AMENDED AND RESTATED
SERIES LIMITED LIABILITY COMPANY
AGREEMENT
FOR
VV MARKETS, LLC,
A DELAWARE LIMITED LIABILITY COMPANY
TABLE OF CONTENTS
1.
Recitals
1
1.1
Headings and Definitions
1
2.
Formation of Company
1
2.1
Name of Company
2
2.2
Principal Place of Business
2
2.3
Registered Office and Registered Agent
2
2.4
Term
2
2.5
Founder Contributions and Compensation
2
3.
Series of the Company
3
3.1
Series Creation
3
3.2
Series Management
3
3.3
Series Membership
4
3.4
Subsidiaries of Series
4
3.5
Series Debt Liability; Books and Records
5
4.
Business Purpose
5
4.1
Business of Company, Its Series, and Their Subsidiaries
5
4.2
Affiliates of the Founder May Provide Services
6
5.
Members' Names and Addresses; Member Classes
5
5.1
Company and Series Members
5
5.2
Series Member Classes
6
6.
Rights and Duties of Management
6
6.1
Management of the Company and Series
6
6.2
Exclusive Authority of the Series Managers
7
6.3
Authority of the Series Members
8
6.4
Series Manager's Liability for Certain Acts
9
6.5
Bank Accounts
9
6.6
Indemnity of the Series Managers, Employees and Other
Agents
9
6.7
Salaries
10
6.8
Resignation
10
6.9
Removal
10
6.10
Vacancies
11
7.
Rights and Obligations of Members
11
7.1
Limitation of Liability
11
7.2
List of Members
12
7.3
Company Books
12
7.4
Priority and Return of Capital
12
7.5
Liability of a Series Member to the Company
12
8.
Meetings of Members
13
8.1
Meetings
13
8.2
Place of Meetings
13
8.3
Notice of Meetings
13
8.4
Meetings of All Voting Members
13
8.5
Record Date
13
8.6
Quorum
14
8.7
Manner of Acting
14
8.8
Proxies
14
8.9
Action by Members without a Meeting
14
8.10
Waiver of Notice
15
9.
Contributions to the Company and Capital Accounts
15
9.1
Capital Contributions
15
9.2
Voluntary Additional Capital Contributions
15
9.3
Time of Capital Contributions; Withdrawal Not Permitted
16
9.4
Loans
16
9.5
Company Interests
16
9.6
Voting Units
16
9.7
Series Ownership
17
9.8
Capital Accounts
17
10.
Distributions
17
10.1
Distributable Cash
17
10.2
Distribution Rules
17
10.3
Limitation upon Distributions
18
10.4
No Interest on Capital Contributions
18
11.
Books and Records, Bank Accounts, Tax Matters
18
11.1
Accounting Method
18
11.2
Records, Audits and Reports
18
11.3
Returns and Other Elections
19
12.
Voluntary Transfers; Additional and Substitute
Members
19
12.1
Transfers Restricted
19
12.2
Percentage of Limitations or Transfers
20
12.3
Voluntary Withdrawal, Resignation or Disassociation
Prohibited
20
12.4
Admission of Additional Series Members
20
12.5
Transfer Prohibited Except as Expressly Authorized
Herein
20
12.6
Conditions for Permissible Voluntary Transfer
21
12.7
Substitution
21
12.8
Voluntary Transfer; Right of First Xxxxxxx
00
00.
Involuntary Transfer; Disassociation
24
13.1
Disassociation for Cause
24
13.2
Disassociation by Operation of Law
24
13.3
Effect of Disassociation
25
13.4
Sale and Valuation of a Disassociated Member's Interest
26
13.5
Closing on a Disassociated Members' Interest
26
13.6
Payment for a Disassociated Member's Interest
27
13.7
Transfer of Economic Interest; Rights of an Involuntary
Transferee
27
14.
Dispute Resolution
28
14.1
Notice of Disputes
28
14.2
Negotiation of Disputes
28
14.3
Mandatory Alternative Dispute Resolution
29
14.4
Mediation
30
14.5
Arbitration
30
15.
Termination of Series and Company
31
15.1
Dissolution of the Company
31
15.2
Termination of a Series
32
15.3
Winding Up of a Series on Termination of Such Series
32
15.4
Winding Up On Dissolution of the Company
33
15.5
Certificate of Cancellation
33
15.6
Effect of Filing Certificate of Cancellation or Equivalent
33
15.7
Returns of Contributions Nonrecourse to Other Members
33
16.
Miscellaneous Provisions
34
16.1
Notices
34
16.2
Binding Effect
34
16.3
Governing Law
34
16.4
Waiver of Action for Partition
34
16.5
Amendments
33
16.6
Execution of Additional Instruments
35
16.7
Construction
35
16.8
Waivers
35
16.9
Severability
35
16.10
Creditors
36
16.11
Counterparts
36
16.12
Integration
36
17.
Signatures
36
Appendix A: Capital Accounts and Allocations
A-1
Appendix B: Definitions
B-1
C-1
AMENDED AND RESTATED
SERIES LIMITED LIABILITY COMPANY
AGREEMENT
FOR
VV MARKETS, LLC,
A DELAWARE LIMITED LIABILITY COMPANY
THIS AMENDED AND RESTATED SERIES LIMITED
LIABILITY COMPANY AGREEMENT (Company
Agreement) for VV Markets, LLC, a Delaware limited
liability company (the Company) is effective as of the
date executed below, and is the governing document by
and between the Company, its Founder (VinVesto, Inc., a
Delaware corporation), its Series, and the Series
Managers and Series Members.
1. Recitals
WHEREAS, the parties hereto desire to enter into
this Agreement; and
WHEREAS, it is intended by the parties hereto
that Underlying Asset(s) or Asset(s) shall be acquired by
a Series of the Company and that the debts, liabilities and
obligations incurred, contracted for or otherwise existing
with respect to a particular Series of the Company will be
enforceable against the assets of such Series only, and not
against the assets of the Company generally or any other
Series thereof, and none of the debts, liabilities,
obligations and expenses incurred, contracted for or
otherwise existing with respect to the Company generally
or any other Series thereof shall be enforceable against
the assets of such Series; and
NOW, THEREFORE, this Amended and Restated
Operating Agreement shall replace in all respects the
Company's previous operating agreement, and in
consideration of the mutual promises and obligations
contained herein, the parties, intending to be legally
bound, hereby agree as follows:
1.1 Headings and Definitions
The headings and subheadings in this Agreement are
included for convenience and identification only and are
in no way intended to describe, interpret, define or limit
the scope, extent or intent of this Agreement, a Series
Agreement or any provision hereof.
Capitalized terms in this Agreement (and any associated
Series Agreements) are defined in Appendix B hereof.
2. Formation of Company
The Founder has executed and delivered a Certificate of
Formation to the Delaware Secretary of State in
accordance with and pursuant to the Delaware Limited
Liability Company Act, as codified in the Delaware
Code, Title 6, Chapter 18 (the Act). Upon execution of
this Agreement, without the need for the consent or other
action of any Person or members of any Series, the
Founder shall be admitted as the sole Member of the
Company not associated with any Series.
The Founder (as the sole Member of the Company)
hereby ratifies and approves formation of the Company
as a Delaware Series limited liability company under and
pursuant to the provisions of the Act and agrees that the
rights, duties and liabilities of the Founder, Series
Managers and Series Members shall be as provided in the
Act, except as otherwise provided herein. The Company
shall not acquire assets or incur liabilities or other
obligations unless they are acquired or incurred on behalf
of a Series and not with respect to the Company
generally.
2.1 Name of Company
The name of the Company shall be VV Markets, LLC, a
Delaware Series limited liability company. The business
of the Company may be conducted in compliance with all
applicable laws under the Company or its Series' name,
or such assumed name as may be designated by the
Founder or a Series Manager.
2.2 Principal Place of Business
The principal place of business of the Company and the
Founder is:
VV Markets, LLC
c/o Xxxxxxxx Xxxx
0000 Xxxxxxxxx Xxx
Xxxxxxxx, XX 00000
The Company and its Series may locate its place of
business and registered office at any other place as the
Founder may from time-to-time deem advisable. The
Founder or Series Managers will convey any changes in
addresses after inception of the Company by sending
correspondence to all affected Persons.
2.3 Registered Office and Registered Agent
The Company shall maintain a registered agent in
Delaware at all times during operation of the Company or
any Series. The Founder may change the registered office
and registered agent of the Company at any time by filing
the address of the new registered office and/or the name
of the new registered agent with the Secretary of State of
the State of Delaware pursuant to the Act.
2.4 Term
The Company and each of its Series shall have perpetual
existence unless the Company is earlier dissolved in
accordance with the provisions of this Agreement or the
terms of a Series Agreement.
2.5 Founder Contributions and Compensation
The Founder, through its members, has made such
Capital Contributions to the Company as necessary for its
formation. The Founder does not plan to collect Fees or
Distributions from any of the Series on account of its role
as the Founder, but it may receive Fees or Distributions to
the extent it or an Affiliate acts as a Series Manager as
described in a Series Agreement.
The Founder (except in its capacity as a Series Manager
or Series Member) shall not acquire assets for or incur
liabilities or other obligations with respect to the
Company or any Series unless the Founder (as a Series
Manager) shall be deemed admitted as a Member of a
newly created Series upon its execution of a counterpart
signature page to a Series Agreement. As its capacity as a
Series Manager, VinVesto, Inc. will acquire assets and
subsequently sell those assets to the Company.
The Founder may be reimbursed pro rata from each
Series for common expenses such as accounting,
insurance, office space, asset managers or other
employees who administer services to the Series' on
behalf of the Company. Additionally, the Founder may
grant Class B Interests in its Series to others who provide
services to the Company and/or a Series. The Founder
may determine and collect a pro-rata amount from each
Series after considering the actual time spent on behalf of
each Series, the relative revenue generated by a Series, or
any other means the Founder deems fair and reasonable.
3. Series of the Company
In accordance with this Agreement, the Founder may
from time to time form such Series of the Company as
may be necessary to meet the Company's business
objectives (See Article 4.1).
3.1 Series Creation
Each Series will have the following characteristics:
- A separate business purpose or investment objective;
- Series Members who will make Capital Contributions or
Non-Capital Contributions the Series to further its
separate business objectives (see Article 4.1);
- Separate rights, powers or duties with respect to
management, control, or disposition of Underlying
Asset(s) of a Series;
- Separate obligations or rights to share in Profits and
Losses associated with Underlying Asset(s) of a Series.
Each Series Agreement and its exhibits will describe the
purpose, Underlying Asset(s), characteristics, capital
requirements, and investment strategies for a Series.
3.2 Series Management
Management of each Series will automatically be vested
in the Founder (as the Series Manager) or an Affiliate of
the Founder (owned or controlled by the Founder or its
members), as designated by the Founder in a Series
Agreement. The Founder has the exclusive authority to
designate itself as the Series Manager or to designate a
Series Manager, who may be an Affiliate of the Founder,
its members, or a Series Member.
The Founder may designate a Series Manager to
accommodate:
- The request of a lender to include an additional loan
guarantor for an acquisition, refinance or other loan
against Underlying Asset(s) of the Series;
- Active participants who may participate in asset
procurement, asset management, fundraising or other
needed services on behalf of a Series; or
- For any other reason that the Founder, in its sole
discretion, deems appropriate or beneficial for a Series.
A Series Manager (or its members or Affiliates) may be a
manager of one or more Series and may make Capital or
Non-Capital Contributions to such Series in exchange for
its Membership Interests, management designation, Fees
and/or Distributions.
3.3 Series Membership
An Investor who makes Capital Contributions or Non-
Capital Contributions to a Series and is accepted by the
Series Manager shall become a "Series Member" of that
Series, but not of the Company generally, or of any other
Series. A Series Member may be a Member of one or
more Series. A Series Member may earn Distributions
only from the Series to which it is admitted as a Member.
The Founder shall maintain a list of all Series, the
respective Series Members, and the Series Managers.
Each Series Agreement will each identify all Series
Members and the Series Manager. The Founder shall
periodically update such lists as necessary to update the
information contained therein, including, without
limitation, the establishment of additional Series, the
admission or Disassociation of Series Members, the
respective Series Managers, and all relevant contact
information.
3.4 Subsidiaries of Series
The Founder may form single purpose limited liability
companies (Subsidiaries) on behalf of a Series as
necessary to:
- Take title to Underlying Asset(s);
- Borrow money to finance the usually required by a
lender;
- Execute a lease on a Underlying Asset(s) on behalf of a
Series (as the lessee);
- Execute a purchase option on a Underlying Asset(s) (as
an optionee).
Where such Subsidiaries are formed, the sole Member of
the Subsidiary will be a Series, unless the Series joint
ventures with another entity or Person to acquire the
Underlying Asset(s). In any case, the Founder or a
designated Series Manager shall retain management
control of the Subsidiary on behalf of the Series and its
Members.
3.5 Series Debt Liability; Books and Records
No debt, liability or obligation of a Series shall be a debt,
liability or obligation of the Company or any other Series.
The debts, liabilities and obligations incurred, contracted
for or otherwise existing with respect to a Series shall be
enforceable against the assets of such Series or its
Subsidiaries only and not against any other assets of the
Company generally or any other Series.
The Founder shall cause each Series to maintain separate
and distinct records for its Subsidiaries and Property. All
assets or liabilities associated with a Series shall be
accounted for separately from the other assets or
liabilities of the Company, or any other Series.
