0001144204-19-034533.txt : 20190712 0001144204-19-034533.hdr.sgml : 20190712 20190712134237 ACCESSION NUMBER: 0001144204-19-034533 CONFORMED SUBMISSION TYPE: 1-A PUBLIC DOCUMENT COUNT: 29 FILED AS OF DATE: 20190712 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GolfSuites 2, Inc. CENTRAL INDEX KEY: 0001774902 IRS NUMBER: 833979706 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 1-A SEC ACT: 1933 Act SEC FILE NUMBER: 024-11036 FILM NUMBER: 19952666 BUSINESS ADDRESS: STREET 1: 2738 FALKENBURG ROAD SOUTH CITY: RIVERVIEW STATE: FL ZIP: 33578 BUSINESS PHONE: 813 621-5000 MAIL ADDRESS: STREET 1: 2738 FALKENBURG ROAD SOUTH CITY: RIVERVIEW STATE: FL ZIP: 33578 1-A 1 primary_doc.xml 1-A LIVE 0001774902 XXXXXXXX GolfSuites 2. Inc. DE 2019 0001774902 7900 83-3979706 0 0 2738 FALKENBURG RD. S. RIVERVIEW FL 33578 813-621-5000 Jamie Ostrow Other 180.00 0.00 0.00 0.00 6513.00 143514.00 0.00 143514.00 -137181.00 6513.00 0.00 0.00 0.00 0.00 0.00 00.00 IndigoSpires CPA Group, LLC Class B Common Stock 18000000 000000N/A N/A N/A 0 000000N/A N/A N/A 0 000000N/A N/A true true Tier2 Audited Equity (common or preferred stock) Y N N Y Y N 10000000 0 5.0000 50000000.00 0.00 0.00 0.00 50000000.00 Sageworks Capital, LLC 513000.00 IndigoSpire CPA LLC 2500.00 CrowdCheck Law, LLC 25000.00 State Filing Fees 10000.00 162182 44500000.00 true AL AK AZ AR CA CO CT DE FL GA HI ID IL IN IA KS KY LA ME MD MA MI MN MS MO MT NE NV NH NJ NM NY NC ND OH OK OR PA RI SC SD TN TX UT VT VA WA WV WI WY DC PR AL AK AZ AR CA CO CT DE FL GA HI ID IL IN IA KS KY LA ME MD MA MI MN MS MO MT NE NV NH NJ NM NY NC ND OH OK OR PA RI SC SD TN TX UT VT VA WA WV WI WY DC PR GolfSuites 2, Inc. Class B Common Shares 18000000 0 $180 (determined at $0.00001 per share) Section 4(a)(2) of the Securities Act PART II AND III 2 tv523247_partiiandiii.htm PART II AND III

  

PRELIMINARY OFFERING CIRCULAR DATED JULY 12, 2019

 

GOLFSUITES 2, INC.

 

 

 

2738 FALKENBURG ROAD SOUTH

RIVERVIEW, FL 33578

(813) 621-5000

 

Up to 10,000,000 shares of Preferred Stock and

up to 10,000,000 shares of Class A Common Stock into which the Preferred Stock may convert*

 

 

 

 

Minimum investment 100 shares of Preferred Stock ($500)

 

SEE “SECURITIES BEING OFFERED” AT PAGE 43

 

   Price to Public   Broker-Dealer
discount and
commissions (1)
   Proceeds to
issuer (2)
   Proceeds to
other persons
 
Per share  $5   $0.05   $4.95   $0 
Total Maximum  $50,000,000   $513,000   $49,487,000   $0 

 

*The Preferred Stock is convertible into Class A Common Stock either at the discretion of the investor or automatically upon effectiveness of registration of the securities in an initial public offering. The total number of shares of the Class A Common Stock into which the Preferred may be converted will be determined by dividing the original issue price per share by the conversion price per share. See “Securities Being Offered” at Page 43 for additional details.

 

(1) The company has engaged Sageworks Capital, LLC, member FINRA/SIPC (“Sageworks”), to perform administrative and technology related functions in connection with this offering, but not for underwriting or placement agent services. This includes the 1% commission, but it does not include the one-time set-up fees payable by the company to Sageworks. See “Plan of Distribution” for details.

 

(2) The company expects that, not including state filing fees, the minimum amount of expenses of the offering that we will pay will be approximately $483,000 regardless of the number of shares that are sold in this offering. In the event that the maximum offering amount is sold, the total offering expenses will be approximately $5,500,000.

 

This offering will terminate at the earlier of (1) the date at which the maximum offering amount has been sold, (2) the date which is one year from this offering being qualified by the United States Securities and Exchange Commission, or (3) the date at which the offering is earlier terminated by the company at its sole discretion. The company has engaged Prime Trust, LLC as agent to hold any funds that are tendered by investors. The offering is being conducted on a best-efforts basis without any minimum target. Provided that an investor purchases shares in the amount of the minimum investment, $500 (100 shares), there is no minimum number of shares that needs to be sold in order for funds to be released to the company and for this offering to close, which may mean that the company does not receive sufficient funds to cover the cost of this offering. The company may undertake one or more closings on a rolling basis. After each closing, funds tendered by investors will be made available to the company. After the initial closing of this offering, we expect to hold closings on at least a monthly basis.

 

Each holder of GolfSuites 2 Series A Preferred Stock (the “Preferred Stock”) is entitled to one vote for each share on all matters submitted to a vote of the stockholders. Holders of Preferred Stock will vote together with the holders of Common Stock as a single class on all matters (including the election of directors) submitted to vote or for the consent of the stockholders of GolfSuites 2. Holders of the Class B Common Stock will continue to hold a majority of the voting power of all of the company’s equity stock at the conclusion of this offering and therefore control the board.

 

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THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION DOES NOT PASS UPON THE MERITS OR GIVE ITS APPROVAL OF ANY SECURITIES OFFERED OR THE TERMS OF THE OFFERING, NOR DOES IT PASS UPON THE ACCURACY OR COMPLETENESS OF ANY OFFERING CIRCULAR OR OTHER SOLICITATION MATERIALS. THESE SECURITIES ARE OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION WITH THE COMMISSION; HOWEVER, THE COMMISSION HAS NOT MADE AN INDEPENDENT DETERMINATION THAT THE SECURITIES OFFERED ARE EXEMPT FROM REGISTRATION

 

GENERALLY, NO SALE MAY BE MADE TO YOU IN THIS OFFERING IF THE AGGREGATE PURCHASE PRICE YOU PAY IS MORE THAN 10% OF THE GREATER OF YOUR ANNUAL INCOME OR NET WORTH. DIFFERENT RULES APPLY TO ACCREDITED INVESTORS AND NON-NATURAL PERSONS. BEFORE MAKING ANY REPRESENTATION THAT YOUR INVESTMENT DOES NOT EXCEED APPLICABLE THRESHOLDS, WE ENCOURAGE YOU TO REVIEW RULE 251(d)(2)(i)(C) OF REGULATION A. FOR GENERAL INFORMATION ON INVESTING, WE ENCOURAGE YOU TO REFER TO www.investor.gov.

 

This offering is inherently risky. See “Risk Factors” on page 11. 

 

Sales of these securities will commence on approximately                               , 2019.

 

The company is following the “Offering Circular” format of disclosure under Regulation A.

 

In the event that we become a reporting company under the Securities Exchange Act of 1934, we intend to take advantage of the provisions that relate to “Emerging Growth Companies” under the JOBS Act of 2012. See “Implications of Being an Emerging Growth Company.”

 

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TABLE OF CONTENTS

 

Summary 5
Risk Factors 11
Dilution 20
Plan of Distribution and Selling Securityholders 22
Use of Proceeds to Issuer 26
The Company’s Business 28
The Company’s Property 34
Conflicts of Interest 34
Management’s Discussion and Analysis of Financial Condition and Results of Operations 35
Directors, Executive Officers and Significant Employees 38
Compensation of Directors and Officers 39
Security Ownership of Management and Certain Securityholders 40
Interest of Management and Others in Certain Transactions 40
Securities Being Offered 43
Financial Statements F-1

 

In this Offering Circular, the term “GolfSuites 2,” “we,” “us, “our” or “the company” refers to GolfSuites 2, Inc., a Delaware corporation.

 

THIS OFFERING CIRCULAR MAY CONTAIN FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO, AMONG OTHER THINGS, THE COMPANY, ITS BUSINESS PLAN AND STRATEGY, AND ITS INDUSTRY. THESE FORWARD-LOOKING STATEMENTS ARE BASED ON THE BELIEFS OF, ASSUMPTIONS MADE BY, AND INFORMATION CURRENTLY AVAILABLE TO THE COMPANY’S MANAGEMENT. WHEN USED IN THE OFFERING MATERIALS, THE WORDS “ESTIMATE,” “PROJECT,” “BELIEVE,” “ANTICIPATE,” “INTEND,” “EXPECT” AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS, WHICH CONSTITUTE FORWARD LOOKING STATEMENTS. THESE STATEMENTS REFLECT MANAGEMENT’S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE THE COMPANY’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN THE FORWARD-LOOKING STATEMENTS. INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE ON WHICH THEY ARE MADE. THE COMPANY DOES NOT UNDERTAKE ANY OBLIGATION TO REVISE OR UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER SUCH DATE OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.

 

IMAGES CONTAINED IN THIS OFFERING CIRCULAR ARE ARTIST’S IMPRESSIONS AND THE ACTUAL FACILITIES MAY VARY. 

 

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SUMMARY

 

GolfSuites 2, Inc. is an early stage hospitality and entertainment company devoted to the development and operation of golf driving range and entertainment centers in the Southeastern sector of the United States. The company will purchase the land and manage the zoning, entitlement, design, construction and operation of the planned facilities.

 

The company will operate under the brand name “GolfSuites” and is a subsidiary of KGEM Golf, Inc. (“KGEM”). KGEM was incorporated in 2018 as a successor entity to KGE, LLC, which was created in 2016 to develop and operate a national chain of golf driving range entertainment centers.

 

KGEM operates six operating subsidiaries, GolfSuites 1, Inc. (“GolfSuites 1”), GolfSuites 2, Inc. (“GolfSuites 2”), GolfSuites 3, Inc. (“GolfSuites 3”), GolfSuites 4, Inc. (“GolfSuites 4”), GolfSuites 5, Inc. (“GolfSuites 5”) and GolfSuites 6, Inc. (“GolfSuites 6”), (each an “Operating Subsidiary” and collectively the “Operating Subsidiaries”). Each Operating Subsidiary will be located in a different region within the United States. The Operating Subsidiaries will be located in the following regions of the United States and will operate under the names listed below:

 

REGION NAME
Midwest United States GolfSuites 1, Inc.
Southeast United States GolfSuites 2, Inc.
Central United States GolfSuites 3, Inc.
Northwest United States GolfSuites 4, Inc.
Southwest United States GolfSuites 5, Inc.
Northeast United States GolfSuites 6, Inc.

 

GolfSuites 2 is targeting avid and novice golfers, families, millennials and other segments seeking recreation, hospitality, and entertainment in golf-themed complexes. The facilities will be designed to effectively host corporate meetings, fund raising events, national skill event qualifiers and professional showcase events.

 

The company was incorporated in Delaware on March 13, 2019. GolfSuites 2 is not currently profitable.

 

Our plan to differentiate ourselves from competitors

 

GolfSuites 2 intends to provide a realistic golf experience so that it can better appeal to avid and moderate golfers. Climate-controlled semi-private golf suites open up to the golf target field and incorporate comfortable seating, ball dispensers, club storage, gaming and media displays. In addition to hospitality, entertainment, events and family fun, the company plans to appeal to a wide demographic. The company believes that it will be able to leverage the following advantages:

 

·Realistic Golf Experience:

oSkill-based gaming and simulated play golf built into a 300+ yard range.

§The golf target field consists of multiple simulated green sites and simulated water and sand hazards allowing for accelerated hole play as well as skill-based gaming.

 

o“Real” golf balls that simulate more life-like play.

§The golf balls have the ability to simulate life-like play because they are of premium quality and durability and do not incorporate an electronic chip which would impact their balance and overall efficacy.

 

·Superior Technology:

oRadar technology allows players to measure their ball flight to within 3-4 inches.

  o Ball flight data including ball speed, direction and distance provided in each suite

  o Ability to simulate play on famous golf courses.

  o Video swing analysis.

  o Gaming and data analytics that can be shared with others on social media.

 

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  · Holistic Game Improvement: The company will offer a premier coaching and holistic game improvement center:

  o The Golf Academy (the “Golf Academy”), based on the successful model of The Golf Room (the “Golf Room”) located in Dublin, Ohio.

  o The Golf Room was founded by Kyle Morris, a former PGA Tour player and a nationally renowned golf instructor and coach.

  o At each Golf Academy, players will be able to access swing instruction, golf fitness and rehabilitation, mental sports performance, and college golf recruiting.

 

  · Enhanced Guest Experiences:

  o VIP Member concierge and hosts.

  o VIP Member Select Suites.

  o Men’s and women’s member locker rooms.

  o Second floor covered drive-up arrival zone.

  o Improved digital experiences for guest engagement before, during and after onsite visits.

  o Online reservation system.

  o Onsite games including pinball, pool and corn hole.

  o Onsite and post-visit engagement and social sharing.

 

  · Interactive Games and Contests:

  o Ability for customers to compete against other suites and customers with closest to the pin, long drive and other skill-based games.

  o A software application which will allow players to satisfy their desire to play an 18-hole golf round in 1.5 hours instead of the traditional 3-4 hours.

 

  · Women Designed Programs and Coaching: These include learn-to-play days and women-only events and leagues.

 

  · Beginner Player Designed Programs and Coaching: These include learn-to-play days and beginner player events and leagues.

 

  · Upgraded Amenities: These include the following:

  o Luxury bathrooms.

  o Child care.

  o Business networking zones.

  o Conference rooms.

  o Free high-speed Wi-Fi.

  o Family restrooms and changing areas.

 

  · Healthy and Localized Menus: chef-inspired authentic healthy menu offerings, farm to table sourcing, localized craft beers and select menu items to appeal to regional customers’ tastes, seasonality and lifestyles.

 

Revenue Plan

 

During 2019, the company believes it can break ground on at least one facility in the Southeastern sector of the United States (the “Phase 1 Construction”). Over time, the company intends to operate at least three Southeastern facilities.

 

The company intends to generate revenue through the following activities:

 

  · individual and corporate membership sales,

  · food and beverage sales,

  · coaching and instruction services,

  · suite rentals,

  · retail sales,

 

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  · sponsorships, advertising and naming rights, and

  · contest and qualifier fees and ticket purchases.

 

The Offering

 

Securities offered   Up to 10,000,000 shares of Preferred Stock and up to 10,000,000 shares of Class A Common Stock into which they may convert
     
Class A Stock Common outstanding before the offering   0 shares of Class A Common Stock.
     
Preferred Stock outstanding before the offering   0 shares of Preferred Stock.
     
Preferred Stock outstanding after the offering   10,000,000 shares of Preferred Stock
     
Share Price   $5 per share
     
Minimum Investment   $500

 

Terms of the Preferred Stock

 

Holders of the Preferred Stock are entitled to the following:

·Dividend distribution:

  o Accrual of dividends:

§Investors in this offering will begin to accrue an annual 8% dividend after the issuance of their Preferred Stock.

  § Payment of dividends:

·Payments will be made monthly providing legally available funds are available.

 

  · Declared dividends

  o In the event the company declares a dividend distribution to the Common Stock holders, holders of Preferred Stock will receive dividend distribution. Dividends will be distributed to holders on a pro-rata on an as converted basis.

 

  · Voting:

  o Holders of the Preferred Stock are entitled to one vote for each share on all matters submitted to a vote of the shareholders.

  o Holders of Preferred Stock at all times will vote together with the holders of Common Stock as a single class on all matters (including the election of directors) submitted to vote or for the consent of the stockholders of GolfSuites 2.

  o Holders of Class B Common Stock (currently held exclusively KGEM) are entitled to five votes per share (see, “Risk Factors – The officers of GolfSuites 2 control the company and the company does not currently have any independent directors”) and thus will control the board.

 

  · Liquidation preference:

  o In the event of a liquidation, investors will be entitled to receive the greater of the amount of their total investment in the shares of Preferred Stock and any accrued and unpaid dividends or their pro rata percentage of the proceeds calculated based on the number of shares owned by each investor on an “as converted to Common Stock” basis.

 

  · Conversion:

  o Holders of the Preferred Stock may convert their shares of Preferred Stock into Class A Common Stock in their sole discretion.

  o In the event of an initial public offering, as defined in the Certificate of Designations, conversion of the Preferred Stock is mandatory.

  o Anti-dilution protection is provided to holders of the Preferred Stock using the weighted average method. See, “Securities Being Offered – Preferred Stock – Anti-Dilution Rights”; Section 5 of the Certificate of Designations filed as an exhibit to this Offering Statement of which this Offering Circular forms a part.

 

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Use of Proceeds

 

Proceeds from this offering will be used to fund the company’s construction and development of golf driving range entertainment centers in the Southeast, related marketing efforts and operational expenses. See “Use of Proceeds to Issuer” section of this Offering Circular.

 

Implications of Being an Emerging Growth Company

 

As an issuer with less than $1 billion in total annual gross revenues during our last fiscal year, we will qualify as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) and this status will be significant if and when we become subject to the ongoing reporting requirements of the Exchange Act of 1934, as amended. An emerging growth company may take advantage of certain reduced reporting requirements and is relieved of certain other significant requirements that are otherwise generally applicable to public companies. In particular, as an emerging growth company we:

 

·will not be required to obtain an auditor attestation on our internal controls over financial reporting pursuant to the Sarbanes-Oxley Act of 2002;

 

·will not be required to provide a detailed narrative disclosure discussing our compensation principles, objectives and elements and analyzing how those elements fit with our principles and objectives (commonly referred to as “compensation discussion and analysis”);

 

·will not be required to obtain a non-binding advisory vote from our shareholders on executive compensation or golden parachute arrangements (commonly referred to as the “say-on-pay,” “say-on-frequency” and “say-on-golden-parachute” votes);

 

·will be exempt from certain executive compensation disclosure provisions requiring a pay-for-performance graph and CEO pay ratio disclosure;

 

·may present only two years of audited financial statements and only two years of related Management’s Discussion and Analysis of Financial Condition and Results of Operations, or MD&A; and

 

·will be eligible to claim longer phase-in periods for the adoption of new or revised financial accounting standards.

 

We intend to take advantage of all of these reduced reporting requirements and exemptions, including the longer phase-in periods for the adoption of new or revised financial accounting standards under Section 107 of the JOBS Act. Our election to use the phase-in periods may make it difficult to compare our financial statements to those of non-emerging growth companies and other emerging growth companies that have opted out of the phase-in periods under Section 107 of the JOBS Act.

 

Under the JOBS Act, we may take advantage of the above-described reduced reporting requirements and exemptions for up to five years after our initial sale of common equity pursuant to a registration statement declared effective under the Securities Act of 1933, as amended, or such earlier time that we no longer meet the definition of an emerging growth company. Note that this offering, while a public offering, is not a sale of common equity pursuant to a registration statement, since the offering is conducted pursuant to an exemption from the registration requirements. In this regard, the JOBS Act provides that we would cease to be an “emerging growth company” if we have more than $1 billion in annual revenues, have more than $700 million in market value of our common stock held by non-affiliates, or issue more than $1 billion in principal amount of non-convertible debt over a three-year period.

 

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Certain of these reduced reporting requirements and exemptions are also available to us due to the fact that we may also qualify, once listed, as a “smaller reporting company” under the Commission’s rules. For instance, smaller reporting companies are not required to obtain an auditor attestation on their assessment of internal control over financial reporting; are not required to provide a compensation discussion and analysis; are not required to provide a pay-for-performance graph or CEO pay ratio disclosure; and may present only two years of audited financial statements and related MD&A disclosure.

 

Summary Risk Factors

 

GolfSuites 2 is a startup. The company was incorporated on March 13, 2019 and is still in an early stage of development. The company is not close to profitability as projects take approximately one year to develop and construct and may not provide a return on investment for approximately 24 months thereafter. Investing in the company involves a high degree of risk (see “Risk Factors”). As an investor, you should be able to bear a complete loss of your investment. Some of the more significant risks include those set forth below:

 

  · This is a very young company.

  · The company’s affiliated entities have no prior performance record.

  · The company’s auditor has issued a “going concern” opinion.

  · The company has minimal operating capital, no significant assets and no revenue from operations.

  · The success of GolfSuites 2 business is dependent on purchasing large parcels of land at favorable prices.

  · The company plans to raise significantly more capital and future fundraising rounds could result in dilution.

  · Success in the hospitality and entertainment industry is highly unpredictable, and there is no guarantee the company’s content will be successful in the market.

  · The company may not be able to attract and retain individuals interested in annual memberships at its facilities, and attract drop-in/daily memberships, which could harm its business, financial condition and results of operations.

  · GolfSuites 2 operates in a highly competitive market.

  · Competition in the “alternative venues for recreational pursuits” industry could have a material adverse effect on the company’s business and results of operations.

  · Customer complaints or litigation on behalf of our customers or employees may adversely affect our business, results of operations or financial condition.

  · The company’s insurance coverage may not be adequate to cover all possible losses that it could suffer and its insurance costs may increase.

  · The company may not be able to operate its facilities, or obtain and maintain licenses and permits necessary for such operation, in compliance with laws, regulations and other requirements, which could adversely affect its business, results of operations or financial condition.

  · The company has concentrated its investments in golf-related real estate and facilities, which are subject to numerous risks, including the risk that the values of their investments may decline if there is a prolonged downturn in real estate values.

  · The illiquidity of real estate may make it difficult for the company to dispose of one or more of our properties or negatively affect its ability to profitably sell such properties and access liquidity.

  · The company’s development and growth strategy depends on its ability to fund, develop and open new entertainment venues and operate them profitably.

  · The company’s development and construction of the first Southeastern facility depends on its ability to obtain favorable mortgage financing.

 

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  · GolfSuites 2 depends on a small management team and may need to hire more people to be successful.

  · Key Man Risk.

  · The company will require a general manager, who has not yet been hired.

  · KGEM may not be able to protect all of its intellectual property.

  · KGEM has not yet entered into any master licensing agreements with third party suppliers of technology and GolfSuites 2 has not yet been made a sublicense to the relevant master licensing agreements.

  · The payment of accrued dividends is paid out of the company’s reserved funds for the foreseeable future.

  · Distributions will be only made if permitted under Delaware law, which is subject to change, and in the sole discretion of the board of directors.

  · The tax treatment of dividends may vary and distributions to shareholders may be taxed as capital gains. 

  · The company is responsible for certain administrative burdens relating to taxation.

  · The offering price has been arbitrarily set by the company.

  · There is no minimum amount set as a condition to closing this offering.

  · The officers of GolfSuites 2 control the company and the company does not currently have any independent directors.

  · The exclusive forum provision in the company’s Certificate of Incorporation may have the effect of limiting an investor’s ability to bring legal action against the company and could limit an investor’s ability to obtain a favorable judicial forum for disputes.

  · Investors in this offering may not be entitled to a jury trial with respect to claims arising under the subscription agreement and claims where the forum selection provision is applicable, which could result in less favorable outcomes to the plaintiff(s) in any such action.

  · There is no current market for GolfSuites 2’s shares.

  · There are conflicts of interest between the company, its management and their affiliates.

  · The interests of GolfSuites 2, KGEM, the other Operating Subsidiaries and the company’s other affiliates may conflict with your interests.  

  · There are conflicts of interest between the company and some of the members of the Board of Directors.

  · Loans issued by KGEM to GolfSuites 2 may not be made at arm’s length.

  · KGEM and GolfSuites 2 intend to share some services.

 

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RISK FACTORS

 

The SEC requires the company to identify risks that are specific to its business and its financial condition. The company is still subject to all the same risks that all companies in its business, and all companies in the economy, are exposed to. These include risks relating to economic downturns, political and economic events and technological developments (such as hacking and the ability to prevent hacking). Additionally, early-stage companies are inherently riskier than more developed companies. You should consider general risks as well as specific risks when deciding whether to invest.

 

Risks relating to our business

 

This is a very young company.

The company was incorporated in March 13, 2019. It is a startup company that has not yet started operations, and has not started to build its golf facilities. There is no history upon which an evaluation of its past performance and future prospects in the hospitality and entertainment industry can be made. Statistically, most startup companies fail.

 

The company’s affiliated entities have no prior performance record.

Just as GolfSuites 2 is a new entrant in the market, the affiliates of GolfSuites 2, such as the other Operating Subsidiaries, KGEM, (which will provide management services to GolfSuites 2) do not have a track record of involvement in hospitality and entertainment that investors may assess. Even if an affiliate of GolfSuites 2 did have such prior experience, that experience would not be indicative of its future performance.

 

The company’s auditor has issued a “going concern” opinion.

GolfSuites 2 auditor has issued a “going concern” opinion on their financial statements, which means the company may not be able to succeed as a business without additional financing. GolfSuites 2 was incorporated in March 13, 2019. As of May 15, 2019, the date of its financial statements, it has no revenues and is not close to profitability. It has an accumulated deficit of $137,181, as of May 15, 2019. The audit report states that the company’s ability to continue as a going concern for the next twelve months is dependent upon its ability to generate cash from operating activities and/or to raise additional capital to fund its operations. The company’s failure to raise additional short-term capital could have a negative impact on not only their financial condition but also their ability to remain in business.

 

The company has minimal operating capital, no significant assets and no revenue from operations.

The company currently has minimal operating capital and for the foreseeable future will be dependent upon its ability to finance its planned operations from the sale of securities or other financing alternatives. There can be no assurance that it will be able to successfully raise operating capital in this or other offerings of securities, or to raise enough funds to fully construct operational golf entertainment centers. The failure to successfully raise operating capital could result in its inability to execute its business plan and potentially lead to bankruptcy, which would have a material adverse effect on the company and its investors.

 

The success of GolfSuites 2 business is dependent on purchasing large parcels of land at favorable prices.

GolfSuites 2 is a capital-intensive operation and requires the purchase of large parcels of land prior to construction. As of the date of this Offering Circular, the company has not purchased land for the first Southeastern facility. Further, the company does not know whether it will be able to obtain purchase terms that are favorable. Finally, if this offering does not raise enough capital to purchase the land and begin construction, the company will need to procure external financing for the purchase of the land and/or construction of the facility.

 

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The company plans to raise significantly more capital and future fundraising rounds could result in dilution.

GolfSuites 2 will need to raise additional funds to finance its operations or fund its business plan. Even if the company manages to raise subsequent financing or borrowing rounds, the terms of those borrowing rounds might be more favorable to new investors or creditors than to existing investors such as you. New equity investors or lenders could have greater rights to our financial resources (such as liens over our assets) compared to existing shareholders. Additional financings could also dilute your ownership stake, potentially drastically. See “Dilution” and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations– Plan of Operation” for more information.

 

Success in the hospitality and entertainment industry is highly unpredictable and there is no guarantee the company’s content will be successful in the market.

The company’s success will depend on the popularity of its hospitality and entertainment facilities. Consumer tastes, trends and preferences frequently change and are notoriously difficult to predict. If the company fails to anticipate future consumer preferences in the hospitality and entertainment business, its business and financial performance will likely suffer. The hospitality and entertainment industry is fiercely competitive. The company may not be able to develop facilities that will become profitable. The company may also invest in facilities that end up losing money. Even if one of its facilities is successful, the company may lose money in others.

 

The company may not be able to attract and retain individuals interested in annual memberships at its facilities, and attract drop-in/daily memberships, which could harm its business, financial condition and results of operations.

The company’s success depends on its ability to:

·attract individuals interested in paying for annual memberships,

  · attract individuals interested in paying for daily memberships,

  · attract consistent suite rentals,

  · provide dining and leisure experiences that members are interested in paying for,

  · maintain or increase revenues generated from corporate events,

  · maintain or increase revenues generated from food and beverage sales, and

  · maintain or increase revenues generated from retail sales.

 

Changes in consumer financial condition, leisure tastes and preferences, particularly those affecting the popularity of golf, and other social and demographic trends could adversely affect its business. Significant periods where attrition rates exceed enrolment rates or where facilities usage is below historical levels would have a material adverse effect on its business, results of operations and financial condition. If the company cannot attract new members, retain its existing members, its financial condition and results of operations could be harmed.

 

GolfSuites 2 operates in a highly competitive market.

GolfSuites 2 plans to operate in a highly competitive market and faces intense competition. Competitors will include Top Golf, DriveShack, 1Up Golf, Big Shots, Driv, 4ORE! and The Flying Tee. Many of the company’s current and potential competitors have greater resources, longer histories, more customers, and greater brand recognition. Competitors may secure better terms from vendors, adopt more aggressive pricing and devote more resources to technology, infrastructure, fulfillment, and marketing. 

 

Further, GolfSuites 2 properties will compete on a local and regional level with restaurants and other business, dining and social clubs. The number and variety of competitors in this business will vary based on the location and setting of each facility. Some facilities may be situated in intensely competitive upscale urban areas characterized by frequent innovations in the products and services offered by competing restaurants and other business, dining and social clubs. In addition, in most regions, the competitive landscape is in constant flux as new restaurants and other social and meeting venues open or expand their amenities. As a result of these characteristics, the supply in a given region may exceed the demand for such facilities, and any increase in the number or quality of restaurants and other social and meeting venues, or the products and services they provide, in such region could significantly impact the ability of the company’s properties to attract and retain members, which could harm their business and results of operations.

 

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Competition in the “alternative venues for recreational pursuits” industry could have a material adverse effect on the company’s business and results of operations.

GolfSuites 2 properties compete on a local and regional level with alternative venues for recreational pursuits. The company’s results of operations could be affected by the availability of, and demand for, alternative venues for recreational pursuits, such as multi-use sports and athletic centers. In addition, member-owned and individual privately-owned clubs may be able to create a perception of exclusivity that the company has difficulty replicating. To the extent these alternatives succeed in diverting actual or prospective members away from the company’s facilities or affects its membership rates, the company’s business and results of operations could be harmed.

 

Customer complaints or litigation on behalf of our customers or employees may adversely affect our business, results of operations or financial condition.

The company’s business may be adversely affected by legal or governmental proceedings brought by or on behalf of their customers or employees. Regardless of whether any claims against the company are valid or whether they are liable, claims may be expensive to defend and may divert time and money away from operations and hurt our financial performance. A judgment significantly in excess of their insurance coverage or not covered by insurance could have a material adverse effect on the company’s business, results of operations or financial condition. Also, adverse publicity resulting from these allegations may materially affect the company.

 

The company’s insurance coverage may not be adequate to cover all possible losses that it could suffer and its insurance costs may increase.

The company has not yet acquired insurance. It may not be able to acquire insurance policies that cover all types of losses and liabilities. Additionally, once the company acquires insurance, there can be no assurance that its insurance will be sufficient to cover the full extent of all of its losses or liabilities for which it is insured. Further, insurance policies expire annually and the company cannot guarantee that it will be able to renew insurance policies on favorable terms, or at all. In addition, if it, or other leisure facilities, sustain significant losses or make significant insurance claims, then its ability to obtain future insurance coverage at commercially reasonable rates could be materially adversely affected. If the company’s insurance coverage is not adequate, or it becomes subject to damages that cannot by law be insured against, such as punitive damages or certain intentional misconduct by their employees, this could adversely affect the company’s financial condition or results of operations.

 

The company may not be able to operate its facilities, or obtain and maintain licenses and permits necessary for such operation, in compliance with laws, regulations and other requirements, which could adversely affect its business, results of operations or financial condition.

Each facility is subject to licensing and regulation by alcoholic beverage control, amusement, health, sanitation, safety, building code and fire agencies in the state, county and/or municipality in which the facility is located.

 

Each facility is required to obtain a license to sell alcoholic beverages on the premises from a state authority and, in certain locations, county and municipal authorities. Typically, licenses must be renewed annually and may be revoked or suspended for cause at any time. In some states, the loss of a license for cause with respect to one facility may lead to the loss of licenses at all facilities in that state and could make it more difficult to obtain additional licenses in that state. Alcoholic beverage control regulations relate to numerous aspects of the daily operations of each facility, including minimum age of patrons and employees, hours of operation, advertising, wholesale purchasing, inventory control and handling and storage and dispensing of alcoholic beverages. The failure to receive or retain a liquor license, or any other required permit or license, in a particular location, or to continue to qualify for, or renew licenses, could have a material adverse effect on operations and the company’s ability to obtain such a license or permit in other locations.

 

The company may be subject to “dram shop” statutes in states where its facilities may be located. These statutes generally provide a person injured by an intoxicated person the right to recover damages from an establishment that wrongfully served alcoholic beverages to the intoxicated individual. Recent litigation against restaurant chains has resulted in significant judgments and settlements under dram shop statutes. Because these cases often seek punitive damages, which may not be covered by insurance, such litigation could have an adverse impact on the company’s business, results of operations or financial condition.

 

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As a result of operating certain entertainment games and attractions, including skill-based games that offer redemption prizes, the company is subject to amusement licensing and regulation by the states, counties and municipalities in which its facilities are to be located. These laws and regulations can vary significantly by state, county, and municipality and, in some jurisdictions, may require the company to modify their business operations or alter the mix of redemption games and simulators that they offer.

 

Moreover, as more states and local communities implement legalized gambling, the laws and corresponding enabling regulations may also be applicable to the company’s redemption games and regulators may create new licensing requirements, taxes or fees, or restrictions on the various types of redemption games the company offers. Furthermore, other states, counties and municipalities may make changes to existing laws to further regulate legalized gaming and illegal gambling. Adoption of these laws, or adverse interpretation of existing laws, could cause the company to modify its plans for its facilities and if the company creates facilities in these jurisdictions it may be required to alter the mix of games, modify certain games, limit the number of tickets that may be won by a customer from a redemption game, change the mix of prizes that the company may offer or terminate the use of specific games, any of which could adversely affect the company’s operations. If the company fails to comply with such laws and regulations, the company may be subject to various sanctions and/or penalties and fines or may be required to cease operations until it achieves compliance, which could have an adverse effect on the company’s business and financial results.

 

The company has concentrated its investments in golf-related real estate and facilities, which are subject to numerous risks, including the risk that the values of their investments may decline if there is a prolonged downturn in real estate values.

The company’s operations will consist almost entirely of golf properties, approximately 15-20 acres in size, that encompass a large amount of real estate holdings. Accordingly, the company is subject to the risks associated with holding real estate investments. A prolonged decline in the popularity of golf could adversely affect the value of its real estate holdings and could make it difficult to sell facilities or businesses.

 

The company’s real estate holdings will be subject to risks typically associated with investments in real estate. The investment returns available from equity investments in real estate depend in large part on the amount of income earned, expenses incurred and capital appreciation generated by the related properties. In addition, a variety of other factors affect income from properties and real estate values, including governmental regulations, real estate, insurance, zoning, tax and eminent domain laws, interest rate levels and the availability of financing. For example, new or existing real estate zoning or tax laws can make it more expensive and time-consuming to expand, modify or renovate older properties. Under eminent domain laws, governments can take real property. Sometimes this taking is for less compensation than the owner believes the property is worth. Any of these factors could have an adverse impact on our business, financial condition or results of operations.

 

The illiquidity of real estate may make it difficult for the company to dispose of one or more of our properties or negatively affect its ability to profitably sell such properties and access liquidity.

The company may from time to time decide to dispose of one or more of its real estate assets. Because real estate holdings generally, are relatively illiquid, the company may not be able to dispose of one or more real estate assets on a timely basis. In some circumstances, sales may result in investment losses which could adversely affect the company’s financial condition. The illiquidity of its real estate assets could mean that it continues to operate a facility that management has identified for disposition. Failure to dispose of a real estate asset in a timely fashion, or at all, could adversely affect the company’s business, financial condition and results of operations.

 

The company’s development and growth strategy depends on its ability to fund, develop and open new entertainment venues and operate them profitably.

A key element of the company’s growth strategy is to develop and open golf entertainment venues. The company has identified a number of locations for potential future entertainment golf venues and is still the process of identifying more locations and analyzing the locations. The company’s ability to fund, develop and open these venues on a timely and cost-effective basis, or at all, is dependent on a number of factors, many of which are beyond its control, including but not limited to our ability to:

·Find quality locations.

  · Reach acceptable agreements regarding the lease or purchase of locations, and comply with our commitments under our lease agreements during the development and construction phases.

 

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  · Comply with applicable zoning, licensing, land use and environmental regulations.

  · Raise or have available an adequate amount of cash or currently available financing and mortgage terms for construction and opening costs.

  · Adequately complete construction for operations.

  · Timely hire, train and retain the skilled management and other employees’ necessary to meet staffing needs.

  · Obtain, for acceptable cost, required permits and approvals, including liquor licenses; and

  · Efficiently manage the amount of time and money used to build and open each new venue.

 

If the company succeeds in opening entertainment golf facilities on a timely and cost-effective basis, the company may nonetheless be unable to attract enough customers to these new venues because potential customers may be unfamiliar with its venue or concept, entertainment and menu options might not appeal to them and the company may face competition from other food and leisure venues.

 

The company’s development and construction of the first Southeastern facility depends on its ability to obtain favorable mortgage financing.

The company intends to secure mortgage financing to fund up to 70% of its first Southeastern facility and plans to use this debt financings to development and construct subsequent facilities. There is no guarantee that the company will be able to obtain financing on favorable terms. In the event that the company is unable to obtain such financing it may limit the company’s ability to effectuate its plans and will increase the costs and expenses of the company, thereby negatively impacting its financial prospects.

 

GolfSuites 2 depends on a small management team and may need to hire more people to be successful.

The success of GolfSuites 2 will greatly depend on the skills, connections and experiences of the executives, Gerald Ellenburg, John Galvin, Kyle Morris and Ryan Koenig. GolfSuites 2 has not entered into employment agreements with the aforementioned executives. There is no guarantee that the executives will agree to terms and execute employment agreements that are favorable to the company. Should any of them discontinue working for GolfSuites 2, there is no assurance that the company will continue. Further, there is no assurance that the company will be able to identify, hire and retain the right people for the various key positions.

 

Key Man Risk.

The company’s founders and key men are serial entrepreneurs. It is likely that some, if not all of the founders and key men, may exit the business within the next three years. In the event one or more of our founders and/or key men exit the business the company may experience following:

  · financial loss;

  · a disruption to the organization's future projects;

  · damage to the brand; and

  · potentially supporting a competitor.

 

The company will require a general manager, who has not yet been hired.

KGEM is currently performing an executive search for the general manager and operator of GolfSuites 2. There is no way to be certain that the general manager of GolfSuites 2, once appointed, will be able to execute the same vision as KGEM itself. If an appropriate person is not identified and hired, the company will not succeed and since its performance will depend on that person’s performance, it is possible that other KGEM subsidiaries will be more successful than the company.

 

KGEM may not be able to protect all of its intellectual property.

GolfSuites 2, will be using the intellectual property of its parents, including the following trademarks that have been filed: GolfSuites, Off The Deck and FirstCut. The profitability of GolfSuites 2 may depend in part on KGEM’s ability, to effectively protect its intellectual property and the ability of GolfSuites 2 and, in the future, each of the other subsidiaries to operate without inadvertently infringing on the proprietary rights of others. Any litigation protecting the KGEM’s intellectual property and defending its original content could have a material adverse effect on the business, operating results and financial condition regardless of the outcome of such litigation.

 

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KGEM has not yet entered into master licensing agreements with some of its third party suppliers of technology and GolfSuites 2 has not yet been made a sublicense to the relevant master licensing agreements.

KGEM intends to use the following technologies at the operating facilities of all of its subsidiaries:

  · Trackman Range

  · Trackman Doppler Radar

 

As of the date of this offering circular KGEM has not yet entered into any licensing agreements related to the aforementioned technologies. There is no way to be certain that KGEM will be able to enter into the relevant licensing agreements on terms that are favorable to the company. If KGEM does not enter into the relevant master licensing agreements, GolfSuites 2 will not be able to become a sublicense of those technologies. Accordingly, the company may need to do modify its plans for facilities and potentially negatively impact the company’s appeal to consumers and financial prospects.

 

Risks relating to this offering and our shares

 

The payment of accrued dividends is paid out of the company’s reserved funds for the foreseeable future.

As soon as the company receives proceeds from this offering and it is legally permissible, the company intends to pay dividends to investors. The dividend will initially be paid to investors out of the company’s reserved funds, as opposed to its revenues. Payment of the dividends and the establishment of the reserve fund will reduce the capital the company has to develop and begin operations in its GolfSuites 2 facilities. These reserved funds will be held in a segregated account money market account located at Fifth Third Bank, Cincinnati, OH. Most, if not all, of the reserved funds in the dividend reserve account will be the proceeds from this offering. (See “Use of Proceeds”). It is not certain when, if at all, the company will be able to make dividends payments to investors out of the company’s revenues.

 

Distributions will be only made if permitted under Delaware law, which is subject to change, and in the sole discretion of the board of directors.

Pursuant to section 170 of the Delaware General Corporation Law (“Delaware Law”), dividends may be paid out of “surplus” even in the absence of profits.  Under section 154, “surplus” may be defined by the board of directors, in their sole discretion, but generally may not be less than the par value of the shares issued. Accordingly, most of the proceeds of this offering may be considered surplus. However, Delaware Law is subject to change, and the company cannot guarantee that dividend payments will always be permitted under Delaware Law.

 

The tax treatment of dividends may vary and distributions to shareholders may be taxed as capital gains. 

The distributions made pursuant to the Preferred Stock dividend provisions will be taxable as dividends to shareholders only to the extent of current and accumulated earnings and profits.  To the extent the company does not have current and accumulated earnings and profits, the distributions will be treated as a non-taxable return of capital to the extent of the shareholder’s adjusted basis. If distributions still exceed the amount of adjusted basis, such excess would be considered as capital gains income to the shareholder, who will generally be subject to federal (and possibly State) income tax on such gains at a rate that depends upon the shareholder’s holding period with respect to the shares in question, among other factors. Since the tax treatment of any distributions may vary according to the financial performance of the company, as well as the particular circumstances of the investor, investors should consult their own tax advisers, and should further not assume that the distributions will be subject to the same tax treatment from year to year.

 

The company is responsible for certain administrative burdens relating to taxation.

Federal law required that the company report annually all distributions to shareholders on a Form 1099-DIV.  The company is responsible for ensuring that the extent to which such distributions constitute a distribution of earnings and profits is correctly identified on form 1099-DIV. This reporting requirement adds to the administrative burdens of the company.

 

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The offering price has been arbitrarily set by the company.

GolfSuites 2 has set the price of its Preferred Stock at $5.00 per share. Valuations for companies at GolfSuites 2 stage are purely speculative. The company’s valuation has not been validated by any independent third party and may fall precipitously. It is a question of whether you, the investor, are willing to pay this price for a percentage ownership of a start-up company. You should not invest if you disagree with this valuation.

 

There is no minimum amount set as a condition to closing this offering.

Because this is a “best efforts” offering with no minimum, the company will have access to any funds tendered. This might mean that any investment made could be the only investment in this offering, leaving the company without adequate capital to pursue its business plan or even to cover the expenses of this offering.

 

The officers of GolfSuites 2 control the company and the company does not currently have any independent directors.

KGEM is currently the company’s controlling shareholder. Moreover, the company’s executive officers and directors, through their ownership in KGEM, are currently GolfSuites 2 controlling shareholders. As holders of the Class B Common Stock which gives KGEM 5 votes per share, as opposed to 1 vote per share for holders of Class A Common Stock and Series A Preferred Stock, KGEM will continue to hold a majority of the voting power of all the company’s equity stock and therefore control the board at the conclusion of this offering. Even if KGEM were to own as little as 16.7% of the equity securities of the company, KGEM would still control a majority of the voting stock. This could lead to unintentional subjectivity in matters of corporate governance, especially in matters of compensation and related party transactions. The company does not benefit from the advantages of having independent directors, including bringing an outside perspective on strategy and control, adding new skills and knowledge that may not be available within GolfSuites 2, and having extra checks and balances to prevent fraud and produce reliable financial reports.

