PART II AND III

PRELIMINARY OFFERING CIRCULAR

DATED DECEMBER 13, 2019

AN OFFERING STATEMENT PURSUANT TO REGULATION A RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. INFORMATION CONTAINED IN THIS PRELIMINARY OFFERING CIRCULAR IS SUBJECT TO COMPLETION OR AMENDMENT. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED BEFORE THE OFFERING STATEMENT FILED WITH THE COMMISSION IS QUALIFIED. THIS PRELIMINARY OFFERING CIRCULAR SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR MAY THERE BE ANY SALES OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL BEFORE REGISTRATION OR QUALIFICATION UNDER THE LAWS OF ANY SUCH STATE. WE MAY ELECT TO SATISFY OUR OBLIGATION TO DELIVER A FINAL OFFERING CIRCULAR BY SENDING YOU A NOTICE WITHIN TWO BUSINESS DAYS AFTER THE COMPLETION OF OUR SALE TO YOU THAT CONTAINS THE URL WHERE THE FINAL OFFERING CIRCULAR OR THE OFFERING STATEMENT IN WHICH SUCH FINAL OFFERING CIRCULAR WAS FILED MAY BE OBTAINED. 

COMMONWEALTH THOROUGHBREDS LLC

1450 North Broadway, Lexington, Kentucky 40505

Telephone: (859) 977-0124

Website: www.joincommonwealth.com

Series Membership Units Overview
		Price to Public	Underwriting Discounts and Commissions (1)(2)	Proceeds to Issuer	Proceeds to Other Persons
Series TF2019	Per Unit	$50.00	$0	$50.00	$0
	Total Minimum	$125,000	$0	$125,000	$0
	Total Maximum	$150,000	$0	$150,000	$0
Series OL2018	Per Unit	$50.00	$0	$50.00	$0
	Total Minimum	$110,000	$0	$110,000	$0
	Total Maximum	$125,000	$0	$125,000	$0

⁽¹⁾  North Capital Private Securities Corporation (“North Capital”) will be acting as an executing broker and entitled to a Brokerage Fee equal to 1% of the offering proceeds, as described in greater detail under “Plan of Distribution and Subscription Procedure – Broker” and “Fees and Expenses.”

⁽²⁾ No underwriter has been engaged in connection with the Offering (as defined below), and neither North Capital nor any other entity receives a finder’s fee or any underwriting or placement agent discounts or commissions in relation to any offering of our units of membership interest. We intend to distribute units of membership interest of any of our series principally through the Commonwealth Platform, as described in greater detail under “Plan of Distribution and Subscription Procedure.”

Commonwealth Thoroughbreds LLC, a Delaware series limited liability company (“we,” “us,” “our,” “Commonwealth Thoroughbreds” or the “Company”) is offering, on a best efforts basis, units of membership interest of each of the following series of the Company:

● a minimum of 2,500 units and a maximum of 3,000 units of Series TF2019 (the “Series TF2019 Units”, the offering of which is described as the “Series TF2019 Offering”), and

● a minimum of 2,200 units and a maximum of 2,500 units of Series OL2018 (the “Series OL2018 Units”, the offering of which is described as the “Series OL2018 Offering”).

We may refer to the Company’s series offered hereunder collectively as the “Series” and each individually as a “Series.” Likewise, we may refer to the units of membership interests of all the series described above collectively as the “Units” and each, individually, as a “Unit”, and we may refer to the offerings of the Units collectively as the “offerings” and each, individually, as an “offering”.

The Company is managed by Commonwealth Markets Inc., a Delaware corporation, which we refer to in this Offering Circular as the “Manager.”

The sale of Units is being facilitated by North Capital, a broker-dealer registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and member of FINRA, and is registered in each state where the offer or sales of the Units will occur. We may also refer to North Capital as the “Broker.”  The Company is not offering, and does not anticipate selling, Units in any state where North Capital is not registered as a broker-dealer. For the avoidance of doubt, North Capital does not and will not solicit purchases of Units or make any recommendations regarding the Units to prospective investors.

Units of each Series are available for purchase exclusively through the Commonwealth Platform and will be issued in book-entry electronic form only. ClearTrust LLC has been engaged as the Company’s SEC-registered transfer agent and registrar of the Units pursuant to Section 17A(c) of the Exchange Act.

Sale of the Units of each Series will begin upon qualification of this Offering Circular, and Units of each Series will be sold to no more than 2,000 qualified purchasers (no more than 500 of whom cannot be “accredited investors”). In this Offering Circular, we refer to a purchaser of the Units as an “Investor” or as a “Unit Holder.”

There will be a separate closing with respect to each Offering (each, a “Closing”). The Closing of an Offering will take place on the earliest to occur of (i) the date subscriptions for the maximum Units of a Series have been accepted or (ii) a date determined by the Manager of the Company in its sole discretion, provided that subscriptions for the minimum Units have been accepted. If Closing has not occurred, the Offering will terminate on (i) the date one year after the date this Offering Circular, or an Amendment to it, is qualified by the U.S. Securities and Exchange Commission (the “SEC”), which period may be extended by an additional six months by the Manager in its sole discretion, or (ii) any date on which the Manager elects to terminate the offering in its sole discretion. Any subscription funds advanced by a prospective Investor as part of the subscription process will be held in a non-interest-bearing escrow account with North Capital and will not be commingled with the operating account of the Series, until, if and when there is a Closing with respect to that Investor. See “Plan of Distribution and Subscription Procedure” and “Description of Units Offered” for additional information.

This Offering is being conducted under Regulation A (17 CFR 230.251 et. seq.) and the information contained herein is being presented in Offering Circular format. In general, 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. The information contained on our Internet website, or any other Internet site described herein, is not a part of, and is not incorporated or deemed to be incorporated by reference into this Offering Circular.

The United States Securities and Exchange Commission does not pass upon the merits of or give its approval to 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. The Units are offered pursuant to an exemption from registration with the SEC; however, the SEC has not made an independent determination that the Units are exempt from registration. This Offering Circular does not constitute an offer to sell or the solicitation of an offer to buy, nor may there be any sales of these securities in, any state in which such offer, solicitation or sale would be unlawful before registration or qualification of the offer and sale under the laws of that state.

An investment in the Units involves a high degree of risk. See “Risk Factors” on Page 17 for a description of some of the risks that you should consider before investing in the Units.

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TABLE OF CONTENTS

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS	6
GLOSSARY	7
OFFERING SUMMARY	10
RISK FACTORS	19
Risks Related to the Structure, Operation and Performance of the Company	19
Risks Related to the Thoroughbred Industry	26
Risks Related to the Offering	30
Risks Related to Ownership of our Units	33
POTENTIAL CONFLICTS OF INTEREST	35
DILUTION	39
USE OF PROCEEDS – SERIES TF2019	40
USE OF PROCEEDS – SERIES OL2018	42
DESCRIPTION OF THE TIMIDO FILLY	44
Information About the Timido Filly	44
Pedigree	44
Initial Appraisal	44
Boarding Arrangements; Development Timetable	44
DESCRIPTION OF THE ORB COLT	45
Information About the Orb Colt	45
Pedigree	45
Initial Appraisal	45
Boarding Arrangements; Development Timetable	45
PLAN OF DISTRIBUTION AND SUBSCRIPTION PROCEDURE	46
Plan of Distribution	46
Minimum and Maximum Investment	47
Investor Eligibility Standards	47
Eligibility for Registration as a Racehorse Owner	48
Broker	49
Escrow Agent	49
Additional Information Regarding this Offering Circular	50
How to Subscribe	50
MANAGEMENT’S DISCUSSION AND ANALYSIS  OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	52
Operating Results	52
Liquidity and Capital Resources	53
Plan of Operations	53
Trend Information	53
DESCRIPTION OF THE BUSINESS	54
Overview	54
Business of the Company	54
The Commonwealth Platform	55
The Manager	56
Advisory Board	57

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Asset Selection and Acquisition	58
Training and Boarding	59
Racing	60
Sale of Assets	60
Breeding Activities	60
Insurance	61
Operating Expenses	61
Allocation of Revenue and Expense	62
Oversight and Governance	62
Indemnification of the Manager	62
Description of the Management Services Agreement	63
Management Fee	63
Legal Proceedings	64
THOROUGHBRED INDUSTRY	64
Introduction	64
Breeding	64
Thoroughbred Sales at Public Auction	65
Weanling Auctions	65
Yearling Auctions	65
Two-Year-Old Auctions	66
Broodmare Auctions	67
Private Sales	67
Marketplace and Competition	67
Racing	67
Wagering and Purses	68
Stallion Share/Stallion Ownership	70
Industry Organizations	71
Racetrack Industry	72
Supervision and Regulation	73
Sales Practices	74
FEES AND EXPENSES	75
Offering Expenses	75
Acquisition Expenses	75
Brokerage Fee	75
Sourcing Fee	76
Organizational Fee	76
Management Fee	76
Advisory Board Compensation	76
MANAGEMENT	77
Manager	77
Executive Officers, Directors and Key Employees	79
Advisory Board	80
COMPENSATION	81
Compensation of Executive Officers	81
Compensation of Manager	81
PRINCIPAL INTEREST HOLDERS	82
DESCRIPTION OF THE UNITS OFFERED	83
Description of the Units	83

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Further Issuance of Units	85
Distribution rights	85
Redemption provisions	86
Registration rights	86
Voting rights	86
Liquidation rights	88
Transfer restrictions	88
Agreement to be Bound by the Operating Agreement; Power of Attorney	89
Duties of officers	89
Books and reports	89
Exclusive jurisdiction; waiver of jury trial	90
Listing	90
MATERIAL UNITED STATES TAX CONSIDERATIONS	91
Definitions	91
Taxation of each Series of Units as a “C” Corporation	92
Taxation of Distributions to Investors	92
Taxation of Dispositions of Units	92
Backup Withholding and Information Reporting	93
WHERE TO FIND ADDITIONAL INFORMATION	94
INDEX TO FINANCIAL STATEMENTS	F-1

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

The information contained in this Offering Circular includes some statements that are not historical and that are considered “forward-looking statements.” Such forward-looking statements include, but are not limited to, statements regarding our development plans for our business; our strategies and business outlook; anticipated development of the Company, the Manager, each series of the Company and the Commonwealth Platform (defined below); and various other matters (including contingent liabilities and obligations and changes in accounting policies, standards and interpretations). These forward-looking statements express the Manager’s expectations, hopes, beliefs, and intentions regarding the future. In addition, without limiting the foregoing, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipates,” “believes,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “might,” “plans,” “possible,” “potential,” “predicts,” “projects,” “seeks,” “should,” “will,” “would” and similar expressions and variations, or comparable terminology, or the negatives of any of the foregoing, may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.

The forward-looking statements contained in this Offering Circular are based on current expectations and beliefs concerning future developments that are difficult to predict. Neither the Company nor the Manager can guarantee future performance, or that future developments affecting the Company, the Manager or the Commonwealth Platform will be as currently anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements.

All forward-looking statements attributable to us are expressly qualified in their entirety by these risks and uncertainties. These risks and uncertainties, along with others, are also described below under the heading “Risk Factors.” Should one or more of these risks or uncertainties materialize, or should any of the parties’ assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. You should not place undue reliance on any forward-looking statements and should not make an investment decision based solely on these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

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GLOSSARY

broodmare	a female Thoroughbred in foal or previously used for breeding
champion	In the United States, the recipient of an Eclipse Award as the horse voted best of its division in a given year by the members of the Daily Racing Form, Thoroughbred Racing Association, and National Turf Writers Association. In other countries, a champion is either voted upon in a similar fashion or top-weighted on a published year-end handicap list
classic winner	a Thoroughbred winner of one of the classic races (the Kentucky Derby, the Preakness and Belmont Stakes in the United States) run by three-year old horses
colt	a male thoroughbred (other than a gelding) under 5 years of age
conformation	the symmetrical relationship between the physical attributes of a Thoroughbred; its physical appearance and structural makeup
dam	the female parent of a Thoroughbred
filly	female Thoroughbred under 5 years of age which has not been bred
foal	the young offspring of a Thoroughbred, usually a Thoroughbred under 1 year of age
gelding	a castrated Thoroughbred
graded stakes race	a stakes race which is evaluated, or graded, by a panel of racing authorities (the American Grades Stakes Committee of the Thoroughbred Owners and Breeders Association (TOBA)) and is assigned Grade I, II, or III status based upon an evaluation of the quality of the prior participants in the stakes, the amount of added money contributed to the purse by the racetrack, and the overall prestige of the race
half-brother (or -sister)	the get of the same dam but not the same sire; the term does not apply equally to Thoroughbreds with only the same sire
in foal	refers to a pregnant broodmare
juvenile	a two-year-old Thoroughbred
mare	a female Thoroughbred 5 years of age or over
multiple graded stakes winner	a Thoroughbred winner of more than one graded stakes race
multiple stakes winner	a Thoroughbred winner of more than one stakes race, whether graded or ungraded

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pari-mutuel wagering	a system of legalized betting on races whereby the holders of winning tickets divide the total amount bet (by pools such as win, place, show, exacta, trifecta, pick three, daily double, etc.) less the set deductions (“take out”) for purses and the track conducting the live race, each in proportion to the sums wagered by the winning ticket holders
pinhooking	buying weanlings or yearlings for resale as yearlings or two-year olds
purses	the amount of money offered as an incentive to the entrants in a race as the prize or earnings, distributed in proportion to the placing of the horses, usually 60% to the winner, 20% to the second place finisher, 10% to the third place finisher, 5% to the fourth place finisher, etc.
select sale	a public auction of Thoroughbreds with certain conformation and pedigree restrictions, in contrast to an open sale where the requirements are proper nomination and payment of an entry fee
sire	a stallion which has produced a foal
stakes placed	under the rules of the International Cataloguing Standards Committee (ICSC), a Thoroughbred which has finished second or third in a stakes race, either graded or ungraded.
stakes race	the highest class of race in any racing jurisdiction; a race in which an entry fee is paid by the owners of the Thoroughbreds starting and those entry fees are added to the purse; often all such entry fees are paid to the winner (entry fees are not required for any other type of race); also, invitational races (no entry fee required) with a large purse (usually $50,000 or more) are regarded as stakes races
stakes winner	a Thoroughbred winner of a stakes race, whether graded or ungraded
stallion	a male Thoroughbred which has not been castrated; usually used in reference to a retired racehorse which is or will be used for breeding
stallion season	the right to breed one broodmare to a particular stallion for the purpose of producing one foal during a particular season, sometimes referred to as a “breeding season,” which does not include an ownership interest in the stallion
stallion share	an undivided fractional interest in a stallion, which customarily entitles the owner to breed at least one broodmare with the stallion each year for the useful life of the stallion, plus an occasional extra season, depending on the syndication agreement; syndication agreements usually provide for 40 to 60 shares and frequently provide 4 to 10 breeding rights to the syndicate manager or farm where the stallion stands and 1 breeding right to the stallion’s trainer; a “lifetime breeding right” is similar to a stallion share, but does not include an ownership interest in the stallion; the owner of a lifetime breeding right is not entitled to bonus seasons or bonus distributions, nor is the owner obligated to assume any liabilities associated with the care of the stallion
suckling foal	a newborn foal still nursing from its mother

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under tack	When a horse is fitted with a bridle and saddle it is “tacked up” or “under tack,” and can be ridden, exercised, trained, or raced.
weanling	a Thoroughbred before its first birthday on the January 1 following its birth (the universal birthday for all Thoroughbred horses) but after it is no longer a suckling foal and has been removed (or “weaned”) from its mother
yearling	a Thoroughbred between the first New Year’s Day after being foaled and the following January 1

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OFFERING SUMMARY

The following summary is qualified in its entirety by the more detailed information appearing elsewhere in this Offering Circular and in the Exhibits to it. You should read the entire Offering Circular and carefully consider, among other things, the matters set forth in the “Risk Factors” section. We encourage you to seek the advice of your attorney, tax consultant, and business advisor with respect to the legal, tax, and business aspects of an investment in the Units. All references in this Offering Circular to “$” or “dollars” are to United States dollars. Certain terms relating to the Thoroughbred industry are defined in the Glossary immediately preceding this Offering Summary section.

The Company:	Commonwealth Thoroughbreds LLC, a Delaware series limited liability company formed June 12, 2019.
Series Asset:	●     Series TF2019 will own a 100% interest in a filly born in April 2019 by Justin Phillip out of Timido by Gio Ponti, which we refer to as the “Timido Filly.” ●     Series OL2018 will own a 75% interest in a yearling colt by Orb out of Latique by Elusive Quality, which we refer to as the “Orb Colt.” See “Description of the Timido Filly” and “Description of the Orb Colt” for further details.
	We may refer to the interests in a Thoroughbred owned by a Series as the “Series Asset” or alternatively as its “Thoroughbred Asset.”   We do not anticipate that any Series would own any assets other than the interests in the Thoroughbreds described in this Offering Circular, plus cash reserves for boarding, training, insurance and other expenses related to those Thoroughbreds and amounts earned by the Series from racing and breeding activities. We do not intend to add any Thoroughbred assets to any Series once the Offering of that Series has closed.
Securities Offered:	Investors will acquire units of membership interest in a Series of the Company, each of which is intended to be a separate series of the Company for purposes of assets and liabilities. See “Description of Units Offered” for further details. The purchase of membership units in a Series of the Company is an investment only in that one Series and not an investment in the Company as a whole.
	The Units will have voting rights only with respect to specific matters set forth in the Amended and Restated Limited Liability Company Agreement of the Company (the “Operating Agreement”). Those matters are: ●    the for-cause removal of the Manager; ●    the dissolution of the Company upon the for-cause removal of the Manager, and ●    an amendment to the Operating Agreement that would: o  enlarge the obligations of, or adversely affect, an interest holder in any material respect;

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	o   reduce the voting percentage required for any action to be taken by the holders of units in the Company under the Operating Agreement; o   change the situations in which the Company and any series can be dissolved or terminated; o   change the term of the Company (other than the circumstances provided in the Operating Agreement); or o   give any person the right to dissolve the Company. In addition, the holders of a majority of the units of an individual series must approve any amendment to the Operating Agreement that would adversely change the rights of the units of the series, result in mergers, consolidations or conversions of the units of the series and for any other matter that the Manager, in its sole discretion, determines will require the approval of the holders of the units of the series voting as a separate class.   See “Description of the Units Offered – Voting Rights” for further information.
Investors:	Each Investor must be a “qualified purchaser” as defined by Regulation A and must also be eligible to own racehorses under the applicable rules of state racing commissions. See “Plan of Distribution and Subscription Procedure – Investor Eligibility Standards” for further details.
	The Manager may, in its sole discretion, decline to admit any prospective Investor, or accept only a portion of such Investor’s subscription, regardless of whether such person is a “qualified purchaser.” Furthermore, the Manager anticipates only accepting subscriptions from prospective Investors located in states where the Broker is registered.
The Manager:	Commonwealth Markets Inc., a Delaware corporation, is the manager of the Company and the managing member of each series of the Company’s membership units, including Series TF2019 and Series OL2018.
	Commonwealth Markets Inc. also owns and operates a mobile app-based investment platform called the Commonwealth Platform through which the Units in the Company’s series are sold. See “Description of the Business – The Commonwealth Platform” for more information.
Advisory Board:	The Manager intends to assemble a network of advisors with experience in the equine industry and other relevant fields to serve on an Advisory Board and assist the Manager in identifying, acquiring, training, breeding, reselling and otherwise managing the Thoroughbred assets held by each of the Company’s Series.
Broker:	The Company has entered into an agreement with North Capital Private Securities Corporation (in its capacity as broker of record, “North Capital” or the “Broker”), a broker-dealer registered with the SEC and each state where the Offering will be made and with such other regulators as may be required to execute the sale transactions and provide related services in connection with this Offering. North Capital is a member of FINRA and SIPC.

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Price per Unit:	The price per Unit is $50.00 for both Series TF2019 Units and Series OL2018 Units. The Purchase Price will be payable in cash at the time of subscription. Payment will only be accepted by means of electronic transfer via wire or ACH payment and not by check or credit card.
Minimum and Maximum Unit Purchase:	The minimum subscription by an Investor is one (1) Unit. The maximum subscription by any Investor is for Units representing 10% of the total Units in the Series, although that limit may be waived by the Manager in its sole discretion.
Offering Size:
Series TF 2019	Maximum Offering -- 3,000 Units Minimum Offering – 2,500 Units
Series OL2018	Maximum Offering -- 2,500 Units Minimum Offering – 2,200 Units
Terms of Series Asset Acquisitions:
Series TF 2019	The Company acquired a 100% interest in the Timido Filly from an officer of the Manager in exchange for a convertible promissory note in the principal amount of $7,500. The purchase price was based on a valuation of the Timido Filly by an independent appraiser. The principal and interest payable on the note will convert automatically into Units at the $50.00 offering price per Unit at the Series TF2019 Closing, which would represent approximately 4.8% of the outstanding Series TF2019 Units if the maximum number of Units are sold in the Series TF2019 Offering. The terms of the convertible promissory note issued by the Company to the seller of the Timido Filly are described under “Use of Proceeds – Series TF2019.”
Series OL2018	The Company has entered into an agreement with a third-party seller to acquire a 75% interest in the Orb Colt for a purchase price of $20,000.  Payment is due no later than January 17, 2020.  The Company will fund the purchase with a $20,000 loan from the Manager. The convertible promissory note issued by the Company to the Manager provides that at the Series OL2018 Closing $10,000 of the principal will convert automatically into Series OL2018 Units at the $50.00 offering price per Unit, and the balance of the principal and accrued interest will be paid in cash to the Manager.  The Units issued to the Manager would represent approximately 7.4% of the outstanding Series TF2019 Units if the maximum number of Units are sold in the Series TF2019 Offering.  The terms of the convertible promissory note issued by the Company to the Manager are described under “Use of Proceeds – Series OL2018.”

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Ownership by Management:	The Manager together with its affiliates must own a minimum of 2% and may own up to a maximum of 10% of the outstanding Units of a Series immediately following each Closing (but which the Manager may sell at any time after the Closing).
Series TF 2019	The Units issued upon conversion of the note issued by the Company to an officer of the Manager to acquire the Timido Filly would represent from approximately 4.8% to 5.7% of the outstanding Series TF2019 Units depending on the number of Units sold in the Series TF2019 Offering.
Series OL2018	The Units issued upon conversion of the note issued by the Company to the Manager to acquire the Orb Colt would represent from approximately 7.4% to 9.1% of the outstanding Series OL2018 Units depending on the number of Units sold in the Series OL2018 Offering.

Escrow Agent:	North Capital Private Securities Corporation (in its capacity as the escrow agent, the “Escrow Agent”). Fees paid to the Escrow Agent are categorized as Offering Expenses.
Escrow:	The subscription funds advanced by a prospective Investor as part of the subscription process will be held in a non-interest-bearing escrow account with the Escrow Agent and will not be commingled with the operating account of any Series, until, if and when there is a Closing with respect to that Investor. When the Escrow Agent has received instructions from the Manager or the Broker that the Offering will close and the Investor’s subscription is to be accepted (either in whole or part), then the Escrow Agent will disburse the Investor’s subscription proceeds in its possession to the account of the Series, and Units of the Series will be issued to the Investor. If the Offering is terminated without a Closing, or if a prospective Investor’s subscription is not accepted or is cut back due to oversubscription or otherwise, funds held in escrow for unaccepted subscriptions will be returned promptly to the Investor without interest. Any costs and expenses associated with a terminated offering will be borne by the Manager.
Offering Period:	There will be a separate closing with respect to each Offering. The Closing of each Offering will take place on the earliest to occur of (i) the date subscriptions for the maximum number of Units offered have been accepted or (ii) a date determined by the Manager in its sole discretion, provided that subscriptions for the minimum number of Units offered have been accepted. If the Closing has not occurred, the Offering will terminate on (i) the date that is one year from the date this Offering Circular, or an Amendment to it, is qualified by SEC, which period may be extended by an additional six months by the Manager in its sole discretion, or (ii) any date on which the Manager elects to terminate the offering in its sole discretion.  The Manager reserves the right to terminate the offering if 35 or fewer persons subscribe for the Units of any Series.

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Use of Proceeds: The Offering proceeds received by the Series will be applied in the following order of priority of payment:   (i)   Brokerage Fee: A fee equal to 1% of the amount raised through this Offering (which excludes any Units purchased by the Manager or its affiliates) paid to North Capital as compensation for brokerage services.   (ii)  Cost of the Series Asset: The actual cost incurred to acquire the Series Asset (which may have been paid before Closing with funds loaned to the Company), including any interest payable on loans to the Company, and down payments paid by the Manager or its affiliates to acquire the Series Asset before an Offering.   (iii) Offering Expenses: In general, these costs include actual legal, accounting, escrow, underwriting, filing, wire transfer and compliance costs incurred by the Company in connection with the offering of a series, as applicable, paid to legal advisors, brokerage, escrow, underwriters, printing, financial institutions, accounting firms and the custodian, as the case may be. Offering Expenses excludes ongoing costs described below as Operating Expenses.   The Manager has agreed to limit the reimbursement by Series TF2019 and Series OL2018 for Offering Expenses incurred in connection with the applicable Offering to 10% of the offering proceeds received.   (iv) Acquisition Expenses: In general, these include actual costs associated with the identification, investigation, evaluation and acquisition of a Thoroughbred asset, pre-purchase medical examinations, appraisal fees, and transportation to a boarding or training facility, as applicable.   The Manager has elected to waive reimbursement of Acquisition Expenses in connection with both the Series TF2019 Offering and the Series OL2018 Offering.   (v)  Sourcing Fee: A Sourcing Fee will be paid to the Manager as compensation for identifying investigating, evaluating and managing the acquisition of a Thoroughbred asset, the amount of which will be determined by the Manager at the time of each Offering of Units.   For both Series TF2019 and Series OL2018, the Sourcing Fee is equal to 10% of the purchase price of the Series Asset.   (vi) Organizational Fee: An Organizational Fee equal to 3% of the proceeds received from each offering of the Company’s units will be paid to the Manager to cover legal, accounting and compliance expenses incurred to set up the legal and financial framework and compliance infrastructure for the marketing and sale of the Units offered hereby and all subsequent offerings.   See “Use of Proceeds – Series TF2019,” “Use of Proceeds – Series OL2018” and “Fees and Expenses” for further details.

