MANAGEMENT SERVICES AGREEMENT
This Agreement (?Agreement?) is made as of July 1, 2020 by
and between VV Markets, LLC, a Delaware limited liability company
(the ?Company?), and VinVesto, Inc., a Delaware corporation
(?Collection Manager?).
W I T N E S S E T H:
WHEREAS, the Company desires to retain Collection Manager to
furnish services to the Company, and Collection Manager wishes to be
retained to provide such services, on the terms and conditions hereinafter
set forth.
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Company
and Collection Manager hereby agree as follows:
1. Duties of Collection Manager.
(a) Employment of Collection Manager. The Company hereby engages
Collection Manager to source, acquire, sell to the Company, and manage
the storage, investment, and liquidation of the assets of the Company,
subject to the supervision of the Manager of the Company (the
?Company Manager?), during the term hereof and upon the terms and
conditions herein set forth, in accordance with:
(i) the investment objectives, policies and restrictions that are
determined by the Company Manager from time to time and disclosed to
Collection Manager, which objectives, policies and restrictions shall
initially be those set forth in the Company?s Form 1-A, filed with the
Securities and Exchange Commission (the ?SEC?), and as amended from
time to time;
(ii) all applicable federal and state laws, rules and regulations,
and the Company?s charter and bylaws.
Collection Manager hereby accepts such engagement and agrees during
the term hereof to render such services, subject to the payment of
compensation as described in the Company?s applicable offering
circular(s).
(b) Certain Services. Without limiting the generality of Section 1(a),
Collection Manager shall:
(i) determine the composition of the asset portfolio of the
Company and related series LLCs over time, including the nature and
timing of the changes thereto and the manner of implementing such
changes;
(ii) assist the Company in determining the assets that the
Company will purchase, retain, or sell;
(iii) acquire wine assets on the market and transfer those assets
to the Company;
(iv) execute, close, service and monitor the Company?s
investments;
(v) manage the transportation and storage of Company assets;
and
(vi) provide the Company with such other advisory,
management, research and related services as the Company may, from
time to time, reasonably require.
Collection Manager shall have the power and authority on behalf of the
Company to effectuate its investment decisions for the Company, to
make acquisitions and dispositions of assets, and to execute and deliver
all documents relating to the Company?s investments and the placing of
orders for other purchase or sale transactions on behalf of the Company.
In the event that the Company determines to incur debt financing,
Collection Manager shall arrange for such financing on the Company?s
behalf, subject to the oversight and any required approval of the
Company Manager. If it is necessary for Collection Manager to make
investments on behalf of the Company through a special purpose vehicle,
Collection Manager shall have authority to create or arrange for the
creation of such special purpose vehicle and to make such investments
through such special purpose vehicle in accordance with the Investment
Company Act.
(c) Advisers. Collection Manager is hereby authorized to enter into one
or more advisory agreements with other investment advisers pursuant to
which Collection Manager may obtain the services of the adviser(s) to
assist Collection Manager in providing the advisory and transactional
services required to be provided by Collection Manager under this
Agreement. At the time of this Agreement, one such advisor is
sommelier, wine investor, speaker, and author Xxxx Vet.
(d) Independent Contractors. Collection Manager, and any adviser, shall
for all purposes herein each be deemed to be an independent contractor
and, except as expressly provided or authorized herein, shall have no
authority to act for or represent the Company in any way or otherwise be
deemed an agent of the Company.
(e) Books and Records. Collection Manager shall keep and preserve
books and records relevant to the provision of services to the Company
and shall specifically maintain all books and records with respect to the
Company?s portfolio transactions and shall render to the Company
Manager such periodic and special reports as the Company Manager may
reasonably request. Collection Manager agrees that all records that it
maintains for the Company are the property of the Company and shall
surrender promptly to the Company any such records upon the
Company?s request; provided that Collection Manager may retain a copy
of such records.
2. Allocation of Costs and Expenses, Company Financial Practices.
(a) Expenses Payable by Collection Manager. All investment
professionals of Collection Manager and/or its affiliates, when and to the
extent engaged in providing investment services required to be provided
by Collection Manager under this Agreement, and the compensation and
routine overhead expenses of such personnel allocable to such services,
shall be provided and paid for by Collection Manager and not by the
Company.
(b) Expenses Payable by the Company. Other than those expenses
specifically assumed by Collection Manager pursuant to Section 2(a), the
Company shall bear all costs and expenses that are incurred in its
operation, administration and transactions.
