0001822911-20-000008.txt : 20210524
0001822911-20-000008.hdr.sgml : 20210524
20201223091408
ACCESSION NUMBER: 0001822911-20-000008
CONFORMED SUBMISSION TYPE: 1-A
PUBLIC DOCUMENT COUNT: 8
FILED AS OF DATE: 20201223
DATE AS OF CHANGE: 20201223
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: 024-11391
FILM NUMBER: 201409925
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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2020
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2800 Patterson Ave
Richmond
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23221
8045100638
Christopher E. Gatewood
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PART II AND III
3
VVM2oc1220.txt
AMENDED OFFERING CIRCULAR
PRELIMINARY OFFERING CIRCULAR
DATED August 28, 2020, revised November 13,
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;
revised November 16, 2020 in response to SEC
comments
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
$45 to $55 per membership unit and 1,000 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 qualified
investors to access the 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. These industry experts may
be a part of the advisory board, or may be outside
consultants. Industry leaders may qualify as such by
designations (sommelier), or by way of past
experience in the industry. These experts will assist
in the sourcing of different wines that comprise a
collection. Unless a Collection has been specified to
be a single vineyard collection, we will diversify
across multiple different vineyards and vintages. 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 qualified investors
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.
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 19.99%
of the Series upon the Closing of the Offering.
The Manager will purchase 0.94% of the first series
Offering, Series VV 0001.
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. The sale of these shares by the Manager
may occur in a secondary market. The Company
does not intend to register the resale of shares held
by the Manager on this offering statement.
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.
Such advisors will include industry leaders whom
the Manager will qualify as experts by their
designations (sommelier), or by their experience in
the wine industry.
The industry experts who will be members of the
Advisory Board are likely to change over time. All
members of the Advisory Board will not be known
until after qualification of the Form 1-A. As of the
date of this Offering Circular, they include Ryan
Vet and Miles Davis, as noted below in the section
Members of the Advisory Board.
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 a qualified 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 19.99% 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 19.99%) 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 Manager 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 the Manager to acquire an
Underlying Asset. The Manager has identified
and sourced the Underlying Asset and will sell
the asset to the Company.
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. In general, the
sourcing fee will be half of the difference between
the offering amount and the calculated market
value. This fee may increase if the offering is listed
below the market value. The Manager reserves the
right to adjust this fee to compensate Manager and
other necessary contributors for the managing of the
Series.
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,
insurance, 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.
Certain of the Operating Expenses, including in
particular storage and insurance costs, will be paid
to the Manager, which will pay the providers.
The Company's planned use of proceeds for the
first series is summarized here:
Cash Portion of the VV 0001 Asset Cost
$42,000
87.9%
Interest Issued to the Asset Seller as part of total consideration
$440
0.9%
Cash on Series Balance Sheet
$0
0%
Brokerage Fee
$0
0.0%
Offering Expenses
$0
0.0%
Acquisition Expenses:
0.0%
Accrued Interest
$0
0.0%
Transportation Costs
$0
0.0%
Storage and Maintenance Costs
$1,000
2.1%
Insurance Costs
$1,000
2.1%
Sourcing Fee to Manager
$3,348.52
5.5%
Total Fees and Expenses
$5,789
12.1%
Total Proceeds
$47,789
100%
The total amount of fees and expenses paid to
the manager are $5,789. These fees and expenses are
paid to the Manager, who pays the storage and insurance
fees to the third party partners. The sourcing fee is
compensation to the Manager for asset identification
and sourcing. This fee may be used to cover excess
expenses related to the Series.
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:
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:
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 1,000 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 state and federal courts located in the City of
Richmond, Virginia. 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 City of Richmond, Virginia.
Federal and state courts in Virginia routinely apply
the laws of other states and adjudicate matters
involving Delaware entities, and the Company does not
anticipate that any claimant would receive a different
result due to this choice of venue.
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 Operating Agreement of the Company limits
the forum and manner for the resolution of disputes.
These limitations do not apply to any matters
regarding compliance with federal securities laws.
For other matters, the Operating Agreement
provides for mandatory arbitration of claims, forum
for arbitration or for litigation of non-arbitrable
claim in the area of Richmond, Virginia, and the
waiver of right to a jury trial. To the extent that
this forum for disputes is remote to an investor or
related claimant, such remoteness might increase the
cost of bringing such a claim, discourage claims, or
limit investors' ability to bring a claim in a forum
that such investors find favorable. The Operating
Agreement also contains provisions for
indemnification by an investor who becomes a
member of the Company or any series LLC, so that
such members will be liable to the Company and
other members for any illegal actions or breaches of
Company-related agreements by each such member.
These provisions are believed by the Company to be
enforceable under state and federal laws, and they
will define the manner, forum, and potential
liabilities of the Company, members, and investors.
In the event that a secondary market is available for
the sale of assets or the interests of the Company's
investors and members, purchasers of interests in
such secondary markets would be subject to such
provisions as well.
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
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 excess cash
on the balance sheet of 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. With reference
to Item 17.6(b)(ii) of Form 1-A, the Manager's
agreement with Domaine Wine Storage is attached
as Exhibit 17.6.
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 19.99% 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.
Illustrative use of Proceeds for a given Series can be
seen on page 12 of this offering circular, in the Use
of Proceeds table for the initial Series.
The cash portion of the asset costs will consist of
the estimated acquisition price based on sourcing
efforts. Upon the close of an 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.
To the extent that Acquisition Expenses are lower
than anticipated for any asset group, 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 19.99% 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
These Company assets have been acquired by the
Manager, VinVesto, Inc. from its sources, and have
been sold to the Company.
Summary Overview:
- The underlying assets for our collection are
as follows:
- 6 x 750ml bottles of 2017 Harlan Estate The
Maiden (Original Wooden Case)
- 6 x 750ml bottles of 2017 Opus One
(Original Wooden Case)
- 3 x 750ml bottles of 2010 Screaming Eagle
(Original Wooden Case)
- 3 x 750ml bottles of 2015 Screaming Eagle
(Original Wooden Case)
- 6 x 750ml bottles of 2016 Screaming Eagle
(Original Wooden Case)
- The Manager purchased these wines for
$40,961.48. The Company, per its agreement (PSA) with
the Manager, will purchase these assets for $42,000
subject to qualification of this offering and the
investment of sufficient funds in the offering.
- Harlan Estate was founded in 1984 by H.
William Harlan.
- Harlan Estate is known as "the ultimate cult
winery." Their wines are also known as the "first
growths of California." (Source)
- A large success for the Harlan Estate was a
$700,000 auction sale. This price was achieved at
auction for a 10 year vertical.
- 'The Maiden' is the second tier wine from
the Harlan Estate.
- Opus One was founded in 1978. The
establishment was formed through a Robert
Mondavi & Baron Phillipe de Rothschild
partnership. Constellation Brands acquired the
winery in 2004 (Source).
- Notes on the Opus One 2017 vintage:
"Superb flavors and excellent ripening led to an
earlier than expected harvest, which commenced on
the 5th of September." (Source)
- Screaming Eagle has arguably the greatest
brand power of all USA based wines. The winery
was founded in the late 80s and has built a
reputation for incredible wines and privacy.
Screaming Eagle is very focused on long term
relationships and small allocations. Total production
is between 500-800 cases per year.
- Our 3 Screaming Eagle vintages have been
awarded 100 point ratings by the famous Robert
Parker.
- Starting with the 2010 vintage, the winery
protects all bottles with a "bubble-coded"
verification system.
- Our Screaming Eagle vintages are in an
exclusive group of USA wines that have received
100 point ratings from Robert Parker.
Asset Description
Ownership History
- The Harlan Estate, "The Maiden" has been
sourced directly from the vineyard & will be
shipped to our storage facility.
- The Opus One has been sourced from the
Oak House Durham. The Oak House Durham
sourced the wine directly from the vineyard.
- The Screaming Eagle cases have been
sourced from William Gladstone Imports. They
have a tremendous track record dating back to 1993.
They place a key focus on quality wines.
Wine Characteristics
Harlan Estate 'The Maiden'
- 6 x 750ml bottles (Original Wooden Case)
- Vintage: 2017
- Country: United States
- Region: Napa Valley
- Wine Style: Red
- Varietal: Cabernet Sauvignon
- Grape Blend: Bordeaux Blend Red
- Avg Price: $549/bottle (WineSearcher)
Opus One
- 6 x 750ml (Original Wooden Case)
- Vintage: 2017
- Country: United States
- Region: Napa Valley
- Wine Style: Red
- Varietal: Cabernet Sauvignon
- Grape Blend: Bordeaux Blend Red
- Avg Price: $364/bottle (WineSearcher)
Screaming Eagle
- 12 x 750ml (4 Original Wooden Cases)
- Vintages: 2010, 2015, 2016 (x2)
- Country: United States
- Region: Napa Valley
- Wine Style: Red
- Varietal: Cabernet Sauvignon
- Grape Blend: Cabernet Sauvignon
- 2016 Average Price: $3,514/bottle
- 2015 Average Price: $3,419/bottle
- 2010 Average Price: $3,950/bottle
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:
- 2017 Harlan Estate 'The Maiden': N/A
- 2014 Vintage: 92.89
- 2017 Opus One: N/A
- 2015 Vintage: 95.71
- 2010 Screaming Eagle: 99.31
- 2015 Screaming Eagle: 98.19
- 2016 Screaming Eagle: 99.43
Bottle Condition
All bottles are considered to be in good condition,
as qualified by the Asset Seller.
Asset Acquisition by Manager and by Series
The Manager acquired the Series VV 0001 assets from
three different sellers, for a total price of from
the asset seller for a total cost of $40,961.38,
which was paid in cash by the Manager. The Manager
purchased the assets from the sellers on September
24, 2020, October 18, 2020, and October 30, 2020.
The Screaming Eagle wines are currently stored at
Domaine Wine Storage Washington DC, under the Manager's
storage contract with Domaine. The Opus One 2017 is
stored at The Oak House Durham (126 W Main St. Durham,
NC 27701), this wine will be shipped to Domaine Wine
Storage Washington DC within the next few weeks. The
Harlan Estate The Maiden is stored in the Harlan
Estate winery in Oakville, California. The Harlan wines
will be shipped to the Domaine storage facility in
Spring 2021.
The invoices from the asset sellers are the Manager's
only sale contract with the sellers. Those invoices
are attached as exhibits to this offering circular.
These asset sellers are not affiliates of the Company,
the Manager, or any of their respective officers or
directors. The Company has entered into a purchase
and sale agreement (PSA) with the Manager for the
purchase of the Series VV 0001 assets for $42,000.
This includes holding costs incurred by the Manager.
For these Series VV 0001 assets, the Manager is not
otherwise seeking reimbursement of costs. The Series
VV 0001 assets are valued by a third party called
WineSearcher at $48,794.00. The Manager has transferred,
sold, and has been fully divested of its interest in
the Series VV 0001 assets pursuant to the terms of the
PSA.
