4. Representations, Warranties and Covenants of Collection Manager.
Collection Manager agrees that its activities shall at all times be in
compliance in all material respects with all applicable federal and state
laws governing its operations and investments, and that its activities shall
be consistent with forms, offering documentation, and other documents
and materials filed with the Securities Exchange Commission.
5. Responsibility of Dual Directors, Officers and/or Employees. If any
person who is a member, Collection Manager, partner, officer or
employee of Collection Manager is or becomes a director, officer and/or
employee of the Company and acts as such in any business of the
Company, then such member, Collection Manager, partner, officer
and/or employee shall be deemed to be acting in such capacity solely for
the Company, and not as a member, Collection Manager, partner, officer
or employee of Collection Manager or under the control or direction of
Collection Manager, even if paid by Collection Manager.
6. Limitation of Liability of Collection Manager; Indemnification.
Collection Manager and its affiliates and its and its affiliates? respective
directors, officers, employees, members, Collection Managers, partners
and stockholders, each of whom shall be deemed a third party
beneficiary hereof (collectively, the ?Indemnified Parties?), shall not be
liable to the Company or its subsidiaries or its and its subsidiaries?
respective directors, officers, employees, members, Collection Managers,
partners or stockholders for any action taken or omitted to be taken by
Collection Manager in connection with the performance of any of its
duties or obligations under this Agreement or otherwise on behalf of the
Company. The Company shall indemnify, defend and protect the
Indemnified Parties and hold them harmless from and against all claims
or liabilities (including reasonable attorneys? fees) and other expenses
reasonably incurred by the Indemnified Parties in or by reason of any
pending, threatened or completed action, suit, investigation or other
proceeding (including an action or suit by or in the right of the Company
or its security holders) arising out of or in connection with the
performance of any of Collection Manager?s duties or obligations under
this Agreement or otherwise for the Company. Notwithstanding the
foregoing provisions of this Section to the contrary, nothing contained
herein shall protect or be deemed to protect the Indemnified Parties
against, or entitle or be deemed to entitle the Indemnified Parties to
indemnification in respect of, any liability to the Company or its security
holders to which the Indemnified Parties would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence in the
performance of such Indemnified Party?s duties or by reason of such
Indemnified Party?s reckless disregard of its obligations and duties under
this Agreement (as the same shall be determined in accordance with the
Investment Company Act and any interpretations or guidance by the SEC
or its staff thereunder).
7. Effectiveness, Duration and Termination.
(a) This Agreement shall become effective as of the first date above
written. This Agreement shall remain in effect for two years after such
date, and thereafter shall continue automatically for successive annual
periods; provided that the Company Manager may prevent such
continuance upon written notice to Collection Manager
(b) This Agreement may be terminated at any time, without the payment
of any penalty, upon 60 days? written notice, by (i) the vote of holders of
a majority of the outstanding voting securities of the Company, (ii) the
vote of the Company Manager, or (iii) Collection Manager.
(d) The provisions of Section 6 of this Agreement shall remain in full
force and effect, and apply to Collection Manager and its representatives
as and to the extent applicable, and Collection Manager shall remain
entitled to the benefits thereof, notwithstanding any termination or
expiration of this Agreement. Further, notwithstanding the termination or
expiration of this Agreement as aforesaid, Collection Manager shall be
entitled to any amounts owed under Section 3 through the date of
termination or expiration.
8. Third Party Beneficiaries. Nothing in this Agreement, either express or
implied, is intended to or shall confer upon any person other than the
parties hereto and the Indemnified Parties any legal or equitable right,
benefit or remedy of any nature whatsoever under or by reason of this
Agreement.
9. Amendments of this Agreement. This Agreement may not be amended
or modified except by an instrument in writing signed by both parties
hereto, and upon the consent of a majority in interest of the members of
the Company.
10. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Delaware, and the applicable
provisions of the Investment Company Act, if any. To the extent that the
applicable laws of the State of Delaware, or any of the provisions herein,
conflict with the applicable provisions of the Investment Company Act,
if any, the latter shall control. The parties hereto unconditionally and
irrevocably consent to the exclusive jurisdiction of the federal and state
courts located in the Commonwealth of Virginia and waive any objection
with respect thereto, for the purpose of any action, suit or proceeding
arising out of or relating to this Agreement or the transactions
contemplated hereby.
11. No Waiver. The failure of either party hereto to enforce at any time
for any period the provisions of or any rights deriving from this
Agreement shall not be construed to be a waiver of such provisions or
rights or the right of such party thereafter to enforce such provisions, and
no waiver shall be binding unless executed in writing by all parties
hereto.
12. Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any law or public
policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in
any manner materially adverse to either party hereto. Upon such
determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner in order that the
transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
13. Headings. The descriptive headings contained in this Agreement are
for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
14. Counterparts. This Agreement may be executed in one or more
counterparts, each of which when executed shall be deemed to be an
original instrument and all of which taken together shall constitute one
and the same agreement.
15. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made
(and shall be deemed to have been duly given or made upon receipt) by
delivery in person, by overnight courier service (with signature required),
by facsimile, or by registered or certified mail (postage prepaid, return
receipt requested) to the parties hereto at their respective principal
executive office addresses.
16. Entire Agreement. This Agreement constitutes the entire agreement
of the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and undertakings, both written and oral,
between the parties hereto with respect to such subject matter.
17. Certain Matters of Construction.
(a) The words ?hereof?, ?herein?, ?hereunder? and words of similar
import shall refer to this Agreement as a whole and not to any particular
Section or provision of this Agreement, and reference to a particular
Section of this Agreement shall include all subsections thereof.
(b) Definitions shall be equally applicable to both the singular and plural
forms of the terms defined, and references to the masculine, feminine or
neuter gender shall include each other gender.
(c) The word ?including? shall mean including without limitation.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
VinVesto, Inc.
By: __/s/ Nicholas King__________
Name: _Nicholas King____
Title: __CEO___________
VV Markets LLC
By: __/s/ Nicholas King__________
Name: _Nicholas King____
Title: __CEO of Managing Member___
Exhibit 2.C to Management Services Agreement
Company Financial Matters Generally
Note 1: NATURE OF OPERATIONS
VV Markets, LLC (the ?Company?) is a Delaware series limited liability
company formed on June 16th, 2020. VinVesto Inc. is the sole owner of
interests of the Company (other than interests issued in a particular series
to other investors). The Company was formed to acquire and manage
fine wines, spirits, and other wine related entities. It is expected that the
Company will create a number of separate series of interests (the
?Series? or ?Series of Interests?) and that each collection will be owned
by a separate Series, and that the assets and liabilities of each Series will
be separate in accordance with Delaware law. Investors acquire
membership interests (the ?Interests?) in each Series and will be entitled
to share in the return of that particular Series, but will not be entitled to
share in the return of any other Series.
The Company?s managing member is VinVesto, Inc. (the ?Manager?).
The Manager is a Delaware corporation formed on June 16th, 2020. The
Manager is a technology and marketing company that operates the
VinVesto platform ("Platform") and manages the Company and the
assets owned by the Company in its roles as the Manager and manager of
the assets of each Series (the ?Asset Manager?).
As of June 16th, 2020, the Company has not commenced planned
principal operations nor generated revenue. The Company?s activities
since inception have consisted of formation activities and preparations to
raise capital. Once the Company commences its planned principal
operations, it will incur significant additional expenses. The Company is
dependent upon additional capital resources for the commencement of its
planned principal operations and is subject to significant risks and
uncertainties; including failing to secure funding to operationalize the
Company?s planned operations or failing to profitably operate the
business.
The Company intends to sell Interests in a number of separate individual
Series of the Company. Investors in any Series acquire a proportional
share of income and liabilities as they pertain to a particular Series, and
the sole assets and liabilities of any given Series at the time of an
offering related to that particular Series a single collectible asset, (plus
any cash reserves for future operating expenses). All voting rights,
except as specified in the operating agreement or required by law remain
with the Manager (e.g., determining the type and quantity of general
maintenance and other expenses required, determining how to best
commercialize the applicable Series assets, evaluating potential sale
offers and the liquidation of a Series). The Manager manages the
ongoing operations of each Series in accordance with the operating
agreement of the Company, as amended and restated from time to time
(the ?Operating Agreement?). The Company and each Series shall have
perpetual existence unless terminated pursuant to the Operating
Agreement or law.
Note 2: OPERATING AGREEMENT
In accordance with the Operating Agreement each interest holder in a
Series grants a power of attorney to the Manager. The Manager has the
right to appoint officers of the Company and each Series.
After the closing of an offering, each Series is responsible for its own
Operating expenses (as defined in Note 2(5)). Prior to the closing,
Operating expenses are borne by the Manager and not reimbursed by the
economic members. Should post-closing Operating expenses exceed
revenues or cash reserves then the Manager may (a) pay such Operating
expenses and not seek reimbursement, (b) loan the amount of the
Operating expenses to the series and be entitled to reimbursement of
such amount from future revenues generated by the series (?Operating
expenses Reimbursement Obligation(s)?), on which the Manager may
impose a reasonable rate of interest, and/or (c) cause additional Interests
to be issued in order to cover such additional amounts, which Interests
may be issued to existing or new investors, which may include the
Manager or its affiliates.
Note 3: LIQUIDITY AND CAPITAL RESOURCES
The accompanying financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The Company
or any of the Series have not generated profits since inception. The
Company has sustained no income or loss for the period ended July 1st,
2020 and, has no members? equity as of July 1, 2020. The Company or
any of the Series may lack liquidity to satisfy obligations as they come
due. Future liabilities, other than ones for which the Manager does not
seek reimbursement, will be covered through the proceeds of future
offerings for the various Series of Interests. These conditions raise
substantial doubt as to the Company's ability to continue as a going
concern.