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Operating Expenses: “Operating Expenses” are the costs and expenses attributable to the activities of a Series including:   ●    costs incurred in managing the Series Thoroughbred, including, but not limited to boarding, training, veterinarian and transportation costs;   ●    costs incurred in preparing any reports and accounts of the Series, including any tax filings and any annual audit of the accounts of the Series (if applicable) or costs payable to any third-party registrar or transfer agent and any reports to be filed with SEC;   ●     any and all insurance premiums or expenses in connection with the Series Thoroughbred, including mortality, liability and medical insurance of the Series Thoroughbred to insure against the death, injury or third-party liability of racehorse ownership (as described in “Description of the Business – Business of the Company”).  The decision to purchase insurance on a Thoroughbred will be made on a horse-by-horse basis, depending on such considerations as the amount of Series’ investment, premium rates, racing performance, pedigree, use (racing, stallion or broodmare) and similar factors; and   ●     any indemnification payments.   The Manager has agreed to pay and not be reimbursed for Operating Expenses incurred prior to the Series TF2019 and Series OL2018 Closings. Operating Expenses incurred after the Closing will be the responsibility of the Series.   If the Operating Expenses exceed the amount of revenues generated from the Series Asset and cannot be covered by any Operating Expense reserves on the balance sheet of the Series, the Manager may (a) pay such Operating Expenses and not seek reimbursement, (b) loan the amount of the Operating Expenses to the Series, on which the Manager may impose a reasonable rate of interest, which cannot be lower than the Applicable Federal Rate (as defined in the Internal Revenue Code), and be entitled to reimbursement of such amount from future revenues generated by the Series Asset (the “Operating Expenses Reimbursement Obligation”), or (c) cause additional Units to be issued in order to cover the additional amount of Operating Expenses.   We do not anticipate that Series TF2019 will generate any revenues before 2021, when the Timido Filly is first able to race as a two-year old.   Whether Series OL2018 will generate any revenues in 2020 will depend on the development of the Orb Colt, which we anticipate will begin training in 2020 and may race as a two-year old later in the year.   See discussion of “Description of the Business – Operating Expenses” for additional information.

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Issuance of Additional Units:	The Manager may sell its Units of a Series from time to time after the Closing of the Offering of that Series. If there are not sufficient cash reserves of, or revenues generated by, a Series to meet the Series’ Operating Expenses, the Manager may sell additional Units of the series as well as take the other actions described in immediately preceding “Operating Expenses” section of this Offering Summary.
Free Cash Flow:	The net income (as determined under U.S. generally accepted accounting principles (“GAAP”)) generated by the Series plus any change in net working capital and depreciation and amortization (and any other non-cash Operating Expenses) and less any capital expenditures related to the Series Asset. The Manager may maintain Free Cash Flow funds in a deposit account or an investment account for the benefit of the Series. A Series will typically generate Free Cash Flow from racing, breeding and sales activities.  The frequency with which revenue generating events occur will depend on the racing schedule, potential sales of the Series Asset and other events that do not occur on a fixed or set time period (e.g., quarterly or monthly).
Management Fee:	As compensation for the services provided by the Manager under the Management Services Agreement, the Manager will be paid a semi-annual fee equal to: ●    10% of any Free Cash Flow generated by the Series, until such time as Investors have  received a return of their invested capital. Thereafter: ●     20% of any Free Cash Flow generated by the Series from racing activities; and ●     30% of any Free Cash Flow generated by the Series from breeding activities and sales of Series Assets. The Management Fee will only become due and payable at the time there is a distribution of Free Cash Flow to Unit Holders of the Series, as described in Distribution Rights below. For tax and accounting purposes the Management Fee will be accounted for as an expense on the books of the Series.
Distribution Rights:	The Manager has sole discretion in determining when distributions of Free Cash Flow, if any, are made to Series Unit Holders and the amount of any such distributions. Any Free Cash Flow generated by the Series from racing, breeding and sales activities will be applied in the following order of priority: (i)   to repay any amounts outstanding under Operating Expenses Reimbursement Obligations plus accrued interest; (ii)  to create such reserves as the Manager deems necessary, in its sole discretion, to pay corporate income taxes applicable to the Series and meet future Operating Expenses;

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	(iii) distributions to Unit Holders, net of the Management Fee payable; and (iv) distributions to the Manager in payment of the Management Fee, as described above.
Timing of Distributions:	The Manager has the sole discretion to determine the timing of any distributions of Free Cash Flow to Unit Holders and to withhold Free Cash Flow entirely or in part to meet anticipated costs and liabilities of the Series.  The Manager is only entitled to receive the Management Fee at the time Free Cash Flow is distributed to Unit Holders of a Series. In general, the timing and amount of distributions will depend on such factors as the development of the Series Thoroughbred, the quality of the races in which it is entered, winnings, and its value as breeding stallion or broodmare.
No Trading Market:	There is currently no public trading market for any of our Units, and no such public market may ever develop. If an active public trading market for our securities does not develop or is not sustained, it may be difficult or impossible for you to resell your Units at any price. Even if a public market does develop, the market price could decline below the amount you paid for your Units. The Company estimates that each Series will exist for 4-6 years (the racing life cycle) and then the Series Asset will be sold, which will be the primary liquidity event other than distributions on Free Cash Flow as discussed above. A sale of the Series Asset may occur at a lower value than when the Series Asset was first acquired or at a lower price than the aggregate of costs, fees and expenses used to purchase the Series Asset.  The Company expects to terminate each Series after the Series Asset is sold and to distribute the sales proceeds to the unitholders of that Series.
Fiduciary Duties:	The Operating Agreement provides that neither the Manager, nor any directors, officers, or employees of the Manager, nor any members of the Advisory Board, nor persons acting at the request of the Company or any series in certain capacities with respect to other entities (collectively, the “Indemnified Parties”) will be liable to the Company, the Series, or any Unit Holders for any act or omission taken by any Indemnified Party in connection with the business of the Company or its series of membership units unless determined to constitute fraud, willful misconduct or gross negligence. Therefore, Investors have a more limited right of action than they would have absent the limitation in the Operating Agreement.
Indemnification:	The Company or, where relevant, the Series will indemnify the Indemnified Parties out of its assets against all liabilities and losses (including amounts paid in respect of judgments, fines, penalties or settlement of litigation, including legal fees and expenses) to which they become subject by virtue of serving as Indemnified Parties with respect to any act or omission that has not been determined to constitute fraud, willful misconduct or gross negligence. Unless attributable to a specific series of units or a specific underlying asset, the costs of meeting any indemnification will be allocated pro rata across each of series of units based on the value of each underlying asset.

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Transfers:

The Manager may refuse a transfer of Units by an Unit Holder if the transfer would result in (a) there being more than 2,000 beneficial owners in the Series or more than 500 beneficial owners that are not “accredited investors,” (b) the assets of the Series being deemed “plan assets” for purposes of ERISA, (c) such Unit Holder holding more than 19.9% of the Series Units, (d) a change of U.S. federal income tax treatment of the Company and/or the Series, or (e) the Company, the Series of Units or the Manager being subject to additional regulatory requirements. In addition, because the Units will not be registered under the Securities Act of 1933, as amended (the “Securities Act”), Units may only be transferred in accordance with exemptions from registrations under the Securities Act and applicable state securities laws. See “Description of Units Offered – Transfer Restrictions” for more information.

Governing Law:

To the fullest extent permitted by applicable law, the Company and the Operating Agreement will be governed by Delaware law and any dispute in relation to the Company and the Operating Agreement is subject to the exclusive jurisdiction of the Court of Chancery of the State of Delaware. If a Unit Holder were to bring a claim against the Company or the Manager pursuant to the Operating Agreement, it would be required to do so in the Delaware Court of Chancery to the extent the claim isn’t vested in the exclusive jurisdiction of a court or forum other than the Delaware Court of Chancery, or for which the Delaware Court of Chancery does not have subject matter jurisdiction, or where exclusive jurisdiction is not permitted under applicable law.

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RISK FACTORS

An investment in a Series is highly speculative in nature, involves substantial risks and is suitable only for sophisticated Investors for whom an investment in a Series is only one portion of an investment program, who fully understand and are capable of bearing the risks of the investment and who can afford to lose their entire investment. We cannot assure you that the Company’s investment objectives will be achieved or that a secondary market would ever develop for the Units, whether via the Commonwealth Platform, via third party registered broker-dealers or otherwise. Before making an investment decision, you should carefully consider all information contained in this Offering Circular (and the exhibits hereto) and should give particular consideration to the risks described below. The business, operating results and financial condition of the Company or an individual Series all could be adversely affected by any of the following risks. The risk factors below are not intended to be an exhaustive list of the general or specific risks involved, but merely to identify certain risks that are now foreseen by the Company. Other risks, not now foreseen, may become significant in the future and that the risks which are now foreseen may affect the Company or a Series to a greater extent than is now foreseen or in a manner not now contemplated. Prospective Investors should obtain their own legal and tax advice prior to making an investment in a Series.

Risks Related to the Structure, Operation and Performance of the Company

Our Company was recently formed and has no prior operating history. Therefore, acquiring Units in its Series is a speculative investment. We cannot assure you that you will realize your investment objectives.

An investment in our Units involves a high degree of risk, including the possibility that you may not realize a return on your investment, or that your investment could lose some or all its value. The Company was recently formed, has not generated any revenues to date, and has no operating history upon which prospective Investors may evaluate its performance. There is no guarantee that any Series will generate a financial return or that the value of its Thoroughbred Asset will increase. For these reasons, we urge you to read this Offering Circular carefully, and consult with your legal and financial advisors before deciding to invest in these Units.

The prospects of a Series must be considered in light of the risks, expenses, and difficulties encountered in establishing a new business in a highly competitive industry. The Company will be engaged in a highly speculative business. The future financial performance of each Series will depend on its ability to earn purses from racing, profitably resell its ownership units in runners and breeding stallions, sell broodmares and the progeny of broodmares and engage in other Thoroughbred activities. We cannot assure you the Company can successfully carry out its investment and operational strategy.

An investment made through this Offering constitutes only an investment in a Series and not in the Company or the underlying Thoroughbred.

A purchase of Units in a Series does not constitute an investment in either the Company or the underlying Thoroughbred directly. This limits the voting rights of the Investor solely to the Series, which are further limited by the Company’s Operating Agreement, described further in this Offering Circular. Investors will have voting rights only with respect to certain matters, primarily relating to amendments to the Operating Agreement that would adversely change the rights of their Units and removal of the Manager for “cause.” The Manager thus retains significant control over the management of the Company and the underlying Thoroughbred Assets. Furthermore, because the Units in a Series do not constitute an investment in the Company as a whole, holders of the Units in one Series will not receive any economic benefit from, or be subject to the liabilities of, the assets of any of the Company’s other Series. In addition, the economic interest of a holder in a Series will not be identical to owning a direct undivided interest in the underlying Thoroughbred Asset because, among other things, the Series will be required to pay corporate taxes before distributions are made to the holders, and the Manager will receive a fee in respect of its management of the Series’ Thoroughbred.

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Liability of investors between series of membership units.

The Company is structured as a Delaware series limited liability company that issues different series of membership units for each underlying asset. Each series of membership units, including the Series TF2019 Units and the Series OL2018 Units, will merely be a separate series and not a separate legal entity. Under the Delaware Limited Liability Company Act (the “LLC Act”), if certain conditions (as set forth in Section 18-215(b) of the LLC Act) are met, the liability of investors holding one series is segregated from the liability of investors holding another series and the assets of one series are not available to satisfy the liabilities of other series. Although this limitation of liability is recognized by the courts of Delaware, there is no guarantee that if challenged in the courts of another U.S. State or a foreign jurisdiction, those courts will uphold a similar interpretation of Delaware corporation law. Approximately 40% of the U.S. states plus the District of Columbia have adopted statutes authorizing the formation of series limited liability companies.  It is unclear whether the remaining states would honor the limited liability afforded to each series of a series limited liability company under Delaware law, and to date there have been only a limited number of judicial decisions to provide guidance. If the Company’s series limited liability company structure is not respected, then Investors may have to share any liabilities of the Company with all investors and not just those who hold the same series as them. Furthermore, while we intend to maintain separate and distinct records for each series and account for them separately and otherwise meet the requirements of the LLC Act, it is possible a court could conclude that the methods used did not satisfy Section 18-215(b) of the LLC Act and thus potentially expose the assets of Series TF2019 to the liabilities of another series. The consequence of this is that Investors may have to bear higher than anticipated expenses which would adversely affect the value of their Units or the likelihood of any distributions being made by the Series to the Investors. In addition, we are not aware of any court case that has tested the limitations on inter-series liability provided by Section 18-215(b) in federal bankruptcy courts, and it is possible that a bankruptcy court could determine that the assets of one series should be applied to meet the liabilities of another series or the liabilities of the Company generally where the assets of such other series or of the Company generally are insufficient to meet its respective liabilities.

If any fees, costs and expenses of the Company are not allocable to a specific series, they will be borne proportionately across all the series. Although the Manager will allocate fees, costs and expenses acting reasonably and in accordance with its allocation policy (see “Description of the Business – Allocation of Revenue and Expense”), there may be situations where it is difficult to allocate fees, costs and expenses to a specific series. Therefore, there is a risk that a series may bear a proportion of the fees, costs and expenses for a service or product for which another series received a disproportionately high benefit.

Initially there will be no public market for the resale of the Units, and no such public market may ever develop.

There is currently no public trading market for any of our Units, and no such public market may ever develop. The Manager has no current plans to facilitate the resale of Units acquired by Investors on the Commonwealth Platform and potentially help provide liquidity to Investors.  If an active public trading market for our Units does not develop or is not sustained, it may be difficult or impossible for you to resell your Units at any price. Even if a public market does develop, the market price could decline below the amount you paid for your Units.

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There may be state law restrictions on an Investor’s ability to sell the Units.

Each state has its own securities laws, often called “blue sky” laws, which (1) limit sales of securities to a state’s residents unless the securities are registered in that state or qualify for an exemption from registration and (2) govern the reporting requirements for broker-dealers and stock brokers doing business directly or indirectly in the state. Before a security is sold in a state, there must be a registration in place to cover the transaction, or it must be exempt from registration. Also, the broker must be registered in that state. We do not know whether our securities will be registered, or exempt, under the laws of any states. A determination regarding registration will be made by the broker-dealers, if any, who agree to serve as the market-makers for our Units. There may be significant state blue sky law restrictions on the ability of Investors to sell, and on purchasers to buy, our Units. In addition, Tier 2 of Regulation A limits qualified resales of our Units to 30% of the aggregate offering price of a particular offering. Investors should consider the resale market for our Units to be limited. Investors may be unable to resell their Units, or they may be unable to resell them without the significant expense of state registration or qualification or opinions to our satisfaction that no such registration or qualification is required.

Limited Investor appetite.

Due to the start-up nature of the Company, there can be no guarantee that the Company will reach its funding target from potential Investors with respect to the Series TF2019 Units, the Series OL2018 Units or any future proposed series of units. If the Company does not reach a funding target, it may not be able to achieve its investment objectives by acquiring additional underlying Thoroughbred assets through the issuance of further series and generating revenue to enable distributions for Investors. In addition, if the Company is unable to raise funding for additional series, this may impact any Investors already holding units as they will not see the benefits that arise from economies of scale following the acquisition by other series of additional Thoroughbred assets and other opportunities to generate revenue from racing, breeding or sales activities.

There are few businesses that have pursued a strategy or investment objective similar to the Company’s.

We believe other companies crowdfunding ownership interests in racehorses or proposing to run a platform for crowdfunding of interests in racehorses has been very limited to date. The Company and the Units may not gain market acceptance from potential Investors, Thoroughbred breeders or service providers within the racehorse ownership/syndicate industry, including insurance companies, syndicate managers, training facilities or maintenance partners. This could result in an inability of the Manager to manage the career of the Company’s Thoroughbred assets profitably. It could impact the issuance of further series of units and additional Thoroughbred assets being acquired by the Company. It would further inhibit market acceptance of the Company and if the Company does not acquire any additional Thoroughbred assets, Investors would not receive any benefits that arise from economies of scale (such as a reduction in boarding, training and transportation costs and group discounts on insurance).

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Offering amount exceeds value of the underlying Thoroughbred.

The size of the Series TF2019 Offering and the Series OL2018 Offering will each exceed the purchase price of the Thoroughbred Asset of each Series on the date its Offering closes because the proceeds of the Offering in excess of the purchase price of the Thoroughbred Asset will be used to pay fees, costs and expenses incurred in making this Offering, acquiring the Thoroughbred Asset, and establishing reserves to cover Operating Expenses until the Thoroughbred develops and is capable of racing competitively. If a Thoroughbred Asset must be sold before there has been substantial appreciation of the value of the Thoroughbred Asset, the proceeds from the sale remaining after first paying off any liabilities owed in connection with the Thoroughbred Asset at the time of the sale (including but not limited to any outstanding Operating Expenses Reimbursement Obligation) may not be sufficient to repay Investors the amount of their initial investment or any additional profits in excess of that amount.

A Series may not be able to control many of its operating costs, and unexpected costs may adversely affect its financial results.

We cannot provide assurance that the Manager’s estimates regarding the price of Thoroughbreds, the cost of maintaining, training and racing Thoroughbreds or maintaining and standing stallions, or the cost and expenses associated with buying and reselling pinhooking prospects (as described below) will prove accurate. Numerous factors may affect a Series’ operating expenses, many of which will be beyond its control. The costs of purchasing, boarding, training, providing veterinary care for, and otherwise owning and maintaining Thoroughbreds are substantial and outside the Company’s control. The Company expects these costs and expenses to increase over time due to inflationary factors.

Other factors that could cause a Series’ expenses to be higher than expected include market fluctuations in the Thoroughbred industry, risks associated with transporting the horses to and from races and auctions, the overall health, soundness and competitiveness of the Thoroughbred a Series owns, interest and currency exchange rates, and other factors that are beyond the Company’s control or that cannot be accurately predicted at this time. Outbreaks of infectious diseases could result in quarantines or other restrictions that may halt racing and breeding or restrict movement, and thus impede a Series’ racing and breeding activities. For example, in recent months there were several new reported cases of equine viral herpes, a potentially fatal disease that may render surviving victims infertile. This has resulted in quarantines being imposed at several racetracks and training facilities. Although similar outbreaks have been contained in the past, the disease has the potential to create significant problems with the racing, breeding and transport of horses, which could have a material adverse effect on the activities and revenues of a Series.

The Company intends that each Series will pay its operating expenses from the proceeds from the sale of its Units and future operating revenue.  Higher than expected operating expenses could force a Series to sell Series Assets during unfavorable market conditions.  Events that increase a Series’ operating expenses or reduce its capital resources and liquidity could prevent the Investors from receiving their anticipated return on investment.

The Company is controlled by the Manager, and Members must rely solely on the judgment of the Manager’s management team, which has limited prior experience in the equine industry.

The success of the Company and each of its Series will depend upon the experience and business judgment of the Manager, its management team and the advisors the Manager engages. The Manager’s management team has limited prior experience in overseeing Thoroughbred acquisition, training, racing, breeding and sales activities.

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The Manager has exclusive control over the day-to-day operations of each Series and most decisions as to the use of the proceeds of this offering following the purchase of the Series’ Thoroughbred Asset. The selection of a Series’ Thoroughbreds will be based on an analysis of bloodlines, evaluations of physical condition, and the past performance of related Thoroughbred horses, none of which is an exact science. To a significant degree, the Manager will be relying on the advice of trainers, bloodstock agents, consignors, members of its advisory board, co-owners of horses owned in part by a Series and other advisors.

The Manager will have full and complete control and authority with respect to the business and affairs of each Series, and will have responsibility for, among other things:

● the selection and acquisition of the interests in Thoroughbreds to be purchased by each Series;

● decisions concerning the care and maintenance of the Series’ Thoroughbreds (including the selection of boarding, training, transporting and veterinary services);

● decisions relating to the amount and form of compensation to be paid to persons providing services to a Series (other than parties related to the Manager or any Member); and

● decisions regarding the racing, breeding and eventual sale of the Thoroughbreds and their offspring.

The Members (other than the Manager) will not be able to exercise any significant control or influence over the operation of the business of the Company and each Series, even if Members disagree with the Manager’s decisions or disapprove of its performance. Accordingly, no person should invest in a Series unless he or she is willing to entrust all aspects of control to Commonwealth Markets and to rely on its management ability.

The loss of the Manager’s key executives could jeopardize your investment.

The Company will depend on the efforts and expertise of the Manager’s key employees Brian Doxtator and Chase Chamberlin.  If the Manager loses or suffers an extended interruption in the service of one or more of its key personnel, the Company and the Units could be adversely affected.  The Manager does not expect to maintain key-man insurance on Messrs. Doxtator and Chamberlin. 

The Management Fee paid to the Manager by each Series is based on the performance of the Series

Each Series pays the Manager a Management Fee that is based upon the Series’ performance. This performance-based fee structure may create an incentive for the Manager to cause the Company to make investments that are riskier or more speculative than might otherwise be the case in the absence of such a fee.

A Series’ financial performance will depend on the Manager’s relationships within the Thoroughbred industry.

The ability to purchase desirable Thoroughbreds may depend in part upon the Manager’s relationships with trainers, bloodstock agents and consultants and Thoroughbred owners.  These relationships provide the Manager with access to information that is useful in determining which Thoroughbreds are available in the public and private markets and which have the potential to be successful.  The Manager may lose key personnel who maintain key relationships. Any failure to maintain, manage or continue to establish relationships with key individuals and institutions in the Thoroughbred industry may hinder the Manager’s ability to purchase desirable Thoroughbreds for the Company’s Series.

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The financial performance of each Series will depend on the quality of the services performed by trainers and other independent contractors.

The Manager will engage independent contractors to perform many essential services required for Thoroughbred racing and breeding, including selection, training, boarding and veterinary care of its Thoroughbreds.  These independent contractors often subcontract or employ others who actually perform the contracted for services. Some of these contractors will be also servicing other horses not owned by the Company’s Series.  The Company may have to compete for the services of trainers, bloodstock agents, jockeys and consignors, and conflicts of interest may arise from time to time. 

Trainers, veterinarians and jockeys are licensed by regulatory bodies overseeing racing and are subject to fines, suspension or revocation of their licenses if it is determined that a violation of racing rules occurred.  Suspension or revocation of a key trainer’s, veterinarian’s or jockey’s license may interrupt the Manager’s ability to train and race the horses of the Company’s Series in the intended manner until a suitable replacement can be found.  Administrative regulations are in effect in some states that provide for the suspension of a horse from competition if a trainer violates a rule involving the participation of the horse in a race or would require an owner to engage personnel unrelated to the suspended trainer to care for or train its horses during the trainer’s suspension.  Any adverse administrative rulings, either against a trainer, veterinarian or jockey engaged by a Series or directly against a Series as owner, could result in fines, suspension or revocation of a license to participate in racing.  Such sanctions may result in lost opportunities to race a Series’ Thoroughbred and cause significant damage to the Company’s reputation, jeopardizing the Company’s ability to successfully carry out its business plan and may adversely affect the value of the Series Assets.

Injury, infertility or death of a Series’ Thoroughbred(s) could diminish revenue and net asset values.

The Company plans to acquire Thoroughbreds with the pedigree quality indicative of the ability to compete and produce offspring who can compete in allowance and stakes races.  Because purchasing Thoroughbreds of this caliber can be expected to require a substantial investment by a Series, any illness, injury, accident, impairment, or death of one or more of a Series’ Thoroughbreds could have a material adverse effect on the value of Units.  Failure to perform as anticipated due to inability or lack of competitive will, injury, illness, disability or death of a Thoroughbred that is uninsured or underinsured could materially diminish a Series’ net asset value.  A stallion in which a Series owns an interest may be or become infertile to the extent that the stallion becomes a commercial failure.  Any infertility problems with stallions could result in possible losses for a Series to the extent fertility insurance proceeds (available only in the first year of a stallion’s breeding career) do not cover the purchase price of the Units.  Even if losses are fully insured, a Series will not receive the future earnings stream associated with a Thoroughbred, which could materially reduce a Series’ financial performance.

