May 4, 2009 To Potential Investors of PG Golf, LLC: My name is Pat Grady and it has been my dream of playing on the PGA Tour for as long as I can remember. I will graduate from the University of Colorado this week and plan to turn professional on June 5, 2009. I have worked tremendously hard on my game throughout college and have improved every year. This year has been by far my best as I was awarded Colorado Golf Association Player of the Year for the second year in a row. At the CU Sports Performers of the Year Awards I was recognized as CU Male Athlete of the Year. I also earned a spot on the All-Big 12 Conference team (both the tournament team and regular season team) I plan on playing in about ten State Open events this summer and roughly four or five Nationwide Tour Monday qualifiers. I will then go to PGA Tour Qualifying School in the fall. If Q-School doesn’t work out I will probably play on the Gateway Tour in Phoenix during the winter months. I have included a tentative schedule. Professional golf is extremely expensive, but I like to think of PG Golf, LLC as an investment opportunity. I know that if I play as well as I’ve played this past year that I should be able to earn a profit on the mini-tours. The reason I formed this company is because I don’t have the capital to sign up for all these events right away. I don’t want to be playing with the pressure that if I miss a cut or two that I could go into serious debt. I believe I have prepared myself during college to take my game to the next level, but need financial support to continue developing. I have lived at home throughout college to keep my expenses down and used my scholarship money wisely to the point that I am now debt free. However that didn’t leave much of a savings for professional golf. I know that the economy is about as bad as it has ever been, but I would really appreciate if you could help out. Thanks for your time, and I hope you will consider buying a share or more of PG Golf, LLC Sincerely, Pat Grady Pat Grady 1132 Aberdeen Dr. • Broomfield, CO 80020 • (303) 507-3789 PatrickRGrady@gmail.com Education University of Colorado at Boulder Bachelor of Science in Business Administration Double Emphasis in Accounting and Finance 3.25 G.P.A. Dean’s List Fall 2008 Academic All-American 2008-09 Extra Curricular Activities / Awards Student Athlete Advisory Committee (SAAC) Served as a team representative for four years (2006-09) President 2007-08, Vice-President 2008-09 Helped coordinate, lead, and volunteer at numerous: community service projects, banquets, events, and meetings. Big 12 SAAC, Represented CU at the conference meeting in Dallas in 2007 and 2008. Buffalo Leadership and Initiative Award 2007. Given to one Junior Student-Athlete who exhibited outstanding initiative and demonstrates a strong commitment to service to the CU and Boulder communities. Big 12 Conference Medal Award 2009. Given to one male and female athlete who are completing their eligibility with an outstanding record of scholarship and athletics. CU Athlete of the Year 2008-09. Given to one male and one female athlete who had the most outstanding athletic achievements throughout the year. Work Experience Nike Golf Camps and Schools (2005-2008) Camp Counselor. Responsible for 40 kids day and night in week long camps. Taught the fundamentals of golf to aspiring juniors. 2008 - 09 CU Athlete of the Year (All Sports Included) 2007 and 2008 Colorado Golf Association Player of the Year #26 Ranked Player in the Nation All-Big 12 Tournament Team and Regular Season Team Complete Resume Available on CUBuffs.com Intercollegiate Golf Fall 2008 USF Olympic Club Intercollegiate 70-75-70---215 T7th st DU-Ron Moore Invitational 67-69-68---204 1 UNM Tucker Invitational 73-70-77—220 T16th Northwestern Windon Memorial 78-77-76—231 T67th The Prestige At PGA West 77-78-76—231 T54th NMSU Wimberly Intercollegiate 69-69-71—209 T2nd Intercollegiate Golf Spring 2009 UH Hilo Intercollegiate 73-69-70—212 T3rd Louisiana Classics 70-75-66---211 T3rd th Oregon Duck Invitational 76-70-74--- 220 12 Western Intercollegiate 68-73-74--- 215 T6th st Stevinson Ranch Invitational 69-68-71---208 1 th Big 12 Championship 71-71-70-75---287 6 Other Major Amateur Accomplishments 2004 CGA Junior Match Play Championship 1st 2005 CGA Match Play Championship 1st 2006 CGA Stroke Play Championship 66-70-70-67 1st 2006 CGA Western Chapter Championship 66-66 1st 2007 CGA Public Links Championship 70-67-65 1st 2007 CGA Two-Man Championship 1st 2007 High Plains Amateur Championship 68-71 1st 2008 Southwestern Amateur Championship 68-74-70-77 6th 2008 US Amateur Public Links Championship Round 16 2008 CGA Stroke Play Championship 67-72-69 T2nd 2008 CGA Public Links Championship 65-68-68 2nd 2008 CGA Match Play Championship Semi-Finals 2008 CGA 4-Ball Championship 65-64 1st Records at CU 71.97 scoring average (through Big 12’s) would be 3rd all time if season was over. -12 204 at the 2008 DU Ron Moore Intercollegiate ties school record for most strokes under par in a 54 hole event -5 205 at the 2006 Perry Maxwell Intercollegiate ties the school record for most strokes under par on a par 70 course in a 54 hole event. 