Market Assessment
Our California Collection is composed of wines
from the Napa Valley region in the United States.
The United States region is a growing market in the
fine wine world. Since 2003, the California 50
index has gained 197% as of July 2020. The United
States region has been gaining share in the broader
fine wine trade. The United States makes up 13.8%
of the Rest of World segment in the Cult Wines
regional sub-index. In 2010, there were only 101
wines from US and the Rest of the World regions
traded on Liv-ex. By the end of 2018, that number
had risen to 904 (Source: Cult Wines US &
Emerging Markets Report).
The Company does not use any such market
assessment to calculate the market value
of any collection of assets. The market assessment is a
description of past performance from comparable assets.
Past performance is not an indication of future
performance. To value series assets, the Company uses
current market data from winesearcher.com, wineowners.com,
and liv-ex.com to determine the market value 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. We
believe that these fine wine collections are highly
stable assets with low historic volatility, and that
low historic volatility does not limit the potential for
upside returns in the fine wine market. Over the
long term, fine wine has shown strong annual
returns. For example, as per Cult Wines, the Liv-Ex
1000 has returned over 7% anually, on a rolling 10-
year basis, with a volatility of 1.46%. Further,
Forbes reports that "Fine Wine Investing Counters
Volatility of 'Stock-Dominated' Portfolios" , and
the S&P Global Market Intelligence site has noted
recently that "Fine wine is one of the few luxury
goods that has withstood the severe hit to assets
triggered by the coronavirus pandemic."
The Company currently does not own any assets,
but intends to perform on a purchase agreement the
Company has 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 with the Manager 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.
A two-person team is developing the Company's
web-based investment platform, and it is expected
to be complete and ready for launch by the end of
this calendar year. The Company has also engaged
with a third-party partner, North Capital Investment
Technology, to provide escrow services and
transactional platform technology.
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 all 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
There is no management fee. The Manager
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.
Prior to the qualification of the offering, the
manager will purchase the underlying Assets. For
subsequent offerings the Company may 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, Description of Property
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.
Apart from such offices and the contract storage
locations for the wine assets, the Company has no
other principal plants, physical locations, or
interests in real property. Such facilities are
adequate and suited to the Company's needs. In
particular, the flexibility of multiple location
options, and the ability to scale capacity as needed
for the contract storage facilities will be a cost-
efficient way of serving the Company's growing
needs. At present, the Company has leased a 28-
case wine locker on Connecticut Avenue
Northwest, in Washington, DC from industry leader
Domaine Wine Storage.
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.
In the short to middle term, our acquisitions and
operations will be limited to the United States. If in
time we acquire wines from outside of the United
States, we may be subject to international
government regulation. We may limit our need to
import wines by engaging a third party storage
services provider such as Domaine Wine Storage to
store and maintain any international acqusitions
outside the United States. We intend to minimize
the impact of any applicable international
regulations by working with a fine wine portfolio
manager in London. Our advisor, Miles Davis, is
the head of Professional Portfolio Management at
Wine Owners. The need, if any, for changes in
operations needed to comply with international
regulations will pose some risk of greater expenses
to any acquisitions and operations outside of the
United States.
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;
-
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
Position
Age
Term of Office
Approximate hours per week
Nicholas King
Chief Executive Officer
23
June 1, 2019 to Present
25
Patrick Sanders
Chief Technology Officer
23
June 1, 2019 to Present
25
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 TSW, an investment firm specializing in
value investing. There he sharpened his business
analysis, fundamental research, financial modeling,
and investing abilities.
Before TSW 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.
Nick graduated with distinction with a degree in
Financial Economics from the University of
Virginia.
Patrick Sanders, Chief Technology Officer
Patrick is an entrepreneur with technology
experience. Patrick was an Associate Data Engineer
with Capital One. Prior to Capital One, Patrick
worked as a Software Engineer Intern at CarMax.
Patrick has strong front end and back end
development skills that hare being utilized to
develop out platform.
Patrick graduated from the University of Virginia
with a degree in Computer Science and
Mathematics.
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:
Ryan Vet, Advisor
Ryan is a sommelier and founder of Boon, Inc. He
has tremendous marketing experience as well as
wine knowledge.
Miles Davis, Advisor
Based out of London, Miles previously ran two
wine investment funds as a partner at Wine Asset
Managers. At its peak, Wine Asset Managers had
nearly $30 million invested in wine. He currently
manages the Professional Portfolio Management
service at Wine Owners, a UK-based fine wine
platform. He provides valuable insights into the
European market and decades of experience in the
wine market.
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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 19.49% of the Interests, capped at
19.99% 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.
At the time of this filing, the beneficial ownership
of VV Markets LLC is as shown:
Title of class
Name and address of beneficial owner
Amount and nature of beneficial ownership
Amount and nature of beneficial ownership
acquirable
Percent of class
LLC membership interest
Vinvesto, Inc.
2800 Patterson Ave, Richmond VA 23221
100% of outstanding membership units
0%, N/A
100%
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 capital
appreciation derived from the underlying assets
related to the series.. Our manager, an affiliate of
our company, will own a minimum of 0.5% 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.
We do not intend to generate Free Cash Flow.
-
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 1,000 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, apart from any
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 as Amended
4. Subscription Agreement
6. Management Agreement
12. Opinion regarding legality
16. Other: Audited financial reports
17.6 Domaine Wine Storage Agreement
III, 17.11 Consent of Independent Auditor
https://www.forbes.com/sites/rogeraitken/2018/12/07/fine-wine-
investing-counters-volatility-of-stock-denominated-portfolios/
#2aebf0ae33a3
https://www.spglobal.com/marketintelligence/en/news-insights/
latest-news-headlines/fine-wine-investors-toast-despite-stock-market-
tumble-58149302
1
PART II AND III
4
VVM2subscrip.txt
SUBSCRIPTION AGREEMENT
Form of Subscription Agreement
[Name of Series], a series of VV Markets, LLC
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, 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
[quantity] [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 SIPC (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: ________________
PART II AND III
5
vvmMgrSeriesPSA.txt
ASSET PURCHASE SALE AGREEMENT
Purchase and Sale Agreement
THIS PURCHASE AGREEMENT (this "Agreement")
is made as of September 1, 2020, by and between
Vinvesto, Inc. a Delaware corporation ("Seller" or
"Manager"), and VV Markets, LLC, a Delaware series
limited liability company, (the "Buyer"), with respect to the
following:
A. Seller is in the process of purchasing certain
personal property, which is or will be strategically
chosen and sourced collectible wines (the
"Assets"). The Assets have been identified as
Six 750ml bottles of 2017 Harlan Estate The
Maiden (Original Wooden Case)
Six 750ml bottles of 2017 Opus One (Original
Wooden Case)
Three 750ml bottles of 2010 Screaming Eagle
(Original Wooden Case)
Three 750ml bottles of 2015 Screaming Eagle
(Original Wooden Case)
Six 750ml bottles of 2016 Screaming Eagle
(Original Wooden Case)
B. The WineSearcher valuation of the Assets is
approximately $48,000.
C. Buyer is interested in acquiring the Assets on
the terms described in this Agreement for the
benefit of the holders of series limited liability
company membership interests (the "Series
Interests").
IN CONSIDERATION OF the premises and mutual
covenants contained in this Agreement, and for good and
valuable consideration, the parties, intending to be legally
bound, agree as follows:
1. Purchase and Sale of Assets. Subject to the conditions
set forth in this Agreement, Seller agrees to sell, transfer
and assign, and Buyer agrees to purchase, the Assets at
the price of $42.000 (the "Purchase Price"). Buyer shall
pay and deliver the Purchase Price following notice from
Seller that all of the Assets have been acquired and all
consideration for the Assets paid to the relevant third
parties by the Seller, and subject to the qualification by the
SEC of the Buyer's investment offering and the investment
of sufficient funds in that offering. Buyer and Seller agree
to take reasonable steps to confirm the method and time of
payment of the Purchase Price, including any information
that Buyer requires to initiate a wire transfer to Seller.
2. Possession and Delivery. Right to possession of the
Assets shall transfer to Buyer upon payment of the
Purchase Price. It is Seller's duty to ensure the Assets are
delivered to the Buyer or to Buyer's designated storage
facility in the same condition as when purchased by Seller.
3. Taxes. Seller will pay all personal property taxes
associated with ownership of the Assets and accrued for
the period of Seller's possession of the Assets, and,
subject to Seller's actual delivery of the Assets to Buyer
pursuant to Section 2 hereof, Buyer will pay all such
personal property taxes that accrue thereafter.
4. Seller Representations and Warranties. Seller
represents and warrants that: (i) it has or will have at the
time of transfer good and marketable title to the Assets and
full authority to sell the Assets; (ii) the Assets are sold free
and clear of all liens, indebtedness, or liabilities; and (iii)
the Assets are of actual quality, provenance, authenticity,
condition, and value as described or disclosed by Seller to
Buyer from time to time (collectively, the "Seller
Representations"). Buyer may request a Bill of Sale from
the Seller for the Assets.
5. Indemnification. Seller shall indemnify, defend and hold
Buyer and its affiliates, directors, officers, shareholders,
employees, attorneys, agents and other representatives
from and against any and all demands, claims, actions,
causes of action, proceedings, assessments, losses,
damages, liabilities, settlements, judgments, fines,
penalties, interest, costs and expenses (including fees and
disbursements of counsel), arising out of (i) any breach of
any representation, warranty or covenant of this
Agreement, and (ii) Seller's use of the Assets.
6. Miscellaneous.
6.1 Entire Agreement and Amendment. This
Agreement constitutes the entire understanding among the
parties with respect to the subject matter hereof, and
supersedes all negotiations, prior discussions or other
agreements, oral or written with respect to its subject
matter. This Agreement may only be amended or modified
by the written agreement of the parties.
6.2 Termination. Buyer may terminate this
Agreement at any time prior to taking actual possession of
the Assets pursuant to Section 2 hereof. In the event that
Buyer terminates this Agreement for any reason other than
Seller's breach of the Seller Representations, Buyer's
obligations hereunder and any liabilities to Seller shall
terminate effective immediately. In the event that Buyer
terminates this Agreement in connection with Seller's
breach of the Seller Representations, Buyer's obligations
hereunder and any liabilities to Seller shall terminate
effective immediately and Seller shall promptly return to
Buyer any consideration delivered to Seller in connection
with this Agreement.
6.3 Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of
the Commonwealth of Virginia, without giving effect to the
conflict of laws principles thereof. The parties agree that
any action brought by either party under or in relation to
this Agreement, including without limitation to interpret or
enforce any provision of this Agreement, shall be brought
in, and each party agrees to and does hereby submit to the
jurisdiction and venue of, any state or federal court located
in the City of Richmond, Virginia.
6.4 Fees and Costs. Each party shall bear its own
attorneys' fees and expenses in connection with the
negotiation, preparation and consummation of this
Agreement.