A Thoroughbred acquired as a yearling or juvenile will require development and training to race competitively. Accordingly, the potential of a yearling or juvenile Thoroughbred to generate revenue for a Series will not be known for a period that could be as short as 30-60 days after acquisition for juveniles to as long as 18 months after acquisition, particularly for yearlings.

The Company intends to acquire yearlings and juvenile Thoroughbreds with a pedigree that indicates the potential to race competitively in allowance and stakes races in the future.  However, yearlings acquired in the fall will normally require 6 to 18 months of development before they are able to race competitively.  A juvenile (a two-year-old Thoroughbred) purchased in the spring or early summer of its two-year-old year will normally require from 3 to 9 months of additional training prior to racing competitively but may be ready to race within 1-2 months of acquisition.  Accordingly, the ability of a yearling or a juvenile Thoroughbred to produce revenue and generate distributable Free Cash Flow from racing will not be known for a variable amount of time, and accurately projecting the timing of receipt of revenues, if any, from yearlings and juveniles is problematic. 

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The cost of insurance could be high, and caps on coverage could limit a Series’ ability to fully insure its assets.

To reduce the risks associated with possible death of its Thoroughbreds, the Company expects each Series to purchase mortality insurance on the Thoroughbreds in which it owns a substantial interest, as determined by the Manager in its discretion. However, changes in the market for insurance may affect the Company’s ability to obtain the insurance coverage at reasonable rates. Moreover, insurance is typically limited to the purchase price plus 10% and the Company cannot reasonably insure for the potential profit that each horse represents. Insurers have limited coverage on highly valued Thoroughbreds for congenital first year fertility and mortality following significant losses on several prominent racehorses that failed at stud in recent years. Any increase in the cost of such insurance could reduce a Series’ income and its ability to insure its assets. In addition, a Series’ inability to fully insure a highly valued Thoroughbred due to coverage caps could result in a significant reduction in net asset value in the event of the Thoroughbred’s death or infertility.

The Manager cannot predict how long a Series will own its horses, which may adversely affect a Series’ operating expenses.

The Company’s goal is for its Series to own Thoroughbreds for varying lengths of time and resell or breed them when appropriate. A Series may sell the progeny of its mares or sell its mares as broodmare prospects or in foal. A Series may not have sufficient resources to maintain horses for extended periods, which may cause it to resell a horse at a loss. Alternatively, a Series’ inability to resell horses within its expected resale window may result in an unanticipated increase in operating expenses that could adversely affect a Series’ results.

Absence of physical facilities; reliance on others for boarding and maintenance.

Neither the Manager nor the Company currently owns any physical facilities for the boarding or training of the Thoroughbreds that the Company’s Series will own.  Therefore, the Company will rely on third parties to board, train and race its Thoroughbreds.  We do not expect to have written agreements with trainers, veterinarians or other third-party vendors, as it is not a customary practice in the industry. Should any third-party contractor fail to competently train or care for a Thoroughbred owned by a Series, the health and/or value of that horse could suffer, which could negatively affect the net asset values of a Series.

Subscribers must be eligible to be licensed to own racehorses.

State horseracing commissions have licensure requirements that require Investors be licensed if they hold a certain ownership interest of a racehorse. For this reason, subscribers for Units must certify that they are eligible to be licensed as a Thoroughbred racehorse owner and are not the subject of any
pending disciplinary or legal proceedings that may result in ineligibility for licensure. Subscribers for more than 3% of the Units of a Series may also be required to provide additional personal information sufficient to permit the Manager to assess the prospective subscriber’s ability to be licensed under the applicable regulations of the racing commissions of the various states. A promising Thoroughbred owned by a Series could be excluded from high profile stakes races in New York or other states if a Unit holder becomes ineligible to hold an owner’s license, which could reduce the value of the Thoroughbred and reduce the Series’ return on investment. An Investor who knowingly fails to disclose his or her ineligibility for licensure could be subject to claims for any damages to the Series resulting from such bad faith. See “Plan of Distribution and Subscription Procedure -- Eligibility for Registration as a Racehorse Owner” for more detail about these eligibility requirements.

Potential breach of the security measures of the Commonwealth Platform.

The highly automated nature of the Commonwealth Platform through which potential investors acquire or transfer Units may make it an attractive target and potentially vulnerable to cyber-attacks, computer viruses, physical or electronic break-ins or similar disruptions. The Commonwealth Platform processes certain confidential information about investors, Thoroughbred breeders, and Thoroughbred assets held by the Company’s Series. While we intend to take commercially reasonable measures to protect our confidential information and maintain appropriate cybersecurity, the security measures of the Commonwealth Platform, the Company, the Manager or the Company’s service providers (including North Capital) could be breached. Any accidental or willful security breaches or other unauthorized access to the Commonwealth Platform could cause confidential information to be stolen and used for criminal purposes or have other harmful effects. Security breaches or unauthorized access to confidential information could also expose the Company to liability related to the loss of the information, time-consuming and expensive litigation and negative publicity, or loss of the proprietary nature of the Manager’s and the Company’s trade secrets. If security measures are breached because of third-party action, employee error, malfeasance or otherwise, or if design flaws in the Commonwealth Platform software are exposed and exploited, the relationships between the Company, investors, users, Thoroughbred breeders and equine professionals could be severely damaged, and the Company or the Manager could incur significant liability or have the attention of the Manager’s personnel significantly diverted from racing, breeding and sales activities, which could have a material negative impact on the value of Units or the potential for distributions to be made on the Units.

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Because techniques used to sabotage or obtain unauthorized access to systems change frequently and generally are not recognized until they are launched against a target, the Company, the third-party hosting used by the Commonwealth Platform and other third-party service providers may be unable to anticipate these techniques or to implement adequate preventative measures. In addition, federal regulators and many federal and state laws and regulations require companies to notify individuals of data security breaches involving their personal data. These mandatory disclosures regarding a security breach are costly to implement and often lead to widespread negative publicity, which may cause investors, Thoroughbred breeders or service providers within the industry, including insurance companies, to lose confidence in the effectiveness of the secure nature of the Commonwealth Platform. Any security breach, whether actual or perceived, would harm the reputation of the Company and the Commonwealth Platform and the Company could lose investors and the opportunity to acquire Thoroughbred assets or retain equine service providers. This would impair the ability of the Company to achieve its objectives of acquiring additional Thoroughbred assets through the issuance of further series of Units and conducting racing, breeding and sales activities.

Risks Related to the Thoroughbred Industry

Investing in Thoroughbreds is a speculative venture and highly susceptible to changes in market conditions.

The success of a Series will depend in large part upon racing performance, breeding success, demand for particular types of horses and particular pedigrees, and the present and future values of Thoroughbreds generally, which can be highly volatile.  Thoroughbred values often depend on highly subjective and unquantifiable factors.  Ownership and the racing of Thoroughbred horses are often regarded more in terms of a sport, rather than a business.  As a result, industry practices, structures, and valuation approaches have developed that may not be based solely upon economic considerations and may be inconsistent with the maximization of profits.  For instance, a particular bloodline might command substantial prices due principally to the interest of a small group of individuals having particular goals unrelated to the economic value of the horse, and a decline in their interest would likely have an unexpected and adverse effect on the value of the bloodline.  As a result, valuations for particular horses can be subject to sudden and unpredictable reversals that could cause Series Assets to depreciate for reasons outside the Manager’s control.

The market for Thoroughbreds has been and will continue to be affected by the state of the economy, the amount of money available for investment purposes, the level of interest of investors and enthusiasts in horse racing, the availability of purses and racing opportunities, the attractiveness of other investments and currency exchange rates, none of which can be accurately predicted.  Other factors that may affect market valuations for Thoroughbreds include, but are not limited to:

● the presence or absence at auctions (or other sales) of purchasers who buy for speculative purposes;

● the apparent attractiveness of Thoroughbreds to foreign investors and the continued interest of such foreign investors;

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● the federal income tax treatment of equine activities;

● the expansion of alternate forms of gaming, including “historic racing” slot machines, casino gambling and sports betting, among others;

● the continued availability of the federal statutory basis for interstate wagering and exemption from the legal constraints relating to the dissemination of gambling information;

● the level of betting handle (the amount of money wagered), and the amount of “takeout” (the percentage charged bettors) assessed to third party bet takers by agreement between tracks and horsemen, which both bear a direct relationship to the size of racing purses;

● the continued ability for the tracks and horsemen to agree to such contracts, the absence of which will adversely impact purse revenues; and

● the continued availability of purse supplements currently available from sources other than take out from pari-mutuel handle, such as subsidies from other forms of gaming and state breeders incentive programs.

If the Thoroughbred racing industry experiences further declines in revenues, or if general economic conditions deteriorate, the average sales price for quality Thoroughbreds may decline, in which case a Series could suffer substantial losses from owning Thoroughbreds and the value of the Series’ Units would be materially and adversely affected.

Buying and selling Thoroughbreds is highly competitive.

Buying and selling Thoroughbreds is highly competitive, with numerous breeders and individual investors typically competing for prized acquisitions. Some investors have substantially greater resources than our Series will have. Moreover, the market for Thoroughbreds can be inefficient and lack transparency. Some Thoroughbreds may be sold at public auctions in which the Manager may not participate, and the Manager may not have access to private sales of highly desirable horses. Because Thoroughbreds and auctions are frequently advertised internationally, when the Manager purchases Thoroughbreds for the Company’s Series, it may be competing against many industry participants from all over the world, some of whom also have the benefit of favorable currency exchange rates relative to the United States dollar, sales tax exemptions, or other economic advantages not available to the Series. These and other competitive factors may impede the Manager’s ability to implement its strategy to focus on Thoroughbreds that can compete successfully in allowance and stakes races.

Pinhooking is especially volatile.

Pinhooking, which generally involves acquiring weanlings, yearlings or barren or off the track mares for resale as yearlings, two-year-old’s, or in foal mares, can be more volatile than other segments of the Thoroughbred industry, and therefore involves greater risk. A Series could incur losses on its investment in weanlings, yearlings or barren or off the track mares for resale as a result of abrupt declines in market prices. In addition, a Series could also incur losses, even in rising markets, if individual horses fail to mature physically, lack recent commercially appealing activity in their pedigree, develop veterinary problems or simply fail to be noticed at a particular sale.

The performance of Thoroughbreds in training or as lightly raced prospects with limited past performances is unpredictable.

A business strategy to purchase yearlings or in-training racing prospects, either before or after making initial appearances in training or actual races, is highly speculative. Intangibles such as racing class and distance/surface preferences or limitations are still highly unpredictable at early stages in a horse’s development. Horses exhibiting precocious talent are often the subject of highly competitive bidding among several interested buyers, including the larger Kentucky-based breeding/stallion operations such as WinStar, Coolmore, Darley (owned by the ruler of Dubai), Lane’s End, Three Chimneys, Stonestreet and others, either alone or acting together as a partnership, co-ownership or “syndicate.” Therefore, acquiring highly sought prospects from successful bloodlines can require a substantial investment, and there is no assurance such a prospect will compete successfully.

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Thoroughbred racing is highly competitive and is undertaken by individuals and entities with significantly greater financial resources than the Company.

The Company, through its different Series, will engage in Thoroughbred horse racing in the United States as one of its primary activities. Future racing success will depend upon the ability of the Manager to purchase all or interests in high-quality Thoroughbreds for the Company’s series, whether those Thoroughbreds are being trained and cared for by highly skilled professionals, and whether the Thoroughbreds will be ridden by highly skilled professional jockeys. Thoroughbred horse racing is an intensely competitive activity, and the Company will be competing with individuals and entities with substantially greater experience and financial resources than the Company and with the financial ability to purchase all of, or interests in, the best racehorses.  The Company may not be successful in its effort to acquire competitive Thoroughbreds for its Series, making it more difficult to achieve a return on the investment. Further, if the Company acquires only a partial interest in a Thoroughbred, the Company may have less influence over the training, handling, and management of the Thoroughbred’s career, which could adversely affect the prospect of a financial return for the series.

A Thoroughbred’s ability to compete successfully depends on intangible factors that are difficult to evaluate.

Physical appearance, pedigree and early racing performance in maiden or allowance races can only give some indication of future success.  The ability of a Thoroughbred to race successfully also depends on intangible behavioral factors, such as the ability to withstand the rigors of training and racing while maintaining the appropriate demeanor and composure.  Factors related to racing at the highest levels, as the Company intends to do, such as frequent travel (often international), change of stabling environment, track surface, extreme weather and soundness issues may compromise the ability to train properly for key races.  Ultimately, some horses simply do not have the will to win at the highest levels, even though they may possess the physical talent to do so.  This intangible factor cannot be determined with any certainty as physical health and management of the racing career of the horse are often factors in the development or destruction of a horse’s willingness to perform at the highest levels.  Examples of well bred, precocious two and three-year-old horses sold for millions of dollars early in their racing or training careers, which ultimately fail to perform competitively when challenged in upper level stakes races, are common.

Values of fractional interests and related breeding rights in stallions are volatile.

The net asset value of certain Thoroughbred Assets will depend in part upon the present and future values of stallions generally.  Buying and selling fractional interests and related breeding rights in stallions are susceptible to rapidly changing market conditions.  There can be no assurance that fractional interests will maintain or increase in value or that stud fees will maintain a profitable level in relation to the purchase price of the associated stallion shares or fractional interests.

Market valuations for stallions are affected by the success or lack thereof of the stallions’ progeny on the racetrack, which is highly unpredictable. Past successes of a stallion’s progeny may not be indicative of the success of future progeny. Should the progeny of stallions in which a Series purchases fractional interests later fail to have success on the racetrack, the value of a Series’ Units may decline.

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Another factor that affects market valuations for stallions relates to the number of Thoroughbred mares available for breeding and the frequency of breeding a stallion may be able to realize in a given year. Over time there has been a general increase in the number of times a stallion is bred in a given year, resulting in additional revenue to the fractional interest owner and an increase in market valuations for stallions. Should there be a reversal of this trend, market valuations for stallions could decline as a result of reduced potential profitability associated with stallion ownership.

Highly subjective and unquantifiable factors also affect market values for stallions and their progeny. Ownership and the racing of Thoroughbred horses are often regarded more in terms of a sport than a business. As a result, industry practices, structures, and valuation approaches have developed that are not based upon economic considerations and may be inconsistent with the maximization of profits. For instance, a particular bloodline might command substantial prices due principally to the interest of a small group of individuals having particular goals unrelated to the economic value of the stallion; a decline in such interest would likely have an unexpected and adverse effect on the value of the bloodline. As a result, valuations for particular stallions can be subject to sudden and unpredictable changes, which could cause a Series’ investments to depreciate despite the Manager’s best efforts to carefully select its acquisitions.

If foreign purchasers reduce their participation in U.S. auction markets, prices paid for Thoroughbreds could decline and the Company’s assets could depreciate.

Foreign purchasers have accounted for a significant portion of the purchases of the most expensive yearlings at major auctions over the past several years. In particular, Sheik Mohammed bin Rashid al Maktoum, the ruler of Dubai, and entities owned by Dubai-based families have invested heavily in breeding stock in Australia, North America, South America, Great Britain and Europe. The recent effort of this group to greatly expand its ownership of top caliber stallions and stallion prospects, and its growing involvement in the Thoroughbred business, fueled by rising oil prices and the devaluation of the dollar, escalated demand and prices for Thoroughbred horses worldwide. In April 2008, a related Dubai-based investment company acquired Fasig-Tipton, a leading North American Thoroughbred auction company, a first-time event in the Thoroughbred business.

Factors that could affect participation by foreign interests in the North American Thoroughbred market include:

● world economic and political conditions,

● the development of competitive breeding and racing programs in other countries,

● a decline in the popularity of pari-mutuel gambling or the advent and continued proliferation of alternative forms of gambling,

● restrictions upon the use of the Internet as a platform for Advanced Deposit Wagering (pari-mutuel) and simulcasting,

● the proliferation of exchange wagering or fixed odds wagering systems in the U.S. (as has been offered by Betfair and others in New Jersey, Great Britain and Europe),

● restrictions or government regulation of the use of credit facilities to deposit funds in accounts to be used for on-line wagering,

● restrictions on the international transfer of funds,

● the strength or weakness of the United States dollar compared to foreign currencies, and

● governmental regulation by the United States or foreign governments.

The volatility in oil prices and the high levels of debt incurred for development in Dubai may discourage Dubai-based investors from participation in the Thoroughbred business at recent levels. If the Dubai-based group or other foreign investors significantly reduce their participation in public Thoroughbred auctions, or in the Thoroughbred business generally, it could lead to a significant downturn in values for Thoroughbreds. Fluctuations in prices at the major sales in Kentucky could affect prices for Thoroughbreds throughout the world.

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The number of Thoroughbred racetracks could decrease.

A decrease in the number of racetracks would reduce the number of races, which would likely reduce the total purses available.  In recent years the operating environment for racetracks has become increasingly challenging.  Decreasing attendance and competition from off-track and alternative forms of wagering, coupled with increasing costs, could jeopardize the continued existence of certain racetracks.  If the number of racetracks decreases, it could reduce demand for Thoroughbreds and depress market values, either of which could adversely affect a series and its units.  In the first six months of 2019 there were over 30 equine fatalities at Santa Anita Racetrack located in southern California despite a concerted effort by the owner of the track to impose high safety standards.  The California legislature recently passed legislation to impose additional safety standards and to allow the California Racing Board greater latitude in the evaluation of the competition readiness of the horses in training and racing in California.  There have been ongoing protests organized and funded by animal rights organizations in response to the equine fatalities with the stated objective of those protests to ban racing from the state.  It has become a political issue with the Governor and senior U.S. Senator of California making public statements on the subject.  Should horseracing in California be shut down it would have an economic impact on the Thoroughbred business estimated by the National Thoroughbred Racing Association to be in the hundreds of millions of dollars.  That development could significantly decrease demand for Thoroughbred horses of all ages and depress prices significantly.

Government regulation of the Thoroughbred racing industry could increase.

The attractiveness of owning Thoroughbreds depends largely upon continued governmental acceptance of Thoroughbred racing as a form of legalized gambling.  Though valuable to federal, state and local government as a source of revenue, Thoroughbred racing could be subjected, at any time, to more restrictive regulation or banned entirely.  The value of the Thoroughbreds owned by a Series could be drastically diminished by stricter regulation or a ban, which would have a material adverse effect on the Series and the value of its Units.

Risks Related to the Offering

We are offering our Units pursuant to Tier 2 of Regulation A, and we cannot be certain if the reduced disclosure requirements applicable to Tier 2 issuers will make our Units less attractive to investors as compared to a traditional initial public offering.

As a Tier 2 issuer, we will be subject to scaled disclosure and reporting requirements which may make an investment in our Units less attractive to investors who are accustomed to enhanced disclosure and more frequent financial reporting. In addition, given the relative lack of regulatory precedence regarding Regulation A, there is a significant amount of regulatory uncertainty in regard to how the SEC or the individual state securities regulators will regulate both the offer and sale of our securities, as well as any ongoing compliance that we may be subject to. If our scaled disclosure and reporting requirements, or regulatory uncertainty regarding Regulation A, reduces the attractiveness of the Units, we may be unable to raise the funds necessary to fund future offerings, which could impair our ability to develop a diversified portfolio of racehorses and create economies of scale, which may adversely affect the value of the Units or the ability to make distributions to Investors.

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Investment in fractional interests; absence of regulatory oversight.

The Manager intends that each Series will hold a controlling interest in the assets it acquires and will manage the equine activities in which those assets are engaged. From time to time, however, the Manager may have the opportunity to acquire a minority interest in a Thoroughbred that has shown promise as a racehorse, is eligible for stakes or graded stakes races or otherwise presents substantial potential for appreciation in value. Whenever possible, the Manager will seek, by agreement with other co-owners, to obtain a meaningful degree of management control over the racing or breeding career of a Thoroughbred in which a Series holds a minority interest. The Manager intends that no Series will hold assets in which the Manager has limited or no management control that would represent more than 40% of the aggregate value of the Series’ total assets, so that it is not considered to be an investment company within the meaning of the Investment Company Act of 1940, as amended. Accordingly, certain provisions of the Investment Company Act (which, among other things, require investment companies to have a certain number of disinterested directors and regulate the relationship between the advisor and the investment company) will not apply.

There may be deficiencies with our internal controls that require improvements, and if we are unable to adequately evaluate internal controls, we may be subject to sanctions.

As a Tier 2 issuer, we will not need to provide a report on the effectiveness of our internal controls over financial reporting, and we will be exempt from the auditor attestation requirements concerning any such report so long as we are a Tier 2 issuer. We are in the process of evaluating whether our internal control procedures are effective and therefore there is a greater likelihood of undiscovered errors in our internal controls or reported financial statements as compared to issuers that have conducted such evaluations.

Impact of non-compliance with regulations.

The Series of Units is being sold by North Capital, which is a registered broker-dealer under the Exchange Act and will be registered in each state where the Offering and sale of the Series of Unit will occur prior to the launch of the Offering, and it is anticipated that the Units will be offered and sold only in states where North Capital is registered as a broker-dealer. If a regulatory authority determines that the Manager, who is not a registered broker-dealer under the Exchange Act or any state securities laws, has itself engaged in brokerage activities, the Manager may need to stop operating and therefore, the Company will not have an entity managing the underlying Thoroughbred. In addition, if the Manager is required to register as a ‘broker-dealer’, there is a risk that any series of units offered and sold while the Manager was not registered may be subject to a right of rescission, which may result in the early termination of the Series.

Furthermore, the Company is not registered and will not be registered as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”), and the Manager is not and will not be registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Investment Advisers Act”). Thus, the Series TF2019 Units do not have the benefit of the protections of the Investment Company Act or the Investment Advisers Act. The Company and the Manager have taken the position that the underlying assets are not “securities” within the meaning of the of the Investment Company Act or the Investment Advisers Act, and thus the Company’s assets will comprise of less than 40% investment securities under the Investment Company Act and the Manager will not be advising with respect to securities under the Investment Advisers Act. This position, however, is based upon applicable case law that is inherently subject to judgments and interpretation. If the Company were to be required to register under the Investment Company Act or the Manager were to be required to register under the Investment Advisers Act, it could have a material and adverse impact on the results of operations and expenses of the Company’s Series, and the Manager may be forced to liquidate and wind up the Company’s Series or rescind any Offering of its Series.

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Possible changes in federal tax laws.

The Internal Revenue Code (the “Code”) is subject to change by Congress, and interpretations of the Code may be modified or affected by judicial decisions, by the Treasury Department through changes in regulations and by the Internal Revenue Service through its audit policy, announcements, and published and private rulings. Although significant changes to the tax laws historically have been given prospective application, we cannot assure you that any changes made in the tax law affecting an investment in any series of interest of the Company would be limited to prospective effect. Accordingly, the ultimate effect on an Investor’s tax situation may be governed by laws, regulations or interpretations of laws or regulations which have not yet been proposed, passed or made, as the case may be.

Lack of diversification.

It is not anticipated that Series TF2019 and Series OL2018 would own any assets other than their respective Thoroughbred Assets, plus potential cash reserves for maintenance, training, insurance and other expenses pertaining to the Thoroughbreds and amounts earned by Series TF2019 from racing, breeding and sales activities. Investors looking for diversification will have to create their own diversified portfolio by investing in other opportunities in addition to Series TF2019 and Series OL2018.

Industry concentration and general downturn in industry.

Given the concentrated nature of the Series Assets (i.e., only racehorses and related interests in them), any downturn in the racehorse industry is likely to impact the value of the Series Assets, and consequently the value of the Units. In the event of a downturn in the industry, the value of the Thoroughbred Assets of a Series is likely to decrease.

Difficulties in determining the value of interests in Thoroughbreds.

As explained in the “Description of the Business” section, racehorses are difficult to value. Valuations of the underlying assets will be based upon the subjective approach taken by the members of the Manager’s network of experts and members of the Advisory Board, valuation experts appointed by the Company, and other data provided by third parties (such as auction results, health records, past performances, veterinary inspections/examinations and previous sales history). The Manager sources data from reputable valuation providers in the industry, such as Bill Oppenheim Bloodstock, Keeneland Sales Results, Fasig-Tipton Sales Results, and OBS Sales Results among others; however, the Manager may rely on the accuracy of the underlying data without any means of detailed verification. Consequently, valuations may be uncertain.

The value of Thoroughbred Assets and, consequently, the value of an Investor’s Units can go down as well as up. Valuations are not guarantees of realizable price, do not necessarily represent the price at which the Units may be sold on the Commonwealth Platform and the value of the Series Assets may be materially affected by a number of factors outside the control of the Company, including any volatility in the economic markets and the condition of the horseracing industry.

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Risks Related to Ownership of our Units

Lack of voting rights.

The Manager has the unilateral ability to amend the Operating Agreement and the allocation policy in certain circumstances without the consent of the Investors, and the Investors only have limited voting rights in respect of the Series in which they hold Units. Investors will have voting rights only with respect to certain matters, primarily relating to amendments to the Operating Agreement that would adversely change the rights of their Units and removal of the Manager for “cause.”  Investors will therefore be subject to any amendments the Manager makes (if any) to the Operating Agreement and allocation policy and also any decision it takes in respect of the Company and its series, which the Investors do not get a right to vote upon. Investors may not necessarily agree with such amendments or decisions, and such amendments or decisions may only be in the best interests of only a limited number of the Investors, but not Investors as a whole.