 

The exclusive forum provision in the company’s Certificate of Incorporation may have the effect of limiting an investor’s ability to bring legal action against the company and could limit an investor’s ability to obtain a favorable judicial forum for disputes.

Article VII of the company’s Certificate of Incorporation contain exclusive forum provisions for certain lawsuits, see “Securities Being Offered – All Classes of Stock – Forum Selection Provisions.” Further, Section 6 of the subscription agreement for this offering includes exclusive forum provisions for certain lawsuits pursuant to the subscription agreement; see “Securities Being Offered – All Classes of Stock – Forum Selection Provisions.” The forum for these lawsuits will be the Court of Chancery in the State of Delaware. None of the forum selections provisions will be applicable to lawsuits arising from the federal securities laws. These provisions may have the effect of limiting the ability of investors to bring a legal claim against us due to geographic limitations. There is also the possibility that the exclusive forum provisions may discourage stockholder lawsuits, or limit stockholders’ ability to bring a claim in a judicial forum that it finds favorable for disputes with us and our officers and directors. Alternatively, if a court were to find this exclusive forum provision inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, the company may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect its business and financial condition.

 

Investors in this offering may not be entitled to a jury trial with respect to claims arising under the subscription agreement and claims where the forum selection provision is applicable, which could result in less favorable outcomes to the plaintiff(s) in any such action. 

Investors in this offering will be bound by the subscription agreement, which includes a provision under which investors waive the right to a jury trial of any claim they may have against the company arising out of or relating to the subscription agreement, including any claim under the federal securities laws. Further, the forum selection provisions in the Certificate of Incorporation and the subscription agreement provide that the for certain lawsuits the Court of Chancery in Delaware will be the exclusive forum. The Court of Chancery in Delaware is a non-jury trial court and therefore those claims will not be adjudicated by a jury. See “Securities Being Offered – All Classes of Stock – Jury Trial Waiver” and “Securities Being Offered – All Classes of Stock – Forum Selection Provisions.”

 

If the company opposed a jury trial demand based on the waiver, a court would determine whether the waiver was enforceable based on the facts and circumstances of that case in accordance with the applicable state and federal law. To the company’s knowledge, the enforceability of a contractual pre-dispute jury trial waiver in connection with claims arising under the federal securities laws has not been finally adjudicated by a federal court. However, the company believes that a contractual pre-dispute jury trial waiver provision is generally enforceable, including under the laws of the State of New York, which governs the subscription agreement, in the Court of Chancery in the State of Delaware. In determining whether to enforce a contractual pre-dispute jury trial waiver provision, courts will generally consider whether the visibility of the jury trial waiver provision within the agreement is sufficiently prominent such that a party knowingly, intelligently and voluntarily waived the right to a jury trial. The company believes that this is the case with respect to the subscription agreement. Investors should consult legal counsel regarding the jury waiver provision before entering into the subscription agreement. 

 

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If an investor brings a claim against the company in connection with matters arising under the subscription agreement, including claims under federal securities laws, an investor may not be entitled to a jury trial with respect to those claims, which may have the effect of limiting and discouraging lawsuits against the company. If a lawsuit is brought against the company under the subscription agreement, it may be heard only by a judge or justice of the applicable trial court, which would be conducted according to different civil procedures and may result in different outcomes than a trial by jury would have had, including results that could be less favorable to the plaintiff(s) in such an action. 

 

Nevertheless, if this jury trial waiver provision is not permitted by applicable law, an action could proceed under the terms of the subscription agreement with a jury trial. No condition, stipulation or provision of the subscription agreement serves as a waiver by any holder of common shares or by us of compliance with any substantive provision of the federal securities laws and the rules and regulations promulgated under those laws.

 

In addition, when the shares are transferred, the transferee is required to agree to all the same conditions, obligations and restrictions applicable to the shares or to the transferor with regard to ownership of the shares, that were in effect immediately prior to the transfer of the shares of Preferred Stock, including but not limited to the subscription agreement.

 

There is no current market for GolfSuites 2’s shares.

There is no formal marketplace for the resale of our securities. Shares of the company’s Preferred Stock may eventually be traded to the extent any demand and/or trading platform(s) exists. However, there is no guarantee there will be demand for the shares, or a trading platform that allows you to sell them. The company does not have plans to apply for or otherwise seek trading or quotation of its Preferred Stock on an over-the-counter market. It is also hard to predict if the company will ever be acquired by a bigger company. Investors should assume that they may not be able to liquidate their investment or pledge their shares as collateral for some time.

 

Risks Related to Certain Conflicts of Interest

 

There are conflicts of interest between the company, its management and their affiliates.

KGEM is the parent company of GolfSuites 2 and currently holds all of the issued Common Stock of GolfSuites 2. KGEM is also affiliated with each of the other Operating Subsidiaries and ERC Home Builders, Inc. and its subsidiaries (the “ERC entities”). Many if not all of the executives are the same for GolfSuites 2, KGEM, the other Operating Subsidiaries, and ERC. Therefore, it is likely that conflicts of interest will arise between the affiliates. Conflicts of interest could include, but are not limited to the following:

  · use of time,

  · use of human capital, and

  · competition regarding the acquisition of properties and other assets.

 

The interests of GolfSuites 2, KGEM and the company’s other affiliates may conflict with your interests.  

The company’s Certificate of Incorporation, Certificate of Designations, bylaws and Delaware law provide company management with broad powers and authority that could result in one or more conflicts of interest between your interests and those of the officers and directors of GolfSuites 2, the other Operating Subsidiaries, KGEM, and the company’s other affiliates.  This risk is increased by the affiliated entities being controlled by KGEM who currently owns all of the company’s Common Stock and all our officers and directors currently have an interest in KGEM, through ownership, as an officer or director in KGEM contractually or any combination thereof. Potential conflicts of interest include, but are not limited to, the following:

KGEM and the company’s other affiliates will not be required to disgorge any profits or fees or other compensation they may receive from any other business they own separate from the company, and you will not be entitled to receive or share in any of the profits, return, fees or compensation from any other business owned and operated by the management and their affiliates for their own benefit.

 

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  The company may engage KGEM, or other companies affiliated with GolfSuites 2 to perform services, and determination for the terms of those services will not be conducted at arms’ length negotiations; and

  The company’s officers and directors are not required to devote all of their time and efforts to the affairs of the company.

 

There are conflicts of interest between the company and some of the members of the Board of Directors.

Rod Turner, the CEO of the online platform on which the company is offering shares, is also a member of the Board of Directors. It is likely that conflicts of interest will arise between the company and the board member. Conflicts of interest include, but are not limited to the following:

·Determining whether something is in the best interest of the company or the online platform on which the company is listing the Preferred Stock.

  · Whether to keep the offering open or to close it.

  · Use of time.

  · Payment to the online platform.

 

Loans issued by KGEM to GolfSuites 2 may not be made at arm’s length.

KGEM may make various loans to GolfSuites 2. These transactions may not be at arm’s length and therefore there is no way to assure third parties that KGEM and GolfSuites 2 will be acting in their own self-interest and not subject to pressure or duress from the other party.

 

KGEM and GolfSuites 2 intend to share some services.

KGEM and GolfSuites 2 will share the following services:

  · intellectual property,

  · licensing for the use of the name and brand identity, and

  · the services of Manhattan Street Capital.

Internal transactions incorporating products and services, fee sharing, cost allocations, and financing activities can create inefficiency, financial exposures and reporting risk. This arrangement could result in potential actual or perceived conflicts of interest.

 

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DILUTION

 

Dilution means a reduction in value, control or earnings of the shares the investor owns.

 

Immediate dilution

 

An early-stage company typically sells its shares (or grants options over its shares) to its founders and early employees at a very low cash cost, because they are, in effect, putting their “sweat equity” into the company. When the company seeks cash investments from outside investors, like you, the new investors typically pay a much larger sum for their shares than the founders or earlier investors, which means that the cash value of your stake is diluted because all the shares are worth the same amount, and you paid more than earlier investors for your shares. If you invest in our Preferred Stock, your interest will be diluted immediately to the extent of the difference between the offering price per share of our Preferred Stock and the pro forma net tangible book value per share of our Preferred Stock after this offering.

 

As of May 15, 2019, the net tangible book value of the Company was ($137,001.00). Based on the number of shares of Common Stock issued and outstanding as of the date of the offering (18,000,000 shares) that equates to a net tangible book value of approximately ($0.0076) per share of Common Stock on a pro forma basis. Net tangible book value per share consists of stockholders’ aggregate deficit divided by the total number of shares of Common Stock outstanding. Without giving effect to any changes in such net tangible book value after May 15, 2019, other than to give effect to the sale of 10,000,000 shares of Preferred Stock being offered by the company in this offering for the net subscription amount of $44,500,000.00 the pro forma net tangible book value, assuming full subscription, would be $ 44,362,999.00. Based on the total number of shares of Common and Preferred Stock that would be outstanding assuming full subscription (28,000,000 shares), that equates to approximately $ 1.5844 of tangible net book value per share.

 

Thus, if the offering is fully subscribed, the net tangible book value per share of Common Stock owned by our current stockholders will have immediately increased by approximately $ 1.5920 without any additional investment on their behalf and the net tangible book value per Share for new investors will be immediately diluted by $ 3.4156 per share. These calculations do not include the costs of the offering, and such expenses will cause further dilution.

 

Offering price per share of Preferred Stock*  $5.00 
Net Tangible Book Value per share of Preferred Stock before the Offering (based on 18,000,000 shares)  $(0.0076)
      
Increased in Net Tangible Book Value per Share Attributable to Shares Offered in the Offering (based on 10,000,000 shares)  $1.5920 
Net Tangible Book Value per Share after Offering (based on 28,000,000 shares)  $1.5844 
      
Dilution of Net Tangible Book Value per Share to Purchasers in this Offering  $3.4156 

*before deduction of offering expenses.

 

Future dilution

 

Another important way of looking at dilution is the dilution that happens due to future actions by the company. The investor’s stake in a company could be diluted due to the company issuing additional shares. In other words, when the company issues more shares, the percentage of the company that you own will go down, even though the value of the company may go up. You will own a smaller piece of a larger company. This increase in number of shares outstanding could result from a stock offering (such as an initial public offering, another crowdfunding round, a venture capital round, angel investment), employees exercising stock options, or by conversion of certain instruments (e.g. convertible bonds, preferred shares or warrants) into stock.

 

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If the company decides to issue more shares, an investor could experience value dilution, with each share being worth less than before, and control dilution, with the total percentage an investor owns being less than before. There may also be earnings dilution, with a reduction in the amount earned per share (though this typically occurs only if the company offers dividends, and most early stage companies are unlikely to offer dividends, preferring to invest any earnings into the company).

 

The type of dilution that hurts early-stage investors most often occurs when the company sells more shares in a “down round,” meaning at a lower valuation than in earlier offerings. An example of how this might occur is as follows (numbers are for illustrative purposes only):

  · In June 2014 Jane invests $20,000 for shares that represent 2% of a company valued at $1 million.

  · In December, the company is doing very well and sells $5 million in shares to venture capitalists on a valuation (before the new investment) of $10 million. Jane now owns only 1.3% of the company but her stake is worth $200,000.

  · In June 2015, the company has run into serious problems and in order to stay afloat it raises $1 million at a valuation of only $2 million (the “down round”). Jane now owns only 0.89% of the company and her stake is worth only $26,660.

 

This type of dilution might also happen upon conversion of convertible notes into shares. Typically, the terms of convertible notes issued by early-stage companies provide that in the event of another round of financing, the holders of the convertible notes get to convert their notes into equity at a “discount” to the price paid by the new investors, i.e., they get more shares than the new investors would for the same price. Additionally, convertible notes may have a “price cap” on the conversion price, which effectively acts as a share price ceiling. Either way, the holders of the convertible notes get more shares for their money than new investors. In the event that the financing is a “down round” the holders of the convertible notes will dilute existing equity holders, and even more than the new investors do, because they get more shares for their money. Investors should pay careful attention to number of convertible notes that the company has issued (and may issue in the future, and the terms of those notes.

 

If you are making an investment expecting to own a certain percentage of the company or expecting each share to hold a certain amount of value, it’s important to realize how the value of those shares can decrease by actions taken by the company. Dilution can make drastic changes to the value of each share, ownership percentage, voting control, and earnings per share.

 

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PLAN OF DISTRIBUTION AND SELLING SECURITYHOLDERS

 

Plan of Distribution

 

GolfSuites 2, Inc. is offering a maximum of 10,000,000 shares of Preferred Stock on a “best efforts” basis.

 

The cash price per share of Preferred Stock is $5.

 

The company intends to market the shares in this offering both through online and offline means. Online marketing may take the form of contacting potential investors through electronic media and posting our Offering Circular or “testing the waters” materials on an online investment platform.

 

The offering will terminate at the earliest of: (1) the date at which the maximum offering amount has been sold, (2) the date which is one year from this offering being qualified by the Commission, and (3) the date at which the offering is earlier terminated by GolfSuites 2, Inc. in its sole discretion.

 

The company may undertake one or more closings on an ongoing basis. After each closing, funds tendered by investors will be available to the company. After the initial closing of this offering, the company expects to hold closings on at least a monthly basis.

 

The company is offering its securities in all states.

 

The company has engaged Sageworks Capital, LLC (“Sageworks”) a broker-dealer registered with the SEC and a member of FINRA, to perform the following administrative and technology related functions in connection with this offering, but not for underwriting or placement agent services:

 

·Review investor information, including KYC (“Know Your Customer”) data, AML (“Anti Money Laundering”) and other compliance background checks, and provide a recommendation to the company whether or not to accept investor as a customer.

·Review each investors subscription agreement to confirm such investors participation in the offering, and provide a determination to the company whether or not to accept the use of the subscription agreement for the investors participation.

·Contact and/or notify the company, if needed, to gather additional information or clarification on an investor.

·Not provide any investment advice nor any investment recommendations to any investor.

·Keep investor details and data confidential and not disclose to any third-party except as required by regulators or pursuant to the terms of the agreement (e.g. as needed for AML and background checks).

·Coordinate with third party providers to ensure adequate review and compliance.

 

As compensation for the services listed above, the company has agreed to pay Sageworks $13,000 in one-time set up fees, consisting of a $5,000 agreement fee and approximately $8,000 for fees to be paid to FINRA, plus a commission equal to 1% of the amount raised in the offering to support the offering once the SEC has qualified the Offering Statement and the offering commences. Assuming that the offering is open for 12 months, the company estimates that total fees due to pay Sageworks would be $513,000 for a fully-subscribed offering. These assumptions were used in estimating the fees due in the “Use of Proceeds.”

 

Incentives

 

The company intends to offer marketing promotions to encourage potential investors to invest. Details on the company's current incentives can be found on the company's offering page found at www.manhattanstreetcapital.com/GolfSuites.

 

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TAX CONSEQUENCES FOR RECIPIENT (INCLUDING FEDERAL, STATE, LOCAL AND FOREIGN INCOME TAX CONSEQUENCES) WITH RESPECT TO THE INVESTMENT PURCHASE PACKAGES ARE THE SOLE RESPONSIBILITY OF THE INVESTOR. INVESTORS MUST CONSULT WITH THEIR OWN PERSONAL ACCOUNTANT(S) AND/OR TAX ADVISOR(S) REGARDING THESE MATTERS.

 

No Minimum Offering Amount

 

The shares being offered will be issued in one or more closings. No minimum number of shares must be sold before a closing can occur; however, investors may only purchase shares in minimum increments of $500. Potential investors should be aware that there can be no assurance that any other funds will be invested in this offering other than their own funds.

 

No Selling Shareholders

 

No securities are being sold for the account of security holders; all net proceeds of this offering will go to GolfSuites 2, Inc.

 

The Online Platform

 

The company will pay FundAthena, Inc., d/b/a Manhattan Street Capital (“Manhattan Street Capital” or “MSC” as applicable) for its services in hosting the offering of the shares on its online platform.

 

Further, KGEM has entered into a Consulting Agreement with MSC effective July 15, 2018 (the “Consulting Agreement”), which includes consulting services and technology services, see “Plan of Distribution and Selling Securityholders – The Online Platform.” KGEM, or the company as applicable, will pay MSC the following:

 

·A technology and administration fee of $25 per investor, in cash, paid by the company when each investor deposits funds into the escrow account.

  · A cashless 10 year warrant to purchase 25 shares of KGEM common stock for $1.00 per share, per investor escrow account, in each Operating Subsidiary Regulation A offering.

oThe warrant calculations shall be capped at a maximum of 150,000 investors, aggregated from the 6 contemplated Regulation A offerings of the 6 Operating Subsidiaries. Which results in warrants to purchase a maximum of 3,750,000 shares of KGEM common stock;

  · AML check fees between $2 and $6 per investor. AML fees will be dependent on the location of the investor.

  · A technology license fee of $300 per month.

  · Any applicable fees for fund transfers (ACH $2, check $5, debit card fees of $0.35 + 3% as charged by debit card processor, wire $15 or $35 for international fund transfers). 


 

Payments made or to be made by KGEM to MSC relating to this offering and each Operating Subsidiary Regulation A offering:

·Pursuant to the Consulting Agreement, on August 22, 2018, KGEM paid $180,000 ($20,000 per month for 9 months) in cash to MSC.
·Prior to the launch of this offering, KGEM will deliver to MSC cashless 10 year warrants for 720,000 shares of KGEM common stock with an exercise price of $0.25 per share.

 

GolfSuites 2 will reimburse KGEM for its portion of the fee to MSC in accordance with the Management Services Agreement. All fees are due to MSC regardless of whether investors are rejected after AML checks or the success of the offering.

 

For additional information please see “Interests of Management and Others in Certain Transactions”.

 

Manhattan Street Capital does not directly solicit or communicate with investors with respect to offerings posted on its site, although it does advertise the existence of its platform, which may include identifying issuers listed on the platform. Our Offering Circular will be furnished to prospective investors in this offering via download 24 hours a day, 7 days a week on the www.manhattanstreetcapital.com website.

 

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Investors’ Tender of Funds

 

After the Offering Statement has been qualified by the Securities and Exchange Commission (the “SEC”), the company will accept tenders of funds to purchase whole shares and fractional shares. Prospective investors who submitted non-binding indications of interest during the “test the waters” period will receive an automated message from us indicating that the offering is open for investment. We will conduct multiple closings on investments (so not all investors will receive their shares on the same date). Each time the company accepts funds transferred from the Escrow Agent is defined as a “Closing.” The funds tendered by potential investors will be held by our escrow agent, Prime Trust, LLC (the “Escrow Agent”) and will be transferred to us at each Closing. The escrow agreement can be found in Exhibit 8 to the Offering Statement of which this Offering Circular is a part.

 

Process of Subscribing

 

You will be required to complete a subscription agreement in order to invest. The subscription agreement includes a representation by the investor to the effect that, if you are not an “accredited investor” as defined under securities law, you are investing an amount that does not exceed the greater of 10% of your annual income or 10% of your net worth (excluding your principal residence).

 

If you decide to subscribe for the Preferred Stock in this offering, you should complete the following steps:

 

1.Go to www.manhattanstreetcapital.com/GolfSuites, click on the "Invest Now" button;

2.Complete the online investment form;

3.Deliver funds directly by check, wire, debit card, or electronic funds transfer via ACH to the specified account or deliver evidence of cancellation of debt;

4.Once funds or documentation are received an automated AML check will be performed to verify the identity and status of the investor;

5.Once AML is verified, investor will electronically receive, review, execute and deliver to us a subscription agreement.

 

Any potential investor will have ample time to review the subscription agreement, along with their counsel, prior to making any final investment decision. Sageworks will review all subscription agreements completed by the investor. After Sageworks has completed its review of a subscription agreement for an investment in the company, the funds may be released by the escrow agent.

 

If the subscription agreement is not complete or there is other missing or incomplete information, the funds will not be released until the investor provides all required information. In the case of a debit card payment, provided the payment is approved, Sageworks will have up to three days to ensure all the documentation is complete. Sageworks will generally review all subscription agreements on the same day, but not later than the day after the submission of the subscription agreement.

 

All funds tendered (by check, wire, debit card, or electronic funds transfer via ACH to the specified account or deliver evidence of cancellation of debt) by investors will be deposited into an escrow account at the Escrow Agent for the benefit of the company. All funds received by wire transfer will be made available immediately while funds transferred by ACH will be restricted for a minimum of three days to clear the banking system prior to deposit into an account at the Escrow Agent.

 

The company maintains the right to accept or reject subscriptions in whole or in part, for any reason or for no reason, including, but not limited to, in the event that an investor fails to provide all necessary information, even after further requests from the company, in the event an investor fails to provide requested follow up information to complete background checks or fails background checks, and in the event the company receives oversubscriptions in excess of the maximum offering amount.

 

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In the interest of allowing interested investors as much time as possible to complete the paperwork associated with a subscription, the company has not set a maximum period of time to decide whether to accept or reject a subscription. If a subscription is rejected, funds will not be accepted by wire transfer or ACH, and payments made by debit card or check will be returned to subscribers within 30 days of such rejection without deduction or interest. Upon acceptance of a subscription, the company will send a confirmation of such acceptance to the subscriber.

 

Sageworks has not investigated the desirability or advisability of investment in the shares nor approved, endorsed or passed upon the merits of purchasing the Preferred Shares. Sageworks is not participating as an underwriter and under no circumstance will it solicit any investment in the company, recommend the company’s securities or provide investment advice to any prospective investor, or make any securities recommendations to investors. Sageworks is not distributing any offering circulars or making any oral representations concerning this Offering Circular or this offering. Based upon Sageworks’ anticipated limited role in this offering, it has not and will not conduct extensive due diligence of this offering and no investor should rely on the involvement of Sageworks in this offering as any basis for a belief that it has done extensive due diligence. Sageworks does not expressly or impliedly affirm the completeness or accuracy of the Offering Statement and/or Offering Circular presented to investors by the company. All inquiries regarding this offering should be made directly to the company.

 

Upon confirmation that an investor’s funds have cleared, the company will instruct the Transfer Agent to issue shares to the investor. The Transfer Agent will notify an investor when shares are ready to be issued and the Transfer Agent has set up an account for the investor.

 

Escrow Agent  

 

The Escrow Agent has not investigated the desirability or advisability of investment in the shares nor approved, endorsed or passed upon the merits of purchasing the securities.

 

The company has agreed to pay the Escrow Agent:

 

·$400 for escrow account set-up fee,

  · $30 per month escrow account fee for so long as the offering is being conducted,

  · a cash management fee of 0.5% of funds processed (up to a maximum of $8,000),

  · technology platform license fee of $400.00 per month,

  · transaction fee of $10.00 per investor,

  · ACH processing fee of $2.00 per transaction,

  · wire processing fee of $15.00 per transaction (domestic),

  · check processing of $5.00 per transaction, and

  · AML check $5.00 per investor

 

Transfer Agent

 

The company has also engaged Computershare, a registered transfer agent with the SEC, who will serve as transfer agent to maintain shareholder information on a book-entry basis; there are no set up costs for this service, fees for this service will be limited to secondary market activity. The company estimates the aggregate fee due to Computershare for the above services to be $60,000 annually.

 

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USE OF PROCEEDS TO ISSUER

 

The following discussion addresses the use of proceeds from this offering. The company currently estimates that, at a per share price of $5, the net proceeds from the sale of the 10,000,000 shares of Preferred Stock will likely be $44,500,000 after deducting the estimated offering expenses of approximately $5,500,000.

 

The following table breaks down the use of proceeds into different categories under various funding scenarios:

 

Gross Proceeds  $1,000,000   $12,500,000   $25,000,000   $50,000,000 
Estimated offering expenses (1)  $360,000    1,625,000   $2,750,000   $5,500,000 
Net Proceeds  $640,000   $10,875,000   $22,250,000   $44,500,000 
Development period overhead (2 years pro rata)
(This includes operating expense that is incurred during the development and construction of the initial site(s) (2)
  $280,000   $1,000,000   $1,000,000   $1,000,000 
8% preferred return reserve
(18 months reserved for dividend payments to investors)
  $120,000   $1,500,000   $3,000,000   $6,000,000 
Land & building improvements, engineering and construction    N/A     $7,625,000   $17,750,000   $36,750,000 
Working capital*  $240,000   $750,000   $750,000   $750,000 
Total use of proceeds  $1,000,000   $12,500,000   $25,000,000   $50,000,000 

 

(1)Estimated offering expenses include legal, accounting, printing, advertising, broker-dealer fees and commissions, marketing and state notice fees and other expenses of this offering.
(2)These amounts may be used to pay expenses relating to salaries, bonuses, and other compensation to our officers and employees.

 

* Approximately 25% of gross proceeds are allocated to working capital subject to a maximum working capital amount of $750,000. The above estimates for overhead improvements and working capital are subject to change based upon the timing and amounts of gross proceeds and development timetables.

 

Cost per facility and Phase 1 costs.

We anticipate the total cost for each Southeastern facility will be approximately $30,000,000. Below is a tentative breakdown of costs:

  · Cost of land: up to $5,000,000 
  · Zoning: up to $200,000
  · Architects, designer and engineers: up to $300,000

  · Construction: up to $24,500,000
  · Training of employees: up to $500,000

 

The company may also finance the construction with mortgage financing. For additional information see “Management Discussion and Analysis – Plan of Operations.”

 

Dividends and profit sharing dividends

 

12% of the proceeds raised in the offering will be reserved for the payment of dividends.

 

Investors in this offering will begin to accrue a monthly dividend payment that pays 8% per annum after the issuance of their Preferred Stock. When the funds are legally available for distributions the company intends to pay these dividends. The dividends will compound annually.

 

The dividend reserve (12% of the gross proceeds from this offering) will be held in a money market account located at Fifth Third Bank, Cincinnati, OH. Until the company generates revenue that will support the distribution of dividends, the company intends to pay dividends from the and legally available funds in the dividend reserve account, see “Securities Being Issued – Preferred Stock – Dividends.”

 

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In the event the company declares a dividend distribution to the Common Stock holders, all Preferred Stockholders will receive their pro rata share.

 

There is no guarantee regarding the tax treatment of the 8% dividends. Please see “Securities Being Offered – Tax Treatment.”

 

We reserve the right to change the above use of proceeds if management believes it is in the best interest of the company.

 

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THE COMPANY’S BUSINESS

 

Overview

 

GolfSuites 2, Inc. is an early stage hospitality and entertainment company devoted to the development and operation of golf driving range and entertainment centers in the Southeastern region of the United States. The company will purchase the land and manage zoning, entitlement, design, construction and operation of the planned facilities.

 

The company will operate under the brand name “GolfSuites” and is a subsidiary of KGEM. KGEM intends to operate six operating subsidiaries each covering a different region in the United States. The six operating subsidiaries are located in the following regions of the United States and operate under the names listed below:

 

REGION   NAME
Midwest United States   GolfSuites 1, Inc.
Southeast United States   GolfSuites 2, Inc.
Central United States   GolfSuites 3, Inc.
Northwest United States   GolfSuites 4, Inc.
Southwest United States   GolfSuites 5, Inc.
Northeast United States   GolfSuites 6, Inc.

 

 

 

The company is targeting avid and novice golfers, families, millennials and other demographic groups seeking recreation, hospitality and entertainment in golf-themed complexes. The facilities will be designed to effectively host corporate meetings, fund raising events, national skill event qualifiers and professional showcase events.

 

Principal Products and Services

 

Currently, the company is at the earliest stages of development. The company has not yet purchased land for Phase I Construction of its first Southeastern location. The company believes that it will take approximately 24 months after land purchase to complete Phase I Construction. Upon completion of Phase I Construction the relevant facility will be operational.

 

Location and size of each facility

The company considers the following factors when determining the location and size of each facility:

  · Large and mid-size populations within metropolitan areas.
  · University communities with populations of at least 100,000.
  · Millennial populations within and give trade market.
  · The proximity to major highway, interstate access other large entertainment facilities, restaurant and recreational attractions.
  · Ongoing growth trends in the selected area.   
  · Proximity of select population bases including: university students, types of housing developments and employment rates.
  · Whether a local government is cooperative and favors the development of leisure facilities.
  · Cost of land.
  · Availability and potential threat of competitor facilities within the vicinity.
  · Favorable mortgage/lender terms and relationships.

 

Financing the facilities

The company intends to purchase the land for Phase I Construction with a combination of the following:

  · The proceeds of this offering (see “Use of Proceeds”).
  · Funds advanced to GolfSuites 2 by KGEM.
  · Mortgage financing provided by banks, private equity funds, lending-REITs and/or other financial institutions.

 

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Sourcing the facilities

The company has engaged various regional and national real estate brokerages to source potential sites. We have sourced two properties that we believe may become our first Southeastern location. The company anticipates that it may acquire this land, depending on access to capital or financing, in the second half of 2019.

 

Facility design and construction

The company has not yet sourced quotes for the construction and design of its first facility.

 

Management of the facility

KGEM will oversee the management of all GolfSuites 2 locations. GolfSuites 2 will directly employ management teams and staff to operate all GolfSuites 2 locations.

 

The experience

The company intends to offer customers fun, entertainment, high quality food, creative menus, unique beverages, golf and thoughtfully designed suites to aid in a superior customer experience.

 

The company intends to build each facility with the following specifications:

  · 60-100 climate-controlled suites that open to a 300+ yard golf range. The suites offer comfortable seating, special computer tracking to monitor golf gaming and ball flight data, tee boxes, and large screen monitors to watch sports.
  · Multiple indoor/outdoor bars.
  · Restaurants.
  · VIP Member “Select Suites.”
  · Family-friendly restrooms and changing areas.
  · Child care, play areas for kids.
  · Multiple meeting and conference rooms.
  · State-of-the-art golf academy and training center.
  · State-of-the-art putting course and short game area.

 

The Golf Academy will be based on PGA® professional and NBC Golf Academy® featured instructor, Kyle Morris and his successful studio, The Golf Room in Columbus, Ohio. Kyle’s advanced training and coaching techniques are aimed at improving an individual’s overall golf game. Located on the ground-floor level of each facility, the Golf Academy will consist of golf instruction, golf coaching, junior golf recruitment and advisory services, fitness and rehabilitation therapy, mental sports performance training and custom golf club and equipment fitting.

 

On February 15, 2019, KGEM entered into a License Agreement with Kyle Morris (the “Morris License Agreement”). The Morris License Agreement is attached as an exhibit to the Offering Statement of which this Offering Circular is a part. Pursuant to the Morris License Agreement, a license is granted by Kyle Morris to KGEM to use his likeness, current business, and golf coaching concepts. In addition, it provides for a non-compete and a 10 year term.

 

On February 15, 2019, KGEM entered into a Consulting Agreement with Kyle Morris (the “Morris Consulting Agreement”). The Morris Consulting Agreement is attached as an exhibit to the Offering Statement of which this Offering Circular is a part. Pursuant to the Morris Consulting Agreement, protection of confidential information, non-competition and non-solicitation is provided for. In addition, it provides for a 10 year term and certain remedies.

 

Market Sector

 

GolfSuites 2 intends to participate in the recreational sporting and entertainment facilities market. We believe this market to be young, fast-growing and under-served. This market overlaps three growing, highly profitable markets: the golf market, the recreation/sporting entertainment sector and the food and beverage portion of the hospitality industry. GolfSuites 2 will be competing for revenues from customer spending in each of these three sectors.

 

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Target Audience

The company will have five primary target audiences:

  · Avid golfers,
  · Families looking for a fun experience for their kids and friends,
  · Businesses wanting team building, business gatherings, incentive rewards and corporate event venues with food and entertainment,
  · Experience Seekers, Millennials, Gen-Xers, Boomers seeking unique, fun night/weekend entertainment, and
  · Get together/Fundraiser planners – looking for unique locations for parties, celebrations and fund-raising events – may also be sold through “group sales” programs.

 

Operations

 

GolfSuites 2 intends to provide a realistic golf experience so that it can better appeal to avid and moderate golfers. Climate-controlled semi-private golf suites open up to the golf target field and incorporate comfortable seating, ball dispensers, club storage, gaming and media displays. In addition to hospitality, entertainment, events and family fun, the company plans to appeal to a wide demographic. The company believes that it will be able to leverage the following advantages:

 

  · Realistic Golf Experience:
    o Skill-based gaming and simulated play golf built into a 300+ yard range.
      § The golf target field consists of multiple simulated green sites and simulated water and sand hazards allowing for accelerated hole play as well as skill-based gaming.
    o “Real” golf balls that simulate more life-like play.
      § The golf balls have the ability to simulate life-like play because they are of premium quality and durability and do not incorporate an electronic chip which would impact their balance and overall efficacy.

 

  · Superior Technology:
  o Radar technology allows players to measure their ball flight to within 3-4 inches.
  o Ball flight data including ball speed, direction and distance provided in each suite
  o Ability to simulate play on famous golf courses.
  o Video swing analysis.
  o Gaming and data analytics that can be shared with others on social media.

 

  · Holistic Game Improvement: The company will offer a premier coaching and holistic game improvement center.
  o The Golf Academy (the “Golf Academy”), based on the successful model of The Golf Room (the “Golf Room”) located in Dublin, Ohio.
  o The Golf Room was founded by Kyle Morris, a former PGA Tour player and a nationally renowned golf instructor and coach.
  o At each Golf Academy, players will be able to access swing instruction, golf fitness and rehabilitation, mental sports performance, and college golf recruiting.

 

  · Enhanced Guest Experiences:
  o VIP Member concierge and hosts.
  o VIP Member Select Suites.
  o Men’s and Women’s member locker rooms.
  o Second floor covered drive up arrival zone.
  o Improved digital experiences for guest engagement before, during and after onsite visits.
  o Online reservation system.
  o Onsite games including pinball, pool and corn hole.
  o Onsite and post-visit engagement and social sharing.

 

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  · Interactive Games and Contests:
  o Ability for customers to compete against other suites and customers with closest to the pin, long drive and other skill-based games.
  o A software application which will allow players to satisfy their desire to play an 18-hole golf round in 1.5 hours instead of the traditional 3-4 hours.

 

  · Women Designed Programs and Coaching: These include learn-to-play days and women-only events and leagues.

 

  · Beginner Player Designed Programs and Coaching: These include learn-to-play days and beginner player events and leagues.

 

  · Upgraded Amenities: These include the following:
  o Luxury Bathrooms.
  o Child care.
  o Business networking zones.
  o Conference rooms.
  o Free high-speed Wi-Fi.
  o Family restrooms and changing areas.

 

  · Healthy and Localized Menus: chef-inspired authentic healthy menu offerings, farm to table sourcing, localized craft beers and select menu items to appeal to regional customers’ tastes, seasonality and lifestyles.

 

 

 

 

 

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Support from KGEM

 

GolfSuites 2 entered into a management services agreement with KGEM on April 15, 2019 (the “Management Services Agreement”). Under that agreement, KGEM will manage GolfSuites 2 and allow GolfSuites 2 to use certain intellectual property and business concepts. GolfSuites 2 will incur direct and indirect capitalized costs and overhead expenses, some of these costs will be exclusive to GolfSuites 2 while other costs will be shared among GolfSuites 2 and other Operating Subsidiaries.

 

Direct capitalized costs and overhead expenses will be paid by GolfSuites 2 directly (e.g., salaries, board of director and board of advisor fees, employee benefits, and general administrative costs).

 

Indirect capitalized costs and overhead expenses will be paid by KGEM and then reimbursed by GolfSuites 2. Indirect capital costs and overhead expenses that will be exclusive to GolfSuites 2 will be reimburse in full by GolfSuites 2 (e.g., architectural costs, engineering, land, zoning and permitting and other costs directly related to assets belonging to GolfSuites 2).

 

Some capitalized costs (e.g., technology and other costs related to all Operating Subsidiaries and their assets, concept design common to all Operating Subsidiaries (e.g., restaurant and bar design, golf range design, and training academy design), and intellectual property) and overhead expenses (actual expenses of KGEM) will not be exclusive to GolfSuites 2 and will be shared amongst GolfSuites 2 and the other Operating Subsidiaries.

 

Each Operating Subsidiary will be responsible for its share of capitalized costs once it has commenced fundraising under Regulation A (“KGEM Active Subsidiary” or “KGEM Active Subsidiaries,” as applicable). KGEM reserves the right to defer the collection of reimbursements from GolfSuites 2 and other KGEM Active Subsidiaries, if, in its sole discretion, it determines that such reimbursements should be shared amongst GolfSuites 2, KGEM Active Subsidiaries and any additional subsidiaries.

 

Unless deferred, indirect capitalized costs, will be reimbursed pro-rata based the total number of KGEM Active Subsidiaries.

 

Overhead expenses, which will be reported monthly, will be allocated among the KGEM Active Subsidiaries based upon the number of facilities. Each parcel of land that an KGEM Active Subsidiaries closes on, is considered a facility. If a KGEM Active Subsidiary has yet to purchase land, that subsidiary will be considered to have one facility.

 

The initial term of the agreement is ten years and is automatically renewable. Either party can terminate the agreement by written notice 180 days prior to the end of the current term.

 

For additional information please see the Management Services Agreement, which is an Exhibit to the Offering Statement of which this Offering Circular forms a part.

 

Further, it is the intent of KGEM that KGEM will enter into a participating lease agreement (“PLA”) with GolfSuites 2 and each Operating Subsidiary as needed. For example, in the event that KGEM uses capital to assist GolfSuites 2 or any Operating Subsidiary with the acquisition of land and for certain costs related to the entitlement and zoning for such land, KGEM will execute a PLA with the applicable Operating Subsidiary. PLAs allow for fixed lease payments plus allocations of revenue, wherein KGEM would receive larger lease payments from the applicable Operating Subsidiary in the event revenues increase. KGEM intends that the PLAs will allow for payments from the Operating Subsidiary to KGEM in amounts that closely approximate what would be KGEM’s share of net cash flows based on its pro-rata share of total development costs for the facilities owned by the applicable Operating Subsidiary.

 

KGEM and GolfSuites 2 have not yet entered into a PLA.

 

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Competition

 

Direct competitors

 

Our largest competitor in this emerging market is TopGolf. As of June 20, 2019, there are 53 branded TopGolf locations (50 in the US). Its first facilities were developed less than 20 years ago, and according to public reporting TopGolf intends to add 7 - 10 new venues annually. Other competitors include local and regional facilities as well as other national chains, including DriveShack, 1Up Golf, Big Shots, Driv, 4ORE! and The Flying Tee.

 

Indirect competitors

 

Indirect competitors include sports-themed entertainment facilities with food and beverage offerings that revolve around other sports including, but not limited to bowling, ping pong, baseball, NASCAR, etc. These include PINS Mechanical, Main Event (40+ locations), Lucky Strike, Bowl More, iDrive NASCAR, iFly, and Dave & Buster’s (120+ locations), to name a few.

 

In addition, new entertainment themed centers are being developed within the US that merge retail, food and beverage, entertainment and hospitality into single, tightly-packed mixed-use destinations of 1-3 million square feet. These new developments include American Dream (Miami) and American Dream (NYC), as well as numerous other smaller developments throughout the US. Facilities like these typically include entertainment amenities such as water parks, skydiving, surfing, ice-rinks, drive-in movie theatres, hybrid golf facilities, miniature golf, theme parks, observation wheels, climbing walls, X4D movie theatres, and aquariums.

 

Employees

 

The company currently has no employees, however, KGEM employs five individuals, of which four employees spend approximately half of their time working on matters related to the Operating Subsidiaries. The amount of time that an employee will dedicate to a specific Operating Subsidiary, including GolfSuites 2, will vary from week to week depending on the current needs of that company.

 

Pursuant to the Management Services Agreement, KGEM intends to oversee the development and construction of the first Southeastern facility. During the initial year of development and as the facility nears completion, the KGEM executives will commence hiring the full-time direct staff that GolfSuites 2 will then employ. Once the facility opens, its management will be turned over to the full-time direct staff, which staff will be managed by senior management personnel that KGEM hires.

 

Advisory Board

The advisory board includes the following individuals:

  · Bryan Langton
  · Douglas Barber

 

Regulation

It is likely that the following licenses and permits will be required to operate the Southeastern facilities. At this time, none of the licenses and/or permits have been acquired.

  · State liquor license.
  · State reuse/resale tax for products including but not limited to golf clubs, and apparel.
  · County resale tax certificate. 
  · “Doing Business As” certificates for applicable states.
  · Health department and food service license for each facility.
  · Elevator and Fire department certifications, required annually. 

 

Intellectual Property

 

KGEM has filed the following name trademarks:

  · GolfSuites
  · Off The Deck
  · FirstCut

 

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KGEM intends to file patents and trademarks relating to the following:

  · enhanced golf gaming and skill related games that integrate with the Trackman Range platform and API.

 

Litigation

 

The company has no litigation pending and the management team is not aware of any pending or threatened legal action relating to the company business, intellectual property, conduct or other business issues.

 

THE COMPANY’S PROPERTY

 

The company does not currently own property. However, the company is actively sourcing potential sites for its first Southeastern location. The company believes it will purchase land by Q4 2019.

 

CONFLICTS OF INTEREST

 

We are subject to various conflicts of interest arising out of our relationship with KGEM. We discuss these conflicts below.

 

General

 

KGEM is the parent company of GolfSuites 2 and currently holds all of the issued Common Stock of GolfSuites 2. KGEM is also affiliated with each of the Operating Subsidiaries and ERC. Many if not all of the executives are the same for KGEM, GolfSuites 2, the other Operating Subsidiaries and ERC.

 

These persons have legal obligations with respect to KGEM, the other Operating Subsidiaries and the ERC entities that are similar to their obligations to us. In the future, these persons and other affiliates of KGEM, the other Operating Subsidiaries and the ERC entities may organize/acquire for their own account other leisure facilities, real estate-related or debt-related investment programs. These acquisitions may have also been suitable for GolfSuites 2.

 

Allocation of Our Affiliates’ Time

 

GolfSuites 2 relies on KGEM’s executive officers and other professionals who act on behalf of KGEM, for the day-to-day operation of our business.

 

As a result of the executives competing responsibilities, their obligations to other investors and the fact that they will continue to engage in other business activities on behalf of themselves and others, they will face conflicts of interest in allocating their time to GolfSuites 2 and other entities and other business activities in which they are involved. However, the company believes that the executive officers and investment professionals have sufficient depth to fully discharge their responsibilities to the company and the other entities for which they work, see “The Company’s Business – Support from KGEM.”

 

Receipt of Fees and Other Compensation by KGEM and its Affiliates

 

KGEM and its affiliates will receive substantial fees from the company, which fees will not be negotiated at arm’s length. These fees could influence KGEM’s advice to the company as well as the judgment of the affiliated executives of KGEM and GolfSuites 2 (which are one and the same). For additional information see “The Company’s Business – Support from KGEM” for conflicts relating to the payments between KGEM and GolfSuites 2.

 

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following discussion includes information from the audited financial statements for the inception period of March 13, 2019 (“Inception”) through May 15, 2019 and should be read in conjunction with our financial statements and the related notes included in this Offering Circular. The following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements.

 

Overview

 

GolfSuites 2 is an early stage hospitality and entertainment company devoted to the development and operation of a golf driving range and entertainment centers in the Southeastern sector of the United States. The company will purchase the land and manage the zoning, entitlement, design, construction and operation of the planned facilities.

 

The company anticipates that its revenues will come from the following activities:

  · individual and corporate membership sales,
  · food and beverage sales,
  · coaching and instruction services,
  · suite rentals,
  · retail sales,
  · sponsorships, advertising and naming rights and
  · contest and qualifier fees and ticket purchases

 

The company will collect revenue upon sale of an item (including: membership sales, food and beverage sales, apparel etc.) and recognize the revenue when the sale is made. Operating expenses currently consist of advertising and marketing expenses and general administrative expenses.

 

Results of Operations

 

From Inception to May 15, 2019 we have had no operations and no revenues.

 

Total operating expenses from Inception to May 15, 2019 were $137,181. $55,660 was spent on advertising and marketing and $81,521 was spent on general and administrative costs.

 

As a result of the foregoing, the company generated a net loss of $137,181.