6.5 Assignment. Buyer shall have the right to
assign any of its rights or obligations under this Agreement
to any affiliate or third party without Seller's prior written
consent. Seller shall not have the right to assign any of its
rights or obligations under this Agreement without Buyer's
prior written consent. This Agreement shall be binding
upon and inure to the benefit of the parties and their
permitted successors and assigns.
6.6 Notices. All notices to be given by any party to
this Agreement to the other party shall be in writing, and
shall be (i) sent by email transmission; (ii) mailed by USPS
Certified Mail; or (ii) personally delivered, at the addresses
set forth on the signature pages hereof (or at such other
address for a party as specified by like notice) and shall be
deemed given when received if sent by email transmission
or personally delivered, or if mailed as provided herein, on
the second business day after it is so placed in the mail.
Any party at any time may give notice to the other party of
a different address other than that set forth herein in
accordance with the provisions of this Section.
6.7 Survival of Obligations. All representations and
warranties of the parties set forth in this Agreement shall
survive termination of this Agreement unless expressly
waived by the parties hereof.
6.8 Counterparts. This Agreement may be
executed in counterparts. Duly acknowledged facsimile
signatures shall be deemed as originals.
IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be fully executed as of the day
and year first above written.
Seller:
VINVESTO, INC.
By: __/s/ Nicholas King_______
Name: Nicholas King
Title: CEO
Buyer:
VV Markets, LLC
By: __/s/ Nicholas King_______
Name: Nicholas King
Title: CEO of Managing Member, Vinvesto, Inc.
PART II AND III
6
VVM2ncit.txt
NORTH CAPITAL IT AGREEMENT
This Software and Services License Agreement (including the
Schedules, the Privacy Policy and the Terms of Use, and any
applicable
company policies referenced therein, as in effect from time to
time, collectively and in their entirety, this "Agreement"), is
made and
effective as of the date set forth on the signature page
below (the "Effective Date"), contains the terms and
conditions upon which
North Capital Investment Technology, Inc. ("NCIT") grants to
the undersigned as licensee ("Licensee") a license to use
certain
software, computer programs, business processes, integrated
services and documentation more particularly described on
Schedule
A.
1. Definitions. When used in this Agreement, the
following terms shall have the respective meanings indicated,
such meanings to be applicable to both the singular and
plural
forms of the terms defined:
"Access Credentials" means any username, identification
number, password, license or security key, security token,
PIN or
other security code, method, technology or device used,
alone
or in combination, to verify an individual's identity and
authorization to access and use Hosted Services.
"Action" has the meaning set forth in Section 12.1.
"Agreement" has the meaning set forth in the preamble.
"Authorized User" means each of the individuals authorized
by
or on behalf of Licensee to use the Services pursuant to
Section
3.1.
"Confidential Information" means, as set forth in Section 9.1
and including, without limitation, the Services, the NCIT
Materials and terms and conditions of this Agreement.
"Disclosing Party" has the meaning set forth in Section 9.1.
"Documentation" means the documentation for the Software
and Services such as any manuals, instructions or other
documents or materials that NCIT provides or makes
available
to Licensee in any form or medium and which describe the
functionality, components, features or requirements of the
Services or NCIT Materials, including any aspect of the
installation, configuration, integration, operation, use, support
or maintenance thereof.
"Effective Date" has the meaning set forth in the preamble.
"Error" means a material and continuing failure of the
Software
and Services to function in conformity with the Specifications.
"Fees" has the meaning set forth in Section 8.1.
"Force Majeure Event" has the meaning set forth in Section
14.1.
"Harmful Code" means any software, hardware or other
technology, device or means, including any virus, worm,
malware or other malicious computer code, the purpose or
effect of which is to: (a) permit unauthorized access to, or to
destroy, disrupt, disable, distort or otherwise harm or impede
in
any manner any (i) computer, software, firmware, hardware,
system or network or (ii) any application or function of any
of
the foregoing or the security, integrity, confidentiality or use
of
any data Processed thereby; or (b) prevent Licensee or any
Authorized User from accessing or using the Services or NCIT
Systems as intended by this Agreement. "Harmful Code"
does
not include any NCIT Disabling Device.
"Hosted Services" has the meaning set forth in Section 2.1.
"Indemnitee" has the meaning set forth in Section 12.3.
"Indemnitor" has the meaning set forth in Section 12.3.
"Initial Term" has the meaning set forth in Section 10.1.
"Intellectual Property Rights" means any and all registered
and
unregistered rights granted, applied for or otherwise now or
hereafter in existence under or related to any patent,
copyright,
trademark, trade secret, database protection
or other
intellectual property rights laws or practice, and all similar or
equivalent rights or forms of protection, in any part of the
world.
"Law" means any applicable statute, law, ordinance,
regulation,
rule, code, order, constitution, treaty, common law, judgment,
decree or other requirement of any federal, state, local or
foreign government or political subdivision thereof, regulatory
agency or arbitrator, mediator, court or tribunal of competent
jurisdiction.
"Licensee" has the meaning set forth in the preamble.
"Licensee Data" means, other than Resultant Data,
information,
data and other content, in any form or medium, that is
collected, downloaded or otherwise received, directly or
indirectly from Licensee or an Authorized User by or through
the
Services.
"Licensee Failure" has the meaning set forth in Section 4.2.
"Licensee Systems" means Licensee's information technology
infrastructure, including computers,
software, hardware,
databases, electronic systems (including database
management
systems) and networks, whether operated directly by
Licensee
or through the use of third party services.
"Losses" means any and all losses, damages, liabilities,
deficiencies, claims, actions, judgments, settlements, interest,
awards, penalties, fines, costs or expenses of whatever kind,
including reasonable attorneys' fees and the costs of enforcing
any right hereunder, collection and pursuing any insurance
providers.
"NCIT" has the meaning set forth in the preamble.
"NCIT Disabling Device" means any software, hardware or
other
technology, device or means (including any back door, time
bomb, time out, drop dead device, software routine or other
disabling device) used by NCIT or its designee to disable any
Person's (including, without limitation, Licensee's or any
Authorized User's) access to or use of the Services
automatically
with the passage of time or under the positive control of
NCIT or
its designee.
1
(NCIT SSLA 8/2020)
"NCIT Indemnitee" has the meaning set forth in Section 12.2.
"NCIT Materials" means the Software, Documentation,
Specifications and NCIT Systems and any and all other
information, data, documents, materials, works and other
content, devices, methods, processes, hardware, software
and
other technologies and inventions, including any Licensee
and
other customizations, deliverables, technical or functional
descriptions, requirements, plans or reports, that are
provided
or used by NCIT or any Subcontractor in connection with
the
Services or otherwise comprise or relate to the Services or
NCIT
Systems. For the avoidance of doubt, NCIT Materials include
Resultant Data and any information, data or other content
derived from NCIT's monitoring of Licensee's access to or
use of
the Services, but do not include Licensee Data.
"NCIT Personnel" means all individuals involved in the
performance of Services as employees, agents or
independent
contractors of NCIT or any Subcontractor.
"NCIT Systems" means the information technology
infrastructure used by or on behalf of NCIT in performing the
Services, including all computers, software, hardware,
databases, electronic systems (including database
management
systems) and networks, whether operated directly by NCIT
or
through the use of third party services.
"Person" means an individual, corporation, partnership, joint
venture, limited liability entity, governmental authority,
unincorporated organization, trust, association or other entity.
"Privacy Policy" means NCIT's and its affiliates' data privacy
policies, as posted on a Website, as may be amended by
NCIT or
its affiliates from time to time.
"Process" means to take any action or perform any operation
or
set of operations that the Services are capable of taking or
performing on any data, information or other content,
including
to collect, receive, input, upload, download, record,
reproduce,
store, organize, compile, combine, log, catalog,
cross-reference,
manage, maintain, copy, adapt, alter, translate or make other
derivative works or improvements, process, retrieve, output,
consult, use, perform, display, disseminate, transmit, submit,
post, transfer, disclose or otherwise provide or make
available,
or block, erase or destroy. "Processing" and "Processed"
have
correlative meanings.
"Receiving Party" has the meaning set forth in Section 9.1.
engineered or otherwise identified from the inspection,
analysis
or further Processing of such information, data or content.
"Scheduled Downtime" has the meaning set forth in Section
5.2.
"Service Software" means the NCIT software application or
applications and any third party or other software, and all
new
versions, updates, revisions, improvements, customizations
(including, without limitation, in
connection with this
Agreement for or on behalf of Licensee) and modifications of
the foregoing, that NCIT provides remote access to and use
of as
part of the Services.
"Services" means any services provided by NCIT or its
contractors to Licensee in connection with this Agreement
and
supplemental time and materials ("T+M") contracts, including
software as a service (SaaS), installation, configuration,
integration, customization training, and/or technical support, as
specified in the Order Form and Schedule A, including
Hosted
Services.
"Software" means the computer programs specified in the
Order Form and Schedule A in machine-readable, object
code
form, and any computer programs delivered to Licensee in
machine-readable, object code form and any updates thereto,
or provided by NCIT in connection with any Services
hereunder,
and the Service Software.
"Specifications" means NCIT's current published product
release
definitions.
"Subcontractor" has the meaning set forth in Section 2.5.
"Term" has the meaning set forth in Section 10.2.
"Terms of Use" means NCIT's and its affiliates' terms of use,
as
posted on a Website, as may be amended by NCIT or its
affiliates from time to time.
"Third Party Materials" means materials and information, in
any
form or medium, including any software, documents, data,
content, specifications, products, equipment or components of
or relating to the Services that are not proprietary to NCIT.
"Website" means
https://www.northcapital.com,
https://www.evisor.com,
https://www.accredited.am,
https://www.ppex.com, https://www.p3loans.com and NCIT's
or its Representative's other websites from time to time
(including all data and information services owned or
operated
by, on behalf of or through NCIT or its Representatives).
"Renewal Term" has the meaning set forth in Section 10.2.
2.
Services.
"Representatives" means, with respect to a Person, that
Person's affiliates and their employees, officers, directors,
consultants, agents, independent contractors, service
providers,
sub-licensees, subcontractors and legal, tax, financial and
other
advisors.
"Resultant Data" means information, data and other content
that is derived by or through the Services from Processing
or
aggregating Licensee Data and is sufficiently different from
such
Licensee Data that such Licensee Data cannot be reverse
2.1 Services. Subject to and conditioned on Licensee's
and
its Authorized Users' compliance with the terms and
conditions
of this Agreement, during the Term NCIT shall use
commercially
reasonable efforts to provide to Licensee and its Authorized
Users the Software and Services in accordance with the
terms
and conditions hereof, including to host, manage, operate
and
maintain the Service Software for remote electronic access
and
use by Licensee and its Authorized Users ("Hosted Services")
on
an ongoing basis, except for:
2
(NCIT SSLA 8/2020)
(a)
Scheduled Downtime in accordance with
Licensee's, any Authorized User's or any other Person's
access
Section 5.2;
(b) Service downtime or degradation due to a
Force Majeure Event;
(c) Any other circumstances beyond NCIT's
reasonable control, including Licensee's or any Authorized
User's use of Third Party Materials, misuse of Hosted
Services,
or use of the Services other than in compliance with the
express
terms of this Agreement; and
(d) Any suspension or termination of Licensee's
or
any Authorized Users' access to or use of Hosted Services
as a
result of a Licensee Failure or as otherwise permitted by this
Agreement.