Furthermore, the Manager can only be removed as manager of the Company and each series in a very limited circumstance, following a non-appealable judgment of a court of competent jurisdiction to have committed fraud in connection with the Company or a series. Investors would therefore not be able to remove the Manager merely because they did not agree, for example, with how the Manager was managing a Series Asset.

The Manager will have substantial discretion to determine whether and when you receive any distributions and the amounts distributed.

The Operating Agreement provides that the Manager will distribute cash available for distribution to the Members of a Series as soon as reasonably practicable after the relevant amounts have been received by the Series, but only after the Manager has reserved amounts reasonably believed to provide adequate future working capital for the Series’ ongoing operations and to meet any future contemplated obligations or contingencies. As revenue generated by racing activity is intermittent and highly unpredictable, planning for a Series’ future cash needs will require the Manager to exercise substantial judgment as to the amounts reasonably available at any time for distribution to the Series’ Members. Investors should not expect to receive distributions regularly, if at all.

A Unit Holder’s ownership of a Series may be diluted if the Manager issues additional units of the Series after the Closing of the Offering of that Series.

The Manager may sell additional Units of a Series from time to time after the Closing of the Offering of that Series in order to raise capital to cover the Series’ ongoing operating expenses.  If additional Units are issued in a particular Series, Investors in that Series would have their ownership interest diluted. Dilution could reduce both the current value of the Units of the Series held by existing Investors and the amount of any future distributions payable to the diluted Investors.

The Manager and its affiliates will not be liable to the Company or any Series absent fraud, willful misconduct or gross negligence. In addition, the Company and its Series are obligated to indemnify its officers and the Manager from liability to third parties.

None of the Manager, nor any current or former directors, officers, employees, partners, shareholders, members, controlling persons, agents or independent contractors of the Manager, members of the Advisory Board, nor persons acting at the request of the Company or any Series in certain capacities with respect to other entities (collectively, the “Indemnified Parties”) will be liable to the Company, any Series or any Unit Holders for any act or omission taken by the Indemnified Parties in connection with the business of the Company or a Series that has not been determined in a final, non-appealable decision of a court, arbitrator or other tribunal of competent jurisdiction to constitute fraud, willful misconduct or gross negligence.

The Operating Agreement requires the Company or, where relevant, each Series of the Company to indemnify the Indemnified Parties out of its assets against all liabilities and losses (including amounts paid in respect of judgments, fines, penalties or settlement of litigation, including legal fees and expenses) to which they become subject by virtue of serving as Indemnified Parties with respect to any act or omission that has not been determined by a final, non-appealable decision of a court, arbitrator or other tribunal of competent jurisdiction to constitute fraud, willful misconduct or gross negligence. Unless attributable to a specific Series or a specific Series Asset, the costs of meeting any indemnification will be allocated pro rata across each Series based on the value of each underlying asset.  If a Series is required to indemnify any person as described above, any such payment may reduce or dissipate the assets of a Series.

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Conflicts of interest.

The Manager will devote only such time to our business as it deems necessary. The Operating Agreement allows the Manager and its affiliates to participate in business ventures that are similar to, and that may compete with, our business. If the Manager organizes other companies in the future, we will be competing with the other companies for the time and talents of the personnel employed by the Manager rendering services to us.

The offering price for the Units determined by us may not necessarily bear any relationship to established valuation criteria such as earnings, book value of assets that may be agreed to between purchasers and sellers in private transactions or that may prevail in the market if and when our Units can be traded publicly.

The price of the Units of each Series was not derived as a result of arms-length negotiations, but was instead based upon various factors including the valuation of the Thoroughbred Asset the Series will acquire, anticipated market demand, our future prospects, our capital structure, as well as certain expenses incurred in connection with the Offering and ongoing boarding and training costs. These estimated values and Unit prices do not necessarily accurately reflect the actual value of the Units or the price that may be realized upon disposition of the Units.

If a market ever develops for the Units, the market price and trading volume of our Units may be volatile.

If a market develops for the Units, the market price of the Units could fluctuate significantly for many reasons, including reasons unrelated to our performance, the underlying Thoroughbred or the Series, such as the racing performance of related Thoroughbreds, reports by industry analysts, investor perceptions and general economic and industry conditions. For example, to the extent that other companies, whether large or small, within the pari-mutuel gaming industry experience declines in their share price, the value of Units may decline as well.

In addition, fluctuations in operating results of a particular series or the failure of operating results to meet the expectations of investors may negatively impact the price of our Units. Operating results may fluctuate in the future due to a variety of factors that could negatively affect revenues or expenses in any particular reporting period, including vulnerability of our business to a general economic downturn; changes in the laws that affect our operations; competition from other entertainment enterprises; compensation related expenses; application of accounting standards; seasonality; injury to any of the Thoroughbreds owned by the Company’s series, and our ability to obtain and maintain all necessary regulatory approvals, government certifications or licenses to conduct our business.

Funds from purchasers accompanying subscriptions for the Units will not accrue interest while in escrow prior to admission of the subscriber as an Investor in the Series, if it occurs, in respect of such subscriptions.

The funds paid by purchasers for the Units will be held in a non-interest-bearing escrow account until the admission of the subscriber as an Investor in the Series, if it occurs, in respect of the applicable subscriptions. Purchasers may not have the use of such funds or receive interest thereon pending the completion of the Offering. No subscriptions will be accepted nor Units sold unless valid subscriptions for the Offering are received and accepted prior to the termination of the Offering Period. It is also anticipated that subscriptions will not be accepted from prospective Investors located in states where North Capital is not registered as a broker-dealer. If we terminate the Offering prior to accepting a subscriber’s subscription, escrowed funds will be returned, without interest or deduction, to the proposed Investor.

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Exclusive forum and waiver of jury trial.

Our Operating Agreement, to the fullest extent permitted by applicable law and subject to limited exceptions, provides for investors to consent to exclusive jurisdiction of the Delaware Court of Chancery and for a waiver of the right to a trial by jury with respect to claims relating to the Operating Agreement. These provisions may have the effect of limiting the ability of investors to bring a legal claim against us due to geographic limitations and may limit an investor’s ability to bring such a claim in a judicial forum that it finds favorable for disputes with us. Furthermore, waiver of a trial by jury may disadvantage you to the extent a judge might be less likely than a jury to resolve an action in your favor. In addition, if waiver of a trial by jury is determined to be inapplicable to, or unenforceable in respect of, an action or proceeding against us, it may cause us to incur additional costs associated with resolving these matters in other jurisdictions, which could adversely affect our business and financial condition.

 

POTENTIAL CONFLICTS OF INTEREST

We have identified the following conflicts of interest that may arise in connection with the Units, in particular, in relation to the Company, the Manager and the underlying assets. The conflicts of interest described in this section should not be considered as an exhaustive list of the conflicts of interest that prospective Investors should consider before investing in the Units.

Our Operating Agreement contains provisions that reduce or eliminate duties (including fiduciary duties) of the Manager.

Our Operating Agreement provides that the Manager, in exercising its rights in its capacity as the Manager, will be entitled to consider only such interests and factors as it desires, including its own interests, and will have no duty or obligation (fiduciary or otherwise) to give any consideration to any interest of or factors affecting us or any of our investors and will not be subject to any different standards imposed by our Operating Agreement, the Delaware Limited Liability Company Act or under any other law, rule or regulation or in equity. These modifications of fiduciary duties are expressly permitted by Delaware law.

We do not have a conflicts of interest policy.

The Company, the Manager and their affiliates will try to balance the Company’s interests with their own. To the extent that such parties take actions that are more favorable to other entities than the Company, however, these actions could have a negative impact on the Company’s financial performance and, consequently, on distributions to Investors and the value of the Units. The Company has not adopted, and does not intend to adopt in the future, either a conflicts of interest policy or a conflicts resolution policy.

Payments from the Company to the Manager and its employees or affiliates.

The Manager will engage, on behalf of the Company, with bloodstock agents, consignors, breeders, owners, insurance companies, trainers and other service providers and thus may receive in-kind discounts, for example, reductions in commissions based upon the volume of sales/purchases in a given period of time, commissions paid by breeding farms directly to the Manager for purchasing a season to use in breeding a mare owned by the Company, a reduction in the price or elimination of expense associated with services (e.g. training, transportation, veterinary etc.) provided for Thoroughbreds under the ownership or management of the Manager or its Members. In such circumstances, it is likely that these in-kind discounts may be retained for the benefit of the Manager and not the Company or may apply disproportionately to other series. The Manager may be incentivized to choose a stallion, transportation company, consignor, boarding facility or bloodstock agent, based on the benefits it is to receive or all series collectively are to receive rather than that which is best for the Series.

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Members of the expert network and the Advisory Board are often Thoroughbred horse owners themselves and therefore will be in competition with the Company and may have access to certain information about the Company that may allow them to better compete with the Company and may cause them to be incentivized to sell the Company their own horses at potentially inflated market prices.

Members of the expert network and the Advisory Board may also be Investors, in particular, if they are holding Units acquired as part of their sale of a Thoroughbred to the Company. They may therefore promote their own self-interests when providing advice to the Manager regarding an underlying asset (for example, by encouraging the liquidation of such underlying asset so they can receive a return in their capacity as an Investor).

If the Operating Expenses exceed the revenue from the underlying Thoroughbred and any cash reserves, the Manager has the option to cause the Series to incur an Operating Expenses Reimbursement Obligation to cover such excess. As interest may be payable on such loan, the Manager may be incentivized to cause the Series to incur an Operating Expenses Reimbursement Obligation to pay Operating Expenses rather than look elsewhere for additional sources of income or to repay any outstanding Operating Expenses Reimbursement Obligation as soon as possible rather than make distributions to Investors. The Manager may also choose to issue additional Units to pay for Operating Expenses instead of causing the Company to incur an Operating Expenses Reimbursement Obligation, even if any interest payable by the Series of Units on any Operating Expenses Reimbursement Obligation may be economically more beneficial to Unit Holders than the dilution incurred from the issuance of additional Units.

The Manager determines the timing and amount of distributions made to Investors from Free Cash Flow of the Series. As a consequence, the Manager also determines the timing and amount of payments made to itself, since payments to the Manager are only made if distributions of Free Cash Flow are made to the Investors. The Manager may thus be incentivized to make distributions of Free Cash Flow more frequently and in greater quantities rather than leaving excess Free Cash Flow on the balance sheet of a particular Series to cover future Operating Expenses, which may be more beneficial to a particular Series.

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Ownership of multiple series of interests.

The Manager or its affiliates will acquire interests in each series for their own accounts and may transfer these interests, either directly or through brokers, via the Commonwealth Platform. Depending on the timing of the transfers, this could impact the interests held by the Investors (e.g., driving price down because of supply and demand and over availability of interests). This ownership in each of the series may result in a divergence of interests between the Manager and the Investors who only hold one or certain series (e.g., the Manager or its affiliates, once registered as a broker-dealer with SEC, may disproportionately market or promote a certain series, in particular, where they are a significant owner, so that there will be more demand and an increase in the price of such series).

Allocation of income and expenses as between series of interests

There may be situations when it is challenging or impossible to accurately allocate income, costs and expenses to a specific series and certain series may get a disproportionate percentage of the cost or income, as applicable. In such circumstances, the Manager would be conflicted from acting in the best interests of the Company as a whole or the individual Series. While we presently intend to allocate expenses as described in “Description of the Business – Allocation of Revenue and Expense,” the Manager has the right to change this allocation policy at any time without further notice to Investors.

Conflicting interests of the Manager and the Investors

The Manager may choose to use certain bloodstock agents, appraisers, trainers or other service providers because they get benefits from giving them business, which do not accrue to the Investors.

The Manager will determine whether or not to sell a Thoroughbred owned by a series in response to an offer to acquire the Thoroughbred. The Manager or its affiliates may be incentivized by the opportunity to receive a Management Fee in connection with the sale of all or a portion of the Thoroughbred even though Investors may prefer to retain the gains from any appreciation in value of the Thoroughbred. Furthermore, when determining to liquidate a Series Asset, the Manager will do so considering all the circumstances at the time, which may include obtaining a price for the asset that is in the best interests of a substantial majority, but not all of the Investors.

Selection of trainers and races for one Thoroughbred over another owned by a different series

The Manager may be incentivized to enter a Thoroughbred in a certain race as to do so may generate higher Free Cash Flow to be distributed to the Manager and investors in the series associated with that particular underlying asset. This may lead the Series Asset(s) to generate lower distributions than the underlying assets of other series. The racing of a Thoroughbred asset could increase the risk of the Thoroughbred getting injured and could impact the value of the Thoroughbred and, as a result, the value of the related series. The Manager may therefore be conflicted when determining whether to race the Thoroughbred to generate revenue, diminish or increase the Thoroughbred’s value or limit the potential exposure to injury. Furthermore, the Manager may be incentivized to utilize Thoroughbreds that help popularize the interests via the Commonwealth Platform, which means of utilization may not generate as much immediate returns as other potential utilization methods.

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Conflicts among the Company’s Series

In the future, the Company’s series may be competing for the time and talents of the personnel and service providers employed by the Manager to provide certain services to the Series. At times when the service providers are experiencing high demand and have limited capacity at their facilities or within their respective organizations, their services may not be readily available to the Series or a future series for which the Manager provides management services. Simply because a trainer, jockey veterinarian or other service provider is initially available to the Series is no guarantee that the Series will continue to have access to or will be able to increase the use of that service provider. The Manager may have to make decisions and give preferences, access to or allocations of access to certain service providers in high demand to one series over another, which may not be in the best interests of the affected series. The inability to access the services of a service provider in high demand at a certain time may negatively impact the economic performance of the Series. The Manager and one or more service providers (particularly trainers and veterinarians) may have disagreements over the management of the Series’ Thoroughbreds that lead to the unwillingness of the service provider to continue to provide such services to the Company or to a series. This could lead to a reallocation of the Thoroughbreds among other service providers affording different and less beneficial racing opportunities and lesser quality care of the Thoroughbreds and exposing them to greater risk. Such a reallocation could have an adverse impact on the economic performance of the Series or a series.

The Manager’s discretionary authority to amend the Operating Agreement

The Manager has the ability to unilaterally amend the Operating Agreement and allocation policy. As the Manager is a party, or is subject, to these documents, it may be incentivized to amend them in a manner that is beneficial to it as Manager of the Company or as a holder of units in a particular Series, but which may not benefit all Investors equally. In addition, the Operating Agreement seeks to limit the fiduciary duties that the Manager owes to Investors. Therefore, the Manager is permitted to act in its own best interests rather than the best interests of the Investors. See “Description of the Units Offered” for more information.

Distribution income in addition to the Management Fee.

As the Manager will acquire a percentage of each series, it may be incentivized to attempt to generate more earnings from the underlying assets owned by those series in which it holds a greater stake.

Any profits generated from the Commonwealth Platform (e.g., through advertising) and from issuing additional interests in underlying assets on the Commonwealth Platform (e.g., Sourcing Fees) will be for the benefit of the Manager. In order to increase its revenue stream, the Manager may therefore be incentivized to issue additional series and acquire more underlying assets rather than focus on monetizing any underlying assets already held by existing series.

Conflicts between the Advisory Board and the Company.

The Operating Agreement of the Company provides that the resolution of any conflict of interest approved by the Advisory Board shall be deemed fair and reasonable to the Company and the Members and not a breach of any duty at law, in equity or otherwise. As part of the remuneration package for Advisory Board members, they may receive an ownership stake in the Manager. This may incentivize the Advisory Board members to make decisions in relation to the underlying assets that benefit the Manager rather than the Company.

Advisory Board members who participate in the racehorse industry, they may seek to sell horses to, acquire horses from, or train horses owed by, the Company.

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Conflicts between the Legal Counsel, the Company and the Commonwealth Thoroughbred Parties.

The counsel of the Company is also counsel to the Manager and its affiliates (“Legal Counsel”) and may serve as counsel with respect to other series (collectively, the “Commonwealth Thoroughbred Parties”). Because Legal Counsel represents both the Company and the Commonwealth Thoroughbred Parties, certain conflicts of interest exist and may arise. To the extent that an irreconcilable conflict develops between the Company and any of the Commonwealth Thoroughbred Parties, Legal Counsel may represent the Commonwealth Thoroughbred Parties and not the Company or the Series. Legal Counsel may, in the future, render services to the Company or the Commonwealth Thoroughbred Parties with respect to activities relating to the Company as well as other unrelated activities. Legal Counsel is not representing any prospective Investors of the Series TF2019 Units in connection with this Offering and will not be representing the members of the Company other than the Manager, although the prospective Investors may rely on the opinion of legality of Legal Counsel provided at Exhibit 12.1. Prospective Investors are advised to consult their own independent counsel with respect to the other legal and tax implications of an investment in the Series TF2019 Units.

DILUTION

Dilution means a reduction in value, control or earnings of the Units the Investor owns. From time to time, additional Units of a Series may be issued in order to raise capital to cover the Series’ ongoing operating expenses. See “Description of the Business – Operating Expenses” for further details.

The Manager, together with its affiliates, must acquire a minimum of 2% and may acquire a maximum of 10% of the Units in connection with this Offering (of which the Manager may sell all or any portion from time to time following the Closing of the Offering). The Manager and its affiliates will pay the price per share offered to all other potential Investors hereunder.

The principal and interest payable on the convertible promissory note issued by the Company to an officer of the Manager to acquire the Timido Filly will convert into additional Series TF2019 Units at the purchase price per Unit when the Series TF2019 Closing occurs. The Units issued upon conversion of the note would represent approximately 4.8% to 5.7% of the outstanding Series TF2019 Units depending on the number of Units sold in the Series TF2019 Offering.

In addition, $10,000 of principal payable on the convertible promissory note issued by the Company to the Manager to acquire the Orb Colt will convert into additional Series OL2018 Units at the purchase price per Unit when the Series OL2018 Closing occurs. The Units issued upon conversion of the note would represent from approximately 7.4% to 9.1% of the outstanding Series OL2018 Units depending on the number of Units sold in the Series OL2018 Offering.

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USE OF PROCEEDS – SERIES TF2019

We estimate that the gross proceeds of this Offering (including from Series TF2019 Units acquired by the Manager) will be approximately $150,000 assuming the full amount of this Offering is sold and will be used as shown in the following table:

	Dollar Amount		Percentage of Gross Cash Proceeds
Offering Proceeds	$	150,000		100.0	%
Uses of Funds
Brokerage Fee (1)	$	1,500		1.0	%
Cost of Series Asset (2)		0		--
Offering Expenses (3)		15,000		10.0	%
Acquisition Expenses (4)		0		--
Sourcing Fee		750		0.5	%
Organizational Fee (5)		4,500		3.0	%
Total Acquisition and Offering Expenses	$	21,750		14.5	%
Working Capital
Estimated Pre-Training Costs	$	18,000		12.0	%
Estimated Training Costs		90,000		60.0	%
Additional Working Capital		20,200		13.5	%
Total Working Capital	$	128,200		85.5	%

⁽¹⁾ Calculation of the Brokerage Fee excludes proceeds from the sale of Units to the Manager and its affiliates.

⁽²⁾ The Company acquired the Timido Filly for $7,500, based on a valuation of the Timido Filly by an independent appraiser without mark-up. The terms of the convertible promissory note issued by the Company to the seller of the Timido Filly, who is an officer of the Manager, are described below. When the Series TF2019 Closing occurs, the principal and interest payable of the note will automatically convert into Units at the offering price per Unit, or approximately 4.8% of the outstanding Units if the maximum number of Units are sold in the offering.

⁽³⁾ In connection with the Series TF2019 offering, the Manager will be reimbursed for Offering Expenses equal to no more than 10% of offering proceeds. Reimbursement will be reduced to the extent gross offering proceeds are less than $150,000.

⁽⁴⁾ The Manager has agreed to waive reimbursement for the appraiser’s fee and any other expenses incurred to acquire the Timido Filly.

⁽⁵⁾ Fee of 3.0% of the offering proceeds received from the offering of each series of units to reimburse the Manager for expenses incurred to set up the legal and financial framework and compliance infrastructure for the marketing and sale of offerings of each series of units.

The Company acquired the Timido Filly from an officer of the Manager in exchange for a convertible promissory note in the principal amount of $7,500, which accrues interest at a rate of 1.91% per annum, the Applicable Federal Rate at the time of the loan. Accrued interest on the note is expected to total approximately $50.00, assuming a January 2020 closing of the Offering. The principal and accrued interest payable on the promissory note will be converted automatically into Series TF2019 Units at the $50.00 purchase price per Unit when the Series TF2019 Offering occurs. The convertible promissory note is attached as Exhibit 6.2(a) to the Offering Statement.

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Upon the Closing of the Series TF2019 Offering and the conversion of the promissory note, proceeds from the sale of the Units will be distributed to the account of the Series, and the Timido Filly will be owned by the Series and not subject to any liens or encumbrances. Proceeds from the Offering will be used to pay the following:

● the Brokerage Fee, estimated to be $1,250 to $1,500, as consideration to the Broker for providing services to the Company in connection with this Offering;

● the Organizational Fee of up to $4,500 (3% of the gross offering proceeds) to reimburse the Manager for a portion of the expenses incurred to set up the legal and financial framework and compliance infrastructure for the marketing and sale of offerings of each series of units.

● Offering Expenses of up to $15,000, the maximum for which the Manager will be reimbursed; and

● $750 to the Manager as consideration for assisting in the sourcing of the Timido Filly.

To the extent that offering proceeds total less than the maximum of $150,000, the Additional Working Capital reserve would be first be reduced or eliminated entirely, and then the reserve for Estimated Training Expenses would be reduced by up to $1,700 if only the minimum offering proceeds of $125,000 were raised.  The Manager may also elect to waive the Sourcing Fee and not seek reimbursement for Offering Expenses.

The range for Brokerage Fee assumes the Manager will not directly purchase Units in the Series TF2019 offering. No Brokerage Fee will be paid on Series TF2019 Units issued upon the conversion of the convertible promissory note by an officer of the Manager, which would represent from 4.8% to 5.6% of the Series TF2019 Units outstanding upon completion of the Offering. See “Fees and Expenses” for additional information.

The Manager has elected to waive reimbursement of Acquisition Expenses incurred in connection with the Series TF2019 Offering.  Acquisition Expenses would ordinarily include such items as costs of due diligence investigation of a potential Series Asset, pre-purchase medical examinations, appraisal fees, auction-related expenses, and interest on funds borrowed to acquire a Series Asset prior to a series offering. To the extent that Acquisition Expenses are lower than anticipated, any overage will be maintained in an operating account for future Operating Expenses.

The allocation of the net proceeds of this Offering set forth above represents our intentions based upon our current plans and assumptions regarding industry and general economic conditions, our future revenues and expenditures. The amounts and timing of our actual expenditures will depend upon numerous factors, including market conditions, cash generated by our operations, business developments, and related rate of growth. The Manager reserves the right to modify the Use of Proceeds based on the factors set forth above.

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USE.OF PROCEEDS – SERIES OL2018

We estimate that the gross proceeds of this Offering (including from Series OL2018 Units acquired by the Manager) will be approximately $125,000 assuming the full amount of this Offering is sold, and will be used as shown in the following table:

	Dollar Amount		Percentage of Gross Cash Proceeds
Offering Proceeds	$	125,000		100.0	%
Uses of Funds
Brokerage Fee (1)	$	1,250		1.0	%
Organizational Fee (2)		3,750		3.0	%
Cost of Thoroughbred Asset (3)		10,000		8.0	%
Offering Expenses (4)		12,500		10.0	%
Acquisition Expenses (5)		0		--
Sourcing Fee		2,000		1.6	%
Total Acquisition and Offering Expenses	$	29,500		23.6	%
Working Capital
Estimated Pre-Training Costs (6)	$	11,025		8.8	%
Estimated Training Costs (6)		71,250		57.0	%
Additional Working Capital		13,225		10.6	%
Total Working Capital	$	95,500		76.4	%

⁽¹⁾ Calculation of the Brokerage Fee excludes proceeds from the sale of Units to the Manager and its affiliates.

⁽²⁾ Fee of 3.0% of the offering proceeds received from the offering of each series of units to reimburse the Manager for expenses incurred to set up the legal and financial framework and compliance infrastructure for the marketing and sale of offerings of each series of units.

⁽³⁾ Represents the portion of the purchase price will be paid to the Manager in cash from the offering proceeds. The Company has agreed to acquire a 75% interest in the Orb Colt for $20,000 no later than January 17, 2020, and the Manager has agreed to loan the funds for the purchase to the Company. When the Series OL2018 Closing occurs, the Manager will be paid $10,000 in cash from the offering proceeds and be issued 200 Series OL2018 Units at the $50 purchase price per Unit in full payment of the loan.

⁽⁴⁾ In connection with the Series OL2018 Offering, the Manager will be reimbursed for Offering Expenses equal to no more than 10% of offering proceeds. Reimbursement will be reduced to the extent gross offering proceeds are less than $125,000.

⁽⁵⁾ The Manager has agreed to waive reimbursement expenses incurred to acquire the Orb Colt.

⁽⁶⁾ The Co-ownership Agreement requires the Company to pay 75% of boarding, training, and related expenses.