 

Monthly Operating Expenses

 

Currently, pursuant to the Management Services Agreement dated April 15, 2019, KGEM pays the operating expenses of GolfSuites 2. As of July 12, 2019, GolfSuites 2 monthly expected burn rate for operating expenses is approximately $175,000 per month. The company anticipates that in the coming months approximately $120,000 will be spent on salaries, $20,000 will be spent on employee benefits and taxes, and $35,000 will be spent on other general and administrative costs. KGEM will not be reimbursed for these aforementioned expenses until KGEM determines, in its sole discretion, that the company has raised sufficient capital in this offering.

 

GolfSuites 2 intends to begin repayment to KGEM all of its accrued monthly operating expenses at the commencement of this offering. All accrued operating expenses will be compounded annually at an interest rate of 8%.

 

At the commencement of this offering, GolfSuites 2 will be responsible for all of its monthly operating expenses.

 

All monthly expenses will be reported quarterly. Monthly operating expenses include the following:

  · salaries and benefits,
  · compensation to contractors,

 

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  · expenses related to local marketing, promotion and public relations,
  · travel,
  · legal and accounting, and
  · insurance and technology.

 

Celebrity Fees, etc.

In the event KGEM pays fees to celebrities, sports professionals and other similarly situated individuals, those fees will be charged to the subsidiaries at cost, without markup, using the same expense allocation method.

 

For additional information regarding expense reimbursement please see the Management Services Agreement filed as Exhibit 6.2 to this Offering Circular.

 

Plan of Operation

 

Upon completion of this offering, the company intends to fund operations with the proceeds from this offering and use mortgage financing to advance the purchase of the land, construction of the facility, design of the facility, use of architects, and hiring of employees. Approximate costs for each stage of developing a facility are as follows:

  · purchase the land: up to $5,000,000
  · construction and design of the facility: up to $24,500,000
  · architectural and engineering costs: up to $300,000
  · employee related expenses: up to $500,000

 

The company has estimated that it will be financing the purchase of land and construction of the facilities with mortgages obtained, representing between 50% and 70% of the total value of the location.

 

Pursuant to the Management Services Agreement, KGEM intends to assist with the management of the first Southeastern facility. During a two- year time period KGEM will focus on hiring and training GolfSuites 2 executives and employees.

 

As of July 12, 2019, the company is currently in the beginning stages identifying land for the Southeastern locations. The company intends to finance some of the purchase of the land from proceeds of this offering.

 

Over the next 12 months, the company plans to do the following:

  · Select and acquire at least one parcel of land.
  · Negotiate and execute mortgage financing for approved segments of the development and construction.
  · Finalize site and building design per the overall GolfSuites 2 concept design.
  · Apply for and receive building permits.
  · Execute a general contracting agreement.
  · Break ground on the first Southeastern facility.
  · Hire a general manager / operator and team to run the first Southeastern facility.
  · Acquire necessary permits to construct, finish, serve food and beverage and equip the facilities, as applicable.
  · Engage architects, engineers and general contractors for the overall development and construction of the facility.

 

Beginning in January 2020 the company intends to do the following:

  · Oversee and manage the construction, finish, equipping and staffing of the Southeastern location in order to commence operations.
  · Acquire necessary permits to construct, finish, serve food and beverage and equip the facilities, as applicable.

 

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Liquidity and Capital Resources

 

As of May 15, 2019, the company’s cash on hand was $180. Currently, the company is not generating a profit. Accordingly, since Inception, GolfSuites 2 has relied upon the cash advances from its current shareholder KGEM and management. The company plans to continue to try to raise additional capital through additional offerings and mortgage financing. Absent additional capital, the company may be forced to significantly reduce expenses and could become insolvent.

 

Indebtedness

  · As of May 1, 2019, the company has received $143,514 from KGEM, pursuant to a Promissory Note for working capital to cover expenses and costs while preparing for the securities offering.

 

Relaxed Ongoing Reporting Requirements

 

If we become a public reporting company in the future, we will be required to publicly report on an ongoing basis as an “emerging growth company” (as defined in the Jumpstart Our Business Startups Act of 2012, which we refer to as the JOBS Act) under the reporting rules set forth under the Exchange Act. For so long as we remain an “emerging growth company”, we may take advantage of certain exemptions from various reporting requirements that are applicable to other Exchange Act reporting companies that are not “emerging growth companies”, including but not limited to:

 

·not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act;

 

·taking advantage of extensions of time to comply with certain new or revised financial accounting standards;

 

·being permitted to comply with reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and

 

·being exempt from the requirement to hold a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

 

If we become a public reporting company in the future, we expect to take advantage of these reporting exemptions until we are no longer an emerging growth company. We would remain an “emerging growth company” for up to five years, although if the market value of our Common Stock that is held by non-affiliates exceeds $700 million as of any June 30 before that time, we would cease to be an “emerging growth company” as of the following December 31.

 

If we do not become a public reporting company under the Exchange Act for any reason, we will be required to publicly report on an ongoing basis under the reporting rules set forth in Regulation A for Tier 2 issuers. The ongoing reporting requirements under Regulation A are more relaxed than for “emerging growth companies” under the Exchange Act. The differences include, but are not limited to, being required to file only annual and semiannual reports, rather than annual and quarterly reports. Annual reports are due within 120 calendar days after the end of the issuer’s fiscal year, and semiannual reports are due within 90 calendar days after the end of the first six months of the issuer’s fiscal year.

 

In either case, we will be subject to ongoing public reporting requirements that are less rigorous than Exchange Act rules for companies that are not “emerging growth companies”, and our shareholders could receive less information than they might expect to receive from more mature public companies.

 

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DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES

 

The table below sets forth the directors of the company.

 

Name   Position   Employer   Age  

Term of Office (If

indefinite give date

of appointment)

Gerald Ellenburg   Director, CEO   GolfSuites 2, Inc.   70   March 14, 2019
Ryan Koenig   Director   GolfSuites 2, Inc.   41   March 14, 2019
Kyle Morris   Director   GolfSuites 2, Inc.   33   March 14, 2019
John Galvin   Director   GolfSuites 2, Inc.   55   March 14, 2019
Rod Turner   Director   GolfSuites 2, Inc.   62   March 14, 2019

 

The table below sets forth the officers and directors of KGEM.

 

Name   Position   Employer   Age   

Term of Office (If

indefinite give date

of appointment)

Gerald Ellenburg  

Director

Chairman

Chief Executive Officer

  KGEM Golf, Inc.   70   November 8, 2018
Nicholas Flanagan   Chief Operating Officer   KGEM Golf, Inc.   53   July 1, 2019
John Galvin   Director, Experience Director   KGEM Golf, Inc.   55   November 8, 2018 
Laurent Gray   Capital Markets Director   KGEM Golf, Inc.   65   July 1, 2019
Ryan Koenig  

Director,

Development Director

  KGEM Golf, Inc.   41   November 8, 2018
Tom LaPlante   Chief Technology Officer   KGEM Golf, Inc.   62   July 1, 2019
Kyle Morris  

Director,

Golf Director

  KGEM Golf, Inc.   33   November 8, 2018
David A. Morris III   Consulting CFO   KGEM Golf, Inc.   60   November 8, 2018
Scott Smylie   General Counsel   KGEM Golf, Inc.   44   December 1, 2018
Michael Zylstra   Chief Administrative Officer   KGEM Golf, Inc.   53   July 1, 2019

 

Gerald Ellenburg

Gerald Ellenburg (“Jerry”) is the Chairman and Chief Executive Officer of KGEM since August 2016. Jerry also serves as the Chairman and Chief Executive Officer of ERC Home Builders, Inc. (f/k/a, ERC Investment Properties, LLC) since March 2011. Further, Jerry is the Chief Executive Officer of each Operating Subsidiary. Jerry has a total of 35 years of experience in the following areas:

  · real estate ownership,
  · management and the financing of multi-family properties and
  · management of over $750 million in debt and equity financings.

Jerry graduated from the University of California, Berkeley in 1971, and is a California-licensed CPA (inactive).

 

Nicholas Flanagan

Nick Flanagan is the Chief Operating Officer of KGEM Golf, Inc. since July 1, 2019.  Nick is a 30 year veteran of major restaurant and retail branded companies. From 1989 to 2004 he served in various roles with Steak & Ale Restaurant Corp.  From 2004 to June 2019 Nick served in various roles at Cracker Barrel Old Country Store, Inc. (“Cracker Barrel”). Nick’s most recent role at Cracker Barrel was Senior Vice President of Restaurant & Retail Operations.  While in this role, he served on the company’s executive team. Nick graduated from the University of Central Florida in 1989 with a Bachelor of Business Administration degree.

 

John Galvin

John Galvin is a Director and the Chief Experience Officer of KGEM since August 2016. From June 2017 until present, John has served as the Chief Branding and Experience Officer at Boulevard Strategies. John is the Founder and Chief Experience Officer of 7Nine Partners since January 2014. John has a total of 31 years in marketing, branding, experience design, advertising and promotion for companies including, but not limited to, Ford, JP Morgan Chase, Citi, Lowe’s, Victoria’s Secret, Champion Sportswear, and Dick’s Sporting Goods. John graduated from The Ohio State University in 1987.

 

Laurent Gray

Laurent Gray is the Capital Markets Director of KGEM Golf, Inc. since July 1, 2019.  From April 2010 until present Laurent served as a managing director at Versaille St. Germain, LLC.  Laurent, has multi-decade experience in investment banking and mortgage banking, and has been the development principal of a number of national projects. To date he has successfully raised more than 3 billion dollars. His portfolio of closed deals includes Spanish Broadcasting, Vermont Teddy Bear, several Bio Tech companies and various railroad short track companies.

 

Ryan Koenig

Ryan Koenig is a Director and the Chief Development Officer of KGEM since August 2016. Ryan also serves as President and Chief Operating Officer of ERC Homebuilders, Inc., a position he has held since December 2018. From March 2011 until the present, he has been the Chief Development Officer at eResidential and Commercial LLC (eRC Homes). Ryan has over 20 years of experience in real estate development and construction with the following companies: Wood Partners Camden Properties, Turner Construction and Zaremba Development. Ryan has overseen approximately $500 million in completed construction projects.

 

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Tom LaPlante

Tom LaPlante is the Chief Information Officer of KGEM Golf, Inc. since July 1, 2019.  Since February 2015 Tom has also served as a Managing Partner at Star Support and from April 2012 to February 2015 Tom served as the former Chief Information Officer of TopGolf. Tom brings more than 30 years of experience and a broad background in the fields of travel, hospitality, retail and entertainment.  Tom graduated from the University of Georgia with a Bachelor of Science.

 

Kyle Morris

Kyle Morris is a Director and Chief Golf Officer of KGEM since December 2017. Kyle is a member of the Professional Golf Association and from 2008 to 2015 he toured with the PGA national and international tournaments. Following eight wins worldwide, Kyle created The Golf Room, a holistic coaching facility in Dublin, Ohio in January, 2016. Kyle has been named by Golf Digest as one of the “Best Young Instructors”, and was included in the “Best Teachers” in the State of Ohio. Kyle received a Master Certification with Trackman and currently serves as an NBC Golf Channel Academy Lead Coach since January 2017. Kyle graduated from Seton Hall University in 2008.

 

David A. Morris III

David Morris is the Consulting Chief Financial Officer of KGEM since August 2016. David is also the Consulting Chief Financial Officer at ERC Homebuilders from March 2011 until present. David has over 30 years of experience in finance and financial forensics. During his tenure at KGEM, David will oversee the following:

  · tax planning,
  · compliance,
  · accounting,
  · audit,
  · forecasts and
  · investment analysis. 

David’s’ career has included the Vice-Presidency of Finance at Belz Enterprises, a large real estate development and management company.  David graduated from the University of Wisconsin, La Crosse, in 1980 and is a Tennessee-licensed CPA.

 

Scott Smylie

Scott Smylie is the General Counsel and Secretary of KGEM Golf, Inc.  since December 1, 2018 and ERC Homebuilders, Inc. since December 1, 2018, He currently also serves in that capacity for all their operating subsidiaries, and has been our General Counsel and Secretary since March 2019. Previously, Scott practiced law in Florida at Monica L Sierra PLLC (May 2018 – November 2018), Meridian Partners in Florida (September 2016 – May 2018), and Bivins & Hemenway PA in Florida (May 2012 – June 2015). During Scott’s tenure he represented real estate developers, lenders, landlords and tenants, and business entities in a variety of corporate and real estate related transactions.  Scott graduated cum laude in 2003 from the University of Florida’s School of Law with a Juris Doctor, and also earned a Master’s of Science in Real Estate from the University of Florida’s School of Business that same year.

 

Rod Turner

Rod Turner is the founder and CEO of Manhattan Street Capital, since April 2015. Rod was a senior executive at Symantec from Jan 1985 to March1993 and has played a key role in building successful companies including Symantec/Norton (SYMC), Ashton-Tate (TATE), MicroPort and Knowledge Adventure Rod co-founded Irvine Ventures in 1999. 

 

Michael Zylstra

Michael Zylstra is the Chief Administrative Officer of KGEM Golf, Inc. since July 1, 2019.  From 1992 until 2017 Michael has worked extensively in the restaurant and retail industry with Cracker Barrel. In his most recent role at Cracker Barrel Michael served as VP, General Counsel & Corporate Secretary.  Michael graduated from the University of Western Ontario in 1988 and from Cumberland School of Law at Samford University in 1991.

 

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

 

The company was incorporated in 2019. One of its directors, Rod Turner, is also the CEO of Manhattan Street Capital, which received $180,000 in fees in 2018 from our parent company, KGEM Golf, Inc. to be reimbursed by the Operating Subsidiaries see “Interest of Managements and Others in Certain Transactions”.

 

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The KGEM Golf, Inc. intends to pay salaries beginning July 1, 2019. The highest paid officers of the company will be paid as follows:

 

Name   Position   Annual Compensation  
Nicholas Flanagan   Chief Operating Officer   $ 600,000  
John Galvin   Experience Director   $ 360,000  
Tom LaPlante   Chief Technology Officer   $ 360,000  

  

All compensation will be paid on behalf of the company by KGEM Golf, Inc. and total compensation described above is for work performed at all the Operating Subsidiaries. Each Operating Subsidiary, including GolfSuites 2, will reimburse KGEM Golf, Inc. for their pro rata share of the compensation in accordance with the Management Services Agreement. See “The Company’s Business – Support from KGEM” for additional information.

 

In the future, the company will have to pay its officers, directors and other employees, which will impact the company’s financial condition and results of operations, as discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The company may choose to establish an equity compensation plan for its management and other employees in the future. Further, as the company grows, the company intends to add additional executives, including but not limited to, a General Manager, a Food and Beverage Manager and a Golf Manager.

 

SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITYHOLDERS

 

The following table sets out, as of July 12, 2019, GolfSuites 2 voting securities that are owned by our executive officers, directors and other persons holding more than 10% of the company’s voting securities.

 

Title of class  Name and address
of
beneficial owner
  Amount and nature
of beneficial
ownership
   Amount and nature
of beneficial
ownership
acquirable
  Percent of class 
Class B Common Stock  KGEM Golf, Inc.
 
2738 Falkenburg Road South, Riverview, FL 33578
   18,000,000   N/A   100%

 

There are currently no outstanding shares of our Class A Common Stock and Preferred Stock.

 

The following table sets out, as of July 12, 2019 KGEM’s voting securities that are owned by our executive officers, directors and other persons holding more than 10% of the company’s voting securities.

 

Title of class  Name and address
of
beneficial owner
  Amount and
nature
of beneficial
ownership
   Amount and nature
of beneficial
ownership
acquirable
  Percent of class 
Common Stock  Gerald Ellenburg   24,000,000   N/A   12.82%
   John Galvin   19,950,000   N/A   10.75%
   Ryan Koenig   19,950,000   N/A   10.75%
   Kyle Morris   19,950,000   N/A   10.75%

 

(1)The address for all the executive officers, directors, and beneficial owners is c/o KGEM Golf, Inc. 2738 Falkenburg Road South, Riverview, FL 33578

 

INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS

 

Gerald Ellenburg and David Morris receive salaries from KGEM, and ERC HomeBuilders, Inc.

 

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Relationship with KGEM

The company has received working capital to cover expenses and costs while preparing for the securities offering from KGEM in the amount of $143,514. The balance of these covered costs is recorded as a liability of the company. On May 1, 2019, the company entered into a promissory note for that amount (the “Promissory Note”). The note has a maturity date of December 31, 2019 and interest accrues at a rate of 3% per annum. The Promissory Note is attached as an exhibit to the Offering Statement of which this Offering Circular is a part.

 

The company has issued 18,000,000 shares of Class B Common Stock to KGEM, at par, in exchange for $180.

 

Management Services Agreement

The company has entered into a Management Services Agreement with KGEM. Pursuant to this agreement, KGEM is to provide the following to GolfSuites 2:

  · All licenses necessary for GolfSuites 2 to conduct its business,
  · Supervise the operations of GolfSuites 2,
  · Manage all necessary negotiations relating to the business, personnel, etc.

 

GolfSuites 2 is also expected to reimburse KGEM for certain direct and indirect costs, see “The Company’s Business – Support from KGEM”. The term of the agreement is for ten years. Upon expiration of the agreement it shall automatically renew for another ten years. Either party can terminate the agreement provided 180 days written notice has been given to the other party.

 

Relationship with Golf Room

On January 4, 2018, KGE, LLC (the predecessor of KGEM) entered into Membership Unit Purchase Agreement with Kyle Morris, one of our directors, and on December 24, 2018, KGEM and Kyle Morris entered into an addendum to that agreement (together with the Membership Unit Purchase Agreement the “MUP Agreement”). The MUP Agreement is attached as an exhibit to the Offering Statement of which this Offering Circular is a part.

 

Under the MUP Agreement, Kyle Morris purchased a 25% share of KGEM for nominal consideration along with granting the following non-exclusive licensing rights to KGEM (and to each of the Operating Subsidiaries through the Management Services Agreements):

  · Use of the name, and likeness of Kyle Morris; and
  · the Golf Room name and proprietary information related to the Golf Academy.

 

On February 15, 2019 KGEM entered into the Morris License Agreement with Kyle Morris. The Morris License Agreement is attached as an exhibit to the Offering Statement of which this Offering Circular is a part. Pursuant to the Morris License Agreement a license is granted by Kyle Morris to KGEM to use his likeness, current business, and golf coaching concepts. In addition, it provides for a non-compete and a 10 year term.

 

On February 15, 2019 KGEM entered into a Consulting Agreement with Kyle Morris (the “Morris Consulting Agreement”). The Morris Consulting Agreement is attached as an exhibit to the Offering Statement of which this Offering Circular is a part. Pursuant to the Morris Consulting Agreement, protection of confidential information, non-competition and non-solicitation is provided for. In addition, it provides for a 10 year term and certain remedies.

 

Relationship with ERC Homebuilders, Inc.

Some of the parties involved with the operation and management of the company, including Gerald Ellenburg, Rod Turner, David Morris, Ryan Koenig, and Scott Smylie, have other relationships that may create disincentives to act in the best interest of the company and its investors These parties are also involved with ERC Homebuilders, Inc. and its subsidiaries in similar capacities. These conflicts may inhibit or interfere with the sound and profitable operation of the company. See “Risk Factors — Risks Related to Certain Conflicts of Interest.”

 

Relationship with Manhattan Street Capital

One of our directors, Rod Turner, is also the CEO of Manhattan Street Capital. MSC is listing this offering on its platform. Further, KGEM has entered into a Consulting Agreement with MSC, which includes consulting services and technology services, see “Plan of Distribution and Selling Securityholders – The Online Platform”.

 

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Pursuant to the Consulting Agreement, KGEM has or will pay MSC the following for the Regulation A offerings of all of the Operating Subsidiaries:

 

·On August 22, 2018, KGEM paid MSC $180,000 ($20,000 per month for 9 months) in cash.
·KGEM intends to deliver to MSC cashless 10 year warrants for 720,000 shares of KGEM common stock with an exercise price of $0.25 per share.

 

Pursuant to the Management Services Agreement, GolfSuites 2 will reimburse KGEM for certain costs, including fees, related to the Consulting Agreement see “The Company’s Business – Support from KGEM.”

 

In addition, KGEM, or the company as applicable, will pay MSC the following for this offering:

  · A technology and administration fee of $25 per investor, in cash, paid by the company when each investor deposits funds into the escrow account.
  · A cashless 10 year warrant to purchase 25 shares of KGEM common stock for $1.00 per share, per investor escrow account, in each Operating Subsidiary Regulation A offering.
    O The warrant calculations shall be capped at a maximum of 150,000 investors (or 3,750,000 shares of KGEM common stock), aggregated from the 6 contemplated Regulation A offerings of the 6 Operating Subsidiaries.
  · AML check fees between $2 and $6 per investor. AML fees will be dependent on the location of the investor.
  · A technology license fee of $300 per month.
  · Any applicable fees for fund transfers (ACH $2, check $5, wire $15 or $35 for international fund transfers).

 

The Consulting Agreement has similar terms for each of the Operating Subsidiaries. The Consulting Agreement is attached as an exhibit to the Offering Statement of which this Offering Circular is a part.

 

KGEM has also entered into a regulation D Consulting Agreement with MSC. This agreement dated March 15, 2019 provides for consulting services and technology services related to a Regulation D offering for KGEM.

 

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SECURITIES BEING OFFERED

 

GolfSuites 2 is offering Preferred Stock in this offering. The Preferred Stock may be converted into the Common Stock of the company at the discretion of each investor, or automatically upon the occurrence of certain events, like an initial public offering. As such, the company is qualifying up to 10,000,000 shares of Preferred Stock and up to 10,000,000 shares of Class A Common Stock under this Offering Statement, of which this Offering Circular is part.

 

GolfSuites 2 authorized capital stock consists of 200,000,000 shares of capital stock, of which 150,000,000 shares are designated Common Stock (the “Common Stock”), at $0.00001 par value, of which 132,000,000 shares are Class A Common Stock (“Class A Common Stock”) and 18,000,000 shares are Class B Common Stock (“Class B Common Stock”) and 50,000,000 shares of Preferred Stock, at $0.00001 par value, of which 10,000,000 shares are Series A Preferred Stock (the “Preferred Stock” or “Series A Preferred Stock”). Class A Common Stock has the same rights and powers of, ranks equally to, shares ratably with and is identical in all respects, and as to all matters to Class B Common Stock; except that each holder of Class B Common Stock is entitled to 5 votes per share of Class B Common Stock whereas each holder of Class A Common Stock is entitled to only 1 vote per share of Class A Common Stock. The company may issue fractions of shares.

 

The following is a summary of the rights of GolfSuites 2’s capital stock as provided in its Certificate of Incorporation, Certificate of Designations, and Bylaws, which have been filed as exhibits to the Offering Statement of which this Offering Circular is a part.

 

For a complete description of GolfSuites 2’s capital stock, you should refer to its Certificate of Incorporation, Certificate of Designations and Bylaws, and applicable provisions of the Delaware General Corporation Law.

 

Class A Common Stock

 

Voting Rights.

 

Each holder of GolfSuites 2’s Class A Common Stock is entitled to one vote for each share on all matters submitted to a vote of the shareholders. Holders of Class A Common Stock at all times shall vote together with the holders of Class B Common Stock and Series A Preferred Stock as a single class on all matters (including the election of directors) submitted to vote or for the consent of the stockholders of GolfSuites 2.

 

Class B Common Stock

 

Voting Rights.

 

Each holder of GolfSuites 2’s Class B Common Stock is entitled to five votes for each share on all matters submitted to a vote of the shareholders. Holders of Class B Common Stock at all times shall vote together with the holders of Class A Common Stock and Series A Preferred Stock as a single class on all matters (including the election of directors) submitted to vote or for the consent of the stockholders of GolfSuites 2.

 

Conversion Rights.

 

Each share of Class B Common Stock is convertible into one share of Class A Common Stock at the option of the holder at any time upon written notice to GolfSuites 2.

 

All Classes of Common Stock

 

Dividends.

 

Subject to preferences that may be applicable to any then outstanding class of capital stock having prior rights to dividends (including the company’s Series A Preferred Stock), shareholders of GolfSuites 2’s Class A Common Stock and Class B Common Stock are entitled to receive dividends, if any, as may be declared from time to time by the board of directors out of legally-available funds. Any dividends in excess of dividends payable to holders of the Series A Preferred Stock, will be paid ratably among the holders of Class A Common Stock, Class B Common Stock and Series A Preferred Stock on an as-converted basis. GolfSuites 2 has never declared nor paid cash dividends on any of its capital stock and currently does not anticipate paying any cash dividends after this offering or in the foreseeable future on its Common Stock.

 

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Liquidation Rights.

 

In the event of GolfSuites 2’s liquidation, dissolution or winding up, holders of GolfSuites 2’s Class A and Class B Common Stock will be entitled to share ratably in the net assets legally available for distribution to stockholders after the payment of all of GolfSuites 2’s debts and other liabilities and the satisfaction of any liquidation preference granted to holders of Series A Preferred Stock; however if the amount that the holders of Series A Preferred Stock would receive based on the pro rata percentage of the proceeds calculated based on the number of shares owned by each investor on an “as converted to Common Stock” basis is greater than the then applicable liquidation preference available to Series A Preferred Stock, the holders of Series A Preferred Stock, Class A Common Stock and Class B Common Stock will receive that amount.

 

Other Rights.

 

Holders of GolfSuites 2’s Class A and Class B Common Stock have no preemptive, subscription or other rights, and there are no redemption or sinking fund provisions applicable to GolfSuites 2’s Class A or Class B Common Stock.

 

Preferred Stock

 

Voting Rights.

Each holder of GolfSuites 2 Preferred Stock is entitled to one vote for each share on all matters submitted to a vote of the shareholders. Holders of Preferred Stock at all times shall vote together with holders of the Common Stock as a single class on all matters (including the election of directors) submitted to vote or for the consent of the stockholders of GolfSuites 2.

 

Dividends.

Each share of Preferred Stock is entitled to cumulative dividends which shall accrue, whether or not declared by the Board and whether or not there are funds legally available for the payment of dividends, on a daily basis in arrears at the rate of 8% per annum on the sum of the invested amount sum plus all unpaid accrued and accumulated dividends thereon. The dividends will be paid monthly

 

In the event the company declares a dividend distribution to the Common Stock holders, all Preferred Stockholders will receive their pro rata share.

 

Liquidation preference.

In the event of a liquidation, investors will be entitled to receive the greater of their total investment amount in the shares of Preferred Stock and any accrued and unpaid dividends or their pro rata percentage of the proceeds calculated based on the number of shares owned by each investor on an “as converted to Common Stock” basis.

 

Conversion.

The Preferred Stock is convertible into the Class A Common Stock of the company as provided by Section 5 of the Certificate of Designations. Each share of Preferred Stock shall be convertible, at the option of the holder thereof, at any time after the date of issuance of such share into that number of fully-paid, nonassessable shares of Class A Common Stock determined by dividing the Conversion Price (defined therein), as adjusted for any accrued and unpaid dividends, by the original purchase price. The Conversion Price is the original purchase price, adjusted from time to time as described below under “Anti-Dilution Rights”.

 

Holders of the Preferred Stock, may convert their shares of Preferred Stock into Common Stock in their sole discretion. In the event of a Qualified Public Offering, as defined in the Certificate of Designations conversion of the Preferred Stock is mandatory.

 

44

 

 

Anti-Dilution Rights

Holders of Preferred Stock have the benefit of anti-dilution protective provisions that will be applied to adjust the number of shares of Class A Common Stock issuable upon conversion of the shares of the Preferred Stock. If equity securities are subsequently issued by the company at a price per share less than the conversion price of the Preferred Stock then in effect, the conversion price of the Preferred Stock will be adjusted using a broad-based, weighted-average adjustment formula as set out in the Certificate of Designations.

 

These terms generally provide that if the company issues certain additional shares of Common Stock (as detailed in the Certificate of Designations) without consideration or for a consideration per share less than the Conversion Price, in effect on the date of and immediately prior to such issue, then, the Conversion Price will be reduced. The new Conversion Price will be the amount equal to the quotient obtained by dividing the (i) the sum of (A) the number of shares of Common Stock deemed outstanding prior to such issuance (as determined on an as-converted basis) times the Conversion Price then in effect with (B) the consideration, if any, from that issuances by (ii) the sum of (A) the number of shares of Common Stock deemed outstanding prior to such issuance (a determined on an as-converted basis) plus the number of such additional shares of Common Stock so issued.

 

Other Rights.

Holders of GolfSuites 2’s Preferred Stock have no preemptive, subscription or other rights, and there is no redemption or sinking fund provisions applicable to its’ Preferred Stock.

 

All Classes of Stock

 

Forum Selection Provisions.

 

Article VII of our Certificate of Incorporation contain exclusive forum provisions. With a few exceptions, the Court of Chancery in the State of Delaware will be the sole and exclusive forum for any holder of GolfSuites 2’s Class A and Class B Common Stock (including a beneficial owner) to bring (i) any derivative action or proceeding brought on the company’s behalf, (ii) any action asserting a claim of breach of fiduciary duty owed by any director, officer or other employee, (iii) any action asserting a claim against the company, its directors, officers or employees arising pursuant to any provision of the Delaware General Corporation Law or the Corporation’s certificate of incorporation or bylaws or (iv) any action asserting a claim against the company, its directors, officers or employees governed by the internal affairs doctrine.  These sections shall not apply to actions arising under the federal securities laws. 

 

Section 6 of our subscription agreement (which appears as an exhibit to the offering statement of which this offering circular forms a part) provides that the Court of Chancery in the State of Delaware is the exclusive forum for all actions or proceedings relating to the subscription agreement. However, this exclusive forum provision does not apply to actions arising under the federal securities laws. 

 

Jury Trial Waiver 

 

The Court of Chancery in the State of Delaware is a non-jury trial court. The parties in any lawsuits where the forum selection provisions are applicable will not be entitled to a jury.

 

Moreover, holders of Shares of Series A Preferred Stock as well as holders of Class A Common Stock converted from Series A Preferred Stock will be bound by the subscription agreement, which provides that subscribers waive the right to a jury trial of any claim they may have against us arising out of or relating to the subscription agreement, including any claim under federal securities laws. If we opposed a jury trial demand based on the waiver, a court would determine whether the waiver was enforceable given the facts and circumstances of that case in accordance with applicable case law.

 

Tax Treatment of Dividends

 

The 8% dividends will likely be treated as a corporate distribution on equity. Corporate distributions on equity are not deductible to the corporation but are generally taxable to the shareholder, subject to various exceptions and limitations.

 

45

 

 

The distributions made pursuant to the Preferred Stock dividend provisions will be taxable as dividends to shareholders only to the extent of current and accumulated earnings and profits.  To the extent the company does not have current and accumulated earnings and profits, the distributions will be treated as a non-taxable return of capital to the extent of the shareholder’s adjusted basis. If distributions still exceed the amount of adjusted basis, such excess would be considered as capital gains income to the shareholder, who will generally be subject to federal (and possibly state) income tax on such gains at a rate that depends upon the shareholder’s holding period with respect to the shares in question, among other factors. Since the tax treatment of any distributions may vary according to the financial performance of the company, as well as the particular circumstances of the investor, investors should consult their own tax advisers, and should further not assume that the distributions will be subject to the same tax treatment from year to year.

 

These amounts will be reported to shareholders on Form 1099-DIV each year as part of their investment reporting package.

 

46

 

 

ONGOING REPORTING AND SUPPLEMENTS TO THIS OFFERING CIRCULAR 

 

We will be required to make annual and semi-annual filings with the SEC. We will make annual filings on Form 1-K, which will be due by the end of April each year and will include audited financial statements for the previous fiscal year. We will make semi-annual filings on Form 1-SA, which will be due by September 28 each year, which will include unaudited financial statements for the six months to June 30. We will also file a Form 1-U to announce important events such as the loss of a senior officer, a change in auditors or certain types of capital-raising. We will be required to keep making these reports unless we file a Form 1-Z to exit the reporting system, which we will only be able to do if we have less than 300 shareholders of record and have filed at least one Form 1-K.

 

We may supplement the information in this Offering Circular by filing a Supplement with the SEC. We hereby incorporate by reference into this Offering Circular all such Supplements, and the information on any Form 1-K, 1-SA or 1-U filed after the date of this Offering Circular.

 

All these filings will be available on the SEC’s EDGAR filing system. You should read all the available information before investing.

 

47

 

 

GolfSuites 2, Inc.

(a Delaware corporation)

 

Audited Financial Statements

For the inception period of March 13, 2019 through May 15, 2019

 

F-1

 

 

Financial Statements

 

GolfSuites 2, Inc.

 

Table of Contents

 

Independent Accountant’s Audit Report F-3
 
Financial Statements and Supplementary Notes  
 
Balance Sheet as of May 15, 2019 F-5
   
Statement of Operations for the period of March 13, 2019 (inception) through May 15, 2019 F-6
 
Statement of Changes in Shareholders’ Equity for the period of March 13, 2019 (inception) through May 15, 2019 F-7
   
Statement of Cash Flows for the period of March 13, 2019 (inception) through May 15, 2019 F-8
 
Notes and Additional Disclosures to the Financial Statements as of May 15, 2019 F-9

 

F-2

 

 

 

INDEPENDENT AUDITOR’S REPORT

 

May 24, 2019

 

To:Board of Directors, GolfSuites 2, Inc.

Attn: Gerald D. Ellenburg

 

Re:2019 (inception) Financial Statement Audit

 

We have audited the accompanying financial statements of GolfSuites 2, Inc. (a corporation organized in Delaware) (the “Company”), which comprise the balance sheet(s) as of May 15, 2019, and the related statements of income, stockholders’ equity, and cash flows for the period of March 13, 2019 (inception) and ending May 15, 2019, and the related notes to the financial statements.

 

Management’s Responsibility for the Financial Statements

 

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

 

Auditor’s Responsibility

 

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of the Company’s financial statements in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

 

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion.

 

An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.  We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

 

F-3

 

 

Opinion

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of May 15, 2019, and the results of its operations, shareholders’ equity and its cash flows for the period March 13, 2019 (inception) through May 15, 2019 in accordance with accounting principles generally accepted in the United States of America.

 

Going Concern

 

As discussed in the Notes and Additional Disclosures, certain conditions indicate the Company may be unable to continue as a going concern. The accompanying financial statements do not include any adjustments which might be necessary should the Company be unable to continue as a going concern. Our conclusion is not modified with respect to that matter.

 

Sincerely,

 

/s/ IndigoSpire CPA Group

 

IndigoSpire CPA Group, LLC

Aurora, Colorado

 

May 24, 2019

 

F-4

 

 

GOLFSUITES 2, INC.

BALANCE SHEET

As of May 15, 2019

See accompanying Auditor’s Report and Notes to these Statements

 

ASSETS     
      
Current Assets:     
Cash and cash equivalents  $180 
Deferred offering costs   6,333 
Total Current Assets   6,513 
      
Property, Plant and Equipment, net   NONE 
      
TOTAL ASSETS  $6,513 
      
LIABILITIES AND SHAREHOLDERS’ EQUITY     
      
Liabilities:     
Current Liabilities:     
Advances from affiliate  $143,514 
Total Current Liabilities   143,514 
      
Non-current Liabilities:     
None   0 
      
TOTAL LIABILITIES   143,514 
      
Shareholders’ Equity:     
Class A Common Stock, 132,000,000 shares authorized, $0.00001 par, 0 shares issued and outstanding   0 
Class B Common Stock, 18,000,000 shares authorized, $0.00001 par, 18,000,000 shares issued and outstanding   180 
Preferred Stock, 50,000,000 shares authorized, 0 shares issued and outstanding   0 
Retained earnings, net of distributions   (137,181)
Total Stockholder’s Equity   (137,001)
      
TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY  $6,513 

 

F-5

 

 

GOLFSUITES 2, INC.

STATEMENT OF OPERATIONS

For the period of March 13, 2019 (inception) to May 15, 2019

See accompanying Auditor’s Report and Notes to these Statements

 

Revenues  $0 
Cost of revenues   0 
Gross Profit (Loss)   0 
      
Operating Expenses:     
Advertising and marketing   55,660 
General and administrative   81,521 
Total Operating Expenses   137,181 
      
Operating Loss   (137,181)
      
Provision for Income Taxes   0 
      
Net Loss   (137,181)

 

F-6

 

 

GOLFSUITES 2, INC.

STATEMENT OF STOCKHOLDER’S EQUITY

For the period of March 13, 2019 (inception) to May 15, 2019

See accompanying Auditor’s Report and Notes to these Statements

 

   Class B
Common Stock
         
   Shares   Value   Accumulated
Earnings/Deficit
   Total Stockholder’s
Equity (Deficit)
 
As of March 13, 2019 (inception)   0   $0   $0   $0 
Initial Share Issuance   18,000,000    180         180 
Net Loss             (137,181)   (137,181)
Balance as of  May 15, 2019   18,000,000   $180   $(137,181)  $(137,001)

  

F-7

 

 

GOLFSUITES 2, INC.

STATEMENT OF CASH FLOWS

For the period of March 13, 2019 (inception) to May 15, 2019

See accompanying Auditor’s Report and Notes to these Statements

 

Cash Flows from Operating Activities     
Net Loss  $(137,181)
Adjustments to reconcile net loss to net cash used in operating activities:     
Changes in operating assets and liabilities:     
None   0 
Net Cash Used in Operating Activities   (137,181)
      
Cash Flows from Investing Activities     
None     
Net Cash Used in Investing Activities   0 
      
Cash Flows from Financing Activities     
Advances from affiliate   143,514 
Costs of offering   (6,333)
Issuance of shares   180 
Net Cash Provided by Financing Activities   137,361 
      
Net Change In Cash and Cash Equivalents   180 
      
Cash and Cash Equivalents at Beginning of Period   0 
Cash and Cash Equivalents at End of Period  $180 
      
Supplemental Disclosure of Cash Flow Information     
Cash paid for interest  $0 
Cash paid for income taxes   0 

 

F-8

 

 

GOLFSUITES 2, INC.

NOTES TO FINANCIAL STATEMENTS

As of May 15, 2019
See accompanying Auditors’ Report

 

NOTE 1 - NATURE OF OPERATIONS

 

GolfSuites 2, Inc. (which may be referred to as the “Company,” “we,” “us,” or “our”) is an early stage company devoted to devoted to the development and operation of golf driving range and entertainment centers. The Company will operate under the brand GOLFSUITES. The Company will oversee the acquisition of land, zoning, entitlement, design, construction and operation of the planned facilities.

 

The Company incorporated on March 13, 2019 in the state of Delaware.

 

Since Inception, the Company has relied on advances from an affiliate to fund its operations. As of May 15, 2019, the Company had little working capital and will likely incur losses prior to generating positive working capital. These matters raise substantial concern about the Company’s ability to continue as a going concern (see Note 6). During the next 12 months, the Company intends to fund its operations with funding from a securities offering campaign (see Note 8) and funds from revenue producing activities, if and when such can be realized. If the Company cannot secure additional short-term capital, it may cease operations. These financial statements and related notes thereto do not include any adjustments that might result from these uncertainties.

 

NOTE 2 - 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"). The Company has selected December 31 as the year end as the basis for its reporting.

 

Use of Estimates

The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the footnotes thereto. Actual results could differ from those estimates. It is reasonably possible that changes in estimates will occur in the near term.

 

Risks and Uncertainties

The Company has a limited operating history. The Company's business and operations are sensitive to general business and economic conditions in the United States. A host of factors beyond the Company's control could cause fluctuations in these conditions. Adverse conditions may include: recession, downturn or otherwise, local competition or changes in consumer taste. These adverse conditions could affect the Company's financial condition and the results of its operations. As of May 15, 2019, the Company is operating as a going concern.

 

Cash and Cash Equivalents

The Company considers short-term, highly liquid investment with original maturities of three months or less at the time of purchase to be cash equivalents. Cash consists of currency held in the Company’s checking account. As of May 15, 2019, the Company had $180 in a corporate checking account.

 

Receivables and Credit Policy

Trade receivables from customers are uncollateralized customer obligations due under normal trade terms, primarily requiring payment before services are rendered. Trade receivables are stated at the amount billed to the customer. Payments of trade receivables are allocated to the specific invoices identified on the customer’s remittance advice or, if unspecified, are applied to the earliest unpaid invoice. The Company, by policy, routinely assesses the financial strength of its customer. As a result, the Company believes that its accounts receivable credit risk exposure is limited and it has not experienced significant write-downs in its accounts receivable balances. As of May 15, 2019, the Company did not have any outstanding accounts receivable.

 

F-9

 

 

Property and Equipment

Property and equipment are recorded at cost. Expenditures for renewals and improvements that significantly add to the productive capacity or extend the useful life of an asset are capitalized. Expenditures for maintenance and repairs are expensed as incurred. When equipment is retired or sold, the cost and related accumulated depreciation are eliminated from the balance sheet accounts and the resultant gain or loss is reflected in income.

 

Depreciation is provided using the straight-line method, based on useful lives of the assets. As of May 15, 2019, the Company had recorded no depreciation.

 

The Company reviews the carrying value of property and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of assets. The factors considered by management in performing this assessment include current operating results, trends and prospects, the manner in which the property is used, and the effects of obsolescence, demand, competition, and other economic factors. As of May 15, 2019, the Company had no fixed assets.

 

Deferred Offering Costs

The Company complies with the requirements of ASC 340-10.  The Deferred Offering Costs of the Company consist solely of legal and other fees incurred in connection with the capital raising efforts of the Company.  Under ASC 340-10, costs incurred are capitalized until the offering whereupon the offering costs are charged to members’ equity or expensed depending on whether the offering is successful or not successful, respectively. As of May 15, 2019, the Company had recorded a balance of deferred offering costs of $6,333.

 

Income Taxes

Income taxes are provided for the tax effects of transactions reporting in the financial statements and consist of taxes currently due plus deferred taxes related primarily to differences between the basis of receivables, inventory, property and equipment, intangible assets, cryptocurrency valuation and accrued expenses for financial and income tax reporting. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all the deferred tax assets will not be realized.

 

The Company is taxed as a C Corporation for federal and state income tax purposes. As the Company has recently been formed, no material tax provision exists as of the balance sheet date.

 

The Company evaluates its tax positions that have been taken or are expected to be taken on income tax returns to determine if an accrual is necessary for uncertain tax positions. As of May 15, 2019, the unrecognized tax benefits accrual was zero.

 

The Company is current with its foreign, US federal and state income tax filing obligations and is not currently under examination from any taxing authority.

 

Revenue Recognition

The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, or services have been rendered, the fee for the arrangement is fixed or determinable and collectability is reasonably assured.

 

Advertising Expenses

The Company expenses advertising costs as they are incurred.

 

Organizational Costs

In accordance with FASB ASC 720, organizational costs, including accounting fees, legal fees, and costs of incorporation, are expensed as incurred.

 

F-10

 

 

Concentration of Credit Risk

The Company maintains its cash with a major financial institution located in the United States of America, which it believes to be credit worthy. The Federal Deposit Insurance Corporation insures balances up to $250,000. At times, the Company may maintain balances in excess of the federally insured limits.

 

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers". Under this guidance, revenue is recognized when promised goods or services are transferred to customers in an amount that reflects the consideration expected to be received for those goods or services. The updated standard will replace most existing revenue recognition guidance under U.S. GAAP when it becomes effective and permits the use of either the retrospective or cumulative effect transition method. Early adoption is not permitted. The updated standard for nonpublic entities will be effective after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. We are currently evaluating the effect that the updated standard will have on our financial statements and related disclosures.

 

In February 2016, FASB issued ASU No. 2016-02, Leases, that requires organizations that lease assets, referred to as "lessees", to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases with lease terms of more than 12 months. ASU 2016-02 will also require disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases and will include qualitative and quantitative requirements. The new standard for nonpublic entities will be effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020, and early application is permitted. We are currently evaluating the effect that the updated standard will have on our financial statements and related disclosures.

 

In August 2016, FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230).” ASU 2016-15 provides classification guidance for certain cash receipts and cash payments including payment of debt extinguishment costs, settlement of zero-coupon debt instruments, insurance claim payments and distributions from equity method investees. The standard is effective on January 1, 2018, with early adoption permitted. The Company is currently in the process of evaluating the impact the adoption will have on its financial statements and related disclosures.