Through July 1, 2020, none of the Series have recorded any revenues.
The Company anticipates that it will commence commercializing the
collection in fiscal year 2020, but does not expect to generate any
revenues for any of the Series in the first year of operations. Each Series
will continue to incur Operating expenses including, but not limited to,
storage, insurance, transportation and maintenance expenses, on an
ongoing basis.
From inception through July 1, 2020, VinVesto, Inc. or an affiliate has
borne all of the costs of the Company. The Company and each Series
expect to continue to have access to ample capital financing from the
Manager going forward. Until such time as the Series? have the capacity
to generate cash flows from operations, the Manager may cover any
deficits through additional capital contributions or the issuance of
additional Interests in any individual Series. In addition, parts of the
proceeds of future offerings may be used to create reserves for future
Operating expenses for individual Series at the sole discretion of the
Manager.
Note 4: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accounting and reporting policies of the Company conform to
accounting principles generally accepted in the United States of America
(GAAP).
Use of Estimates
The preparation of the balance sheet in conformity with GAAP requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of contingent assets and
liabilities at the date of the balance sheet and the reported amounts of
revenues and expenses during the reporting period. Actual results could
differ from those estimates.
Cash Equivalents and Concentration of Cash Balance
The Company considers all highly liquid securities with an original
maturity of less than three months to be cash equivalents. The
Company?s cash and cash equivalents in bank deposit accounts, at times,
may exceed federally insured limits.
Offering Expenses
Offering expenses relate to the offering for a specific Series and consist
of underwriting, legal, accounting, escrow, compliance, filing and other
expenses incurred through the balance sheet date that are directly related
to a proposed offering and will generally be charged to members' equity
upon the completion of the proposed offering. Offering expenses that are
incurred prior to the closing of an offering for such Series, are being
funded by the Manager and will generally be reimbursed through the
proceeds of the offering related to the Series. Should the proposed
offering prove to be unsuccessful, these costs, as well as additional
expenses to be incurred, will be charged to the Manager.
Operating Expenses
Operating expenses related to a particular collectible asset are costs and
expenses attributable the assets of a particular Series and include storage,
insurance, transportation (other than the initial transportation from the
card location to the Manager?s storage facility prior to the offering,
which is treated as an ?Acquisition Expense?, as defined below), annual
audit and legal expenses and other specific expenses as detailed in the
Manager?s allocation policy. We distinguish between pre-closing and
post-closing Operating expenses. Operating expenses are expensed as
incurred.
Except as disclosed with respect to any future offering, expenses of this
nature that are incurred prior to the closing of an offering of Series of
Interests are funded by the Manager and are not reimbursed by the
Company, Series or economic members. These are accounted for as
capital contributions by the Manager for expenses related to the business
of the Company or a Series.
Upon closing of an offering, a Series becomes responsible for these
expenses and finances them either through revenues generated by a
Series or available cash reserves at the Series. Should revenues or cash
reserves not be sufficient to cover Operating expenses the Manager may
(a) pay such Operating expenses and not seek reimbursement, (b) loan
the amount of the Operating expenses to the Series at a reasonable rate of
interest and be entitled to reimbursement of such amount from future
revenues generated by the Series (?Operating expenses Reimbursement
Obligation(s)?), and/or (c) cause additional Interests to be issued in order
to cover such additional amounts.
Income Taxes
The Company intends that the master series and separate Series will elect
and qualify to be taxed as a C-corporation under the Internal Revenue
Code. The separate Series will comply with the accounting and
disclosure requirement of ASC Topic 740, "Income Taxes," which
requires an asset and liability approach to financial accounting and
reporting for income taxes. Deferred income tax assets and liabilities are
computed for differences between the financial statement and tax bases
of assets and liabilities that will result in future taxable or deductible
amounts, based on enacted tax laws and rates applicable to the periods in
which the differences are expected to affect taxable income. Valuation
allowances are established, when necessary, to reduce deferred tax assets
to the amount expected to be realized.
Note 5: RELATED PARTY TRANSACTIONS
The Company, a Delaware series limited liability company, whose
managing member is the Manager, will admit additional members to
each of its series through the offerings for each series. By purchasing an
Interest in a Series of Interests, the investor is admitted as a member of
the Company and will be bound by the Company's Operating Agreement.
Under the Operating Agreement, each investor grants a power of
attorney to the Manager. The Operating Agreement provides that the
Manager with the ability to appoint officers
Note 6: REVENUE, EXPENSE AND COST ALLOCATION
METHODOLOGY
The Company distinguishes expenses and costs between those related to
the purchase of a particular collectible asset and Operating expenses
related to the management of such collectible assets.