(c) Company Financial Matters Generally. Company and Collection
Manager understand and agree that Collection Manager?s services will
be performed, and Collection Manager?s compensation paid, consistently
with overall Company financial practices. The Company,
contemporaneously with this Agreement, has undergone an audit of its
finances. Company and Collection Manager are familiar with the resuts
of such audit, and agree the to the policies and procedures adopted or
documented by the Company and its auditors in connection with such
audit. Exhibit 2.C to this Agreement, below, contains certain statements
and policies which have been adopted and/or documented by the
Company during the audit process, which statements and policies are
incorporated into this Agreement.
3. Compensation of Collection Manager. The Company agrees to pay,
and Collection Manager agrees to accept, as compensation for the
services provided by Collection Manager hereunder, A sourcing fee of 0-
10% of the aggregate purchase price of the relevant assets is paid to the
Collection Manager as compensation for identifying and managing the
acquisition of the assets. This fee will be set at the higher end of the
percentage range where the Collection Manager is successful in
acquiring assets below their average market value.
4. Representations, Warranties and Covenants of Collection Manager.
Collection Manager agrees that its activities shall at all times be in
compliance in all material respects with all applicable federal and state
laws governing its operations and investments, and that its activities shall
be consistent with forms, offering documentation, and other documents
and materials filed with the Securities Exchange Commission.
5. Responsibility of Dual Directors, Officers and/or Employees. If any
person who is a member, Collection Manager, partner, officer or
employee of Collection Manager is or becomes a director, officer and/or
employee of the Company and acts as such in any business of the
Company, then such member, Collection Manager, partner, officer
and/or employee shall be deemed to be acting in such capacity solely for
the Company, and not as a member, Collection Manager, partner, officer
or employee of Collection Manager or under the control or direction of
Collection Manager, even if paid by Collection Manager.
6. Limitation of Liability of Collection Manager; Indemnification.
Collection Manager and its affiliates and its and its affiliates? respective
directors, officers, employees, members, Collection Managers, partners
and stockholders, each of whom shall be deemed a third party
beneficiary hereof (collectively, the ?Indemnified Parties?), shall not be
liable to the Company or its subsidiaries or its and its subsidiaries?
respective directors, officers, employees, members, Collection Managers,
partners or stockholders for any action taken or omitted to be taken by
Collection Manager in connection with the performance of any of its
duties or obligations under this Agreement or otherwise on behalf of the
Company. The Company shall indemnify, defend and protect the
Indemnified Parties and hold them harmless from and against all claims
or liabilities (including reasonable attorneys? fees) and other expenses
reasonably incurred by the Indemnified Parties in or by reason of any
pending, threatened or completed action, suit, investigation or other
proceeding (including an action or suit by or in the right of the Company
or its security holders) arising out of or in connection with the
performance of any of Collection Manager?s duties or obligations under
this Agreement or otherwise for the Company. Notwithstanding the
foregoing provisions of this Section to the contrary, nothing contained
herein shall protect or be deemed to protect the Indemnified Parties
against, or entitle or be deemed to entitle the Indemnified Parties to
indemnification in respect of, any liability to the Company or its security
holders to which the Indemnified Parties would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence in the
performance of such Indemnified Party?s duties or by reason of such
Indemnified Party?s reckless disregard of its obligations and duties under
this Agreement (as the same shall be determined in accordance with the
Investment Company Act and any interpretations or guidance by the SEC
or its staff thereunder).
7. Effectiveness, Duration and Termination.
(a) This Agreement shall become effective as of the first date above
written. This Agreement shall remain in effect for two years after such
date, and thereafter shall continue automatically for successive annual
periods; provided that the Company Manager may prevent such
continuance upon written notice to Collection Manager
(b) This Agreement may be terminated at any time, without the payment
of any penalty, upon 60 days? written notice, by (i) the vote of holders of
a majority of the outstanding voting securities of the Company, (ii) the
vote of the Company Manager, or (iii) Collection Manager.
(d) The provisions of Section 6 of this Agreement shall remain in full
force and effect, and apply to Collection Manager and its representatives
as and to the extent applicable, and Collection Manager shall remain
entitled to the benefits thereof, notwithstanding any termination or
expiration of this Agreement. Further, notwithstanding the termination or
expiration of this Agreement as aforesaid, Collection Manager shall be
entitled to any amounts owed under Section 3 through the date of
termination or expiration.
8. Third Party Beneficiaries. Nothing in this Agreement, either express or
implied, is intended to or shall confer upon any person other than the
parties hereto and the Indemnified Parties any legal or equitable right,
benefit or remedy of any nature whatsoever under or by reason of this
Agreement.
9. Amendments of this Agreement. This Agreement may not be amended
or modified except by an instrument in writing signed by both parties
hereto, and upon the consent of a majority in interest of the members of
the Company.
10. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Delaware, and the applicable
provisions of the Investment Company Act, if any. To the extent that the
applicable laws of the State of Delaware, or any of the provisions herein,
conflict with the applicable provisions of the Investment Company Act,
if any, the latter shall control. The parties hereto unconditionally and
irrevocably consent to the exclusive jurisdiction of the federal and state
courts located in the Commonwealth of Virginia and waive any objection
with respect thereto, for the purpose of any action, suit or proceeding
arising out of or relating to this Agreement or the transactions
contemplated hereby.
11. No Waiver. The failure of either party hereto to enforce at any time
for any period the provisions of or any rights deriving from this
Agreement shall not be construed to be a waiver of such provisions or
rights or the right of such party thereafter to enforce such provisions, and
no waiver shall be binding unless executed in writing by all parties
hereto.
12. Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any law or public
policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in
any manner materially adverse to either party hereto. Upon such
determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner in order that the
transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
13. Headings. The descriptive headings contained in this Agreement are
for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
14. Counterparts. This Agreement may be executed in one or more
counterparts, each of which when executed shall be deemed to be an
original instrument and all of which taken together shall constitute one
and the same agreement.
15. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made
(and shall be deemed to have been duly given or made upon receipt) by
delivery in person, by overnight courier service (with signature required),
by facsimile, or by registered or certified mail (postage prepaid, return
receipt requested) to the parties hereto at their respective principal
executive office addresses.
16. Entire Agreement. This Agreement constitutes the entire agreement
of the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and undertakings, both written and oral,
between the parties hereto with respect to such subject matter.
17. Certain Matters of Construction.
(a) The words ?hereof?, ?herein?, ?hereunder? and words of similar
import shall refer to this Agreement as a whole and not to any particular
Section or provision of this Agreement, and reference to a particular
Section of this Agreement shall include all subsections thereof.
(b) Definitions shall be equally applicable to both the singular and plural
forms of the terms defined, and references to the masculine, feminine or
neuter gender shall include each other gender.
(c) The word ?including? shall mean including without limitation.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
VinVesto, Inc.
By: __/s/ Xxxxxxxx King__________
Name: _Nicholas King____
Title: __CEO___________
VV Markets LLC
By: __/s/ Xxxxxxxx King__________
Name: _Nicholas King____
Title: __CEO of Managing Member___
Exhibit 2.C to Management Services Agreement
Company Financial Matters Generally
Note 1: NATURE OF OPERATIONS
VV Markets, LLC (the ?Company?) is a Delaware series limited liability
company formed on June 16th, 2020. VinVesto Inc. is the sole owner of
interests of the Company (other than interests issued in a particular series
to other investors). The Company was formed to acquire and manage
fine wines, spirits, and other wine related entities. It is expected that the
Company will create a number of separate series of interests (the
?Series? or ?Series of Interests?) and that each collection will be owned
by a separate Series, and that the assets and liabilities of each Series will
be separate in accordance with Delaware law. Investors acquire
membership interests (the ?Interests?) in each Series and will be entitled
to share in the return of that particular Series, but will not be entitled to
share in the return of any other Series.
The Company?s managing member is VinVesto, Inc. (the ?Manager?).
The Manager is a Delaware corporation formed on June 16th, 2020. The
Manager is a technology and marketing company that operates the
VinVesto platform ("Platform") and manages the Company and the
assets owned by the Company in its roles as the Manager and manager of
the assets of each Series (the ?Asset Manager?).
As of June 16th, 2020, the Company has not commenced planned
principal operations nor generated revenue. The Company?s activities
since inception have consisted of formation activities and preparations to
raise capital. Once the Company commences its planned principal
operations, it will incur significant additional expenses. The Company is
dependent upon additional capital resources for the commencement of its
planned principal operations and is subject to significant risks and
uncertainties; including failing to secure funding to operationalize the
Company?s planned operations or failing to profitably operate the
business.
The Company intends to sell Interests in a number of separate individual
Series of the Company. Investors in any Series acquire a proportional
share of income and liabilities as they pertain to a particular Series, and
the sole assets and liabilities of any given Series at the time of an
offering related to that particular Series a single collectible asset, (plus
any cash reserves for future operating expenses). All voting rights,
except as specified in the operating agreement or required by law remain
with the Manager (e.g., determining the type and quantity of general
maintenance and other expenses required, determining how to best
commercialize the applicable Series assets, evaluating potential sale
offers and the liquidation of a Series). The Manager manages the
ongoing operations of each Series in accordance with the operating
agreement of the Company, as amended and restated from time to time
(the ?Operating Agreement?). The Company and each Series shall have
perpetual existence unless terminated pursuant to the Operating
Agreement or law.