3.6 Operating Expenses
Operating Expenses are costs and expenses attributable to
the activities of the Series (collectively, "Operating
Expenses") including:
- costs incurred in managing the Underlying Asset,
including, but not limited to storage, maintenance and
transportation costs (other than transportation costs
described in Acquisition Expenses);
- costs incurred in preparing any reports and accounts of
the Series, including any tax filings and any annual audit
of the accounts of the Series (if applicable) or costs
payable to any third-party registrar or transfer agent and
any reports to be filed with the Commission including
periodic reports on Forms 1-K, 1-SA and 1-U;
- any indemnification payments; and
- any and all insurance premiums or expenses in
connection with the Underlying Asset, including
insurance required for utilization at and transportation of
the Underlying Asset to events under Fan Club
Experiences (as described in "Description of the Business
- Business of the Company") (excluding any insurance
taken out by a corporate sponsor or individual paying to
showcase an asset at an event but including, if obtained,
directors and officers insurance of the directors and
officers of the Manager or the Series Manager).
4. Business Purpose
4.1 Business of Company, Its Series, and Their
Subsidiaries
The business objectives of the Company and each of its
Series, and their Subsidiaries shall be:
- To acquire (by purchase, purchase option or installment
contract, or direct sourcing) collectible assets (wines),
from the Founder, for purposes of investment,
management, operation, and disposition by sale or
lease/option to a third-party or to an Affiliate of the
Founder or its members.
- To transact any and all lawful business for which a
limited liability company may be formed under the Act in
furtherance of the business objectives stated in the
preceding paragraph; and
- To transact all business necessary, appropriate, advisable,
convenient or incidental to any of the foregoing
provisions.
The Founder and each Series shall have the power to do
any or all of the acts necessary, appropriate, advisable,
incidental or convenient to or for the furtherance of the
purposes and business described herein and for the
protection or benefit of the Company and its Series. The
Company and each Series shall have any or all of the
powers that may be exercised on behalf of the Company
or such Series by any Person in accordance with the Act.
4.2 Affiliates of the Founder May Provide Services
The Founder (or its members), or an Affiliate may
provide or participate in Asset-related services for the
Series and their Subsidiaries. So long as the rates a Series
pays for such services are commensurate with third-party
rates, this shall not be considered a conflict of interest,
nor will contracts related to such services require the
consent of any Person other than the Series Manager.
5. Members' Names and Addresses; Member Classes
5.1 Company and Series Members
The name and address of the Founder is provided in
Article 2.2 hereof. The name of respective Series
Members will be provided in Appendices attached to the
applicable Series Agreement.
5.2 Series Member Classes
On formation of a Series, the Founder will cause to be
drafted a Series Agreement, designating such Member
Classes as may be necessary, appropriate, or
advantageous for operation of the Series and meeting its
specific business objectives. On creation of a Series, the
Founder may designate certain Member Classes having
preferential rights to compensation or a return of capital
over other, subordinate classes. Assignment of Series
Member Classes may be based on the amount, character
(loan v. equity), or timing of an investor's Capital
Contribution to a Series, as the Founder deems
appropriate when forming the Series.
6. Rights and Duties of Management
6.1 Management of the Company and Series
The Founder shall be vested with the authority to act as
and on behalf of the Company, and shall have the sole
and exclusive authority to appoint an initial Manager for
each Series. The business and affairs of a Series shall be
vested in the Manager and Members of that Series in
accordance with its Series Agreement. In the absence of a
Series Manager, the Founder shall be vested with the
authority to act as and on behalf of the Series as its
Manager. A Series Manager need not be a member of that
Series or a member of the Company. Series Managers
may receive compensation in the form of Fees and/or
Series Membership Interests for which they may receive
Distributions.
The Founder reserves the exclusive authority to enter into
selling or other agreements with FINRA registered selling
agents or brokers on behalf of the Company or its Series.
The Company may such pay finder's fees or
commissions, or issue subordinate (e.g., Class B
Interests) in a Series to such Persons for introducing or
referring Investors who purchase Series Interests. The
amount of cash paid by the Company for finder's fees or
commissions paid to such Persons, if any, may reduce the
proceeds available for investment in a Series, although
Investors so referred will be given full credit for the total
amount of their Capital Contributions. However, any
right to Distributions granted by the Manager to such
Persons as compensation for Investor referrals will come
from the Series Manager's allocation, and will not impact
the Distributions or dilute the Percentage Interests of
Investors or their Member Class.
6.2 Exclusive Authority of the Series Managers
A Series Manager, if one or more are designated by the
Founder, shall be vested with the authority to act as and
on behalf of such Series. The Series Manager(s) shall
serve until each of its successors are elected by the
Members of that Series. Unless otherwise specified in a
Series Agreement, the Series Manager for each Series
will be VV Markets, LLC, a Delaware limited liability
company (or its Affiliates).
Without limiting the general authority of a Series
Manager provided in Article 6.2 a Series Manager shall
have the sole power and authority, on behalf of a Series
to:
- Acquire title or management control of Underlying
Asset(s) (by purchase, lease, purchase option, installment
contract) from any Person as the Series Manager(s) may
determine, whether or not such Person is directly or
indirectly affiliated or connected with the Founder or any
Series Member;
- Borrow money for a Series (or their Subsidiaries) from
banks, other lending institutions, other Series Members,
or the Founder, on such terms as the Series Manager
deems appropriate, and in connection therewith, to
hypothecate, encumber and grant security Interests in the
assets of a Series to secure repayment of the borrowed
sums. No debt shall be contracted or liability incurred by
or on behalf of any Series except by the Series
Manager(s), or, to the extent permitted under the Act and
this Agreement, by agents or employees associated with a
Series or the Series Manager(s) expressly authorized by
the Series Manager(s) to contract such debt or incur such
liability;
- Purchase liability and other insurance to protect the
property and business or the Company or Series, and/or
directors and officers for the assets of a Series, the Series
itself, the Series Manager, the Company, or its Founder;
- Hold, own and/or operate such assets in the name of a
Series or its Subsidiary, as appropriate;
- To joint venture with other companies to accomplish the
objectives of the Company or a Series;
- Form new, single purpose entities, e.g., limited liability
companies, limited partnerships, corporations, or trusts,
(Subsidiaries) to take title to or management control of a
specific Underlying Asset(s), so long as the Subsidiary is
managed by the Founder or an Affiliate;
- Sell or otherwise dispose of all or substantially all of the
assets of a Series as part of a single transaction or plan as
long as such disposition is not in violation of or a cause
of a default under any other agreement to which such
Series may be bound;
- Execute on behalf of a Series all instruments and
documents, including, without limitation, checks; drafts;
notes and other negotiable instruments; mortgages or
deeds of trust; security agreements; financing statements;
documents providing for the acquisition, mortgage or
disposition of such Series' property; assignments; bills of
sale; leases; and any other instruments or documents
necessary, appropriate, convenient, advisable or
incidental to the business of such Series;
- Employ accountants, legal counsel, managing agents or
other experts to perform services for the Company with
respect to a Series;
- Pay, collect, compromise, litigate, arbitrate, or otherwise
adjust or settle any and all other claims or demands of or
against such Series or to hold such proceeds against the
payment of contingent liabilities;
- Enter into any and all other agreements on behalf of the
Company with respect to a Series, as appropriate; and
- Do and perform all other acts as may be necessary,
appropriate, convenient, advisable or incidental to the
conduct of such Series' business.
Each Series Manager shall have the exclusive power and
authority to bind a Series on any matter described above,
and shall be deemed to be authorized by the Series
Members to act as an agent of the Company only with
respect to such Series.
6.3 Authority of the Series Members
The Series Members shall have the authority to direct,
manage and control the business and affairs of their
respective Series on such matters, if any, on which they
may be entitled to vote as described in a Series
Agreement. Such voting rights shall be exercised by the
Series Members in accordance with their Percentage
Interests in the Series (or their Member Class) as to the
management and conduct of that Series only (not
generally with respect to the Company or any other
Series). Unless otherwise specified in a Series
Agreement, an affirmative vote of Series Members
holding a Majority of Interests in a Series shall control on
all such matters in which they are entitled to vote.
The affirmative vote of a Majority of Interests of all of
the Members associated with a Series shall be required
for the Company to merge or consolidate with or into, or
convert into, another entity, (but not to joint venture).
Unless authorized to do so by this Agreement or
specifically by its Series Manager, no attorney-in-fact,
employee or other agent of the Company or such Series
shall have any power or authority to bind the Company or
such Series in any way, to pledge the Company's or a
Series' credit or to render the Company or a Series liable
for any purpose.
6.4 Series Manager's Liability for Certain Acts
Each Series Manager shall perform its duties in good
faith, in a manner it reasonably believes to be in the best
interests of the Company and such Series, and with such
care as an ordinarily prudent person in a like position
would use under similar circumstances. A Series
Manager shall not be liable to the Company, the Series
with which it is associated, or to any other Series Member
or Series for any loss or damage sustained by such Series
or Series Member, unless the loss or damage shall have
been the result of fraud, deceit, gross negligence, willful
misconduct or a wrongful taking by the Series Manager.
6.5 Bank Accounts
A Series Manager or the Founder may from time to time
open bank accounts in the name of the Company or such
Series, or in the name of a Subsidiary, as appropriate, and
the Founder and Series Manager shall be the only
signatories thereon, unless such Series Manager
determines otherwise.
6.6 Indemnity of the Series Managers, Employees and
Other Agents
To the fullest extent permitted by applicable law, subject
to approval of each Series Manager or the Founder, all
officers, directors, shareholders, partners, members,
employees, representatives or agents of the Founder or a
Series Manager, or their respective affiliates, employees
or agents (each, a "Covered Person") shall be entitled to
indemnification from such Series (and the Company
generally) for any loss, damage or claim incurred by such
Covered Person by reason of any act or omission
performed or omitted by such Covered Person in good
faith on behalf of the Founder or such Series and in a
manner reasonably believed to be within the scope of
authority conferred on such Covered Person by this
Agreement and any Series Agreement, except that no
Covered Person shall be entitled to be indemnified for
any loss, damage or claim incurred by such Covered
Person by reason of fraud, deceit, gross negligence,
willful misconduct or a wrongful taking with respect to
such acts or omissions; provided, however, that any
indemnity under this Article 6.6 shall be provided out of
and to the extent of the assets of the such Series only, and
no other Covered Person or any other Series or the
Company or the Founder shall have any liability on
account thereof. Such Covered Persons will have no duty
or obligation (fiduciary or otherwise) to give any
consideration to any interest of or factors affecting us or
any of our Members and will not be subject to any
different standards imposed by our operating agreement,
the Delaware Limited Liability Company Act or under
any other law, rule or regulation or in equity. These
modifications of fiduciary duties are expressly permitted
by Delaware law.
To the fullest extent permitted by applicable law, subject
to approval of the Founder or a Series Manager, all
expenses (including legal fees) incurred by a Covered
Person in defending any claim, demand, action, suit or
proceeding shall, from time to time, be advanced by such
Series prior to the final disposition of such claim,
demand, action, suit or proceeding upon receipt by such
Series of an undertaking by or on behalf of the Covered
Person to repay such amount if it shall be determined that
the Covered Person is not entitled to be indemnified as
authorized in this Article 6.6.
The Founder (on behalf of the Company as a whole) or a
Series may purchase and maintain insurance, to the extent
and in such amounts as its Series Manager(s) and/or the
Founder shall deem reasonable, on behalf of Covered
Persons and such other Persons as the Founder or Series
Manager(s) shall determine, against any liability that may
be asserted against or expenses that may be incurred by
any such Person in connection with the activities of the
Company or a Series, or such indemnities in general,
regardless of whether a Series would have the power to
indemnify such Person against such liability under the
provisions of this Agreement or a Series Agreement.
The Founder (on behalf of the Company as a whole) or a
Series may enter into indemnity contracts with Covered
Persons and such other Persons as the Founder or a Series
Manager shall determine and may, but are not required to,
adopt written procedures pursuant to which arrangements
are made for the advancement of expenses and the
funding of obligations under this Article 6.6 and
containing such other procedures regarding
indemnification as are appropriate.
6.7 Salaries
Neither the Founder nor any Series Manager is expected
to earn a salary. However, salaries, fees or other
compensation (such as Distributions on account of its
Series Membership Interest) of a Series Manager may be
fixed from time to time, as specified in a Series
Agreement or other relevant agreement, or subsequently
by an affirmative vote of the Series Members holding at
least a Majority of Interests of such Series. This provision
is expected to accommodate the Series Members' need to
hire a replacement Series Manager (who may not be a
Series Member or an Affiliate of the Founder), in the
unlikely event that the initial Series Manager is removed
or has resigned or is no longer able to serve as the Series
Manager and the Founder is unable or unwilling to serve
in its stead (see Articles 6.8 and 6.9 below).
6.8 Resignation
Any Series Manager may resign at any time by giving
written notice to the Series Members and the Founder.
The resignation of a Series Manager shall take effect
upon receipt of notice thereof or at such later time as shall
be specified in such notice; and, unless otherwise
specified therein, the acceptance of such resignation shall
not be necessary to make it effective. The resignation of a
Series Manager who is also a Member of a Series shall
not affect its Series Membership Interests and shall not
constitute its withdrawal as a Series Member.
6.9 Removal
At a meeting called expressly for that purpose, a Series
Manager may be removed at any time, for Good Cause,
by the decision of such Series Members owning more
than seventy-five percent (75%) of the Percentage
Interests in that Series. Good Cause shall include only the
following:
- Committing any of the acts described in Article 6.4
hereof (including fraud, deceit, gross negligence, willful
misconduct or a wrongful taking);
- A breach of a Series Manager's duties or authority
hereunder;
- Bad faith;
- Death or disability wherein the Series Manager (or each
of the members of the Manager with authority to Manage
the Series) dies or becomes physically, mentally, or
legally incapacitated such that it can no longer effectively
function as the Series Manager or the dissolution,
liquidation or termination of any entity serving as a Series
Manager and no other member of the Series Manager is
willing or able to effectively perform the Series
Manager's duties;
- Disappearance wherein the Series Manager (or each of
the its members) fails to return phone calls and/or written
correspondence (including email) for more than thirty
days (30) without prior notice, or failure to provide the
Series Members with new contact information; or
- Issuance of a legal charging order and/or judgment by
any judgment creditor against the Manager's Interest in
Cash Distributions or Fees from the Company.