 

The FASB issues ASUs to amend the authoritative literature in ASC. There have been a number of ASUs to date, including those above, that amend the original text of ASC. Management believes that those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to us or (iv) are not expected to have a significant impact our balance sheet.

 

NOTE 3 – INCOME TAX PROVISION

 

As described above, the Company was recently formed and has only incurred costs of its start-up operations and capital raising. As such, no material tax provision yet exists.

 

NOTE 4 – COMMITMENTS AND CONTINGENCIES

 

Legal Matters

Company is not currently involved with and does not know of any pending or threatening litigation against the Company or founders.

 

NOTE 5 – COMMON AND PREFERRED EQUITY

 

The Company has issued 18,000,000 shares of Class B Common Stock to its parent company, at par, in exchange for $180.  The Company has authorized 132,000,000 shares of Class A Common Stock and 50,000,000 shares of preferred stock, of which 10,000,000 shares are designated as Series A Preferred Stock which is convertible into Class A Common Stock.  None of the Class A Common Stock or the Preferred Stock have been issued.  The company intends to offer and sell the 10,000,000 shares of Series A Preferred Stock as part of a Regulation A offering (discussed more below). 

 

F-11

 

 

Class A Common stockholders are entitled to a single vote per share and have equal dividend and liquidation preferences as Class B Common stockholders. Class B Common stockholders have five votes per share and shares of Class B Common Stock can be converted into shares of Class A Common Stock at the option of the holder. Series A Preferred stockholders are entitled to a single vote per share and to an 8 percent annual dividend, which will accrue if funds are not legally available to distribute, in addition to a liquidation preference. Shares of Series A Preferred Stock can be converted into shares of Class A Common Stock at the option of the holder and shares will automatically converted in the event of a qualified public offering, as defined in the Certificate of Designations.

 

NOTE 6 – GOING CONCERN

 

These financial statements are prepared on a going concern basis. The Company began operation in 2019 and has limited operating history. The Company’s ability to continue is dependent upon management’s plan to raise additional funds (see Note 8) and achieve and sustain profitable operations. The financial statements do not include any adjustments that might be necessary if the Company is not able to continue as a going concern.

 

NOTE 7 – RELATED PARTY TRANSACTIONS

 

Related Party Transactions

The Company has received working capital to cover expenses and costs while preparing for the securities offering from an affiliate company in the amount of $143,514 as of the balance sheet date. The balance of these covered costs is recorded as a liability of the Company. This amount has been formalized into a note payable due on December 31, 2019 and bearing interest at 3 percent per annum.

 

As these are agreements between related parties, there is no guarantee that these rates or costs are commensurate with an arm’s-length arrangement.

 

NOTE 8 – SUBSEQUENT EVENTS

 

Securities Offering

The Company is offering up to 10,000,000 shares of Series A Preferred Stock in a securities offering planned to be exempt from SEC registration under Regulation A, tier 2. The Company has engaged with various advisors and other professionals to facilitate the offering who are being paid customary fees and equity interests for their work. This offering is conditional upon the qualification of the offering by the US Securities and Exchange Commission.

 

Management’s Evaluation

Management has evaluated subsequent events through May 24, 2019, the date the financial statements were available to be issued.  Based on this evaluation, no additional material events were identified which require adjustment or disclosure in the financial statements.

 

F-12

 

 

PART III

INDEX TO EXHIBITS

 

2.1 Certificate of Incorporation
2.2 Certificate of Designations
2.3 Bylaws
4 Form of Subscription Agreement
6.1 Reg A+ Engagement Agreement between KGEM Golf, Inc. and Manhattan Street Capital dated July 15, 2018
6.2 Management Services Agreement between GolfSuites 2, Inc. and KGEM Golf, Inc. dated April 15, 2019
6.3 Promissory Note with KGEM Golf, Inc. dated May 1, 2019
6.4 Membership Unit Purchase Agreement in KGE, LLC dated January 4, 2018 (Kyle Morris)
6.5 Addendum to Agreement Between KGEM Golf, Inc. and Kyle Morris dated December 24, 2018
6.6 License Agreement between KGEM Golf, Inc. and Kyle Morris dated February 15, 2019
6.7 Consulting Agreement between KGEM Golf, Inc. and Kyle Morris dated February 15, 2019
6.8 Sageworks Capital, LLC Broker-Dealer Agreement and Interface Proposal dated April 26, 2019
8 Escrow Services Agreement
11 Consent of IndigoSpire
12 Attorney opinion on legality of the offering
13 “Testing the waters” materials*

 

*To be filed by amendment

48

 

 

SIGNATURES

 

Pursuant to the requirements of Regulation A, the issuer certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form 1-A and has duly caused this Offering Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Riverview, State of Florida, on July 12, 2019.

 

GolfSuites 2, Inc.  
   
/s/ Gerald Ellenburg  
   
By Gerald Ellenburg  
CEO of GolfSuites 2, Inc.  

 

This Offering Statement has been signed by the following persons in the capacities and on the dates indicated.

 

/s/ Gerald Ellenburg  

Gerald Ellenburg, Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer and Director

Date: July 12, 2019

 

/s/ Ryan Koenig  
Ryan Koenig, Director  
Date: July 12, 2019  
   
/s/ Kyle Morris  
Kyle Morris, Director  
Date: July 12, 2019  
   
/s/ John Galvin  
John Galvin, Director  
Date: July 12, 2019  
   
/s/ Rod Turner  
Rod Turner, Director  
Date: July 12, 2019  

 

49

EX1A-2A CHARTER 3 tv523247_ex2-1.htm EXHIBIT 2.1

 

Exhibit 2.1

 

Delaware

The First State

 

I, JEFFREY W. BULLOCK, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF INCORPORATION OF “GOLFSUITES 2 INC.”, FILED IN THIS OFFICE ON THE THIRTEENTH DAY OF MARCH, A.D. 2019, AT 4:17 O`CLOCK P.M.

 

    /s/ Jeffery W. Bullock
  Jeffery W. Bullock, Secretary of State
   
7272808 8100 Authentication: 202446128
SR# 20191992286 Date: 03-14-19

 

You may verify this certificate online at corp.delaware.gov/authver.shtml

 

 

 

 

State of Delaware  
Secretary of State  
Division of Corporations  
Delivered 04:17 PM 03/13/2019  
FILED 04:17 PM 03/13/2019  
SR 20191949126 - File Number 7272808  

 

CERTIFICATE OF INCORPORATION

 

OF

 

GOLFSUITES 2, INC.

 

ARTICLE I

 

The name of the corporation is GolfSuites 2, Inc. (the “Corporation”),

 

ARTICLE II

 

The address of the Corporation’s registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, New Castle County, Wilmington, Delaware 19801. The name of its registered agent at such address is The Corporation Trust Company.

 

ARTICLE III

 

The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the Delaware General Corporation Law (the “DGCL”).

 

ARTICLE IV

 

The aggregate number of shares which the Corporation shall have authority to issue is up to 200,000,000 shares of capital stock of which 50,000,000 shall be designated as “Preferred Stock” and 150,000,000 shall be designated as “Common Stock” and have a par value of $0.00001 per share. One Hundred and Thirty Two Million (132,000,000) shares of the authorized Common Stock of the Corporation are hereby designated “Class A Common Stock” and Eighteen Million (18,000,000) shares of the authorized Common Stock of the Corporation are hereby designated “Class B Common Stock”.

 

The following is a statement of the designations and the powers, privileges and rights, and the qualifications, limitations or restrictions thereof in respect of each class of capital stock of the Corporation.

 

A.Class A Common Stock.

 

The rights, powers and restrictions granted to and imposed on the Class A Common Stock are as set forth below in this Article IV.

 

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1.          Dividend Rights. Subject to the prior rights of holders of all classes of stock at the time outstanding having prior rights as to dividends, including the holders of Preferred Stock, the holders of the Class A Common Stock shall be entitled to receive, when and as declared by the Board of Directors of the Corporation (the “Board”), such dividends as may be declared from time to time by the Board with respect to the Class B Common Stock out of any assets of the Corporation legally available therefor, and no dividend shall be declared or paid on shares of the Class B Common Stock unless the same dividend with the same record date and payment date shall be declared or paid on the shares of Class A Common Stock; provided, however, that dividends payable in shares of Class B Common Stock or rights to acquire Class B Common Stock may be declared and paid to the holders of the Class B Common Stock without the same dividend being declared and paid to the holders of the Class A Common Stock if and only if a dividend payable in shares of Class A Common Stock or rights to acquire Class A Common Stock (as the case may be) at the same rate and with the same record date and payment date as the dividend declared and paid to the holders of the Class B Common Stock shall be declared and paid to the holders of Class A Common Stock.

 

2.          Voting Rights. Each holder of Class A Common Stock shall have the right to one (1) vote per share of Class A Common Stock, and shall be entitled to notice of any stockholders’ meeting in accordance with the Bylaws of the Corporation, and shall be entitled to vote upon such matters and in such manner as may be provided by law. Except as expressly provided by this Certificate of Incorporation or as provided by law, the holders of shares of Class A Common Stock shall at all times vote together with the holders of Class B Common Stock as a single class on all matters (including the election of directors) submitted to vote or for the consent of the stockholders of the Corporation. The number of authorized shares of Class A Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of shares of stock of the Corporation representing a majority of the votes represented by all outstanding shares of stock of the Corporation entitled to vote, irrespective of the provisions of Section 242(b)(2) of the Delaware General Corporation Law.

 

3.          Equal Status. Except as expressly set forth in this Article IV, Class A Common Stock shall have the same rights and powers of, rank equally to, share ratably with and be identical in all respects and as to all matters to Class B Common Stock.

 

B.Class B Common Stock.

 

The rights, powers and restrictions granted to and imposed on the Class B Common Stock are as set forth below in this Article IV.

 

1.          Dividend Rights. Subject to the prior rights of holders of all classes of stock at the time outstanding having prior rights as to dividends, including the holders of Preferred Stock, the holders of the Class B Common Stock shall be entitled to receive, when and as declared by the Board, such dividends as may be declared from time to time by the Board with respect to the Class A Common Stock out of assets or funds of the Corporation legally available therefor, and no dividend shall be declared or paid on shares of the Class A Common Stock unless the same dividend with the same record date and payment date shall be declared or paid on the shares of Class B Common Stock; provided, however, that dividends payable in shares of Class A Common Stock or rights to acquire Class A Common Stock may be declared and paid to the holders of the Class A Common Stock without the same dividend being declared and paid to the holders of the Class B Common Stock if and only if a dividend payable in shares of Class B Common Stock or rights to acquire Class B Common Stock (as the case may be) at the same rate and with the same record date and payment date as the dividend declared and paid to the holders of the Class A Common Stock shall be declared and paid to the holders of Class B Common Stock.

 

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2.          Voting Rights. Each holder of Class B Common Stock shall be entitled to five (5) votes per share of Class B Common Stock, and shall be entitled to notice of any stockholders’ meeting in accordance with the Bylaws of the Corporation, and shall be entitled to vote upon such matters and in such manner as may be provided by law. Except as expressly provided by this Certificate of Incorporation or as provided by law, the holders of shares of Class B Common Stock shall at all times vote together with the holders of Class A Common Stock as a single class on all matters (including the election of directors) submitted to vote or for the consent of the stockholders of the Corporation. The number of authorized shares of Class B Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders or shares of stock of the Corporation representing a majority of the votes represented by all outstanding shares of stock of the Corporation entitled to vote, irrespective of the provisions of Section 242(b)(2) of the Delaware General Corporation Law of the State of Delaware.

 

3.          Conversion. (a) Each share of Class B Common Stock shall be convertible into one fully paid and nonassessable share of Class A Common Stock at the option of the holder thereof at any time upon written notice to the Corporation. In order to effectuate a conversion of shares of Class B Common Stock, a holder shall (a) submit a written election to the Corporation that such holder elects to convert shares of Class B Common Stock, the number of such shares elected to be converted and (b) (if such shares are certificated), along with such written election, surrender to the Corporation the certificate or certificates representing the shares being converted, duly assigned or endorsed for transfer to the Corporation (or accompanied by duly executed stock powers relating thereto) or, in the event the certificate or certificates are lost, stolen or missing, accompanied by an affidavit of loss executed by the holder. The conversion of such shares hereunder shall be deemed effective as of the date of surrender of such Class B Common Stock certificate or certificates, delivery of such affidavit of loss or the written election to convert for uncertificated shares. Upon the receipt by the Corporation of a written election and, if applicable, the surrender of such certificate(s) and accompanying materials, the Corporation shall as promptly as practicable (but in any event within 10 days thereafter) either (a) deliver to the relevant holder (i) a certificate in such holder’s name (or the name of such holder’s designee as stated in the written election) for the number of shares of Class A Common Stock to which such holder shall be entitled upon conversion of the applicable shares as calculated pursuant to this Section 3 and, if applicable (ii) a certificate in such holder’s (or the name of such holder’s designee as stated in the written election) for the number of shares of Class B Common Stock (including any fractional share) represented by the certificate or certificates delivered to the Corporation for conversion but otherwise not elected to be converted pursuant to the written election or (b) note the conversion of the shares on the stock ledger of the Corporation. All shares of capital stock issued hereunder by the Corporation shall be duly and validly issued, fully paid and nonassessable, free and clear of all taxes, liens, charges and encumbrances with respect to the issuance thereof. Each share of Class B Common Stock that is converted pursuant to this Section 3(a) shall be retired by the Corporation and shall not be available for reissuance.

 

(b)        The Corporation may, from time to time, establish such policies and procedures, not in violation of applicable law or the other provisions of this Certificate of Incorporation, relating to the conversion of the Class B Common Stock into Class A Common Stock and the dual class common stock structure contemplated by this Certificate of Incorporation as it may deem necessary or advisable.

 

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4.          Subdivisions or Combinations. If the Corporation in any manner subdivides or combines the outstanding shares of Class A Common Stock, then the outstanding shares of Class B Common Stock will be subdivided or combined in the same proportion and manner.

 

5.          Equal Status. Except as expressly set forth in this Article IV, Class B Common Stock shall have the same rights and powers of, rank equally to, share ratably with and be identical in all respects and as to all matters to Class A Common Stock.

 

6.          Reservation of Stock. The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Class A Common Stock, solely for the purpose of effecting the conversion of the shares of Class B Common Stock, such number of shares of Class A Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of Class B Common Stock into shares of Class A Common Stock.

 

C.Preferred Stock.

 

The Preferred Stock may be issued from time to time in one or more series. The Board of Directors of the Corporation (the Board”) is hereby expressly authorized to provide for the issue of all or any of the shares of the Preferred Stock in one or more series, and to fix the number of shares and to determine or alter for each such series, such voting powers, full or limited, or no voting powers, and such designation, preferences, and relative, participating, optional, or other rights and such qualifications, limitations, or restrictions thereof, as shall be stated and expressed in the resolution or resolutions adopted by the Board providing for the issuance of such shares and as may be permitted by the DGCL. Except as otherwise provided in this Certificate of Incorporation, the Board is also expressly authorized to increase or decrease the number of authorized shares of any series subsequent to the issuance of shares of that series, but not below the number of shares of such series then outstanding. In case the number of shares of any series shall be decreased in accordance with the foregoing sentence, the shares constituting such decrease shall resume the status that they had prior to the adoption of the resolution originally fixing the number of shares of such series. The number of authorized shares of Preferred Stock or any series thereof, as applicable, may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of shares of capital stock of the Corporation representing a majority of the votes represented by all outstanding shares of capital stock of the Corporation entitled to vote thereon, without a separate vote of the holders of the Preferred Stock or series thereof, as applicable, irrespective of the provisions of Section 242(b)(2) of the DGCL, unless a vote of any such holders is required pursuant to the terms of any certificate of designation filed with respect to any series of Preferred Stock.

 

ARTICLE V

 

The business and affairs of the Corporation shall be managed by or under the direction of the Board. Elections of directors need not be by written ballot unless otherwise provided in the Bylaws of the Corporation. In furtherance of and not in limitation of the powers conferred by the laws of the state of Delaware, the Board is expressly authorized to make, amend or repeal Bylaws of the Corporation.

 

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ARTICLE VI

 

(A)       To the fullest extent permitted by the DGCL, as the same exists or as may hereafter be amended, a director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director.

 

(B)        The Corporation shall indemnify to the fullest extent permitted by law any person made or threatened to be made a party to an action or proceeding, whether criminal, civil, administrative or investigative, by reason of the fact that he, his testator or intestate is or was a director or officer of the Corporation or any predecessor of the Corporation, or serves or served at any other enterprise as a director or officer at the request of the Corporation or any predecessor to the Corporation.

 

(C)        Neither any amendment nor repeal of this Article VI, nor the adoption of any provision of the Corporation’s Certificate of Incorporation inconsistent with this Article VI, shall eliminate or reduce the effect of this Article VI in respect of any matter occurring, or any action or proceeding accruing or arising or that, but for this Article VI, would accrue or arise, prior to such amendment, repeal or adoption of an inconsistent provision.

 

ARTICLE VII

 

Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for (A) any derivative action or proceeding brought on behalf of the Corporation, (B) any action or proceeding asserting a claim of breach of a fiduciary duty owed by any director, officer, employee or agent of the Corporation to the Corporation or the Corporation’s stockholders, (C) any action or proceeding asserting a claim against the Corporation arising pursuant to any provision of the Delaware General Corporation Law or the Corporation’s Certificate of Incorporation or Bylaws, or (D) any action or proceeding asserting a claim governed by the internal affairs doctrine, in each case subject to said Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein. Notwithstanding the foregoing, this Article VII shall not apply to the extent that its application would violate any Federal law or regulation.

 

ARTICLE VIII

 

The name and mailing address of the incorporator are as follows:

 

Gerald D. Ellenburg

2738 Falkenburg Road South

Riverview, FL 33578

 

Executed on March 12, 2019.

 

/s/ Gerald D. Ellenburg  
Gerald D. Ellenburg, Incorporator  

 

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EX1A-2A CHARTER 4 tv523247_ex2-2.htm EXHIBIT 2.2

 

Exhibit 2.2

 

Delaware

The First State

 

I, JEFFREY W. BULLOCK, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF DESIGNATION OF “GOLFSUITES 2, INC.”, FILED IN THIS OFFICE ON THE TWENTY-SECOND DAY OF APRIL, A.D. 2019, AT 1:21 O`CLOCK P.M.

 

A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE COUNTY RECORDER OF DEEDS.

 

    /s/ Jeffery W. Bullock
  Jeffery W. Bullock, Secretary of State
   
7272808 8100 Authentication: 202702802
SR# 20193033648 Date: 04-24-19

 

You may verify this certificate online at corp.delaware.gov/authver.shtml

 

 

 

 

State of Delaware  
Secretary of State  
Division of Corporations  
Delivered 01:21 PM 04/22/2019  
FILED 01:21 PM 04/22/2019  
SR 20193033648 - File Number 7272808  

 

CERTIFICATE OF DESIGNATIONS

 

OF

 

SERIES A PREFERRED STOCK

 

OF

 

GOLFSUITES 2, INC.

 

Pursuant to Section 151 of the General Corporation Law of the State of Delaware, GolfSuites 2, Inc., a corporation organized and existing under the General Corporation Law of the State of Delaware (the “Corporation”), in accordance with the provisions of Section 103 thereof, does hereby submit the following:

 

WHEREAS, the Certificate of Incorporation of the Corporation (the “Certificate of Incorporation”) authorizes the issuance of up to 50,000,000 shares of preferred stock, par value $0.00001 per share, of the Corporation (“Preferred Stock”) in one or more series, and expressly authorizes the Board of Directors of the Corporation (the “Board”), subject to limitations prescribed by law, to provide, out of the unissued shares of Preferred Stock, for series of Preferred Stock, and, with respect to each such series, to establish and fix the number of shares to be included in any series of Preferred Stock and the designations, preferences, and relative, participating, optional, or other rights and such qualifications, limitations, or restrictions, of the shares of such series; and

 

WHEREAS, it is the desire of the Board to establish and fix the number of shares to be included in a new series of Preferred Stock and the designations, preferences, and relative, participating, optional, or other rights and such qualifications, limitations, or restrictions of the shares of such new series.

 

NOW, THEREFORE, BE IT RESOLVED, that the Board does hereby provide for the issue of a series of Preferred Stock and does hereby in this Certificate of Designations (the “Certificate of Designations”) establish and fix and herein state and express the designation, preferences, and relative, participating, optional, or other rights and such qualifications, limitations, or restrictions of such series of Preferred Stock as follows:

 

1.          Designation. There shall be a series of Preferred Stock that shall be designated as “Series A Preferred Stock” (the “Series A Preferred Stock”). The number of shares initially constituting the Series A Preferred Stock shall be 10,000,000, which number may be increased or decreased by the Board without a vote of stockholders; provided, however, that such number may not be decreased below the sum of the number of then outstanding shares of Series A Preferred Stock. The rights, preferences, powers, restrictions and limitations of the Series A Preferred Stock shall be as set forth herein.

 

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2.          Dividends.

 

2.1        Accrual and Payment of Dividends. From and after the date on which the Corporation initially issues such share of Series A Preferred Stock (without regard to any subsequent transfer of such share or reissuance of the certificate(s) representing such share) (the Date of Issuance”) of any Series A Preferred Stock, cumulative dividends on such share shall accrue, whether or not declared by the Board and whether or not there are funds legally available for the payment of dividends, on a daily basis in arrears at the rate of 8% per annum on the sum of the Liquidation Value thereof plus all unpaid accrued and accumulated dividends thereon. All accrued dividends on any share shall be paid in cash only when, as and if declared by the Board out of funds legally available therefor or upon a liquidation or redemption of the Series A Preferred Stock in accordance with the provisions of Section 3; provided, that to the extent not paid on the last day of each calendar month of each calendar year (each such date, a Dividend Payment Date”), all accrued dividends on any share shall accumulate and compound on the applicable Dividend Payment Date whether or not declared by the Board and shall remain accumulated, compounding dividends until paid pursuant hereto or converted pursuant to Section 5. All accrued and accumulated dividends on the shares of Series A Preferred Stock shall be prior and in preference to any dividend on any share of Common Stock and shall be fully declared and paid before any dividends are declared and paid, or any other distributions or redemptions are made, on any share of Common Stock, other than to (a) declare or pay any dividend or distribution payable on the Common Stock in shares of Common Stock or (b) repurchase Common Stock held by employees or consultants of the Corporation upon termination of their employment or services pursuant to agreements providing for such repurchase. “Liquidation Value” means the original purchase price of the Series A Preferred Stock (as adjusted for any stock splits, stock dividends, recapitalizations or similar transaction) with respect to the Series A Preferred Stock.

 

2.2        Participating Dividends. Subject to Section 2.1, in addition to the dividends accruing on the Series A Preferred Stock pursuant to Section 2.1 hereof, if the Corporation declares or pays a dividend or distribution on the Common Stock, whether such dividend or distribution is payable in cash, securities or other property, including the purchase or redemption by the Corporation of shares of Common Stock for cash, securities or property, but excluding (i) any dividend or distribution payable on the Common Stock in shares of Common Stock and (ii) any repurchases of Common Stock held by employees or consultants of the Corporation upon termination of their employment or services pursuant to agreements providing for such repurchase, the Corporation shall simultaneously declare and pay a dividend on the Series A Preferred Stock on a pro rata basis with the Common Stock determined on an as-converted basis assuming all shares of Series A Preferred Stock had been converted pursuant to Section 5 as of immediately prior to the record date of the applicable dividend (or if no record date is fixed, the date as of which the record holders of Common Stock entitled to such dividends are to be determined).

 

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2.3        Partial Dividend Payments. Except as otherwise provided herein, if at any time the Corporation pays less than the total amount of dividends then accrued and accumulated with respect to the Series A Preferred Stock, such payment shall be distributed pro rata among the holders thereof based upon the aggregate accrued and accumulated but unpaid dividends on the shares of Series A Preferred Stock held by each such holder.

 

3.          Liquidation.

 

3.1        Liquidation; Deemed Liquidation.

 

(a)         Liquidation. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation (collectively with a Deemed Liquidation, a Liquidation”), the holders of shares of Series A Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders, before any payment shall be made to the holders of Common Stock by reason of their ownership thereof, an amount in cash equal to the greater of (i) the aggregate Liquidation Value of all shares of Series A Preferred Stock held by such holder, plus all unpaid accrued and accumulated dividends on all such shares (whether or not declared) or (ii) such amount per share as would have been payable had all shares of Preferred Stock been converted into Common Stock pursuant to Section 5 immediately prior to such Liquidation (or Deemed Liquidation).

 

(b)        Deemed Liquidation. The occurrence of a Change of Control (such event, a Deemed Liquidation”) shall be deemed a Liquidation for purposes of this Section 3. Upon the consummation of any such Deemed Liquidation, the holders of the Series A Preferred Stock shall, in consideration for cancellation of their shares of Series A Preferred Stock, be entitled to the same rights such holders are entitled to under this Section 3 upon the occurrence of a Liquidation, including the right to receive the full preferential payment from the Corporation of the amounts payable with respect to the Series A Preferred Stock under Section 3.1(a) hereof. Notwithstanding the foregoing, nothing in this Section 3.1(b) shall limit in any respect the right of any holder of Series A Preferred Stock to elect the benefits of either this Section 3 or Section 5.4(f) in connection with any Change of Control. “Change of Control” means (a) any sale, lease or transfer or series of sales, leases or transfers of all or substantially all of the assets of the Corporation; (b) any sale, transfer or issuance (or series of sales, transfers or issuances) of capital stock by the Corporation or the holders of Common Stock (or other voting stock of the Corporation) that results in the inability of the holders of Common Stock (or other voting stock of the Corporation) immediately prior to such sale, transfer or issuance to designate or elect a majority of the board of directors (or its equivalent) of the Corporation; or (c) any merger, consolidation, recapitalization or reorganization of the Corporation with or into another Person (whether or not the Corporation is the surviving corporation) that results in the inability of the holders of Common Stock (or other voting stock of the Corporation) immediately prior to such merger, consolidation, recapitalization or reorganization to designate or elect a majority of the board of directors (or its equivalent) of the resulting entity or its parent company.

 

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(c)        Deemed Liquidation Procedures. In furtherance of the foregoing, the Corporation shall take such actions as are necessary to give effect to the provisions of Section 3.1(b), including, without limitation, (i) in the case of a Change of Control structured as a merger, consolidation or similar reorganization, causing the definitive agreement relating to such transaction to provide for a rate at which the shares of Series A Preferred Stock are converted into or exchanged for cash, new securities or other property, or (ii) in the case of a Change of Control structured as an asset sale, as promptly as practicable following such transaction, either dissolving the Corporation and distributing the assets of the Corporation in accordance with applicable law or redeeming all outstanding shares of Series A Preferred Stock and, in the case of both (i) and (ii), giving effect to the preferences and priorities set forth in this Section 5. The Corporation shall promptly provide to the holders of shares of Series A Preferred Stock such information concerning the terms of such Change of Control, and the value of the assets of the Corporation as may reasonably be requested by the holders of Series A Preferred Stock.

 

3.2        Payments to Holders of Common Stock. In the event of Liquidation (or Deemed Liquidation), after the payment of all preferential amounts required to be paid to the holders of shares of Preferred Stock as provided in Section 3.1(a), the remaining funds and assets available for distribution to the stockholders of the Corporation shall be distributed among the holders of shares of Common Stock, pro rata based on the number of shares of Common Stock held by each such holder.

 

3.3        Insufficient Assets. If upon any Liquidation (or Deemed Liquidation) the remaining assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the holders of the shares of Series A Preferred Stock the full preferential amount to which they are entitled under this Section 3, (a) the holders of the shares of Series A Preferred Stock shall share ratably in any distribution of the remaining assets and funds of the Corporation in proportion to the respective full preferential amounts which would otherwise be payable in respect of the Series A Preferred Stock in the aggregate upon such Liquidation (or Deemed Liquidation) if all amounts payable on or with respect to such shares were paid in full, and (b) the Corporation shall not make or agree to make any payments to the holders of Common Stock.

 

3.4        Notice. Notice Requirement. In the event of any Liquidation (or Deemed Liquidation), the Corporation shall, within 10 days of the date the Board approves such action, or no later than 20 days of any stockholders’ meeting called to approve such action, or within 20 days of the commencement of any involuntary proceeding, whichever is earlier, give each holder of shares of Series A Preferred Stock written notice of the proposed action. Such written notice shall describe the material terms and conditions of such proposed action, including a description of the stock, cash and property to be received by the holders of shares of Series A Preferred Stock upon consummation of the proposed action and the date of delivery thereof. If any material change in the facts set forth in the initial notice shall occur, the Corporation shall promptly give written notice to each holder of such shares of such material change.

 

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4.          Voting. Each holder of outstanding shares of Series A Preferred Stock shall be entitled to vote with holders of outstanding shares of Common Stock, voting together as a single class, with respect to any and all matters presented to the stockholders of the Corporation for their action or consideration (whether at a meeting of stockholders of the Corporation, by written action of stockholders in lieu of a meeting or otherwise), except as provided by law. In any such vote, each share of Series A Preferred Stock shall be entitled to a number of votes equal to the number of shares of Series A Common Stock into which the share of Series A Preferred Stock is convertible pursuant to Section 5 herein as of the record date for such vote or written consent or, if there is no specified record date, as of the date of such vote or written consent. Each holder of outstanding shares of Series A Preferred Stock shall be entitled to notice of all stockholder meetings (or requests for written consent) in accordance with the Corporation’s bylaws.

 

5.          Conversion.

 

5.1        Right to Convert; Automatic Conversion.

 

(a)        Right to Convert. Subject to the provisions of this Section 5, at any time and from time to time on or after the Date of Issuance, any holder of Series A Preferred Stock shall have the right by written election to the Corporation to convert all or any portion of the outstanding shares of Series A Preferred Stock (including any fraction of a share) held by such holder along with the aggregate accrued or accumulated and unpaid dividends thereon into an aggregate number of shares of Series A Common Stock (including any fraction of a share) as is determined by (i) multiplying the number of shares of Series A Preferred Stock (including any fraction of such shares) to be converted by the Liquidation Value thereof, (ii) adding to the result all accrued and accumulated and unpaid dividends on such shares to be converted, and then (ii) dividing the result by the Conversion Price in effect immediately prior to such conversion. The initial conversion price per share of Series A Preferred Stock (the “Conversion Price”) shall be the Liquidation Value of such share, subject to adjustment as applicable in accordance with Section 5.4 below.

 

(b)        Automatic Conversion. Subject to the provisions of this Section 5, in connection with, and on the closing of, a Qualified Public Offering by the Corporation, all of the outstanding shares of Series A Preferred Stock (including any fraction of such shares) held by stockholders shall automatically convert along with the aggregate accrued or accumulated and unpaid dividends thereon into an aggregate number of shares of Series A Common Stock (including any fraction of a share) as is determined by (i) multiplying the number of shares of Series A Preferred Stock (including any fraction of such shares) to be converted by the Liquidation Value thereof, (ii) adding to the result all accrued and accumulated and unpaid dividends on such shares to be converted, and then (ii) dividing the result by the applicable Conversion Price then in effect. If a closing of a Qualified Public Offering occurs, such automatic conversion of all of the outstanding shares of Series A Preferred Stock shall be deemed to have been converted into shares of Series A Common Stock as of immediately prior to such closing. “Qualified Public Offering” means the sale, in a firm commitment underwritten public offering led by a nationally recognized underwriting firm pursuant to an effective registration statement under the Securities Act, of Common Stock of the Corporation having an aggregate offering value (net of underwriters’ discounts and selling commissions) of at least $25 million following which at least 20% of the total Common Stock of the Corporation on a fully diluted, as-converted basis shall have been sold to the public and shall be listed on any national securities exchange registered with the Securities and Exchange Commission under Section 6(a) of the Securities Exchange Act of 1934, as amended.

 

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Procedures for Conversion; Effect of Conversion.

 

(c)        Procedures for Holder Conversion. In order to effectuate a conversion of shares of Series A Preferred Stock pursuant to Section 5.1(a), a holder shall (a) submit a written election to the Corporation that such holder elects to convert shares of Series A Preferred Stock, the number of such shares elected to be converted and (b) (if such shares are certificated), along with such written election, surrender to the Corporation the certificate or certificates representing the shares being converted, duly assigned or endorsed for transfer to the Corporation (or accompanied by duly executed stock powers relating thereto) or, in the event the certificate or certificates are lost, stolen or missing, accompanied by an affidavit of loss executed by the holder. The conversion of such shares hereunder shall be deemed effective as of the date of surrender of such Series A Preferred Stock certificate or certificates, delivery of such affidavit of loss or the written election to convert for uncertificated shares. Upon the receipt by the Corporation of a written election and, if applicable, the surrender of such certificate(s) and accompanying materials, the Corporation shall as promptly as practicable (but in any event within 10 days thereafter) either (a) deliver to the relevant holder (i) a certificate in such holder’s name (or the name of such holder’s designee as stated in the written election) for the number of shares of Series A Common Stock (including any fractional share) to which such holder shall be entitled upon conversion of the applicable shares as calculated pursuant to Section 5.1(a) and, if applicable (ii) a certificate in such holder’s (or the name of such holder’s designee as stated in the written election) for the number of shares of Series A Preferred Stock (including any fractional share) represented by the certificate or certificates delivered to the Corporation for conversion but otherwise not elected to be converted pursuant to the written election or (b) note the conversion of the shares on the stock ledger of the Corporation. All shares of capital stock issued hereunder by the Corporation shall be duly and validly issued, fully paid and nonassessable, free and clear of all taxes, liens, charges and encumbrances with respect to the issuance thereof.

 

(d)        Procedures for Automatic Conversion. As of the closing of a Qualified Public Offering all outstanding shares of Series A Preferred Stock shall be converted to the number of shares of Series A Common Stock calculated pursuant to Section 5.1(b) without any further action by the relevant holder of such shares or the Corporation. As promptly as practicable following such Qualified Public Offering (but in any event within five (5) days thereafter), the Corporation shall send each holder of shares of Series A Preferred Stock written notice of such event. Upon receipt of such notice, if applicable, each holder shall surrender to the Corporation the certificate or certificates representing the shares being converted, duly assigned or endorsed for transfer to the Corporation (or accompanied by duly executed stock powers relating thereto) or, in the event the certificate or certificates are lost, stolen or missing, accompanied by an affidavit of loss executed by the holder. Upon the surrender of such certificate(s) and accompanying materials, the Corporation shall as promptly as practicable (but in any event within 10 days thereafter) deliver to the relevant holder a certificate in such holder’s name (or the name of such holder’s designee as stated in the written election) for the number of shares of Series A Common Stock (including any fractional share) to which such holder shall be entitled upon conversion of the applicable shares or note the conversion of the shares on the stock ledger of the Corporation. All shares of Series A Common Stock issued hereunder by the Corporation shall be duly and validly issued, fully paid and nonassessable, free and clear of all taxes, liens, charges and encumbrances with respect to the issuance thereof.

 

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(e)         Effect of Conversion. All shares of Series A Preferred Stock converted as provided in this Section 5.1 shall no longer be deemed outstanding as of the effective time of the applicable conversion and all rights with respect to such shares shall immediately cease and terminate as of such time, other than the right of the holder to receive shares of Series A Common Stock and payment in lieu of any fraction of a share of Series A Preferred Stock in exchange therefor.

 

5.2        Reservation of Stock. The Corporation shall at all times when any shares of Series A Preferred Stock is outstanding reserve and keep available out of its authorized but unissued shares of capital stock, solely for the purpose of issuance upon the conversion of the Series A Preferred Stock, such number of shares of Series A Common Stock issuable upon the conversion of all outstanding Series A Preferred Stock pursuant to this Section 5, taking into account any adjustment to such number of shares so issuable in accordance with Section 5.4 hereof. The Corporation shall take all such actions as may be necessary to assure that all such shares of Series A Common Stock may be so issued without violation of any applicable law or governmental regulation or any requirements of any domestic securities exchange upon which shares of Series A Common Stock may be listed (except for official notice of issuance which shall be immediately delivered by the Corporation upon each such issuance). The Corporation shall not close its books against the transfer of any of its capital stock in any manner which would prevent the timely conversion of the shares of Series A Preferred Stock.

 

5.3        No Charge or Payment. The issuance of shares of Series A Common Stock upon conversion of shares of Series A Preferred Stock pursuant to Section 5.1 shall be made without payment of additional consideration by, or other charge, cost or tax to, the holder in respect thereof.

 

5.4        Adjustment to Conversion Price and number of shares of Series A Common Stock or other capital stock of the Corporation then issuable upon conversion of the Series A Preferred Stock in accordance with the terms of Section 5 (the “Conversion Shares”). In order to prevent dilution of the conversion rights granted under this Section 5, the Conversion Price and the number of Conversion Shares issuable on conversion of the shares of Series A Preferred Stock shall be subject to adjustment from time to time as provided in this Section 5.4.

 

(a)        Adjustment to Conversion Price upon Issuance of Common Stock. Except as provided in Section 5.4(c) and except in the case of an event described in either Section 5.4(e) or Section 5.4(f), if the Corporation shall, at any time or from time to time after the Date of Issuance, issue or sell, or in accordance with Section 5.4(d) is deemed to have issued or sold, any shares of Common Stock without consideration or for consideration per share less than the Conversion Price in effect immediately prior to such issuance or sale (or deemed issuance or sale), then immediately upon such issuance or sale (or deemed issuance or sale), the Conversion Price in effect immediately prior to such issuance or sale (or deemed issuance or sale) shall be reduced (and in no event increased) to a Conversion Price equal to the quotient obtained by dividing:

 

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(i)         the sum of (A) the product obtained by multiplying the Common Stock Deemed Outstanding immediately prior to such issuance or sale (or deemed issuance or sale) by the Conversion Price then in effect plus (B) the aggregate consideration, if any, received by the Corporation upon such issuance or sale (or deemed issuance or sale); by

 

(ii)        the sum of (A) the Common Stock Deemed Outstanding immediately prior to such issuance or sale (or deemed issuance or sale) plus (B) the aggregate number of shares of Common Stock issued or sold (or deemed issued or sold) by the Corporation in such issuance or sale (or deemed issuance or sale).

 

“Common Stock Deemed Outstanding” means, at any given time, the sum of (a) the number of shares of Common Stock actually outstanding at such time, plus (b) the number of shares of Common Stock issuable upon exercise of options actually outstanding at such time, plus (c) the number of shares of Common Stock issuable upon conversion or exchange of convertible securities actually outstanding at such time (treating as actually outstanding any convertible securities issuable upon exercise of options actually outstanding at such time), in each case, regardless of whether the options or convertible securities are actually exercisable at such time; provided, that Common Stock Deemed Outstanding at any given time shall not include shares owned or held by or for the account of the Corporation or any of its wholly owned subsidiaries.

 

Whenever following the Date of Issuance, the Corporation shall issue or sell, or in accordance with Section 5.4(d) is deemed to have issued or sold, any shares of Common Stock, the Corporation shall prepare a certificate signed by an executive officer setting forth, in reasonable detail, the number of shares issued or sold, or deemed issued or sold, the amount and the form of the consideration received by the Corporation and the method of computation of such amount and shall cause copies of such certificate to be mailed to the holders of record of Series A Preferred Stock at the address specified for such holder in the books and records of the Corporation (or at such other address as may be provided to the Corporation in writing by such holder).

 

(b)        Adjustment to Number of Conversion Shares Upon Adjustment to Conversion Price. Upon any and each adjustment of the Conversion Price as provided in Section 5.4(a), the number of Conversion Shares issuable upon the conversion of the Series A Preferred Stock immediately prior to any such adjustment shall be increased to a number of Conversion Shares equal to the quotient obtained by dividing:

 

(i)         the product of (A) the Conversion Price in effect immediately prior to any such adjustment multiplied by (B) the number of Conversion Shares issuable upon conversion of the Series A Preferred Stock immediately prior to any such adjustment; by

 

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(ii)       the Conversion Price resulting from such adjustment.

 

(c)        Exceptions to Adjustment Upon Issuance of Common Stock. Anything herein to the contrary notwithstanding, there shall be no adjustment to the Conversion Price or the number of Conversion Shares issuable upon conversion of the Series A Preferred Stock with respect to any issuance or sale (or deemed issuance or sale in accordance with Section 5.4(d)) by the Corporation after the Date of Issuance of: (a) shares of Series A Common Stock issued on the conversion of the Series A Preferred Stock or Series B Common Stock; (b) shares of Common Stock (as such number of shares is equitably adjusted for subsequent stock splits, stock combinations, stock dividends and recapitalizations) issued directly or upon the exercise of options to directors, officers, employees, or consultants of the Corporation in connection with their service as directors of the Corporation, their employment by the Corporation or their retention as consultants by the Corporation, in each case authorized by the Board and issued pursuant to the Corporation’s equity incentive plan (including all such shares of Common Stock and options outstanding prior to the Date of Issuance); or (c) shares of Common Stock issued upon the conversion or exercise of options (other than options covered by clause (b) above) or convertible securities issued prior to the Date of Issuance, provided that such securities are not amended after the date hereof to increase the number of shares of Common Stock issuable thereunder or to lower the exercise or conversion price thereof (“Excluded Issuance”).

 

(d)        Effect of Certain Events on Adjustment to Conversion Price. For purposes of determining the adjusted Conversion Price under Section 5.4(a) hereof, the following shall be applicable:

 

(i)         Issuance of Options. If the Corporation shall, at any time or from time to time after the Date of Issuance, in any manner grant or sell (whether directly or by assumption in a merger or otherwise) any options, whether or not such options or the right to convert or exchange any convertible securities issuable upon the exercise of such options are immediately exercisable, and the price per share (determined as provided in this paragraph and in Section 5.4(d)(v)) for which Common Stock is issuable upon the exercise of such options or upon the conversion or exchange of convertible securities issuable upon the exercise of such options is less than the Conversion Price in effect immediately prior to the time of the granting or sale of such options, then the total maximum number of shares of Common Stock issuable upon the exercise of such options or upon conversion or exchange of the total maximum amount of convertible securities issuable upon the exercise of such options shall be deemed to have been issued as of the date of granting or sale of such options (and thereafter shall be deemed to be outstanding for purposes of adjusting the Conversion Price under Section 5.4(a)), at a price per share equal to the quotient obtained by dividing (A) the sum (which sum shall constitute the applicable consideration received for purposes of Section 5.4(a)) of (x) the total amount, if any, received or receivable by the Corporation as consideration for the granting or sale of all such options, plus (y) the minimum aggregate amount of additional consideration payable to the Corporation upon the exercise of all such options, plus (z), in the case of such options which relate to convertible securities, the minimum aggregate amount of additional consideration, if any, payable to the Corporation upon the issuance or sale of all such convertible securities and the conversion or exchange of all such convertible securities, by (B) the total maximum number of shares of Common Stock issuable upon the exercise of all such options or upon the conversion or exchange of all convertible securities issuable upon the exercise of all such options. Except as otherwise provided in Section 5.4(d)(iii), no further adjustment of the Conversion Price shall be made upon the actual issuance of Common Stock or of convertible securities upon exercise of such options or upon the actual issuance of Common Stock upon conversion or exchange of convertible securities issuable upon exercise of such options.

 

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(ii)         Issuance of Convertible Securities. If the Corporation shall, at any time or from time to time after the Date of Issuance, in any manner grant or sell (whether directly or by assumption in a merger or otherwise) any convertible securities, whether or not the right to convert or exchange any such convertible securities is immediately exercisable, and the price per share (determined as provided in this paragraph and in Section 5.4(d)(v)) for which Common Stock is issuable upon the conversion or exchange of such convertible securities is less than the Conversion Price in effect immediately prior to the time of the granting or sale of such convertible securities, then the total maximum number of shares of Common Stock issuable upon conversion or exchange of the total maximum amount of such convertible securities shall be deemed to have been issued as of the date of granting or sale of such convertible securities (and thereafter shall be deemed to be outstanding for purposes of adjusting the Conversion Price pursuant to Section 5.4(a)), at a price per share equal to the quotient obtained by dividing (A) the sum (which sum shall constitute the applicable consideration received for purposes of Section 5.4(a)) of (x) the total amount, if any, received or receivable by the Corporation as consideration for the granting or sale of such convertible securities, plus (y) the minimum aggregate amount of additional consideration, if any, payable to the Corporation upon the conversion or exchange of all such convertible securities, by (B) the total maximum number of shares of Common Stock issuable upon the conversion or exchange of all such convertible securities. Except as otherwise provided in Section 5.4(d)(iii), (A) no further adjustment of the Conversion Price shall be made upon the actual issuance of Common Stock upon conversion or exchange of such convertible securities and (B) no further adjustment of the Conversion Price shall be made by reason of the issue or sale of convertible securities upon exercise of any options to purchase any such convertible securities for which adjustments of the Conversion Price have been made pursuant to the other provisions of this Section 5.4(d).