Note 2: OPERATING AGREEMENT
In accordance with the Operating Agreement each interest holder in a
Series grants a power of attorney to the Manager. The Manager has the
right to appoint officers of the Company and each Series.
After the closing of an offering, each Series is responsible for its own
Operating expenses (as defined in Note 2(5)). Prior to the closing,
Operating expenses are borne by the Manager and not reimbursed by the
economic members. Should post-closing Operating expenses exceed
revenues or cash reserves then the Manager may (a) pay such Operating
expenses and not seek reimbursement, (b) loan the amount of the
Operating expenses to the series and be entitled to reimbursement of
such amount from future revenues generated by the series (?Operating
expenses Reimbursement Obligation(s)?), on which the Manager may
impose a reasonable rate of interest, and/or (c) cause additional Interests
to be issued in order to cover such additional amounts, which Interests
may be issued to existing or new investors, which may include the
Manager or its affiliates.
Note 3: LIQUIDITY AND CAPITAL RESOURCES
The accompanying financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The Company
or any of the Series have not generated profits since inception. The
Company has sustained no income or loss for the period ended July 1st,
2020 and, has no members? equity as of July 1, 2020. The Company or
any of the Series may lack liquidity to satisfy obligations as they come
due. Future liabilities, other than ones for which the Manager does not
seek reimbursement, will be covered through the proceeds of future
offerings for the various Series of Interests. These conditions raise
substantial doubt as to the Company's ability to continue as a going
concern.
Through July 1, 2020, none of the Series have recorded any revenues.
The Company anticipates that it will commence commercializing the
collection in fiscal year 2020, but does not expect to generate any
revenues for any of the Series in the first year of operations. Each Series
will continue to incur Operating expenses including, but not limited to,
storage, insurance, transportation and maintenance expenses, on an
ongoing basis.
From inception through July 1, 2020, VinVesto, Inc. or an affiliate has
borne all of the costs of the Company. The Company and each Series
expect to continue to have access to ample capital financing from the
Manager going forward. Until such time as the Series? have the capacity
to generate cash flows from operations, the Manager may cover any
deficits through additional capital contributions or the issuance of
additional Interests in any individual Series. In addition, parts of the
proceeds of future offerings may be used to create reserves for future
Operating expenses for individual Series at the sole discretion of the
Manager.
Note 4: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accounting and reporting policies of the Company conform to
accounting principles generally accepted in the United States of America
(GAAP).
Use of Estimates
The preparation of the balance sheet in conformity with GAAP requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of contingent assets and
liabilities at the date of the balance sheet and the reported amounts of
revenues and expenses during the reporting period. Actual results could
differ from those estimates.
Cash Equivalents and Concentration of Cash Balance
The Company considers all highly liquid securities with an original
maturity of less than three months to be cash equivalents. The
Company?s cash and cash equivalents in bank deposit accounts, at times,
may exceed federally insured limits.
Offering Expenses
Offering expenses relate to the offering for a specific Series and consist
of underwriting, legal, accounting, escrow, compliance, filing and other
expenses incurred through the balance sheet date that are directly related
to a proposed offering and will generally be charged to members' equity
upon the completion of the proposed offering. Offering expenses that are
incurred prior to the closing of an offering for such Series, are being
funded by the Manager and will generally be reimbursed through the
proceeds of the offering related to the Series. Should the proposed
offering prove to be unsuccessful, these costs, as well as additional
expenses to be incurred, will be charged to the Manager.
Operating Expenses
Operating expenses related to a particular collectible asset are costs and
expenses attributable the assets of a particular Series and include storage,
insurance, transportation (other than the initial transportation from the
card location to the Manager?s storage facility prior to the offering,
which is treated as an ?Acquisition Expense?, as defined below), annual
audit and legal expenses and other specific expenses as detailed in the
Manager?s allocation policy. We distinguish between pre-closing and
post-closing Operating expenses. Operating expenses are expensed as
incurred.
Except as disclosed with respect to any future offering, expenses of this
nature that are incurred prior to the closing of an offering of Series of
Interests are funded by the Manager and are not reimbursed by the
Company, Series or economic members. These are accounted for as
capital contributions by the Manager for expenses related to the business
of the Company or a Series.