6.10 Vacancies
A Series Manager's vacancy shall be filled by:
- The Founder or its designee, unless the Founder is the
Series Manager is the subject of the removal action.
- In that event the replacement Series Manager will be
elected by a vote of a Majority of Interests of such Series
Members at either a special meeting or by written
consent.
A Series Manager elected to fill a vacancy shall be
elected for the un-expired term of its predecessor in office
and shall hold office until expiration of such term and
until its successor shall be elected and shall qualify or
until its, resignation or removal.
7. Rights and Obligations of Members
7.1 Limitation of Liability
7.1.1 Limitation of Liability of the Company
Except as otherwise provided in this Agreement, or the
Act, the debts, obligations and liabilities of the Company
where such liabilities are incurred in its own name and
not with respect to a Series, whether arising in contract,
torts or otherwise, shall be solely the debts, obligations
and liabilities only of the Company, and no Series, Series
Member or Series Manager shall be obligated personally
for any such debt, obligation or liability of the Company
solely by reason of being a Series Member or Series
Manager.
7.1.2 Limitation of Liability of a Series
Except as otherwise provided in its Series Agreement, or
the Act, the debts, obligations and liabilities of a Series,
where such liabilities are incurred in its own name and
not generally with respect to the Company, whether
arising in contract, torts or otherwise, shall be solely the
debts, obligations and liabilities only of that Series, and
neither the Members or Manager of that Series (nor any
other Series or its Members or Manager), shall be
obligated personally for any such debt, obligation or
liability solely by reason of being a Member or Manager
of either the Series that is the subject of the liability or
another Series of the Company. Each Series Member
shall nevertheless be liable for its obligations to make
Capital Contributions pursuant to Articles 9.1 and 9.2.
7.2 List of Members
Upon the written request of any Series Member for any
purpose reasonably related to such Member's Interest in
such Series, the Series Manager shall provide to such
Member a list showing the names, and Membership
Interests of all Series Members. The Series Manager will
maintain as confidential all Members' contact
information to the extent provided by the Act and other
applicable law.
7.3 Company Books
The Founder shall maintain and preserve, during the
existence of such Series, the accounts, books and other
relevant Series documents described in Article 11 at the
Founder's place of business. Notwithstanding anything in
this Agreement to the contrary, the Founder, in concert
with each Series Manager will be responsible for
maintaining separate and distinct records for each and
every Series, and the assets associated with each Series
shall be held and accounted for separately from the other
assets of the Company or of any other Series.
Upon reasonable written request stating the reason for the
request, a Series Member shall have the right, at a time
during ordinary business hours, as reasonably determined
by such Series Manager(s), to inspect and copy, at the
requesting Series Member's expense, the books and
records for such Series and its Subsidiaries for a business
purpose reasonably related to such Series Member's
Interest with respect to such Series. The Series Manager
may choose to provide the requested information
electronically, at its option.
No Series Member or Series Manager will have the right
to inspect and copy the books and records of any other
Series of which it is not a Member or a Manager, nor of
the Company generally, unless specifically required by
the Act.
The Company, Founder, and Series Managers will
maintain confidentiality of the Series Members contact
information to the extent allowed under the Act.
7.4 Priority and Return of Capital
No Series Member shall have priority over any other
Series Member either as to the return of Capital
Contributions or as to allocation of Profits, Losses or
Distributions; provided that this Article 7.4 shall not
apply to loans made to the Company by the Founder, a
Series Manager or Series Member with respect to a
Series, unless Member Classes specifically having such
priority are provided in a Series Agreement.
7.5 Liability of a Series Member to the Company
A Series Member who receives a Distribution from the
Company with respect to a Series is liable to the
Company with respect to such Series or to others only to
the extent provided by the Act and other applicable law.
8. Meetings of Members
8.1 Meetings
Meetings of Series Members, for any purpose or
purposes, may be called by any Series Manager, or by the
Series Members holding at least twenty-five percent
(25%) of the Percentage Interests of such Series on notice
to the Series Manager, but there shall be no requirement
that there be an annual meeting.
8.2 Place of Meetings
A Series Manager may designate any place, either within
or outside the State of Delaware, as the place of meeting
for any meeting of the Series Members. If a designation is
not made, or if a special meeting is otherwise called, the
place of meeting shall be the principal place of business
of the Company. Any meeting of Series Members may
also take place by teleconferencing as long as a quorum
(as defined in Article 8.6 below) participate in the same.
8.3 Notice of Meetings
Except as provided in Article 8.4, written notice stating
the place, day and hour of the meeting and the purpose or
purposes for which the meeting is called shall be
delivered not less than three (3) nor more than thirty (30)
days before the date of the meeting, either personally, by
email, or by mail, by or at the direction of a Series
Manager or Person calling the meeting, to each Member
entitled to vote at such meeting. If email, such notice
shall be deemed delivered one (1) business day after
being sent, and if mailed, such notice shall be deemed to
be delivered two (2) business days after being deposited
in the United States mail, addressed to the Member at its
address as it appears on the books of the Company, with
postage thereon prepaid.
8.4 Meetings of All Voting Members
If all Members of a Series shall meet at any time and
place, either within or outside the State of Delaware, or
participate in a teleconference meeting, and consent to the
holding of a meeting at such time and place or by
teleconference, such meeting shall be valid without call
or notice, and at such meeting lawful action may be
taken.
8.5 Record Date
Unless otherwise stated in a Series Agreement, for the
purpose of determining Series Members entitled to notice
of or to vote at any meeting of Series Members or any
adjournment thereof, or Series Members entitled to
receive payment of any Distribution, or in order to make
a determination of Series Members on a specific date for
any other purpose, the day immediately prior to the date
on which notice of the meeting is mailed or the day
immediately prior to the latest date on which the such
Distribution will be calculated (i.e., the day before the
Distribution is made), as the case may be, shall be the
record date for such determination of Series Members.
When a determination of Series Members entitled to vote
at any meeting of Series Members has been made as
provided in this Article 8.5, such determination shall
apply to any adjournment thereof.
8.6 Quorum
Series Members holding at least two-thirds (2/3) of all
Percentage Interests of such Series, represented in person
or by proxy, shall constitute a quorum at any meeting of
Series Members. In the absence of a quorum at any such
meeting, Series Members holding a majority of the
Percentage Interests so represented may adjourn the
meeting from time to time for a period not to exceed sixty
(60) days without further notice. However, if the
adjournment is for more than sixty (60) days, or if after
the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting
shall be given to each Series Member of record entitled to
vote at the meeting. If a quorum is present or represented
at such adjourned meeting, any business may be
transacted which might have been transacted at the
meeting as originally noticed. The Series Members
present at a duly noticed meeting may continue to
transact business until adjournment, notwithstanding the
withdrawal during such meeting of that number of
Percentage Interests whose absence would cause less than
a quorum.
8.7 Manner of Acting
If a quorum is present, the affirmative vote of Series
Members holding a Majority Interest in a Series shall be
the act of the Series Members, unless the vote of a greater
or lesser proportion or number is otherwise required by
the Act or expressly by this Agreement or a Series
Agreement. Only the Series Members of each specific
Series may vote or consent upon any matter concerning
that Series, and their vote or consent, as the case may be,
shall be counted in the determination of whether the
matter was approved by the Series Members.
8.8 Proxies
At all meetings of Series Members, a Series Member may
vote in person or by proxy executed in writing by the
Member or by a duly authorized attorney-in-fact. Such
proxy shall be filed with the Manager before or at the
time of the meeting. No proxy shall be valid after eleven
months from the date of its execution, unless otherwise
provided in the proxy. A proxy may only be given
verbally during a meeting taking place by
teleconferencing and shall expire at the termination of
said teleconference.
8.9 Action by Members without a Meeting
Action required or permitted to be taken at a meeting of
Series Members may be taken without a meeting and
without prior notice if consents, whether oral or written,
of Series Members are received in writing (by email
originating from a Members' email account, or mail)
representing the minimum number of votes that would be
necessary to authorize or take such action at a meeting at
which all Members of such Series were present and
voted, and all Series Members entitled to vote were
notified of the meeting.
8.10 Waiver of Notice
When any notice is required to be given to any Member,
a waiver thereof in writing signed by the Member entitled
to such notice, whether before, at, or after the time stated
therein, or the participation in a teleconference meeting,
shall be equivalent to the giving of such notice.
9. Contributions to the Company and Capital
Accounts
9.1 Capital Contributions
The Founder may raise Capital Contributions for each
Series by the sale of Units in each Series via the
Company's Private Placement Memorandum. The
Founder will determine the minimum or maximum
number of Units to be sold on behalf of a Series, and the
minimum investment amount required of an individual
Investor in a Series. Each Series Member shall contribute
to such Series in the amount set forth in a Series
Agreement as its Initial Capital Contribution to the
Company with respect to such Series. The Founder will
accept or reject the Subscription after making a
determination of whether the Investor meets the
suitability standards established by the Founder to invest
in the Company. Each Series Member's holdings of Units
may but are not required to be evidenced by a certificate
or receipt in a form approved by the Founder.
9.2 Voluntary Additional Capital Contributions
No Series Member will be required to make Additional
Capital Contributions. If a Series' funds are insufficient
to meet the needs of the Series, the Series Manager shall
notify the Series Members of the need for additional
capital and the Series Members may be permitted, but not
required, to make Additional Capital Contributions to the
Series on a pro-rata basis. In the event all Series Members
do not make Additional Capital Contributions
proportionate to their previous Series Percentage
Interests, the Series Manager will recalculate the
Percentage Interests of the Series Members after
collection of the Additional Capital Contributions by: a)
calculating the sum of each Series Member's initial
Capital Contributions plus their Additional Capital
Contributions, and b) dividing this amount by the sum of
the total Capital Contributions and Additional Capital
Contributions of all Series Members. If the Series
Members make disproportionate Additional Capital
Contributions, the Percentage Interests of the Series
Members who made Additional Capital Contributions
will be increased and the Percentage Interests of the
Series Members who did not make Additional Capital
Contributions will be decreased.
In the event the existing Series Members do not
voluntarily make Additional Capital Contributions in
amounts sufficient to meet a Series' need; the Series
Manager may request that the Founder seek the needed
capital from other sources, which may include a loan
from the Founder, a Series Manager, a Series Member,
another Series (or its Members or Manager), a third-
party; or the sale of additional Interests in such Series to
new Series Members.
The Series Members hereby acknowledge and agree that
noncontributing Members' Percentage Interests in a
Series may be reduced: a) as a result of Additional
Capital Contributions made by contributing Series
Members, or b) by the sale of additional Interests to new
Series Members, and that the Series Manager or Founder,
as applicable, is authorized to take either action on behalf
of a Series if additional funds are needed to meet the
Series' business objectives.
9.3 Time of Capital Contributions; Withdrawal Not
Permitted
Capital Contributions shall be made by Series Members
in full on admission to a Series. No portion of the capital
of a Series may be withdrawn until dissolution of a Series
or the Company, except as otherwise expressly provided
in this Agreement or a Series Agreement.
9.4 Loans
Nothing in this Agreement shall prevent any Series
Member from making secured or unsecured loans to a
Series or its Subsidiary by agreement approved by such
Series Manager, as the case may be.
9.5 Company Interests
Subject to the other provisions of this Agreement or a
Series Agreement, each Series Interest shall have the
rights, and be subject to the obligations, identical to those
of every other Interest of the same Member Class in a
Series.
The Founder retains the sole and exclusive right to
establish Series, Series Member Classes, the quantity and
value of Units in a Series to be sold in exchange for
Capital Contributions to each Series as may be necessary
to accomplish the objectives of the Series or the
Company. The voting rights, if any associated with the
Units will be specified in a Series Agreement.
If any non-voting Interests are issued by a Series, the
non-voting Interest holders although Series Members,
shall be passive, shall not have any power to vote, except
as otherwise provided in such Series Agreement or by
law, and shall only obtain a purely Economic Interest in
the particular Series.
Initial Interest Allocation for Interests Issued by the
Company to its Founder:
VinVesto, Inc.: 100%
9.6 Voting Units
Subject to the other provisions of this Agreement, each
voting Unit in a Series shall have the rights, and be
subject to the obligations, identical to those of each other
voting Unit of the same Member Class in the Series. The
holders of voting Units shall be entitled to one vote for
each voting Unit held at all meetings of voting Series
Members (and written actions in lieu of meetings), with
no right to cumulative voting.
9.7 Series Ownership
Membership Interests sold by the Company on behalf of a
Series may be denominated in Units where one Unit
equals an investment of One Thousand Dollars ($1,000),
or such other increments or amounts as may be described
in the Series Agreement. Each Unit shall have the rights,
and be subject to the obligations, identical to those of
other Units of the same Member Class within such Series.
9.8 Capital Accounts
See Appendix A for Capital Accounts and Allocations.
10. Distributions
This Article 10 pertains to Cash Distributions made to
Series Members only. The Founder of the Company does
not expect to receive any Distributions from the
Company, and will only share in Distributions in
accordance with its membership in a Series, or for
management of a Series, in accordance with the Series
Agreement for each such Series.