The Company has entered into an Agreement of Purchase and Sale and Co-Ownership (the “Co-Ownership Agreement”) to acquire a 75% interest in the Orb Colt for a purchase price of $20,000.  The purchase price becomes payable within five days after the qualification of this Offering Statement or January 17, 2020, whichever occurs earlier. The Co-Ownership Agreement is attached as Exhibit 6.3(b) to the Offering Statement. The Manager has agreed to loan the $20,000 purchase price to the Company. When the Series OL2018 Closing occurs, the Manager will be paid $ 10,000 in cash from the offering proceeds and will be issued 200 Series OL2018 Units at the $50 purchase price per Unit in full payment of the loan.  The 200 Units would represent 7.4% of the Series OL2018 Units outstanding if the maximum of 2,500 Units are sold in the Series OL2018 Offering. The convertible promissory note issued by the Company to the Manager is attached as Exhibit 6.2(b) to the Offering Statement. Upon payment of the cash and the issuance of the Units to the Manager, the Orb Colt will be owned by the Series and not subject to any liens or encumbrances.

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The seller will retain a 25% interest in the Orb Colt.  The Company will have the exclusive right to manage the Orb Colt as long as it holds a majority ownership interest in the Orb Colt.  All expenses relating to the reasonable boarding, care and training of the Orb Colt (such as veterinary, farrier and transportation) incurred from October 10, 2019 onward will be borne in accordance with the ownership percentages of the co-owners.  The Co-Ownership Agreement names the trainers who will train the Orb Colt. All co-owners will be listed in the track program and the Daily Racing Form for races in which the Orb Colt is entered, and all purses, bonuses, payments and awards earned by the Orb Colt will be allocated among the co-owners in accordance with their ownership percentages.

Upon the Closing of the Offering, proceeds from the sale of the Units will be distributed to the account of the Series. The Series will use those proceeds to pay the following amounts:

● the Brokerage Fee, estimated to be $1,250 to $1,100, as consideration to the Broker for providing services to the Company in connection with this Offering;

● the Organizational Fee of up to $3,750 (3% of the gross offering proceeds) to reimburse the Manager for a portion of the expenses incurred to set up the legal and financial framework and compliance infrastructure for the marketing and sale of offerings of each series of units.

● The $10,000 portion of the loan to purchase the interest in the Orb Colt to be repaid in cash;

● Offering Expenses of $12,500, the maximum for which the Manager will be reimbursed; and

● $2,000 to the Manager as consideration for assisting in the sourcing of the Orb Colt.

To the extent that offering proceeds total less than the maximum of $125,000, the Additional Working Capital reserve would be reduced, totaling $325 if only the minimum offering proceeds of $110,000 were raised.  The Manager may also elect to waive the Sourcing Fee and not seek reimbursement for Offering Expenses.

The range for Brokerage Fee assumes the Manager will not directly purchase Series OL2018 Units in this offering, and no Brokerage Fee will be paid on Series OL2018 Units issued to the Manager to repay the loan for the purchase of the interest in the Orb Colt, which would represent from 7.4% to 9.1% of the Series OL2018 Units outstanding upon completion of the Offering. See “Fees and Expenses” for additional information.

The Manager has elected to waive reimbursement of Acquisition Expenses incurred in connection with this Offering of the Series OL2018 Units.  Acquisition Expenses would ordinarily include such items as costs of due diligence investigation of a potential Series Asset, pre-purchase medical examinations, appraisal fees, auction-related expenses, and interest on funds borrowed to acquire a Series Asset prior to a series offering. To the extent that Acquisition Expenses are lower than anticipated, any overage will be maintained in an operating account for future Operating Expenses.

The allocation of the net proceeds of this Offering set forth above represents our intentions based upon our current plans and assumptions regarding industry and general economic conditions, our future revenues and expenditures. The amounts and timing of our actual expenditures will depend upon numerous factors, including market conditions, cash generated by our operations, business developments, and related rate of growth. The Manager reserves the right to modify the Use of Proceeds based on the factors set forth above. If less than the maximum of 3,000 Series OL2018 Units are sold in connection with this Offering, the Manager may waive the Sourcing Fee and pay, and not seek reimbursement for, Offering Expenses.

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DESCRIPTION OF THE TIMIDO FILLY

Information About the Timido Filly

The Timido Filly is a bay filly born in April 2019 by Justin Phillip out of Timido by Gio Ponti. Her dam, Timido, was purchased in foal in February 2019 by Brian Doxtator, a principal executive of the Manager.

To date, a veterinarian has performed a physical exam of the Timido Filly and has issued a certificate of insurability. The Manager intends to have another physical examination conducted, including radiographs, when the Timido Filly is more mature and evaluated to determine her suitability for racing as a two-year old.

Pedigree

Timido is a 2013 bay mare by Gio Ponti out of Shy Lil by Lil’s Lad, which sold for $130,000 as a weanling and earned $26,909 in her racing career. Timido is a large, powerful mare standing 16.3 hands and has a pedigree including several successful broodmare sires.

Timido’s sire, Gio Ponti (a son of Tale of the Cat) out of Chipeta Springs, was two times Horse of the Year and earned $6,169,800 in his racing career. Gio Ponti is the sire of five crops and his offspring had winnings of $12,591,997 through 2018.

The Timido Filly’s sire is Justin Phillip, a 2008 bay stallion by First Samurai out of Ava Knows the Code by Cryptoclearance. Justin Phillip earned $1,293,437 in his facing career. Justin Phillip was named the 2019 Top Pinhook Sire by Rate of Return providing a 235% ROR—the highest ROR among sires with three or more 2019 pinhooks sold. ¹

Initial Appraisal

Hyperion Thoroughbred Consultants, Lexington, Kentucky, conducted an initial appraisal of the Timido Filly on July 16, 2019, which formed the basis for purchase price of $7,500.

Boarding Arrangements; Development Timetable

The Timido Filly is currently boarded at industry standard rates (or below) near Louisville, Kentucky, and will remain there until she enters training in the fall of 2020. In 2021, she will enter full race training with a trainer to be selected by the Manager in consultation with the Advisory Board at the appropriate time.  See “Description of the Business – Training and Boarding” for a more detailed description of boarding and training expenses.

¹  Bloodhorse, July 15, 2019; available at https://www.bloodhorse.com/horse-racing/articles/234736/justin-phillip-top-2019-pinhook-sire-by-rate-of-return.

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DESCRIPTION OF THE ORB COLT

Information About the Orb Colt

The Orb Colt is a dark bay colt born in February 2018 by Orb out of Latique by Elusive Quality.  The Orb Colt was bred by Jack G.  Jones, Jr. and Mineola Farm II, LLC.

To date, a veterinarian has taken radiographs and performed a scope, and both were reported within acceptable limits for purchase as a racing prospect.

Pedigree

The Orb Colt’s sire, Orb (a son of Malibu Moon) out of Lady Liberty was the winner of the 2013 Kentucky Derby, the 2013 Florida Derby and the 2013 Fountain of Youth Stakes. Orb earned $2,612,516 in his racing career. Orb is the sire of five crops, and his offspring had winnings of $6,192,566 through 2019. Orb’s most successful daughter, Sippican Harbor, winner of the Grade 1 Spinaway Stakes, earned $262,650 and is bred similarly to the colt coming from a Deputy Minister bred mare.

The colt’s dam, Latique is a 2011 bay mare by Elusive Quality out of Chatique by Deputy Minister. She is multiple graded-stakes placed, and earned $115,716 in her racing career. Her half-brother Tikhvin Flew was purchased for $110,000 as a yearling, is graded-stakes placed, and has earned $87,293 in his racing career.

Initial Appraisal

Hyperion Thoroughbred Consultants, Lexington, Kentucky, conducted an initial appraisal of the Orb Colt on November 14, 2019 and offered an appraised value of $22,000.

Boarding Arrangements; Development Timetable

The Orb Colt is currently being lightly trained by Tony and Liz Everard at New Episode Farm (a rural Florida setting with mild winter weather and a six-furlong training track) in Ocala, Florida.  Tony Everard trained 2003 Kentucky Derby winner Funny Cide. The Orb Colt will remain at the Everard facility until March or April of 2020 or when he is ready to enter full race training. At that time, it is contemplated that he will be sent to Graham Motion, trainer of 2011 Kentucky Derby winner Animal Kingdom, at Fair Hill Training Center in Elkton, Maryland.

See “Description of the Business – Training and Boarding” for a more detailed description of boarding and training expenses.

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PLAN OF DISTRIBUTION AND SUBSCRIPTION PROCEDURE

Plan of Distribution

The Manager of the Company is Commonwealth Markets Inc., a Delaware corporation incorporated in 2019. The Manager also owns and operates a mobile app-based investment platform called the Commonwealth Platform through which investors may indirectly invest, through a series of the Company’s units, in Thoroughbred opportunities that have been historically difficult to access for many market participants. Through the use of the Commonwealth Platform, investors can browse and screen the potential investments and sign legal documents electronically. We intend to distribute the Units exclusively through the Commonwealth Platform. Neither Commonwealth Markets Inc. nor any other affiliated entity involved in the offer and sale of the Units is a member firm of the Financial Industry Regulatory Authority, Inc., or FINRA, and no person associated with us will be deemed to be a broker solely by reason of his or her participation in the sale of the Units.

Each Offering of Units is being conducted under Regulation A under the Securities Act and therefore, the Units are only offered and sold to “qualified purchasers.” In addition, purchasers of Units must be eligible to own interests in racehorses under the rules of racing commissions in North America. For further details on the suitability requirements an Investor must meet in order to participate in this Offering, see “Plan of Distribution and Subscription Procedure – Investor Eligibility Standards.” As a Tier 2 offering pursuant to Regulation A, this offering will be exempt from review under state securities laws, subject to meeting certain state filing requirements and complying with certain antifraud provisions, to the extent that our Units are offered and sold only to “qualified purchasers” or at a time when our Units are listed on a national securities exchange. We anticipate that sales of securities will only be made in states where the Broker is registered.

The initial offering price per Unit of each Series (the “Purchase Price”) was determined by the Manager based on the sum of the following estimated costs, in each case as described below: (i) the purchase price of the Thoroughbred Asset, (ii) the Brokerage Fee, (iii) Offering Expenses, (iv) the Organizational Fee, (v) the Sourcing Fee, and (vi) anticipated post-offering Operating Expenses.

The Closing of an Offering of Units will take place on the earliest to occur of (i) the date subscriptions for the maximum number of Units of such Offering have been accepted or (ii) a date determined by the Manager in its sole discretion, provided that subscriptions for the minimum number of Units of such Offering have been accepted. If Closing has not occurred, the Offering will terminate on (i) the date one year after the date this Offering Circular is qualified by the SEC, which period may be extended by an additional six months by the Manager in its sole discretion, or (ii) any date on which the Manager elects to terminate the offering in its sole discretion. Units are being offered by subscription only in the U.S. and to residents of those states in which the offer and sale is not prohibited. This Offering Circular does not constitute an offer or sale of Units outside of the United States. 

Due to racehorse owner licensing requirements of state racing commissions, the Manager reserves the right to terminate an Offering if 35 or fewer persons subscribe for the Units of the Series.  See “Eligibility for Registration as a Racehorse Owner,” below.

Those persons who want to invest in the Units must sign a Subscription Agreement, which will contain representations, warranties, covenants, and conditions customary for private placement investments in limited liability companies. See “How to Subscribe” below for further details. A copy of the form of Subscription Agreement is attached as Exhibit 4.1 to the Offering Statement.

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Units will be issued in book-entry form without certificates.  ClearTrust LLC will serve as transfer agent and registrar to maintain Unit Holder records on a book-entry basis.

In general, the Manager, and not the Company, will pay all of the expenses incurred in offering the Company’s units of membership interest that are not covered by the Brokerage Fee, the Sourcing Fee, the Organizational Fee, Offering Expenses or Acquisition Expenses, including fees to Legal Counsel, but excluding fees for counsel or other advisors to the Investors and fees associated with the filing of periodic reports with the SEC and future filings with state securities departments, as applicable. For both the Series TF2019 Offering and the Series OL2018 Offering, the Manager has also agreed to waive reimbursement of all Acquisition Expenses and Offering Expenses greater than 10% of the proceeds raised in each Offering. Any Investor desiring to engage separate legal counsel or other professional advisors in connection with this Offering will be responsible for the fees and costs of such separate representation.

Minimum and Maximum Investment

The minimum subscription an Investor can make in this Offering is for one (1) Unit. The maximum subscription an Investor can make in this Offering is for Units representing 10% of the total number of Units of the Series that are issued.

Investor Eligibility Standards

The Units are being offered and sold only to “qualified purchasers,” as defined in Regulation A. “Qualified purchasers” include:

● “accredited investors” under Rule 501(a) of Regulation D and

● any other investor so long as that person’s investment in the Company (including Units of each of  the Company's Series offered under Regulation A) does not represent more than 10% of the greater of the investor’s annual income or net worth (for natural persons), or 10% of the greater of the investor’s annual revenue or net assets at fiscal year-end (for non-natural persons).

In addition, a purchaser must be eligible to own an interest in a racehorse under the rules of the racing commission of each North American jurisdiction. See “Eligibility for Registration as a Racehorse Owner,” below.

We reserve the right to reject any investor’s subscription in whole or in part for any reason, including if we determine in our sole and absolute discretion that such investor is not a “qualified purchaser” for purposes of Regulation A or is ineligible to own an interest in a racehorse under the rules of the racing commission of any North American jurisdiction.

To qualify as an “accredited investor” for purposes of satisfying one of the tests in the “qualified purchaser” definition, the investor who is a natural person must have either:

(1) an individual net worth, or joint net worth with the person’s spouse, that exceeds $1,000,000 at the time of the purchase. For this purpose, net worth excludes the value of the person’s primary residence and the mortgage on that primary residence (to the extent not underwater), but includes the amount of debt that exceeds the value of that residence and including any increase in debt on that residence within the prior 60 days, other than as a result of the acquisition of that primary residence; or

(2) earned income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year.

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If the investor is not a natural person, different standards apply. See Rule 501 of Regulation D for more details. For purposes of determining whether a potential investor is a “qualified purchaser,” annual income and net worth should be calculated as provided in the “accredited investor” definition under Rule 501 of Regulation D. In particular, net worth in all cases should be calculated excluding the value of an investor’s home, home furnishings and automobiles.

The Units will not be offered or sold to prospective Investors subject to the Employee Retirement Income Security Act of 1974 and regulations thereunder, as amended (“ERISA”).

If you live outside the United States, it is your responsibility to fully observe the laws of any relevant territory or jurisdiction outside the United States in connection with any purchase, including obtaining required governmental or other consent and observing any other required legal or other formalities.

Our Manager and North Capital, in its capacity as broker of record for this Offering, will be permitted to determine whether the subscribers of Units in this offering are qualified purchasers in reliance on the information and representations provided by the subscriber regarding the subscriber’s financial situation. Before making any representation that your investment does not exceed applicable federal 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 http://www.investor.gov.

An investment in our Units involves significant risks. Only investors who can bear both the economic risk of the investment indefinitely and the possible loss of their entire investment should invest in the Units. See “Risk Factors.”

Eligibility for Registration as a Racehorse Owner

Investors must be eligible to be licensed as a racehorse owner under the regulations of the various state racing commissions.  For example, the New York Racing Commission, which has the most stringent licensure requirements, requires any person who owns, directly or indirectly, an ownership interest of 3% in a Thoroughbred owned by 35 owners or more must be licensed to race on a New York racetrack.  If there are fewer than 35 owners of a Thoroughbred, then the New York Racing Commission requires that all the owners must be licensed. For this reason, the Manager reserves the right to terminate the Offering if there are fewer than 35 prospective subscribers for Series TF2019 Units.

The subscription agreement that prospective investors must complete requires them to certify that they are eligible to be licensed as a Thoroughbred racehorse owner and are not the subject of any pending disciplinary or legal proceedings that may result in ineligibility for licensure. In addition, if there are fewer than 35 prospective subscribers for a Series, or if a prospective subscriber subscribes for a number of Units that would result in an ownership percentage in the Thoroughbred(s) owned by the Series requiring licensure by any racing jurisdiction, each prospective subscriber will be required to provide background information sufficient to permit the Manager to assess the prospective subscriber’s ability to be licensed under the applicable regulations of the racing commissions of the various states.  State racing commissions often demand shareholder background information as a condition to licensing a Thoroughbred owned by a corporation or limited liability company.  This information includes, among other things:

● Horse race licensing history, including any denial, suspension or revocation of a license;

● Past disciplinary actions in connection with horse racing;

● Past convictions and pending criminal proceedings;

● Outstanding civil judgments;

● Current ownership of racehorses; and

● Relationships with racing regulators and track officials.

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The Manager reserves the right, in its discretion, to reject the subscription of any person whom the Manager believes may be ineligible to hold an owner’s license.

Broker

North Capital Private Securities Corporation, a Delaware corporation (“North Capital” or “Broker”), will manage the sale of the Units as an executing broker pursuant to a Broker Dealer Services Agreement effective as of December 10, 2019 (the “Brokerage Agreement”) and will serve as broker of record for the Company’s Regulation A offerings, process transactions by subscribers to the Offering and provide investor qualification services (such as Know Your Customer and Anti Money Laundering checks). North Capital is a broker-dealer registered with the SEC and a member of the FINRA and the SIPC and will be registered in each state where the Offering and sale of the Series of Unit will occur, prior to the launch of the Offering. North Capital will not solicit any investors on our behalf or act as underwriter.  Instead, North Capital’s role in the offering is limited to processing transactions of potential investors through the technology that our Manager licenses from North Capital and providing investor qualification services. North Capital will receive a brokerage fee of 1.0%, but will not purchase any Units and, therefore, will not be eligible to receive any discounts, commissions or any underwriting or finder’s fees in connection with the Offering. In addition, as provided by the Brokerage Agreement North Capital received accountable due diligence fees totaling $10,000. North Capital is also entitled to receive an additional accountable due diligence fee of $1,000 per series, beginning with the offering of a third series by the Company. The Brokerage Agreement may be terminated by either party at any time by providing 60 days’ written notice to the other party.  A copy of the Brokerage Agreement is attached to the Offering Statement as Exhibit 6.4.

The amount recoverable under any claim by the Manager against North Capital is limited to the total of the brokerage fees actually paid by the Manager to the North Capital under the Brokerage Agreement. The Manager and the Company will indemnify North Capital, its directors, officers, registered representatives, controlling persons and their respective affiliates, managers, agents and employees against any losses which are incurred in connection with providing the services under the Brokerage Agreement other than losses which arise out of the indemnified party’s recklessness, willful misconduct or breach of the Brokerage Agreement.

In addition to the brokerage fee, our Manager pays North Capital Investment Technology, the parent company of the Broker, a monthly administrative fee of $750 for technology tools to facilitate the offering of securities. Our manager will also pay North Capital Investment Technology a one-time installation and setup fee of $2,500. The aggregate amount of fees payable to North Capital cannot exceed the maximum amount permitted by applicable FINRA rules.

Escrow Agent

North Capital Private Securities Corporation will also serve as escrow agent for the Offering (the “Escrow Agent”) under the terms of an escrow agreement among North Capital in its capacity as broker of record, North Capital in its capacity as the Escrow Agent, and the Company on behalf of the Series (the “Escrow Agreement”). A copy of the Escrow Agreement is attached to the Offering Statement as Exhibit 8.1. Each series will generally be responsible for fees due to the Escrow Agent, which are categorized as part of the Offering Expenses described in the “Fees and Expenses” section below.

The Company and North Capital must jointly and severally indemnify the Escrow Agent and each of its officers, directors, employees and agents against any losses that are incurred in connection with providing the services under the Escrow Agreement other than losses that arise out of the Escrow Agent’s gross negligence or willful misconduct.

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Additional Information Regarding this Offering Circular

We have not authorized anyone to provide you with information other than as set forth in this Offering Circular. Except as otherwise indicated, all information contained in this Offering Circular is given as of the date of this Offering Circular. Neither the delivery of this Offering Circular nor any sale made hereunder shall under any circumstances create any implication that there has been no change in our affairs since the date hereof.

From time to time, we may provide an “Offering Circular Supplement” that may add, update or change information contained in this Offering Circular. Any statement that we make in this Offering Circular will be modified or superseded by any inconsistent statement made by us in a subsequent Offering Circular Supplement. The Offering Statement we filed with the SEC includes exhibits that provide more detailed descriptions of the matters discussed in this Offering Circular. You should read this Offering Circular and the related exhibits filed with the SEC and any Offering Circular Supplement together with additional information contained in our annual reports, semiannual reports and other reports and information statements that we will file periodically with SEC.

The Offering Statement and all supplements and reports that we have filed or will file in the future can be read on the SEC website at www.sec.gov. They will also be available on the section for Series TF2019 on the Commonwealth Platform at www.joincommonwealth.com. The contents of the Commonwealth Platform (other than the Offering Statement, this Offering Circular and the Appendices and Exhibits to them) are not incorporated by reference in or otherwise a part of this Offering Circular.

How to Subscribe

Potential Investors who are “qualified purchasers” may subscribe to purchase Series TF2019 or Series OL2018 Units. Any potential Investor wishing to acquire Units must:

⁽¹⁾  First, download the “CMNWLTH” mobile app on a mobile device by following a link on the Company’s website.  You must create then an account and answer four questions about your accredited or non-accredited status and prior ownership of racehorses. You will then receive an e-mail acknowledging your account. 

⁽²⁾  Before subscribing for Units, you must first open an account with the broker North Capital, providing name, address, social security number, and other customary background information. You must also complete a suitability questionnaire describing financial and investment experience and authenticate electronic payment information.

⁽³⁾  Carefully read this Offering Circular, and any current supplement, as well as any documents described in the Offering Circular and attached to it or which you have requested. The home page of the app has separate links to the Offering Circular, Operating Agreement, Subscription Agreement, and regulatory disclosures as well as information about the Thoroughbred asset to be acquired by each series offering its units.

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⁽⁴⁾ Consult with your tax, legal and financial advisors to determine whether an investment in the Units is suitable for you.

⁽⁵⁾ Review and complete the Subscription Agreement (including the “Investor Qualification and Attestation”) and digitally sign the completed Subscription Agreement using electronic signature. Except as otherwise required by law, subscriptions may not be withdrawn or cancelled by subscribers.

⁽⁶⁾ Once the completed Subscription Agreement is signed, an integrated online payment provider will transfer funds in an amount equal to the purchase price for the Units you have applied to subscribe for (as set out on the front page of your Subscription Agreement) into the escrow account for the series. Payment will only be accepted by means of electronic transfer via wire or ACH payment and not by check or credit card. The Escrow Agent will hold such subscription monies in escrow until such time as your Subscription Agreement is either accepted or rejected by the Manager and, if accepted, such further time until the Offering closes and Units are issued to you.

⁽⁷⁾ The Manager and North Capital will review the subscription documentation completed and signed by you. You may be asked to provide additional information. The Manager or North Capital will contact you directly if required. We reserve the right to reject any subscriptions, in whole or in part, for any or no reason, and to withdraw the Offering at any time prior to Closing.

⁽⁸⁾ Once the review is complete, the Manager will inform you whether or not your application to subscribe for Units is approved or denied and if approved, the number of Units you are entitled to subscribe for. If your subscription is rejected in whole or in part, then your subscription payments (being the entire amount if your application is rejected in whole or the payments associated with those subscriptions rejected in part) will be refunded promptly, without interest or deduction. The Manager accepts subscriptions on a first come, first served basis, subject to the right to reject or reduce subscriptions.

⁽⁹⁾ If all or a part of your subscription is approved, then the number of Units you are entitled to subscribe for will be issued to you upon the Closing. Simultaneously with the issuance of your Units, the subscription monies held by the Escrow Agent in escrow on your behalf will be transferred to the account of the Series as consideration for such Units.

By executing the Subscription Agreement, you agree to be bound by the terms of the Subscription Agreement and the Company’s Operating Agreement. The Company, the Manager and North Capital will rely on the information you provide in the Subscription Agreement, including the “Investor Qualification and Attestation” attached thereto and the supplemental information you provide in order for the Manager and North Capital to verify your status as a “qualified purchaser.” If any information about your “qualified purchaser” status changes prior to you being issued Units, please notify the Manager immediately using the contact details set out in the Subscription Agreement.

For further information on the subscription process, please contact the Manager using the contact details set out in the “Where to Find Additional Information” section.

The subscription funds advanced by prospective Investors as part of the subscription process will be held in a non-interest-bearing account with the Escrow Agent and will not be commingled with the operating account of any Series, until if, and when there is a Closing with respect to that Investor. When the Escrow Agent has received instructions from the Manager that the Offering will close and the Investor’s subscription is to be accepted (either in whole or part), then the Escrow Agent will disburse the Investor’s subscription proceeds in its possession to the account of the Series. If the Offering is terminated without a Closing, or if a prospective Investor’s subscription is not accepted or is cut back due to oversubscription or otherwise, the amounts deposited into escrow by prospective Investors will be returned promptly to them without interest or deductions. Any costs and expenses associated with a terminated offering will be borne by the Manager.

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

Since its formation in June 2019, the Company has been engaged primarily in developing the financial, offering and other materials to begin fundraising. We are considered to be a development stage company, since we are devoting substantially all of our efforts to establishing our business and planned principal operations have only recently commenced. We are in the process of launching our initial offering of units through the sale of the Series TF2019 Units.