8th in top 5 finishes (9), 7th in top 10 finishes (12), 8th in top 20’s (17) All time record for most rounds in the 60’s single season. (10) So far… How Investment in PG Golf, LLC Works… This section is not the contract, it is just an outline. The actual contract is the document titled “Operating Agreement.” PG Golf, LLC will have a maximum ‘life span” of three and a half years (6/1/09 – 12/31/12), during which time Pat Grady will pursue a career as a professional touring golfer. The fiscal year ends on 12/31. PG Golf, LLC will maintain two classes of stock; “voting” and “non-voting.” All voting stock (200 shares) will be vested in Pat Grady, giving him the ability to make all company decisions. There will be 200 shares of non-voting stock. If Pat Grady cannot find enough investors to purchase all 200 units of non-voting stock in the initial offering, the remaining shares shall remain up for sale and may be purchased at any time. The non-voting shares will be sold for $500 each and an investor may buy as many as he or she desires until all 200 shares have been purchased. Return on Investment o Pat Grady will prepare a detailed income statement and balance twice annually. The first fiscal period is January 1 – June 30, and the second fiscal period is July 1 – December 31. o All tournament winnings will be included in income. Money from any type of apparel/club sponsorship will not be included in company income. Income is clearly detailed in Article 2.4 of the Operating Agreement. o Expenses include but are not limited to: tournament entrance fees, travel to and from tournaments, food at tournaments, caddy fees, basic health insurance, golf equipment, automobile related expenses from tournament travel, practice expenses, room and board (if Pat Grady has to move to play a mini-tour series), and other tournament related miscellaneous expenses. They are detailed in Article 2.5 of the Operating Agreement. o Net Income shall be divided 50/50. 50% will go to Pat Grady and 50% will be divided amongst the non-voting shareholders in proportion to percentage of ownership. Articles 2.7 -2.9 detail this. Net Income distributions will be made twice annually. See Article 2.7. o The goal of PG Golf, LLC is to help Pat Grady achieve his dream of playing on the PGA Tour. Pat has spoken with many potential investors and it seems everyone wants something different. Most would like a return on their investment, while others just want their money back or nothing back at all. On the “Subscription Agreement” a non-voting member shall note a maximum desired return on his or her initial investment. This shall be any number between 100% and a maximum of 200%. The total of distribution and dissolution payments an investor may receive from one share is his desired return multiplied by $500. For example, if a non-voting member purchases one share for $500, and notes a desired return of 200%, then the maximum total distribution and dissolution payments that investor could receive is $1,000. If a similar investor notes a desired return of 100%, then the maximum total distribution and dissolution payments would be $500. Pat has also spoken with some potential investors who say they want nothing to do with a company like this and would just like to pay for a single tournament entry fee directly. If that is the case, that person could contact Pat directly and he would facilitate that person at their convenience. o PG Golf, LLC’s Net Income is subject to distribution until all non-voting members are paid their full desired returns. When this takes place, all future Net Income belongs to Pat Grady. o If Pat Grady decides to stop pursuing his dream as a professional golfer, all Company cash and assets will be distributed equally to non-voting members based on percentage of ownership. See article 6.1 for more detail. o If the above does not occur, on 12/31/12 the Company will cease to exist and all Company cash and assets will be distributed evenly to non-voting members based on percentage of ownership until the first occurs: (a) all assets are distributed or (b) all non-voting members are paid their full desired returns. If example (b) occurs, all remaining company cash will belong to Patrick Ryan Grady. Article 6.1 details this. DIRECTIONS 1) Please read the Operating Agreement carefully 2) Watch the DVD. It is a six minute video. If you do not have a DVD player, I have uploaded the video on YouTube.com. Search “PG Golf, LLC” 3) Fill out: Subscription Agreement, IRS Form W-9, and Contact Information. 