10.1 Distributable Cash
Except as otherwise provided in Article 15 hereof
(relating to the dissolution of the Company), any
Distribution of the Distributable Cash of a Series during
any Fiscal Year shall: (a) be made to the Series Members
in proportion to such Series Members' respective
Percentage Interests in a Series, prioritized by Member
Class, if applicable, or (b) in any other manner described
in an applicable Series Agreement.
10.2 Distribution Rules
All Distributions to Series Members pursuant to Article
10.1 shall made be at such times and in such amounts as
shall be determined solely by the Series Manager;
provided, however, that the Series Manager shall use its
best efforts to cause the Series to distribute to such Series
Members an amount of Distributable Cash sufficient to
enable the Series Members to pay their federal and state
income-tax liabilities attributable to their respective
distributive Interests of the taxable income of a Series, as
applicable.
All amounts withheld pursuant to the Code or any
provision of any state or local tax law with respect to any
payment, Distribution or allocation to Series Members
shall be treated as amounts distributed to the Series
Members pursuant to this Article 10 for all purposes of
this Agreement and the Series Agreements.
A Series Manager is authorized to withhold from
Distributions, or with respect to allocations, to the
respective Series Members and to pay over to any federal,
state or local government any amounts required to be so
withheld pursuant to the Code or any provision of any
other federal, state or local law and shall allocate such
amounts to those Series Members with respect to which
such amounts were withheld.
10.3 Limitation upon Distributions
Notwithstanding any provision to the contrary contained
in this Agreement, a Series shall not make any
Distribution to any Person on account of its Interest in the
Company with respect to such Series if such Distribution
would violate the Act or other applicable law.
The Series Manager may base a determination that a
Distribution or return of a Series Member's Capital
Contribution may be made under Article 10.1 in good-
faith reliance upon a balance sheet and profit and loss
statement of such Series represented to be correct by the
Person having charge of its books of account or by an
independent public or certified public accountant or firm
of accountants to fairly reflect the financial condition of
such Series.
10.4 No Interest on Capital Contributions
No Series Member shall be entitled to interest on its
Capital Contributions or to return of their Capital
Contributions.
11. Books and Records, Bank Accounts, Tax Matters
11.1 Accounting Method
11.2 The Company, for accounting and income tax
purposes, shall operate on a Fiscal Year ending December
31 of each year, and shall make such income tax elections
and use such methods of depreciation as shall be
determined by the Manager. The books and records of the
Company will be kept on a GAAP basis in accordance
with sound accounting practices to reflect all income and
expenses of the Company. Records, Audits and Reports
At the expense of the Company or the relevant Series,
each Series Manager shall maintain separate and distinct
records and accounts of the operations and expenditures
of the Company and each Series during the term of the
Company or each such Series, and for seven (7) years
thereafter. At a minimum, the Company and each Series
shall keep at the principal place of business of the
Company the following records:
- True and full information regarding the status of the
business and financial condition of such Series and the
Company;
- Promptly after becoming available, a copy of the
Company's federal, state and local income tax returns for
each year;
- The current list of the name and last known business,
residence or mailing address of each Series Member;
- A copy of this Agreement, Series Agreements, and the
Certificate of Formation of the Company;
- True and full information regarding the amount of cash
and a description and statement of the Gross Asset Value
of any other property or services contributed by each
Series Member to the Company with respect to such
Series and which each Series Member has agreed to
contribute in the future, and the date on which each
became a Series Member;
- Minutes of every meeting held, if any;
- Any written consents obtained from Series Members for
actions taken by such Members without a meeting; and
- Unless contained in the Certificate of Formation or this
Agreement, a writing prepared by each Series Manager
setting out the following:
- The times at which or events on the happening of which
any Additional Capital Contributions agreed to be made
by each Series Member are to be made; and
- Any right of a Series Member to receive Distributions
that include a return of all or any part of the Series
Member's contributions.
11.3 Returns and Other Elections
The Founder and/or Series Managers, as applicable, shall
cause the preparation and timely filing of all tax returns
required to be filed by the Company or its Series,
pursuant to the Code and all other tax returns deemed
necessary and required in each jurisdiction in which the
Company does business. Copies of such returns, or
pertinent information therefrom, shall be furnished to the
respective Series Members within a reasonable time after
the end of the Company's Fiscal Year. All elections
permitted to be made by the Company under federal or
state laws shall be made by the Series Managers and/or
Founder in its sole discretion.
12. Voluntary Transfers; Additional and Substitute
Members
The Founder, as the issuer of Interests in the Company
and its Series, shall have the sole and exclusive authority
to grant, convey, sell, transfer, hypothecate, disassociate
or otherwise dispose of all or a portion of the Series'
Interests without input or vote of the Series Members or
Series Managers consistent with the Series Agreement.
Once interests in a Series have been sold, the Series
Manager may only affect a change in the Membership
Interests of a Series Member by following the procedures
described below:
12.1 Transfers Restricted
No Series Member shall voluntarily transfer all or any
part of its Economic Interest in a Series, except as
provided in this Article 12. In the event a Series Member
or a Transferee of a Series Member violates any of the
provisions of this Article, such transfer shall be null and
void and of no force or effect.
12.2 Percentage of Limitations or Transfers
Notwithstanding any other provision of this Agreement to
the contrary, the Company or a Series Manager shall not
be required to recognize any transfer of an Interest in a
Series if the transfer, when considered with other
transfers of the Interests in a Series made within the
period of twelve (12) consecutive calendar months prior
thereto, would constitute a sale or exchange of fifty
percent (50%) or more of the total Series' Interest and
result in the tax termination of the Company under article
708(b) of the Internal Revenue Code of 1986, as
amended.
12.3 Voluntary Withdrawal, Resignation or
Disassociation Prohibited
No Series Member may withdraw, resign or voluntarily
disassociate from a Series, unless such Series Member
complies with the transfer provisions set forth in this
Article. The provisions of this Article shall apply to all
Voluntary Transfers of a Series Member's Interests in a
Series. Involuntary Transfers are addressed in Article 13.
Unless otherwise approved by a Series Manager, a Series
Member who resigns as a Series Member (a "Resigning
Member"), regardless of whether such termination was
the result of a voluntary act by such Series Member, shall
not be entitled to receive any further Distributions from
the Company with respect to such Series. Damages for
breach of this Article 12.3 shall be monetary damages
only (and not specific performance), and such damages
may be offset against Distributions by such Series to
which the Resigning Member would otherwise be
entitled.
12.4 Admission of Additional Series Members
Only the Founder may sell Interests in a Series or admit
Series Members. Once the Company closes the offering
period for the sale of Interests in a Series, no additional
Interests in the Series may be sold, or any Additional
Series Members admitted, unless: a) the admission of an
Additional Series Member is approved by the Founder.
The Founder reserves the exclusive right to sell additional
Interests in a Series to new or existing Series Members,
and to admit new Series Members whose Interests may be
equal or senior to the existing Interests in a Series as
necessary to raise needed capital for a Series.
12.5 Transfer Prohibited Except as Expressly Authorized
Herein
No Series Member may voluntarily, involuntarily, or by
operation of law assign, transfer, sell, pledge,
hypothecate, or otherwise dispose of (collectively
transfer) all or part of its Interest in the Company or a
Series, except as is specifically permitted by this
Agreement or a Series Agreement. In no event shall any
Voluntary Transfer be made to a trust (including grantor
trusts), a partnership, a disregarder entity, or any other
Person whose Membership would preclude the Company
from continuing to operate under the opt-out provisions
of the BBA audit procedures pursuant to section of
6221(b) of the Code. Any Voluntary Transfer made in
violation of this Article shall be void and of no legal
effect.
Further, in no event shall any Voluntary Transfer be
made within one (1) year of the initial sale of the Interests
proposed for transfer unless the Transferor provides a
letter from an attorney, acceptable to the Series Manager,
stating that in the opinion of such attorney, the proposed
transfer is exempt from registration under the Securities
Act and under all applicable state securities laws or is
otherwise compliant with Rule 144 under the Securities
Act of 1933. The Series Manager is legally obligated to
refuse to honor any transfer made in violation of this
provision.
12.6 Conditions for Permissible Voluntary Transfer
Notwithstanding anything contained in this Agreement or
a Series Agreement to the contrary, Series Manager shall,
- On written request of a Series Member, transfer all or any
part of its Interest with respect to a Series to another
Series Member or to a transferee that bears one of the
following relationships to the transferring Series
Member: a spouse, a lineal descendant or a trust created
for the exclusive benefit of the transferring Series
Member, the transferring Series Member's spouse and/or
the transferring Series Member's lineal descendant(s), or
an Affiliate as a Substitute Member, or
- At the request of an IRA custodian or the Series Member,
transfer all or any part of a Company or Series interest to
the Series Member or another XXX Custodian.
Approval of Substitute Membership shall not be
unreasonably withheld on delivery of all requested
documents to the Series Manager necessary to
accomplish such transfer. However, any subsequent
conveyance or transfer of ownership Interests within the
Affiliate so that it no longer meets the definition of an
Affiliate with respect to the original Series Member, shall
make its membership in a Series subject to revocation or
Disassociation (per Article 13) by the Series Manager.
Unless the Affiliate requests and is approved by the
Series Manager as a Substitute Member, an unauthorized
Affiliate shall have only the Economic Interest of the
former Series Member.
12.7 Substitution
A permitted transfer of any Series Member's Interest
shall only be granted as to that Member's Economic
Interest unless the Series Manager accepts a permitted
transferee (Transferee) as a Substitute Member. A
permitted Transferee shall become a Substitute Member
only on satisfaction of all of the following conditions:
- Filing of a duly executed and acknowledged written
instrument of assignment in a form approved by the
Series Manager specifying the Member's Percentage
Interest being assigned and setting forth the intention of
the assignor that the permitted assignee succeed to the
assignor's Economic Interest (or the portion thereof)
and/or its Interest as a Series Member;
- Execution, acknowledgment and delivery by the assignor
and assignee of any other instruments reasonably required
by the Series Manager including an agreement of the
permitted assignee to be bound by the provisions of this
Agreement and the Series Agreement; and
- The Series Manager's approval of the Transferee's or
assignee's admission to the Series as a Substitute
Member and concurrent and complete Disassociation of
all of the Membership and Economic Interests of the
Transferor with respect to such Series.
12.8 Voluntary Transfer; Right of First Refusal
- Notice of Sale. In the event any Series Member (a Selling
Member) wishes to sell its Interest a Series, it must first
present its offer to sell and proposed price (terms and
conditions) in a Notice of Sale submitted in writing to the
Series Manager. The Series Manager and/or the Series
Members (Purchasing Members) shall have thirty (30)
days to elect to purchase the entire Selling Member's
Interest, which shall be offered to each in the order of
priority described below:
- First, the Series Manager (or its members) may elect to
purchase the entire Interest proposed for sale on the same
terms and conditions as contained in the Notice of Sale,
but if they don't; then
- Second, all or part of the Series Members may purchase
the entire Selling Member's Interest on the same terms
and conditions as contained in the Notice of Sale; the
Purchasing Members will be given priority to purchase in
the same ratio as their existing Percentage Interest before
allowing existing Series Members to purchase
disproportionate amounts;
- Third, if the Series Members elect to purchase less than
the entire Interest proposed for sale, the Series Manager
(or its members) and/or Founder may combine in any
ratio to purchase the remaining Interest, providing the
overall purchase is of the entire Selling Member's
Interest and on the same terms and conditions as
contained in the Notice of Sale; and
- Fourth, in the event the Series Members and/or Series
Manager or the Founder fail to respond within thirty (30)
days of the Selling Member's Notice of Sale, or if the
Series Manager and/or Members expressly elect not to
purchase the entire Selling Member's Interest, the Selling
Member shall have the right to sell its Interest to the
third-party on the same terms and conditions contained in
the original Notice of Sale.
- Fifth, in the event the Selling Member receives or obtains
a bona fide offer from a third-party to purchase all or any
portion of its Interest in the Company or a Series, which
offer it desires to accept, then prior to accepting such
offer, the Selling Member shall give written notice (the
Notice of Sale) of such offer to the Series Manager. The
Notice of Sale shall set forth the material terms of such
offer, including without limitation the identity of the
third-party, and the purchase price and terms of payment.
- Sixth, if the terms are different than the original Notice of
Sale offered to the Series Manager, the Selling Member
must comply again with the terms of this Article (giving
the Series Manager, the Series Members and/or the
Founder the first right to purchase its Interest on the same
terms and conditions offered by the third-party) with
respect to the existing offer and all subsequent third-party
offers.
- If a Series Manager and the Founder approves the sale to
the third-party, it must be completed within three (3)
months. If the sale to the third-party is not consummated
on the terms contained in the approved Notice of Sale
within three (3) months following the date of the Notice
of Sale, then the Selling Member must seek a renewed
approval from the Series Manager and Founder, who may
require that the Selling Member again comply with the
first right of refusal provisions of this Article.
In any purchase by the Series Members, Series Manager,
or Founder as described above, the Series Manager will
automatically adjust the Membership Interests of the
Purchasing Members and Selling Members to reflect the
respective number and class of Units or Interests
transferred, and the Series Manager shall update the list
of Series Members and their Percentage Interests in the
Series Agreement as appropriate to reflect such transfer.
- Costs of Conveyance for Voluntary Transfer. In the event
that the Series Manager, the Series Members, and/or the
Founder elect to purchase as provided this Article, the
cost of such transaction, including without limitation,
recording fees, escrow fees, if any, and other fees,
(excluding attorneys' fees which shall be the sole expense
of the party who retained them) shall be borne by the
Selling Member. The Selling Member shall deliver all
appropriate documents of transfer for approval by the
Series Manager at least three (3) days prior to the closing
of such sale for its review and approval. The Series
Manager may deduct its costs of sale from the Capital
Account of the Transferring Member, unless other
reimbursement is received.