 

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(iii)       Change in Terms of Options or Convertible Securities. Upon any change in any of (A) the total amount received or receivable by the Corporation as consideration for the granting or sale of any options or convertible securities referred to in Section 5.4(d)(i) or Section 5.4(d)(ii) hereof, (B) the minimum aggregate amount of additional consideration, if any, payable to the Corporation upon the exercise of any options or upon the issuance, conversion or exchange of any convertible securities referred to in Section 5.4(d)(i) or Section 5.4(d)(ii) hereof, (C) the rate at which convertible securities referred to in Section 5.4(d)(i) or Section 5.4(d)(ii) hereof are convertible into or exchangeable for Common Stock, or (D) the maximum number of shares of Common Stock issuable in connection with any options referred to in Section 5.4(d)(i) hereof or any convertible securities referred to in Section 5.4(d)(ii) hereof (in each case, other than in connection with an Excluded Issuance), then (whether or not the original issuance or sale of such options or convertible securities resulted in an adjustment to the Conversion Price pursuant to this Section 5.4) the Conversion Price in effect at the time of such change shall be adjusted or readjusted, as applicable, to the Conversion Price which would have been in effect at such time pursuant to the provisions of this Section 5.4 had such options or convertible securities still outstanding provided for such changed consideration, conversion rate or maximum number of shares, as the case may be, at the time initially granted, issued or sold, but only if as a result of such adjustment or readjustment the Conversion Price then in effect is reduced, and the number of Conversion Shares issuable upon the conversion of the Series A Preferred Stock immediately prior to any such adjustment or readjustment shall be correspondingly adjusted or readjusted pursuant to the provisions of Section 5.4(b).

 

(iv)       Treatment of Expired or Terminated Options or Convertible Securities, Upon the expiration or termination of any unexercised option (or portion thereof) or any unconverted or unexchanged convertible security (or portion thereof) for which any adjustment (either upon its original issuance or upon a revision of its terms) was made pursuant to this Section 5.4 (including without limitation upon the redemption or purchase for consideration of all or any portion of such option or convertible security by the Corporation), the Conversion Price then in effect hereunder shall forthwith be changed pursuant to the provisions of this Section 5.4 to the Conversion Price which would have been in effect at the time of such expiration or termination had such unexercised option (or portion thereof) or unconverted or unexchanged convertible security (or portion thereof), to the extent outstanding immediately prior to such expiration or termination, never been issued.

 

(v)        Calculation of Consideration Received. If the Corporation shall, at any time or from time to time after the Date of Issuance, issue or sell, or is deemed to have issued or sold in accordance with Section 5.4(d), any shares of Common Stock, options or convertible securities: (A) for cash, the consideration received therefor shall be deemed to be the net amount received by the Corporation therefor; (B) for consideration other than cash, the amount of the consideration other than cash received by the Corporation shall be the fair value of such consideration, except where such consideration consists of marketable securities, in which case the amount of consideration received by the Corporation shall be the market price (as reflected on any securities exchange, quotation system or association or similar pricing system covering such security) for such securities as of the end of business on the date of receipt of such securities; (C) for no specifically allocated consideration in connection with an issuance or sale of other securities of the Corporation, together comprising one integrated transaction, the amount of the consideration therefor shall be deemed to be the fair value of such portion of the aggregate consideration received by the Corporation in such transaction as is attributable to such shares of Common Stock, options or convertible securities, as the case may be, issued in such transaction; or (D) to the owners of the non- surviving entity in connection with any merger in which the Corporation is the surviving corporation, the amount of consideration therefor shall be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, options or convertible securities, as the case may be, issued to such owners. The net amount of any cash consideration and the fair value of any consideration other than cash or marketable securities shall be determined in good faith jointly by the Board and a not less than one-half of the then total outstanding shares of Series A Preferred Stock.

 

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(vi)       Record Date. For purposes of any adjustment to the Conversion Price or the number of Conversion Shares in accordance with this Section 5.4, in case the Corporation shall take a record of the holders of its Common Stock for the purpose of entitling them (A) to receive a dividend or other distribution payable in Common Stock, options or convertible securities or (B) to subscribe for or purchase Common Stock, options or convertible securities, then such record date shall be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be.

 

(vii)      Treasury Shares. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Corporation or any of its wholly-owned subsidiaries, and the disposition of any such shares (other than the cancellation or retirement thereof or the transfer of such shares among the Corporation and its wholly-owned subsidiaries) shall be considered an issue or sale of Common Stock for the purpose of this Section 5.4.

 

(e)        Adjustment to Conversion Price and Conversion Shares Upon Dividend, Subdivision or Combination of Common Stock. If the Corporation shall, at any time or from time to time after the Date of Issuance, (i) pay a dividend or make any other distribution upon the Common Stock or any other capital stock of the Corporation payable in shares of Common Stock or in options or convertible securities, or (ii) subdivide (by any stock split, recapitalization or otherwise) its outstanding shares of Common Stock into a greater number of shares, the Conversion Price in effect immediately prior to any such dividend, distribution or subdivision shall be proportionately reduced and the number of Conversion Shares issuable upon conversion of the Series A Preferred Stock shall be proportionately increased. If the Corporation at any time combines (by combination, reverse stock split or otherwise) its outstanding shares of Common Stock into a smaller number of shares, the Conversion Price in effect immediately prior to such combination shall be proportionately increased and the number of Conversion Shares issuable upon conversion of the Series A Preferred Stock shall be proportionately decreased. Any adjustment under this Section 5.4(e) shall become effective at the close of business on the date the dividend, subdivision or combination becomes effective.

 

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(f)         Adjustment to Conversion Price and Conversion Shares Upon Reorganization, Reclassification, Consolidation or Merger. In the event of any (i) capital reorganization of the Corporation, (ii) reclassification of the stock of the Corporation (other than a change in par value or from par value to no par value or from no par value to par value or as a result of a stock dividend or subdivision, split-up or combination of shares), (iii) consolidation or merger of the Corporation with or into another Person, (iv) sale of all or substantially all of the Corporation’s assets to another Person or (v) other similar transaction (other than any such transaction covered by Section 5.4(e)), in each case which entitles the holders of Common Stock to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock, each share of Series A Preferred Stock shall, immediately after such reorganization, reclassification, consolidation, merger, sale or similar transaction, remain outstanding and shall thereafter, in lieu of or in addition to (as the case may be) the number of Conversion Shares then convertible for such share, be exercisable for the kind and number of shares of stock or other securities or assets of the Corporation or of the successor Person resulting from such transaction to which such share would have been entitled upon such reorganization, reclassification, consolidation, merger, sale or similar transaction if the share had been converted in full immediately prior to the time of such reorganization, reclassification, consolidation, merger, sale or similar transaction and acquired the applicable number of Conversion Shares then issuable hereunder as a result of such conversion (without taking into account any limitations or restrictions on the convertibility of such share, if any); and, in such case, appropriate adjustment shall be made with respect to such holder’s rights under this Certificate of Designations to insure that the provisions of this Section 5 hereof shall thereafter be applicable, as nearly as possible, to the Series A Preferred Stock in relation to any shares of stock, securities or assets thereafter acquirable upon conversion of Series A Preferred Stock (including, in the case of any consolidation, merger, sale or similar transaction in which the successor or purchasing Person is other than the Corporation, an immediate adjustment in the Conversion Price to the value per share for the Common Stock reflected by the terms of such consolidation, merger, sale or similar transaction, and a corresponding immediate adjustment to the number of Conversion Shares acquirable upon conversion of the Series A Preferred Stock without regard to any limitations or restrictions on conversion, if the value so reflected is less than the Conversion Price in effect immediately prior to such consolidation, merger, sale or similar transaction). The provisions of this Section 5.4(f) shall similarly apply to successive reorganizations, reclassifications, consolidations, mergers, sales or similar transactions. The Corporation shall not effect any such reorganization, reclassification, consolidation, merger, sale or similar transaction unless, prior to the consummation thereof, the successor Person (if other than the Corporation) resulting from such reorganization, reclassification, consolidation, merger, sale or similar transaction, shall assume, by written instrument substantially similar in form and substance to this Certificate of Incorporation, the obligation to deliver to the holders of Series A Preferred Stock such shares of stock, securities or assets which, in accordance with the foregoing provisions, such holders shall be entitled to receive upon conversion of the Series A Preferred Stock. Notwithstanding anything to the contrary contained herein, with respect to any corporate event or other transaction contemplated by the provisions of this Section 5.4(f), each holder of shares of Series A Preferred Stock shall have the right to elect prior to the consummation of such event or transaction, to give effect to the provisions of Section 5.1(b) (if applicable to such event or transaction) or Section 5 hereunder, instead of giving effect to the provisions contained in this Section 5.4(f) with respect to such holder’s Series A Preferred Stock.

 

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(g)        Certain Events. If any event of the type contemplated by the provisions of this Section 5.4 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features) occurs, then the Board shall make an appropriate adjustment in the Conversion Price and the number of Conversion Shares issuable upon conversion of shares of Series A Preferred Stock so as to protect the rights of the holder of such shares in a manner consistent with the provisions of this Section 5; provided, that no such adjustment pursuant to this Section 5.4 shall increase the Conversion Price or decrease the number of Conversion Shares issuable as otherwise determined pursuant to this Section 5.

 

(h)        Certificate as to Adjustment.

 

(i)         As promptly as reasonably practicable following any adjustment of the Conversion Price, but in any event not later than 30 days thereafter, the Corporation shall furnish to each holder of record of Series A Preferred Stock at the address specified for such holder in the books and records of the Corporation (or at such other address as may be provided to the Corporation in writing by such holder) a certificate of an executive officer setting forth in reasonable detail such adjustment and the facts upon which it is based and certifying the calculation thereof.

 

(ii)        As promptly as reasonably practicable following the receipt by the Corporation of a written request by any holder of Series A Preferred Stock, but in any event not later than 10 days thereafter, the Corporation shall furnish to such holder a certificate of an executive officer certifying the Conversion Price then in effect and the number of Conversion Shares or the amount, if any, of other shares of stock, securities or assets then issuable to such holder upon conversion of the shares of Series A Preferred Stock held by such holder.

 

(i)         Notices. In the event:

 

(i)         that the Corporation shall take a record of the holders of its Common Stock (or other capital stock or securities at the time issuable upon conversion of the Series A Preferred Stock) for the purpose of entitling or enabling them to receive any dividend or other distribution, to vote at a meeting (or by written consent), to receive any right to subscribe for or purchase any shares of capital stock of any class or any other securities, or to receive any other security;

 

(ii)        of any capital reorganization of the Corporation, any reclassification of the Common Stock of the Corporation, any consolidation or merger of the Corporation with or into another Person, or sale of all or substantially all of the Corporation’s assets to another Person; or

 

(iii)       of the voluntary or involuntary dissolution, liquidation or winding-up of the Corporation;

 

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then, and in each such case, the Corporation shall send or cause to be sent to each holder of record of Series A Preferred Stock at the address specified for such holder in the books and records of the Corporation (or at such other address as may be provided to the Corporation in writing by such holder) at least 10 days prior to the applicable record date or the applicable expected effective date, as the case may be, for the event, a written notice specifying, as the case may be, (A) the record date for such dividend, distribution, meeting or consent or other right or action, and a description of such dividend, distribution or other right or action to be taken at such meeting or by written consent, or (B) the effective date on which such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up is proposed to take place, and the date, if any is to be fixed, as of which the books of the Corporation shall close or a record shall be taken with respect to which the holders of record of Common Stock (or such other capital stock or securities at the time issuable upon conversion of the Series A Preferred Stock) shall be entitled to exchange their shares of Common Stock (or such other capital stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up, and the amount per share and character of such exchange applicable to the Series A Preferred Stock and the Conversion Shares.

 

6.          Amendment and Waiver. The terms of this Certificate of Designations shall not, by merger, consolidation or otherwise, be amended, waived, altered or repealed without the affirmative vote of the holders of a majority of the voting power of the Series A Preferred Stock, voting as a separate class. Any of the rights, powers, preferences and other terms of the Series A Preferred Stock set forth herein may be waived on behalf of all holders of Series A Preferred Stock by the affirmative written consent or vote of the holders of a majority of the shares of Series A Preferred Stock then outstanding.

 

7.          Notices. Any notice required or permitted by the provisions of this Section 5 to be given to a holder of shares of Series A Preferred Stock shall be mailed, postage prepaid, to the post office address last shown on the records of the Corporation, or given by electronic communication in compliance with the provisions of the DGCL, and shall be deemed sent upon such mailing or electronic transmission.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, this Certificate of Designations has been executed by the Chief Executive Officer of the Corporation this 18th day of April, 2019.

 

GOLF SUITES 2, INC.  
   
/s/ Gerald D. Ellenburg  
Gerald D. Ellenburg  
Chief Executive Officer  

 

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EX1A-2B BYLAWS 5 tv523247_ex2-3.htm EXHIBIT 2.3

 

Exhibit 2.3

 

BYLAWS OF

 

GOLFSUITES 2, INC.

 

 

 

 

TABLE OF CONTENTS

 

    Page
ARTICLE I CORPORATE OFFICES 1
1.1 Offices 1
ARTICLE II MEETINGS OF STOCKHOLDERS 1
2.1 Place Of Meetings 1
2.2 Annual Meeting 1
2.3 Special Meeting 1
2.4 Notice Of Stockholders’ Meetings 2
2.5 Manner Of Giving Notice; Affidavit Of Notice 2
2.6 Quorum 2
2.7 Adjourned Meeting; Notice 2
2.8 Organization; Conduct Of Business 3
2.9 Voting 3
2.10 Waiver Of Notice 3
2.11 Stockholder Action By Written Consent Without A Meeting 4
2.12 Record Date For Stockholder Notice; Voting; Giving Consents 4
2.13 Proxies 5
ARTICLE III DIRECTORS 5
3.1 Powers 5
3.2 Number Of Directors 5
3.3 Election, Qualification And Term Of Office Of Directors 6
3.4 Resignation And Vacancies 6
3.5 Place Of Meetings; Meetings By Telephone 7
3.6 Regular Meetings 7
3.7 Special Meetings; Notice 7
3.8 Quorum 8
3.9 Waiver Of Notice 8
3.10 Board Action By Written Consent Without A Meeting 8
3.11 Fees And Compensation Of Directors 8
3.12 Approval Of Loans To Officers 9
3.13 Removal Of Directors 9
3.14 Chairperson Of The Board Of Directors 9
ARTICLE IV COMMITTEES 9
4.1 Committees Of Directors 9
4.2 Committee Minutes 10
4.3 Meetings And Actions Of Committees 10
ARTICLE V OFFICERS 10
5.1 Officers 10
5.2 Appointment Of Officers 10
5.3 Subordinate Officers 10
5.4 Removal And Resignation Of Officers 10
5.5 Vacancies In Offices 11

 

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TABLE OF CONTENTS

 

    Page
5.6 Chief Executive Officer 11
5.7 President 11
5.8 Vice Presidents 11
5.9 Secretary 12
5.10 Chief Financial Officer 12
5.11 Treasurer 12
5.12 Representation Of Shares Of Other Corporations 13
5.13 Authority And Duties Of Officers 13
ARTICLE VI INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES, AND OTHER AGENTS 13
6.1 Indemnification Of Directors And Officers 13
6.2 Indemnification Of Others 14
6.3 Payment Of Expenses In Advance 14
6.4 Indemnity Not Exclusive 14
6.5 Insurance 14
6.6 Conflicts 14
ARTICLE VII RECORDS AND REPORTS 15
7.1 Maintenance And Inspection Of Records 15
7.2 Inspection By Directors 15
ARTICLE VIII GENERAL MATTERS 15
8.1 Checks 15
8.2 Execution Of Corporate Contracts And Instruments 16
8.3 Stock Certificates and Notices; Uncertificated Stock; Partly Paid Shares 16
8.4 Special Designation On Certificates and Notices of Issuance 16
8.5 Lost Certificates 17
8.6 Construction; Definitions 17
8.7 Dividends 17
8.8 Fiscal Year 17
8.9 Transfer Of Stock 17
8.10 Stock Transfer Agreements 17
8.11 Stockholders Of Record 18
8.12 Facsimile Or Electronic Signatures 18
ARTICLE IX AMENDMENTS 18

 

 -ii 

 

 

BYLAWS

 

OF

 

GOLFSUITES 2, INC.

 

ARTICLE I

 

CORPORATE OFFICES

 

1.1Offices

 

In addition to the corporation’s registered office set forth in the certificate of incorporation, the Board of Directors may at any time establish other offices at any place or places where the corporation is qualified to do business.

 

ARTICLE II

 

MEETINGS OF STOCKHOLDERS

 

2.1Place Of Meetings

 

Meetings of stockholders shall be held at any place, within or outside the state of Delaware, designated by the Board of Directors. The Board of Directors may, in its sole discretion, determine that a meeting of stockholders shall not be held at any place, but may instead be held solely by means of remote communication as authorized by Section 211(a)(2) of the Delaware General Corporation Law. In the absence of any such designation or determination, stockholders’ meetings shall be held at the registered office of the corporation.

 

2.2Annual Meeting

 

The annual meeting of stockholders shall be held on such date, time and place, either within or without the state of Delaware, as may be designated by resolution of the Board of Directors each year. At the meeting, directors shall be elected and any other proper business may be transacted.

 

2.3Special Meeting

 

A special meeting of the stockholders may be called at any time by the Board of Directors, the chairperson of the board, the chief executive officer, the president or by one or more stockholders holding shares in the aggregate entitled to cast not less than 10% of the votes at that meeting.

 

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If a special meeting is called by any person or persons other than the Board of Directors, the chairperson of the board, the chief executive officer or the president, the request shall be in writing, specifying the time of such meeting and the general nature of the business proposed to be transacted, and shall be delivered personally or sent by registered mail or by email, fax, telegraphic or other facsimile or electronic transmission to the chairperson of the board, the chief executive officer, the president or the secretary of the corporation. No business may be transacted at such special meeting otherwise than specified in such notice. The officer receiving the request shall cause notice to be promptly given to the stockholders entitled to vote, in accordance with the provisions of Sections 2.4 and 2.5 of this Article II, that a meeting will be held at the time requested by the person or persons calling the meeting, not less than 35 nor more than 60 days after the receipt of the request. If the notice is not given within 20 days after the receipt of the request, the person or persons requesting the meeting may give the notice. Nothing contained in this paragraph of this Section 2.3 shall be construed as limiting, fixing, or affecting the time when a meeting of stockholders called by action of the Board of Directors may be held.

 

2.4Notice Of Stockholders’ Meetings

 

All notices of meetings with stockholders shall be in writing and shall be sent or otherwise given in accordance with Section 2.5 of these bylaws not less than 10 nor more than 60 days before the date of the meeting to each stockholder entitled to vote at such meeting. The notice shall specify the place (if any), date and hour of the meeting, and in the case of a special meeting, the purpose or purposes for which the meeting is called.

 

2.5Manner Of Giving Notice; Affidavit Of Notice

 

Written notice of any meeting of stockholders, if mailed, is given when deposited in the United States mail, postage prepaid, directed to the stockholder at his address as it appears on the records of the corporation. Without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders may be given by electronic mail or other electronic transmission, in the manner provided in Section 232 of the Delaware General Corporation Law. An affidavit of the secretary or an assistant secretary or of the transfer agent of the corporation that the notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein.

 

2.6Quorum

 

The holders of a majority of the shares of stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum is not present or represented at any meeting of the stockholders, then either (a) the chairperson of the meeting or (b) holders of a majority of the shares of stock entitled to vote who are present, in person or by proxy, shall have power to adjourn the meeting to another place (if any), date or time.

 

2.7Adjourned Meeting; Notice

 

When a meeting is adjourned to another place (if any), date or time, unless these bylaws otherwise require, notice need not be given of the adjourned meeting if the time and place (if any), thereof and the means of remote communications (if any) by which stockholders and proxyholders may be deemed to be present and vote at such adjourned meeting, are announced at the meeting at which the adjournment is taken. At the adjourned meeting the corporation may transact any business that might have been transacted at the original meeting. If the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, notice of the place (if any), date and time of the adjourned meeting and the means of remote communications (if any) by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

 

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2.8Organization; Conduct Of Business

 

Such person as the Board of Directors may have designated or, in the absence of such a person, the chief executive officer, or in his or her absence, the president or, in his or her absence, such person as may be chosen by the holders of a majority of the shares entitled to vote who are present, in person or by proxy, shall call to order any meeting of the stockholders and act as chairperson of the meeting. In the absence of the secretary of the corporation, the secretary of the meeting shall be such person as the chairperson of the meeting appoints.

 

The chairperson of any meeting of stockholders shall determine the order of business and the procedure at the meeting, including the manner of voting and the conduct of business. The date and time of opening and closing of the polls for each matter upon which the stockholders will vote at the meeting shall be announced at the meeting.

 

2.9Voting

 

The stockholders entitled to vote at any meeting of stockholders shall be determined in accordance with the provisions of Section 2.12 of these bylaws, subject to the provisions of Sections 217 and 218 of the Delaware General Corporation Law (relating to voting rights of fiduciaries, pledgors and joint owners of stock and to voting trusts and other voting agreements).

 

Except as may be otherwise provided in the certificate of incorporation, each stockholder shall be entitled to one vote for each share of capital stock held by such stockholder. All elections shall be determined by a plurality of the votes cast, and except as otherwise required by law, all other matters shall be determined by a majority of the votes cast affirmatively or negatively.

 

2.10Waiver Of Notice

 

Whenever notice is required to be given under any provision of the Delaware General Corporation Law or of the certificate of incorporation or these bylaws, a written waiver thereof, signed by the person entitled to notice, or waiver by electronic mail or other electronic transmission by such person, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any written waiver of notice, or any waiver of notice by electronic transmission, unless so required by the certificate of incorporation or these bylaws.

 

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2.11Stockholder Action By Written Consent Without A Meeting

 

Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action that may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice, and without a vote if a consent in writing, setting forth the action so taken, is (a) signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted, and (b) delivered to the corporation in accordance with Section 228(a) of the Delaware General Corporation Law.

 

Every written consent shall bear the date of signature of each stockholder who signs the consent and no written consent shall be effective to take the corporate action referred to therein unless, within 60 days of the date the earliest dated consent is delivered to the corporation, a written consent or consents signed by a sufficient number of holders to take action are delivered to the corporation in the manner prescribed in this Section. A telegram, cablegram, electronic mail or other electronic transmission consenting to an action to be taken and transmitted by a stockholder or proxyholder, or by a person or persons authorized to act for a stockholder or proxyholder, shall be deemed to be written, signed and dated for purposes of this Section to the extent permitted by law. Any such consent shall be delivered in accordance with Section 228(d)(1) of the Delaware General Corporation Law.

 

Any copy, facsimile or other reliable reproduction of a consent in writing may be substituted or used in lieu of the original writing for any and all purposes for which the original writing could be used, provided that such copy, facsimile or other reproduction shall be a complete reproduction of the entire original writing.

 

Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing (including by electronic mail or other electronic transmission as permitted by law). If the action which is consented to is such as would have required the filing of a certificate under any section of the Delaware General Corporation Law if such action had been voted on by stockholders at a meeting thereof, then the certificate filed under such section shall state, in lieu of any statement required by such section concerning any vote of stockholders, that written notice and written consent have been given as provided in Section 228 of the Delaware General Corporation Law.

 

2.12Record Date For Stockholder Notice; Voting; Giving Consents

 

In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than 60 nor less than 10 days before the date of such meeting, nor more than 60 days prior to any other action.

 

If the Board of Directors does not so fix a record date:

 

(a)          The record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held.

 

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(b)          The record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is necessary, shall be the day on which the first written consent (including consent by electronic mail or other electronic transmission as permitted by law) is delivered to the corporation.

 

(c)          The record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.

 

A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting, if such adjournment is for 30 days or less; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

 

2.13Proxies

 

Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for such stockholder by an instrument in writing or by an electronic transmission permitted by law filed with the secretary of the corporation, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. A proxy shall be deemed signed if the stockholder’s name is placed on the proxy (whether by manual signature, typewriting, facsimile, electronic or telegraphic transmission or otherwise) by the stockholder or the stockholder’s attorney-in-fact. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions of Section 212(e) of the Delaware General Corporation Law.

 

ARTICLE III

 

DIRECTORS

 

3.1Powers

 

Subject to the provisions of the Delaware General Corporation Law and any limitations in the certificate of incorporation or these bylaws relating to action required to be approved by the stockholders or by the outstanding shares, the business and affairs of the corporation shall be managed and all corporate powers shall be exercised by or under the direction of the Board of Directors.

 

3.2Number Of Directors

 

(a)          The total number of directors constituting the entire Board of Directors (the “Number of Authorized Directors”) shall be fixed or changed in the manner provided in these bylaws, unless the certificate of incorporation fixes the Number of Authorized Directors, in which case the Number of Authorized Directors shall be changed only by amendment of the certificate of incorporation.

 

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(b)          Subject to Section 3.4 of these bylaws, the Number of Authorized Directors may be fixed or changed: (i) by a resolution of the Board of Directors or of the stockholders, or (ii) if applicable, by action of the incorporator(s) (which includes any person(s) acting, in accordance with the Delaware General Corporation Law, on behalf of any incorporator(s) not available to act) before the election of the initial Board of Directors. No reduction of the Number of Authorized Directors shall have the effect of removing any director before such director’s term of office expires.

 

(c)          If the Number of Authorized Directors is already fixed (whether by the certificate of incorporation, resolution of the Board of Directors or of the stockholders, action of the incorporators(s) before the election of the initial Board of Directors, or otherwise in accordance with the Delaware General Corporation Law) at the time the adoption of these bylaws is effective (the “Effective Time”), then the Number of Authorized Directors, until changed in accordance with this Section 3.2, is such already fixed Number of Authorized Directors.

 

(d)          If the Number of Authorized Directors is not already fixed at the Effective Time, then: (i) if there are directors in office at the Effective Time, the Number of Authorized Directors, until changed in accordance with this Section 3.2, is the total number of directors in office at the Effective Time, or (ii) if there are no directors in office at the Effective Time, the Number of Authorized Directors, until fixed or changed in accordance with this Section 3.2, is the total number of directors on the Board of Directors as first constituted following the Effective Time (whether such directors are elected by resolution of the stockholders, action of the incorporators(s) before the election of the initial Board of Directors, or otherwise in accordance with the Delaware General Corporation Law).

 

3.3Election, Qualification And Term Of Office Of Directors

 

Except as provided in Section 3.4 of these bylaws, and unless otherwise provided in the certificate of incorporation, directors shall be elected at each annual meeting of stockholders to hold office until the next annual meeting. Directors need not be stockholders unless so required by the certificate of incorporation or these bylaws, wherein other qualifications for directors may be prescribed. Each director, including a director elected to fill a vacancy, shall hold office until his or her successor is elected and qualified or until his or her earlier resignation or removal. Unless otherwise specified in the certificate of incorporation, elections of directors need not be by written ballot.

 

3.4Resignation And Vacancies

 

Any director may resign at any time upon written notice to the attention of the Secretary of the corporation. Notwithstanding the provisions of Section 223(a)(1) and 223(a)(2) of the Delaware General Corporation Law, any vacancy or newly created directorship may be filled by a majority of the directors then in office (including any directors that have tendered a resignation effective at a future date), though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced; provided, however, that where such vacancy or newly created directorship occurs among the directors elected by the holders of a class or series of stock, the holders of shares of such class or series may override the Board of Directors’ action to fill such vacancy or newly created directorship by (i) voting for their own designee to fill such vacancy or newly created directorship at a meeting of the corporation’s stockholders or (ii) written consent, if the consenting stockholders hold a sufficient number of shares to elect their designee at a meeting of the stockholders.

 

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If at any time, by reason of death or resignation or other cause, the corporation should have no directors in office, then any officer or any stockholder or an executor, administrator, trustee or guardian of a stockholder, or other fiduciary entrusted with like responsibility for the person or estate of a stockholder, may call a special meeting of stockholders in accordance with the provisions of the certificate of incorporation or these bylaws, or may apply to the Court of Chancery for a decree summarily ordering an election as provided in Section 211 of the Delaware General Corporation Law.

 

If, at the time of filling any vacancy or any newly created directorship, the directors then in office constitute less than a majority of the whole board (as constituted immediately prior to any such increase), then the Court of Chancery may, upon application of any stockholder or stockholders holding at least 10% of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office as aforesaid, which election shall be governed by the provisions of Section 211 of the Delaware General Corporation Law as far as applicable.

 

3.5Place Of Meetings; Meetings By Telephone

 

The Board of Directors of the corporation may hold meetings, both regular and special, either within or outside the state of Delaware.

 

Unless otherwise restricted by the certificate of incorporation or these bylaws, members of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors, or any committee, by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.

 

3.6Regular Meetings

 

Regular meetings of the Board of Directors may be held without notice at such time and at such place as shall from time to time be determined by the board.

 

3.7Special Meetings; Notice

 

Special meetings of the Board of Directors for any purpose or purposes may be called at any time by the chairperson of the board, the chief executive officer, the president, the secretary or any two directors.

 

Notice of the time and place of special meetings shall be delivered personally or by telephone to each director or sent by first-class mail, facsimile, electronic transmission, or telegram, charges prepaid, addressed to each director at that director’s address as it is shown on the records of the corporation. If the notice is mailed, it shall be deposited in the United States mail at least 4 days before the time of the holding of the meeting. If the notice is delivered personally or by facsimile, electronic transmission, telephone or telegram, it shall be delivered at least 24 hours before the time of the holding of the meeting. Any oral notice given personally or by telephone may be communicated either to the director or to a person at the office of the director who the person giving the notice has reason to believe will promptly communicate it to the director. The notice need not specify the purpose of the meeting. The notice need not specify the place of the meeting, if the meeting is to be held at the principal executive office of the corporation. Unless otherwise indicated in the notice thereof, any and all business may be transacted at a special meeting.

 

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3.8Quorum

 

At all meetings of the Board of Directors, a majority of the total number of directors then in office (but in no case less than 1/3 of the Number of Authorized Directors (as defined in Section 3.2 of these bylaws)) shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum is not present at any meeting of the Board of Directors, then the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present.

 

A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for that meeting.

 

3.9Waiver Of Notice

 

Whenever notice is required to be given under any provision of the Delaware General Corporation Law or of the certificate of incorporation or these bylaws, a written waiver thereof, signed by the person entitled to notice, or waiver by electronic mail or other electronic transmission by such person, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the directors, or members of a committee of directors, need be specified in any written waiver of notice unless so required by the certificate of incorporation or these bylaws.

 

3.10Board Action By Written Consent Without A Meeting

 

Unless otherwise restricted by the certificate of incorporation or these bylaws, any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting if all members of the board or committee, as the case may be, consent thereto in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the board or committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.

 

Any copy, facsimile or other reliable reproduction of a consent in writing may be substituted or used in lieu of the original writing for any and all purposes for which the original writing could be used, provided that such copy, facsimile or other reproduction shall be a complete reproduction of the entire original writing.

 

3.11Fees And Compensation Of Directors

 

Unless otherwise restricted by the certificate of incorporation or these bylaws, the Board of Directors shall have the authority to fix the compensation of directors. No such compensation shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor.

 

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3.12Approval Of Loans To Officers

 

The corporation may lend money to, or guarantee any obligation of, or otherwise assist any officer or other employee of the corporation or of its subsidiary, including any officer or employee who is a director of the corporation or its subsidiary, whenever, in the judgment of the directors, such loan, guaranty or assistance may reasonably be expected to benefit the corporation. The loan, guaranty or other assistance may be with or without interest and may be unsecured, or secured in such manner as the Board of Directors shall approve, including, without limitation, a pledge of shares of stock of the corporation. Nothing in this section shall be deemed to deny, limit or restrict the powers of guaranty or warranty of the corporation at common law or under any statute.

 

3.13Removal Of Directors

 

Unless otherwise restricted by statute, by the certificate of incorporation or by these bylaws, any director or the entire Board of Directors may be removed, with or without cause, by, and only by, the affirmative vote of the holders of the shares of the class or series of stock entitled to elect such director or directors, given either at a special meeting of such stockholders duly called for that purpose or pursuant to a written consent of stockholders, and any vacancy thereby created may be filled by the holders of that class or series of stock represented at the meeting or pursuant to written consent; provided, however, that if the stockholders of the corporation are entitled to cumulative voting, if less than the entire Board of Directors is to be removed, no director may be removed without cause if the votes cast against his removal would be sufficient to elect him if then cumulatively voted at an election of the entire Board of Directors.

 

No reduction of the Number of Authorized Directors (as defined in Section 3.2 of these bylaws) shall have the effect of removing any director before such director’s term of office expires.

 

3.14Chairperson Of The Board Of Directors

 

The corporation may also have, at the discretion of the Board of Directors, a chairperson of the Board of Directors who shall not be considered an officer of the corporation.

 

ARTICLE IV

 

COMMITTEES

 

4.1Committees Of Directors

 

The Board of Directors may designate one or more committees, each committee to consist of one or more of the directors of the corporation. The Board may designate 1 or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board of Directors, or in these bylaws, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to the following matters: (i) approving or adopting, or recommending to the stockholders, any action or matter expressly required by the General Corporate Law of Delaware to be submitted to stockholders for approval or (ii) adopting, amending or repealing any Bylaw of the corporation.

 

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4.2Committee Minutes

 

Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors when required.

 

4.3Meetings And Actions Of Committees

 

Meetings and actions of committees shall be governed by, and held and taken in accordance with, the provisions of Section 3.5 (place of meetings and meetings by telephone), Section 3.6 (regular meetings), Section 3.7 (special meetings and notice), Section 3.8 (quorum), Section 3.9 (waiver of notice), and Section 3.10 (action without a meeting) of these bylaws, with such changes in the context of such provisions as are necessary to substitute the committee and its members for the Board of Directors and its members; provided, however, that the time of regular meetings of committees may be determined either by resolution of the Board of Directors or by resolution of the committee, that special meetings of committees may also be called by resolution of the Board of Directors and that notice of special meetings of committees shall also be given to all alternate members, who shall have the right to attend all meetings of the committee. The Board of Directors may adopt rules for the government of any committee not inconsistent with the provisions of these bylaws.

 

ARTICLE V

 

OFFICERS

5.1Officers

 

The officers of the corporation shall be a president and a secretary. The corporation may also have, at the discretion of the Board of Directors, a chief executive officer, a chief financial officer, a treasurer, one or more vice presidents, one or more assistant secretaries, one or more assistant treasurers, and any such other officers as may be appointed in accordance with the provisions of Section 5.3 of these bylaws. Any number of offices may be held by the same person.

 

5.2Appointment Of Officers

 

The officers of the corporation, except such officers as may be appointed in accordance with the provisions of Sections 5.3 or 5.5 of these bylaws, shall be appointed by the Board of Directors, subject to the rights (if any) of an officer under any contract of employment.

 

5.3Subordinate Officers

 

The Board of Directors may appoint, or empower the chief executive officer or the president to appoint, such other officers and agents as the business of the corporation may require, each of whom shall hold office for such period, have such authority, and perform such duties as are provided in these bylaws or as the Board of Directors may from time to time determine.

 

5.4Removal And Resignation Of Officers

 

Subject to the rights (if any) of an officer under any contract of employment, any officer may be removed, either with or without cause, by an affirmative vote of the majority of the Board of Directors at any regular or special meeting of the board or, except in the case of an officer chosen by the Board of Directors, by any officer upon whom the power of removal is conferred by the Board of Directors.

 

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Any officer may resign at any time by giving written notice to the corporation. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice; and, unless otherwise specified in that notice, the acceptance of the resignation shall not be necessary to make it effective. Any resignation is without prejudice to the rights (if any) of the corporation under any contract to which the officer is a party.

 

5.5Vacancies In Offices

 

Any vacancy occurring in any office of the corporation shall be filled by the Board of Directors.

 

5.6Chief Executive Officer

 

Subject to such supervisory powers (if any) as may be given by the Board of Directors to the chairperson of the board (if any), the chief executive officer of the corporation (if such an officer is appointed) shall, subject to the control of the Board of Directors, have general supervision, direction, and control of the business and the officers of the corporation and shall have the general powers and duties of management usually vested in the office of chief executive officer of a corporation and shall have such other powers and duties as may be prescribed by the Board of Directors or these bylaws.

 

The person serving as chief executive officer shall also be the acting president of the corporation whenever no other person is then serving in such capacity.

 

5.7President

 

Subject to such supervisory powers (if any) as may be given by the Board of Directors to the chairperson of the board (if any) or the chief executive officer, the president shall have general supervision, direction, and control of the business and other officers of the corporation. He or she shall have the general powers and duties of management usually vested in the office of president of a corporation and such other powers and duties as may be prescribed by the Board of Directors or these bylaws.

 

The person serving as president shall also be the acting chief executive officer, secretary or treasurer of the corporation, as applicable, whenever no other person is then serving in such capacity.

 

5.8Vice Presidents

 

In the absence or disability of the chief executive officer and president, the vice presidents (if any) in order of their rank as fixed by the Board of Directors or, if not ranked, a vice president designated by the Board of Directors, shall perform all the duties of the president and when so acting shall have all the powers of, and be subject to all the restrictions upon, the president. The vice presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the Board of Directors, these bylaws, the president or the chairperson of the board.

 

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5.9Secretary

 

The secretary shall keep or cause to be kept, at the principal executive office of the corporation or such other place as the Board of Directors may direct, a book of minutes of all meetings and actions of directors, committees of directors, and stockholders. The minutes shall show the time and place of each meeting, the names of those present at directors’ meetings or committee meetings, the number of shares present or represented at stockholders’ meetings, and the proceedings thereof.

 

The secretary shall keep, or cause to be kept, at the principal executive office of the corporation or at the office of the corporation’s transfer agent or registrar, as determined by resolution of the Board of Directors, a share register, or a duplicate share register, showing the names of all stockholders and their addresses, the number and classes of shares held by each, the number and date of certificates (if any) evidencing such shares, and the number and date of cancellation of every certificate (if any) surrendered for cancellation.

 

The secretary shall give, or cause to be given, notice of all meetings of the stockholders and of the Board of Directors required to be given by law or by these bylaws. He or she shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or by these bylaws.

 

5.10Chief Financial Officer

 

The chief financial officer (if such an officer is appointed) shall keep and maintain, or cause to be kept and maintained, adequate and correct books and records of accounts of the properties and business transactions of the corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, retained earnings and shares.

 

The books of account shall at all reasonable times be open to inspection by any member of the Board of Directors.

 

The chief financial officer shall render to the chief executive officer, the president, or the Board of Directors, upon request, an account of all his or her transactions as chief financial officer and of the financial condition of the corporation. He or she shall have the general powers and duties usually vested in the office of chief financial officer of a corporation and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or these bylaws.

 

The person serving as the chief financial officer shall also be the acting treasurer of the corporation whenever no other person is then serving in such capacity. Subject to such supervisory powers (if any) as may be given by the Board of Directors to another officer of the corporation, the chief financial officer shall supervise and direct the responsibilities of the treasurer whenever someone other than the chief financial officer is serving as treasurer of the corporation.

 

5.11Treasurer

 

The treasurer (if such an officer is appointed) shall keep and maintain, or cause to be kept and maintained, adequate and correct books and records with respect to all bank accounts, deposit accounts, cash management accounts and other investment accounts of the corporation. The books of account shall at all reasonable times be open to inspection by any member of the Board of Directors.

 

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The treasurer shall deposit, or cause to be deposited, all moneys and other valuables in the name and to the credit of the corporation with such depositories as may be designated by the Board of Directors. He or she shall disburse the funds of the corporation as may be ordered by the Board of Directors and shall render to the chief financial officer, the chief executive officer, the president or the Board of Directors, upon request, an account of all his or her transactions as treasurer. He or she shall have the general powers and duties usually vested in the office of treasurer of a corporation and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or these bylaws.

 

The person serving as the treasurer shall also be the acting chief financial officer of the corporation whenever no other person is then serving in such capacity.

 

5.12Representation Of Shares Of Other Corporations

 

The chairperson of the board, the chief executive officer, the president, any vice president, the chief financial officer, the secretary or assistant secretary of this corporation, or any other person authorized by the Board of Directors or the chief executive officer or the president or a vice president, is authorized to vote, represent, and exercise on behalf of this corporation all rights incident to any and all shares of any other corporation or corporations standing in the name of this corporation. The authority granted herein may be exercised either by such person directly or by any other person authorized to do so by proxy or power of attorney duly executed by the person having such authority.

 

5.13Authority And Duties Of Officers

 

In addition to the foregoing authority and duties, all officers of the corporation shall respectively have such authority and perform such duties in the management of the business of the corporation as may be designated from time to time by the Board of Directors or the stockholders.

 

ARTICLE VI

 

INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES, AND OTHER AGENTS

 

6.1Indemnification Of Directors And Officers

 

The corporation shall, to the maximum extent and in the manner permitted by the Delaware General Corporation Law, indemnify each of its directors and officers against expenses (including attorneys’ fees), judgments, fines, settlements and other amounts actually and reasonably incurred in connection with any proceeding, arising by reason of the fact that such person is or was an agent of the corporation. For purposes of this Section 6.1, a “director” or “officer” of the corporation includes any person (a) who is or was a director or officer of the corporation, (b) who is or was serving at the request of the corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, or (c) who was a director or officer of a corporation which was a predecessor corporation of the corporation or of another enterprise at the request of such predecessor corporation.

 

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6.2Indemnification Of Others

 

The corporation shall have the power, to the maximum extent and in the manner permitted by the Delaware General Corporation Law, to indemnify each of its employees and agents (other than directors and officers) against expenses (including attorneys’ fees), judgments, fines, settlements and other amounts actually and reasonably incurred in connection with any proceeding, arising by reason of the fact that such person is or was an agent of the corporation.

 

For purposes of this Section 6.2, an “employee” or “agent” of the corporation (other than a director or officer) includes any person (a) who is or was an employee or agent of the corporation, (b) who is or was serving at the request of the corporation as an employee or agent of another corporation, partnership, joint venture, trust or other enterprise, or (c) who was an employee or agent of a corporation which was a predecessor corporation of the corporation or of another enterprise at the request of such predecessor corporation.

 

6.3Payment Of Expenses In Advance

 

Expenses incurred in defending any action or proceeding for which indemnification is required pursuant to Section 6.1 or for which indemnification is permitted pursuant to Section 6.2 following authorization thereof by the Board of Directors shall be paid by the corporation in advance of the final disposition of such action or proceeding upon receipt of an undertaking by or on behalf of the indemnified party to repay such amount if it shall ultimately be determined by final judicial decision from which there is no further right to appeal that the indemnified party is not entitled to be indemnified as authorized in this Article VI.

 

6.4Indemnity Not Exclusive

 

The indemnification provided by this Article VI shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any Bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in an official capacity and as to action in another capacity while holding such office, to the extent that such additional rights to indemnification are authorized in the certificate of incorporation.

 

6.5Insurance

 

The corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the corporation would have the power to indemnify him or her against such liability under the provisions of the Delaware General Corporation Law.

 

6.6Conflicts

 

No indemnification or advance shall be made under this Article VI, except where such indemnification or advance is mandated by law or the order, judgment or decree of any court of competent jurisdiction, in any circumstance where it appears:

 

(a)          That it would be inconsistent with a provision of the certificate of incorporation, these bylaws, a resolution of the stockholders or an agreement in effect at the time of the accrual of the alleged cause of the action asserted in the proceeding in which the expenses were incurred or other amounts were paid, which prohibits or otherwise limits indemnification; or

 

(b)          That it would be inconsistent with any condition expressly imposed by a court in approving a settlement.