2.2 Service and System Control. Except as otherwise
to or use of all or any part of the Services or NCIT Materials,
without incurring any resulting obligation or liability, if: (a)
NCIT
receives a judicial or other governmental or regulatory
demand
or order, subpoena or law enforcement request that expressly
or by reasonable implication requires NCIT to do so; or (b)
NCIT
believes, in its sole discretion, that (i) Licensee or any
Authorized User has failed to comply with Law or any term
of
this Agreement, or accessed or used the Services beyond
the
scope of the rights granted or for a purpose not authorized
under this Agreement, (ii) Licensee or any Authorized User
is,
has been, or is likely to be involved in any fraudulent,
misleading
or unlawful activities, or (iii) this Agreement expires or is
terminated. This Section 2.6 does not limit any of NCIT's
other
rights or remedies, whether at law, in equity or under this
Agreement.
expressly provided in this Agreement, as between the
parties:
3.
Authorization and Licensee Restrictions.
(a) NCIT has and will retain sole control over
the
operation, provision, maintenance and management of the
Services and NCIT Materials, including the: (i) NCIT
Systems;
(ii) selection, deployment, modification and replacement of
the
Service Software; and (iii) performance of maintenance,
upgrades, corrections and repairs; and
(b) Licensee has and will retain sole control over
the operation, maintenance and management of, and all
access
to and use of, the Licensee Systems, and sole responsibility
for
all access to and use of the Services and NCIT Materials by
any
Person by or through the Licensee Systems or any other
means
controlled by Licensee or any Authorized User, including any
information, instructions or materials provided by any of them
to NCIT or Subcontractors.
2.3 Service Management. Licensee agrees throughout
the
Term to maintain within its organization a service manager
to
serve as NCIT's primary point of contact for day-to-day
communications, consultation and decision-making regarding
the Services. Licensee shall ensure its service manager has
the
requisite organizational authority, skill, experience and other
qualifications to perform in such capacity. If Licensee's
service
manager ceases to be employed by it or it otherwise wishes
to
replace its service manager, Licensee shall promptly name a
new
service manager by written notice to NCIT.
2.4 Changes. NCIT reserves the right, in its sole
discretion,
to make any changes to the Services and NCIT Materials that
it
deems necessary or useful to: (a) maintain or enhance (i)
the
quality or delivery of NCIT's services to its customers, (ii)
the
3.1 Authorization. Subject to and conditioned on
Licensee's
payment of the Fees and compliance and performance in
accordance with all other terms and conditions of this
Agreement, NCIT hereby authorizes Licensee to nonexclusive,
nontransferable access and use, subject to the terms and
conditions herein and during the Term, the Services and
such
NCIT Materials as NCIT may supply or make available to
Licensee
solely for the use by and through Authorized Users in
accordance with the conditions and limitations set forth in this
Agreement. This authorization is non-exclusive and, other than
as may be expressly set forth in Section 15.6,
non-transferable.
3.2 Reservation of Rights. Except for the limited license
in
Section 3.1, nothing in this Agreement grants any right, title
or
interest in or to (including any license under) any Intellectual
Property Rights in or relating to, the Services, NCIT Materials
or
Third Party Materials, whether expressly, by implication,
estoppel or otherwise. All right, title and interest in and to
(including all license under) any Intellectual Property Rights in
or
relating to, the Services, NCIT Materials and Third Party
Materials are and will remain with NCIT and the respective
rights holders in the Third Party Materials.
3.3 Authorization Limitations and Restrictions. Licensee
shall not, and shall not permit any other Person to, access
or use
the Services or NCIT Materials except as expressly permitted
by
this Agreement and, in the case of Third Party Materials, the
applicable third party license agreement. For purposes of
clarity
and without limiting the generality of the foregoing, Licensee
shall not, except as this Agreement expressly permits:
competitive strength of or market for NCIT's services or (iii)
the
Services' cost efficiency or performance; or (b) to comply
with
Law.
(a) modify or create derivative
improvements of the Services or NCIT Materials;
works
or
2.5 Subcontractors. NCIT may from time to time in its
sole
discretion engage third parties to perform Services (each, a
"Subcontractor").
2.6 Suspension or Termination of Services. NCIT may,
directly or indirectly, and by use of a NCIT Disabling Device
or
any lawful means, suspend, terminate or otherwise deny
(b) copy the Software and Documentation,
unless
for archival or backup purposes only; in such case, all titles,
trademarks, and copyright, proprietary and restricted rights
notices shall be reproduced in all such copies, and all copies
shall be subject to the terms of this Agreement;
(c) rent, lease, lend, sell, sublicense, assign,
distribute, publish, transfer or otherwise make available any
3
(NCIT SSLA 8/2020)
Services or NCIT Materials to any Person, including on or in
connection with the internet or any time-sharing, service
bureau, SaaS, cloud or other technology or service;
(d) reverse engineer, disassemble, decompile,
decode, adapt or otherwise attempt to derive or gain access
to
the source code of the Services or NCIT Materials, in whole
or in
part;
(e) bypass or breach any security device or
protection used by the Services or NCIT Materials or access
or
use the Services or NCIT Materials other than by an
Authorized
User through the use of such Authorized User's own then
valid
Access Credentials;
(f) input, upload, transmit or otherwise provide
to or through the Services or NCIT Systems, any information
or
materials that are unlawful or injurious, or contain, transmit or
activate any Harmful Code;
(g) damage, destroy, disrupt, disable, impair,
interfere with or otherwise impede or harm in any manner
the
Services, NCIT Systems or NCIT's provision of services to
any
third party, in whole or in part;
(h) remove, delete, alter or obscure any
trademarks, Documentation, Specification, warranties or
disclaimers, or any copyright, trademark, patent or other
intellectual property or proprietary rights notices from any
Services or NCIT Materials, including any copy thereof;
(i) access or use the Services or NCIT Materials
in
any manner or for any purpose that infringes,
misappropriates
or otherwise violates any Intellectual Property Right or other
right of any third party (including by any unauthorized access
to,
4.2 Effect of Licensee Failure or Delay. NCIT is not
responsible or liable for any delay or failure of performance
caused in whole or in part by Licensee's delay in performing,
or
failure to perform, any of its obligations under this Agreement
(each, a "Licensee Failure").
4.3 Corrective Action and Notice. If Licensee becomes
aware of any actual or threatened activity prohibited by
Section
3.3, Licensee shall, and shall cause its Authorized Users to,
immediately: (a) take all reasonable and lawful measures
within
their respective control that are necessary to stop the activity
or
threatened activity and to mitigate its effects (including, where
applicable, by discontinuing and preventing any unauthorized
access to the Services and NCIT Materials and permanently
erasing from their systems and destroying any data to which
any
of them have gained unauthorized access); and (b) notify
NCIT
of any such actual or threatened activity.
4.4 Consent to Use Licensee Data. Licensee hereby
irrevocably grants a license and all such other rights and
permissions in or relating to Licensee Data: (a) to NCIT, its
Subcontractors and the NCIT Personnel as are necessary or
useful to perform the Services; and (b) to NCIT as are
necessary
or useful to enforce this Agreement and exercise its rights
and
perform its obligations hereunder.
4.5 Export Laws. Licensee shall adhere to all US Export
Administration Law and shall not export or re-export any
technical data or products received by or on behalf of NCIT,
or
the direct products of such technical data, to any proscribed
country listed in the then-current US Export Administration
Law
unless properly authorized by both NCIT and the US
Government.
misappropriation, use, alteration, destruction or disclosure of
5.
Service Levels.
the data of any other NCIT customer), or that violates any
Law;
(j) take any action that might lead a third party
(including an Authorized User) to conclude that the Services
or
NCIT Materials involve the provision of investment advice or
recommendations;
(k) access or use the Services or NCIT
Materials
for purposes of competitive analysis of the Services or NCIT
Materials, the development, provision or use of a competing
software service or product or any other purpose that is to
NCIT's detriment or commercial disadvantage; or
(l) otherwise access or use the Services or
NCIT
Materials beyond the scope of the authorization granted
under
Section 3.1.
5.1 Service Levels. Subject to the terms and conditions
of
this Agreement, NCIT will use commercially reasonable efforts
to make Hosted Services available for access and use by
Licensee and its Authorized Users over the Internet at least
99%
of the time as measured over the course of each calendar
month during the Term excluding unavailability due, in whole
or
in part, to any: (a) act or omission by Licensee or any
Authorized
User, access to or use of Hosted Services by Licensee or
any
Authorized User, or using Licensee's or an Authorized User's
Access Credentials, that does not strictly comply with this
Agreement; (b) Licensee Failure; (c) Licensee's or its
Authorized
User's Internet connectivity; (d) Force Majeure Event; (e)
failure,
interruption, outage or other problem with any software,
hardware, system, network, facility or other matter not
supplied
4.
Licensee Obligations.
by NCIT pursuant to this Agreement; (f) Scheduled Downtime;
or
(g) disabling, suspension or termination of the Services
pursuant
4.1 Licensee Systems and Cooperation. Licensee shall at
all
times during the Term: (a) set up, maintain and operate in
good
repair all Licensee Systems on or through which the
Software or
the Services are accessed or used; and (b) provide all
cooperation and assistance as NCIT may reasonably request
to
enable NCIT to exercise its rights and perform its obligations
under and in connection with this Agreement.
to Section 2.6. Service levels cannot be guaranteed and
NCIT
shall not be liable to Licensee or Authorized Users in the
event
Hosted Services are unavailable.
5.2 Scheduled Downtime. NCIT will use commercially
reasonable efforts to: (a) schedule downtime for routine
maintenance of Hosted Services between the hours of 12:00
a.m. and 6:00 a.m., Eastern Standard Time; and (b) give
Licensee
4
(NCIT SSLA 8/2020)
at least 24 hours prior notice of all scheduled outages of
Hosted
Services ("Scheduled Downtime").
6. Data Backup. NCIT will use commercially reasonable
Services; and (b) control the content and use of Licensee
Data,
including the uploading or other provision of Licensee Data
for
Processing by Hosted Services.
efforts to maintain regular data backups of Licensee Data;
8.
Fees; Payment Terms.
provided however, that NCIT HAS NO OBLIGATION OR
LIABILITY
FOR ANY LOSS, ALTERATION, DESTRUCTION, DAMAGE,
CORRUPTION OR RECOVERY OF LICENSEE DATA.
8.1 Fees. Licensee shall pay NCIT the fees set forth on
Schedule B and Schedule C ("Fees") in accordance with this
Section 8.