- Indemnification of Parties. From and after the date of
such closing, whether the sale is made to the Series
Manager, the Series Members, the Founder, or the third-
party, the Selling Member shall have no further Interest
in the Assets or income of the Series or the Company
and, as a condition of the sale, the Person(s) or entities
purchasing the Interests shall indemnify and hold
harmless the Selling Member from and against any claim,
demand, loss, liability, damage or expense, including
without limitation, attorney's fees arising from the
subsequent operation of the Company or Series, and the
Selling Member shall indemnify and hold harmless the
Purchasing Members from and against any claim,
demand, loss, liability, damage or expense, including
without limitation, attorney's fees arising from the
subsequent operation of the Company or Series.
- Indemnification by Transferring Member. Any Member
that Transfers all or any portion of its Membership
Interest shall in each case as Indemnitor indemnify,
defend, and hold harmless the Company and each other
Member as Indemnitees to the fullest extent permitted by
applicable law against all Losses of those Indemnitees
caused by, resulting from, or arising out of (i) any failure
by the Indemnitor to comply with any federal, state, local,
or foreign securities, antitrust, or other laws or
regulations applicable to such transfer (including those
relating to payment of transfer taxes), (ii) any breach,
default, or violation of any existing financing or future
financing caused by or attributable to such transfer, or
(iii) any federal or state income or other tax obligations
attributable to such transferring Member (whether due to
non-payment of taxes by the Member, deficiency
determined upon audit or others) or to such Transfer.
- Rights and Interests of Voluntary Transferee; Adjustment
of Voting Rights. If a Series Member transfers its Interest
to a third-party Transferee pursuant to this Article, such
Transferee shall only succeed to the Series Member's
Economic Interest unless and until it complies with the
provisions of Article 12.4 and is approved by the Series
Manager as a Substitute Member. Until such time, if ever,
that the third-party Transferee becomes a Substitute
Member, the voting Interests of the Remaining Members
(i.e., all Members, other than the Selling Member) will be
increased proportionate with their Percentage Interests in
the Series as if they had purchased the Selling Member's
Interest.
The obligations, rights and Interests of the Selling,
purchasing, and any Substitute Members shall inure to
and be binding upon the heirs, successors and permitted
assignees of such Transferee subject to the restrictions of
this Article. A third-party Transferee shall have no right
of action against the Company, a Series (its Manager or
Members), or the Founder for not being accepted as a
Substitute Member.
13. Involuntary Transfer; Disassociation
13.1 Disassociation for Cause
A Series Member may be disassociated (i.e., expelled)
from the Series: a) pursuant to a judicial determination, or
b) on application by the Series Manager, another Member
of the same Series, or c) the Founder, for Cause (defined
in the bullets below); upon a written finding by the Series
Manager or applicable judicial body that such Series
Member:
- Engaged in wrongful conduct that adversely and
materially affected the business of a Series and/or the
Company;
- Willfully or persistently committed a material breach of
this Agreement;
- Engaged in conduct relating to the Series' business,
which makes it not reasonably practicable to carry on the
business with the Series Member; or
- Engaged in willful misconduct related to its Membership
in the Series.
13.2 Disassociation by Operation of Law
Additionally, a Series Member may be disassociated by
operation of law, affected solely by action of the Series
Manager or Founder, upon the occurrence of any of the
following triggering events:
- Upon Voluntary or Involuntary Transfer of all or part of a
Member's Economic Interest with respect to a Series;
- Dissolution, suspension, or failure to maintain the legal
operating status of a corporation, partnership or limited
liability company that is a Member of a Series; or
- Any Series Member who meets the definition of a
"covered person" and becomes subject to a "disqualifying
event" at any time during operation of the Company (as
those terms are defined in Regulation D, Rule 506(d))
may automatically, by action of the Founder: a) be
disassociated, or b) be stripped of its voting rights, if any,
as appropriate and necessary to preserve the Company's
securities exemption under Regulation D, Rule 506.
- In the case of a Series Member that is a legal entity, the
Member's:
o Becoming a debtor in Bankruptcy;
o Executing an assignment of all or substantially all of its
Economic Interest for the benefit of creditors;
o The appointment of a trustee, receiver, or liquidator of the
Member or of all or substantially all of the Member's
property including its Interest in the Company pursuant to
an action related to the Member's insolvency; or
o
- In the case of a Member who is an individual:
o The Member's death;
o Becoming a debtor in Bankruptcy;
o The appointment of a guardian or conservator of the
property of the Member; or
o A judicial determination of incapacity or other such
determination indicating that the Member has become
incapable of performing its duties under this Agreement
or the Series Agreement;
- In the case of a Member that is a trust or trustee of a trust,
distribution of the trust's entire rights to receive
Distributions from a Series, but not merely by reason of
the substitution of a successor trustee;
- In the case of a Member that is an estate or personal
representative of an estate, distribution of the estate's
entire rights to receive Distributions from a Series, but
not merely the substitution of a successor personal
representative; or
- Termination of the existence of a Member if the Member
is not an individual, estate, or trust, other than a business
trust.
13.3 Effect of Disassociation
Immediately on mailing of a notice of Disassociation sent
by the Series Manager to a Series Member's last known
address, unless the reason for Disassociation can be and
is cured within sixty (60) days, a Person will cease to be a
Member of the Series and shall henceforth be known as a
Disassociated Member. Any successor in Interest who
succeeds to a Series Member's Interest by operation of
law (per Article 13.2) shall henceforth be known as an
Involuntary Transferee.
Subsequently, the Disassociated Member's right to vote
or participate in management decisions will be
automatically terminated. A Disassociated Member (or its
legal successor) will continue to receive only the
Disassociated Member's Economic Interest in the Series,
unless the Disassociated Member/Involuntary Transferee
elects to sell its Interest following the procedures
described in Article 12.8; and/or a Voluntary or
Involuntary Transferee seeks admission and is approved
by the Series Manager as a Substitute Member (per
Article 12.7).
Until such time, if ever, that the Series Manager approves
the transfer of the entire Disassociated Member's Interest
to the Purchasing Members or a Substitute Member, the
voting Interests of the Remaining Members will be
proportionately increased as necessary to absorb the
Disassociated Member's voting Interests.
If a Member objects to Disassociation, they will be bound
to resolve the dispute in accordance with the Internal
Dispute Resolution Procedure described in Article 14,
unless the reason for the Disassociation can be resolved
within sixty (60) days to the satisfaction of the Series
Manager, in which case their full Membership Interest
will be reinstated. If there is no Involuntary Transferee,
and no third-party buyer is found and the Series Manager
or Remaining Members do not wish to purchase the
Disassociated Member's Interest, the Disassociated
Member will only be entitled to receive its Economic
Interest (no voting rights), indefinitely, until such time as
the Company or such Series is dissolved.
13.4 Sale and Valuation of a Disassociated Member's
Interest
If no outside buyers can be found and the Disassociated
Member still desires to sell its Interest, which the
Remaining Members and/or Series Manager or Founder
(Purchasing Members) wish to purchase, the buyout price
for the Disassociated Member's Interest may be
determined using one of the following methods:
- Negotiated Price: If the Purchasing Members or legal
representative of the Disassociated Member can agree on
a negotiated price for the Interest, then that price will be
used; if not,
- Estimated Market Value within 3 Months: The Series
Manager may quarterly determine the Estimated Market
Value of the Company and/or its Series and report it to
the Series Members. An Estimated Market Value
calculated by the Series Manager in any commercially
accepted manner within the last three (3) months shall
conclusively be used to determine the value of a
Disassociated Member's Interest. The purchase price of
shall be the product of the Disassociated Member's
Percentage Interest in a Series and the Estimated Market
Value of the Series adjusted for the Member Class, if
applicable.
- Appraisal Method: If both of the above methods fail, the
price for a Disassociated Member's Interest shall be
determined by appraisal of the Disassociated Member's
Interests by one or more independent, certified
commercial business appraisers currently operating in the
business of the Underlying Asset(s), as follows:
- The Disassociated Member shall hire and pay the first
appraiser, who shall provide an Estimated Market Value
for the Series. If acceptable to the parties, this Estimated
Market Value will be used to calculate the value of the
Disassociated Member's Interest.
- If the first appraiser's valuation is unacceptable, the
Purchasing Members may hire their own appraiser and
the average of the two appraisals (if within twenty
percent (20%)) may be used to determine the value of the
Series on which the purchase price will be based. If the
two appraisals differ by more than twenty percent (20%)
and the parties still cannot agree on the value, then,
- A third appraisal may be obtained (at the option of either
party), the cost of which will be split between the
Purchasing Members and the Disassociated Member. The
average of the two appraisals closest in value will be
conclusively used to establish the Estimated Market
Value of the Series on which the value of the Interest will
be based.
13.5 Closing on a Disassociated Members' Interest
Unless other terms have been agreed between the
Disassociated and Purchasing Members, the following
terms shall apply to closing of a Disassociated Member's
Interest. After determining value (per Article 12.8 or 13.4
above), the Purchasing Members shall give written notice
fixing the time and date for the closing. The closing shall
be conducted at the principal office of the Company or
other agreed location on the date not less than thirty (30)
days nor more than sixty (60) days after the date of such
notice, or in the event of Bankruptcy, any request for an
extension by any Bankruptcy Court having jurisdiction.
13.6 Payment for a Disassociated Member's Interest
At closing, the Purchasing Members shall pay to the
Disassociated Member by certified or bank check an
amount equal to the determined value of the
Disassociated Member's Interest, or, if such value shall
be determined to be zero or another amount pursuant to
an agreement of the Members, shall deliver an executed
copy of such agreement or a copy of such appraisal
report(s), or a memorandum of the negotiated value (per
Article 12.8 above) as applicable.
Notwithstanding the foregoing, at the option of the
Purchasing Members, the purchase price may be paid by
the delivery of its promissory note in the principal
amount of the purchase price, bearing interest at eight
percent (8%), repayable early without penalty, in eight
(8) equal quarterly installments, or other agreement
between the parties. Simultaneously therewith the
Disassociated Member shall execute, acknowledge and
deliver to the Purchasing Members such instruments of
conveyance, assignment and releases as shall be
necessary or reasonably desirable to convey all of the
right, title and Interest of the Member and the Assets
thereof.
Because of the unique and distinct nature of an Interest in
a Series of the Company, it is agreed that the Purchasing
Members' damages would not be readily ascertainable if
they elect to purchase the Disassociated Member's
Interest as aforesaid and the conveyance thereof were not
consummated, and, therefore, in such case the Purchasing
Members shall be entitled to the remedy of specific
performance in addition to any other remedies that may
be available to them in law or in equity.
13.7 Transfer of Economic Interest; Rights of an
Involuntary Transferee
If the Purchasing Members do not elect to purchase the
Interest of a Disassociated Member as provided in
Articles 13.4 through 13.6, or if by operation of law the
Economic Interest of the Disassociated Member transfers
to an Involuntary Transferee, the Series Manager shall
hereby be granted power of attorney by the Disassociated
Member to execute such documents as may be necessary
and requisite to evidence and cause the transfer only of
the Disassociated Member's Economic Interest to the
Involuntary Transferee, as applicable and appropriate for
the circumstances.
An Involuntary Transferee shall not be deemed a Series
Member until such time if ever, that they seek admission
and are approved as a Substitute Member(s) of a Series.
Until then, they shall only succeed to the Economic
Interest of the Disassociated Member, including the right
to any Distributions and a return of the Disassociated
Member's Unreturned Capital Contributions, if
applicable, which shall be distributed only if and when
such Distributions or return of Capital Contributions shall
become due per the terms of the applicable Series
Agreement. Any Distributions that may be due a
Disassociated Member shall be held in trust by the Series
Manager and no Distributions shall be made to an
Involuntary Transferee until it produces and executes
such documentation as the Series Manager deems
necessary to evidence the Transfer of the Disassociated
Member's Economic Interest, and to indemnify the
Company, the Series Manager or Members for any
liability related to making Distributions directly to the
holder of the Economic Interest.
Any further assignment of the Disassociated Member's
Economic or Membership Interest, or any request of an
Involuntary Transferee to succeed to the Disassociated
Member's full Membership Interest (i.e., to become a
Substituted Member in a Series of the Company), shall be
subject to approval of the Series Manager.
14. Dispute Resolution
These dispute resolution process provisions do not apply
to claims under the federal securities laws. By agreeing to
the dispute resolution process, including mandatory
arbitration, investors will not be deemed to have waived
the Company's or Series' compliance with the federal
securities laws and the rules and regulations thereunder.
Further, the waiver of jury trial provision does not apply
to claims under the federal securities laws.
Because the nature of the Company and its Series is to
generate Profits that it can share with its Series Members,
it is imperative that one Series Member's dispute with the
Company, a Series Manager and/or other Series Members
is not allowed to diminish the Profits available to other
Series Members or resources necessary to operate the
Company or assets of such Series. Litigation could
require diversion of Company or Series Profits to pay
attorney's fees or could tie up Company funds necessary
for operation of the Company or the affected Series, its
Subsidiary or its assets, impacting the profitability of the
investment for all such Series Members. The only way to
prevent such needless expense is to have a
comprehensive Internal Dispute Resolution Procedure
(Procedure) in place, to which each of the Series
Members have specifically agreed in advance of
membership in the Company or in a Series. The
Procedure described below requires an aggrieved party to
take a series of steps designed to amicably resolve a
dispute on terms that will preserve the interests of the
Company or Series, and the other non-disputing Series
Members, before invoking a costly remedy, such as
arbitration.
