Loans and Guarantees from Related Parties
In January 2018, VWE and related entities issued a promissory note, as amended, in favor of the LR Living Trust in the original principal amount of $9,000,000. This note was assigned to from the LR Living Trust to the Rudd Trust effective as of December 31, 2019. The interest rate on the loan is equal to the prime rate of interest published by the Wall Street Journal (the “Prime Rate”) plus 4% as computed on a
360-day
year with the interest rate being adjusted for all outstanding advances as of the first day of each calendar quarter. Any amount that is not paid when due bears interest at the Prime Rate plus 5%. VWE made an interest payment during the fiscal year ended June 30, 2021 in the amount of $1,633,312, representing all accrued interest as of December 31, 2019. The principal amount of $9,000,000 and accrued interest of $920,247 was paid on May 31, 2021.
In January 2018, VWE and related entities issued a promissory note in favor of Mr. Patrick Roney in the original principal amount of $1,000,000. The interest rate on the loan is equal to the Prime Rate plus 4% as computed on a
360-day
year with the interest rate being adjusted for all outstanding advances as of the first day of each calendar quarter. Any amount not paid when due at the Prime Rate plus 5%. On March 9, 2021, VWE paid $488,730 of principal and 267,570 in accrued interest to Patrick Roney. On May 31, 2021, VWE paid the remaining principal of $511,270 and accrued interest of $10,217 to settle the outstanding note.
In 2014, VWE made two unsecured loans to Terry Wheatley, one for $560,000 and the other for $110,000, in connection with VWE’s acquisition of her company, Canopy Brands. In June 2018, the terms of the loans were amended such that the interest accrued on both loans (totaling $86,269), was added to the outstanding principal amount on the loans, resulting in a new loan for the outstanding principal amount of $756,289. The principal amount of this loan was repaid in full in 2021 before the April 28, 2021 filing by the Sponsor with the SEC of the Sponsor’s Registration Statement on
Form S-4
(File
No. 333-254260).
Interest on the loan in the amount of $87,032 was forgiven by VWE at that time. Terry Wheatley is the President of the Company.
Immediate Family Member Employment Agreements
VWE provides at will employment to Mr. Sean Roney, who provides administrative and general services to VWE, manages VWE’s trademarks and acts as brand manager for Sabotage, Sean Roney, who is the son of Mr. Patrick Roney, has served VWE from 2010 to present. During the years ended June 30, 2021 and 2020, he was paid a salary of $142,999 and $133,563, respectively.
In 2018, VWE employed Chris Sebastiani, the brother of Jonathan Sebastiani, as the General Manager of Viansa, responsible for
sales and marketing of the Viansa brand. During the years ended June 30, 2021 and 2020, VWE paid Mr. Sebastiani $155,160 and $150,482, respectively. This arrangement remained in effect in 2021.
In 2014, VWE employed Kevin Lynn, the brother of Terry Wheatley, as Regional Sales Manager, selling wine to distributors. In the year ended June 30, 2020, VWE paid Mr. Lynn $159,900. This arrangement ended in 2020. Mr. Lynn was
re-
hired in October 2021 as the Visual Communications Manager.
Family Member Business Arrangements
In connection with its acquisition of Terry Wheatley’s business in 2014, VWE began to pay an unincorporated business named Tough Enough to Wear Pink for sponsorship services in connection with the latter’s breast cancer awareness campaign in the western community. Tough Enough to Wear Pink is the marketing platform for VWE’s Purple Cowboy brand. During the periods July 1, 2020 to June 30, 2021 and July 1, 2019 to June 30, 2020, VWE paid $360,000 and $380,000, respectively, to Tough Enough to Wear Pink for its services. These payments were made to Lacey and Wade Wheatley, who are the
and son of Terry Wheatley.