7.
Privacy.
8.2 Fee Increases. After the Initial Term (as defined
below),
7.1 NCIT Systems and Obligations. This Agreement
incorporates by reference the Privacy Policy and the Terms
of
Use. In the event of any conflict between this Agreement
and
the Terms of Use, the terms of this Agreement shall prevail.
To
the extent an Authorized User will be disclosing information
using the Services, Licensee shall ensure that its privacy
policy
and terms of use incorporate by reference a link to and an
acknowledgement by Authorized Users of the Privacy Policy
and
Terms of Use or otherwise incorporate terms with
substantially
the same effect and permit the use of such information by
NCIT
and its Representatives in connection with the Services.
7.2 Prohibited Data. Licensee acknowledges that the
Services are not designed with security and access
management
for Processing the following categories of information: (a)
data
that is classified and or used on the U.S. Munitions list,
including
software and technical data; (b) articles, services and related
technical data designated as defense articles or defense
services; (c) ITAR (International Traffic in Arms Regulations)
related data; or (d) protected health information (each of the
foregoing, "Prohibited Data"). Licensee shall not, and shall
not
permit any Authorized User or other Person to, provide any
Prohibited Data to, or Process any Prohibited Data through,
the
Services, the NCIT Systems or any NCIT Personnel.
Licensee is
solely responsible for reviewing all Licensee Data and shall
ensure that no Licensee Data constitutes or contains any
Prohibited Data.
7.3 Licensee Control and Responsibility. Licensee has
and
will retain sole responsibility for: (a) all Licensee Data
(excluding
data transmitted directly into the NCIT Systems by an
Authorized User unaffiliated with Licensee), including its
content
and use, except as set forth in the Privacy Policy; (b) all
information, instructions and materials provided by or on
behalf
of Licensee or any Authorized User in connection with the
Services; (c) Licensee Systems; (d) the security and use of
Licensee's and its Authorized Users' Access Credentials; and
(e)
all access to and use of the Services and NCIT Materials
directly
or indirectly by or through the Licensee Systems or its or its
Authorized Users' Access Credentials, with or without
Licensee's
knowledge or consent, including all results obtained from,
and
all conclusions, decisions and actions based on, such access
or
use.
7.4 Access and Security. Licensee shall employ all
physical,
administrative and technical controls, screening and security
procedures and other safeguards necessary to: (a) securely
administer the distribution and use of all Access Credentials
and
protect against any unauthorized access to or use of Hosted
NCIT may increase Fees by providing written notice to
Licensee
at least 30 days prior to the effective date of the Fee
increase,
and the Fees will be deemed amended accordingly without
further notice or consent; provided that NCIT will not
increase
Fees during the Initial Term. Licensee may terminate this
Agreement effective as of the date of the Fee increase upon
providing written notice to NCIT within 30 days of receipt of
the
notice of Fee increase.
8.3 Taxes. All Fees and other amounts payable by
Licensee
under this Agreement are exclusive of taxes and similar
assessments. Licensee is responsible for all sales, use and
excise
taxes, and any other similar taxes, duties and charges of any
kind imposed by any federal, state or local governmental or
regulatory authority on any amounts payable by Licensee
hereunder, other than any taxes levied or imposed on NCIT's
income.
8.4 Payment. All Fees will be invoiced monthly by the 5th
of
the month and will be charged automatically on the 15th of
each
month, or as otherwise set forth on Schedule B and Schedule
C,
to the credit card or other payment method used for the
purchase under this Agreement or in creating Licensee's
account
(as set forth on the signature page below). Licensee consents
to
NCIT retaining and using Licensee's payment information for
future invoices and as provided in this Agreement. Licensee
agrees and acknowledges that NCIT and its third party
vendors
may retain and use Licensee's payment information to
facilitate
the payments provided for in this Agreement. Licensee
agrees to
promptly provide NCIT with written notice of any update of or
changes to your payment information. All payments shall be
in
US dollars in immediately available funds.
8.5 Late Payment. If Licensee fails to make any payment
when due then, in addition to all other remedies that may be
available:
(a) NCIT may charge interest on the past due
amount at the rate of 1.5% per month, calculated daily and
compounded monthly, or if lower, the highest rate permitted
under Law; such interest may accrue after as well as before
any
judgment relating to collection of the amount due;
(b) Licensee shall reimburse NCIT for all costs
incurred by NCIT in collecting any late payments or interest,
including attorneys' fees, court costs and collection agency
fees;
and
(c) if such failure continues for 10 days
following
written notice thereof, NCIT may suspend performance of the
Services until all past due amounts and interest thereon have
5
(NCIT SSLA 8/2020)
been paid, without incurring any obligation or liability to
Licensee or any other Person by reason of such suspension;
provided that cumulative late payments are subject to the
overall limits set forth in Schedule B. A default under this
Agreement by Licensee shall constitute a default by Licensee
or
its affiliates under all other agreements any of them have
then
in effect with NCIT or its affiliates.
8.6 No Deductions or Setoffs. All amounts payable to
NCIT
under this Agreement shall be paid by Licensee to NCIT in
full
without any setoff, recoupment, counterclaim, deduction, debit
or withholding for any reason (other than any deduction or
withholding of tax as may be required by Law).
Representatives who: (i) need to know such Confidential
Information for purposes of Receiving Party's exercise of its
rights or performance of its obligations under and in
accordance
with this Agreement; (ii) have been informed of the
confidential
nature of the Confidential Information; and (iii) are bound by
confidentiality and restricted use obligations in substantially
similar effect as the terms set forth in this Section 9.3;
(c) safeguard and protect the
Confidential
Information from theft, piracy or unauthorized use, access or
disclosure using at least the degree of care it uses to protect
its
similarly sensitive information and in no event less than a
reasonable degree of care;
9.
Confidentiality.
(d) ensure its Representatives' compliance
with,
and be responsible and liable for any of its Representatives'
9.1 Confidential Information. In connection with this
Agreement, each party ("Disclosing Party") may disclose or
make available Confidential Information to the other party
("Receiving Party"). Subject to Section 9.2, "Confidential
Information" means information in any form or medium
(whether oral, written, electronic or other) that Disclosing
Party
considers confidential or proprietary, including information
consisting of or relating to Disclosing Party's or its affiliates'
technology, trade secrets, know-how, business operations,
plans, strategies, customers, and pricing, and information with
respect to which Disclosing Party has contractual or other
confidentiality obligations, in each case whether or not
marked,
designated or otherwise identified as "confidential". Without
limiting the foregoing, all Services and NCIT Materials,
including
the terms of this Agreement, are the Confidential Information
of
NCIT.
9.2 Exclusions. Confidential Information does not include
information that Receiving Party can demonstrate by written
or
other documentary records: (a) was lawfully known to
Receiving
Party without restriction on use or disclosure prior to such
information's being disclosed or made available to Receiving
Party in connection with this Agreement; (b) was or becomes
generally known by the public other than by Receiving
Party's or
any of its Representatives' noncompliance with this
Agreement;
(c) was or is received by Receiving Party on a
non-confidential
basis from a third party that was not or is not, at the time of
such receipt, under any obligation to maintain its
confidentiality;
or (d) Receiving Party can demonstrate by written or other
documentary records was or is independently developed by
Receiving Party without reference to or use of any
Confidential
Information.
9.3 Protection of Confidential Information. As a condition
non-compliance with, the terms of this Section 9; and
(e) notify Disclosing Party upon discovery of
any
prohibited use or disclosure of the Confidential Information, or
any other breach of these confidentiality obligations by
Receiving Party, and shall cooperate with Disclosing Party to
help Disclosing Party regain possession of the Confidential
Information and prevent the further prohibited use or
disclosure
of the Confidential Information.
9.4 Compelled Disclosures. If Receiving Party or any of
its
Representatives is compelled by Law
to disclose any
Confidential Information then, to the extent permitted by Law,
Receiving Party shall: (a) promptly, and prior to such
disclosure,
notify Disclosing Party in writing of such requirement so that
Disclosing Party can seek a protective order or other remedy
or
waive its rights under Section 9.3; and (b) provide reasonable
assistance to Disclosing Party in opposing such disclosure or
seeking a protective order or other limitations on disclosure. If
Disclosing Party waives compliance or, after providing the
notice
and assistance required under this Section 9.4, Receiving
Party
remains required by Law to disclose any Confidential
Information, Receiving Party shall disclose only that portion of
the Confidential Information that Receiving Party is legally
required to disclose and, on Disclosing Party's request, shall
use
commercially reasonable efforts to obtain assurances from the
applicable court or other presiding authority that such
Confidential Information will be
afforded confidential
treatment. Notwithstanding the foregoing, the restrictions and
requirements herein shall not apply to, and NCIT and its
Representatives may disclose and retain copies of,
Confidential
Information in connection with NCIT's or its Representatives'
compliance with legal, financial or regulatory filings, audits or
examinations or as otherwise required by Law.
to being provided with any disclosure of or access to
Confidential Information, Receiving Party shall:
10.
Term and Termination.
(a) not access or use Confidential Information
other than as necessary to exercise its rights or perform its
obligations under and in accordance with this Agreement;
(b) except as may be permitted by and subject
to
its compliance with Section 9.4, not reveal, disclose or
permit
access to Confidential Information other than to its
10.1 Initial Term. The initial term of this Agreement
commences as of the Effective Date and, unless terminated
earlier pursuant any of the Agreement's express provisions,
will
continue in effect for one year (the "Initial Term").
10.2 Renewal. This Agreement will automatically renew
for
additional successive one-year terms unless earlier terminated
pursuant to this Agreement's express provisions or either
party
6
(NCIT SSLA 8/2020)
gives the other party written notice of non-renewal at least
90
days prior to the expiration of the then-current term (each a
"Renewal Term" and, collectively with the Initial Term, the
"Term").
Licensee Data and Licensee Confidential Information in its
regular backup, archived or disaster recovery systems or files;
(c) Licensee shall promptly cease all use of
any
Services or NCIT Materials and (i) promptly return to NCIT,
or at
10.3
Termination. In addition to Section 8.2 and Section
NCIT's written request destroy, all documents and tangible
10.2:
(a) NCIT may terminate this Agreement, effective
on written notice to Licensee, if Licensee: (i) fails to pay any
amount when due hereunder, and such failure continues
more
than 30 days after NCIT's delivery of written notice thereof;
or
(ii) breaches any of its obligations under Section 3.3
(Authorization Limitations and Restrictions), Section 7.2
(Prohibited Data) or Section 9 (Confidentiality).