4) Make check payable to PG Golf, LLC. 5) Mail: Check, Subscription Agreement, W-9, and Contact Information to Pat Grady at 1132 Aberdeen Dr. Broomfield, CO 80020. 6) Keep the: Operating Agreement, DVD, Resume, and Outline for your own personal files. 7) Upon receipt, Pat Grady will mail a membership certificate that states your desired return, how many shares you own, and the date the check was received. Keep this document for your own personal records. SUBSCRIPTION AGREEMENT To the Manager of PG Golf, LLC: In exchange for an interest as a Non-voting Member of PG Golf, LLC, a Colorado limited liability company, as such interest is described in the operating agreement of the limited liability company, I agree to contribute $ (must be in $500 increments) in cash. This sum shall be payable in one installment due immediately upon placing my signature upon this document. My interest in the limited liability company is referred to as “Non-voting Member Interest” here, and will be effective on the acceptance of this subscription by the Manager of the limited liability company. As a Non-voting Member, I am entitled to earn a maximum desired return of % (must be between 100% and 200%) of my initial investment. My cash contribution entitles me to receive non- voting shares in PG Golf, LLC. In connection with this transaction, I represent and warrant that I am acquiring this interest for investment and not with a view to the resale or distribution of this interest. I agree that I will not transfer the interest in violation of the provisions of the operating agreement. I acknowledge that the Non-voting Member Interest is subject to restrictions on its transfer, as set forth in the operating agreement of the limited liability company, and I agree to observe and be bound by all of these restrictions. I further agree that the limited liability company may endorse itself with an appropriate legend as above. Prior to acquiring the purchase, I have made an investigation of the limited liability company and its business and have had made available to me all information with respect to the interest, the limited liability company and its business which I needed to make an informed decision to acquire the interest. I possess experience and sophistication as an investor which are adequate for the evaluation of the merits and risks of the interest. I understand the following concerning the interest: (a) That it has not been registered under the Securities Act of 1933 or any state securities laws; (b) That I cannot sell the Interest unless it is registered under the Securities Act of 1933 and applicable state securities laws, or pursuant to an exemption from the registration requirements; (c) That I must bear the economic risk of this investment for an indefinite period of time because the interest has not been registered under the Securities Act of 1933 or any state securities laws, and therefore cannot be sold unless it is subsequently registered or unless exemptions from the registration requirements are available; I agree to be bound by the provisions of the operating agreement and I will perform all obligations under it relating to Non-voting Members of the limited liability company. The representations, warranties, and agreements by me here made are made and given to induce the limited liability company to issue the interest to me. Very truly yours, . . Signature Date . Print Name ACCEPTED: PG Golf, LLC By: . Patrick Ryan Grady, Manager Please Fill Out All Items Completely (Personal information will be used for Company and IRS operations only) . (Print name as wanted on a check) . . (Mailing Address) (Apt No.) . . . (City) (State) (Zip) . . (Home Phone) (Cell Phone) . (Email Address) *In an effort to reduce costs, email is imperative for company communication. OPERATING AGREEMENT for PG Golf, LLC The agreement is made by signing the Subscription Agreement and becoming a non- voting member of PG Golf, LLC. The members agree as follows: ARTICLE I ORGANIZATION 1.1 Formation. The members have formed a limited liability company under the Colorado Limited Liability Company Act by filing an Articles of Organization with the Colorado Secretary of State. 