Fees and expenses related to the purchase of an underlying collectible
asset include the offering expenses, Acquisition Expenses, Brokerage
Fee and Sourcing Fee. As of July 1, 2020, VinVesto, Inc. incurred costs
of $0 on behalf of the Company or Series.
Within Operating expenses the Company distinguishes between
Operating expenses incurred prior to the closing of an offering and those
incurred after the close of an offering. Although these pre- and post-
closing Operating expenses are similar in nature and consist of expenses
such as storage, insurance, transportation and maintenance, pre-closing
Operating expenses are borne by the Manager and are not expected to be
reimbursed by the Company or the economic members. Post-closing
Operating expenses are the responsibility of each Series of Interest and
may be financed through (i) revenues generated by the Series or cash
reserves at the Series and/or (ii) contributions made by the Manager, for
which the Manager does not seek reimbursement or (iii) loans by the
Manager, for which the Manager may charge a reasonable rate of interest
or (iv) issuance of additional Interest in a Series.
Allocation of revenues, expenses and costs will be made amongst the
various Series in accordance with the Manager's allocation policy. The
Manager's allocation policy requires items that are related to a specific
Series to be charged to that specific Series. Items not related to a specific
Series will be allocated pro rata based upon the value of the underlying
collectible assets or the number of collectibles, as stated in the Manager?s
allocation policy and as reasonably determined by the Manager. The
Manager may amend its allocation policy in its sole discretion from time
to time.
Revenue from the anticipated commercialization of the collections will
be allocated amongst the Series whose underlying collectibles are part of
the commercialization events, based on the value of the underlying
collectible assets. No revenues have been generated to date.
Offering expenses, other than those related to the overall business of the
Manager (as described in Note 2(4)) are funded by the Manager and
generally reimbursed through the Series proceeds upon the closing of an
offering. No offering expenses have been incurred by the Company as of
July 1, 2020.
Acquisition expenses are funded by the Manager, and reimbursed from
the Series proceeds upon the closing of an offering. The Manager had
incurred $0 in acquisitions expenses at July 1, 2020.
The Sourcing Fee is paid to the Manager from the Series proceeds upon
the close of an offering.
Note 7: GOING CONCERN
The Company?s balance sheet has been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. The Company is a business
that has not commenced planned principal operations, plans to incur
significant costs in pursuit of its capital financing plans, and has not
generated any revenues as of July 1, 2020. The Company?s ability to
continue as a going concern in the next twelve months is dependent upon
its ability to obtain capital financing from investors sufficient to meet
current and future obligations and deploy such capital to produce
profitable operating results. No assurance can be given that the Company
will be successful in these efforts. These factors, among others, raise
substantial doubt about the ability of the Company to continue as a going
concern for a reasonable period of time. The balance sheet does not
include any adjustments relating to the recoverability and classification
of recorded asset amounts or the amounts and classification of liabilities
that might be necessary should the Company be unable to continue as a
going concern.
1
1
EX1A-12 OPN CNSL
9
VVMOpinion203.txt
Christopher E. Gatewood
chris@threshold.cc
August 27, 2020
VV Markets LLC
2800 Patterson Avenue
Richmond, VA 23221
VV Markets, LLC
Preliminary Offering Circular
Ladies and Gentlemen:
I have acted as outside counsel to VV Markets LLC, a
Delaware limited liability company (the ?Company?), in
connection with the review of its prepared offering materials filed
herewith, and its proposed offering of limited liability company
membership units (the ?Shares?).
In connection herewith, I have examined such documents,
records and matters of law as I have deemed necessary to enable
me to render this opinion. For purposes of this opinion, I have
assumed the authenticity of all documents submitted to me. I
have also assumed the legal capacity of all natural persons, the
genuineness of the signatures of persons signing all documents in
connection with which this opinion is rendered, and the authority
of such persons signing on behalf of the parties thereto. As to any
facts material to the opinions expressed herein, I have relied upon
the statements and representations of officers and other
representatives of the Company.
The opinion expressed below is subject to the
qualifications that I express no opinion as to the applicability of,
compliance with, or effect of any laws except the General
Corporation Law of the State of Delaware and the federal law of
the United States of America. Based upon and subject to the
foregoing qualifications, assumptions and limitations and the
further limitations set forth below, I hereby advise you that in my
opinion:
(1) The Company is a corporation existing and in good standing
under the laws of the State of Delaware.
(2) The securities as covered by the offering statement, when
approved by the Commission and when later sold, will be legally
issued, fully paid and non-assessable.
I consent to the filing of this opinion with the Commission
in connection with the proposed offering circular and other
ancillary materials and exhibits. I do not find it necessary for the
purposes of this opinion, and accordingly I do not purport to cover
herein, the application of the securities or ?Blue Sky? laws of the
various states to the issuance and sale of the Shares. This opinion
is limited to the specific issues addressed herein, and no opinion
may be inferred or implied beyond that expressly stated herein. I
assume no obligation to revise or supplement this opinion should
the present laws of the State of Delaware or the federal law of the
United States be changed by legislative action, judicial decision or
otherwise or any future development cause any change or
modification herein.