(b) Either party may terminate this Agreement,
effective on written notice to the other party, if the other
party
materially breaches this Agreement, and such breach: (i) is
incapable of cure within three business days of NCIT's
notice to
Licensee of the breach and NCIT's intent to terminate the
license granted in this Agreement; or (ii) being capable of
cure,
remains uncured 30 days after the non-breaching party
provides
the breaching party with written notice of such breach;
(c) Either party may terminate this Agreement,
effective immediately upon written notice to the other party, if
the other party: (i) becomes insolvent or is generally unable
to
pay, or fails to pay, its debts as they become due; (ii) files
or has
filed against it, a petition for voluntary or involuntary
bankruptcy or otherwise becomes subject, voluntarily or
involuntarily, to any proceeding under any domestic or
foreign
bankruptcy or insolvency Law; (iii) makes or seeks to make
a
general assignment for the benefit of its creditors; or (iv)
applies
for or has appointed a receiver, trustee, custodian or similar
agent appointed by order of any court of competent
jurisdiction
to take charge of or sell any material portion of its property
or
business; and
(d) Either party may terminate this Agreement
upon 90 days written notice to the other for any commercial
or
business reason.
10.4 Effect of Expiration or Termination. Upon any
expiration or termination of this Agreement, except as
expressly
materials containing, reflecting, incorporating or based on any
NCIT Materials or NCIT's Confidential Information; and
(ii) permanently erase all NCIT Materials and NCIT's
Confidential
Information from all systems Licensee directly or indirectly
controls; provided that Licensee may retain NCIT Materials or
NCIT's Confidential Information in its regular backup, archived
or disaster recovery systems or files, or as permitted by
Section
9.4; an officer or director of Licensee shall, within 30 days
from
the effective date of the termination, certify in writing that all
copies of the Software and Documentation have been
returned,
deleted and destroyed;
(d) NCIT may disable all Licensee and
Authorized
User access to Hosted Services and NCIT Materials;
(e) if Licensee terminates
this Agreement
pursuant to Section 10.3(b), Licensee will be relieved of any
obligation to pay any Fees attributable to the period after the
effective date of such termination; and
(f) if NCIT terminates this Agreement pursuant
to
Section 10.3(a) or Section 10.3(b), all Fees that would have
become payable had the Agreement remained in effect until
expiration of the Term will become immediately due and
payable, and Licensee shall pay such Fees, together with all
previously-accrued but not yet paid Fees, on receipt of
NCIT's
invoice therefor.
ALL SALES ARE FINAL; NO REFUNDS OR
EXCHANGES.
10.5 Surviving Terms. The provisions set forth in the
following sections, and any other rights or obligations of the
parties in this Agreement that, by their nature, should survive
termination or expiration of this Agreement, will survive any
expiration or termination of this Agreement (including, without
limitation, Section 9 (Confidentiality), Section 8 (Fees;
Payment
Terms), Section 10 (Term and Termination), Section 12
(Indemnification), Section 13 (Limitations of Liability) and
Section 15 (Miscellaneous)).
otherwise provided in this Agreement (including Section 10.5
below):
11.
Representations, Warranties and Covenants.
(a) all rights, licenses, consents and
authorizations
granted by either party to the other hereunder will
immediately
terminate;
(b) NCIT shall promptly cease all use of any
Licensee Data or Licensee's Confidential Information and
erase
all Licensee Data and Licensee's Confidential Information
from
all systems NCIT controls; provided that, (i) for clarity, NCIT's
obligations under this Section 10.4(b) do not apply to any
Resultant Data, (ii) NCIT and its affiliates may retain, use
and
disclose Licensee Data or Licensee Confidential Information
as
required by Law, and (iii) NCIT and its affiliates may retain
11.1 Mutual Representations and Warranties. Each party
represents and warrants to the other party that:
(a) it is duly organized, validly existing and in
good
standing as a corporation or other entity under the laws of
the
jurisdiction of its incorporation or other organization;
(b) it has the full right, power and authority to
enter into and perform its obligations and grant the rights,
licenses, consents and authorizations it grants or is required
to
grant under this Agreement;
(c) the execution of this Agreement has been
duly
authorized by all necessary corporate or organizational action
of
such party;
7
(NCIT SSLA 8/2020)
(d) its signatory to this Agreement is authorized
to
execute this Agreement on such party's behalf; and
(e) this Agreement constitutes the legal, valid
and
binding obligation of such party, enforceable against such
party
in accordance with its terms.
11.2 Additional NCIT Representations, Warranties and
Covenants. NCIT represents, warrants and covenants to
Licensee
that NCIT will perform the Services using personnel of
required
skill, experience and qualifications and in a professional and
OTHER PERSON'S REQUIREMENTS,
OPERATE WITHOUT
INTERRUPTION, ACHIEVE ANY
INTENDED RESULT, BE
COMPATIBLE OR WORK WITH ANY SOFTWARE, SYSTEM
OR
OTHER SERVICES, OR BE SECURE, ACCURATE,
COMPLETE, FREE
OF HARMFUL CODE OR ERROR FREE. ALL THIRD PARTY
MATERIALS ARE PROVIDED "AS IS" AND ANY
REPRESENTATION
OR WARRANTY OF OR CONCERNING ANY THIRD PARTY
MATERIALS IS STRICTLY BETWEEN LICENSEE AND THE
THIRD
PARTY OWNER OR DISTRIBUTOR OF THE THIRD PARTY
MATERIALS.
workmanlike manner in accordance with generally
recognized
industry standards for similar services and will devote
adequate
12.
Indemnification.
resources to meet its obligations under this Agreement. NCIT
also represents to Licensee that: (a) during the Term, the
Software shall operate without any material Errors; and
(b) upon notification to NCIT of any Errors, NCIT's sole
liability,
and Licensee's sole remedy, will be NCIT's use of
reasonable
efforts during its normal business hours and at no cost to
Licensee to correct such Errors that are verifiable and
reproducible by NCIT, excluding any Errors caused by uses
of the
Software and Services not in accordance with the
Specifications.
Alternatively, in NCIT's sole discretion, NCIT may refund the
portion of the prepaid Fees applicable to the portion of the
Software that is defective.
11.3 Additional Licensee Representations, Warranties and
Covenants. Licensee represents, warrants and covenants to
NCIT
that Licensee owns or otherwise has and will have the
necessary
rights and consents in and relating to the Licensee Data so
that,
as received by NCIT and Processed in accordance with this
Agreement, they do not and will not infringe, misappropriate
or
otherwise violate any Intellectual Property Rights, or any
privacy
or other rights of any third party or violate any Law.
Licensee
acknowledges and agrees that the Services provided by
NCIT
under this Agreement are administrative and technological in
nature and that NCIT is not providing investment advice, or
otherwise acting in an investment advisory capacity, to
Licensee
or any Authorized User.
11.4 DISCLAIMER OF WARRANTIES. EXCEPT FOR
NCIT'S
EXPRESS WARRANTIES SET FORTH IN SECTION 11.1,
SECTION
11.2 AND SECTION 11.3, ALL SERVICES AND NCIT
MATERIALS
ARE PROVIDED "AS IS" AND NCIT HEREBY DISCLAIMS
ALL
WARRANTIES, WHETHER EXPRESS, IMPLIED,
STATUTORY OR
OTHER, AND NCIT SPECIFICALLY DISCLAIMS ALL
IMPLIED
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, TITLE AND NON-INFRINGEMENT,
AND
ALL WARRANTIES ARISING FROM COURSE OF DEALING,
USAGE
OR TRADE PRACTICE. NCIT DOES NOT
PROVIDE ANY
INVESTMENT ADVISORY SERVICE, DUE DILIGENCE,
BROKERAGE,
FINANCIAL MANAGEMENT, TAX, ACCOUNTING OR ANY
OTHER
PROFESSIONAL SERVICE, AND ANY ADVICE
OR OTHER
INFORMATION OBTAINED THROUGH NCIT'S PRODUCTS AND
SERVICES WILL BE USED BY LICENSEE AND ITS
AUTHORIZED
USERS SOLELY AT THEIR OWN RISK. WITHOUT LIMITING
THE
FOREGOING, NCIT MAKES NO WARRANTY OF ANY KIND
THAT
THE SERVICES OR NCIT MATERIALS, OR ANY PRODUCTS
OR
RESULTS OF THE USE THEREOF, WILL MEET
LICENSEE'S OR ANY
12.1 NCIT Indemnification. Subject to the limitations on
liability in this Agreement, including as set forth in Section
13,
NCIT shall indemnify, defend and hold harmless Licensee
from
and against any and all Losses incurred by Licensee arising
out of
or relating to any legal suit, claim, action or proceeding
(each,
an "Action") by a third party (other than an affiliate of
Licensee)
to the extent that such Losses arise from any allegation in
such
Action that Licensee's or an Authorized User's use of the
Services (excluding Licensee Data and Third Party Materials)
in
compliance with this Agreement infringes a U.S. Intellectual
Property Right. The foregoing obligation does not apply to
any
Action or Losses arising out of or relating to any:
(a) access to or use of the Services or NCIT
Materials in combination with any hardware, system, software,
network or other materials or service not provided or
authorized in writing by NCIT;
(b) modification of the Services or NCIT
Materials
other than: (i) by or on behalf of NCIT; or (ii) with NCIT's
written
approval in accordance with NCIT's written specification;
(c) failure to timely implement any
modifications,
upgrades, replacements or enhancements made available to
Licensee by or on behalf of NCIT; or
(d) act, omission or other matter described in
Section 12.2(a)-(g), whether or not the same results in any
Action against or Losses by any NCIT Indemnitee.
12.2 Licensee Indemnification. Licensee shall and shall
cause
its affiliates, jointly and severally, to indemnify, defend and
hold
harmless NCIT and its Subcontractors and their
Representatives
and successors and assigns (each, a "NCIT Indemnitee")
from
and against any and all Losses incurred by such NCIT
Indemnitee
in connection with any Action that arises out of or relates to
this
Agreement or any of the following:
(a) Licensee Data, including any Processing of
Licensee Data by or on behalf of NCIT in accordance with
this
Agreement;
(b) securities offering facilitated by Licensee or
its
affiliates or their Representatives, including any and all data
and
documentation related to such offering, the due diligence
related to such offering, and/or the determination of suitability
or qualification of a prospective investor for an offering;
8
(NCIT SSLA 8/2020)
(c) any other materials or information (including
any documents, data, specifications, software, content or
technology) provided by or on behalf of Licensee or any
Authorized User, including NCIT's compliance with any
specifications or directions provided by or on behalf of
Licensee
or any Authorized User, to the extent prepared without any
contribution by NCIT;
(d) brokerage services or investment advice;
recommendations regarding any particular investment,
security
or course of action; offers to invest or to provide financial
analysis or management services; or similar advice, offers or
guidance to Authorized Users, which shall remain the sole
responsibility of Licensee;
modifications or replacements will constitute Services and
NCIT
Materials, as applicable, under this Agreement; or
(c) by written notice to Licensee, terminate this
Agreement and require Licensee to immediately cease any use
of and destroy or return all copies of the Services and NCIT
Materials in its possession or under its control.