In the event of a dispute, claim, question, or disagreement
between Series Members or between a Series Manager or
the Founder and/or one or more Series Members arising
from or relating to this Agreement, the Series Agreement,
the breach thereof, or any associated transaction, or to
interpret or enforce any rights or duties under the Act
(hereinafter Dispute), all Series Managers and Series
Members hereby agree to resolve such Dispute by strictly
adhering to the Procedure provided below. The following
Procedure has been adapted for purposes of this
Agreement from guidelines and rules published by the
American Arbitration Association (AAA):
14.1 Notice of Disputes
Written notice of a Dispute must be sent to the Series
Manager or Series Member by the aggrieved party as
described in the notice requirements of Article 16.1
below.
14.2 Negotiation of Disputes
The parties hereto shall use their best efforts to settle any
Dispute through negotiation before resorting to any other
means of resolution. To this effect, they shall consult and
negotiate with each other in good faith and, recognizing
their mutual Interests, attempt to reach a just and
equitable solution satisfactory to all parties. If, within a
period of sixty (60) days after written notice of such
Dispute has been served by either party on the other, the
parties have not reached a negotiated solution, then upon
further notice by either party, the Dispute shall be
submitted to mediation administered by the AAA in
accordance with the provisions of its Commercial
Mediation Rules. The onus is on the complaining party to
initiate each next step in this Procedure as provided
below.
14.3 Mandatory Alternative Dispute Resolution
On failure of negotiation provided above; mediation, and
as a last resort, binding arbitration shall be used to
ultimately settle the Dispute. The following provisions of
this Article 14 shall apply to any subsequent mediation or
arbitration.
Exception: On unanimous consent of all parties to a
Dispute, the disputing party may initiate a small claims
action or litigation in lieu of mandatory mediation and
arbitration provided the parties shall further unanimously
determine jurisdiction and venue. In any small claims
action or litigation, the local rules of court shall apply in
lieu of the remaining provisions of this Article.
- Preliminary Relief. Any party to the Dispute may seek
preliminary relief at any time after negotiation has failed,
but prior to arbitration, in accordance with the Optional
Rules for Emergency Measures of Protection of the AAA
Commercial Arbitration Rules and Mediation Procedures.
The AAA case manager may appoint an arbitrator who
will hear only the preliminary relief issues without going
through the arbitrator selection process described in
Article 14.5.1.
- Consolidation. Identical or sufficiently similar Disputes
presented by more than one Series Member may, at the
option of the Series Manager or Founder, be consolidated
into a single Procedure.
- Location of Mediation or Arbitration. Any mediation or
arbitration shall be in State of Delaware and each party to
such mediation or arbitration must attend in person.
- Attorney's Fees and Costs. Each party shall bear its own
costs and expenses (including their own attorney's fees)
and an equal share of the mediator or arbitrators' fees and
any administrative fees, regardless of the outcome;
however, if a Series Manager or the Founder is a party,
their legal fees shall be paid by the Series (per the
indemnification provision described in Article 6.6).
Exception: A Series may reimburse a Series Member for
attorney's fees and costs in any legal action against the
Series Manager or the Company in which the Series
Member is awarded such fees and costs as part of a legal
action.
- Maximum Award. The maximum amount a party may
seek during mediation or be awarded by an arbitrator is
the amount equal to the party's Unreturned Capital
Contributions and any Cash Distributions or Interest to
which the party may be entitled. An arbitrator will have
no authority to award punitive or other damages.
- AAA Commercial Mediation or Arbitration Rules. Any
Dispute submitted for mediation or arbitration shall be
subject to the AAA's Commercial Mediation or
Arbitration Rules. If there is a conflict between the Rules
and this Article, the Article shall be controlling.
14.4 Mediation
Any Dispute that cannot be settled through negotiation as
described in Article 14.2, may proceed to mediation. The
parties shall try in good faith to settle the Dispute by
mediation, which each of the parties to the Dispute must
attend in person, before resorting to arbitration. If, after
no less than three (3) face-to-face mediation sessions,
mediation proves unsuccessful at resolving the Dispute,
the parties may then, and only then, resort to binding
arbitration as described in Article 14.5.
- Selection of Mediator. The complaining party shall
submit a Request for Mediation to the AAA. The AAA
will appoint a qualified mediator to serve on the case. The
preferred mediator shall have specialized knowledge of
securities law, unless the Dispute pertains to financial
accounting issues, in which case the arbitrator shall be a
C.P.A., or if no such person is available, shall be
generally familiar with the subject matter involved in the
Dispute. If the parties are unable to agree on the mediator
within thirty (30) days of the Request for Mediation, the
AAA case manager will make an appointment.
If the initial mediation(s) does not completely resolve the
Dispute, any party may request a different mediator for
subsequent mediation(s) by serving notice of the request
to the other party(ies) for approval, and subject to
qualification per the requirements stated above.
14.5 Arbitration
Any Dispute that remains unresolved after good faith
negotiation and three (3) failed mediation sessions shall
be settled by binding arbitration. Judgment on the award
rendered by the arbitrator(s) shall be final and may be
entered in any court having jurisdiction thereof.
14.5.1 Selection of Arbitrator.
Prior to arbitration, the complaining party shall cause the
appointment of an AAA case manager by filing of a
claim with the AAA along with the appropriate filing fee,
and serving it on the defending party. The AAA case
manager shall provide each party with a list of proposed
arbitrators who meet the qualifications described below,
or if no such person is available, who are generally
familiar with the subject matter involved in the Dispute.
Each side will have fourteen (14) days to strike any
unacceptable names, number the remaining names in
order of preference, and return the list to the AAA. The
case manager shall then invite persons to serve from the
names remaining on the list, in the designated order of
mutual preference. Should this selection procedure fail
for any reason, the AAA case manager shall appoint an
arbitrator as provided in the applicable AAA Commercial
Arbitration Rules.
14.5.2 Qualifications of Arbitrator.
The selected or appointed arbitrator shall be selected
from available candidates in Delaware and shall have
specialized knowledge of securities law, unless the
Dispute pertains to financial accounting issues, in which
case the arbitrator shall be a C.P.A. Further, the selected
arbitrator must agree to sign a certification stating that
they have read all of the documents relevant to the
Member's subscription to the Series, including the
Private Placement Memorandum, the Agreement, the
subject Series Agreement, and the Subscription Booklet
in their entirety, including and any relevant Appendices
or Exhibits.
14.5.3 Limited Discovery.
Discovery shall be limited to only those documents
pertaining to the Member's Subscription to the Series
(and any relevant Appendices or Exhibits), the
Subscription Booklet, any written correspondence
between the parties, and any other documents specifically
requested by the Arbitrator as necessary to facilitate
his/her understanding of the Dispute. The parties may
produce witnesses for live testimony at the arbitration
hearing at their own expense. A list of all such witnesses
and complete copies of any documents to be submitted to
the arbitrator shall be served on the arbitrator and all
other parties within forty-five (45) days of the arbitration
hearing, at the submitting party's expense.
14.5.4 Findings of Arbitrator
If, in any action against a Series Manager, the Company,
or the Founder, the selected or appointed arbitrator, or
judge (if applicable) makes a specific finding that the
Series Manager, Founder or Company has violated
Securities laws, or has otherwise engaged in any of the
actions described in Article 6.4 for which the Series
Manager or Company will not be indemnified, the Series
Manager, Founder, or Company must bear the cost of its
own legal defense. In such case, the Series Manager must
reimburse the Company for any such costs previously
paid by the Company. Until the Company has been fully
reimbursed, the Series Manager will not be entitled to
receive any fees or Distributions it may otherwise be due.
14.5.5 Forum for Related Litigation
The forum for litigation of any non-arbitrable matters,
and for the enforcement of any arbitration award shall be
the state or federal courts located in the City of
Richmond, Virginia.
14.5.6 Waiver of Jury Trial
Each Member, Series Member, successor in interest to
any party to this Agreement waives any right to trial by
jury in any claim or matter. Investors will not be deemed
to have waived the Company's or Series' compliance
with the federal securities laws and the rules and
regulations thereunder. This jury trial waiver does not
apply to claims under the federal securities laws.
15. Termination of Series and Company
15.1 Dissolution of the Company
The Company shall be dissolved upon the occurrence of
either of the following events:
- By sale of all or substantially of the Series' Underlying
Asset(s) and dissolution of all Subsidiaries;
- By the unanimous written agreement of all Series
Managers and the Founder; or
- Upon the entry of decree of judicial dissolution.
The death, retirement, resignation, expulsion, bankruptcy
or dissolution of any Series Manager or Series Member or
the occurrence of any event that terminates the continued
membership of any Series Member in a Series shall not in
and of itself cause the dissolution of the Company.
If a Series Member who is an individual dies or a court of
competent jurisdiction adjudges him to be incompetent to
manage its person or property. The Series Member's
executor, administrator, guardian, conservator, or other
legal representative may exercise all of the Series
Member's rights for the purpose of settling the Member's
estate or administering its property. If a Series Member is
an entity and is dissolved or terminated, the powers of
that Series Member may be exercised by its legal
representative or successor.
15.2 Termination of a Series
A Series shall be terminated upon the occurrence of any
of the following events:
- Upon dissolution of the Company;
- On sale or disposition of all of the Underlying Asset(s)
and dissolution of its Subsidiaries; or
- At the time in which there are no Series Members in a
Series;
- Upon the entry of a decree of judicial termination.
Other than in connection with a transfer of Membership
Interests in accordance with this Agreement, a Series
Member shall not take any voluntary action (including,
without limitation, resignation) that directly causes it to
cease to be a Series Member.
The termination and winding up of a Series shall not
cause the dissolution of the Company (even if there are
no remaining Series so long as the Founder is still a
Member); nor shall it cause the termination of any other
Series. The termination of a Series shall not affect the
limitation on liabilities of such Series or any other Series
formed by the Founder as provided in this Agreement and
consistent with the Act.
15.3 Winding Up of a Series on Termination of Such
Series
Upon termination of a Series, an accounting shall be
made of the accounts of the Company with respect to
such Series and of the assets, liabilities and operations
associated with such Series and its Subsidiaries, from the
date of the last previous accounting until the date of
termination. The Series Manager(s) shall immediately
proceed to wind up the affairs of such Series.
If a Series is terminated and its affairs are to be wound
up, the Series Manager shall:
- Sell or otherwise liquidate all of the assets of such Series
as promptly as practicable (except to the extent such
Series Manager(s) may determine to distribute any assets
to the Series Members in kind);
- Dissolve its Subsidiaries in accordance with the limited
liability act of the state in which the Subsidiaries are
formed;
- Allocate any Profits or Losses resulting from such sales
to the respective Capital Accounts of the Series Members
in accordance with Article 10 and Appendix A hereof;
- Satisfy (whether by payment or reasonable provision for
payment thereof) all liabilities of the Company with
respect to such Series, including liabilities to the Founder,
Series Managers, or Series Members who are creditors to
the Series, to the extent otherwise permitted by law, other
than liabilities to Series Members for Distributions (for
purposes of determining the Capital Accounts of the
Series Members, the amounts of any Reserves created in
connection with the liquidation of such Series shall be
deemed to be an expense of the Company with respect to
such Series); and
- Distribute the remaining assets of such Series to the
Series Members in accordance with their Capital Account
balances after giving effect to all contributions,
Distributions, and allocations for all periods, as further
specified in the Series Agreement associated with such
Series.
Notwithstanding anything to the contrary in this
Agreement, if upon the termination and liquidation of any
Series, any Series Member has a deficit balance in its
Capital Account with respect to with such Series (after
giving effect to all contributions, Distributions,
allocations and other Capital Account adjustments for all
taxable years, including the year during which such
termination and liquidation occurs), such Series Member
shall have no obligation to make any Capital
Contribution, or otherwise restore the deficit balance in
such Series Member's Capital Account, and such deficit
Capital Account balance shall not be considered a debt
owed by such Series Member to the Company with
respect to such Series or otherwise, to any other Series
Member or to any other Person for any purpose
whatsoever.
The Founder, Series Managers and Series Members, as
applicable, shall comply with all requirements of
applicable law pertaining to the winding up of the affairs
of the Company with respect to such Series and the final
disposition of its assets.
15.4 Winding Up On Dissolution of the Company
Upon the dissolution of the Company pursuant to Article
15.1, the Company shall be wound up by winding up
each Series in the manner contemplated by Article 15.3,
except that, for purposes of Article 15.3, paragraph 3, the
separate Capital Accounts of each Member associated
with more than one Series shall be combined into a single
Capital Account of such Member.
15.5 Certificate of Cancellation
If a dissolution of the Company occurs and all debts,
liabilities and obligations of the Company, whether or not
associated with any Series, have been satisfied (whether
by payment or reasonable provision for payment) and all
of the remaining property and assets of the Company,
whether or not associated with any Series, have been
distributed, a certificate of cancellation as required by the
Act shall be jointly executed and filed by the members of
the Company, as authorized persons, within the meaning
of the Act, with the Delaware Secretary of State.
15.6 Effect of Filing Certificate of Cancellation or
Equivalent
Upon the filing of a certificate of cancellation or
equivalent with the Delaware Secretary of State, pursuant
to Article 15.5, the existence of the Company shall cease.
15.7 Returns of Contributions Nonrecourse to Other
Members
Except as otherwise provided by applicable laws, upon
termination of a Series, the Series Member shall look
solely to the assets of such Series for the return of their
Capital Contributions to such Series, and if the assets of
such Series remaining after payment of or due provision
for the debts and liabilities of the Company with respect
to such Series are insufficient to return such Capital
Contributions, such Series Members shall have no
recourse against any other Series, the Company or any
other Series Member, except as otherwise provided by
law.