During the period beginning on June 12, 2019, the Company’s date of formation, through August 31, 2019 (which we refer to as the “Inception Period”), the Company acquired the Timido Filly for the benefit of Series TF2019 on August 20, 2019, from an officer of the Manager in exchange for a convertible promissory note in principal amount of $7,500. The Manager has also incurred expenses to set up the legal and financial framework and compliance infrastructure to enable the Company to market and sell offerings of each series of units, which have been recorded as capital contributions by the Manager. See “Note 3 – Related Party Transactions of the Notes to Financial Statements” and Exhibit 6.2 for more information regarding the convertible promissory note.

Operating Results

Revenues are generated at the series level. As of August 31, 2019, no series of the Company has generated any revenues. We do not expect Series TF2019 to generate any revenues until 2021, when the Timido Filly may have developed sufficiently to race as a two-year old.

Operating expenses related to the Series Asset that are incurred prior to the closing of Series TF2019 Units are being paid by the Manager and will not be reimbursed by the Series. Operating expenses related to boarding of the Timido Filly during the Inception Period totaled $116. Each series of the Company will be responsible for its own operating expenses, such as boarding, training and racing expense and insurance, beginning on the closing date of the offering of each series. The Company also incurred rent and software expenses totaling $427 during the Inception Period and recorded depreciation expense of $112 on the purchased Thoroughbred.

Interest expense on the promissory note issued by the Company to an officer of the Manager for the benefit of Series TF2019 totaled $5 during the Inception Period. See “Note 3 – Related Party Transactions of the Notes to Financial Statements” for more information regarding the loans from officers of the Manager.

The Manager has incurred legal, accounting and compliance expenses of $152,500 as of August 31, 2019 to set up the legal and financial framework and compliance infrastructure for the marketing and sale of the Series TF2019 Units and all subsequent offerings. These organizational expenses were recorded as operating expenses by the Company and as a corresponding capital contribution by the Manager. The Manager will be entitled to receive an organizational fee equal to 3.0% of the proceeds received from the initial offering of each series of units as reimbursement for organizational expenses until the manager has been reimbursed in full.

As a result, the Company’s net loss for the Inception Period was $153,160.

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Liquidity and Capital Resources 

As of August 31, 2019, the Company had $5,000 in cash, and no financial liabilities other than a $7,500 note payable and accrued interest of $5 to an officer of the Manager. From inception, the Company has financed its own business activities and those on behalf of its Series through capital contributions from the Manager or its affiliates. The Company and each Series expect to continue to have access to ample capital financing from the Manager going forward. Until such time as the Series have the capacity to generate cash flows from operations, the Manager may cover any deficits through additional capital contributions or the issuance of additional Units in any individual Series.

Each series will repay any loans used to acquire its underlying asset, plus accrued interest, with proceeds generated from the closing of the offering of the series. No series will have any obligation to repay a loan incurred by the Company to purchase an underlying asset for another series.

Plan of Operations

At the time of the qualification of this Offering Statement, Series TF2019 has not commenced operations, is not capitalized and has no assets or liabilities. We intend for Series TF2019 to start operations at the time of the initial closing of the Offering. All assets and liabilities related to the Timido Filly that have been incurred to date and will be incurred until the Closing are the responsibility of the Company or the Manager, and responsibility for any assets or liabilities related to the Timido Filly will not transfer to the Series until such time as a Closing has occurred.

The Company plans to launch up to six additional offerings in the next twelve months. The proceeds from any offerings closed during the next twelve months will be used to acquire additional Thoroughbred assets. We also intend to engage in racing, sales (pinhooking initially, then sale of progeny produced by the Series’ broodmare(s)) and breeding activities, the commencement of which will depend on the stage of development and training of Thoroughbreds when they are acquired. We intend these activities will generate revenues for each series to cover, in whole or in part, the ongoing post-closing operating expenses of the series. However, a Thoroughbred racing and breeding business is subject to numerous risks, and there can be no assurance that the Thoroughbred assets of any series will produce sufficient revenue to cover its operating expenses, much less fund distributions to its unit holders. See “Risk Factors.”

We do not anticipate Series TF2019 will generate revenues from racing activities before 2021, the earliest time when the Timido Filly would be eligible to race as a two-year old. A substantial portion of the proceeds from the Offering will be used to establish reserves to cover boarding, training, medical and other operating expenses until such time as Series TF2019 would be able to generate racing revenue. See “Description of the Business – Operating Expenses” for additional information regarding the payment of Operating Expenses.

Trend Information

For a description of the Thoroughbred industry, including trends that could affect the financial condition and operations of Series TF2019 and subsequent series of the Company, see “Thoroughbred Industry” beginning on page 59.

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DESCRIPTION OF THE BUSINESS

Overview

As described in greater detail in the “Thoroughbred Industry” section beginning on page 59, the racing sector of the horse industry, which includes the Thoroughbred industry, had an estimated impact on the United States economy of $36.6 billion in 2017. Historically, participation in racing and breeding Thoroughbreds has been largely limited to wealthy individuals, due to the substantial financial investment required.

The Company aims to provide horse racing enthusiasts with the opportunity for greater involvement in the sport by enabling them to acquire a diversified portfolio of equity interests in Thoroughbreds and equine assets through the Commonwealth Platform.

Our principal objective will be to acquire and manage Thoroughbreds with the pedigree, conformation and athletic potential to compete successfully, thereby creating opportunities to generate revenue, provide long and short-term capital appreciation, and ultimately distribute Free Cash Flow to equity Investors in the underlying equine assets. “Free Cash Flow” is defined as the net income (as determined under U.S. GAAP) generated by the Series plus any change in net working capital and depreciation and amortization (and any other non-cash Operating Expenses) and less any capital expenditures related to the Series Asset. The Manager may maintain Free Cash Flow funds in a deposit account or an investment account for the benefit of the Series.

The Company aims to make ownership opportunities in Thoroughbred racing available to a significantly larger number of participants than was previously possible. Breeders, racetracks and professionals in the Thoroughbred racing industry will benefit from greater public interest and participation in horseracing, leading to more races, higher betting handle and purses, and greater attendance. Thoroughbred breeders and owners will benefit from greater liquidity, and potentially lower transaction costs and greater transparency, as compared to traditional methods of conducting Thoroughbred asset transactions.

Business of the Company

The Units represent an investment in a Series of the Company and thus indirectly in the underlying Thoroughbred Assets of the Series.  They do not represent an investment in the Company or the Manager. 

The Timido Filly, which will be transferred by the Company to Series TF2019 at the Closing of the Series TF2019 Offering, is currently being boarded in Oldham County, Kentucky.  Depending on the filly’s development, the Manager anticipates that the Timido Filly will be sent to a trainer in 2021 as a two-year-old, and possibly begin racing later that year.  We do not intend for Series TF2019 to acquire any assets other than the Timido Filly.

The Company has entered into an agreement to acquire a 75% interest in the Orb Colt no later than January 17, 2020, with the seller will retaining a 25% interest. See “Use of Proceeds – OL2018” for a description of the terms of purchase. We do not intend for Series OL2018 to acquire any assets other than its interest in the Orb Colt.

The Company will have the exclusive right to manage the Orb Colt as long as it holds a majority ownership interest.  The Orb Colt is currently being lightly trained, and is expected to be sent to Graham Motion, trainer of 2011 Kentucky Derby winner Animal Kingdom, at Fair Hill Training Center in Elkton, Maryland in the spring of 2020 or when he is ready to enter full race training. All expenses relating to boarding, care and training incurred from October 10, 2019 onward will be borne in accordance with the ownership percentages of the co-owners. All co-owners will be listed in the track program and the Daily Racing Form for races in which the Orb Colt is entered, and all purses, bonuses, payments and awards earned by the Orb Colt will be allocated among the co-owners in accordance with their ownership percentages.

While the Manager may pursue opportunities from any sector of the Thoroughbred racing and breeding business and may acquire interests in Thoroughbreds of any pedigree or racing level, it intends to concentrate on the upper echelon (allowance and stakes races) within the sport. The Company will seek to acquire Thoroughbreds that can race competitively in allowance and stakes races as well as interests in stallions and broodmares that have the lineage to produce foals that can compete at the allowance and stakes level. The Company may own Thoroughbreds wholly or in conjunction with others.

The Company intends to conduct Thoroughbred racing, breeding, pinhooking, sales and other activities through separate Series. In all instances, the Manager will endeavor to manage the Thoroughbreds of each Series in a manner intended to maximize both the earnings capability and value of the Thoroughbred, and the financial return to the Series. Investors may invest in one or more Series, enabling them to participate more directly in the sport and diversify risk by holding fractional interests in several racing Thoroughbreds or other equine-related assets. We expect that the operations of the Company, including the issuance of additional series and their acquisition of additional assets, may also benefit Investors by enabling the Series to gain access to experienced trainers with successful records and benefit from economies of scale with respect to certain operational costs.

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Initially, the Manager intends to use the proceeds from the sale of Units of each Series to acquire an ownership interest in a single Thoroughbred with the potential, based on lineage, to race competitively.  We anticipate these early Series will acquire yearlings and juveniles, who will need up to 18 months to develop and mature before they can generate revenue from racing. The Manager will oversee the development, training, and early racing career of the Thoroughbreds acquired by its Series in accordance with each Series’ Management Services Agreement and the Company’s Operating Agreement.

For future Series, the Manager may acquire Thoroughbreds that are in training or actively racing and can earn revenue without a lengthy development period. The Manager may also employ supplemental strategies to generate distributable Free Cash Flow for Investors, including:

● buying weanlings or yearlings for resale as yearlings or two-year-olds, a practice known as “pinhooking,”

● acquiring stallion shares, and

● acquiring interests in breeding programs.

Commonwealth Thoroughbreds is intended not only to be an investment platform, but also a vehicle to experience the lifestyle and culture of Thoroughbred ownership by offering Investors opportunities to enjoy the benefits made available to owners at racetracks. Depending on the level of ownership in Commonwealth Thoroughbred series, these benefits may include, among other things:

● stable visits to meet your horse and trainer;

● access to restricted areas of the track for licensed owners (primarily the paddock and the backside);

● access to all Company suites, events and after-race parties where Investors can watch their Thoroughbred race and enjoy the company of other Investors and team members;

● invitations to the winner’s circle;

● owner’s license privileges in certain states; and

● concierge-like services provided to participants in stakes races, including complimentary food and drink, seating and other perquisites should the Series have horses competing at that exclusive level.

The Commonwealth Platform

The Manager owns and operates the Commonwealth Platform, through which horseracing enthusiasts may indirectly invest, through a series of our membership units, in Thoroughbred assets that historically have required substantial financial resources to own. Investors will be able to use the Commonwealth Platform to browse and screen the potential investments and sign legal documents electronically. We intend to distribute the Units of the Company’s Series exclusively through the Commonwealth Platform.

We aim to use the Commonwealth Platform to:

● Democratize the ownership of Thoroughbred racehorses and allow more fans to experience the excitement, perks and benefits of ownership of top-tier competitors at a fraction of the historical cost;

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● Provide users with a premium, highly curated, engaging experience through opportunities to interact with the Thoroughbred, trainers and jockeys and as well as exclusive on-track experiences;

● Increase interest in horse racing generally, and provide an opportunity to share in a portion of the financial gains that the ownership of Thoroughbreds and equine assets can create;

● Provide access to a broader range of equine assets for investment and opportunities for portfolio diversification and potentially greater liquidity for their Units (although there can be no guarantee that a secondary market will ever develop or that appropriate registrations to permit such secondary trading will ever be obtained); and 

● Provide purchasers and sellers with greater market transparency and insights, lower transaction costs, potentially greater liquidity, a seamless and convenient acquisition process, portfolio diversification and the ability to retain minority equity positions in assets via the retention of equity units in offerings conducted through the Commonwealth Platform. 

Through the Commonwealth Platform, investors can view a detailed profile of each series of units. Within the mobile experience, investors can view:

● Investors’ amount of investment in each series of units;

● Written overview of each horse’s family;

● Full pedigree of each horse, with insights;

● Photo and video gallery;

● Detailed write up on each horse that outlines why Commonwealth and its partners selected the horse, why we believe it has the potential to be a successful racehorse and any other information that helps an investor make an informed decision. This section may also contain comments from bloodstock agents, trainers and other industry professionals; 

● Offering details of each series of units; and

● Offering Statement, including the Offering Circular, its exhibits and appendices.

The process for subscribing for Units through the Commonwealth Platform is described earlier under “Plan of Distribution and Subscription Procedure – How to Subscribe.”

The Manager

The Operating Agreement designates the Manager as the managing member of the Company and each series of its units. The Manager will generally not be entitled to vote on matters submitted to the unit holders. The Manager will not have any distribution, redemption, conversion or liquidation rights of any series by virtue of its status as the Manager.

The Operating Agreement further provides that the Manager, in exercising its rights in its capacity as the managing member, will be entitled to consider only such interests and factors as it desires, including its own interests, and will have no duty or obligation (fiduciary or otherwise) to give any consideration to any interest of or factors affecting the Company, any series of units or any of the unit holders and will not be subject to any different standards imposed by the Operating Agreement, the LLC Act or under any other law, rule or regulation or in equity. In addition, the Operating Agreement provides that the Manager will not have any duty (including any fiduciary duty) to the Company, any series or any of the unit holders.

If the Manager resigns as managing member of the Company, the holders of a majority of all units of the Company may elect a successor managing member. Holders of units in each series of the Company have the right to remove the Manager as manager of the Company, by a vote of two-thirds of the holders of all units in each series of the Company (excluding the Manager), if the Manager is found by a non-appealable judgment of a court of competent jurisdiction to have committed fraud in connection with a series of units or the Company. If so convicted, the Manager must call a meeting of all the holders of every series of the Company’s units within 30 calendar days after the non-appealable judgment at which the holders may vote to remove the Manager as manager of the Company and each series. If the Manager fails to call such a meeting, any unit holder will have the authority to call such a meeting. If removed, the Manager will be entitled to receive all amounts that have accrued and are due and payable to it. If the holders vote to terminate and dissolve the Company (and therefore the series), the liquidation provisions of the Operating Agreement will apply (as described in “Description of the Units Offered – Liquidation Rights”). If the Manager is removed as manager of the Company, it will also immediately cease to be manager of any series.

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The Manager and Company executives have relationships with executives and high-ranking individuals at the Thoroughbred industry’s most well known breeding farms including: WinStar Farm, Claiborne, Spendthrift, Stonestreet, Lane’s End, Calumet and Hill ‘n’ Dale.

The Manager and Company executives are focused on building and sustaining relationships with industry leading bloodstock agents. Currently, the Company has relationships with bloodstock agents known for selecting top race prospects including Kentucky Derby winners, Breeder’s Cup winners and Graded Stakes winners.

See “Management” on page 72 for additional information regarding the Manager.

Advisory Board

The Manager is in the process of establishing an Advisory Board consisting of members of the Manager’s expert network and additional advisors. We plan to build the Advisory Board over time and are in advanced discussions with various professionals in the Thoroughbred industry. We have already established an informal network of expert advisors who can support the Company in acquisition of Thoroughbreds, valuations, negotiations, training and racing schedules, and breeding matters.

The Advisory Board’s role will be to support the Company and the Manager and be available to provide guidance to the Manager with respect to the following matters:

● The strategy and progress of the Company;

● Material conflicts of interest that arise, or are reasonably likely to arise between the Manager, the Company, a series or a Unit Holder;

● Material transactions between the Company or a series and the Manager or any of its affiliates, another series or a Unit Holder, other than for the purchase of Units;

● The appropriate levels of annual insurance costs and other operating expenses specific to each Thoroughbred asset; and

● Selection of trainers, bloodstock agents, veterinarians and other service providers to be appointed by the Manager in respect of Thoroughbred assets.

Further, the Advisory Board will consult with and support the Manager in the following areas:

Bloodstock Selection: Advisory Board members may review and comment on bloodstock recommendations made by bloodstock agents at public auctions, breeding farms and purchases from other syndication groups.

Racing Management: Advisory Board members may recommend trainers, review racing plans and make recommendations to further strengthen our racing strategies.

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Breeding & Sales: Advisory Board members may provide recommendations when considering the sale of horses for breeding purposes or when entertaining offers to buy horses during the horses’ racing career.

Industry Relationships: Advisory Board members may assist in creating and developing strategic industry partnerships that benefit the Company and promote our interests. (e.g., racetrack partnerships, industry media, breeding farms and bloodstock agents).

Investment, Regulatory and Finance: Advisory Board members may provide advice with regard to navigating and optimizing the regulatory and financial markets to best position the Company and any subsidiaries for success.

The Members of the Advisory Board will not be managers or officers of the Company or any series and will not have fiduciary or other duties to the Unit Holders of any series.

Asset Selection and Acquisition

We plan to work with qualified bloodstock agents, owners, breeders, trainers and partners to identify and acquire a range of assets including yearlings, two-year-old’s and Thoroughbreds of racing age. Target acquisition costs will fall between $70,000 and $250,000 for all or a fractional ownership interest. We will select Thoroughbreds from top-tier auctions, private ownership and breeding farms based on pedigree, conformation and, for horses two years old and older, when available, under tack workout or breeze times and race results.

Selection Criteria

Pedigree. Pedigree is a strong determinant of future success on the track and future commercial values for breeding. Preference will be given to horses with proven pedigrees, where both the sire, dam and siblings of the horse have successful records (past racing performances of merit) on the racetrack and in the breeding shed. The Manager will track current market trends to identify top stallions and top broodmare sires and will look to align these pedigree crosses (or “nicks” as they are often referred to in the bloodstock world) whenever possible.

Conformation. Many factors determine a horse’s ability, including but not limited to breeding, training, mental fitness, and disposition. Analysis of conformation will be used to guide the selection team’s assessment of a Thoroughbred’s potential ability. This will help improve the odds of finding a successful racehorse. Biomechanics, heart scans, detailed gait analysis and endoscopic exams will be used to identify positive physical characteristics and rule out limiting physical characteristics that could make a horse more prone to injury, less athletic, etc.

Under Tack Times and Past Performance. Under tack times indicate a two-year-old’s running ability, running style and overall performance, as well as a metric for comparative analysis against horses of the same age. For Thoroughbreds of racing age, we will also use past performances, race replays, videos of workouts and other data to evaluate the horse’s ability, running style and future potential.

Physical Examination. Each Thoroughbred will undergo pre-purchase and post-purchase physical examinations conducted by a veterinarian. The examination may include but will not be limited to:

● Basic walking examination;

● Soundness and health of hoof structures;

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● Skin and body evaluation to identify previous injuries or surgery that could indicate structural or internal health issues, or which might adversely affect the horse’s future value or performance;

● Oral cavity exam to look for any abnormalities that may affect future training or performance;

● Optical examination for superficial lesions on the cornea, anterior chamber, and lens. A fundic (or base of the eye) exam should be performed to evaluate the posterior chamber and the optic nerve at the back of the eye;

● Cardiac exam to detect evidence of any overt cardiac disease (elevated resting heart rate, elevated resting respiratory rate, distended jugular veins, dependent edema, etc.), cardiac murmurs or cardiac arrhythmias;

● Endoscopic examination to evaluate the functionality and size of the airway; and

● Full radiographs to identify the presence of developmental orthopedic disease (age, breed and joint specific), osteoarthritis or evidence of “wear and tear,” fractures, chips and bone remodeling. Pre-sale radiographs are available in the repository of the auction company. Post-sale radiographs will be taken, and soft tissue ultrasonic examinations of tendons and ligaments will be performed as determined to be necessary by the selection team and its veterinarian.

A post-purchase examination is important to detect any issue concerning the physical condition of a Thoroughbred. The conditions of sale of leading auctions may provide buyers with certain rights based on the results of a post-purchase examination. For example, dispute resolution procedures for sales of two-year-olds in training can be triggered if radiographs taken within 24 hours after the auction session and before the horse leaves the sales grounds show evidence of injury or disease of bone structure that did not appear on previous radiographs filed in the repository provided by the auction house. This could result in the renegotiation of the purchase price or the rescission of the sale and a refund of the purchase price.

Training and Boarding

A foal will be boarded at a farm until it has developed sufficiently to commence training. Boarding rates for suckling foals are generally no more $15 per day.  Rates for weanlings generally range from $25 to $45 per day.  Boarding rates are generally stable, rarely increasing by more than 5% annually. Unanticipated cost increases for hay, bedding or other items due to external factors may sometimes be passed through to boarding customers. 

Thoroughbreds purchased for the Company’s Series and in which the Series holds a controlling interest will be sent to trainers who, in the judgment of the Manager, can best realize the Thoroughbred’s potential. Thoroughbreds purchased as juveniles will be boarded at facilities near the Company’s office in Lexington, Kentucky and may be handled by trainers from the ground under tack to familiarize them with the use of the tack necessary to ride them. During this process they may be ridden in a round pen or paddock to provide them with basic skills until they have matured sufficiently to commence training at a training center or racetrack, usually as a two-year-old.

Each trainer employed by the Series will be an independent contractor and will concurrently be handling Thoroughbreds for other owners.  Racetrack based trainers generally are paid approximately $85 to $135 per Thoroughbred per day, plus 10%-12% of the Thoroughbred’s gross winnings.  Trainers based at non-racetrack affiliated training centers will generally charge lower “day rates” for initial training or training related to rehabilitation from injury than the rates charged by trainers based at racetracks.  Trainers may charge stall rent fees in addition to “day rates” charged for horses located at training centers.  In general, training fees are generally stable, with annual increases of more than 5% uncommon.

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Racing

Once a Thoroughbred horse reaches the final race preparation stage in its training regime, and while racing, certain additional charges for services associated with racing will be incurred. Charges such as having a lead pony take the horse to the gate, fees to have independent contractors handle the horse on race day, race day medication, transportation, jockey’s fees based either on a percentage of winnings for placed horses (first or second, and in some instances third) or a flat fee pursuant to a set schedule for unplaced horses (referred to as “Jock Mounts” in the vernacular,) trainer’s and stable commissions based on a percentage of winnings will be incurred or assessed. For races other than stakes races, there are no entry fees. For stakes races there are nomination or subscription fees, entry and starting fees and, in some instances, supplementary nomination fees to make horses eligible to compete after the closing deadline for nominations.

Each trainer will employ jockeys, who are generally paid a nominal fee plus 10% of the purse if the Thoroughbred finishes first in the race, 5% for second place finishes or sometimes third, and a standard flat fee for lesser placings. In addition, a barn commission amounting to approximately 2% of the purse is usually paid to the groom and barn help of the winning Thoroughbred. This payment is referred to as a “stake” in the stable vernacular.

Because of competition level variables, the racetracks where the Thoroughbreds will be located and the races into which they will be entered will be selected based upon the recommendation of the trainer with the input of the Advisory Board and the Manager’s officers.

  There is no guarantee that a horse entered in a race will “draw in” and be able to race.  Luck can determine if and how many times a horse may run during a race meet. Eligibility and preference of entries are governed by each track’s procedures to maintain a fair and even-handed approach, but horses are routinely excluded from races based upon the random draw in oversubscribed races. In those cases, a horse in such “entered and excluded” status would generally be given priority for entry in a comparable race in the same meet. In addition, trainers would ordinarily have options to race the horse at racetracks in the region. Although as horse may not be able to run as desired during a meet, the possibility that the horse would be excluded entirely from racing even though entered numerous times would be remote. 

Sale of Assets

The Manager expects to sell Thoroughbreds owned by its series from time to time in the ordinary course of operations or in connection with the dissolution of a series. The Manager may sell a particular Thoroughbred if the Manager concludes it would be in the best interest of the series to do so, based on the Thoroughbred’s racing performance and market value.

The Management Services Agreement authorizes the Manager to pay reasonable fees and or commissions consistent with industry standards to unaffiliated agencies such as trainers, sales agencies, or consignors upon any purchase or sale of Thoroughbreds by a series. Some trainers may charge a fee or commission for arranging the sale of a Thoroughbred for the Series. Sales agencies and consignors customarily charge a fee or commission on a set or sliding scale for their services in selling Thoroughbreds at public auctions. The Management Services Agreement requires the Manager to comply with state laws regulating private and public sales of Thoroughbred assets.

Breeding Activities

Thoroughbred breeding activities generally include selling stallion shares and stallion seasons (the right to breed a mare to the stallion in a given breeding season) in a Series Thoroughbred, acquiring stallion shares and stallion seasons, and buying, owning and selling interests in broodmares. The economic results of breeding activity depend to a large extent on the racing performance of the progeny produced, which usually will not be known for at least two to three years. However, breeding assets such as stallion shares may also generate a less volatile and generally more predictable revenue stream than racing activity.

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Insurance

The Manager expects to carry mortality insurance (and fertility insurance if applicable) on the Series’ Thoroughbreds and will decide on a case by case basis the amount of coverage on a particular Thoroughbred. Generally, a full mortality policy will insure against loss by death caused directly or indirectly by sickness, accident and/or disease. The amount of recovery generally would be the lesser of the insured amount or the last claiming price (if any) the Thoroughbred has been subjected to at the time of the casualty.

If a Thoroughbred owned by the Series enjoys great racing success or its value otherwise increases substantially (which can sometimes occur when a member of the immediate family wins a prestigious race), the Manager may decide not to increase mortality insurance to the level of the animal’s value because of the relatively high cost of the additional coverage.