Very truly
yours,
Company
Counsel
/s/
Christopher
E. Gatewood
Christopher E.
Gatewood
Signatory
Attorney
Threshold
Counsel, PC
VV Markets LLC
August 28, 2020
Page 1 of 1
EX1A-15 ADD EXHB
10
VVMfinance20203.txt
VV Markets,LLC
Delaware Limited Liability Company
Financial Statements and Independent Auditor?s Report
June 16th, 2020 (inception)
VV Markets, LLC
TABLE OF CONTENTS
INDEPENDENT AUDITOR?S REPORT
BALANCE SHEET
NOTES TO THE FINANCIAL STATEMENTS
Page
3-4
5
6-9
To the Board of Directors
Example, LLC
Dover, Delaware
INDEPENDENT AUDITOR?S REPORT
Report on the Financial Statements
We have audited the accompanying balance sheet of
Example, LLC (the ?Company?) as of
September 21, 2016
and the related notes to the financial statement.
Management?s Responsibility for the Financial Statement
Management is responsible for the preparation and fair presentati
on of this financial statement in
accordance with accounting principles generally accepted i
n the United States of America; this
includes the design, implementation, and maintenance of
internal control relevant to the
preparation and fair presentation of the financial statement that i
s free from material misstatement,
whether due to fraud or error.
Auditor?s Responsibility
Our responsibility is to express an opinion on the financial
statement based on our audit. We
conducted our audit in accordance with auditing standards genera
lly accepted in the United States
of America. Those standards require that we plan and perf
orm the audit to obtain reasonable
assurance about whether the financial statement is free from
material misstatements.
An audit involves performing procedures to obtain audit
evidence about the amounts and
disclosures in the financial statement. The procedures selected d
epend on the auditor?s judgment,
including the assessment of the risks of material misstatement of
the financial statement, whether
due to fraud or error. In making those risk assessments, th
e auditor considers internal control
relevant to the entity?s preparation and fair presentation
of the financial statement in order to
design audit procedures that are appropriate in the circu
mstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity?s internal
control. Accordingly, we express
Artesian CPA, LLC
1624 Market Street, Suite 202 | Denver, CO 80202
p: 877.968.3330 f: 720.634.0905
info@ArtesianCPA.com | www.ArtesianCPA.com
no such opinion. An audit also includes evaluating the appropriat
eness of accounting policies used
and the reasonableness of significant accounting estimates
made by management, as well as
evaluating the overall presentation of the financial statement.
We believe that the audit evidence
we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
Artesian CPA, LLC
1624 Market Street, Suite 202 | Denver, CO 80202
p: 877.968.3330 f: 720.634.0905
info@ArtesianCPA.com | www.ArtesianCPA.com
Opinion
In our opinion, the financial statement referred to above presents
fairly, in all material respects, the
financial position of Example, LLC as of
September 21, 2016 , in accordance with accounting
principles generally accepted in the United States of America.
Emphasis of Matter Regarding Going Concern
The accompanying financial statement has been prepared
assuming that the Company will
continue as a going concern. As described in Note 3 to the financi
al statement, the Company has
not yet commenced planned principal operations and has not ge
nerated revenues or profits since
inception. These factors, among others, raise substantial d
oubt about the Company?s ability to
continue as a going concern. Management?s plans in regard to th
ese matters are also described in
Note 3. The financial statement does not include any adj
ustments that might result from the
outcome of this uncertainty. Our opinion is not modified wit
h respect to this matter.
/s/ Artesian CPA, LLC
Denver, Colorado
December 29, 2016
Artesian CPA, LLC
1624 Market Street, Suite 202 | Denver, CO 80202
p: 877.968.3330 f: 720.634.0905
info@ArtesianCPA.com | www.ArtesianCPA.com
VV Markets, LLC
BALANCE SHEET
As of June 16th, 2020(inception)
Balance Sheet
July 1, 2020
Assets
Current assets
Total assets
Liabilities and member's equity
Current liabilities
Total liabilities
Capital contributions
Accumulated equity/(deficit)
Members' equity/(deficit)
Total liabilities and
member's equity/(deficit)
0
0
0
0
0
0
0
0
See accompanying Independent Auditor?s Report and accompa
nying notes, which are an integral
part of these financial statements.
VV Markets, LLC
BALANCE SHEET
As of June 16th, 2020(inception)
Statement of Operations
For period June 16, 2020 through July 1, 2020
Revenue:
Expenses:
Net Income (Loss):
0
0
0
Statement of Member's Equity / (Deficit)
For period June 16, 2020 through July 1, 2020
Member's equity / (deficit)
Balance at June 16, 2020
Capital contributions
0
0
Net Income (loss) for the period from
June 16, 2020 through July 1, 2020 0
Balance at July 1, 2020
0
See accompanying Independent Auditor?s Report and accompa
nying notes, which are an integral
part of these financial statements.