1.2 Governing Law. This agreement shall be governed by and interpreted in accordance with the laws of the State of Colorado, including the Colorado Limited Liability Company Act. 1.3 Name. The name of the company shall be “PG Golf, LLC” 1.4 Term. The term of the Company shall not be perpetual as discussed in Article 6.1 of this Operating Agreement. 1.5 Office and Agent. The principal office of the Company shall be located at 1132 Aberdeen Dr. Broomfield, CO 80020. The principal and registered agent of the Company shall be Patrick Ryan Grady and he resides at 1132 Aberdeen Dr. Broomfield, CO 80020. 1.6 Purpose of the Company. The purpose of the Company is to facilitate the development of Patrick Ryan Grady as a professional golfer and to permit him to participate in professional golf tours with the possibility of providing a return on investment to those who purchase shares in PG Golf, LLC. 1.7 Founder of the Company. The legal name of the founder of the Company is Patrick Ryan Grady. ARTICLE II SHAREHOLDER INTERESTS, VOTING, AND PROFIT DISTRIBUTION 2.1 Voting Member. The decisions of the voting member shall be controlling. PG Golf, LLC will issue 200 voting shares. Patrick Ryan Grady will receive all 200 of the voting shares giving him the ability to make all company decisions. The non-voting members shall have no right without prior written consent of the voting member to take any action, enter into any contract or agreement, or perform any act in the name of the Company. 2.2 Non-voting Members. PG Golf, LLC will issue 200 non-voting shares. They will be sold for $500 each. When a share is purchased it will be considered a non-voting share outstanding. Shares issued but not purchased will be considered non-voting shares issued but not outstanding. A non-voting member is anyone who purchases at least one of the 200 non-voting shares. A non-voting share does not mean ownership of part of the Company. It just means the owner of the share has rights on distribution and dissolution payments up to his or her desired return. 2.3 Desired Return on Non-voting Shares. On the “Subscription Agreement,” an investor shall note a maximum “desired return” on his or her investment. This shall be any number between 100% and 200%. The total of distribution and dissolution payments an investor may receive from one share is his desired return multiplied by $500. For example, if an investor purchases one share for $500, and notes a desired return of 200%, then the maximum of total distribution and dissolutions payments that investor may receive shall be $1,000. When that investor receives $1,000 in distributions and or dissolution payments his or her share will become inactive from receiving any future payment. If a similar investor notes a desired return of 100%, then the maximum return on that investment would be $500. When that investor receives $500 from distributions and or dissolution payments his share shall be inactive from any future payment. Pat has also spoken with some potential investors who say they want nothing to do with a company like this and do not want a return. They would just like to pay for a single tournament entry fee directly. If that is the case, that person could contact Pat directly and he would facilitate that person at their convenience. 2.4 Income. Income shall include golf tournament prize monies earned by Patrick Ryan Grady. Any monies earned by Patrick Ryan Grady from sponsorship, appearances, golf lessons, “pro-am” events, clinics or any other employment shall remain those of Patrick Ryan Grady and not belong to or be payable to the Company. Pro-am events are defined as one day outings that typically occur the day before or days before a multi day tournament. There are, however, certain multi-day tournaments with the designation pro-am. For example, Pat plans to play in the SW Kansas Pro-Am in the summer of 2009. This is a three round tournament and no other event is associated with it. Monies from winnings in this event shall be payable to the Company. For the purpose of this Company we define a pro-am as a one day event that typically occurs the day or days before a tournament. If it is a multi-day event in which no other tournament is associated, then the event will be considered a tournament and prize monies belong to the Company. If it is deemed a pro-am and there is an entry fee associated with it, Patrick Ryan Grady must pay that fee himself and may not expense it to the Company. 2.5 Expenses. Expenses include but are not limited to: tournament entrance fees, transportation costs to and from tournaments, basic health insurance, caddy fees, meals at tournaments, golf equipment, automobile expenses from tournament travel, practice expenses, room and board at tournaments, rent (if Pat Grady has to move to play a mini- tour series), tax preparation fees, stamps, and other tournament, practice, and Company related miscellaneous expenses. 