Upon closing of an offering, a Series becomes responsible for these
expenses and finances them either through revenues generated by a
Series or available cash reserves at the Series. Should revenues or cash
reserves not be sufficient to cover Operating expenses the Manager may
(a) pay such Operating expenses and not seek reimbursement, (b) loan
the amount of the Operating expenses to the Series at a reasonable rate of
interest and be entitled to reimbursement of such amount from future
revenues generated by the Series (?Operating expenses Reimbursement
Obligation(s)?), and/or (c) cause additional Interests to be issued in order
to cover such additional amounts.
Income Taxes
The Company intends that the master series and separate Series will elect
and qualify to be taxed as a C-corporation under the Internal Revenue
Code. The separate Series will comply with the accounting and
disclosure requirement of ASC Topic 740, "Income Taxes," which
requires an asset and liability approach to financial accounting and
reporting for income taxes. Deferred income tax assets and liabilities are
computed for differences between the financial statement and tax bases
of assets and liabilities that will result in future taxable or deductible
amounts, based on enacted tax laws and rates applicable to the periods in
which the differences are expected to affect taxable income. Valuation
allowances are established, when necessary, to reduce deferred tax assets
to the amount expected to be realized.
Note 5: RELATED PARTY TRANSACTIONS
The Company, a Delaware series limited liability company, whose
managing member is the Manager, will admit additional members to
each of its series through the offerings for each series. By purchasing an
Interest in a Series of Interests, the investor is admitted as a member of
the Company and will be bound by the Company's Operating Agreement.
Under the Operating Agreement, each investor grants a power of
attorney to the Manager. The Operating Agreement provides that the
Manager with the ability to appoint officers
Note 6: REVENUE, EXPENSE AND COST ALLOCATION
METHODOLOGY
The Company distinguishes expenses and costs between those related to
the purchase of a particular collectible asset and Operating expenses
related to the management of such collectible assets.
Fees and expenses related to the purchase of an underlying collectible
asset include the offering expenses, Acquisition Expenses, Brokerage
Fee and Sourcing Fee. As of July 1, 2020, VinVesto, Inc. incurred costs
of $0 on behalf of the Company or Series.
Within Operating expenses the Company distinguishes between
Operating expenses incurred prior to the closing of an offering and those
incurred after the close of an offering. Although these pre- and post-
closing Operating expenses are similar in nature and consist of expenses
such as storage, insurance, transportation and maintenance, pre-closing
Operating expenses are borne by the Manager and are not expected to be
reimbursed by the Company or the economic members. Post-closing
Operating expenses are the responsibility of each Series of Interest and
may be financed through (i) revenues generated by the Series or cash
reserves at the Series and/or (ii) contributions made by the Manager, for
which the Manager does not seek reimbursement or (iii) loans by the
Manager, for which the Manager may charge a reasonable rate of interest
or (iv) issuance of additional Interest in a Series.
Allocation of revenues, expenses and costs will be made amongst the
various Series in accordance with the Manager's allocation policy. The
Manager's allocation policy requires items that are related to a specific
Series to be charged to that specific Series. Items not related to a specific
Series will be allocated pro rata based upon the value of the underlying
collectible assets or the number of collectibles, as stated in the Manager?s
allocation policy and as reasonably determined by the Manager. The
Manager may amend its allocation policy in its sole discretion from time
to time.
Revenue from the anticipated commercialization of the collections will
be allocated amongst the Series whose underlying collectibles are part of
the commercialization events, based on the value of the underlying
collectible assets. No revenues have been generated to date.
Offering expenses, other than those related to the overall business of the
Manager (as described in Note 2(4)) are funded by the Manager and
generally reimbursed through the Series proceeds upon the closing of an
offering. No offering expenses have been incurred by the Company as of
July 1, 2020.
Acquisition expenses are funded by the Manager, and reimbursed from
the Series proceeds upon the closing of an offering. The Manager had
incurred $0 in acquisitions expenses at July 1, 2020.
The Sourcing Fee is paid to the Manager from the Series proceeds upon
the close of an offering.
Note 7: GOING CONCERN
The Company?s balance sheet has been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. The Company is a business
that has not commenced planned principal operations, plans to incur
significant costs in pursuit of its capital financing plans, and has not
generated any revenues as of July 1, 2020. The Company?s ability to
continue as a going concern in the next twelve months is dependent upon
its ability to obtain capital financing from investors sufficient to meet
current and future obligations and deploy such capital to produce
profitable operating results. No assurance can be given that the Company
will be successful in these efforts. These factors, among others, raise
substantial doubt about the ability of the Company to continue as a going
concern for a reasonable period of time. The balance sheet does not
include any adjustments relating to the recoverability and classification
of recorded asset amounts or the amounts and classification of liabilities
that might be necessary should the Company be unable to continue as a
going concern.
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