VV Markets, LLC
BALANCE SHEET
As of June 16th, 2020(inception)
Statement of Cash Flows
For Period June 16, 2020 through July 1, 2020
Cash flows from operating activities
Net income (loss)
0
Adjustments to reconcile net income (loss) to net cash
0
Net cash provided by (used in) operating activities
Cash flows in investing activities
Net cash provided by (used in) investing activities
Cash flows from financing activities
Net cash provided by (used in) financing activities
Net change in cash
Cash at beginning of period
Cash at end of Period
0
0
0
0
0
0
See accompanying Independent Auditor?s Report and accompa
nying notes, which are an integral
part of these financial statements.
VV Markets, LLC
BALANCE SHEET
As of June 16th, 2020(inception)
VV Markets, LLC
NOTES TO FINANCIAL STATEMENTS
As of June 16th, 2020 (inception)
NOTE 1: NATURE OF OPERATIONS
VV Markets, LLC (the ?Company?) is a Delaware series limited
liability company formed on June
16th, 2020. VinVesto Inc. is the sole owner of interests of th
e Company (other than interests issued
in a particular series to other investors). The Company w
as formed to acquire and manage fine
wines, spirits, and other wine related entities. It is expected that t
he Company will create a number
of separate series of interests (the ?Series? or ?Series of Interests?
) and that each collection will be
owned by a separate Series, and that the assets and lia
bilities of each Series will be separate in
accordance with Delaware law. Investors acquire members
hip interests (the ?Interests?) in each
Series and will be entitled to share in the return of that particular
Series, but will not be entitled to
share in the return of any other Series.
The Company?s managing member is VinVesto, Inc. (the ?Mana
ger?). The Manager is a Delaware
corporation formed on June 16th, 2020. The Manager is a technol
ogy and marketing company that
operates the VinVesto platform ("Platform") and manages the
Company and the assets owned by
the Company in its roles as the Manager and manager
of the assets of each Series (the ?Asset
Manager?).
As of June 16th, 2020, the Company has not commence
d planned principal operations nor
generated revenue. The Company?s activities since inception hav
e consisted of formation activities
and preparations to raise capital. Once the Company commences
its planned principal operations, it
will incur significant additional expenses. The Company is
dependent upon additional capital
resources for the commencement of its planned principal op
erations and is subject to significant
risks and uncertainties; including failing to secure funding to oper
ationalize the Company?s planned
operations or failing to profitably operate the business.
The Company intends to sell Interests in a number of separat
e individual Series of the Company.
Investors in any Series acquire a proportional share of inco
me and liabilities as they pertain to a
particular Series, and the sole assets and liabilities of any
given Series at the time of an offering
related to that particular Series a single collectible asset, (plus any
cash reserves for future operating
expenses). All voting rights, except as specified in the operating ag
reement or required by law remain
with the Manager (e.g., determining the type and quantit
y of general maintenance and other
expenses required, determining how to best commercialize th
e applicable Series assets, evaluating
potential sale offers and the liquidation of a Series). The Manager
manages the ongoing operations
of each Series in accordance with the operating agreement of the
Company, as amended and restated
from time to time (the ?Operating Agreement?). The Company an
d each Series shall have perpetual
existence unless terminated pursuant to the Operating Agree
ment or law.
See accompanying Independent Auditor?s Report
VV Markets, LLC
NOTES TO FINANCIAL STATEMENTS
As of June 16th, 2020 (inception)
OPERATING AGREEMENT
In accordance with the Operating Agreement each interes
t holder in a Series grants a power of
attorney to the Manager. The Manager has the right to appoint
officers of the Company and each
Series.
After the closing of an offering, each Series is responsibl
e for its own Operating expenses (as
defined in Note 2(5)). Prior to the closing, Operating expenses
are borne by the Manager and not
reimbursed by the economic members. Should post-
closing Operating expenses exceed revenues or
cash reserves then the Manager may (a) pay such Operating expe
nses and not seek reimbursement,
(b) loan the amount of the Operating expenses to the series
and be entitled to reimbursement of
such amount from future revenues generated by the series
(?Operating expenses Reimbursement
Obligation(s)?), on which the Manager may impose a reasona
ble rate of interest, and/or (c) cause
additional Interests to be issued in order to cover such additional
amounts, which Interests may be
issued to existing or new investors, which may include the M
anager or its affiliates.