THIS SECTION 12 SETS FORTH LICENSEE'S SOLE
REMEDIES AND
NCIT'S SOLE LIABILITY AND OBLIGATION FOR ANY
ACTUAL,
THREATENED OR ALLEGED CLAIMS THAT THIS
AGREEMENT OR
ANY SUBJECT MATTER HEREOF (INCLUDING THE
SERVICES AND
NCIT MATERIALS)
INFRINGES, MISAPPROPRIATES OR
OTHERWISE VIOLATES ANY THIRD PARTY
INTELLECTUAL
PROPERTY RIGHT.
(e) allegation of facts that, if true, would
constitute Licensee's breach of any of its representations,
13.
Limitations of Liability.
warranties, covenants or obligations under this Agreement;
(f) negligence or more culpable act or omission
(including recklessness or willful misconduct) by Licensee,
any
Authorized User, or any third party on behalf of Licensee or
any
Authorized User, in connection with this Agreement; or
(g) transaction for which the Services or NCIT
Materials is being used by or on behalf of Licensee.
12.3 Indemnification Procedure. Each party shall promptly
notify the other party in writing of any Action for which such
party believes it is entitled to be indemnified pursuant to
Section 12.1 or Section 12.2, as the case may be. The
party
seeking indemnification (the "Indemnitee") shall cooperate
with
the other party (the "Indemnitor") at the Indemnitor's sole
cost
and expense. The Indemnitor shall immediately take control
of
the defense and investigation of such Action and shall
employ
counsel reasonably acceptable to the Indemnitee to handle
and
defend the same, at the Indemnitor's sole cost and expense.
The
Indemnitee's failure to perform any obligations under this
Section 12.3 will not relieve the Indemnitor of its obligations
under this Section 12 except to the extent that the
Indemnitor
can demonstrate that it has been materially prejudiced as a
result of such failure. The Indemnitee may participate in and
observe the proceedings at its own cost and expense with
counsel of its own choosing.
12.4 Mitigation. If any of the Services or NCIT Materials
are,
or in NCIT's opinion are likely to be, claimed to infringe,
misappropriate or otherwise violate any third party Intellectual
Property Right, or if Licensee's or any Authorized User's use
of
the Services or NCIT Materials is enjoined or threatened to
be
enjoined, NCIT may, at its option:
(a) at NCIT's sole cost and expense, obtain the
right for Licensee to continue to use the Services and NCIT
Materials materially as contemplated by this Agreement;
(b) at NCIT's sole cost and expense, modify or
13.1 EXCLUSION OF DAMAGES. NCIT AND ITS
LICENSORS,
SERVICE LICENSORS AND SUPPLIERS SHALL NOT BE
LIABLE
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR
ITS
SUBJECT MATTER UNDER ANY LEGAL OR EQUITABLE
THEORY,
INCLUDING BREACH OF CONTRACT,
TORT (INCLUDING
NEGLIGENCE), STRICT LIABILITY, BREACH OF
WARRANTY,
MISREPRESENTATIONS OR OTHERWISE, FOR ANY: (a)
LOSS OF
PRODUCTION, USE, BUSINESS, REVENUE OR PROFIT OR
DIMINUTION IN VALUE; (b) IMPAIRMENT, INABILITY TO
USE OR
LOSS, INTERRUPTION OR DELAY OF THE SERVICES, (c)
LOSS,
DAMAGE, CORRUPTION OR RECOVERY OF DATA, OR
BREACH OF
DATA OR SYSTEM SECURITY, OR
(d) CONSEQUENTIAL,
INCIDENTAL, INDIRECT, EXEMPLARY, SPECIAL,
ENHANCED OR
PUNITIVE DAMAGES, REGARDLESS OF WHETHER SUCH
PERSONS
WERE ADVISED OF THE POSSIBILITY OF SUCH LOSSES
OR
DAMAGES OR SUCH LOSSES OR DAMAGES WERE
OTHERWISE
FORESEEABLE, AND NOTWITHSTANDING THE FAILURE
OF ANY
AGREED OR OTHER REMEDY OF ITS ESSENTIAL
PURPOSE. BOTH
PARTIES UNDERSTAND AND AGREE THAT THE
REMEDIES AND
LIMITATIONS HEREIN ALLOCATE THE RISKS OF
PRODUCT AND
SERVICE NONCONFORMITY
BETWEEN THE PARTIES AS
AUTHORIZED BY LAW. THE FEES HEREIN REFLECT, AND
ARE SET
IN RELIANCE UPON, THIS ALLOCATION OF RISK AND THE
EXCLUSION OF CONSEQUENTIAL DAMAGES SET FORTH
IN THIS
AGREEMENT.
13.2 CAP ON MONETARY LIABILITY. IN ANY EVENT,
THE
COLLECTIVE AGGREGATE LIABILITY OR OBLIGATION OF
NCIT
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR
ITS
SUBJECT MATTER, UNDER ANY LEGAL OR EQUITABLE
THEORY,
INCLUDING BREACH OF CONTRACT,
TORT (INCLUDING
NEGLIGENCE), STRICT LIABILITY, BREACH OF
WARRANTY,
MISREPRESENTATIONS OR OTHERWISE, SHALL BE
LIMITED TO
THE AMOUNT PAID TO NCIT BY LICENSEE UNDER THIS
AGREEMENT IN THE PRECEDING 12 MONTHS. THE
FOREGOING
LIMITATION APPLIES NOTWITHSTANDING THE FAILURE OF
ANY
AGREED OR OTHER REMEDY OF ITS ESSENTIAL
PURPOSE.
replace the Services and NCIT Materials, in whole or in part,
to
14.
Force Majeure.
seek to make the Services and NCIT Materials (as so
modified or
replaced) non-infringing, while providing substantially
equivalent features and functionality, in which case such
14.1 No Breach or Default. In no event will NCIT be
liable or
responsible to Licensee, or be deemed to have defaulted
under
or breached this Agreement, for any failure or delay in
fulfilling
9
(NCIT SSLA 8/2020)
or performing any term of this Agreement (except for any
payment obligation) when and to the extent such failure or
delay is caused by any circumstances beyond such party's
reasonable control (a "Force Majeure Event"), including acts
of
God, flood, fire, earthquake or explosion, pandemic, war,
terrorism, invasion, riot or other civil unrest, embargoes or
blockades in effect on or after the date of this Agreement,
national or regional emergency, strikes, labor stoppages or
slowdowns or other industrial disturbances, passage of Law
or
any action taken by a governmental or public authority,
including imposing an embargo, export or import restriction,
quota or other restriction or prohibition or any complete or
partial government shutdown, or national or regional shortage
of adequate power or telecommunications or transportation.
NCIT may terminate this Agreement if a Force Majeure
Event
continues substantially uninterrupted for a period of 30 days
or
more.
14.2 Affected Party Obligations. In the event of any failure
or delay caused by a Force Majeure Event, NCIT will give
prompt
written notice to Licensee stating the period of time the
occurrence is expected to continue and use commercially
reasonable efforts to end the failure or delay and minimize
the
effects of such Force Majeure Event.
North Capital Investment Technology, Inc.
Attention: James P. Dowd, President & CEO
623 E. Fort Union Boulevard, Suite 101
Midvale, Utah 84047
Email: jdowd@northcapital.com
Notices sent in accordance with this Section 15.3 will be
deemed effectively given: (a) when received, if delivered by
hand, with signed confirmation of receipt; (b) when received,
if
sent by a nationally recognized overnight courier, signature
required; or (c) on the third day after the date mailed by
certified or registered mail, return receipt requested, postage
prepaid.
Licensee agrees that NCIT can provide notices to Licensee
through NCIT or its affiliates' website or by mailing them to
the
email or physical addresses on file with NCIT (as may be
initially
set forth on the signature page hereto). Such delivery of
notices
has the same legal effect as if NCIT provided Licensee with
a
physical copy and will be deemed to have been received
within
24 hours of the time a notice is posted or sent.
15.4 Interpretation. The parties intend this Agreement to be
construed without regard to any presumption or rule requiring
construction or interpretation against the party drafting an
15.
Miscellaneous.
instrument or causing any instrument to be drafted. Further,
the
headings used in this agreement are for convenience only
and
15.1 Relationship of the Parties. The relationship between
the parties is that of independent contractors. Nothing
contained in this Agreement shall be construed as creating
any
agency, partnership, joint venture or other form of joint
enterprise, employment or fiduciary relationship between the
parties, and neither party shall have authority to contract for
or
bind the other party in any manner whatsoever.
15.2 Public Announcements. Neither party shall issue or
release any announcement, statement, press release or other
publicity or marketing materials relating to this Agreement or
otherwise use the other party's trademarks, service marks,
trade names, logos, domain names or other indicia of
source,
affiliation or sponsorship, in each case, without the prior
written
consent of the other party, which consent shall not be
unreasonably withheld, conditioned or delayed; provided,
however, that NCIT may, without Licensee's consent, include
Licensee's name and logo in NCIT's promotional and
marketing
materials.
15.3 Notices. All notices, requests, consents, claims,
demands, waivers and other communications under this
Agreement ("notices") have binding legal effect only if in
writing
and addressed to NCIT as follows (or to such other address
or
such other Person that NCIT may designate from time to
time in
accordance with this Section 15.3):
North Capital Investment Technology, Inc.
Attention: Legal Department
623 E. Fort Union Boulevard, Suite 101
Midvale, Utah 84047
With a copy to (which shall not constitute notice):
are not intended to be used as an aid to interpretation.
15.5 Entire Agreement. This Agreement constitutes the sole
and entire agreement between the parties with respect to the
subject matter of this Agreement and supersedes and merges
all
prior and contemporaneous
proposals, understandings,
agreements, representations and warranties, both written and
oral, between the parties relating to such subject matter.
To the extent Licensee will be sharing personal or financial
information of a third party in connection with this Agreement,
Licensee shall maintain and obtain the agreement of each
such
third party, which shall permit the sharing of such third
party's
information with NCIT and its affiliates and service providers
for
NCIT and its affiliates and service providers to use, disclose
and
retain it in connection with this Agreement and the provision
of
the services hereunder and as required by Law. NCIT and its
affiliates each shall be a third party beneficiary to such
agreement.
15.6 Assignment. Licensee shall not assign or otherwise
transfer any of its rights, or delegate or otherwise transfer
any
of its obligations or performance, under this Agreement, in
each
case whether voluntarily, involuntarily, by operation of law or
otherwise, without NCIT's prior written consent. No delegation
or other transfer will relieve Licensee of any of its obligations
or
performance under this Agreement. Any purported assignment,
delegation or transfer in violation of this Section 15.6 is void.
Subject to this Section 15.6, this Agreement is binding upon
and
inures to the benefit of the parties and their respective
successors and assigns.
15.7 No Third Party Beneficiaries. Except as otherwise
set
forth in this Agreement, this Agreement is for the sole
benefit of
10
(NCIT SSLA 8/2020)
the parties and, subject to Section 12 and Section 15.6, their
respective successors and assigns, and nothing herein,
express
or implied, is intended to or shall confer upon any other
Person
any legal or equitable right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.