2.6 Net Income. Net Income is defined as income less expenses and taxes. Patrick Ryan Grady will prepare a detailed Income Statement after each semi-annual period. 2.7 Net Income Distribution. Distribution payments, if the below conditions are met, will be paid twice annually. Distributions will be paid one month after the close of each period. The first semi-annual period will be from Jan1 – June 30 and the second period will be from July 1 – Dec 31. 2009 will only have one period because it is only a 7 month year. The 2009 period will be from June 1 – Dec 31. An investor is eligible for distributions in that period if Patrick Ryan Grady receives his or her check anytime before the close of the period. Only positive cumulative Net Income shall be distributed. If semi-annual Net Income is negative, nothing shall be distributed and the loss will carry forward. If there is a loss carry forward from a previous period and Net Income is positive in the current period, the sum, if positive, shall be distributed to members. For example: if 2009 NI is -$3,000, nothing shall be distributed for 2009. If period one of 2010 NI is $5000, the sum of the periods shall be distributed for period one 2010. $5,000+-3000 = $2,000. $2,000 shall be distributed for period one 2010. If period one 2010 NI is only $2,000, that sum is now $2000+-$3000 = -$1,000. That is still a negative number therefore nothing shall be distributed for that period, and the $1,000 loss will carry forward to the next period. There is no guarantee a distribution payment will ever be made. If the Company has a loss every year, there will never be a distribution. Any cash that remains upon the dissolution of the Company shall be paid to non-voting members as is stated in article 6.1. If at the time the Company dissolves, an investor still hasn’t made his money back it will be considered a loss. Pat will present each member an IRS schedule K-1 at the end of each fiscal year and if there is a loss that amount can be taken as a tax write off. 2.8 Member Distribution Rights. The voting member shall receive 50% of company distributions. The non-voting members shall receive the other 50% divided equally based on percentage of ownership. 2.9 Non-voting Member Percentage of Ownership. Total # of Active Shares Owned Total # of Active Shares Outstanding A non-voting member’s percentage of ownership will most likely fluctuate from year to year. It will be calculated as follows. The numerator will be the number of active non- voting shares an investor owns at the end of the year. Active shares are those which currently have not been paid their full desired returns. After a share is paid its full desired return it will be considered an inactive share. The denominator will be the total number of active non-voting shares outstanding as counted at the close of that period. For Example: If at the end of 2009 PG Golf, LLC has only sold 100 of the 200 possible shares and member Z owns 10 active shares, then his ownership of the non-voting shares is 10%. (10/100 = 10%) If in the next semi-annual period PG Golf, LLC is able to sell the remaining 100 shares bringing the total number of shares outstanding to 200 (and all 200 are still active), member Z’s ownership of the non-voting shares is now only 5%. (10/200 = 5%). If after that period member Y who owns 50 shares has been paid back his full desired return (making his shares inactive), there are now only 150 active shares. Shareholder Z’s ownership of the non-voting shares is now 6.67% (10/150 = 6.67%). ARTICLE III LIABILITY 3.1 Liability of Shareholders and Managers. All debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, liabilities and obligations of the Company. ARTICLE IV ACCOUNTING RECORDS, REPORTING, AND BANKING 4.1 Books and Records. PG Golf, LLC shall maintain complete and accurate accounts in proper books of all transactions of the Company. The Company’s books and accounting records shall be in accordance with such accounting principles as the voting member may determine to be proper. 4.2 Income Statement. Patrick Ryan Grady shall keep a detailed and dated ledger of all tournament prize monies and expenses. He shall keep an organized collection of receipts from all these transactions. The semi-annual income statements shall be prepared from this ledger. 