LIQUIDITY AND CAPITAL RESOURCES
The accompanying financial statements have been prepare
d on a going concern basis, which
contemplates the realization of assets and the satisfaction
of liabilities in the normal course of
business. The Company or any of the Series have not g
enerated profits since inception. The
Company has sustained no income or loss for the period ended Jul
y 1st, 2020 and, has no members?
equity as of July 1, 2020. The Company or any of the Series may la
ck liquidity to satisfy obligations
as they come due. Future liabilities, other than ones for
which the Manager does not seek
reimbursement, will be covered through the proceeds of futu
re offerings for the various Series of
Interests. These conditions raise substantial doubt as to the Comp
any's ability to continue as a going
concern.
Through July 1, 2020, none of the Series have recorded any reven
ues. The Company anticipates that
it will commence commercializing the collection in fiscal year 202
0, but does not expect to generate
any revenues for any of the Series in the first year of operations. E
ach Series will continue to incur
Operating expenses including, but not limited to, storage, insuran
ce, transportation and maintenance
expenses, on an ongoing basis.
From inception through July 1, 2020, VinVesto, Inc. or an affiliate
has borne all of the costs of the
Company. The Company and each Series expect to contin
ue to have access to ample capital
financing from the Manager going forward. Until such ti
me as the Series? have the capacity to
generate cash flows from operations, the Manager may cover any
deficits through additional capital
contributions or the issuance of additional Interests in any individ
ual Series. In addition, parts of the
proceeds of future offerings may be used to create rese
rves for future Operating expenses for
individual Series at the sole discretion of the Manager.
See accompanying Independent Auditor?s Report
-6-
VV Markets, LLC
NOTES TO FINANCIAL STATEMENTS
As of June 16th, 2020 (inception)
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accounting and reporting policies of the Company conform t
o accounting principles generally
accepted in the United States of America (GAAP).
Use of Estimates
The preparation of the balance sheet in conformity with
GAAP requires management to make
estimates and assumptions that affect the reported amounts of a
ssets and liabilities and disclosures
of contingent assets and liabilities at the date of the bala
nce sheet and the reported amounts of
revenues and expenses during the reporting period. Actual re
sults could differ from those estimates.
Cash Equivalents and Concentration of Cash Balance
The Company considers all highly liquid securities with an
original maturity of less than three
months to be cash equivalents. The Company?s cash and cash eq
uivalents in bank deposit accounts,
at times, may exceed federally insured limits.
Offering Expenses
Offering expenses relate to the offering for a specific Se
ries and consist of underwriting, legal,
accounting, escrow, compliance, filing and other expenses incur
red through the balance sheet date
that are directly related to a proposed offering and will ge
nerally be charged to members' equity
upon the completion of the proposed offering. Offering e
xpenses that are incurred prior to the
closing of an offering for such Series, are being funded
by the Manager and will generally be
reimbursed through the proceeds of the offering related to the Se
ries. Should the proposed offering
prove to be unsuccessful, these costs, as well as additional expens
es to be incurred, will be charged
to the Manager.
Operating Expenses
Operating expenses related to a particular collectible asset ar
e costs and expenses attributable the
assets of a particular Series and include storage, insuranc
e, transportation (other than the initial
transportation from the card location to the Manager?s storage fa
cility prior to the offering, which is
treated as an ?Acquisition Expense?, as defined below), annual
audit and legal expenses and other
specific expenses as detailed in the Manager?s allocation policy. W
e distinguish between pre-closing
and post-
closing Operating expenses. Operating expenses are expensed
as incurred.
Except as disclosed with respect to any future offering, expe
nses of this nature that are incurred
prior to the closing of an offering of Series of Interests are
funded by the Manager and are not
See accompanying Independent Auditor?s Report
-6-
VV Markets, LLC
NOTES TO FINANCIAL STATEMENTS
reimbursed by the Company, Series or economic members
.. These are accounted for as capital
contributions by the Manager for expenses related to the bu
siness of the Company or a Series.
Upon closing of an offering, a Series becomes responsible fo
r these expenses and finances them
either through revenues generated by a Series or availabl
e cash reserves at the Series. Should
revenues or cash reserves not be sufficient to cover Operatin
g expenses the Manager may (a) pay
such Operating expenses and not seek reimbursement, (b)
loan the amount of the Operating
expenses to the Series at a reasonable rate of interest an
d be entitled to reimbursement of such
amount from future revenues generated by the Series (?
Operating expenses Reimbursement
Obligation(s)?), and/or (c) cause additional Interests to be issued i
n order to cover such additional
amounts.
Income Taxes
The Company intends that the master series and separate Series
will elect and qualify to be taxed as a
C-
corporation under the Internal Revenue Code. The separat
e Series will comply with the
accounting and disclosure requirement of ASC Topic 740, "Income
Taxes," which requires an asset
and liability approach to financial accounting and reporting for in
come taxes. Deferred income tax
assets and liabilities are computed for differences between the f
inancial statement and tax bases of
assets and liabilities that will result in future taxable or dedu
ctible amounts, based on enacted tax
laws and rates applicable to the periods in which the di
fferences are expected to affect taxable
income. Valuation allowances are established, when necessary
, to reduce deferred tax assets to the
amount expected to be realized.