16. Miscellaneous Provisions
16.1 Notices
All notices provided for by this Agreement shall be made
in writing and deemed received (i) twenty-four (24) hours
after emailing to the party entitled thereto, or (ii) on the
mailing of the notice in the U.S. mail at the last known
address of the party entitled thereto, certified mail, return
receipt requested.
16.2 Binding Effect
This Agreement and the Series Agreements are binding
upon and inure to the benefit of the Series Members, and,
to the extent permitted by this Agreement, their
respective legal representatives, successors and assigns.
16.3 Governing Law
This Agreement, Series Agreements, and the rights of the
parties hereunder, shall be construed pursuant to the laws
of the State of Delaware (without regard to conflict of
laws principles).
16.4 Waiver of Action for Partition
Each Member irrevocably waives during the term of the
Company and any Series for which it is a Member, any
right that it may have to maintain any action for partition
with respect to the property of the Company or any
Series.
16.5 Amendments
This Agreement may not be amended except in writing
except by unanimous consent of all Series Managers. A
Series Agreement may only be modified by an
affirmative vote of Series Members holding a Majority of
Interests in the affected Series.
However, notwithstanding anything to the contrary
herein, the Founder may amend this Agreement, a Series
Agreement, or a Subsidiary Company Agreement in a
manner not materially inconsistent with the principles set
forth in this Agreement, without the approval or vote of
the Series Members, including without limitation:
- To issue non-substantive amendment to this Agreement
or a Series Agreement to correct minor technical errors;
- To accommodate a lender's request with respect to a
Series Agreement or a Subsidiary Company Agreement;
- To cure any ambiguity or to correct or supplement any
provision therein which may be inconsistent with any
other provision therein or in any associated document, or
to add any other provisions with respect to matters or
questions arising under this Agreement which will not be
materially inconsistent with the provisions of this
Agreement; and
- To take such steps as the Founder or a Series Manager
deems advisable to preserve the tax status of the
Company or a Series or to otherwise specify the tax status
of a Series or the Company;
- To delete or add any provisions to this Agreement, a
Series Agreement, or a Subsidiary Company Agreement
as requested by the Securities and Exchange
Commission, state securities officials which is deemed by
such regulatory agency or official to be for the benefit or
protection Company, its Members or the Series Members;
or
- To make amendments similar to the foregoing so long as
such action shall not materially and adversely affect the
Interests or returns to the Series Members.
16.6 Execution of Additional Instruments
Each Series Member hereby agrees to execute such other
and further statements of Interest and holdings,
designations and other instruments necessary to comply
with any laws, rules or regulations, or reasonable requests
of the Company, the Founder, or a Series Manager.
16.7 Construction
Whenever the singular number is used in this Agreement
or a Series Agreement and when required by the context,
the same shall include the plural and vice versa, and the
masculine gender shall include the feminine and neuter
genders and vice versa.
16.8 Waivers
The failure of any party hereto to seek redress for default
of or to insist upon the strict performance of any covenant
or condition of this Agreement or a Series Agreement
shall not prevent a subsequent act, which would have
originally constituted a default, from having the effect of
an original default.
16.9 Severability
Every provision of this Agreement and the Series
Agreements are intended to be severable. If any phrase,
sentence, paragraph, or provision of this Agreement or a
Series Agreement or its application thereof to any Person
or circumstance is unenforceable, invalid, the affected
phrase, sentence, paragraph, or provision shall be limited,
construed, and applied in a manner that is valid and
enforceable. If the conflict was with a non-waivable
provision of the Act, phrase, sentence, paragraph, or
provision, it shall be modified to conform to the Act. In
any event, the remaining provisions of this Agreement,
the Series Agreement, or Subsidiary Agreement shall be
given their full effect without the invalid provision or
application. If any term or provision hereof is illegal or
invalid for any reason whatsoever, such legality or
invalidity shall not affect the validity or legality of the
remainder of this Agreement, the Series Agreement or the
Subsidiary Agreement.
16.10 Creditors
None of the provisions of this Agreement or a Series
Agreement shall be for the benefit of or enforceable by
any creditors of (i) the Company, (ii) any Series of the
Company, (iii) any Series Member, (iv) any Series
Manager, or (v) the Founder.
16.11 Counterparts
This Agreement and any associated Series Agreements
may be signed in multiple counterparts, all of which
should be deemed an original and shall constitute one
instrument.
16.12 Integration
This Series Limited Liability Agreement constitutes the
entire agreement between the parties hereto pertaining to
the subject matter hereof and supersedes all prior
agreements and understandings pertaining thereto.
17. Signatures
IN WITNESS WHEREOF, the parties hereto,
whose names and contact information follows, have
caused their signatures or the signatures of their duly
authorized representatives and seals to be set forth below
as of the day and year first above written.
Dated: October 28, 2020 By: VV Markets, LLC
A Delaware Series Limited liability company
By: Its Manager,
VinVesto, Inc.,
A Delaware Corporation
_______/s/ Xxxxxxxx King________________
By: Its CEO,
Xxxxxxxx Xxxx
Appendix A: Capital Accounts and Allocations
1. Capital Accounts
An individual Capital Account shall be maintained solely
for the convenience of the Manager. Since the Company
is treated as a corporation for U.S. federal and state tax
purposes, the earnings and profits of the corporation are
paid solely in conjunction with the Member's Interests,
and Capital Accounts do not serve a purpose for U.S.
federal or state tax purposes.
2. Division of Profits and Losses for Income Tax
Purposes
As an entity electing to be treated as a corporation for
U.S. federal and state tax purposes, the Company will be
responsible for accounting for its profit and loss in
accordance with U.S. tax law prior to the distribution of
cash.
3. Treatment of Distributions of Cash for Tax Purposes
3.1 Distributions of Cash
In the event that the Company generates Distributable
Cash from Capital Transactions, the Company will make
Cash Distributions to the Members as described in Article
4 of the Agreement.
3.2 In-Kind Distribution
Except as otherwise expressly provided herein, without
the prior approval of the Manager, Assets of the
Company, other than cash, shall not be distributed in-kind
to the Members. If any Assets of the Company are
distributed to the Members in-kind for purposes of this
Agreement, such Assets shall be valued on the basis of
the Gross Asset Value thereof (without taking into
account section 7701(g) of the Code) on the date of
Distribution; and any Member entitled to any Interest in
such Assets shall receive such Interest as a tenant-in-
common with the other Member(s) so entitled with an
undivided Interest in such Assets in the amount and to the
extent provided for in Articles 4 and 2.2 of the
Agreement.
Upon such Distribution, the earnings and profits of
the Company shall be
adjusted for any gain or loss pursuant to section
311(b) of the Code.
3.3 Prohibited Distribution; Duty to Return
A Distribution to any Member may not be made if it
would cause the Company's total liabilities to exceed the
fair value of the Company's total Assets. A Member
receiving a Distribution in violation of this provision is
required to return it, if the Member had knowledge of the
violation.
4. Other Tax Matters
4.1 Company Tax Returns and Payment
The Manager shall use its best efforts to cause the
Company's tax return to be prepared prior to March 1 of
each year. As an entity electing to be treated as a
Corporation, the Company will be required to account for
items of profit and loss on its own account and remit
corporate tax due resulting from such calculation. This
corporate tax will be viewed as an expense of the
Company which will reduce Distributable Cash.
5. Tax Matters Related to Foreign Investors
5.1 Non-U.S. Investors
The discussion below is applicable solely to Non-U.S.
Persons investing directly with the Company.
The Company will be required to withhold U.S. Federal
income tax at the rate of up to thirty percent (30%), or
lower treaty rate, if applicable on payments of fixed,
determinable and periodic income to shareholders and
debt obligation holders (including but not limited to
dividends, interest, rents, royalties, etc.) to a Non-U.S.
Person. Documentation is required by the Manager before
the Company can apply a lower tax treaty rate.
The Company is authorized to withhold and pay over any
such withholding taxes and treat such withholding as a
payment to the Non-U.S. Person if the withholding was
required. Such payment will be treated as a Distribution
to the extent that the Non-U.S. Person is then entitled to
receive a Distribution. To the extent that the aggregate of
such payments to a Non-U.S. Person for any period
exceeds the Distributions to which they are entitled for
such period, the Company will notify the Non-U.S.
Person as to the amount of such excess and the amount of
such excess will be treated as a loan by the Company to
the Non-U.S. Person. If a Non-U.S. Person owns a
Membership Interest directly on the date of death, its
estate could be further subject to U.S. estate tax with
respect to such Interest.
It is intended that the holders of the Company's debt
obligations will qualify for the portfolio interest
exemption contained in section 871(h) of the Code so
long as their voting interest in the Company is less than
10 percent.
5.2 Foreign Person Withholding
The Company shall comply with all reporting and
withholding requirements imposed with respect to Non-
U.S. Persons, as defined in the Code, and any Member
that is a Non-U.S. Person shall be obligated to contribute
to the Company any funds necessary to enable the
Company (to the extent not available out of such
Member's share of Distributable Cash or Net Proceeds of
Capital Transactions) to satisfy any such withholding
obligations. In the event any Member shall fail to
contribute to the Company any funds necessary to enable
the Company to satisfy any withholding obligation, the
Manager shall have the right to offset against any
payments due and owing to such Member, or its
Affiliates, the amounts necessary to satisfy such
withholding obligation, or, in the event the Company
shall be required to borrow funds to satisfy any
withholding obligation by reason of a Member's failure
to contribute such funds to the Company, the Manager
shall have the right to offset against said Member's
present and future Distributions, an amount equal to the
amount so borrowed plus the greater of (i) the Company's
actual cost of borrowing such funds, or (ii) the amount
borrowed, multiplied by fifteen percent (15%).
5.3 Non-U.S. Taxes
The Company may be subject to withholding and other
taxes imposed by, and the Non-U.S. Person might be
subject to, taxation and reporting requirements in non-
U.S. jurisdictions. It is possible that tax conventions
between such countries and the U.S. (or another
jurisdiction in which a non-U.S. Member is a resident)
might reduce or eliminate certain of such taxes. It is also
possible that in some cases, if the Non-U.S. Person is a
taxable Member, it might be entitled to claim U.S. tax
credits or deductions with respect to such taxes, subject to
certain limitations under applicable law. The Company
will treat any such tax withheld from or otherwise
payable with respect to income allocated to the Company
as cash the Company received and will treat the Non-U.S.
Person as receiving a payment equal to the portion of
such tax that is attributable to it. Similar provisions would
apply in the case of taxes the Company is required to
withhold.
Appendix B: Definitions
Defined terms are capitalized in this Agreement and may
also appear in the Series Agreement. The singular form of
any term defined below shall include the plural form and
the plural form shall include the singular. Whenever they
appear capitalized in this Agreement, the following terms
shall have the meanings set forth below unless the context
clearly requires a different interpretation:
Act shall mean the Delaware Limited Liability Company
Act, as codified in the Delaware Code, Title 6, Chapter
18, as may be amended from time to time, unless a
superseding Act governing limited liability companies is
enacted by the state legislature and given retroactive
effect or repeals this Act in such a manner that it can no
longer be applied to interpret the Agreement or Series
Agreement, in which case "Act" shall automatically refer
to the new Act, where applicable, to the extent such re-
interpretation is not contrary to the express provisions of
the Agreement or a Series Agreement.
Additional Capital Contribution shall mean any voluntary
contribution to the capital of a Series in cash, property, or
services by a Member made subsequent to the Member's
initial Capital Contribution in response to a Series
Manager's requires for voluntary Additional Capital
Contributions.
Additional Member shall mean any Person admitted to
the Company or a Series as a new or additional member,
subsequent to the sale of Units or Interests in a Series in
exchange for initial Capital Contributions of the Series
Members.
Affiliate or Affiliated shall mean any Person controlling
or controlled by or under common control with the
Founder (or its members), a Member of the Company or a
Series wherein the Manager or Member retains greater
than fifty percent (50%) control of the Affiliate if an
entity.
Article when capitalized and followed by a number refers
the provision of this Company Agreement and its
Appendices or to provisions of a Series Agreement.
Capital Account shall mean the capital account
maintained for each Member in accordance with the
provisions of Article 9.8 and in Appendix A hereto. A
separate Capital Account shall be maintained for each
Series Member's Interest in a Series.
Capital Contribution shall mean, with respect to any
Member, any contribution to the Company or a Series in
cash or other property (at such other property's initial
Gross Asset Value) by such Member whenever made.
"Initial Capital Contribution" shall mean, with respect to
any Member, the initial contribution by such Member to
the Company or a Series pursuant to this Agreement.
"Unreturned Capital Contribution" shall mean, with
respect to any Member, the initial contribution by such
Member to the Company or a Series pursuant to this
Agreement, less any returned capital specified as such,
that is not classified by the Manager as a return on
investment.
Certificate of Formation shall mean the Certificate of
Formation of the Company and any and all amendments
thereto and restatements thereof filed on behalf of the
Company with the office of the Secretary of State of the
State of Delaware pursuant to the Act.
Code shall mean the Internal Revenue Code of 1986, as
amended from time to time, or any superseding federal
tax law. A reference herein to a specific Code section
refers, not only to such specific section, but also to any
corresponding provision of any superseding federal tax
statute, as such specific section or such corresponding
provision is in effect on the date of application of the
provisions of this Agreement containing such reference.
Company shall refer to VV Markets, LLC, formed and
continued under and pursuant to the Act and this
Agreement.
Company Agreement or Agreement shall mean the Series
Limited liability company Agreement, as amended,
modified, supplemented or restated from time to time.