 

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ARTICLE VII

 

RECORDS AND REPORTS

 

7.1Maintenance And Inspection Of Records

 

The corporation shall, either at its principal executive offices or at such place or places as designated by the Board of Directors, keep a record of its stockholders listing their names and addresses and the number and class of shares held by each stockholder, a copy of these bylaws as amended to date, accounting books, and other records.

 

Any stockholder of record, in person or by attorney or other agent, shall, upon written demand under oath stating the purpose thereof, have the right during the usual hours for business to inspect for any proper purpose the corporation’s stock ledger, a list of its stockholders, and its other books and records and to make copies or extracts therefrom. A proper purpose shall mean a purpose reasonably related to such person’s interest as a stockholder. In every instance where an attorney or other agent is the person who seeks the right to inspection, the demand under oath shall be accompanied by a power of attorney or such other writing that authorizes the attorney or other agent to so act on behalf of the stockholder. The demand under oath shall be directed to the corporation at its registered office in Delaware or at its principal place of business.

 

A complete list of stockholders entitled to vote at any meeting of stockholders, arranged in alphabetical order for each class of stock and showing the address of each such stockholder and the number of shares registered in each such stockholder’s name, shall be open to the examination of any such stockholder for a period of at least 10 days prior to the meeting in the manner provided by law. The stock list shall also be open to the examination of any stockholder during the whole time of the meeting as provided by law. This list shall presumptively determine the identity of the stockholders entitled to vote at the meeting and the number of shares held by each of them.

 

7.2Inspection By Directors

 

Any director shall have the right to examine the corporation’s stock ledger, a list of its stockholders, and its other books and records for a purpose reasonably related to his or her position as a director. The Court of Chancery is hereby vested with the exclusive jurisdiction to determine whether a director is entitled to the inspection sought. The Court may summarily order the corporation to permit the director to inspect any and all books and records, the stock ledger, and the stock list and to make copies or extracts therefrom. The Court may, in its discretion, prescribe any limitations or conditions with reference to the inspection, or award such other and further relief as the Court may deem just and proper.

 

ARTICLE VIII

 

GENERAL MATTERS

 

8.1Checks

 

From time to time, the Board of Directors shall determine by resolution which person or persons may sign or endorse all checks, drafts, other orders for payment of money, notes or other evidences of indebtedness that are issued in the name of or payable to the corporation, and only the persons so authorized shall sign or endorse those instruments.

 

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8.2Execution Of Corporate Contracts And Instruments

 

The Board of Directors, except as otherwise provided in these bylaws, may authorize any officer or officers, or agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the corporation; such authority may be general or confined to specific instances. Unless so authorized or ratified by the Board of Directors or within the agency power of an officer, no officer, agent or employee shall have any power or authority to bind the corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount.

 

8.3Stock Certificates and Notices; Uncertificated Stock; Partly Paid Shares

 

The shares of the corporation may be certificated or uncertificated, as provided under Delaware law, and shall be entered in the books of the corporation and recorded as they are issued. Any or all of the signatures on any certificate may be a facsimile or electronic signature. In case any officer, transfer agent or registrar who has signed or whose facsimile or electronic signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he or she were such officer, transfer agent or registrar at the date of issue.

 

Within a reasonable time after the issuance or transfer of uncertificated stock and upon the request of a stockholder, the corporation shall send to the record owner thereof a written notice that shall set forth the name of the corporation, that the corporation is organized under the laws of Delaware, the name of the stockholder, the number and class (and the designation of the series, if any) of the shares, and any restrictions on the transfer or registration of such shares of stock imposed by the corporation’s certificate of incorporation, these bylaws, any agreement among stockholders or any agreement between stockholders and the corporation.

 

The corporation may issue the whole or any part of its shares as partly paid and subject to call for the remainder of the consideration to be paid therefor. Upon the face or back of each stock certificate (if any) issued to represent any such partly paid shares, or upon the books and records of the corporation in the case of uncertificated partly paid shares, the total amount of the consideration to be paid therefor and the amount paid thereon shall be stated. Upon the declaration of any dividend on fully paid shares, the corporation shall declare a dividend upon partly paid shares of the same class, but only upon the basis of the percentage of the consideration actually paid thereon.

 

8.4Special Designation On Certificates and Notices of Issuance

 

If the corporation is authorized to issue more than one class of stock or more than one series of any class, then the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate that the corporation shall issue to represent such class or series of stock or the notice of issuance to the record owner of uncertificated stock; provided, however, that, except as otherwise provided in Section 202 of the Delaware General Corporation Law, in lieu of the foregoing requirements there may be set forth on the face or back of the certificate that the corporation shall issue to represent such class or series of stock or the notice of issuance to the record owner of uncertificated stock, or the purchase agreement for such stock a statement that the corporation will furnish without charge to each stockholder who so requests the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.

 

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8.5Lost Certificates

 

Except as provided in this Section 8.5, no new certificates for shares shall be issued to replace a previously issued certificate unless the latter is surrendered to the corporation and cancelled at the same time. The corporation may issue a new certificate of stock or notice of uncertificated stock in the place of any certificate previously issued by it, alleged to have been lost, stolen or destroyed, and the corporation may require the owner of the lost, stolen or destroyed certificate, or the owner’s legal representative, to give the corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares.

 

8.6Construction; Definitions

 

Unless the context requires otherwise, the general provisions, rules of construction, and definitions in the Delaware General Corporation Law shall govern the construction of these bylaws. Without limiting the generality of this provision, the singular number includes the plural, the plural number includes the singular, and the term “person” includes both a corporation and a natural person.

 

8.7Dividends

 

The directors of the corporation, subject to any restrictions contained in (a) the Delaware General Corporation Law or (b) the certificate of incorporation, may declare and pay dividends upon the shares of its capital stock. Dividends may be paid in cash, in property, or in shares of the corporation’s capital stock. The directors of the corporation may set apart out of any of the funds of the corporation available for dividends a reserve or reserves for any proper purpose and may abolish any such reserve. Such purposes shall include but not be limited to equalizing dividends, repairing or maintaining any property of the corporation, and meeting contingencies.

 

8.8Fiscal Year

 

The fiscal year of the corporation shall be fixed by resolution of the Board of Directors and may be changed by the Board of Directors.

 

8.9Transfer Of Stock

 

Upon receipt by the corporation or the transfer agent of the corporation of proper transfer instructions from the record holder of uncertificated shares or upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate or, in the case of uncertificated securities and upon request, a notice of issuance of shares, to the person entitled thereto, cancel the old certificate (if any) and record the transaction in its books.

 

8.10Stock Transfer Agreements

 

The corporation shall have power to enter into and perform any agreement with any number of stockholders of any one or more classes of stock of the corporation to restrict the transfer of shares of stock of the corporation of any one or more classes owned by such stockholders in any manner not prohibited by the Delaware General Corporation Law.

 

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8.11Stockholders Of Record

 

The corporation shall be entitled to recognize the exclusive right of a person recorded on its books as the owner of shares to receive dividends and to vote as such owner, shall be entitled to hold liable for calls and assessments the person recorded on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of another person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware.

 

8.12Facsimile Or Electronic Signatures

 

In addition to the provisions for use of facsimile or electronic signatures elsewhere specifically authorized in these bylaws, facsimile or electronic signatures of any stockholder, director or officer of the corporation may be used whenever and as authorized by the Board of Directors or a committee thereof.

 

ARTICLE IX

 

AMENDMENTS

 

The Bylaws of the corporation may be adopted, amended or repealed by the stockholders entitled to vote; provided, however, that the corporation may, in its certificate of incorporation, confer the power to adopt, amend or repeal Bylaws upon the directors. The fact that such power has been so conferred upon the directors shall not divest the stockholders of the power, nor limit their power to adopt, amend or repeal Bylaws.

 

[Remainder of Page Intentionally Left Blank - Signature Page Follows]

 

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CERTIFICATE OF ADOPTION OF BYLAWS

 

OF

 

GOLFSUITES 2, INC.

 

ADOPTION BY INCORPORATOR

 

The undersigned person appointed in the certificate of incorporation to act as the Incorporator of GolfSuites 2, Inc., a Delaware corporation, hereby adopts the foregoing Bylaws as the Bylaws of the corporation.

 

Executed on March 14, 2019.

 

INCORPORATOR:

 

/s/ Gerald D. Ellenburg  
Gerald D. Ellenburg  

 

CERTIFICATE BY SECRETARY OF ADOPTION BY INCORPORATOR

 

The undersigned hereby certifies that the undersigned is the duly elected, qualified, and acting Secretary of GolfSuites 2, Inc., a Delaware corporation, and that the foregoing Bylaws were adopted as the Bylaws of the corporation on March 14, 2019, by the person appointed in the certificate of incorporation to act as the Incorporator of the corporation.

 

Executed on March 15, 2019.

 

SECRETARY:  
   
/s/ Scott Smylie  
Scott Smylie  

 

 

 

EX1A-4 SUBS AGMT 6 tv523247_ex4.htm EXHIBIT 4

 

Exhibit 4

 

SUBSCRIPTION AGREEMENT

 

THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. THIS INVESTMENT IS SUITABLE ONLY FOR PERSONS WHO CAN BEAR THE ECONOMIC RISK FOR AN INDEFINITE PERIOD OF TIME AND WHO CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT. FURTHERMORE, INVESTORS MUST UNDERSTAND THAT SUCH INVESTMENT IS ILLIQUID AND IS EXPECTED TO CONTINUE TO BE ILLIQUID FOR AN INDEFINITE PERIOD OF TIME. NO PUBLIC MARKET EXISTS FOR THE SECURITIES, AND NO PUBLIC MARKET IS EXPECTED TO DEVELOP FOLLOWING THIS OFFERING.

 

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES OR BLUE SKY LAWS AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND STATE SECURITIES OR BLUE SKY LAWS. ALTHOUGH AN OFFERING STATEMENT HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE “SEC”), THAT OFFERING STATEMENT DOES NOT INCLUDE THE SAME INFORMATION THAT WOULD BE INCLUDED IN A REGISTRATION STATEMENT UNDER THE ACT. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC, ANY STATE SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON THE MERITS OF THIS OFFERING OR THE ADEQUACY OR ACCURACY OF THE SUBSCRIPTION AGREEMENT OR ANY OTHER MATERIALS OR INFORMATION MADE AVAILABLE TO SUBSCRIBER IN CONNECTION WITH THIS OFFERING OVER THE WEB-BASED PLATFORM MAINTAINED BY FundAthena, Inc., d/b/a Manhattan Street Capital (THE “PLATFORM”) ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

 

INVESTORS WHO ARE NOT “ACCREDITED INVESTORS” (AS THAT TERM IS DEFINED IN SECTION 501 OF REGULATION D PROMULGATED UNDER THE ACT) ARE SUBJECT TO LIMITATIONS ON THE AMOUNT THEY MAY INVEST, AS SET OUT IN SECTION 4. THE COMPANY IS RELYING ON THE REPRESENTATIONS AND WARRANTIES SET FORTH BY EACH SUBSCRIBER IN THIS SUBSCRIPTION AGREEMENT AND THE OTHER INFORMATION PROVIDED BY SUBSCRIBER IN CONNECTION WITH THIS OFFERING TO DETERMINE THE APPLICABILITY TO THIS OFFERING OF EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE ACT.

 

THE OFFERING MATERIALS MAY CONTAIN FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO, AMONG OTHER THINGS, THE COMPANY, ITS BUSINESS PLAN AND STRATEGY, AND ITS INDUSTRY. THESE FORWARD-LOOKING STATEMENTS ARE BASED ON THE BELIEFS OF, ASSUMPTIONS MADE BY, AND INFORMATION CURRENTLY AVAILABLE TO THE COMPANY’S MANAGEMENT. WHEN USED IN THE OFFERING MATERIALS, THE WORDS “ESTIMATE,” “PROJECT,” “BELIEVE,” “ANTICIPATE,” “INTEND,” “EXPECT” AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS, WHICH CONSTITUTE FORWARD LOOKING STATEMENTS. THESE STATEMENTS REFLECT MANAGEMENT’S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE THE COMPANY’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN THE FORWARD-LOOKING STATEMENTS. INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE ON WHICH THEY ARE MADE. THE COMPANY DOES NOT UNDERTAKE ANY OBLIGATION TO REVISE OR UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER SUCH DATE OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.

 

1

 

 

THE COMPANY MAY NOT BE OFFERING THE SECURITIES IN EVERY STATE. THE OFFERING MATERIALS DO NOT CONSTITUTE AN OFFER OR SOLICITATION IN ANY STATE OR JURISDICTION IN WHICH THE SECURITIES ARE NOT BEING OFFERED.

 

THE COMPANY RESERVES THE RIGHT IN ITS SOLE DISCRETION AND FOR ANY REASON WHATSOEVER TO MODIFY, AMEND AND/OR WITHDRAW ALL OR A PORTION OF THE OFFERING AND/OR ACCEPT OR REJECT IN WHOLE OR IN PART ANY PROSPECTIVE INVESTMENT IN THE SECURITIES OR TO ALLOT TO ANY PROSPECTIVE INVESTOR LESS THAN THE AMOUNT OF SECURITIES SUCH INVESTOR DESIRES TO PURCHASE. EXCEPT AS OTHERWISE INDICATED, THE OFFERING MATERIALS SPEAK AS OF THEIR DATE. NEITHER THE DELIVERY NOR THE PURCHASE OF THE SECURITIES SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THAT DATE.

 

2

 

 

TO: GolfSuites 2, Inc.
  2738 Falkenburg Road South
  Riverview, Florida 33578

 

Ladies and Gentlemen:

  

1. Subscription.

 

(a) The undersigned (“Subscriber”) hereby irrevocably subscribes for and agrees to purchase Series A Preferred Stock (the “Securities”), of GolfSuites 2, Inc., a Delaware Corporation (the “Company”), at a purchase price of $5 per share (the “Per Security Price”), upon the terms and conditions set forth herein. The minimum subscription is $500. The Series A Preferred Stock being subscribed for under this Subscription Agreement and the Class A Common Stock (“Common Stock”) issuable upon conversion of the Series A Preferred Stock are also referred to as the “Securities.” The rights and preferences of the Series A Preferred Stock are as set forth in Certificate of Incorporation included as Exhibit 2.1 to the Offering Statement of the Company filed with the SEC (the “Offering Statement”).

 

(b) Subscriber understands that the Securities are being offered pursuant to an offering circular dated [____________] (the “Offering Circular”) filed with the SEC as part of the Offering Statement. By executing this Subscription Agreement, Subscriber acknowledges that Subscriber has received this Subscription Agreement, copies of the Offering Circular and Offering Statement including exhibits thereto and any other information required by the Subscriber to make an investment decision.

 

(c) The Subscriber’s subscription may be accepted or rejected in whole or in part, at any time prior to a Closing Date (as hereinafter defined), by the Company at its sole discretion. In addition, the Company, at its sole discretion, may allocate to Subscriber only a portion of the number of Securities Subscriber has subscribed for. The Company will notify Subscriber whether this subscription is accepted (whether in whole or in part) or rejected. If Subscriber’s subscription is rejected, Subscriber’s payment (or portion thereof if partially rejected) will be returned to Subscriber without interest and all of Subscriber’s obligations hereunder shall terminate.

 

(d) The aggregate number of Securities sold shall not exceed 10,000,000 (the “Maximum Offering”). The Company may accept subscriptions until [______________], unless otherwise extended by the Company in its sole discretion in accordance with applicable SEC regulations for such other period required to sell the Maximum Offering (the “Termination Date”). The Company may elect at any time to close all or any portion of this offering, on various dates at or prior to the Termination Date (each a “Closing Date”).

 

3

 

 

(e) In the event of rejection of this subscription in its entirety, or in the event the sale of the Securities (or any portion thereof) is not consummated for any reason, this Subscription Agreement shall have no force or effect, except for Section 5 hereof, which shall remain in force and effect.

 

(f) The terms of this Subscription Agreement shall be binding upon Subscriber and its transferees, heirs, successors and assigns (collectively, “Transferees”); provided that for any such transfer to be deemed effective, the Transferee shall have executed and delivered to the Company in advance an instrument in a form acceptable to the Company in its sole discretion, pursuant to which the proposed Transferee shall be acknowledge, agree, and be bound by the representations and warranties of Subscriber, terms of this Subscription Agreement.

 

2. Purchase Procedure.

 

(a) Payment. The purchase price for the Securities shall be paid simultaneously with the execution and delivery to the Company of the signature page of this Subscription Agreement. Subscriber shall deliver a signed copy of this Subscription Agreement, along with payment for the aggregate purchase price of the Securities by a check for available funds made payable to “[____________]”, by ACH electronic transfer, wire transfer to an account designated by the Company, or by debit card or credit card (for non-U.S. investors only), by cancellation of any indebtedness and convertible securities (and any notes or evidence thereof) made by the Company to the undersigned (the "Indebtedness"), or by any combination of such methods.

 

(b) Escrow arrangements. Payment for the Securities shall be received by [______________] (the “Escrow Agent”) from the undersigned by transfer of immediately available funds, check or other means approved by the Company at least two days prior to the applicable Closing Date, in the amount as set forth on the signature page hereto. Upon such Closing Date, the Escrow Agent shall release such funds to the Company. The undersigned shall receive notice and evidence of the digital entry of the number of the Securities owned by undersigned reflected on the books and records of the Company and verified by Computershare Inc., (the “Transfer Agent”), which books and records shall bear a notation that the Securities were sold in reliance upon Regulation A.

 

Escrow Agent Name  
Address  
Routing Number  
Account Number  
Account Name  
Further Instructions  

 

3. Representations and Warranties of the Company.

 

The Company represents and warrants to Subscriber that the following representations and warranties are true and complete in all material respects as of the date of each Closing Date, except as otherwise indicated. For purposes of this Agreement, an individual shall be deemed to have “knowledge” of a particular fact or other matter if such individual is actually aware of such fact. The Company will be deemed to have “knowledge” of a particular fact or other matter if one of the Company’s current officers has, or at any time had, actual knowledge of such fact or other matter.

 

4

 

 

(a) Organization and Standing. The Company is a corporation duly formed, validly existing and in good standing under the laws of the State of Delaware. The Company has all requisite power and authority to own and operate its properties and assets, to execute and deliver this Subscription Agreement, and any other agreements or instruments required hereunder. The Company is duly qualified and is authorized to do business and is in good standing as a foreign corporation in all jurisdictions in which the nature of its activities and of its properties (both owned and leased) makes such qualification necessary, except for those jurisdictions in which failure to do so would not have a material adverse effect on the Company or its business.

 

(b) Issuance of the Securities. The issuance, sale and delivery of the Securities in accordance with this Subscription Agreement has been duly authorized by all necessary corporate action on the part of the Company. The Securities, when so issued, sold and delivered against payment therefor in accordance with the provisions of this Subscription Agreement, will be duly and validly issued, fully paid and non-assessable. The Company hereby agrees that there shall be reserved for issuance and delivery upon conversion of the Series A Preferred Stock such number of Class A Common Stock into which such Securities shall then be convertible into.

 

(c) Authority for Agreement. The execution and delivery by the Company of this Subscription Agreement and the consummation of the transactions contemplated hereby (including the issuance, sale and delivery of the Securities) are within the Company’s powers and have been duly authorized by all necessary corporate action on the part of the Company. Upon full execution hereof, this Subscription Agreement shall constitute a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies and (iii) with respect to provisions relating to indemnification and contribution, as limited by considerations of public policy and by federal or state securities laws.

 

(d) No filings. Assuming the accuracy of the Subscriber’s representations and warranties set forth in Section 4 hereof, no order, license, consent, authorization or approval of, or exemption by, or action by or in respect of, or notice to, or filing or registration with, any governmental body, agency or official is required by or with respect to the Company in connection with the execution, delivery and performance by the Company of this Subscription Agreement except (i) for such filings as may be required under Regulation A or under any applicable state securities laws, (ii) for such other filings and approvals as have been made or obtained, or (iii) where the failure to obtain any such order, license, consent, authorization, approval or exemption or give any such notice or make any filing or registration would not have a material adverse effect on the ability of the Company to perform its obligations hereunder.

 

5

 

 

(e) Capitalization. The authorized and outstanding securities of the Company immediately prior to the initial investment in the Securities is as set forth “Securities Being Offered” in the Offering Circular. Except as set forth in the Offering Circular, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), or agreements of any kind (oral or written) for the purchase or acquisition from the Company of any of its securities.

 

(f) Financial statements. Complete copies of the Company’s financial statements consisting of the balance sheets of the Company as at May 15, 2019 and the related statements of income, stockholders’ equity and cash flows for the inception period from March 13, 2019 through May 15, 2019 (the “Financial Statements”) have been made available to the Subscriber and appear in the Offering Circular. The Financial Statements are based on the books and records of the Company and fairly present in all material respects the financial condition of the Company as of the respective dates they were prepared and the results of the operations and cash flows of the Company for the periods indicated. IndigoSpire CPA Group, LLC, which has audited the Financial Statements, is an independent accounting firm within the rules and regulations adopted by the SEC.

 

(g) Proceeds. The Company shall use the proceeds from the issuance and sale of the Securities as set forth in “Use of Proceeds to issuer” in the Offering Circular.

 

(h) Litigation. Except as set forth in the Offering Circular, there is no pending action, suit, proceeding, arbitration, mediation, complaint, claim, charge or investigation before any court, arbitrator, mediator or governmental body, or to the Company’s knowledge, currently threatened in writing (a) against the Company or (b) against any consultant, officer, manager, director or key employee of the Company arising out of his or her consulting, employment or board relationship with the Company or that could otherwise materially impact the Company.

 

4. Representations and Warranties of Subscriber. By executing this Subscription Agreement, Subscriber (and, if Subscriber is purchasing the Securities subscribed for hereby in a fiduciary capacity, the person or persons for whom Subscriber is so purchasing) represents and warrants, which representations and warranties are true and complete in all material respects as of such Subscriber’s respective Closing Date(s):

 

(a) Requisite Power and Authority. Such Subscriber has all necessary power and authority under all applicable provisions of law to execute and deliver this Subscription Agreement, the Operating Agreement and other agreements required hereunder and to carry out their provisions. All action on Subscriber’s part required for the lawful execution and delivery of this Subscription Agreement and other agreements required hereunder have been or will be effectively taken prior to the Closing Date. Upon their execution and delivery, this Subscription Agreement and other agreements required hereunder will be valid and binding obligations of Subscriber, enforceable in accordance with their terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors’ rights and (b) as limited by general principles of equity that restrict the availability of equitable remedies.

 

6

 

 

(b) Investment Representations. Subscriber understands that the Securities have not been registered under the Securities Act of 1933, as amended (the “Securities Act”). Subscriber also understands that the Securities are being offered and sold pursuant to an exemption from registration contained in the Securities Act based in part upon Subscriber’s representations contained in this Subscription Agreement.

 

(c) Illiquidity and Continued Economic Risk. Subscriber acknowledges and agrees that there is no ready public market for the Securities and that there is no guarantee that a market for their resale will ever exist. Subscriber must bear the economic risk of this investment indefinitely and the Company has no obligation to list the Securities on any market or take any steps (including registration under the Securities Act or the Securities Exchange Act of 1934, as amended) with respect to facilitating trading or resale of the Securities. Subscriber acknowledges that Subscriber is able to bear the economic risk of losing Subscriber’s entire investment in the Securities. Subscriber also understands that an investment in the Company involves significant risks and has taken full cognizance of and understands all of the risk factors relating to the purchase of Securities.

 

(d) Accredited Investor Status or Investment Limits. Subscriber represents that either:

 

(i) Subscriber is an “accredited investor” within the meaning of Rule 501 of Regulation D under the Securities Act. Subscriber represents and warrants that the information set forth in response to question (c) on the signature page hereto concerning Subscriber is true and correct; or

 

(ii) The purchase price set out in paragraph (b) of the signature page to this Subscription Agreement, together with any other amounts previously used to purchase Securities in this offering, does not exceed 10% of the greater of the Subscriber’s annual income or net worth.

 

Subscriber represents that to the extent it has any questions with respect to its status as an accredited investor, or the application of the investment limits, it has sought professional advice.

 

(e) Shareholder information. Within five days after receipt of a request from the Company, the Subscriber hereby agrees to provide such information with respect to its status as a shareholder (or potential shareholder) and to execute and deliver such documents as may reasonably be necessary to comply with any and all laws and regulations to which the Company is or may become subject. Subscriber further agrees that in the event it transfers any Securities, it will require the transferee of such Securities to agree to provide such information to the Company as a condition of such transfer.

 

(f) Company Information. Subscriber understands that the Company is subject to all the risks that apply to early-stage companies, whether or not those risks are explicitly set out in the Offering Circular. Subscriber has had such opportunity as it deems necessary (which opportunity may have presented through online chat or commentary functions) to discuss the Company’s business, management and financial affairs with managers, officers and management of the Company and has had the opportunity to review the Company’s operations and facilities. Subscriber has also had the opportunity to ask questions of and receive answers from the Company and its management regarding the terms and conditions of this investment. Subscriber acknowledges that except as set forth herein, no representations or warranties have been made to Subscriber, or to Subscriber’s advisors or representative, by the Company or others with respect to the business or prospects of the Company or its financial condition.

 

7

 

 

(g) Valuation. The Subscriber acknowledges that the price of the Securities was set by the Company on the basis of the Company’s internal valuation and no warranties are made as to value. The Subscriber further acknowledges that future offerings of Securities may be made at lower valuations, with the result that the Subscriber’s investment will bear a lower valuation.

 

(h) Domicile. Subscriber maintains Subscriber’s domicile (and is not a transient or temporary resident) at the address shown on the signature page.

 

(i) No Brokerage Fees. There are no claims for brokerage commission, finders’ fees or similar compensation in connection with the transactions contemplated by this Subscription Agreement or related documents based on any arrangement or agreement binding upon Subscriber.

 

(j) Foreign Investors. If Subscriber is not a United States person (as defined by Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended), Subscriber hereby represents that it has satisfied itself as to the full observance of the laws of its jurisdiction in connection with any invitation to subscribe for the Securities or any use of this Subscription Agreement, including (i) the legal requirements within its jurisdiction for the purchase of the Securities, (ii) any foreign exchange restrictions applicable to such purchase, (iii) any governmental or other consents that may need to be obtained, and (iv) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale, or transfer of the Securities. Subscriber’s subscription and payment for and continued beneficial ownership of the Securities will not violate any applicable securities or other laws of the Subscriber’s jurisdiction.

 

5. Survival of Representations and Indemnity. The representations, warranties and covenants made by the Subscriber herein shall survive the Termination Date of this Agreement. The Subscriber agrees to indemnify and hold harmless the Company and its respective officers, directors and affiliates, and each other person, if any, who controls the Company within the meaning of Section 15 of the Securities Act against any and all loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all reasonable attorneys’ fees, including attorneys’ fees on appeal) and expenses reasonably incurred in investigating, preparing or defending against any false representation or warranty or breach of failure by the Subscriber to comply with any covenant or agreement made by the Subscriber herein or in any other document furnished by the Subscriber to any of the foregoing in connection with this transaction.

 

8

 

 

6. Governing Law; Jurisdiction. This Subscription Agreement shall be governed and construed in accordance with the laws of the State of New York.

 

EACH OF THE SUBSCRIBER AND THE COMPANY CONSENTS TO THE JURISDICTION OF AN ALTERNATIVE FORUM, THE COURT OF CHANCERY IN THE STATE OF DELAWARE, AND NO OTHER PLACE AND IRREVOCABLY AGREES THAT ALL ACTIONS OR PROCEEDINGS RELATING TO THIS SUBSCRIPTION AGREEMENT MAY BE LITIGATED IN SUCH COURTS. EACH OF SUBSCRIBER AND THE COMPANY ACCEPTS FOR ITSELF AND HIMSELF AND IN CONNECTION WITH ITS AND HIS RESPECTIVE PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS SUBSCRIPTION AGREEMENT. NOTWITHSTANDING THE FOREGOING, THIS FORUM SELECTION PROVISION SHALL NOT APPLY TO ACTIONS ARISING UNDER FEDERAL SECURITIES LAWS OR TO THE EXTENT THAT ITS APPLICATION WOULD VIOLATE ANY FEDERAL LAW. EACH OF SUBSCRIBER AND THE COMPANY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN THE MANNER AND IN THE ADDRESS SPECIFIED IN SECTION 8 AND THE SIGNATURE PAGE OF THIS SUBSCRIPTION AGREEMENT 

 

EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED IN CONTRACT, TORT OR OTHERWISE AND INCLUDING CLAIMS UNDER THE FEDERAL SECURITIES LAWS) ARISING OUT OF OR RELATING TO THIS SUBSCRIPTION AGREEMENT OR THE ACTIONS OF EITHER PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF. EACH OF THE PARTIES HERETO ALSO WAIVES ANY BOND OR SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF SUCH PARTY. EACH OF THE PARTIES HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS SUBSCRIPTION AGREEMENT. IN THE EVENT OF LITIGATION, THIS SUBSCRIPTION AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT. BY AGREEING TO THIS WAIVER, THE SUBSCRIBER IS NOT DEEMED TO WAIVE THE COMPANY’S COMPLIANCE WITH THE FEDERAL SECURITIES LAWS AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER. 

 

7. Notices. Notice, requests, demands and other communications relating to this Subscription Agreement and the transactions contemplated herein shall be in writing and shall be deemed to have been duly given if and when (a) delivered personally, on the date of such delivery; or (b) mailed by registered or certified mail, postage prepaid, return receipt requested, in the third day after the posting thereof; or (c) emailed, telecopied or cabled, on the date of such delivery to the address of the respective parties as follows:

 

9

 

 

If to the Company, to:

 

GolfSuites 2, Inc.

Attn: Gerald Ellenburg

2738 Falkenburg Road South

Riverview, Florida 33578

 

Copy to:

GolfSuites 2, Inc.

Attn: General Counsel

2738 Falkenburg Road South

Riverview, Florida 33578

 

If to a Subscriber, to Subscriber’s address as shown on the signature page hereto

 

or to such other address as may be specified by written notice from time to time by the party entitled to receive such notice. Any notices, requests, demands or other communications by telecopy or cable shall be confirmed by letter given in accordance with (a) or (b) above.

 

8. Miscellaneous.

 

(a) All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural, as the identity of the person or persons or entity or entities may require.

 

(b) This Subscription Agreement is not transferable or assignable by Subscriber.

 

(c) The representations, warranties and agreements contained herein shall be deemed to be made by and be binding upon Subscriber and its heirs, executors, administrators and successors and shall inure to the benefit of the Company and its successors and assigns.

 

(d) None of the provisions of this Subscription Agreement may be waived, changed or terminated orally or otherwise, except as specifically set forth herein or except by a writing signed by the Company and Subscriber.

 

(e) In the event any part of this Subscription Agreement is found to be void or unenforceable, the remaining provisions are intended to be separable and binding with the same effect as if the void or unenforceable part were never the subject of agreement.

 

(f) The invalidity, illegality or unenforceability of one or more of the provisions of this Subscription Agreement in any jurisdiction shall not affect the validity, legality or enforceability of the remainder of this Subscription Agreement in such jurisdiction or the validity, legality or enforceability of this Subscription Agreement, including any such provision, in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by law.

 

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(g) This Subscription Agreement supersedes all prior discussions and agreements between the parties with respect to the subject matter hereof and contains the sole and entire agreement between the parties hereto with respect to the subject matter hereof.

 

(h) The terms and provisions of this Subscription Agreement are intended solely for the benefit of each party hereto and their respective successors and assigns, and it is not the intention of the parties to confer, and no provision hereof shall confer, third-party beneficiary rights upon any other person.

 

(i) The headings used in this Subscription Agreement have been inserted for convenience of reference only and do not define or limit the provisions hereof.

 

(j) This Subscription Agreement may be executed in any number of counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.

 

(k) If any recapitalization or other transaction affecting the stock of the Company is effected, then any new, substituted or additional securities or other property which is distributed with respect to the Securities shall be immediately subject to this Subscription Agreement, to the same extent that the Securities, immediately prior thereto, shall have been covered by this Subscription Agreement.

 

(l) No failure or delay by any party in exercising any right, power or privilege under this Subscription Agreement shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

 

[SIGNATURE PAGE FOLLOWS]

 

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EX1A-6 MAT CTRCT 7 tv523247_ex6-1.htm EXHIBIT 6.1

 

Exhibit 6.1

 

Manhattan Street Capital

Reg A+ Engagement Agreement

 

Effective Date: July 15, 2018

 

KGEM Golf Inc

2738 Falkenburg Road South

Riverview, FL 33578

USA

 

Re: Advisory, Technology and Administrative Services

 

This agreement (this “Agreement”) will confirm the arrangements under which FundAthena, Inc., DBA Manhattan Street Capital, Inc. (“MSC”) and KGEM Golf Inc., a Delaware C corporation, and its present and future subsidiaries (collectively, the ’’Client”), to act as the Client’s advisor in connection with a possible Financing (as defined below) and the Client’s use of MSC’s proprietary technology platform (the “MSC Platform”).

 

1. Retention. During the term of this engagement, and as mutually agreed upon by MSC and the Client, MSC shall provide Client with advice, technology, administrative services and assistance with and introductions to resources needed to conduct between one and six parallel offering(s) under Regulation A under the Securities Act of 1933, (any of the foregoing, a “Financing”). Client agrees to be bound by the MSC Platform standard terms and conditions, (the “Platform Terms”) which can be found at (http://www.manhattanstreetcapital.com/terms). Access to the MSC Platform will not be provided without Client’s acceptance of the Platform Terms.

 

2. Cooperation. The Client shall furnish MSC and/or upload to the MSC Platform all current and historical materials and information regarding the business and financial condition of the Client relevant to the Financing, and all other information and data, and access to the Client’s officers, directors, employees and professional advisors, which MSC reasonably requests in connection with MSC’s activities hereunder. All such materials, information and data shall, to the Client’s knowledge, not include any misleading statements of a material fact, in light of the circumstances in which such statements are made. The Client agrees to promptly advise MSC of all developments materially affecting the Client, any proposed Financing or the completeness or accuracy of the information previously furnished to MSC, and agrees that no material initiatives relating to the proposed Financing will be taken without MSC having been consulted in advance thereof.

 

3. Compensation. The Client agrees to promptly pay MSC the following fees with respect to each Financing (the “Fees”):

 

a) Advisory retainer fee of $20,000 and the same value in ten-year cashless exercise warrants for KGEM Golf Common Stock priced at $0.25, the cash fee to be paid in advance for a 9 month period from the Effective Date, warrants will be delivered to MSC prior to the first Financing going live to investors. Reasonable direct expenses Incurred by MSC on behalf of Client will be reimbursed by Client. These fees and reimbursements are not contingent on success of any Financing. This discounted fee is based on the intent of Client to make multiple Regulation A offerings that are substantially identical simultaneously. In the event that a significantly different schedule for the related Financings occurs, MSC and Client will negotiate an amended consulting fee arrangement in good faith to pay MSC for the increased costs and effort involved.

 

 

 

 

b) MSC technology admin and service fee in the sum of (i) $25 per investor, plus (ii) cashless ten year warrants to purchase 25 shares of KGEM Golf Common Stock for the price of $1 per share per investor in each Financing for up to a maximum of 150,000 investors as aggregated from all six (6) Financings. The $25 per investor and warrant fee is constant regardless of the investment amount from each investor, and it is not dependent on the total size of the capital raise. It is paid once per investor. This fee is an obligation of the Client regardless of the success of the Financing. For purposes of calculating this fee, an investor is defined as any person or entity that deposits money into escrow through the MSC investment interface as part of the Financing. The fee is still payable if such investor is rejected after AML and their money is returned.

 

The cash MSC fee will be invoiced weekly by MSC. The cash payment will be due for payment Net 10. MSC technology admin and service fee warrants will be delivered upon completion of each Financing.                                          It is expressly understood that a separate Fee shall be payable in respect of each Financing in the event that more than six Financings occur. The parties acknowledge that MSC fees above do not include back-end payment processing fees, escrow, transfer agent, AML check, Accreditation Verification, broker-dealer or marketing agency fees or marketing costs.

 

c) The parties acknowledge that Client at its own initiative chose to offer MSC the option to purchase common stock in KGEM Golf Inc. at par in the amount of 3 million shares. MSC accepted the offer and purchased these shares on October 17, 2018. Such shares are not the subject of the fee arrangements set out above.

 

4. Confidentiality. Each party acknowledges that, in the course of evaluating the Financing and, it (the “Receiving Party”) may obtain information relating to the other party’s business (the “Disclosing Party”) (all such information the “Confidential Information”). Such Confidential Information shall belong solely to the Disclosing Party. For sake of clarity, information is considered Confidential Information for so long as it has not been made known to the general public by the Disclosing Party or through the rightful actions of a third party, and for so long as the information holds value, as reasonably determined by the Disclosing Party, by virtue of remaining confidential. During the Term and after its termination, the Receiving Party: (a) shall not use, other than as required for the Financing, or disclose Confidential Information without the prior written consent of the Disclosing Party, or unless such Confidential Information becomes part of the public domain without breach of this Agreement by the Receiving Party, its officers, directors, employees or agents; (b) agrees to take all reasonable measures to maintain the Confidential Information in confidence, but not less than those it takes to safeguard its own confidential information; and (c) will disclose the Confidential Information only to those of its employees and consultants as are necessary for the uses licensed hereunder and are bound by obligations of confidentiality. Upon the termination of this Agreement, the Receiving Party shall return or destroy all Confidential Information, as requested by the Disclosing Party.

 

5. Termination.

 

The agreement has a term of 12 months from execution. Upon any termination of this Agreement, the rights and obligations of the parties hereunder shall terminate, except for the obligations set forth in Sections 3 through 4 and 7-9 (inclusive), shall survive termination of this Agreement.

 

6. Exclusivity. During the term of this Agreement, the Client will not, and will not permit any security holder, affiliate, advisor or representative of the Client to engage any other party to perform any services or act in any capacity which is related, to the Financing without the prior written approval of MSC. This exclusion does not apply to Broker-dealers or underwriters.

 

 

 

 

7. Indemnification. Client agrees to indemnify and hold harmless MSC and its affiliates, and each of their respective officers, directors, managers, members, partners, employees and agents, and any other persons controlling MSC or any of its affiliates (collectively, “Indemnified Persons”), to the fullest extent lawful, from and against any claims, liabilities, losses, damages, costs and expenses (or any action, claim, suit or proceeding in respect thereof), as incurred, related to or arising out of or in connection with MSC services (whether occurring before, at or after the date hereof) under the Agreement, the Financing or any proposed Financing contemplated by the Agreement or any Indemnified Person’s role in connection therewith (“Losses”), provided, however, that the Client shall not be responsible for any Losses that arise out of or are based on any action of or failure to act by MSC to the extent such Losses are determined, by a final, non-appealable judgment by a court, to have resulted primarily and directly from MSC’s gross negligence or willful misconduct.

 

8. Limitation on Liability.

 

EXCEPT FOR A PARTY’S BREACH OF SECTION 3 OR CLIENT’S INDEMNIFICATION OBLIGATIONS, NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES OF ANY NATURE, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, AND REGARDLESS OF WHETHER THE CLAIM OR LIABILITY IS BASED UPON ANY CONTRACT, TORT, BREACH OF WARRANTY OR OTHER LEGAL OR EQUITABLE THEORY.

 

EXCEPT FOR A PARTY’S BREACH OF SECTION 3 OR CLIENT’S INDEMNIFICATION OBLIGATIONS, THE TOTAL LIABILITY OF EITHER PARTY, WHETHER BASED IN CONTRACT, TORT (INCLUDING NEGLIGENCE OR STRICT LIABILITY), OR OTHERWISE, WILL NOT EXCEED, IN THE AGGREGATE, THE FEES PAID TO MSC. THE FOREGOING LIMITATIONS WILL APPLY NOTWITHSTANDING ANY FAILURE OF ESSENTIAL FINANCING OF ANY LIMITED REMEDY.

 

9. Independent Contractor. The Client acknowledges and agrees that (i) MSC will act as an independent contractor hereunder, its responsibility is solely owed to the Client and contractual in nature, and MSC does not owe the Client, or any other person or entity (including, without limitation, any securityholders, affiliates, creditors or employees of the Client), any fiduciary or similar duty as a result of its engagement hereunder or otherwise; (ii) MSC and its affiliates will not be liable for any losses, claims, damages or liabilities arising out of the actions taken, omissions of or advice given by other parties who are providing services to the Client; (iii) MSC is not an advisor as to legal, tax, accounting or regulatory matters in any jurisdiction; (iv) the Client has consulted, and will consult, as appropriate, with its own advisors concerning such matters and shall be responsible for making its own independent investigation and appraisal of this Agreement and the Financings contemplated hereby, and that MSC and its affiliates shall have no responsibility or liability with respect thereto; and (v) the Client is capable of evaluating the merits and risks of such Financings and the fees payable in connection therewith and that it understands and accepts the terms, conditions, and risks of such Financings and fees.

 

 

 

 

10. Miscellaneous. This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of Delaware and all claims shall be exclusively commenced in the state or federal courts located in Wilmington, Delaware. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof, and may not be amended or modified except in writing signed by each party hereto; provided, however, that if Client agrees to the Platform Terms, the Platform Terms shall govern Client’s use of the MSC Platform and to the extent there is a conflict or inconsistency between this Agreement and the Platform Terms, the Platform Terms shall control. This Agreement may not be assigned by Client hereto without the prior written consent of MSC. Any attempted assignment of this Agreement made without such consent shall be void and of no effect. This Agreement is solely for the benefit of the Client and MSC. If any provision hereof shall be held by a court of competent jurisdiction to be invalid, void or unenforceable in any respect, or against public policy, such determination shall not affect such provision in any other respect nor any other provision hereof. Headings used herein are for convenience of reference only and shall not affect the interpretation or construction of this Agreement. This Agreement may be executed in facsimile or other electronic counterparts, each of which will be deemed to be an original and all of which together will be deemed to be one and the same document. This Agreement has been reviewed by each of the signatories hereto and its counsel. There shall be no construction of any provision against MSC because this Agreement was drafted by MSC, and the parties waive any statute or rule of law to such effect.

 

Please sign below and return to MSC to indicate the Client’s acceptance of the terms set forth herein, and once executed by each of MSC and the Client, this Agreement shall constitute a binding agreement between the client and MSC as of the date first written above.

 

Client Signed: /s/ Gerald D. Ellenburg   Printed Name: Gerald D. Ellenburg
       
Title: Chairman   Phone: 727 243-2050
       
KGEM Golf Inc    
2738 Falkenburg Road South    
Riverview, FL 33578    
USA    

 

MSC Signed: /s/ Rod Turner   Printed Name: Rod Turner
         
Title: CEO Phone: 760 622 9566    
         
FundAthena, Inc., DBA Manhattan Street Capital, Inc.    
5694 Mission Center Road, Suite 602-468    
San Diego CA 92108    
USA    

 

 

 

EX1A-6 MAT CTRCT 8 tv523247_ex6-2.htm EXHIBIT 6.2

 

Exhibit 6.2

 

MANAGEMENT SERVICES AGREEMENT

 

This MANAGEMENT SERVICES AGREEMENT (“Agreement”) is entered into as of this 15th day of April, 2019, by and between GolfSuites 2, Inc., a Delaware corporation with a principal place of business at 2738 Falkenburg Rd. S., Riverview, FL 33578 (“GolfSuites 2”) and KGEM Golf, Inc., a Delaware corporation with a principal place of business at 2738 Falkenburg Rd. S., Riverview, FL 33578 (“Manager”).