See accompanying Independent Auditor?s Report
-6-
VV Markets, LLC
NOTES TO FINANCIAL STATEMENTS
As of June 16th, 2020 (inception)
NOTE 3 - RELATED PARTY TRANSACTIONS
The Company, a Delaware series limited liability company, whose
managing member is the Manager,
will admit additional members to each of its series thro
ugh the offerings for each series. By
purchasing an Interest in a Series of Interests, the investor is admi
tted as a member of the Company
and will be bound by the Company's Operating Agreement. Under
the Operating Agreement, each
investor grants a power of attorney to the Manager. The Op
erating Agreement provides that the
Manager with the ability to appoint officers.
NOTE 4 -
REVENUE, EXPENSE AND COST ALLOCATION METHODOLOGY
The Company distinguishes expenses and costs between those rel
ated to the purchase of a particular
collectible asset and Operating expenses related to the mana
gement of such collectible assets.
Fees and expenses related to the purchase of an underlyi
ng collectible asset include the offering
expenses, Acquisition Expenses, Brokerage Fee and Sourcing Fee.
As of July 1, 2020, VinVesto, Inc.
incurred costs of $0 on behalf of the Company or Series.
Within Operating expenses the Company distinguishes between
Operating expenses incurred prior
to the closing of an offering and those incurred after the close of
an offering. Although these pre-
and post-
closing Operating expenses are similar in nature and consist of ex
penses such as storage,
insurance, transportation and maintenance, pre-
closing Operating expenses are borne by the
Manager and are not expected to be reimbursed by the
Company or the economic members.
Post-
closing Operating expenses are the responsibility of each
Series of Interest and may be
financed through (i) revenues generated by the Series or
cash reserves at the Series and/or (ii)
contributions made by the Manager, for which the Manager
does not seek reimbursement or (iii)
loans by the Manager, for which the Manager may char
ge a reasonable rate of interest or (i
issuance of additional Interest in a Series.
Allocation of revenues, expenses and costs will be made among
st the various Series in accordance
with the Manager's allocation policy. The Manager's allocation pol
icy requires items that are related
to a specific Series to be charged to that specific Series. Items not
related to a specific Series will be
allocated pro rata based upon the value of the underlyin
g collectible assets or the number of
collectibles, as stated in the Manager?s allocation policy a
nd as reasonably determined by the
Manager. The Manager may amend its allocation policy in its
sole discretion from time to time.
Revenue from the anticipated commercialization of the coll
ections will be allocated amongst the
Series whose underlying collectibles are part of the commercializa
tion events, based on the value of
the underlying collectible assets. No revenues have been gen
erated to date.
See accompanying Independent Auditor?s Report
Offering expenses, other than those related to the overall busines
s of the Manager (as described in
Note 2(4)) are funded by the Manager and generally reimbursed
through the Series proceeds upon
the closing of an offering. No offering expenses have been incu
rred by the Company as of July 1,
2020.
Acquisition expenses are funded by the Manager, and reimbursed
from the Series proceeds upon the
closing of an offering. The Manager had incurred $0 in acqui
sitions expenses at July 1, 2020.
The Sourcing Fee is paid to the Manager from the Series pro
ceeds upon the close of an offering.
NOTE 5: GOING CONCERN
The accompanying balance sheet has been prepared on a going c
oncern basis, which contemplates
the realization of assets and the satisfaction of liabilities
in the normal course of business. The
Company is a business that has not commenced planned
principal operations, plans to incur
significant costs in pursuit of its capital financing plans, and h
as not generated any revenues as of
July 1, 2020. The Company?s ability to continue as a going co
ncern in the next twelve months is
dependent upon its ability to obtain capital financing from invest
ors sufficient to meet current and
future obligations and deploy such capital to produce profitable o
perating results. No assurance can
be given that the Company will be successful in these efforts.
These factors, among others, raise
substantial doubt about the ability of the Company to continue as
a going concern for a reasonable
period of time. The balance sheet does not include any adjus
tments relating to the recoverability
and classification of recorded asset amounts or the amounts and c
lassification of liabilities that might
be necessary should the Company be unable to continue as
a going concern.
NOTE 6: SUBSEQUENT EVENTS
Management has evaluated all subsequent events through
July 1, 2020, the date the financial
statements were available to be issued. There are no additional
material events requiring disclosure
or adjustment to the financial statements.
CORRESP
11
filename11.txt
VV Markets, LLC
Index to Exhibits, by Form 1-A exhibit category number:
2. Charter documents of VV Markets LLC: articles of organization
3. Defining the Rights of Securities Holders: Series Operating Agreement
4. Subscription Agreement
6. Management Agreement
12. Opinion regarding legality
16. Other: Audited financial reports