Operating Expenses

Upon the Closing, the Series will be responsible for the following costs and expenses attributable to the activities of the Company related to the Series (together, the “Operating Expenses”):

● any and all ongoing fees, costs and expenses incurred in connection with the management of the Series Asset, including bloodstock agent commissions, transportation (other than those related to Acquisition Expenses), boarding, training and racing expenses (nomination fees, entry fees, jockey fees, pony fees, etc.), veterinarian fees, farrier charges, feed supplements and medications, physical therapy charges, equipment costs, research and database expenses, periodic registration fees, marketing, security, valuation, and utilization of the Series Asset;

● fees, costs and expenses incurred in connection with preparing any reports and accounts of the Series of Units, including any required federal or state securities filings and any annual audit of the accounts of the Series (if applicable);

● fees, costs and expenses of a third-party registrar and transfer agent appointed in connection with the Series;

● fees, costs and expenses incurred in connection with making any tax filings on behalf of the Series;

● any indemnification payments;

● any and all insurance premiums or expenses incurred in connection with the Series Asset, including equine mortality or fertility insurance; and

● any similar expenses that may be determined to be Operating Expenses, as determined by the Manager in its reasonable discretion.

The Manager has agreed to pay and not be reimbursed for Operating Expenses incurred prior to the Closing. The Manager will bear its own expenses of an ordinary nature, including, all costs and expenses on account of office rental, supplies, secretarial expenses, stationery, charges for furniture, fixtures and equipment, payroll taxes, remuneration and expenses paid to employees and utilities expenditures.

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If the Operating Expenses exceed the amount of revenues generated from the Series Asset and cannot be covered by any Operating Expense reserves on the balance sheet of the Series Asset, the Manager may (a) pay such Operating Expenses and not seek reimbursement, (b) loan the amount of the Operating Expenses to the Series, on which the Manager may impose a reasonable rate of interest, and be entitled to reimbursement of such amount from future revenues generated by the Series (an “Operating Expenses Reimbursement Obligation”), and/or (c) cause additional Units to be issued in the Series in order to cover such additional amounts.

Allocation of Revenue and Expense

To the extent relevant, the Manager will allocate items of expense and revenue that are allocable to a specific series to be borne by, or distributed to (as applicable), the applicable series of units. If, however, an item is not allocable to a specific series but to the Company in general, it will be allocated pro rata based on the value of underlying assets or the number of units, as reasonably determined by the Manager.

Oversight and Governance

The Series will be able to pay a fee or commission to any advisor or other person affiliated with or related to the Manager, Advisory Board member, or any Member only with the approval of the principals of the Manager who are not parties to the transaction and will be fully disclosed to Series owners. In such situations, the Manager may consult with Advisory Board members who also are not parties to the transaction.

Indemnification of the Manager

The Operating Agreement provides that none of the Manager, nor any current or former directors, officers, employees, partners, shareholders, members, controlling persons, agents or independent contractors of the Manager, members of the Advisory Board, nor persons acting at the request of the Company in certain capacities with respect to other entities (collectively, the “Indemnified Parties”) will be liable to the Company, any series or any interest holders for any act or omission taken by the Indemnified Parties in connection with the business of the Company or any Series that has not been determined in a final, non-appealable decision of a court, arbitrator or other tribunal of competent jurisdiction to constitute fraud, willful misconduct or gross negligence.

The Series will indemnify the Indemnified Parties out of its assets against all liabilities and losses (including amounts paid in respect of judgments, fines, penalties or settlement of litigation, including legal fees and expenses) to which they become subject by virtue of serving as Indemnified Parties with respect to the Company or the Series and with respect to any act or omission that has not been determined by a final, nonappealable decision of a court, arbitrator or other tribunal of competent jurisdiction to constitute fraud, willful misconduct or gross negligence.

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Description of the Management Services Agreement

The Series will appoint the Manager to manage the Company’s breeding and racing operations and the Thoroughbred assets of each Series pursuant to a Management Services Agreement. The services provided by the Manager will include:

● Preparing a business plan and operating budget and attending to all bloodstock, breeding and racing matters;

● Selecting and acquiring in the name of the Company or its Series suitable Thoroughbreds for breeding and racing as well as other equine assets;

● Developing and implementing short-term and long-term strategies for each Thoroughbred acquired or raised by the Company with the intent to maximize its potential value and appreciation;

● Securing the services of professional trainers, veterinarians, bloodstock agents and other service providers needed for the proper management, care, breeding and training of the Thoroughbreds in each series;

● Selecting the breeding and racing incentive programs to which the Thoroughbreds produced or owned by the Company will be nominated; and

● Providing general administrative services necessary for managing the Company’s breeding and racing business operations, such as bookkeeping, billing, collection, cash management and payment services.

The Management Services Agreement will have an initial term of one year and will renew for additional consecutive one-year terms until it is terminated in accordance with its terms. Either party may terminate the Management Services Agreement at the end of the initial term or any renewal term by providing the other party with thirty days written notice prior to the expiration of the then effective term. The Management Services Agreement will also terminate upon (i) the removal of the Manager as managing member of the Company (and thus all series of the Company’s units), (ii) notice by one party to the other party following the other party’s failure to cure a material breach of the Management Services Agreement or (iii) such other date as agreed between the parties to the Management Services Agreement.

Each series will indemnify the Manager out of its assets against all liabilities and losses (including amounts paid in respect of judgments, fines, penalties or settlement of litigation, including legal fees and expenses) to which they become subject by virtue of serving as managing member under the Management Services Agreement with respect to any act or omission that has not been determined by a final, non-appealable decision of a court, arbitrator or other tribunal of competent jurisdiction to constitute fraud, willful misconduct or gross negligence.

Management Fee

As consideration for managing the Company’s breeding and racing operations and the Thoroughbred assets of each Series, the Management Services Agreement provides that the Manager will be paid a Management Fee equal to:

● 10% of Free Cash Flow until Series members have received aggregate distributions per Unit equal to the purchase price they paid per Unit; and thereafter

● 20% of Free Cash Flow from racing activities; and

● 30% of Free Cash Flow from breeding activities and asset sales.

The Management Fee will only become payable if and when there are sufficient proceeds to distribute Free Cash Flow to the Unit Holders.

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Legal Proceedings

None of the Company, any series, the Manager, or any director or executive officer of the Manager is presently subject to any material legal proceedings.

THOROUGHBRED INDUSTRY

The information included in the following section has been derived from publicly available Thoroughbred industry sources. We have no reason to believe this information is incorrect, but we have not independently verified its accuracy.

Introduction

In 2017, the horse industry contributed approximately $50 billion in direct economic impact to the U.S. economy, and has a direct employment impact of approximately 1 million jobs.² Additionally, the industry itself contributed $38 billion in direct wages, salaries, and benefits.³

From those direct effects, the horse industry’s contribution ripples out into other sectors of the economy, resulting in an estimated total contribution to the U.S. economy of $122 billion, and a total employment impact of 1.7 million jobs.⁴

The Thoroughbred industry, a subset of the horse industry, traces its roots back over 300 years to England and its contributions to the economy are significant. Thoroughbred racing, together with Quarter Horse and harness racing, had an estimated economic impact of $36.6 billion to the US economy in 2017 with estimated employment impact of 472,000 jobs.⁵

The Company intends to focus its efforts on acquiring, racing, breeding and selling Thoroughbreds with highly sought, commercially attractive pedigrees from established and successful bloodlines.

Breeding

The Thoroughbred breeding industry is perpetuated by selectively breeding top mares to top stallions to yield top quality racehorses. There is no guarantee that a Thoroughbred, even with the most sought-after pedigree, will be marketable. Conformation flaws, injury, death or health issues can and often do render a well-bred Thoroughbred completely valueless. The Thoroughbred breeding industry is largely focused in central Kentucky with the majority of top broodmares and stallions located in and around Lexington, Kentucky. However, in recent years regional markets, fueled by breeders incentive programs and corresponding higher purses (some supplemented by revenues from alternative forms of gaming) in New York and Florida are exerting a stronger influence on the breeding of high quality Thoroughbreds. In North America, stallions are bred to broodmares from mid-February to the end of June of each year. The gestation period for a broodmare (a female horse capable of bearing offspring) is approximately eleven months. Thus, most foals in the United States are born between early January and the end of May.

² American Horse Council web page (Economics) available at www.horsecouncil.org/resources/economics.

³ Id.

⁴ Id.

⁵ Equine Business Association Economic Impact Study available at www.equinebusinessassociation.com/2017-economic-impact-study-u-s-horse-industry/.

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Thoroughbred Sales at Public Auction

The majority of Thoroughbreds are sold at public auction. As the most transparent and efficient market of Thoroughbreds, auction statistics are the traditional barometer for the value of Thoroughbred bloodstock. Auction averages for yearling Thoroughbreds (a traditional economic barometer used in the Thoroughbred business) have increased from less than $50,000 in 2002 into the $84,000 range in 2018. The commercial market for Thoroughbred bloodstock, however, has been cyclical. After steady growth throughout the 1970’s, the bloodstock market increased sharply in the early 1980’s, followed by sharp declines in the mid-1980’s, the early 1990’s and again during the latter part of the first decade of the 2000’s.

The average prices paid for Thoroughbreds sold at public auction in the 21^st century have increased over time, peaking in 2018, after significant declines in 2007-2010. Thereafter, the Thoroughbred yearling market (and the overall Thoroughbred market in general) has experienced a slow, but somewhat erratic growth in yearling sales averages and medians, albeit with significantly reduced numbers of horses offered. The North American foal Crop in 1984 was in excess of 50,000 newborn foals, but volume has steadily declined to 19,925 registered foals in 2018. Although total receipts for public sales of Thoroughbred horses exceeded one billion dollars (U.S.) each year from 2004 through 2007, total receipts from public sales decreased to $941,320,193 in 2008, a drop of 23.8% from 2007 totals. Totals in recent years have reached levels just above one billion dollars with a total of all Thoroughbred auction revenues reaching $1,077,432,891 in 2018.

The primary Thoroughbred auctions are conducted by sales companies such as Keeneland, Fasig-Tipton, Barretts and Ocala Breeders Sales, and are held primarily in Kentucky, Florida, New York, Maryland and California. Auction companies such as these earn a sales commission between 4.5% and 5% on the horses they sell at public auction. The sales held by The Keeneland Association, historically the leading sales company for elite level Thoroughbreds, are considered a measure of industry health due to the large volume and variety of Thoroughbred yearlings sold there. Fasig-Tipton’s standing in the market has increased following its acquisition in 2008 by a firm backed by Dubai’s ruling family.

Weanling Auctions

Selling a horse as a weanling presents the breeder’s initial opportunity to generate revenue. Public auctions for weanlings occur from October through the following January. The gross sales of all weanlings in 2018 totaled over $76.6 million, down 1.2% from 2017.⁶ This decrease followed an increase in gross sales from $61.1 million in 2016 to $73.59 million in 2017, an increase of 8.2%. Gross revenue from weanling sales in North America had increased during each of the three years (2014-2016) prior to the downturn in 2017. The average sale price of $63,755 in 2017 represented a 13.6% decrease from the record average price of approximately $100,000 in 2006.⁷

Yearling Auctions

Yearling sales are traditionally where breeders sell their produce. Public auctions for yearlings occur throughout the country from July through October. In 2018, approximately 36% (7,177) of all registered yearlings bred (19,925) were offered for sale and sold at public auction.⁸ The gross sales of all yearlings in 2018 totaled over $565.1 million, up 14.3% from over $481.7 million in 2017. This figure followed a decline of 7.6% in 2016.⁹ The yearling sales market is concentrated in Kentucky where approximately 50% are sold at public auction. Approximately 54 other public auctions are held throughout North America for the sale of yearlings.

⁶ The Blood-Horse Auction Review.

⁷ Id.

⁸ The Jockey Club Online Fact Book.

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Of the yearling sales, the Keeneland September yearling auction is the largest auction and draws buyers from around the world. The 2018 Keeneland September yearling auction resulted in gross revenues of $377.10 million for the 2,196 horses sold, up 7% from 2017 figures. The 2017 Keeneland September yearling auction yielded gross revenue of approximately $307.8 million for the 2,555 Thoroughbreds sold. The gross revenue figure increased by 12.8% from the total reached in 2016 of approximately $272.8 million.¹⁰ The number of Thoroughbreds sold in 2018 increased 14.1% to 2,916 sold from the previous year number of 2,555 sold at the 2017 Keeneland September auction.¹¹ The average price (mean) per yearling at the 2018 Keeneland September yearling auction was $129,335, which represented a 7.34% increase from the 2017 average of $120,487. The median price was $50,000 in 2018, which represented a 14% decrease from $57,000 in 2017.¹²

Overall, the United States yearling market in 2018, with just under 5,000 sold, experienced an 18% increase in gross sales. The average sale price for a yearling increased 9% to $106,659.¹³ At the recently concluded 2019 Fasig-Tipton July Selected Yearling Sale, 202 yearlings changed hands (about 4% of the anticipated overall market in 2019) with an average price of $92,183 (a drop in average of 8.6% from 2018 figures, which were up 7.7% from 2017) while the median price ($75,000) remained constant.¹⁴ The Fasig-Tipton July Sale will be followed by sales in Saratoga in August, the largest sale of yearlings at the nearly two week long Keeneland September Yearling Sale, followed by smaller sales in Kentucky in October. The overall market results will not be known until early in December, but usually do not diverge much from the trend following the conclusion of the September sale at Keeneland due to its volume.

The yearling and two-year-old markets have become much more international in recent years with horses bred in the U.S. often being offered in foreign markets. In fact, after not reaching his reserve at a yearling auction in the U.S., War of Will, 2019 Preakness Stakes (G1) winner, was purchased by a U.S. based bloodstock agent for approximately $300,000 at the Arqana May two-year-old in training (or “breeze up” sale as it is referred to in Europe) in France, repatriated to the U.S. and campaigned in the Triple Crown series.¹⁵ In addition to the U.S. and European markets, Australia, New Zealand, South Africa, England, Ireland and Japan have active yearling and two-year-old auctions offering racing prospects that often end up competing at U.S. racetracks.

Two-Year-Old Auctions

Public auctions for two-year-old Thoroughbred racing prospects take place from February through June of each year in warmer locales favorable to training. The major two-year-old sales are held in Florida, Maryland, California and Kentucky. In 2019, two-year-old sales figures available through May 27 indicate that the gross sales were up 15% and averages up 7% from 2018.¹⁶ The average price in 2018 was $85,508, a decrease of 4.3% from 2017 figures, but on a three year trend, this average actually represented an increase of 13.6% from an average price of $75,269 in 2016.¹⁷

⁸ Id.

⁹ Keeneland.com Sales Statistics

¹⁰ Id.

¹¹ Id.

¹² The Blood-Horse online July14, 2019, “First Crop Sires Popular at Fasig-Tipton’s July Sale” by Bill Oppenheim.

¹³ Id.

¹⁴ The Blood-Horse online June 5, 2019, “Agent Casse Proud of War of Will’s Accomplishments” by Ron Mitchell

¹⁵ Id.

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Broodmare Auctions

The number of broodmares sold at public auction in North America during 2018 was 2,216 (less than half the number of broodmares sold (4,976) in 2000), which was the highest number of broodmares ever sold in a single year at public auction.¹⁸ Gross sales proceeds decreased 5.7% from 2017 to $147,685,738, lowest gross sales since 2012.¹⁹ The average price for a broodmare in 2018 also declined approximately 5.7% to $66,645.²⁰ Broodmares are usually offered for sale (in foal, barren or maiden) in what are known as breeding stock or bloodstock sales in November and January in the U.S. In January 2019, the Keeneland January Horses of all Ages sale posted a record average of $50,182 per horse with a $20,000 median sale price. There were gross sales of $46,759,600, the highest gross sales amount since 2008 when the gross reached $70.45 million from a seven-session sale. There were only four sessions in the 2019 sale.²¹

Private Sales

A substantial private market for Thoroughbreds also exists. Bloodstock agents negotiate the majority of private deals for buyers and sellers. The success of an agent is often predicated on his reputation in the industry and his longstanding relationships with both buyers and sellers. In addition to bloodstock agents, trainers having a horse sold privately while under their care typically will be paid a sales commission of 5% on the gross sales price of the horse.

Marketplace and Competition

The major markets for Thoroughbreds include the nationwide racing circuit, public auctions and private sales throughout North America. Most buyers are North Americans, but there are a number of significant international buyers from the Middle East, Europe, the U.K., Australia and Japan. Several hundred individuals and agencies conduct pinhooking operations in the weanling and yearling markets across the United States, as well as thousands of owners and trainers who purchase weanlings and yearlings to eventually race for their own account. Competitors in the two-year-old market consist mostly of racehorse owners trying to acquire top two-year-old’s for immediate racing.

Racing

When a yearling becomes a two-year-old on the second January 1 following its birth, it is eligible to race. Early two-year-old races can be as short as two to four furlongs (a quarter to one half of a mile) but are generally five to six furlongs. Two-year-old Thoroughbreds competing in these early races, may later race at distances up to one mile and a sixteenth or beyond. During the early two-year-old season, many young horses prove simply too small or fragile for early racing and are “turned out” for further development. For many Thoroughbred horses, racing careers will not begin until their third or fourth year, when they reach full development.

¹⁷ Id.

¹⁸ The Jockey Club Online Fact Book

¹⁹ Id.

²⁰ Id.

²¹ The Blood-Horse online January 13, 2109, “unusual Depth at Keeneland January Sale” by Eric Mitchell.

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During its career, a Thoroughbred may run in races at a variety of distances and over a variety of surfaces. A “claiming race” is a race in which any horse running may be purchased at a specified “claiming” price, which is posted as a condition of entry. In “allowance” races, the weight each horse will carry is set by conditions written by the track’s racing secretary, making specific allowances in weights for horses with less impressive past performances and saddling better performing horses with more weight. A “weight for age” race utilizes a standard scale of weights established by The Jockey Club, which are then assigned to horses based upon their age and the month of the year.

The most prestigious and lucrative Thoroughbred races, “stakes races,” sometimes run under “handicap” conditions (whereby the track’s handicapper assigns different weights to the horses based upon their relative perceived ability in an effort to achieve a dead heat result, or in other words to give each horse an equal opportunity to win the race, all other factors being equal). These stakes or handicap races attract the best horses and the most public attention. To participate in these types of races, owners must pay a “subscription” or “nomination” fee or a series of nomination fees well in advance, and an entry fee or “starting” fee at the time of the race. Some stakes races allow supplemental nominations if premium nomination fees are paid for otherwise ineligible horses. These fees may or may not be added to the purse money and may be substantial (as much as $360,000 to supplement to the Breeder’s Cup Classic) with no guarantee that any part of the supplementary nomination will be earned back by the horse supplemented. Failure to draw into a stakes race, however, cancels all fees. The stakes money raised by these fees is often supplemented by state breeders’ association awards, the Breeders’ Cup, the track and by sponsorship.

Wagering and Purses

Currently, at least 38 states have adopted legislation permitting pari-mutuel wagering on horse races. Pari-mutuel handle, or the amount of money wagered, on Thoroughbred racing in the United States and North America, peaked in 2003. U.S. handle in 2003 was $15.18 billion. U.S. and North American handle have decreased by 25.77% and 24.99%, respectively, from 2003 through 2018.²² U.S. and North American handle increased slightly by 3.28% and 3.47%, respectively, in 2018. U.S. handle in 2018 totaled to $11.27 billion,²³ an increase due principally to a 4.1% increase in off-track wagering handle.²⁴ Handle is down approximately 7.2% through the first six months of 2019.²⁵

In the United States during 2018, total purses decreased for the first time in three years. According to information published by the Jockey Club Information Systems Inc., in 2018, $1.177 billion in purses was distributed in 41,083 races at North American tracks representing a 3.5% increase from total purses distributed in 2017.²⁶ Average purse per race increased approximately 6.4% to $30,551 in 2018 from $28,695 in 2017. Average purse money per runner decreased slightly by 6.3% to $24,223, the eighth increase in the last eight years.²⁷ If purse levels remain constant and the number of runners and races continues to decline due to shrinking foal crops, then the recent trends may continue. Total purses have increased in 13 of the last 15 years, growing 49.9% since 2004, although the total number of races run in North America in 2018 continued a consistent decline since 2004.²⁸ The overall trend in purse increases, however, can be attributed to the decline in the number of races and increased revenue from video lottery terminals, historic horse racing wagers and table games (or “Alternative Gaming”) at racetracks.

²² The Jockey Club 2018 Online Fact Book.

²³ The Jockey Club 2019 Online Fact Book.

²⁴ Id.

²⁵ www.astarthor.com/blog/asexpected-pari-mutuel-handle-drops

²⁶ The Jockey Club 2019 Online Fact Book.

²⁷ Id.

²⁸ Id.

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Several other sources of revenue support purse-earning opportunities for Thoroughbreds. The sport now has two 24-hour cable channels devoted to it, Horse Racing TV (“HRTV”) and TVG, owned by the British company Betfair Group Ltd. (“Betfair”), an online betting exchange that has been successful in Great Britain and around the world. While betting exchanges (online markets where individuals can act as both bettors and bookmakers with one another) are currently only legal in the United States in New Jersey, more states may authorize online betting exchanges in the near future. In May 2018, the U.S. Supreme Court, adjudicating a case brought before it by the State of New Jersey, struck down a law prohibiting sports gaming in the United States, allowing individual states to pass legislation allowing this form of gambling. To date, Tennessee, Montana, Iowa, Indiana, Illinois and New Jersey, Nevada, Mississippi, Pennsylvania, Virginia, West Virginia, Rhode Island, New York (limited to upstate New York casinos in-person only), Arkansas and Delaware either offer sports wagering or have legislation in place to implement sports wagering.²⁹ Further developments that enhance these potential sources of revenue and allocate a portion to the racing industry could have a positive impact on purses.

Advance deposit wagering (“ADW”) from simulcasts of live racing transmitted from multiple tracks to viewing outlets is another important source of purse revenue. The Interstate Horseracing Act of 1978, as amended, vests in horsemen’s groups at the host tracks the power to withhold consent to the transmission of the signal unless the horsemen receive a fair portion of the ADW revenue. In 2008, when eighteen tracks and the Thoroughbred Horseman’s Group (the “THG”), an entity representing horsemen from those tracks, could not agree on appropriate rates to charge for the signals, THG withheld its consent. As a result, Churchill Downs and other affected tracks were unable to send their signals to simulcast outlets and ADW companies during their live meets, exclusive of certain races for which there were pre-existing agreements. This reduced handle from all sources at several tracks and led the tracks to announce purse reductions (and in one case, suspension of racing) due to the anticipated loss of revenues. Churchill Downs filed suit alleging that the THG violated antitrust laws by forming a compact to “fix prices” for simulcast signals (television and video feeds for computer access to live racing) in restraint of trade. The parties subsequently settled the lawsuit and agreed upon a new rate structure. However, the episode illustrated that a prolonged period without ADW revenue would adversely impact purses at many North American racetracks.

In recent years, many states have authorized the use of Alternative Gaming at racetracks. Revenues from Alternative Gaming have been a significant new source of purse revenue. Several major racing jurisdictions have considered or passed legislation to enable those states to conduct alternative forms of gaming such as the operation of video lottery and historical racing terminals or slot machines at racetracks. Florida has enacted such legislation, limited to certain counties by local option ballot initiatives, and such gaming is being conducted at multiple locations with mixed economic results. Similarly, in 2005, New York authorized Alternative Gaming at several locations. To date, the authorized gaming at the New York Racing Association’s Aqueduct Racetrack has had a significant positive economic impact on Thoroughbred purses and operators. Pennsylvania has approved up to six licenses for alternative forms of gaming, which have been allocated and operational since 2007. Other jurisdictions with Alternative Gaming include Delaware, Indiana, Iowa, Louisiana, New Mexico and West Virginia.

To date, the Kentucky legislature has failed to approve casino-style Alternative Gaming at racetracks. California also has yet to approve on-track Alternative Gaming despite the intense competition its racetracks face from full casino style gaming at Indian reservations throughout the state. Online gaming is now available in at least eight states, including online poker, sports betting, casino style gaming and lottery games. These competing forms of gaming could adversely impact wagering handle on racing.

²⁹ www.legalbettingonline.com

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If more states do not protect horse racing from competition from Alternative Gaming and online gaming or approve Alternative Gaming at racetracks, purse revenues may decline. Conversely, should additional jurisdictions approve such legislation and fully develop Alternative Gaming facilities, purses in those states could increase significantly. If states, however, amend their enabling legislation to divert Alternative Gaming revenue from supporting Thoroughbred racetracks, purses would be adversely affected. Purse funds in West Virginia have already been tapped by the state government as a source of money to stabilize a troubled workers’ compensation fund.

Stallion Share/Stallion Ownership

Ownership of shares in syndicated stallions entitles the owner to certain rights to breed either the owner’s mares or mares owned by third parties to the stallion and to bonus pool revenues generated by the sale of “bonus nominations” – additional rights to breed the stallion. Usually, syndicates consist of from 36-60 shares (sometimes referred to as “fractional interests”) owned by multiple owners, normally a mixture of individuals, farms and other entities. The syndicate manager, usually an entity associated with an established commercial breeding farm, has a fiduciary duty to the syndicate members to manage the stallion to maximize its potential in the marketplace, to enhance or maintain the value of the stallion, and to generate revenues to pay the expenses of the syndicate and to make distributions to the syndicate members as set forth in the syndicate (co-ownership) agreement.