 

WHEREAS, GolfSuites 2 is a corporation incorporated to develop, own, and operate a golf-themed entertainment and hospitality business; and

 

WHEREAS, Manager is in the business of developing, managing, and operating golf-themed entertainment and hospitality businesses; and

 

WHEREAS, Manager owns certain intellectual property and business concepts related to managing and operating golf-themed entertainment and hospitality businesses; and

 

WHEREAS, Manager plans the formation of other similar subsidiary corporations like GolfSuites 2, and plans therefore to enter into similar agreements with such entities, and should the formation of other similar subsidiaries by Manager occur, these entities are anticipated to reduce in part the amount of funds paid from GolfSuites 2 to Manager; and

 

WHEREAS, GolfSuites 2 wishes to retain Manager as the Manager of the GolfSuites 2, to manage the business and affairs of GolfSuites 2 in accordance with the terms and conditions of this Agreement, its Bylaws, and applicable state law.

 

NOW THEREFORE, in consideration of the foregoing premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1.           Incorporation of Recitals. The Recitals are hereby incorporated in and made a part of the Agreement.

 

2.           Engagement of Manager. GolfSuites 2 hereby engages Manager to supervise, direct and control the acquisition, development, management, operation and promotion of GolfSuites 2’s locations, which includes, but is not limited to, the exclusive authority to direct, supervise, manage and operate the golf-themed entertainment and hospitality business on a day-to-day basis.

 

3.           Manager’s Responsibilities and Authority. In connection with the duties assumed or assigned hereunder, Manager shall supervise the operations at GolfSuites 2’s locations consistent and in accordance with the terms and conditions of this Agreement. Manager’s authority, obligations and responsibilities include, but are not limited to, the following:

 

a)Manager may negotiate, execute and deliver on behalf of GolfSuites 2 such agreements, certificates, deeds, deeds of trust, notes, leases, security agreements, contracts of sale, and other documents as it deems necessary and appropriate in its sole discretion to give effect to any conveyances, leases, debt obligations and security therefore, and to procure real estate, labor, materials, or services including, without limitation, the services of professionals.

 

 

 

 

b)Manager shall determine and implement all personnel policies relating to GolfSuites 2’s locations, including policies and practices relating to terms and conditions of employment, screening, selection, training, supervision, compensation, bonuses, benefit plans, discipline, discharge and replacement for all personnel.

 

c)Manager shall purchase the following insurance on behalf of GolfSuites 2 as necessary in Manager’s sole discretion: (i) for each GolfSuites 2 location, property insurance on contents as well as improvements and betterments, if necessary; (ii) general liability insurance for premises and operations; (iii) workers compensation and employer’s liability insurance; (iv) hired and non-owned automobile liability insurance; (v) $1,000,000 umbrella liability insurance policy; (vi) directors and officers liability insurance; and (vii) group medical, life, accidental death and dismemberment and long-term disability insurance for GolfSuites 2 employees in accordance with the human resources policies developed by Manager.

 

d)Manager shall prepare such budgets and periodic reports for GolfSuites 2 as it deems necessary and appropriate, and Manager shall provide such budgets and reports to the shareholders of GolfSuites 2. If GolfSuites 2 is required to have an annual audit, Manager shall coordinate such audit at GolfSuites 2’s expense.

 

e)Manager shall coordinate, at GolfSuites 2’s expense, the timely filing of all tax returns required under applicable state and federal laws.

 

f)Manager shall hold meetings of directors and shareholders in person or via conference call as necessary or required, or may request that action be taken by written consent; provided, however, that Manager shall act in accordance with the GolfSuites 2’s Bylaws and applicable laws and regulations in doing so.

 

g)Manager shall license to GolfSuites 2 the intellectual property and business concepts and design necessary to develop a “GolfSuites” golf-themed entertainment and hospitality business on the locations GolfSuites 2 acquires. GolfSuites 2 will receive a nonexclusive license for all intellectual property rights needed for a “GolfSuites” business for no charge, or if a charge is required, then at a nominal charge from Manager; provided, however, any intellectual property or business concept expenses related to the acquisition, creation, or development of such “GolfSuites” intellectual property, including but not limited to the name, interior design of locations, architecture, or staff training, shall be paid by Manager and allocated to the managed corporations, including GolfSuites 2, pursuant to Section 5 below.

 

h)Manager may perform all other acts as may be necessary or appropriate to conduct GolfSuites 2’s business, subject to all conditions and limitations set forth in the GolfSuites 2’s Bylaws.

 

4.           Term and Termination. The initial term of this Agreement is ten (10) years, which shall automatically renew for additional ten (10) year terms. Either party has the right to terminate this Agreement with written notice at least 180 days prior to the end of the current term.

 

5.           Management Reimbursement Expenses. GolfSuites 2 shall pay Manager a monthly management expense reimbursement payment (“Management Payment”) in United States Dollars at the place for giving of notice to Manager, or to such other place as Manager shall designate, that shall be due and payable on the 30th day after the end of the each respective month. The Management Payment is calculated as follows:

 

Page 2 of 4

 

 

a)GolfSuites 2 will incur direct and indirect capitalized costs and overhead expenses. Direct capitalized costs and overhead expenses will be paid by GolfSuites 2 directly, but indirect capital costs and overhead expenses will be paid by Manager and then reimbursed by GolfSuites 2, as follows:

 

i.Capitalized costs that are exclusive to GolfSuites 2 and paid by Manager will be reimbursed in full by GolfSuites 2. Such costs would include architectural, engineering, land, zoning and other costs directly related to assets belonging to GolfSuites 2.

 

ii.Capitalized costs that are to be shared amongst GolfSuites 2 and other active subsidiaries managed by Manager will be reimbursed pro-rata based upon the number of active subsidiaries (an active subsidiary is defined as one that has received SEC Qualification for its Reg A Plus offering and has commenced fundraising. Thereafter it is considered active). Manager reserves the right to defer the collection of reimbursements from GolfSuites 2 and / or other subsidiaries, if it determines that such reimbursements should be shared amongst more or all of its planned subsidiaries. Such costs would include concept design common to all of Manager’s subsidiaries, intellectual properties, technology and other costs related to all of Manager’s subsidiaries and their assets.

 

b)Overhead expenses will be fully reimbursed pro-rata to Manager by those subsidiaries that are active at the time such expenses are incurred, based on the following levels:

 

i.“Level 1” will require expenses to be reimbursed pro-rata by the number of subsidiaries that are formed and actively procuring funds in their Reg A Plus offerings. While GolfSuites 2 is the sole subsidiary formed and procuring funds in its Reg A Plus offering (if and when SEC Qualified), it will be the sole entity reimbursing Manager. As future subsidiaries are formed and commence procuring funds under SEC Qualified Reg A Plus offerings, they will contribute to the reimbursement on an equal basis. When there are two that are active and funding, they will share half each. When there are three, they will share 1/3 each. And so on until Manager overhead expenses are being shared equally by all six planned subsidiaries.

 

ii.“Level 2” will require that once subsidiaries commence opening locations, (opening locations is defined as the closing on buying a piece of land by the respective Reg A Plus subsidiary) it will become the “location-count” that determines the sharing of overhead expense reimbursements. As an example, if there are six subsidiaries active, and one of those subsidiaries has two opened locations, then the overhead expense reimbursement will be shared 1/7th, with the subsidiary having two locations reimbursing Manager 2/7th’s and the other five reimbursing 1/7th each. In this manner, overhead expense reimbursement will be shared equally by the number of open locations.

 

Page 3 of 4

 

 

c)Manager shall not charge GolfSuites 2 any “profit fees” or “management fees” in addition to the cost allocations above. Actual Manager expenses that are chargeable to GolfSuites 2 will be paid by GolfSuites 2 to Manager without markup. Loans made from Manager to GolfSuites 2 will be required to be repaid in full at the Wall Street Journal Prime Rate (currently 5.50%).

 

6.           Compliance. Manager shall perform its duties hereunder in compliance with all applicable state and federal laws and regulations.

 

7.           Assignment. This Agreement is not assignable by either party hereto without the prior written consent of the other party. The terms, promises, covenants and agreements contained in this Agreement shall apply to, be binding upon and inure to the benefit of the parties hereto and their respective successors, legal representatives and permitted assigns.

 

8.           Non-waiver. Failure of either party to enforce any provision of this Agreement shall not operate or be construed as a waiver of any such provision or provisions, nor prevent such party from thereafter enforcing any of its rights with respect to other or further violations of the Agreement.

 

9.           Entirety. This Agreement constitutes the entire agreement between the parties with respect to the subject matter contained herein and it supersedes all prior written or oral agreements and undertakings with respect to such subject matter. This Agreement may be modified only by a writing signed by both parties to this Agreement.

 

10.         Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware.

 

11.         Notice. All notices, requests, demands, payments and other communications hereunder shall be deemed to have been duly given if sent in writing, by hand delivery or certified mail, to the address set forth in the preamble hereof, or to such other address as may be given to the other party in writing. Notice of change of address shall be effective only upon receipt.

 

The parties hereto have executed this Management Services Agreement as of the date set forth above.

 

GolfSuites 2, Inc., a Delaware corporation  
   
By: /s/ Gerald D. Ellenburg  
  Gerald D. Ellenburg, Chief Executive Officer and President  
     
KGEM Golf, Inc., a Delaware corporation  
   
By: /s/ Gerald D. Ellenburg  
  Gerald D. Ellenburg, Chief Executive Officer and President  

 

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EX1A-6 MAT CTRCT 9 tv523247_ex6-3.htm EXHIBIT 6.3

 

Exhibit 6.3

 

PROMISSORY NOTE

 

$143,514.00 Tampa, Florida
  May 1, 2019

 

FOR VALUE RECEIVED, the undersigned, GOLFSUITES 2, INC., a Delaware corporation having an address of 2738 Falkenburg Rd. S., Riverview, FL 33578 (the “Borrower”), unconditionally promises to pay to the order of KGEM GOLF, INC., a Delaware corporation (“Lender”, which shall include any subsequent holder hereof or any interest herein), having an address of 2738 Falkenburg Rd. S., Riverview, FL 33578, or at such other place as Lender may from time to time designate in writing, without grace, the principal sum of $143,514.00 or so much as may be outstanding and advanced pursuant hereto, together with interest on the unpaid principal balance from time to time, in accordance with the provisions in this Promissory Note (“Note”) set forth below.

 

TERM. The term of this Note (the “Term”) shall commence as of the date set forth above (the “Effective Date”) and shall continue thereafter until December 31, 2019 (the “Maturity Date”). Notwithstanding the foregoing, Borrower acknowledges and confirms that, unless this Note is otherwise modified and amended, in writing, by the parties hereto (which Borrower agrees that Lender is and shall be under no obligation to do), all outstanding amounts hereunder shall be due and payable by Borrower to Lender on the Maturity Date.

 

INTEREST ACCRUAL. The outstanding unpaid principal balance of this Note shall bear interest at a rate equal to three percent (3%) per annum (the “Interest Rate”). Interest shall be calculated at the Interest Rate, monthly, upon the basis of the actual number of days elapsed in each calendar month during which all or any portion of the principal balance advanced hereunder remains outstanding. Absent manifest error, Lender’s records shall be conclusive evidence of the principal and accrued interest owing hereunder.

 

PAYMENTS. The entire outstanding unpaid principal balance, plus all accrued interest thereon, shall be due and payable on the Maturity Date. All payments hereunder must be made in legal tender of the United States of America in good, collected funds at the place of payment. Any payment received after 2:00 p.m. Eastern shall be credited on the next succeeding business day. For purposes hereof, only weekends and nationally recognized United States holidays shall be deemed non-business days.

 

WAIVERS. Borrower, any endorser, any guarantor hereof or any other party hereto (individually, an “Obligor” and collectively, “Obligors”) and each of them jointly and severally: (a) waive presentment, demand, protest, notice of demand, notice of intent to accelerate, notice of acceleration of maturity, notice of protest, notice of nonpayment, notice of dishonor, and any other notice required to be given under the law to any Obligor in connection with the delivery, acceptance, performance, default or enforcement of this Note, any endorsement or guaranty of this Note, or any other documents executed in connection with this Note (collectively, the “Loan Documents”); (b) consent to all delays, extensions, renewals or other modifications of this Note and/or the Loan Documents, or waivers of any term hereof and/or of the Loan Documents, or release or discharge by Lender of any Obligor, or release, substitution or exchange of any security for the payment hereof, or the failure to act on the part of Lender, or any indulgence shown by Lender (without notice to or further assent from any of Obligors), and agree that no such action, failure to act or failure to exercise any right or remedy by Lender shall in any way affect or impair the obligations of any Obligors or be construed as a waiver by Lender of, or otherwise affect, any of Lender’s rights under this Note, under any endorsement or guaranty of this Note or under any of the Loan Documents; and (c) agree to pay, on demand, all costs and expenses of collection or defense of this Note and/or of any endorsement or guaranty hereof and/or the enforcement or defense of Lender’s rights with respect to, or the administration, supervision, preservation, protection of, or realization upon, any property securing payment hereof, including, without limitation, attorneys’ and paralegals’ fees, including fees related to any suit, mediation or arbitration proceeding, out of court payment agreement, trial, appeal, bankruptcy proceedings (including without limitation seeking relief from the stay of 11 U.S.C. §362 and limiting the use of cash collateral under 11 U.S.C. §363), receivership, or other proceeding, in such amount as may be determined reasonable by any arbitrator or court, whichever is applicable. Any award or payment of attorneys’ or paralegal’s fees hereunder or by order of a court of competent jurisdiction shall include as a part thereof any and all sales or use taxes imposed thereon by any appropriate governmental authority.

 

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EVENTS OF DEFAULT. Any one or more of the following shall constitute an “Event of Default” hereunder: (a) the failure to make any payment of principal and/or interest and/or fees under this Note or any other obligation of any Obligor to Lender when due, at maturity or by acceleration; (b) default, which is not cured within the applicable grace or curative period, if any, shall occur under any other obligation, liability or indebtedness of any Obligor to Lender; (c) the commencement of a proceeding by or against any Obligor for dissolution or liquidation, the voluntary or involuntary termination or dissolution of any Obligor or the merger or consolidation of any Obligor with or into another entity; (d) the insolvency of, the business failure of, the appointment of a custodian, trustee, liquidator or receiver for or for any of the property of, the assignment for the benefit of creditors by, or the filing of a petition under bankruptcy, insolvency or debtor’s relief law or the filing of a petition for any adjustment of indebtedness, composition or extension by or against any Obligor; (e) the entry of a judgment against any Obligor which Lender deems to be of a material nature, in Lender’s sole discretion, which is not released or satisfied within 30 days of the entry thereof; or (f) the seizure or forfeiture of, or the issuance of any writ of possession, garnishment or attachment, or any turnover order for any property of any Obligor.

 

REMEDIES. Upon the occurrence of an Event of Default: (a) Lender shall have the optional right to accelerate and declare as immediately due and payable in full the entire balance (principal, interest and all other charges due hereunder or under the Loan Documents) outstanding hereunder and all other obligations of any Obligor to Lender (however acquired or evidenced); and/or (b) to the extent permitted by law, the Interest Rate shall be increased at Lender’s discretion up to the maximum non-usurious rate chargeable by applicable law (the “Default Rate”). The provisions herein for a Default Rate shall not be deemed to extend the time for any payment hereunder or to constitute a grace period giving Obligors a right to cure any default. At Lender’s option, any accrued and unpaid interest, fees or charges may, for purposes of computing and accruing interest on a daily basis after the due date of the Note or any installment thereof, be deemed to be a part of the principal balance, and interest shall accrue on a daily compounded basis after such date at the Default Rate provided in this Note until the entire outstanding balance of principal and interest is paid in full. Lender is hereby authorized at any time to set off any charge against any deposit accounts of any Obligor, as well as any money, instruments, securities, documents, chattel paper, credits, claims, demands, income and any other property, rights and interests of any Obligor which at any time shall come into the possession or custody or under the control of Lender or any of its agents, affiliates or correspondents, without notice or demand, any and all obligations due hereunder. Any judgment rendered on this Note shall bear interest at the highest rate of interest permitted pursuant to Chapter 687, Fla. Stat.

 

Page 2 of 4

 

 

REMEDIES CUMULATIVE. The failure at any time of Lender to exercise any of its options or any other rights hereunder shall not constitute a waiver thereof, nor shall it be a bar to the exercise of any of its options or rights at a later date. All rights and remedies of Lender shall be cumulative and may be pursued singly, successively or together, at the option of Lender. The acceptance by Lender of any partial payment shall not constitute a waiver of any default or of any of Lender’s rights under this Note. No waiver of any of its rights hereunder, and no modification or amendment of this Note, shall be deemed to be made by Lender unless the same shall be in writing, duly signed on behalf of Lender; each such waiver shall apply only with respect to the specific instance involved, and shall in no way impair the rights of Lender or the obligations of Obligor to Lender in any other respect at any other time.

 

MISCELLANEOUS PROVISIONS. This Note, any Loan Documents, and the rights and obligations of Borrower and Lender shall be governed by and interpreted in accordance with the laws of the State of Florida, without regard to its internal conflicts of laws principles. In any litigation in connection with or to enforce this Note or any endorsement or guaranty of this Note or any Loan Documents, each Obligor irrevocably consents to and confers personal jurisdiction on the courts of the State of Florida or the United States located in Hillsborough County, Florida, and expressly waives any objections as to venue in any such courts. Nothing contained herein shall, however, prevent Lender from bringing any action or exercising any rights within any other state or jurisdiction or from obtaining personal jurisdiction by any other means available under applicable law.

 

Notwithstanding anything contained in this Note to the contrary, including the definition of the Interest Rate, Lender shall never be deemed to have contracted for or be entitled to receive, collect or apply as interest on this Note, any amount in excess of the amount permitted and calculated at the Maximum Rate (as hereinafter defined), and, in the event Lender ever receives, collects or applies as interest any amount in excess of the amount permitted and calculated at the Maximum Rate, such amount which would be excessive interest shall be applied to the reduction of the unpaid principal balance of this Note, and, if the principal balance of this Note is paid in full, any remaining excess shall forthwith be paid to Borrower. In determining whether or not the interest paid or payable under any specific contingency exceeds the Maximum Rate, Borrower and Lender shall, to the maximum extent permitted under applicable law: (i) characterize any non-principal payment (other than payments which are expressly designated as interest payments hereunder) as an expense, fee, or premium, rather than as interest, (ii) exclude voluntary prepayments and the effect thereof; and (iii) spread the total amount of interest throughout the entire contemplated term of this Note. The term “Maximum Rate” shall mean, as to Lender, the maximum non-usurious interest rate, if any, that at any time, or from time to time, may be contracted for, taken, reserved, charged, or received on the indebtedness evidenced by this Note under the laws which are presently in effect of the United States and the State of Florida applicable to Lender and such indebtedness or, to the extent permitted by applicable law, under such applicable laws of the United States and the State of Florida which may hereafter be in effect and which allow a higher maximum non-usurious interest rate than applicable laws now allow.

 

TIME IS OF THE ESSENCE IN THE PERFORMANCE OF EACH AND EVERY COVENANT AND/OR OBLIGATION OF BORROWER HEREUNDER.

 

Any notice to be given or to be served upon any party hereto shall be given, in writing, and delivered personally, via registered or certified U.S. Mail, with all charges pre-paid, or by a nationally recognized overnight courier that provides confirmation of delivery, and such notices shall be directed to the addresses set forth above or to such other or additional addresses as any party might designate by written notice to the other party.

 

In this Note, whenever the context so requires, the neuter gender includes the feminine and/or masculine, as the case may be, and the singular number includes the plural.

 

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BORROWER BY ITS EXECUTION HEREOF KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES, FOR ITSELF AND ITS SUCCESSORS AND ASSIGNS, ANY RIGHT WHICH IT MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION, ACTION, SUIT OR PROCEEDING (WHETHER AT LAW OR IN EQUITY) BASED ON THIS NOTE OR ARISING OUT OF, UNDER OR IN CONNECTION WITH ANY OF THE TRANSACTIONS PROVIDED IN THIS NOTE, OR ANY COURSE OF CONDUCT, COURSE OF DEALING (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY PARTY OR THEIR RESPECTIVE OFFICERS, PRINCIPALS, PARTNERS, EMPLOYEES, AGENTS OR REPRESENTATIVES IN CONNECTION WITH THE SUBJECT MATTER OF THIS NOTE, WHETHER ARISING IN CONTRACT, TORT OR OTHERWISE AND WHETHER ASSERTED BY WAY OF COMPLAINT, ANSWER, CROSS-CLAIM, COUNTERCLAIM, AFFIRMATIVE DEFENSE OR OTHERWISE. BORROWER SHALL NOT SEEK TO CONSOLIDATE ANY SUCH LITIGATION, ACTION, SUIT OR PROCEEDING IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED. THIS PROVISION IS A MATERIAL INDUCEMENT TO LENDER’S ACCEPTANCE OF THIS NOTE.

 

IN WITNESS WHEREOF, Borrower has caused this Note to be executed in its name as of the day and year first above written.

 

  BORROWER:
   
  GOLFSUITES 2, INC., a Delaware corporation
     
  By: /s/ Gerald D. Ellenburg
    Gerald D. Ellenburg, CEO and President

 

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EX1A-6 MAT CTRCT 10 tv523247_ex6-4.htm EXHIBIT 6.4

 

Exhibit 6.4

 

MEMBERSHIP UNIT PURCHASE AGREEMENT

 

January 4, 2018

 

This Membership Unit Purchase Agreement (the “Agreement”) is entered into effective January 4, 2018, between and amongst KGE, LLC, a Florida limited liability company (“KGE”) and Kyle Morris, an individual (“Morris”) (collectively, the “Parties”), for the purpose of delineating a) the terms and conditions whereby Morris is to become a member (owner) of KGE, and b) the initial covenants that are to exist amongst the Parties, as follows –

 

1.UNIT PURCHASE:

 

KGE has agreed to sell and Morris has agreed to purchase a 25% interest in KGE for a total consideration of $225.00, payable upon final execution of this Agreement. Said $225.00 is based on the existing par capital issued by KGE to its existing owners totaling $900.00, and the $225.00 will be distributed $75.00 each to the three existing members of KGE, resulting in the following capital ownership –

 

John Galvin  $225.00 
Ryan Koenig  $225.00 
Gerald Ellenburg  $225.00 
Kyle Morris  $225.00 
TOTAL  $900.00 

 

The $900.00 par capital amount is referenced in the existing offering materials for KGE, including its business plan, operating agreement and other securities documents, and currently represents a planned 75% ownership of KGE in Class A membership units (or shares), once KGE’s full capitalization is complete. The remaining $300.00 of planned par capital is projected to be infused by Class B members, thereby comprising a total planned par capital of $1,200.00.

 

2.PLANNED BUSINESS ACTIVITY OF KGE:

 

The overall plans for KGE are outlined in its business plan, operating agreement and other offering materials, all included as an integral part of this Agreement. Moreover, KGE plans to –

 

 

 

 

a)Procure as much as $2 million of interim private capital to finance its initial launch activities.

 

b)Promote and fund an SEC Regulation A – Tier 2 (“Reg A-2”) offering for as much as $50 million.

 

c)Procure adequate mortgage financing to be combined with the Reg A-2 funding.

 

d)Develop, build and operate multiple golf driving range / entertainment complexes nationwide, utilizing the funds procured in a, b and c above, and to further finance ongoing locations with additional procured capital and retained earnings.

 

KGE can make no assurances to Morris as to its success in the above planned endeavors, and Morris has been advised of the inherent risks of a capitalization and business operation such as KGE’s.

 

KGE has a current brand under consideration that is planned for submission and publication, entitled “GOLFZONE”. KGE can make no representation at this time as to the success of this planned brand being approved by federal and various state authorities.

 

3.INTEGRATION OF MORRIS’ BUSINESS ACTIVITIES:

 

Morris has been invited to join KGE as a member, founder and executive, that he may integrate his existing business enterprise, to be expanded with KGE on a national basis. KGE acknowledges that Morris’ existing business operation in Dublin, Ohio – “The Golf Room” – is not to be included within the KGE planned business operation. Further, should Morris’ “The Golf Room” be integrated into a KGE site anywhere in the greater Columbus, Ohio metropolitan area, Morris retains the option to own that sector of such location attributable to his “The Golf Room” activity unto himself, free-standing from other business activities of KGE within such location. Details such as lease payments, etc., are planned to be worked out at such time as a greater Columbus, Ohio location comes into existence.

 

Further, KGE likely will wish to integrate a “sub-brand” of Morris’s activity to align with its planned brand.

 

 

 

 

4.INVESTMENT PROCUREMENT:

 

On a best-efforts basis, Morris agrees to work with the other members of KGE in the procurement of funds under Sections 1 – a-c above. Such contribution of effort does not require any specified success on Morris’ behalf, and his membership ownership of KGE is not dependent on such success in any manner. Morris acknowledges herein that his stature in the American golf industry is a meaningful addition to KGE’s attributes, and he has agreed to be willing to “leverage” such stature on KGE’s behalf in manners he deems appropriate. No damages can be inferred against Morris should he not succeed in any manner to procure funds as above-described.

 

5.DUTIES:

 

Morris has agreed to assist KGE in his capacity as a member in the following manner –

 

a)Facility design.

 

b)Integration of golf education and training, following largely on his “The Golf Room” success.

 

c)Professional golf affiliations – companies, membership groups and golf professionals.

 

d)Ongoing management duties, once KGE is opened and operating. It is anticipated that Morris would be an active member of KGE’s executive management.

 

6.DILUTION:

 

The planned 75% ownership of (what will now be) the four members is scheduled for dilution, attributable primarily to investors in the planned $2 million interim capital placement, potential members of management who may be hired, and in Class B shares that are planned to be issued within the Reg A-2 offering. Such dilution will be shared equally amongst the four members, and Morris will suffer no discriminatory dilution that favors any one or all of the other three members.

 

7.REFERENCED ITEMS TO THIS AGREEMENT:

 

Included as integral parts of this Agreement are –

 

a)KGE’s planned operating agreement.

 

b)KGE’s updated business plan.

 

c)KGE’s updated offering package.

 

 

 

 

d)All KGE investor summaries and promotional materials.

 

e)The December 11, 2017 letter from Gerald (Jerry) Ellenburg to Morris.

 

8.VENUE:

 

KGE is a Florida limited liability company and is currently headquartered in that state. Accordingly, any dispute amongst the Parties is to be heard in Florida and is subject to the laws of that state.

 

It is mutually understood that many items of agreement remain to be evolved and settled amongst the four members of KGE, and the Parties agree to work in good faith together in such items of agreement.

 

AGREED:    
     
KGE, LLC, a Florida limited liability company    
     
By    
  Gerald D. Ellenburg, Chairman Date  
       
     
  KYLE MORRIS Date  
     
ACKNOWLEDGED:    
     
     
  John Galvin, Member Date  
       
     
  Ryan Koenig, Member Date  

 

 

 

EX1A-6 MAT CTRCT 11 tv523247_ex6-5.htm EXHIBIT 6.5

 

Exhibit 6.5

 

ADDENDUM TO AGREEMENT

 

BETWEEN KGEM GOLF, INC. AND KYLE MORRIS

 

December 24, 2018

 

This Addendum (the "Addendum") to Membership Unit Purchase Agreement between KGEM Golf, Inc., a Delaware corporation, as successor in interest by corporate conversion of KGE, LLC, a Florida limited liability company ("KGE") and Kyle Morris ("Morris") (collectively, the "Parties") hereby amends the existing agreement (the "Agreement") amongst the Parties dated January 4, 2018, as follows:

 

Section 3 is amended and restated in its entirety as follows:

 

Morris has been invited to join KGE as a member, founder and executive, so that he will integrate his existing business enterprise, to be expanded with KGE on a national basis. KGE acknowledges that Morris' existing business operation in Dublin, Ohio - "The Golf Room" – is not to be included within the KGE planned business operation. Further, should Morris' "The Golf Room" be integrated into a KGE site anywhere in the greater Columbus, Ohio metropolitan area, Morris retains the option to own that sector of such location attributable to his "The Golf Room" activity unto himself, free-standing from other business activities of KGE within such location. Details such as lease payments, etc., are planned to be worked out at such time as a greater Columbus, Ohio location comes into existence.

 

Further, KGE will integrate a "sub-brand" of Morris's activity to align with its planned brand "GolfSuites", and Morris hereby grants an KGE, and its subsidiaries, a license to use his name, likeness, and The Golf Room name and proprietary information related to his golf coaching program (subject to the location restrictions in the above paragraph) as part of his investment in KGE.

 

Any disputes amongst the Parties shall be heard in Hillsborough County, state of Florida, in accordance with the laws of the state of Florida without regard to the conflict of laws provisions. The Agreement and Addendum may be executed with counterpart signature pages. Any other or further terms of the Agreement between the parties that are not in conflict with this Addendum shall remain in full force and effect, and are fully ratified as if set forth herein in their entirety.

 

[Signature Page Follows]

 

Page 1 of 2Addendum to Agreement

 

 

Effective as of December 24, 2018.    
     
KGEM Golf, Inc., a Delaware corporation   Kyle Morris
     
By /s/ Gerald D. Ellenburg   By /s/ Kyle Morris
 

Gerald D. Ellenburg, Chairman &

President

    Kyle Morris

 

Page 2 of 2Addendum to Agreement

  

EX1A-6 MAT CTRCT 12 tv523247_ex6-6.htm EXHIBIT 6.6

 

Exhibit 6.6

 

LICENSE AGREEMENT

 

This License Agreement (the “Agreement”) is entered into as of this February 15, 2019 (the “Effective Date”), by and between KGEM Golf, Inc., a Delaware corporation with offices at 2738 Falkenburg Rd. S., Riverview, FL 33578 (hereinafter called “Licensee”), and The Golf Room, LLC an Ohio limited liability company, with an address at 6807 Dublin Center Drive, Dublin OH 43017 (hereinafter called “Licensor”). Licensee and Licensor may be referred to in this Agreement collectively as “Parties” or individually as a “Party”.

 

RECITALS

 

WHEREAS, Licensor’s sole member Kyle Morris (“Morris”) is an investor in Licensee pursuant to that certain Membership Unit Purchase Agreement dated January 4, 2018, as amended by that certain Addendum to Agreement between KGEM Golf Inc., and Kyle Morris, dated December 24, 2018 (collectively, the “Purchase Agreement”);

 

WHEREAS, Licensor is currently doing business as “The Golf Room” in Dublin, Ohio (the greater Columbus, Ohio metropolitan area), whereby Licensor provides golf coaching programs and instruction;

 

WHEREAS, Licensor and Licensee desire to clarify certain licenses and responsibilities of the parties as referenced in the Purchase Agreement;

 

WHEREAS, subject to the terms, conditions, and limitations set forth herein, Licensee desires to license from Licensor the licensed information and Licensor desires to license to Licensee the licensed information for such use by Licensee.

 

NOW THEREFORE, in consideration of the foregoing premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1.           Incorporation of Recitals.  The Recitals are hereby incorporated in and made a part of the Agreement.

 

2.           Grant of License.  As additional consideration for the shares granted to Morris under the Purchase Agreement which provides both direct and indirect benefits to Licensor, Licensor hereby grants to Licensee a non-exclusive license to use any and all trademarks, names, titles, logos and symbols owned by Licensor (collectively, the “Licensed Rights”).  Licensor retains the right to terminate this license in its commercially reasonable good faith discretion after written notice to Licensee in the event that it determines that the license is being used in a manner inconsistent with its intended purpose of promoting golf training, golf entertainment, and hospitality services at Licensee’s locations, the event of non-use, or the reduction or cancellation of the contemplated services to be provided by and between Licensor and Licensee (collectively, a “Violation Notice”); provided that Licensee shall have thirty (30) day from receipt of written notice to cure the violation in such Violation Notice, or if such cure shall take longer than thirty (30) days, that such cure is commenced within the thirty (30) day period and prosecuted diligently until completion.  In consideration of the Licensee entering into this Agreement and of the financial benefits to Morris because of Morris’s stock ownership of Licensee, Licensor and Morris agree that at all times during the term in Paragraph 3 below, and thereafter for the time period described herein below, neither Licensor nor Morris shall directly or indirectly, for Licensor or on behalf of or in conjunction with, any other person, company, partnership, corporation, business, group, or other entity until the third anniversary after the term of this agreement, as renewed, license the Licensed Rights to, for, or on behalf of a Competitor.  For purposes of this Agreement, Competitor means a person or entity who or which is engaged in the business providing golf entertainment and hospitality services, including but not limited to Top Golf, DriveShack, 1 Up Golf, Big Shots Golf, Drive, 4ORE!, The Flying Tee, and Swing  Golf.  

 

Page 1 of 3 

 

 

3.           Term and Termination.  The initial term of this Agreement is ten years (10) years commencing on the Effective Date, which shall automatically renew for additional ten (10) year terms. Either party has the right to terminate this Agreement with written notice at least 180 days prior to the end of the current term.

 

4.           Conflicting Provisions.  To the extent there is determined to be conflict between the provisions of this Agreement and the Purchase Agreement, the provisions of this Agreement shall control over the provisions in the Purchase Agreement.  

 

5.           Notices.  All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered (a) in person; (b) by any national overnight courier or other service providing evidence of delivery, or by registered or certified mail (postage prepaid, return receipt requested); or (c) by email with a copy delivered the next business day by any overnight courier or other service providing evidence of delivery, to the respective parties at the following addresses:

 

To Licensor:: Kyle Morris
  6807 Dublin Center Drive
  Dublin, OH 43017
   
To Licensee: KGEM Golf, Inc.
  703 W Swann Ave
  Tampa, FL 33606
  Attention: General Counsel

 

or to such other address as the party to whom notice is given may have previously furnished to the others in writing in the manner set forth above (provided that notice of any change of address shall be effective only upon receipt thereof).

 

6.           No Strict Construction; Headings.  The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any Party.  The headings used in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.  

 

7.           Amendments. No amendment or waiver of any term of this Agreement shall be effective unless such amendment or waiver is in writing and is signed by each of the Parties hereto.  

 

8.           Assignment.  Licensor shall not assign or transfer, in whole or in part and whether by contract or operation of law, this Agreement, or any rights or obligations hereunder. Licensee may assign this Agreement to any or all subsidiaries that is controlled by Licensee (whether by management agreement, shareholder voting control, or other common corporate control).  Subject to the foregoing, this Agreement shall be binding upon, and shall inure to the benefit of, the Parties and their respective representatives, successors and assigns.  

 

9.           Dispute Resolution.  Should there be any ambiguity, contradiction or inconsistency in this Agreement, or should any disagreement or dispute arise between the Parties in connection with this Agreement, the Parties shall first attempt in good faith amicably to settle the matter by mutual negotiations.  If any Party shall commence any action or proceeding, including arbitration, against the other in order to enforce the provisions of this Agreement, or to recover damages as the result of the alleged breach of any of the provisions of this Agreement, the prevailing party therein shall be entitled to recover all reasonable costs incurred in connection therewith against the party commencing such action or the party who has breached this Agreement, as the case may be, including reasonable attorneys’ fees.

 

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10.           Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Ohio, other than such laws, rules, regulations and case law that would result in the application of the laws of a jurisdiction other than the State of Ohio.  Any suit to enforce any provision of this Agreement, or arising out of or based upon this Agreement, shall be brought exclusively in the United States District Court for the Southern District of Ohio or such District Court in and for the city of Columbus and the County of Franklin, State of Ohio. Each Party hereby agrees that such courts shall have in personam jurisdiction and venue with respect to such Party, and each Party hereby submits to the in personam jurisdiction and venue of such courts.  

 

11.           Severability. If any provision of the Agreement shall be held by a court competent jurisdiction to be illegal, invalid or unenforceable, the parties hereby authorize the court to modify such provision to the minimum extent necessary to effectuate the Parties’ intentions and the remaining provisions shall remain in full force and effect.  

 

12.           Entirety.  This Agreement constitutes the entire agreement between the Parties with respect to the subject matter contained herein and it supersedes all prior written or oral agreements and undertakings with respect to such subject matter.  This Agreement may be modified only by a writing signed by both parties to this Agreement.

 

13.           Counterparts; Delivery.  This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute but one and the same instrument.  The parties agree that this Agreement may be executed and delivered by facsimile or other electronic transmission.  

 

The Parties hereto have executed this Agreement as of the Effective Date set forth above.

  

“Licensee”   “Licensor”
KGEM Golf, Inc., a Delaware corporation   The Golf Room, LLC
       
    By /s/ Kyle Morris
      Kyle Morris, sole member
By /s/ Gerald D. Ellenburg    
  Gerald D. Ellenburg, Chairman & CEO    
    Acknowledged and Agreed to as third-party
    beneficiary to this agreement
     
    By /s/ Kyle Morris
      Kyle Morris, individually

  

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EX1A-6 MAT CTRCT 13 tv523247_ex6-7.htm EXHIBIT 6.7

 

Exhibit 6.7

 

CONSULTING AGREEMENT

 

This CONSTULTING AGREEMENT (this Agreement) is made and entered into this 15th day of February, 2019 between KGEM Golf, Inc., a Delaware corporation (the “Company”), and KYLE MORRIS (the Morris).

 

Morris and the Company wish to continue a consulting relationship on the terms and conditions set forth in this Agreement.

 

Accordingly, the Company and Morris hereby agree as follows:

 

1.Duties and Acceptance.

 

1.1           Employment, Duties.  The Company hereby agrees to continue to engage Morris for the Term (as defined in Section 2.1), to render consulting services to the Company.  In such capacity or capacities, Morris shall have such duties, responsibilities and authority as agreed to from time to time by Morris and the Chairman or the Chairman’s designee.

 

1.2           Acceptance.  Morris hereby accepts such engagement and agrees to render the agreed upon services.    

 

2.Term of Engagement

 

2.1           Term.  The term  Morris’s engagement under this Agreement (the Term) shall commence on February 15, 2019 (the Effective Date), and shall end on the earlier of (i) the tenth anniversary of the Effective Date, or (ii) such earlier date on which the Term is terminated pursuant to Section 4 (the Initial Term); provided, however, that upon the tenth anniversary of the Effective Date, and upon each anniversary thereafter, the Term shall be automatically extended for one (1) year (the Renewal Term) unless either the Company or Morris shall have given written notice to the other at least ninety (90) days prior thereto that the Term shall not be so extended.  

 

3.Compensation.

 

3.1            As compensation for all services to be rendered pursuant to this Agreement, the Company agrees to pay to Morris during the Term an amount to be agreed upon by Morris and the Chairman or his designee; however, the Parties acknowledge that a substantial part of the Morris’s compensation is derived from his ownership of 19,950,000 shares in the Company.  On each anniversary of the Effective Date or such other appropriate date during each year of the Term, Morris and the Chairman shall review the compensation and determine if, and by how much, his compensation should be modified, provided that it is not reduced from the prior amount for similar or increased responsibilities.  

 

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4.Termination.

 

4.1          Termination Events.  

 

(a)           Morris’s engagement with the Company shall terminate upon the first to occur of any of the following:

 

(i)           Death:  the death of Morris.

 

(ii)          Disability:  the physical or mental disability of Morris, whether totally or partially, such that with or without reasonable accommodation Morris is unable to perform  Morris’s material duties, for a period of one (1) year from the last day actively worked.  

 

(iii)         By the Company:  The Company may terminate Morris’s engagement for any reason thirty (30) days following written notice of termination.  

 

(iv)         By Morris:  Morris may voluntarily resign the engagement after providing thirty (30) days written notice to Company regarding any conduct of Company’s chief executive officers that results in a conviction of such officer(s) of any felony criminal statute of moral turpitude, including but not limited to, a felony conviction or any act of dishonesty, theft or misappropriation of property.

 

5.Protection of Confidential Information; Non-Competition and Non-Solicitation.

 

5.1          Confidential Information.  Morris acknowledges that Morris’s services will be unique, that they will involve the development of Company (and its subsidiaries and affiliates) subsidized relationships with key customers, sponsors, suppliers, and service providers as well as with key Company (and its subsidiaries and affiliates) employees and that Morris’s work for the Company (and/or its subsidiaries and affiliates) will give Morris access to highly confidential information not available to the public or competitors, including trade secrets and confidential marketing, sales, product development and other data and information which it would be impracticable for the Company (and/or its subsidiaries and affiliates) to effectively protect and preserve in the absence of this Section 5 and the disclosure or misappropriation of which could materially adversely affect the Company (and/or its subsidiaries and affiliates).  Accordingly, Morris agrees:

 

(a)           except in the course of performing Morris’s duties provided for in Section 1.1, not at any time, whether before, during or after Morris’s engagement with the Company, to divulge to any other entity or person any confidential information acquired by Morris concerning the Company’s or its subsidiaries’ or affiliates’ financial affairs or business processes or methods or their research, development or marketing programs or plans, or any other of its or their trade secrets.  The foregoing prohibitions shall include, without limitation, directly or indirectly publishing (or causing, participating in, assisting or providing any statement, opinion or information in connection with the publication of) any diary, memoir, letter, story, photograph, interview, article, essay, account or description (whether fictionalized or not) concerning any of the foregoing, publication being deemed to include any presentation or reproduction of any written, verbal or visual material in any communication medium, including any book, magazine, newspaper, theatrical production or movie, or television or radio programming or commercial.  Morris may disclose information subject to this Section 5.1 when required to do so by a court of competent jurisdiction, by any governmental agency having authority over Morris or the business of the Company or its affiliates or by any administrative body or legislative body (including a committee thereof) with jurisdiction to order Morris to divulge, disclose, or make accessible such information, provided, however, Morris will promptly notify the Company, take all reasonable steps requested by the Company to defend against the compulsory disclosure and permit the Company to control with counsel of its choice any proceeding relating to the compulsory disclosure, all at the Company’s expense.  Morris acknowledges that all information, the disclosure of which is prohibited by this section, is of a confidential and proprietary character and of great value to the Company and its subsidiaries and affiliates;

 

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(b)           to deliver promptly to the Company on termination of Morris’s engagement with the Company, or at any time during the Term that the Company may so request, all confidential memoranda, notes, records, reports, manuals, drawings, software, electronic/digital media records, blueprints and other documents (and all copies/excerpts thereof) relating to the Company’s (and its subsidiaries’ and affiliates’) business and all property associated therewith, which Morris may then possess or have under Morris’s control.  Notwithstanding anything in this Section 5.1 to the contrary, Morris shall be entitled to retain:  

 

(i)           any home office equipment provided that any Trade Secret or Confidential Information is not retained by Morris on such equipment;  

 

(ii)          papers and other materials of a personal nature, including, but not limited to, photographs, correspondence, personal diaries, calendars, Rolodexes, personal files and telephone books;  

 

(iii)         information showing Morris’s compensation or benefits or relating to reimbursement of business expenses;  

 

(iv)         information that Morris reasonably believes may be needed for tax purposes; and  

 

(v)          copies of plans, programs and agreements pertaining to Morris’s engagement, or termination thereof, with the Company; and

 

(c)          that Morris's engagement with the Company will end as of the Termination Date and Morris further agrees that:

 

(i)           Morris will not, for any purpose, attempt to use or access any Company computer or computer network system, including, without limitation the Company's electronic mail system after Morris's Termination Date (or during the Term if so requested in writing by the Chairman or the Chairman’s designee); and

 

(ii)           not later than one (1) day following Morris's Termination Date (or during the Term if so requested in writing by the Chairman or the Chairman's designee) to disclose to the Company, in writing, all passwords necessary or desirable to access all information which Morris has password-protected on any Company computer equipment, or on its computer network or system.

 

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(d)           that Morris is hereby notified in accordance with the Defend Trade Secrets Act of 2016 that Morris will not be held criminally or civilly liable under any federal or state trade secrets law for the disclosure of a trade secret that is made in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney solely for the purpose of reporting or investigating a suspected violation of law, or is made in a complaint or other document that is filed under seal in a lawsuit or other proceeding.  If Morris files a lawsuit for retaliation against the Company for reporting a suspected violation of law, Morris may disclose the Company's trade secrets to Morris's attorney and use the trade secret information in the court proceeding if Morris files any document containing the trade secret under seal, and does not disclose the trade secret, except pursuant to court order.  