4.3 Balance Sheet. Patrick Ryan Grady shall prepare a balance sheet at the close of each fiscal year. 4.4 Capital Accounts. Pat Grady shall organize a spreadsheet with 200 rows, one for each share of non-voting stock. This spreadsheet will contain important information about each share of stock including: date of purchase, desired return, distributions received, etc. 4.5 Taxes. One month after the close of the fiscal year Patrick Ryan Grady will provide all non-voting members with a statement of their respective Capital Accounts, distribution information, IRS schedule K-1, and any other financial information a non- voting shareholder needs to prepare his or her federal and state income tax returns. Patrick Ryan Grady, on company expense, shall cause the income tax returns for the Company to be prepared and timely filed with the appropriate authorities. 4.6 Inspection of Books and Records. Each non-voting member has the right, on reasonable request for purposes reasonably related to the interest of the person as a non- voting member, to: (a) inspect and copy any of the company’s records described above; and (b) obtain from the Company promptly after their becoming available a copy of the Company’s federal, state and local income tax or information returns for each fiscal year. 4.7 Bank Account. PG Golf, LLC shall maintain its funds in a bank account in the name of the Company, and shall not permit the funds of the Company to be mingled in any fashion with the funds of any other person. ARTICLE V TRANSFER OR ASSIGNMENT OF SHARES 5.1 Death of a Non-voting Member. Upon the death of a non-voting member, the member’s estate will be entitled to all his or her shares. The estate will receive all future distribution and dissolution payments from the shares. 5.2 Restrictions of Transfer. No non-voting member shall sell, pledge, assign, or otherwise transfer his or her shares. No exceptions. ARTICLE VI DISSOLUTION AND WINDING UP 6.1 Dissolution. The Company may be dissolved at any time if Patrick Ryan Grady decides not to continue to compete as a touring golf professional. The company may also be dissolved, by decision of Patrick Ryan Grady, if every non-voting member has been paid his full desired return. Take for example Pat wins a PGA Tour event and makes $1 million. That would be more than enough money to pay every investor his full desired return. In an instance like this the company would make distribution payments and then immediately dissolve. The mission of the Company would have been accomplished, and there would be no further use for the Company. The Company shall be dissolved on 12/31/2012 if either of the above does not occur first. The first step that will occur upon dissolution is company profits will be distributed just like at the end of any other period. The second step is all non-depreciated company assets and cash will be evenly distributed to non-voting members based on percentage of ownership. Percentage of ownership is calculated the same way as it is in Article 2.9. A non-voting member, as long as there are sufficient company assets, will receive dissolution payments until their full desired return is met. For example, if an investor buys one share in 2009 with a desired return of 200% and has amassed distribution payments of $250 throughout the years, he is entitled to dissolution payments of no more than $750. $250+$750=$1,000, which is his full desired return. Example 2: If an investor buys one share in 2009 with a desired return of 100% and has amassed distribution payments of $250 throughout the years, he is entitled to $250 in dissolution payments because $250+$250 = $500 and that equals his desired return. Upon dissolution, and after all shareholders are paid their full desired returns, any remaining cash and non-depreciated assets shall belong to Patrick Ryan Grady. 6.2 Statement of Dissolution. The voting shareholder conducting the dissolution shall cause to be filed in the office of, and on a form prescribed by the Colorado Secretary of State, a Statement of Dissolution of the Articles of Organization. ARTICLE VII DISPUTE RESOLUTION 7.1 Disputes among members. The members agree that in the event of any dispute relating to the Company they shall use their best efforts to use good-faith negotiation to resolve the conflict. In the event the members are unable to resolve any dispute, such parties shall first attempt to resolve the problem with a non-binding mediation proceeding. Mediation proceedings shall be conducted in accordance with the most recent rules of the Commercial Mediation Rules of the American Arbitration Association, “the AAA”. In the event one party is still not satisfied with the decision, any unresolved disputes shall be finally settled in accordance with an arbitration proceeding. Arbitration proceedings must be conducted in accordance with the most current rules of the AAA.
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