Company Minimum Gain has the meaning set forth in
sections 1.704-2(b)(2) and 1.704-2(d) of the Treasury
Regulations.
Covered Person, when capitalized, shall have the
meaning as set forth in Article 6.6 hereof.
Depreciation shall mean, with respect to a Series, and for
each Fiscal Year or other period, an amount equal to the
depreciation, amortization or other cost recovery
deduction allowable with respect to an asset associated
with such Series for such Fiscal Year or other period;
provided, however, that if the Gross Asset Value of an
asset associated with such Series differs from its adjusted
basis for federal income-tax purposes at the beginning of
such Fiscal Year or other period, Depreciation shall be an
amount that bears the same ratio to such beginning Gross
Asset Value as the federal income-tax depreciation,
amortization or other cost recovery deduction with
respect to such asset for such Fiscal Year or other period
bears to such beginning adjusted tax basis; and provided
further, that if the federal income-tax depreciation,
amortization or other cost recovery deduction for such
Fiscal Year or other period is zero, Depreciation shall be
determined with reference to such beginning Gross Asset
Value using any reasonable method selected by the Series
Manager or Founder.
Disassociated Member shall mean a Member who has
been involuntarily disassociated from the Company or a
Series by one of the actions described in Article 13.1 or
13.2, or by Voluntary Transfer of its Membership Interest
to a Voluntary Transferee as described in Articles 12.3
through 12.8.
Disassociation shall mean an action of the Series
Manager of a Series to remove a Series Member's right to
participate in management of the Series (i.e., removal of
its voting Interest) for cause (per Article 13.1) or by
operation of law (per Article 13.2).
Dispute, when capitalized, shall have the meaning set
forth in Article 14 hereof
Distributable Cash shall mean all cash, revenues and
funds received by a Series from operation of its
Subsidiaries and its Underlying Asset(s), less the sum of
the following to the extent paid or set aside by the Series:
(i) all principal and interest payments on indebtedness of
the Subsidiary of the Series and all other sums paid to
lenders with respect to the Series; (ii) all cash
expenditures incurred in the normal operation of the
Series business; and (iii) such Reserves as the Founder
deem reasonably necessary for the proper operation of the
Series' business.
Distribution or Distributions shall mean the cash paid to
Series Members on account of their Series Membership
Interests.
Economic Interest shall mean a Person's right to share in
the income, gains, losses, deductions, credit, or similar
items of, and to receive Distributions from a Series, but
does not include any other rights of a Series Member,
including, without limitation, the right to vote or to
participate in management, and any right to information
concerning the business and affairs of the Series in which
it is a Member.
Estimated Market Value shall mean the estimated market
value of the Underlying Asset(s) owned by a Subsidiary
of a Series, which shall be determined annually by the
Manager of such Series and reported to the Members of
such Series.
Fees refers to compensation received by a Series
Manager for services provided to Series as a Series
Manager.
Fiscal Year shall mean (i) the period commencing upon
the formation of the Company and ending on December
31, (ii) any subsequent twelve (12) month period
commencing on May 15 and ending on December 31, or
(iii) any portion of the period described in Clause (ii) of
this sentence for which the Company is required to
allocate Profits, Losses and other items of a Series'
income, gain, loss or deduction pursuant to Article 9 and
Appendix A hereof.
Founder shall initially mean VinVesto, Inc. a Delaware
corporation, which is the initial and sole Member of the
Company not associated with any Series.
Free Cash Flow is the net income (as determined under
U.S. generally accepted accounting principles ("GAAP"))
generated by the Series plus any change in net working
capital and depreciation and amortization (and any other
non-cash Operating Expenses) and less any capital
expenditures related to the Underlying Asset ("Free Cash
Flow.") The Manager may maintain Free Cash Flow
funds in a deposit account or an investment account for
the benefit of the Series.
Gross Asset Value shall mean, with respect to any asset
associated with a Series, such asset's adjusted basis for
federal income-tax purposes, except as follows:
- The initial Gross Asset Value of any asset contributed by
a Member to a Series shall be the gross fair market value
of such asset, as agreed to by the manager of such Series;
- The Gross Asset Value of all assets of a Series shall be
adjusted to equal their respective gross fair market values,
as determined by the Series Manager, as of the following
times: (a) the acquisition of an additional Interest in such
Series by any new or existing Member in exchange for
more than a de minimis Capital Contribution; (b) the
distribution to a Member of such Series of more than a de
minimis amount of Series assets as consideration for an
Interest in the Series; and (c) the liquidation of the assets
of a Series within the meaning of Treasury Regulation
1.704 1 b2iig provided, however, that
adjustments pursuant to Clause (a) and Clause (b) of this
sentence shall be made only if the Series Manager of such
Series reasonably determines that such adjustments are
necessary or appropriate to reflect the relative Economic
Interests of the Members in such Series; and
- The Gross Asset Value of any Series asset that is
distributed to any Series Member shall be the gross fair
market value of such asset on the date of Distribution, as
determined by the Manager of such Series, which shall be
determined by any commercially reasonable method.
- If the Gross Asset Value of an asset has been determined
or adjusted pursuant to Paragraph (a) or Paragraph (b)
above, such Gross Asset Value shall thereafter be
adjusted by the Depreciation taken into account with
respect to such asset for purposes of computing Series
Profits and Losses.
Interest or Membership Interest shall mean a Member's
rights in the Company (with respect to the Founder), or a
Series (with respect to Series Members), including the
Member's Economic Interest in the Company of a Series,
plus any additional right to vote or participate in
management of the Company or Series, and any right to
information concerning the business and affairs of the
Company or Series provided by the Act and/or described
in the Company Agreement or a Series Agreement.
Investor shall mean Persons who make Capital
Contributions to a Series of the Company in exchange for
Membership Interests in such Series.
Involuntary Transfer shall mean any transfer not
specifically authorized under Article 12.
Involuntary Transferee shall mean a Series Member's
heirs, estate, or creditors that have taken by foreclosure,
receivership, or inheritance and not as a result of a
Voluntary Transfer.
Majority of Interests shall mean, with respect to a Series,
the vote of Membership Interests of one or more Series
Members that in the aggregate exceed fifty percent (50%)
of all voting Percentage Interests owned by Members of
that Series entitled to vote. Except as otherwise provided
in a Series Agreement; non-voting Series Members, if
applicable, shall have no voting rights.
Member Class shall mean a separate class of interests in a
Series as described in Article 5.2 whose rights and duties
are separate and distinct from other Members in a Series.
Member or Company Member, with respect to the
Company, shall include VinVesto, Inc. a Delaware
corporation, as the Founder of the Company. Member or
Series Member shall include Persons later admitted as
Members of a Series, who shall be admitted in
accordance with this Agreement. Upon being admitted as
a Member of a Series, unless otherwise specified such
Series Agreement, such Series Member shall not be
considered admitted as a Member of the Company or any
other Series.
Member Nonrecourse Debt has the meaning set forth in
section 1.704-2(b)(4) of the Treasury Regulations.
Member Nonrecourse Debt Minimum Gain means an
amount, with respect to each Member Nonrecourse Debt,
equal to the Company Minimum Gain that would result if
such Member Nonrecourse Debt were treated as a
Nonrecourse Liability, determined in accordance with
section 1.704-2(i)(3) of the Treasury Regulations.
Member Nonrecourse Deductions has the meaning set
forth in Treasury Regulation section 1.704-2 i 2. For
any Fiscal Year of the Company, the amount of Member
Nonrecourse Deductions with respect to a Member
Nonrecourse Debt equals the net increase during that
Fiscal Year in Member Nonrecourse Debt Minimum Gain
attributable to such Member Nonrecourse Debt during
that Fiscal Year, reduced (but not below zero) by the
amount of any Distributions during such year to the
Member bearing the economic risk of loss for such
Member Nonrecourse Debt if such Distributions are both
from the proceeds of such Member Nonrecourse Debt
and are allocable to an increase in Member Nonrecourse
Debt Minimum Gain attributable to such Member
Nonrecourse Debt, all as determined according to the
provisions of Treasury Regulation section 1.704-2 i 2.
In determining Member Nonrecourse Deductions, the
ordering rules of Treasury Regulation section 1.704-2 j
shall be followed.
Non-Capital Contributions shall mean the contributions
made by Members of the Company or a Series other than
cash.
Nonrecourse Deductions has the meaning set forth in
Treasury Regulation section 1.704-2c. The amount of
Nonrecourse Deductions for a Company Fiscal Year
equals the net increase in the amount of Company
Minimum Gain during that Fiscal Year, reduced (but not
below zero) by the aggregate amount of any Distributions
during that Fiscal Year of proceeds of a Nonrecourse
Liability that are allocable to an increase in Company
Minimum Gain.
Nonrecourse Liability has the meaning set forth in section
1.704-2b3 of the Treasury Regulations.
Notice of Sale shall have the meaning set forth in Article
12.8, pertaining to a Voluntary Transfer of a Series
Member's Interest.
Percentage Interest or Series Percentage Interest shall
mean, for any Member associated with a Series, such
Member's Percentage Interest in such Series, as set forth
herein or in a Series Agreement.
Person or Persons shall mean any individual or legal
entity, their heirs, executors, administrators, legal
representatives, successors, and assigns of such
individual or entity where the context so permits.
Profits and Losses shall mean, with respect to a Series,
and for each Fiscal Year, an amount equal to the Series'
taxable income or loss associated with such Series for a
Fiscal Year, determined in accordance with 703(a) of
the Code (but including in taxable income or loss, for this
purpose, all items of income, gain, loss or deduction
associated with such Series that are required to be stated
separately pursuant to 703(a)(1) of the Code), with the
following adjustments:
- Any income of a Series that is exempt from federal
income tax and not otherwise taken into account in
computing Profits or Losses pursuant to this definition
shall be added to such taxable income or loss;
- Any expenditures of such Series that are described in
705a2B of the Code (or treated as expenditures
described in 705a2B of the Code pursuant to
Treasury Regulation 1.704-1 b 2 iv i and not
otherwise taken into account in computing Profits or
Losses pursuant to this definition shall be subtracted from
such taxable income or loss;
- In the event the Gross Asset Value of any asset associated
with such Series is adjusted in accordance with Paragraph
(ii) or Paragraph (iii) of the definition of "Gross Asset
Value" above, the amount of such adjustment shall be
taken into account as gain or loss from the disposition of
such asset for purposes of computing Profits or Losses;
- Gain or loss resulting from any disposition of any asset of
such Series with respect to which gain or loss is
recognized for federal income-tax purposes shall be
computed by reference to the Gross Asset Value of the
asset disposed of, notwithstanding that the adjusted tax
basis of such asset differs from its Gross Asset Value;
and
- In lieu of the Depreciation, amortization and other cost
recovery deductions taken into account in computing
such taxable income or loss, there shall be taken into
account Depreciation associated with such Series for such
Fiscal Year or other period, computed in accordance with
the definition of "Depreciation" above.
Purchasing Member shall mean any current Series
Member, Series Manager or Founder that agrees to
purchase a selling Series Members Interest with respect
to a Series, including the Series Member's Economic
Interest and/or voting rights referenced in Articles 12 and
13.
Remaining Members shall have the meaning set forth in
Articles 12 and 13 hereof.
Reserves shall mean, with respect to a Series, funds set
aside or amounts allocated to reserves that shall be
maintained in amounts deemed sufficient by the Series
Manager of such Series for working capital and to pay
taxes, insurance, debt service or other costs or expenses
incident to the ownership or operation of the business of
the Company with respect to such Series, or incident to
the liquidation of such Series pursuant to Article 15.3.
Section, when capitalized and followed by a number,
refers the sections of the Appendices to this Company
Agreement.
Selling Member shall mean any Series Member that sells,
assigns, hypothecates, pledges, or otherwise transfers all
or any portion of its rights of membership in a Series,
including its Economic Interest and/or voting rights.
Series shall mean a designated Series with separate
Members, Managers or Interests established in
accordance with this Agreement, the Act, and a Series
Agreement having separate rights, powers or duties with
respect to Underlying Asset(s) or obligations or profits
and losses associated with Underlying Asset(s) or
obligations and, to the extent provided in this Agreement
or a Series Agreement.
Series Agreement shall mean a separate, abbreviated
Agreement (including amendments) establishing a Series,
and executed by the Founder and Series Managers and
adopted (via their Subscription Booklets) by the Series
Members. To the extent that a Series Agreement conflicts
with the Company Agreement, the Series Agreement
shall control.
Series Manager shall mean a Person appointed by the
Founder of the Company to manage a Series of the
Company, or such Person as may be subsequently elected
by the Series Members.
Series Member shall mean a Person who has made a
Capital Contribution to the Company in exchange for
Membership Interests in a Series of the Company.
Subsidiary or Subsidiaries shall mean the single purpose
limited liability companies formed by the Founder to take
title to individual Properties.
Substitute Member shall mean any Person or entity
admitted to a Series as a Member of the Series, on
approval by the Series Manager, with all the rights of a
Series Member pursuant to Article 7 of this Agreement.
Transferee when capitalized, shall have the meaning set
forth in Article 12 hereof.
Treasury Regulations shall mean the income-tax
regulations, including temporary regulations,
promulgated under the Code, as such regulations may be
amended from time to time (including corresponding
provisions of superseding regulations).
Underlying Asset(s) or Asset shall mean those assets that
an individual Series acquires to advance the purpose of
the Company. The Company, via individual Series,
intends to acquire assets such as fine and vintage wines.
Underlying Assets shall be specified in separate Series
Agreements.
Voluntary Transfer shall have the meaning set forth in
Article 12.
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