15.8 Amendment and Modification; Waiver. Except as set
forth herein, no amendment to or modification of this
Agreement is effective unless it is in writing and signed by
an
authorized representative of each party. No waiver by any
party
of any of the provisions hereof shall be effective unless
explicitly
set forth in writing and signed by the party so waiving.
Except as
otherwise set forth in this Agreement, no failure to exercise,
or
delay in exercising, any rights, remedy, power or privilege
arising from this Agreement shall operate or be construed as
a
waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any
other
or further exercise thereof or the exercise of any other right,
remedy, power or privilege.
15.9 Severability. If any provision of this Agreement is
invalid, illegal or unenforceable in any jurisdiction, such
invalidity, illegality or unenforceability shall not affect any
other
term or provision of this Agreement or invalidate or render
unenforceable such term or provision in any other
jurisdiction.
Upon such determination that any term or other provision is
invalid, illegal or unenforceable, the parties shall negotiate in
good faith to modify this Agreement so as to effect the
original
intent of the parties as closely as possible in a mutually
acceptable manner in order that the transactions
contemplated
by this Agreement be consummated as originally
contemplated
to the greatest extent possible.
15.10 Governing Law; Submission to Jurisdiction. This
Agreement is governed by and shall be construed in
accordance
with the internal laws of the State of Delaware without
giving
effect to any choice or conflict of law provision or rule that
would require or permit the application of the laws of any
other
jurisdiction. Any Action arising out of or related to this
Agreement, the licenses granted hereunder or the
transactions
federal courts of the United States of America or the courts of
the State of Utah, in each case located in Salt Lake City, and
each party irrevocably submits to the exclusive jurisdiction of
such courts in any such Action. In the event of any Action
arising
out of or related to this Agreement, the licenses granted
hereunder or the transactions contemplated hereby, the
prevailing party thereto shall be entitled to, in addition to any
other damages assessed, its reasonable attorneys' fees and all
other costs and expenses incurred in connection therewith,
including, without limitation, cost of collection and
enforcement
and in pursuit of insurance claims; provided that any
obligation
by NCIT hereunder remains subject to Section 13.2.
15.11 WAIVER OF JURY TRIAL. EACH PARTY
IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE
TO A TRIAL
BY JURY IN RESPECT OF ANY ACTION ARISING OUT OF
OR
RELATING TO THIS AGREEMENT, THE LICENSES
GRANTED
HEREUNDER OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
15.12 Equitable Relief. Each party acknowledges and
agrees
that a breach or threatened breach by such party of any of
its
obligations under this Agreement may cause the other party
irreparable harm for which monetary damages would not be
an
adequate remedy and agrees that, in the event of such
breach
or threatened breach, the other party will be entitled to seek
equitable relief, including a restraining order, an injunction,
specific performance and any other relief that may be
available
from any court, without any requirement to post a bond or
other security, or to prove actual damages or that monetary
damages are not an adequate remedy. Such remedies are
not
exclusive and are in addition to all other remedies that may
be
available at law, in equity or otherwise.
15.13 Counterparts. This Agreement may be executed in
counterparts, each of which is deemed an original, but all of
which together are deemed to be one and the same
agreement.
A signed copy of this Agreement by facsimile, email or other
means of electronic transmission or signature is deemed to
have
the same legal effect as delivery of an original signed copy
of
this Agreement.
contemplated hereby shall be instituted exclusively in the
[Signatures appear
on following page(s).]
11
(NCIT SSLA 8/2020)
In witness whereof, the Parties have executed this
Agreement as of the Effective Date.
12/2/2020
Effective Date:___________________________________
LICENSEE:
VinVesto, Inc
By:
Name:Nick King
CEO
Title:
Date:
NCIT:
North Capital Investment Technology Inc.
By:
Name:
Title:
Date:
Address: 2800 Patterson Ave
Ste. 300
Richmond, VA 23221
Email:
Licensee to select from the following options for payment of
the Fees set forth in Schedule B and Schedule C:
?
X?
Credit Card
Name on Card:
Credit Card Number:
Expiration Date (Month/Year):
Security Code:
Billing Address:
Telephone Number:
ACH Draw
Bank Name: Wells Fargo
Account Holder Name: Nicholas King
Routing Number: 121000248
Account Number: 5701978362
Account Type (Checking or Savings):
Checking
Please include the billing contact for Licensee below:
Main Contact:
Contact Name: Nicholas King
Contact Email: nick@vinvesto.org
Contact Phone: 804-833-7974
Alternate:
Contact Name:
Contact Email:
Contact Phone:
12
(NCIT SSLA 8/2020)
Summary of Services (mark with "X" below; include
number of subscriptions, as applicable)
_
_
_
_
_
_
X
_
_
_
_
_
_
1. TransactAPI
? One instance of TransactAPI
to be used in a live production
environment (PROD).
? One instance of TransactAPI
to be used for pre-production
testing purposes (STAGING).
? Installation and functional
configuration of the two instances
above, according to the software
and
services specifications for
TransactAPI.
_
_
_
_
_
_
_
_
_
_
_
_
_
2. White-label Platform
? All of the services in (1.)
above.
? One instance of White-label
Platform Technology to be used
in a live production environment
(PROD).
? One instance of White-label
Platform Technology to be used
for pre-production testing
purposes
(STAGING).
? Installation and functional
configuration of the two instances
above, according to the software
and
services specifications.
_
_
_
_
_
_
_
_
_
_
_
_
_
3. DirectInvest Button
? TransactAPI Client ID and
access to the Client Admin
Environment.
? Creation of one offering in
TransactAPI.
? Embed and sharing
capabilities for integration of the
DirectInvest Button Technology.
_
_
_
_
_
_
_
_
_
_
_
_
_
4. DirectAccreditation Button
? TransactAPI Client ID and
access to the Client Admin
Environment.
? Embed and sharing
capabilities for integration of the
DirectAccreditation Button
Technology.
SCHED
ULE A
SOFTWARE
AND SERVICES
The following Services will be provided under this Agreement
(as marked below), subject to Licensee's payment of the
applicable
fees and expenses listed in Schedule B:
determined in NCIT's sole discretion.
13
(NCIT SSLA 8/2020)
SCHED
ULE B
FEES AND
EXPENSES
The following fees and expenses shall apply to the Services
to be provided by NCIT to Licensee, as applicable as set
forth on Schedule
A:
(1) TransactAPI Basic Licensing and Service Fee
A.
B.
C.
D.
Installation and set-up fee of $2,500, which includes basic
installation of a client instance in the TAPI Admin
Console, support and troubleshooting during the integration
period.*
Basic licensing and service fee of $1,250 per month, payable
monthly in advance, upon receipt of production
credentials.
If NCPS serves as escrow agent for Licensee securities
offerings, the basic licensing and service fee will be
discounted to $750 per month, payable monthly in advance,
upon receipt of production credentials.
If NCPS is the broker-of-record for Licensee securities
offerings, the basic licensing and service fee will be
discounted to $500 per month, payable
monthly in advance, upon receipt of production credentials.
(2) White-label Platform Basic Licensing and Service Fee
A.
B.
C.
D.
Installation and set-up fee of $5,000, which includes basic
installation of a dedicated portal instance and a client
instance in the TAPI Admin Console, support, and
troubleshooting during the integration period.* Also includes
basic customization and branding limited to 15 hours.**
Basic licensing and service fee of $2,500 per month, payable
monthly in advance, upon completion of installation.
If NCPS serves as escrow agent for Licensee securities
offerings, the basic licensing and service fee will be
discounted to $1,500 per month, payable monthly in advance,
upon completion of installation.
If NCPS is the broker-of-record for Licensee securities
offerings, the basic licensing and service fee will be
discounted to $1,000 per month, payable
monthly in advance, upon completion of installation.
(3) DirectInvest Button Basic License and Service Fee
A.
B.
Installation and set-up fee of $500, which includes basic
set-up of one offering and one DirectInvest Button
offering, a client instance in the TAPI Admin Console, support
and troubleshooting during integration period.*
Basic licensing and service fee of $500 per month, or part
thereof, per offering for the duration of the offering
beginning at the earlier of: (i) 120 days from
the date of installation; and (ii) the "go-live date" as
specified by the
Licensee, payable at the beginning of each
month.
(4) DirectAccreditation Button Basic License and Service Fee
A.
B.
Installation and set-up fee of $250, which includes basic
set-up of one DirectAccreditation Button offering, a client
instance in the TAPI Admin Console, support and
troubleshooting during integration period.*
Basic licensing and service fee of $250 per month, or part
thereof, beginning at the earlier of: (i) 120 days from the
date of installation; and (ii) the "go-live date"
as specified by the Licensee, payable at the beginning of
each month.
*Integration period limited to 60 days post-installation;
support and troubleshooting after the integration period
subject to "T+M"
rates set forth in Schedule C below.
**Basic customization and branding hours must be used
within 60 days of the date of installation; non-basic
customization and
branding and basic customization and branding after the
60-day post-installation period subject to "T+M" rates set
forth in Schedule
C below. Services not included in the prices above and
subject to the "T+M" rates set forth in Schedule C below
include, without
limitation, additional customization, project management and
general technical support, including, without limitation,
troubleshooting and debugging.
*** The fees payable under this Agreement, plus the other
relevant fees attributable to any public offering, shall be
capped at an
aggregate amount not to exceed as permitted by applicable
FINRA rules.
Any contractual agreements with third party vendors are not
subject to the terms of this Agreement, unless otherwise
provided for
herein. References to third party fees, expenses, expense
rates and cost estimates are for indicative purposes only.
Such fees may
include, but are not limited to, the following:
?
?
Design and branding
UX design
14
(NCIT SSLA 8/2020)
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
Independent project management
Custom development
System integration services
Testing services
System configuration, administration, support
Dedicated servers
Backups and storage
Disaster recovery
Bandwidth and load balancing
DNS management
Email marketing and support
Electronic document management systems
(Docusign/Echosign)
Identity verification (KYC/OFAC/AML) and accreditation checks
Payment processing fees
SSL Certificates
ALL SALES ARE FINAL; NO REFUNDS OR EXCHANGES.
15
(NCIT SSLA 8/2020)
SCHEDU
LE C
T+M FEES
AND EXPENSES
This Schedule C is provided for information purposes only.
Any and all custom development work, project management
and general
technical support, including, without limitation, troubleshooting
and debugging, will be charged on a time and material
("T+M")
basis.
The following hourly rates will apply, which NCIT reserves
the right to update with 30 days' prior written notice.
Solutions Architect
Senior Consultant
Project Manager
Developer
$250
$250
$150
$45
Discount for 100 hour prepaid block:
Discount for 250 hour prepaid block:
5%
10%
Materials and services provided by parties other than the
NCIT will be billed at cost.
16
(NCIT SSLA 8/2020)
PART II AND III
7
WineInvoices.pdf
ASSET ACQUISITION BY MANAGER
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