 

5.2          Company Protections.  In consideration of the Company’s entering into this Agreement, Morris agrees that at all times during the Term and thereafter for the time period described herein below, Morris shall not, directly or indirectly, for Morris or on behalf of or in conjunction with, any other person, company, partnership, corporation, business, group, or other entity (each, a Person):

 

(a)          Non-Competition:  until the third anniversary of the Termination Date, engage in any activity for or on behalf of a Competitor, as director, employee, shareholder, consultant or otherwise; or

 

(b)          Non-Solicitation:  until the fifth anniversary of the Termination Date:  

 

(i)           Of Employees:  call upon any Person who is, at such Termination Date, engaged in activity on behalf of the Company or any subsidiary or affiliate of the Company for the purpose or with the intent of enticing such Person to cease such activity on behalf of the Company or such subsidiary or affiliate; provided, however, the Company acknowledges that its employees or those of its affiliates may join other entities with which Morris is affiliated and that such an event will not constitute a violation of this Agreement if Morris was not involved (directly or indirectly, through contacts with others) in hiring or in identifying the employee of the Company or its affiliates as a potential recruit or otherwise assisting in, or counseling others concerning, the recruitment of the employee of the Company or affiliate for such entity; or  

 

(ii)           Of Customers/Sponsors:  solicit, induce, or attempt to induce any customer or sponsor of the Company (or a subsidiary or affiliate) to cease doing business in whole or in part with or through the Company or a subsidiary or affiliate, or to do business with any Competitor.

 

For purposes of this Agreement, Competitor means a person or entity who or which is engaged in the business providing golf entertainment and hospitality services such as Top Golf, DriveShack, 1 Up Golf, Big Shots Golf, Drive, 4ORE!, The Flying Tee, and Swing  Golf.  It is understood and agreed that nothing contained herein shall limit Morris’ ability to continue operating The Golf Room, LLC and that it shall not be deemed a Competitor.  In the event that Company opens a GolfSuites or similar business in an area outside of Columbus, Ohio, and Morris has a Golf Room in that metropolitan area, then Morris hereby agrees to merge or transfer his facility to the Company’s facility when Company’s facility opens for business.

 

5.3           Remedies and Injunctive Relief.  If Morris commits a breach or threatens to breach any of the provisions of Section 5.1 or 5.2 hereof, the Company shall have the right and remedy to have the provisions of this Agreement specifically enforced by injunction or otherwise by any court of competent jurisdiction in Franklin County in the State of Ohio, it being acknowledged and agreed that any such breach will cause irreparable injury to the Company in addition to money damage and that money damages alone will not provide a complete or adequate remedy to the Company, it being further agreed that such right and remedy shall be in addition to, and not in lieu of, any other rights and remedies available to the Company under law or in equity.

 

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5.4           Severability.  If any of the provisions of this Agreement, or any part thereof, hereafter are construed to be invalid or unenforceable, the same shall not affect the remainder of the provision or provisions, which shall be given full effect, without regard to the invalid portions.

 

5.5           Extension of Term of Covenants Following Violation.  The period during which the prohibitions of Section 5.2 are in effect shall be extended by any period or periods during which Morris is in violation of Section 5.2.

 

5.6           Blue Penciling by Court.  If any of the covenants contained in Sections 5.1 or 5.2, or any part thereof, are held to be unenforceable, the parties agree that the court making such determination shall have the power to revise or modify such provision to make it enforceable to the maximum extent permitted by applicable law and, in its revised or modified form, said provision shall then be enforceable.

 

6.Notices.

 

6.1           To the Company.  All notices, requests, consents and other communications required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given if delivered personally, one day after sent by overnight courier or three (3) days after mailed first class, postage prepaid, by registered or certified mail, as follows (or to such other address as either party shall designate by notice in writing to the other in accordance herewith):

 

If to the Company, to:
 

KGEM Golf, Inc.

703 W Swann Ave

Tampa, FL 33606

Attention: General Counsel
 
If to Morris, to Morris’s principal residence as reflected in the records of the Company.

 

7.General.

 

7.1           Governing Law.  This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Ohio.

 

7.2           Headings.  The section headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.

 

7.3           Entire Agreement.  This Agreement sets forth the entire agreement and understanding of the parties relating to the subject matter hereof, and supersedes all prior agreements, arrangements and understandings, written or oral, relating to the subject matter hereof.  No representation, promise or inducement has been made by either party that is not embodied in this Agreement, and neither party shall be bound by or liable for any alleged representation, promise or inducement not so set forth.

 

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7.4          Assignability.  

 

(a)           Nonassignability by Morris.  This Agreement, and Morris’s rights and obligations hereunder, may not be assigned by Morris, nor may Morris pledge, encumber or anticipate any payments or benefits due hereunder, by operation of law or otherwise other than Morris’s rights to compensation and benefits, which may be assigned or transferred by will or operation of law; provided, however, Morris shall be entitled, to the extent permitted under applicable law or the relevant plans, to select and change a beneficiary or beneficiaries to receive any compensation or benefit hereunder following Morris’s death by giving the Company written notice thereof.  In the event of Morris’s death or a judicial determination of Morris’s incompetence, reference in this Agreement to Morris shall be deemed, where appropriate, to refer to Morris’s beneficiary, estate or other legal representative which recognizes same under applicable law.  

 

(b)           Assignability by Company.  The Company may not assign its rights or obligations under this Agreement except that such rights and obligations may be assigned or transferred pursuant to a merger or consolidation in which the Company is not the continuing entity, or a sale, liquidation or other disposition of all or substantially all of the assets of the Company, provided that the assignee or transferee is the successor to all or substantially all of the assets of the Company and assumes the liabilities, obligations and duties of the Company under this Agreement, either contractually or as a matter of law;  provided, however, that no assignment pursuant to this paragraph shall relieve the Company from its obligations hereunder to the extent the same are not timely discharged by such assignee.

 

7.5           Survival.  The respective rights and obligations of the parties hereunder shall survive any termination of this Agreement or the Term to the extent necessary to the intended preservation of such rights and obligations.

 

7.6           Amendment.  This Agreement may be amended, modified, superseded, canceled, renewed or extended and the terms or covenants hereof may be waived, only by a written instrument executed by both of the parties hereto, or in the case of a waiver, by the party waiving compliance.  The failure of either party at any time or times to require performance of any provision hereof shall in no manner affect the right at a later time to enforce the same.  No waiver by either party of the breach of any term or covenant contained in this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such breach, or a waiver of the breach of any other term or covenant contained in this Agreement.

 

7.7           Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

 

7.8           Acknowledgement of Ability to Have Counsel Review.  The parties acknowledge that this Agreement is the result of arm’s-length negotiations between sophisticated parties each afforded the opportunity to utilize representation by legal counsel.  Each and every provision of this Agreement shall be construed as though both parties participated equally in the drafting of same, and any rule of construction that a document shall be construed against the drafting party shall not be applicable to this Agreement.

 

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8.Dispute Resolution.

 

8.1           Dispute Resolution.  Any controversy, claim or dispute arising out of or relating to this Agreement, the breach thereof, or Morris’s engagement by the Company shall be adjudicated by a court of competent jurisdiction in Franklin County in the State of Ohio.

 

9.Subsidiaries and Affiliates.

 

9.1           Definitions.  As used herein, the term subsidiary shall mean any corporation or other business entity controlled directly or indirectly by the Company or other business entity in question, and the term affiliate shall mean and include any corporation or other business entity directly or indirectly controlling, controlled by or under common control with the Company, its subsidiaries or other business entity in question.

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

 

  KGEM Golf, Inc.
   
  By: /s/ Gerald D. Ellenburg
  Name: Gerald D. Ellenburg
  Title: Chairman and Chief Executive Officer
     
  /s/ Kyle Morris
  Name: Kyle Morris

 

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EX1A-6 MAT CTRCT 14 tv523247_ex6-8.htm EXHIBIT 6.8

 

Exhibit 6.8

 

 

Broker-Dealer Agreement

 

This amended agreement (together with exhibits and schedules, the “Agreement”) is entered into by and between GolfSuites 2, Inc. (“Client”) a Delaware Corporation, and Sageworks Capital LLC., a Pennsylvania Limited Liability Company (“Sageworks”). Client and Sageworks agree to be bound by the terms of this Agreement, effective of April 26, 2019 (the “Effective Date”):

 

Whereas, Sageworks is a registered broker-dealer providing technology and services in the equity and debt securities market, including offerings conducted via SEC approved exemptions such as Reg D 506(b), 506(c), Regulation A+, Reg CF and others;

 

Whereas, Client is offering securities directly to the public in an offering exempt from registration under Regulation A+ (the “Offering”); and

 

Whereas, Client recognizes the benefit of having Sageworks as a service provider for investors who participate in the Offering (“investors”).

 

Now, Therefore, in consideration of the mutual promises and covenants contained herein and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

 

1.Appointment, Term, and Termination

 

a.           Client hereby engages and retains Sageworks to provide technology and compliance services at Client’s discretion.

 

b.           The Agreement will commence on the Effective Date and will remain in effect for a period of twelve (12) months and will renew automatically for successive renewal terms of twelve (12) months each unless any party provides notice to the other party of non-renewal at least sixty (60) days prior to the expiration of the current term. If Client defaults in performing the obligations under this Agreement, the Agreement may be terminated (i) upon sixty (60) days written notice if Client fails to perform or observe any material term, covenant or condition to be performed or observed by it under this Agreement and such failure continues to be unremedied, (ii) upon written notice, if any material representation or warranty made by either Provider or Client proves to be incorrect at any time in any material respect, (iii) in order to comply with a Legal Requirement, if compliance cannot be timely achieved using commercially reasonable efforts, after providing as much notice as practicable, or (iv) upon thirty (30) days’ written notice if Client or Sageworks commences a voluntary proceeding seeking liquidation, reorganization or other relief or is adjudged bankrupt or insolvent or has entered against it a final and unappeable order for relief, under any bankruptcy, insolvency or other similar law, or either party executes and delivers a general assignment for the benefit of its creditors. The description in this section of specific remedies will not exclude the availability of any other remedies. Any delay or failure by Client to exercise any right, power, remedy or privilege will not be construed to be a waiver of such right, power, remedy or privilege or to limit the exercise of such right, power, remedy or privilege. No single, partial or other exercise of any such right, power, remedy or privilege will preclude the further exercise thereof or the exercise of any other right, power, remedy or privilege. All terms of the Agreement, which should reasonably survive termination, shall so survive, including, without limitation, limitations of liability and indemnities, and the obligation to pay Fees relating to Services provided prior to termination.

 

 

 

 

 

 

2.           Services. Sageworks will perform the services listed on Exhibit A attached hereto and made a part hereof, in connection with the Offering (the “Services”). Unless otherwise agreed to in writing by the parties.

 

3.           Compensation. As compensation for the Services, Client shall pay to Sageworks a fee equal to one hundred (100) basis points on the aggregate amount raised by the Client from Investors.

 

There will also be a one time advance set up fee of $5,000. Fee is due and payable upon execution of this agreement. The advance fee will cover reasonable out-of-pocket accountable expenses actually anticipated to be incurred by the firm such a preparing the FINRA filing, working the Client’s SEC counsel in providing information to the extent necessary, coordination with any third party vendors involved in the offering and any other services necessary and required prior to the approval of the offering. The firm will refund any fee related to the advance to the extent it was not used, incurred or provided to the Client.

 

4.Regulatory Compliance

 

a.           Client and all its third party providers shall at all times (i) comply with direct requests of Sageworks; (ii) maintain all required registrations and licenses, including foreign qualification, if necessary; and (iii) pay all related fees and expenses (including the FINRA Corporate Filing Fee), in each case that are necessary or appropriate to perform their respective obligations under this Agreement. Client shall comply with and adhere to all Sageworks policies and procedures.

 

FINRA Corporate Filing Fee for this $50,000,000 best efforts offering will be $8,000 and will be a pass through fee payable to Sageworks, from the Client, who will then forward it to FINRA as payment for the filing.

 

b.           Client and Sageworks will have the shared responsibility for the review of all documentation related to the Transaction but the ultimate discretion about accepting a client will be the sole decision of the Client. Each Investor will be considered to be that of the Client’s and NOT Sageworks.

 

 

 

 

 

 

c.           Client and Sageworks will each be responsible for supervising the activities and training of their respective sales employees, as well as all of their other respective employees in the performance of functions specifically allocated to them pursuant to the terms of this Agreement.

 

d.           Client and Sageworks agree to promptly notify the other concerning any material communications from or with any Governmental Authority or Self Regulatory Organization with respect to this Agreement or the performance of its obligations, unless such notification is expressly prohibited by the applicable Governmental Authority.

 

5.           Role of Sageworks. Client acknowledges and agrees that Client will rely on Client’s own judgment in using Sageworks’ Services. Sageworks (i) makes no representations with respect to the quality of any investment opportunity or of any issuer; (ii) does not guarantee the performance to and of any Investor; (iii) will make commercially reasonable efforts to perform the Services in accordance with its specifications; (iv) does not guarantee the performance of any party or facility which provides connectivity to Sageworks; and (v) is not an investment adviser, does not provide investment advice and does not recommend securities transactions and any display of data or other information about an investment opportunity, does not constitute a recommendation as to the appropriateness, suitability, legality, validity or profitability of any transaction. Nothing in this Agreement should be construed to create a partnership, joint venture, or employer-employee relationship of any kind.

 

6.Indemnification.

 

a.           Indemnification by Client. Client shall indemnify and hold Sageworks, its affiliates and their representatives and agents harmless from, any and all actual or direct losses, liabilities, judgments, arbitration awards, settlements, damages and costs (collectively, “Losses”), resulting from or arising out of any third party suits, actions, claims, demands or similar proceedings (collectively, “Proceedings”) to the extent they are based upon (i) a breach of this Agreement by Client, (ii) the wrongful acts or omissions of Client, or (iii) the Offering.

 

b.           Indemnification by Sageworks. Sageworks shall indemnify and hold Client, Client’s affiliates and Client’s representatives and agents harmless from any Losses resulting from or arising out of Proceedings to the extent they are based upon a breach of this Agreement by Sageworks.

 

 

 

 

 

 

c.           Indemnification Procedure. If any Proceeding is commenced against a party entitled to indemnification under this section, prompt notice of the Proceeding shall be given to the party obligated to provide such indemnification. The indemnifying party shall be entitled to take control of the defense, investigation or settlement of the Proceeding and the indemnified party agrees to reasonably cooperate, at the indemnifying party's cost in the ensuing investigations, defense or settlement.

 

7.           Notices. Any notices required by this Agreement shall be in writing and shall be addressed, and delivered or mailed postage prepaid, or faxed or emailed to the other parties hereto at such addresses as such other parties may designate from time to time for the receipt of such notices. Until further notice, the address of each party to this Agreement for this purpose shall be the following:

 

If to the Client:

 

GolfSuites 2, Inc.

2738 Falkenburg Road S

Riverview, FL 33578

Attn: Gerald Ellenburg, Chairman/CEO

Tel: (727) 243-2050

jerry@erchomes.com

 

If to the Sageworks:

 

Sageworks Capital, LLC.

252 Bradley Court

Holland, PA 18966

Attn: Vlad Uchenik, CEO

Tel: 215-806-9031

vuchenik@sageworks-capital.com

 

8.Confidentiality and Mutual Non-Disclosure:

 

a.Confidentiality.

 

i.            Included Information. For purposes of this Agreement the term “Confidential Information” means all confidential and proprietary information of a party, including but not limited to (i) financial information, (ii) business and marketing plans, (iii) the names of employees and owners, (iv) the names and other personally-identifiable information of users of the Portal, (v) security codes, and (vi) all documentation provided by Client or Investor.

 

ii.           Excluded Information. For purposes of this Agreement, the term “confidential and proprietary information” shall not include (i) information already known or independently developed by the recipient without the use of any confidential and proprietary information, or (ii) information known to the public through no wrongful act of the recipient.

 

 

 

 

 

 

iii.          Confidentiality Obligations. During the Term and at all times thereafter, neither party shall disclose Confidential Information of the other party or use such Confidential Information for any purpose without the prior written consent of such other party. Without limiting the preceding sentence, each party shall use at least the same degree of care in safeguarding the other party’s Confidential Information as it uses to safeguard its own Confidential Information. Notwithstanding the foregoing, a party may disclose Confidential Information (i) if required to do by order of a court of competent jurisdiction, provided that such party shall notify the other party in writing promptly upon receipt of knowledge of such order so that such other party may attempt to prevent such disclosure or seek a protective order; or (ii) to any applicable governmental authority as required by applicable law. Nothing contained herein shall be construed to prohibit the SEC, FINRA, or other government official or entities from obtaining, reviewing, and auditing any information, records, or data. Issuer acknowledges that regulatory record-keeping requirements, as well as securities industry best practices, require Provider to maintain copies of practically all data, including communications and materials, regardless of any termination of this Agreement.

 

9.Miscellaneous.

 

a.           ANY DISPUTE OR CONTROVERSY BETWEEN THE CLIENT AND PROVIDER RELATING TO OR ARISING OUT OF THIS AGREEMENT WILL BE SETTLED BY ARBITRATION BEFORE AND UNDER THE RULES OF THE ARBITRATION COMMITIEE OF FINRA.

 

b.           This Agreement is non-exclusive and shall not be construed to prevent either party from engaging in any other business activities

 

c.           This Agreement will be binding upon all successors, assigns or transferees of Client. No assignment of this Agreement by either party will be valid unless the other party consents to such an assignment in writing. Either party may freely assign this Agreement to any person or entity that acquires all or substantially all of its business or assets. Any assignment by the either party to any subsidiary that it may create or to a company affiliated with or controlled directly or indirectly by it will be deemed valid and enforceable in the absence of any consent from the other party.

 

 

 

 

 

 

d.          Neither party will, without prior written approval of the other party, place or agree to place any advertisement in any website, newspaper, publication, periodical or any other media or communicate with the public in any manner whatsoever if such advertisement or communication in any manner makes reference to the other party, to any person or entity that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control, with the other party and to the clearing arrangements and/or any of the Services embodied in this Agreement. Client and Sageworks will work together to authorize and approve co-branded notifications and client facing communication materials regarding the representations in this Agreement. Notwithstanding any provisions to the contrary within, Client agrees that Sageworks may make reference in marketing or other materials to any transactions completed during the term of this Agreement, provided no personal data or Confidential Information is disclosed in such materials.

 

e.           THE CONSTRUCTION AND EFFECT OF EVERY PROVISION OF THIS AGREEMENT, THE RIGHTS OF THE PARTIES UNDER THIS AGREEMENT AND ANY QUESTIONS ARISING OUT OF THE AGREEMENT, WILL BE SUBJECT TO THE STATUTORY AND COMMON LAW OF THE STATE OF PENNSYLVANIA, WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES. The language used in this Agreement shall be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction will be applied against any party

 

f.           If any provision or condition of this Agreement will be held to be invalid or unenforceable by any court, or regulatory or self-regulatory agency or body, the validity of the remaining provisions and conditions will not be affected and this Agreement will be carried out as if any such invalid or unenforceable provision or condition were not included in the Agreement.

 

g.          This Agreement sets forth the entire agreement between the parties with respect to the subject matter hereof and supersedes any prior agreement relating to the subject matter herein. The Agreement may not be modified or amended except by written agreement.

 

h.          This Agreement may be executed in multiple counterparts and by facsimile or electronic means, each of which shall be deemed an original but all of which together shall constitute one and the same agreement.

 

[SIGNATURES APPEAR ON FOLLOWING PAGE(S)]

 

 

 

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

  CLIENT: GolfSuites 2, Inc.
   
  By /s/ Gerald Ellenburg
  Name: Gerald Ellenburg
  Its: Chairman/CEO
   
  SAGEWORK CAPITAL, LLC:
   
  By /s/ Vlad Uchenik
  Name: Vlad Uchenik
  Its:       CEO

 

 

 

 

 

 

Exhibit A

 

Services:

 

a.Sageworks Responsibilities - Sageworks agrees to:

 

i.Review investor information, including KYC (Know Your Customer) data, perform AML (Anti-Money Laundering) and other compliance background checks, and provide a recommendation to Client whether or not to accept investor as a customer of the Client;
ii.Review each investors subscription agreement to confirm such Investors participation in the offering, and provide a determination to Client whether or not to accept the use of the subscription agreement for the Investors participation;
iii.Contact and/or notify the issuer, if needed, to gather additional information or clarification on an investor;
iv.Not provide any investment advice nor any investment recommendations to any investor;
v.Keep investor details and data confidential and not disclose to any third-party except as required by regulators or in our performance under this Agreement (e.g. as needed for AML and background checks);
vi.Coordinate with third party providers to ensure adequate review and compliance.

 

 

 

 

EX1A-8 ESCW AGMT 15 tv523247_ex8.htm EXHIBIT 8

Exhibit 8

 

 

 

Escrow Services Agreement

 

This Escrow Services Agreement (this “Agreement”) is made and entered into as of [●] by and between Prime Trust, LLC (“Prime Trust” or “Escrow Agent”) and [●] (the “Issuer”).

 

Recitals

 

WHEREAS, the Issuer proposes to offer for sale and sell securities to prospective investors (“Subscribers”), as disclosed in its offering materials, in a registered offering pursuant to the Securities Act of 1933, as amended, or exemption from registration (i.e. Regulation A+, D or S) (the “Offering”), the equity, debt or other securities of the Issuer (the “Securities”) in the amount of at least [●] (the “Minimum Amount of the Offering”) and up to the maximum amount of [●] (the “Maximum Amount of the Offering”).

 

WHEREAS, Issuer desires to establish an Escrow Account in which funds received from Subscribers will be held during the Offering, subject to the terms and conditions of this Agreement.

 

WHEREAS, Prime Trust agrees to serve as third-party escrow agent for the Subscribers with respect to such Escrow Account (as defined below) in accordance with the terms and conditions set forth herein.

 

Agreement

 

NOW THEREFORE, in consideration for the mutual covenants, promises, agreements, representations, and warranties contained in this Agreement and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties herby agree as follows:

 

1.Establishment of Escrow Account. Prior to the Issuer initiating the Offering, and prior to the receipt of the first Subscriber funds, Escrow Agent shall establish an account for the Issuer (the “Escrow Account”). All parties agree to maintain the Escrow Account and Escrow Amount (as defined below) in a manner that is compliant with banking and securities regulations. For purposes of communications and directives, Escrow Agent shall be the sole administrator of the Escrow Account.

 

2.Escrow Period. The escrow period (“Escrow Period”) shall begin with the commencement of the Offering and shall be held in the Escrow Account for the benefit of Subscribers, upon the earlier to occur of the following:

 

a.The date upon which the Minimum Amount of the Offering is received, in bona fide transactions that are fully paid for with cleared funds, which is defined to occur when Escrow Agent has received gross proceeds of at least Minimum Offering Amount that have cleared in the Escrow Account and the Issuer has instructed a partial or full closing on those funds.; or

 

b.[●] if the Minimum Amount of the Offering has not been reached; or

 

c.The date upon which a determination is made by Issuer and/or their authorized representatives, to terminate the Offering; or.

 

d.Escrow Agent’s exercise of the termination rights specified in Section 8.

 

During the Escrow Period, the parties agree that (i) the Escrow Account and escrowed funds will be held for the benefit of the Subscribers, and that (ii) Issuer is not entitled to any funds received into the Escrow Account, and that no amounts deposited into the Escrow Account shall become the property of Issuer or any other entity, or be subject to any debts, liens or encumbrances of any kind of Issuer or any other entity, until the contingency has been satisfied by the sale of the Minimum Amount of the Offering to such investors in bona fide transactions that are fully paid and cleared.

 

 

 

 

 

3.Deposits into the Escrow Account. All Subscribers will be directed by the Issuer and its agents to transmit their data and subscription amounts, via Escrow Agent’s technology systems (“Issuer Dashboard”), directly to the Escrow Account to be held for the benefit of Subscribers in accordance with the terms of this Agreement and applicable regulations. All Subscribers will transfer funds directly to the Escrow Agent (with checks, if any, made payable to “Prime Trust, LLC as Escrow Agent for Investors in [●]”) for deposit into the Escrow Account. Escrow Agent shall process all Escrow Amounts for collection through the banking system, shall hold such funds, and shall maintain an accounting of each deposit posted to its ledger, which also sets forth, among other things, each Subscriber’s name and address, the quantity of Securities purchased, and the amount paid. All monies so deposited in the Escrow Account and which have cleared the banking system are hereinafter referred to as the "Escrow Amount." No interest shall be paid to Issuer or Subscribers on balances in the Escrow Account. Issuer shall promptly, concurrent with any new or modified Subscription Agreement and/or offering documents, provide Escrow Agent with a copy of the Subscriber’s subscription and other information as may be reasonably requested by Escrow Agent in the performance of their duties under this Agreement. Escrow Agent is under no duty or responsibility to enforce collection of any funds delivered to it hereunder. Issuer shall assist Escrow Agent with clearing any and all AML and ACH exceptions.

 

Funds Hold — clearing, settlement and risk management policy: All parties agree that funds are considered “cleared” as follows:
* Wires — 24 hours after receipt of funds
* Checks — 10 days after deposit
* ACH — As transaction must clear in a manner similar to checks, and as Federal regulations provide investors with 60 days to recall funds. For risk reduction and protection, in making an effort to provide flexibility to Issuer, the Escrow Agent shall at its discretion post funds as cleared starting 10 calendar days after receipt. Of course, regardless of this operating policy, Issuer remains liable to immediately and without protestation or delay return to Prime Trust any funds recalled for whatever reason pursuant to Federal regulations.

 

Notwithstanding the foregoing, cleared funds remain subject to internal compliance review in accordance with internal procedures and applicable rules and regulations. Escrow Agent reserves the right to deny, suspend or terminate participation in the Escrow Account of any Subscriber to the extent Escrow Agent, in its sole and absolute discretion, deems it advisable or necessary to comply with applicable laws or to eliminate practices that are not consistent with laws, rules, regulations or best practices.

 

4.Disbursements from the Escrow Account. In the event Escrow Agent does not receive the Minimum Amount of the Offering prior to the termination of the Escrow Period, Escrow Agent shall terminate the Escrow Account and make a full and prompt return of cleared funds to each Subscriber to the Offering.

 

In the event Escrow Agent receives cleared funds for at least the Minimum Amount of the Offering prior to the termination of the Escrow Period, and for any point thereafter and Escrow Agent receives a written instruction from Issuer (generally via notification on the Issuer Dashboard), Escrow Agent shall, pursuant to those instructions, make a disbursement to the Issuer from the Escrow Account. Issuer acknowledges that there is a 24-hour (one business day) processing time once a request has been received to disburse funds from the Escrow Account. Furthermore, Issuer directs Escrow Agent to accept instructions regarding fees from registered securities brokers in the syndicate, if any, or from the API integrated platform or portal through which this offering is being conducted, if any.

 

 

 

 

 

5.Collection Procedure. Escrow Agent is hereby authorized, upon receipt of Subscriber funds, to promptly deposit them in the Escrow Account. Any Subscriber funds which fail to clear or are subsequently reversed, including but not limited to ACH chargebacks and wire recalls, shall be debited to the Escrow Account, with such debits reflected on the Escrow Account ledger accessible via Escrow Agent’s API or dashboard technology. Any and all escrow fees paid by Issuer, including those for funds receipt and processing are non-refundable, regardless of whether ultimately cleared, failed, rescinded, returned or recalled. In the event of any Subscriber refunds, returns or recalls after funds have already been remitted to Issuer, then Issuer hereby irrevocably agrees to immediately and without delay or dispute send equivalent funds to Escrow Agent to cover such refunds, returns or recalls. If Issuer has any dispute or disagreement with its Subscriber then that is separate and apart from this Agreement and Issuer will address such situation directly with said Subscriber, including taking whatever actions Issuer determines appropriate, but Issuer shall regardless remit funds to Escrow Agent and not involve Escrow Agent in any such disputes.

 

6.Escrow Administration Fees, Compensation of Prime Trust. Escrow Agent is entitled to escrow administration fees from Issuer as set forth in Schedule A attached hereto. All fees are charged immediately upon receipt of this Agreement and then immediately as they are incurred in Escrow Agent’s performance hereunder and are not contingent in any way on the success or failure of the Offering or transactions contemplate by this Agreement. No fees, charges or expense reimbursements of Escrow Agent are reimbursable, and are not subject to pro-rata analysis. All fees and charges, if not paid by a representative of Issuer (e.g. funding platform, lead syndicate broker, etc.), may be made via either Issuers credit card or ACH information on file with Escrow Agent. Escrow Agent may also collect its fee(s), at its option, from any other account held by the Issuer at Prime Trust. It is acknowledged and agreed that no fees, reimbursement for costs and expenses, indemnification for any damages incurred by Issuer or Escrow Agent shall be paid out of or chargeable to the investor funds on deposit in the Escrow Account.

 

7.Representations and Warranties. The Issuer covenants and makes the following representations and warranties to Escrow Agent:

 

a.It is duly organized, validly existing, and in good standing under the laws of the state of its incorporation or organization and has full power and authority to execute and deliver this Agreement and to perform its obligations hereunder.

 

b.This Agreement and the transactions contemplated thereby have been duly approved by all necessary actions, including any necessary shareholder or membership approval, has been executed by its duly authorized officers, and constitutes a valid and binding agreement enforceable in accordance with its terms.

 

c.The execution, delivery, and performance of this Agreement is in accordance with the agreements related to the Offering and will not violate, conflict with, or cause a default under its articles of incorporation, bylaws, management agreement or other organizational document, as applicable, any applicable law, rule or regulation, any court order or administrative ruling or decree to which it is a party or any of its property is subject, or any agreement, contract, indenture, or other binding arrangement, including the agreements related to the Offering, to which it is a party or any of its property is subject.

 

d.The Offering shall contain a statement that Escrow Agent has not investigated the desirability or advisability of investment in the Securities nor approved, endorsed or passed upon the merits of purchasing the Securities; and the name of Escrow Agent has not and shall not be used in any manner in connection with the Offering of the Securities other than to state that Escrow Agent has agreed to serve as escrow agent for the limited purposes set forth in this Agreement.

 

 

 

 

 

e.No party other than the parties hereto has, or shall have, any lien, claim or security interest in the Escrow Funds or any part thereof. No financing statement under the Uniform Commercial Code is on file in any jurisdiction claiming a security interest in or describing (whether specifically or generally) the Escrow Funds or any part thereof.

 

f.It possesses such valid and current licenses, certificates, authorizations or permits issued by the appropriate state, federal or foreign regulatory agencies or bodies necessary to conduct its respective businesses, and it has not received any notice of proceedings relating to the revocation or modification of, or non-compliance with, any such license, certificate, authorization or permit.

 

g.Its business activities are in no way related to Cannabis, gambling, pornography, or firearms.

 

h.The Offering complies in all material respects with the Act and all applicable laws, rules and regulations.

 

i.Issuer shall make no representation or implication that the Escrow Agent has investigated the desirability or advisability of investment in the Securities or has approved, endorsed or passed upon the merits of the investment therein and that the name of the Escrow Agent has not and shall not be used in any manner in connection with the offer or sale of the Securities other than to state that the Escrow Agent has agreed to serve as escrow agent for the limited purposes set forth herein.

 

All of its representations and warranties contained herein are true and complete as of the date hereof and will be true and complete at the time of any disbursement of Escrow Funds.

 

8.Term and Termination. This Agreement will remain in full force during the Escrow Period and shall terminate upon the following:

 

a.As set forth in Section 2.

 

b.Termination for Convenience. Any party may terminate this Agreement at any time for any reason by giving at least thirty (30) days’ written notice.

 

c.Escrow Agent’s Resignation. Escrow Agent may unilaterally resign by giving written notice to Issuer, whereupon Issuer will immediately appoint a successor escrow agent. Without limiting the generality of the foregoing, Escrow Agent may terminate this Agreement and thereby unilaterally resign under the circumstances specified in Section 2. Until a successor escrow agent accepts appointment or until another disposition of the subject matter has been agreed upon by the parties, following such resignation notice, Escrow Agent shall be discharged of all of its duties hereunder save to keep the subject matter whole.

 

9.Binding Arbitration, Applicable Law, Venue, and Attorney’s Fees. This Agreement is governed by, and will be interpreted and enforced in accordance with the laws of the State of Nevada, as applicable, without regard to principles of conflict of laws. Any claim or dispute arising under this Agreement may only be brought in arbitration, pursuant to the rules of the American Arbitration Association, with venue in Clark County, Nevada. The parties consent to this method of dispute resolution, as well as jurisdiction, and consent to this being a convenient forum for any such claim or dispute and waives any right it may have to object to either the method or jurisdiction for such claim or dispute. Furthermore, the prevailing party shall be entitled to recover damages plus reasonable attorney’s fees and costs and the decision of the arbitrator shall be final, binding and enforceable in any court.

 

 

 

 

 

10.Limited Capacity of Escrow Agent. This Agreement expressly and exclusively sets forth the duties of Escrow Agent with respect to any and all matters pertinent hereto, and no implied duties or obligations shall be read into this Agreement against Escrow Agent. Escrow Agent acts hereunder as an escrow agent only and is not associated, affiliated, or involved in the business decisions or business activities of Issuer, portal, or Subscriber. Escrow Agent is not responsible or liable in any manner whatsoever for the sufficiency, correctness, genuineness, or validity of the subject matter of this Agreement or any part thereof, or for the form of execution thereof, or for the identity or authority of any person executing or depositing such subject matter. Escrow Agent shall be under no duty to investigate or inquire as to the validity or accuracy of any document, agreement, instruction, or request furnished to it hereunder, including, without limitation, the authority or the identity of any signer thereof, believed by it to be genuine, and Escrow Agent may rely and act upon, and shall not be liable for acting or not acting upon, any such document, agreement, instruction, or request. Escrow Agent shall in no way be responsible for notifying, nor shall it be responsible to notify, any party thereto or any other party interested in this Agreement of any payment required or maturity occurring under this Agreement or under the terms of any instrument deposited herewith. Escrow Agent’s entire liability and exclusive remedy in any cause of action based on contract, tort, or otherwise in connection with any services furnished pursuant to this Agreement shall be limited to the total fees paid to Escrow Agent by Issuer. The Escrow Agent shall not be called upon to advise any party as to the wisdom in selling or retaining or taking or refraining from any action with respect to any securities or other property deposited hereunder. Escrow Agent may consult legal counsel selected by it in the event of any dispute or question as to the construction of any of the provisions hereof or of any other agreement or of its duties hereunder, or relating to any dispute involving any party hereto, and shall incur no liability and shall be fully indemnified from any reasonable liability whatsoever in acting in accordance with the reasonable opinion or instruction of such counsel. Issuer shall promptly pay, upon demand, the reasonable fees and expenses of any such counsel.

 

11.Indemnity. Issuer agrees to defend, indemnify and hold Escrow Agent and its related entities, directors, employees, service providers, advertisers, affiliates, officers, agents, and partners and third-party service providers (collectively “Escrow Agent Indemnified Parties”) harmless from and against any loss, liability, claim, or demand, including attorney’s fees (collectively “Expenses”), made by any third party due to or arising out of (i) this Agreement or a breach of any provision in this Agreement, or (ii) any change in regulation or law, state or federal, and the enforcement or prosecution of such as such authorities may apply to or against Issuer. This indemnity shall include, but is not limited to, all Expenses incurred in conjunction with any interpleader that Escrow Agent may enter into regarding this Agreement and/or third-party subpoena or discovery process that may be directed to Escrow Agent Indemnified Parties. It shall also include any action(s) by a governmental or trade association authority seeking to impose criminal or civil sanctions on any Escrow Agent Indemnified Parties based on a connection or alleged connection between this Agreement and Issuers business and/or associated persons. These defense, indemnification and hold harmless obligations will survive termination of this Agreement. Escrow Agent reserves the right to control the defense of any such claim or action and all negotiations for settlement or compromise, and to select or approve defense counsel, and Issuer agrees to fully cooperate with Escrow Agent in the defense of any such claim, action, settlement, or compromise negotiations.

 

12.Entire Agreement, Severability and Force Majeure. This Agreement contains the entire agreement between Issuer and Escrow Agent regarding the Escrow Account. If any provision of this Agreement is held invalid, the remainder of this Agreement shall continue in full force and effect. Furthermore, no party shall be responsible for any failure to perform due to acts beyond its reasonable control, including acts of God, terrorism, shortage of supply, labor difficulties (including strikes), war, civil unrest, fire, floods, electrical outages, equipment or transmission failures, internet interruptions, vendor failures (including information technology providers), or other similar causes.

 

 

 

 

 

13.Escrow Agent Compliance. Escrow Agent may, at its sole discretion, comply with any new, changed, or reinterpreted regulatory or legal rules, laws or regulations, law enforcement or prosecution policies, and any interpretations of any of the foregoing, and without necessity of notice, Escrow Agent may (i) modify either this Agreement or the Escrow Account, or both, to comply with or conform to such changes or interpretations or (ii) terminate this Agreement or the Escrow Account or both if, in the sole and absolute discretion of Escrow Agent, changes in law enforcement or prosecution policies (or enactment or issuance of new laws or regulations) applicable to the Issuer might expose Escrow Agent to a risk of criminal or civil prosecution, and/or of governmental or regulatory sanctions or forfeitures if Escrow Agent were to continue its performance under this Agreement. Furthermore, all parties agree that this Agreement shall continue in full force and be valid, unchanged and binding upon any successors of Escrow Agent. Changes to this Agreement will be sent to Issuer via email. Escrow Agent may act or refrain from acting in respect of any matter referred to in this Escrow Agreement in full reliance upon and by and with the advice of its legal counsel and shall be fully protected in so acting or in refraining from acting upon advice of counsel. In the event that the Escrow Agent shall be uncertain as to its duties or rights hereunder, the Escrow Agent shall be entitled to (i) refrain from taking any action other than to keep safe the Escrow Amounts until directed otherwise by a court of competent jurisdiction or, (ii) interpead the Escrow Amount to a court of competent jurisdiction.

 

14.Waivers. No waiver by any party to this Agreement of any condition or breach of any provision of this Agreement will be effective unless in writing. No waiver by any party of any such condition or breach, in any one instance, will be deemed to be a further or continuing waiver of any such condition or breach or a waiver of any other condition or breach of any other provision contained in this Agreement.

 

15.Notices. Any notice to Escrow Agent is to be sent to escrow@primetrust.com. Any notices to Issuer will be to [●] .

 

Any party may change their notice or email address giving notice thereof in accordance with this Paragraph. All notices hereunder shall be deemed given: (1) if served in person, when served; (2) if sent by facsimile or email, on the date of transmission if before 6:00 p.m. Eastern time, provided that a hard copy of such notice is also sent by either a nationally recognized overnight courier or by U.S. Mail, first class; (3) if by overnight courier, by a nationally recognized courier which has a system of providing evidence of delivery, on the first business day after delivery to the courier; or (4) if by U.S. Mail, on the third day after deposit in the mail, postage prepaid, certified mail, return receipt requested. Furthermore, all parties hereby agree that all current and future notices, confirmations and other communications regarding this Agreement specifically, and future communications in general between the parties, may be made by email, sent to the email address of record as set forth above or as otherwise from time to time changed or updated in Issuer Dashboard, directly by the party changing such information, without necessity of confirmation of receipt, delivery or reading, and such form of electronic communication is sufficient for all matters regarding the relationship between the parties. If any such electronically-sent communication fails to be received for any reason, including but not limited to such communications being diverted to the recipients’ spam filters by the recipients email service provider or technology, or due to a recipients’ change of address, or due to technology issues by the recipients’ service provider, the parties agree that the burden of such failure to receive is on the recipient and not the sender, and that the sender is under no obligation to resend communications via any other means, including but not limited to postal service or overnight courier, and that such communications shall for all purposes, including legal and regulatory, be deemed to have been delivered and received. No physical, paper documents will be sent to Issuer, including statements, and if such documents are desired then that party agrees to directly and personally print, at their own expense, the electronically-sent communication(s) or dashboard reports and maintaining such physical records in any manner or form that they desire. Your Consent is Hereby Given: By signing this Agreement electronically, you explicitly agree to this Agreement and to receive documents electronically, including your copy of this signed Agreement as well as ongoing disclosures, communications and notices.

 

 

 

 

 

 

16.Counterparts; Facsimile; Email; Signatures; Electronic Signatures. This Agreement may be executed in counterparts, each of which will be deemed an original and all of which, taken together, will constitute one and the same instrument, binding on each signatory thereto. This Agreement may be executed by signatures, electronically or otherwise, and delivered by email in .pdf format, which shall be binding upon each signing party to the same extent as an original executed version hereof.

 

17.Substitute Form W–9: Taxpayer Identification Number certification and backup withholding statement. PRIVACY ACT STATEMENT: Section 6109 of the Internal Revenue Code requires you (Issuer) to provide us with your correct Taxpayer Identification Number (TIN). Under penalties of Perjury, Issuer certifies that: (1) The tax identification number provided to Escrow Agent is the correct taxpayer identification number and (2) Issuer is not subject to backup withholding because: (a) Issuer is exempt from backup withholding, or, (b) Issuer has not been notified by the Internal Revenue Service (IRS) that it is subject to backup withholding. Notification Obligation: Issuer agrees to immediately inform Prime Trust in writing if it has been, or at any time in the future is notified by the IRS that Issuer is subject to backup withholding.

 

18.Survival. Even after this Agreement is terminated, certain provisions will remain in effect, including but not limited to Sections 3, 4, 5, 10, 11, 12 and 14 of this Agreement. Upon any termination, Escrow Agent shall be compensated for the services as of the date of the termination or removal.

 

[Signature Page Follows]

 

 

 

 

 

 

Consent is Hereby Given: By signing this Agreement electronically, Issuer explicitly agrees to receive documents electronically including its copy of this signed Agreement as well as ongoing disclosures, communications, and notices.

 

Agreed as of the date set forth above by and between:

 

 

[●]

 

 

By: _______________________

 

Name: _____________________

Title: ______________________

 

 

Prime Trust, LLC

 

 

By: _______________________

 

Name: _____________________

Title: ______________________

 

 

 

  

 

Schedule A

 

Escrow Agent Fees

  

[ATTACHED & Listed on Issuer Dashboard]

 

 

 

EX1A-11 CONSENT 16 tv523247_ex11.htm EXHIBIT 11

 

Exhibit 11

 

CONSENT OF INDEPENDENT PUBLIC

ACCOUNTING FIRM

 

July 10, 2019

 

Board of Directors

GolfSuites 2, Inc.

 

We hereby consent to the inclusion in the Offering Circular filed under Regulation A tier 2 on Form 1-A of our reports dated May 24, 2019, with respect to the balance sheet of GolfSuites 2, Inc. as of May 15, 2019 and the related statements of operations, stockholders’ equity/(deficit) and cash flows for the inception period from March 13, 2019 (inception) through May 15, 2019 and the related notes to the financial statements.

 

  /s/ IndigoSpire CPA Group  

 

Aurora, Colorado

July 10, 2019

 

  

EX1A-12 OPN CNSL 17 tv523247_ex12.htm EXHIBIT 12

Exhibit 12

 

 

 

 

 

July 12, 2019

 

Board of Directors

GolfSuites 2, Inc. 

 

To the Board of Directors:

 

We are acting as counsel to GolfSuites 2, Inc. (the “Company”) with respect to the preparation and filing of an offering statement on Form 1-A. The offering statement covers the contemplated sale of up to 10,000,000 shares of the Company’s Series A Preferred Stock, as well as the Company’s Class A Common Stock into which the Series A Preferred Stock may convert. 

 

In connection with the opinion contained herein, we have examined the offering statement, the certificate of incorporation, certificate of designations, and bylaws, the minutes of meetings of the Company’s board of directors, as well as all other documents necessary to render an opinion. In our examination, we have assumed the legal capacity of all natural persons, the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified or photostatic copies and the authenticity of the originals of such copies.

 

Based upon the foregoing, we are of the opinion that the shares of Series A Preferred Stock, and Class A Common Stock into which the Series A Preferred Stock may convert, being sold pursuant to the offering statement are duly authorized and will be, when issued in the manner described in the offering statement, legally and validly issued, fully paid and non-assessable. 

 

No opinion is being rendered hereby with respect to the truth and accuracy, or completeness of the offering statement or any portion thereof.

 

We further consent to the use of this opinion as an exhibit to the offering statement. 

 

Yours truly,

 

/s/ CrowdCheck Law, LLP

 

By Jamie Ostrow, Partner

CrowdCheck Law LLP

 

 

 

 

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