Ownership of a stallion share usually entitles an owner to one or two regular nominations (sometimes simply referred to as “seasons” which in effect is the right to breed one mare to the stallion as many times as is reasonably necessary to obtain a pregnancy during a given breeding season) and often a bonus nomination every year, every other year or every third year, as the syndicate agreement provides, on a rotating basis with other share owners. The allocation of bonus nominations is in the discretion of the syndicate manager and can be limited if the stallion is injured, is out of service due to sickness or disease, or is physically unable (usually due to advanced age or semen quality issues) to impregnate mares in large numbers. A stallion share owner may elect to sell both regular and bonus nominations through either private sale, public auction (generally, very limited and almost always subject to the consent of the syndicate manager), or by offering the nominations to the syndicate manager to sell at the farm. Another available option is to sell the contract at a discount (usually in the 75-85% of live foal stud fee range) to a company in the business of factoring such contracts for the immediate payment of cash without further risk of loss.

In response to increases and declines in auction prices for yearlings, most major commercial breeding farms will raise or lower stud fees. Reductions and increases of as much as 20-25% are common in all price ranges of stallions offered for breeding in 2019, depending on market demand and the performance of the stallion’s progeny at the racetrack or his in-foal mares and offspring selling at public auction. Increases and decreases in stud fees can affect the value of stallions, as there is a direct correlation between available stud fee revenue, stud fees actually paid and the overall value of the stallion. Commercial breeding farms may resort to alternative arrangements to ensure mares are attracted to the stallions standing at their respective farms. Some farms are offering breeders incentives, guarantees on sales (stud fee will be no more than the sale price if the progeny of the stallion fails to bring an amount equal to the stud fee), the option to convert a “stands and nurses contract” to a “foal share” arrangement, or the option to pay the stud fee out of the proceeds of sale (essentially interest free financing of the stud fee for up to 30 months). These stallion management strategies can affect anticipated cash flow and asset values of stallions held for appreciation and revenue generation and may have an overall negative or positive affect on the projected revenues and values of the Company’s stallion share portfolio, if any.

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Shares in syndicated stallions are available in various price ranges and multiples of stud fees (a common measure of value in the marketplace), since the market demand for stallions varies widely based upon commercial success at the industry sales events and success at the racetracks. Another factor is the stallion’s fertility and libido, which determines the size of the book of mares the stallion may reasonably service in a given breeding season. Stallion books range from a modest 50 mares (or less) to more than 200 mares in the Northern Hemisphere breeding season.

The Southern Hemisphere breeding season begins in August. Some stallions also shuttle to the Southern Hemisphere (primarily South America and Australia, but also to South Africa or New Zealand) either on a lease basis or to stand at an affiliate of the syndicate manager for the benefit of the stallion share owner. They may breed a similar number of mares in the Southern Hemisphere season, but the stud fees are usually reduced by 35%-50% depending upon the location of the stallion and the demand for his services. There are additional costs to the syndicate for transportation and quarantine that are incurred when shuttling stallions. An alternative used less frequently, but with some economic success, however, has North American stallions breeding Southern Hemisphere based mares (or those to be transported to the Southern Hemisphere after breeding) during the Southern Hemisphere breeding season while remaining at their Northern Hemisphere homes.

Colts successful in graded stakes races often are targeted as stallion prospects by major commercial breeding farms. As these horses establish their ability on the racetrack, breeding farms are making assessments of pedigree, conformation and commercial appeal of the crop of colts racing to determine if they represent viable commercial stallion prospects fitting their future stallion needs. Usually the prospective stallion buyer projects what the market is willing to pay for the stallion’s services on a live foal basis for these colts upon retirement. Once the projected live foal stud fee is determined, farms will gauge demand and appraise the stallion prospect based on recouping their investment in three years. In recent years Darley and Coolmore, two of the largest commercial breeding farms and aggressive competitors in the marketplace for stallions, have driven up the price of viable stallion prospects considerably.

The breeding rights often will be acquired before the stallion prospect is actually retired from racing. Some owners prefer to retain some or all of the breeding rights and share the upside potential for a stallion should the prospect prove to be successful in the breeding shed. It is also customary to grant to the trainer of the stallion one or two breeding rights per year. Agents involved in the purchase or sale of stallion prospects may also be awarded lifetime breeding rights as part of their compensation for facilitating the transaction whereby the stallion’s breeding rights are sold or purchased. Other owners of male Thoroughbred racehorse stallion prospects retain only breeding rights (but no liabilities) and otherwise sell the breeding rights outright upon retirement of the colt. Revenue generated by ownership of proven or unproven stallions varies as stud fees are routinely adjusted based initially upon sales results and then upon racing performance of the stallion’s progeny.

Share ownership in commercially proven stallions can be lucrative. Investment in unproven stallions is speculative, and the industry generally accepts that one of ten stallion prospects will ultimately be a commercially viable stallion in central Kentucky. Fortunately, there is a secondary market in other states and foreign countries so that stallion prospects failing to establish commercial viability can be sold or leased to stallion operations in such regional markets or in foreign countries. Insurance is available to cover first year congenital infertility. The continued availability of such insurance is subject to rate variability and to caps on coverage. Not all stallion prospects will be fully insurable for mortality or infertility.

Industry Organizations

The Jockey Club, with offices in New York City and Lexington, Kentucky, is the recognized official registry for Thoroughbred horses in the United States. Similar organizations exist in other racing countries throughout the world. The Jockey Club database includes the names of more than 3,000,000 horses tracing back to the late 1800’s. The database also is updated daily to include results of virtually every race in North America and pedigree and racing data from major racing centers throughout the world.

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To race in sanctioned races or to register its offspring, a Thoroughbred must be registered with The Jockey Club. Purchasers generally require a Jockey Club Certificate of Foal Registration as a condition of sale. These certificates are now available in electronic form. All the Company’s Thoroughbreds will be registered with The Jockey Club.

The National Thoroughbred Racing Association (“NTRA”) was established in April 1998 by a coalition of Thoroughbred industry interests including owners, trainers, racetracks, horsemen’s groups, jockeys, off-track betting facilities and breeders’ sales companies. At the time, the Thoroughbred industry faced challenges such as declining revenue growth and attendance, an aging fan base and increased competition from new gaming alternatives and other nationally marketed sports. The mission of the NTRA is to increase public awareness of Thoroughbred racing, its fan base, total handle and purses. The main objective of the NTRA is to create a centralized national structure and successfully implement a comprehensive marketing and television strategy for the Thoroughbred racing industry.

The NTRA has launched several extensive marketing and advertising campaigns with mixed reviews from industry participants. The NTRA is not self-funding and depends on industry contributions to continue its operations. In particular, the NTRA depends on the continued support of Churchill Downs and The Stronach Group, the two major operators of Thoroughbred racetracks. Any withdrawal of financial support by a significant group of racetracks, as has been threatened in the past, could compromise the ability of the NTRA to function as a nationally recognized industry association and could have a significant adverse effect on industry unity and continued viability of the Thoroughbred business.

Racetrack Industry

In the late 1990’s, Churchill Downs, Inc. (“CDI”) and Magna Entertainment Corp. (“MEC”) emerged as the two principal national racetrack operators, buying up major racetracks from coast to coast, as well as some smaller facilities. The consolidation trend ended a few years later when CDI sold Hollywood Park in Inglewood, California to developers and sold Ellis Park in Henderson, Kentucky and Hoosier Park in Anderson, Indiana. During the same period, MEC went through a bankruptcy, sold some of its facilities, emerged as a reorganized company and has been transformed into The Stronach Group headed by its founder’s daughter, Belinda Stronach. The two major players are also finding competition from gaming companies that are interested in racetracks authorized to offer Alternative Gaming. Casino operators like Eldorado Resorts, Hollywood Casinos, MGM Resorts, Boyd Gaming, Caesars Indiana Grand and Indian tribes with gaming industry acumen have entered the racetrack business. Smaller racetrack operators like Penn National Gaming, Inc. and Boyd Gaming earning Alternative Gaming revenue at their tracks have shifted focus to become “gaming” companies and have purchased or opened other small facilities authorized to offer Alternative Gaming.

The consolidation in ownership of major racing facilities brought greater continuity and cohesiveness to the industry. CDI and The Stronach Group are still the two principal national racetrack operators and are partners as well as competitors in various racing related ventures. CDI now owns multiple racetrack properties including Churchill Downs (Louisville, Kentucky), Calder Race Course (Miami Gardens, Florida), Fairgrounds Race Course & Slots (New Orleans, Louisiana), Ocean Downs (Berlin, Maryland), Presque Isle Downs (Erie, Pennsylvania), Arlington Park (Arlington Heights, Illinois) and a new harness track soon to be built in Oak Grove, Kentucky. CDI also owns its own account deposit wagering platform, Twinspires.com; its own research database, Bloodstock Research Information Systems; and off-track betting facilities related to its racetrack holdings. In addition, CDI owns United Tote (a totalizator company it uses to process wagers).

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The Stronach Group’s Thoroughbred racetrack holdings include Santa Anita Park (Arcadia, California), Golden Gate Fields (Berkley, California) and Portland Meadows (Portland, Oregon). Beyond racetracks, The Stronach Group owns AmTote, a totalizator service provider for the pari-mutuel industry; Palm Meadows, a training center near Boynton Beach, Florida that provides necessary stabling to conduct live racing at Gulfstream Park; XpressBet, an account deposit wagering platform; and Monarch Content Development, LLC, a simulcast purchase and sales agent for numerous North American racetracks and wagering outlets. Monarch sells horse racing content from its stable of racetracks to a variety of wagering outlets around the world, including racetracks, casinos, off-track wagering facilities, and internet-based wagering companies. Monarch’s current customers include Santa Anita Park, Del Mar, Gulfstream Park, Pimlico, Laurel Park, Golden Gate Fields, Los Alamitos (TB), Portland Meadows, Meadowlands, Monmouth Park, XpressBet and XBNet.

As a result of this consolidation of racetrack ownership, any significant financial setbacks or other threats to the ongoing viability of CDI or The Stronach Group could have a material adverse impact on the industry as a whole. The Stronach Group’s racetracks have a significant impact on the Thoroughbred industry. Gulfstream Park and Santa Anita conduct major race meets offering lucrative purses for winter racing. In addition, The Stronach Group’s second tier tracks offer significant opportunities in geographic areas not otherwise offering live racing. If any of the racetracks owned by CDI or the Stronach Group cease to operate, it could have an adverse impact on the overall health of the Thoroughbred industry.

Santa Anita Park conducts most Southern California racing in the fall, winter and spring months since Hollywood Park closed in 2009 to be sold and developed as commercial real estate. If Santa Anita Park were also to be sold for real estate development, the Los Angeles area would be without a major Thoroughbred racing and training facility. The end of live Thoroughbred racing in one of North America’s largest metropolitan areas would greatly reduce the sport’s ability to gain exposure in an important market and would also eliminate some of the highest purses in North America. Santa Anita has also experienced a spate of equine fatalities during the 2019 winter race meet. The potential fallout from this pattern of fatalities could provide the impetus for legislation banning or severely limiting horse racing in California. This would have a significant adverse impact on the Thoroughbred racing and breeding business in North America.

Supervision and Regulation

The supervision and regulation of horse racing and pari-mutuel wagering are principally governed by state law, which varies from state to state. A horse racing board or commission is the state governmental authority that oversees horse racing, pari-mutuel wagering, and related activities for the purpose of, among other things, ensuring the integrity of racing within the state. In general, state racing commissions have authority to supervise and regulate the following activities associated with horse racing:

● The conduct of all horse racing activities at licensed racetracks within the state, including scheduling meets, setting standards for tracks and grounds, and inspecting racing facilities;

● The conduct of pari-mutuel wagering and the amount of purses, stakes, or awards to be offered;

● Licensing requirements and procedures and for participation by owners, jockeys, trainers and others;

● Oversight of the health and sound racing condition of racehorses;

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● Restricting or prohibiting the use and administration of drugs or stimulants or other improper acts to horses before participating in a race;

● Maintaining and operating facilities for drug testing;

● Establishing safety standards for jockeys and racing equipment;

● Setting minimum fees for jockeys to be effective in the absence of a contract between an employing owner or trainer and a jockey;

● Requiring racetrack operators to file financial information and a list of their stockholders or other persons holding a beneficial interest in the organization; and

● Enforcing statutes and regulations governing horse racing, including adjudicatory power to conduct hearings, issue subpoenas and impose penalties for violations, such as suspension or revocation of licenses, fines and forfeiture of purses.

The National Racing Compact was created as an independent, interstate governmental entity, (the Association of Racing Commissioners International) composed of pari-mutuel racing regulators from participating states, to set standards for individual licenses, accept applications and fingerprints, analyze criminal history information and issue a national license. The national license is recognized by the 15 compact member states and nine other states that have elected to recognize the national license or the application for the license to a lesser degree.

The National Association of State Racing Commissioners was formed in 1947 to “encourage forceful and honest nationwide control of racing for the protection of the public.” Renamed the Association of Racing Commissioners International, Inc. (RCI) in 1988, the goals of the organization are to facilitate reciprocity in enforcing each other’s official rulings (penalties) and uniform rules and practices. From the beginning, the Association has functioned as a repository and redistribution center for all official rulings by stewards and racing commissioners.

Sales Practices

In three of the four states where a significant percentage of public auctions of Thoroughbreds are conducted, California, Florida and Kentucky, have enacted statutes governing the documentation of transactions involving horses. (The fourth, New York, has not followed suit.) In general, these statutes require that the purchase or sale of equine assets be accompanied by a written bill of sale signed by both the buyer and the seller or their authorized agent. For purchases and sales made through public auctions, the bill of sale requirement may be satisfied by the issuance of an auction receipt or acknowledgement of purchase generated by the auction house and signed by the buyer or the buyer’s authorized agent.

In response to allegations of unfair and deceptive trade practices, states have begun to enact legislation intended to foster greater transparency in transactions involving equine assets. Florida and Kentucky have enacted laws governing the conduct of agents acting on behalf of buyers and sellers of equine assets. For example, an agent is not permitted to represent both the buyer and seller in the same transaction, unless the agent first discloses the dual representation and obtains the written consent of both the buyer and seller. Similarly, an agent is not permitted to purchase on behalf of a buyer, or recommend that the buyer purchase, any equine asset in which the agent has a direct or indirect interest without the buyer’s prior knowledge and written consent. An agent is also not permitted to receive payments in excess of $500 in connection with the purchase or sale of an equine asset from anyone other than his or her principal, unless the agent and the person making the payment first discloses the payment in writing to both the purchaser and seller, and the agent’s principal consents in writing to the payment. In addition, an agent acting on behalf of a buyer or seller in a transaction involving an equine asset is required, upon the request of his or her principal, to provide the principal with all financial records relating to the transaction.

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These laws generally afford a person injured by a violation the right to recover from the violator the difference between the price paid for the equine assets and the actual value of the equine assets at the time of sale, the amount of any undisclosed or unapproved payments made by a third party, and legal fees and expenses.

FEES AND EXPENSES

Offering Expenses

Each series of the Company’s units will generally be responsible for certain fees, costs and expenses incurred in connection with the offering of the units associated with that series. Offering expenses consist of legal, accounting, escrow, underwriting, filing and compliance costs, as applicable, related to a specific offering (and excludes the ongoing costs of operating the series, classified as operating expenses). The Manager has agreed to limit the reimbursement of offering expenses by Series TF2019 and Series OL2018 to 10% of the offering proceeds.

Acquisition Expenses

Each series of the Company’s units will be responsible for any and all fees, costs and expenses incurred in connection with the evaluation, discovery, investigation, development and acquisition of the underlying asset related to such series incurred prior to the Closing. Acquisition expenses are expected to consist principally of the purchase price of the Series Asset, plus documentation costs, interest expense, the cost of pre-purchase medical examinations, bloodstock agent and sales fees and commissions, appraisal fees, research fees, transfer taxes, third party industry and due diligence experts, bank fees and interest (if the underlying asset was acquired using debt prior to completion of an offering), auction house fees, travel and lodging for inspection purposes and transportation costs to transfer the Thoroughbred from the seller’s possession.  Acquisition expenses do not include the Brokerage Fee described in the following section.

The Manager has elected to waive reimbursement of acquisition expenses in connection with the Series TF2019 and Series OL2018 Offerings.

Brokerage Fee

As compensation for serving as executing broker providing certain administrative services to the Company in connection with this Offering, North Capital will receive a Brokerage Fee equal to 1% of the amount raised through this Offering (which, to clarify, excludes any Units purchased by the Manager and its affiliates). Each series of the Company’s units will be responsible for paying its own Brokerage Fee to North Capital in connection with each offering and sale of units. The Brokerage Fee will be payable from the proceeds of each offering of units immediately upon closing. North Capital is also entitled to receive an accountable due diligence fee of $1,000 per series, beginning with the offering of a third series by the Company.

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Please see “Use of Proceeds – Series TF2019,” “Use of Proceeds – Series OL2018” and “Plan of Distribution and Subscription Procedure” for further details.

Sourcing Fee

The Manager will be paid a Sourcing Fee equal to 10% of the cost of acquiring the Thoroughbred Asset as compensation for identifying and exploring acquisition opportunities, conducting due diligence evaluations of potential Thoroughbred assets, negotiating and structuring the terms and conditions of acquisitions and other related functions. The amount of the Sourcing Fee will be determined by the Manager at the time of each offering of units.

The Sourcing Fee will be 10% of the purchase price of the Thoroughbred asset in respect of both the Series TF2019 Offering and the Series OL2018 Offering.  See also “Use of Proceeds – Series TF2019,” “Use of Proceeds – Series OL2018” and “Plan of Distribution and Subscription Procedure.”

Organizational Fee

The Manager will be paid an Organizational Fee equal to 3% of the proceeds received from each offering of units of the Company’s series to reimburse the Manager for legal, accounting and compliance expenses incurred to set up the legal and financial framework and compliance infrastructure for the marketing and sale of the Series TF2019 Units and all subsequent offerings. Organizational expenses incurred by the Manager totaled $152,500 as of August 31, 2019.

The Organizational Fee would be 3% of the offering proceeds raised in respect of both the Series TF2019 Offering and the Series OL2018 Offering.

Management Fee 

The Company, the Series and the Manager will enter into the Management Services Agreement, pursuant to which the Series will appoint the Manager to manage the Series’ Thoroughbred asset and the conduct of its racing and breeding activities. See “Description of the Business – Description of the Management Services Agreement.”  As consideration for providing management services, the Manager will be a Management Fee equal to:

● 10% of Free Cash Flow until Series members have received aggregate distributions per Unit equal to the purchase price they paid per Unit; and thereafter

● 20% of Free Cash Flow from racing activities; and

● 30% of Free Cash Flow from breeding activities and asset sales.

The Management Fee will only become payable if there are sufficient proceeds to distribute Free Cash Flow to the Unit Holders. The Manager will not be entitled to any other compensation and will be responsible for its owning operating and administrative expenses.

Advisory Board Compensation

Advisory Board members will not be entitled to compensation by the Company or any series for their services advising the Manager. Members of the Advisory Board may be reimbursed by a series for out-of-pocket expenses they incur for services provided to a series (such as, for example, travel related to the evaluation of a Thoroughbred asset).

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MANAGEMENT

Manager

The Manager of the Company is Commonwealth Markets Inc., a Delaware corporation formed in 2019. The Company operates under the direction of the Manager, which is responsible for conducting the operation of its business, directing its day-to-day affairs, and implementing our investment strategy. The Manager serves as the “Managing Member” of each series under the terms of the Operating Agreement and the Management Services Agreement of that series.

The Manager will make decisions with respect to all asset acquisitions and dispositions and determine how to manage the Thoroughbred Assets in order, in general terms, to generate revenue, maximize asset value, and evaluate potential sale opportunities, which may lead to the liquidation of a Series. The Manager will be responsible for the development, health and training of Series Thoroughbreds, including hiring trainers and veterinarians. The Manager and its officers and directors are not required to devote all their time to our business and are only required to devote such time to our affairs as their duties require.

The Company will follow guidelines adopted by the Manager and implement policies set forth in the Operating Agreement unless otherwise modified by the Manager. The Manager may establish further written policies and will monitor our administrative procedures, investment operations and performance to ensure that the policies are fulfilled. The Manager may change our objectives at any time without approval of our Unit Holders. The Manager itself has no track record and is relying on the experience of its individual officers, directors and advisors.

The Manager performs its duties and responsibilities as set forth in our Operating Agreement. The Manager maintains a contractual, as opposed to a fiduciary relationship, with us and our Unit Holders. Furthermore, we have agreed to limit the liability of the Manager and to indemnify the Manager against certain liabilities.

Responsibilities of the Manager

The responsibilities of the Manager include:

Thoroughbred Sourcing and Disposition Services:

● Define and oversee the overall strategy of Thoroughbred sourcing, training, racing, breeding and disposition;

● Manage the Company’s Thoroughbred sourcing activities including, creating the Thoroughbred acquisition policy, organizing and evaluating due diligence for specific acquisition opportunities, and structuring partnerships with breeders, trainers, brokers and dealers who may provide opportunities to source quality Thoroughbreds;

● Negotiate and structure the terms and conditions of acquisitions of Thoroughbred assets with sellers;

● Evaluate any potential Thoroughbred purchase offers from third parties, which may result in Thoroughbred sales or other liquidity transactions;

● Structure and negotiate the terms and conditions of transactions pursuant to which Thoroughbred assets may be sold;

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Services in Connection with an Offering:

● Create and manage all series of interest for offerings related to Thoroughbred assets on the Commonwealth Platform;

● Develop offering materials, including the determination of its specific terms and structure and description of the Thoroughbred assets;

● Create and submit all necessary regulatory filings including, but not limited to, SEC filings and financial audits and coordinate with the broker of record, lawyers, accountants and escrow agents as necessary in such processes;

● Prepare all marketing materials related to offerings and obtain approval for such materials from the broker of record;

● Together with the broker of record, coordinate the receipt, collection, processing and acceptance of subscription agreements and other administrative support functions;

● Create and implement various technology services, transactional services, and electronic communications related to any offerings;

● All other necessary offering related services;

Thoroughbred Operations:

● Oversee training, racing and breeding opportunities by any Thoroughbred assets;

● Engage service providers for training, racing and breeding activities of Thoroughbred assets;

● Allocate revenues and costs related to Thoroughbred racing and breeding activities to the appropriate series in accordance with our allocation policy;

● Approve potential joint ventures, limited partnerships and other such relationships with third parties related to Thoroughbred assets;

Unit Holder Relationship Services:

● Provide any appropriate updates related to Thoroughbred assets or offerings electronically or through the Commonwealth Platform;

● Manage communications with Unit Holders, including answering e-mails, preparing and sending written and electronic reports and other communications;

● Establish technology infrastructure to assist in providing Unit Holder support and services;

● Determine our distribution policy and determine amounts of and authorize Free Cash Flow distributions from time to time;

● Maintain Free Cash Flow funds in deposit accounts or investment accounts for the benefit of a Series;

Administrative Services:

● Manage and perform the various administrative functions necessary for our day-to-day operations;

● Provide financial and operational planning services and collection management functions including determination, administration and servicing of any expense reimbursement made to the Company or any series by the Manager to cover any operating expense shortfalls;

● Administer the potential issuance of additional Units to cover any potential operating expense shortfalls;

● Maintain accounting data and any other information concerning our activities as will be required to prepare and to file all periodic financial reports and required to be filed with the SEC and any other regulatory agency, including annual and semi-annual financial statements;

● Maintain all appropriate books and records for the Company and all the series of units;

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● Obtain and update market research and economic and statistical data in connection with the Thoroughbred assets and the general Thoroughbred market;

● Oversee tax and compliance services and risk management services and coordinate with appropriate third parties, including independent accountants and other consultants, on related tax matters;

● Supervise the performance of such ministerial and administrative functions as may be necessary in connection with our daily operations;

● Provide all necessary cash management services;

● Manage and coordinate with the transfer agent, if any, the process of making distributions and payments to Unit Holders or the transfer or re-sale of securities as may be permitted by law;

● Evaluate and obtain adequate insurance coverage for the Thoroughbred assets based upon risk management determinations;

● Provide timely updates related to the overall regulatory environment affecting the Company, as well as managing compliance with regulatory matters;

● Evaluate our corporate governance structure and appropriate policies and procedures related thereto; and

● Oversee all reporting, record keeping, internal controls and similar matters in a manner to allow us to comply with applicable law.

Executive Officers, Directors and Key Employees

The following individuals are the principal shareholders, directors, executive officers and significant employees of the Manager:

Name	Position	Age	Term of Office
Brian Doxtator	Chief Executive and Chief Financial Officer	37	Since June 2019
Chase Chamberlin	Chief Marketing Officer; Head of Equine Operations	29	Since June 2019

Brian Doxtator, age 37, has over 15 years’ experience at the intersection of strategy, operations, and management at companies focused on innovation and growth industries. His formative years were spent in the fields of mergers and acquisitions (“M&A”) and corporate strategy. First, Brian was as an analyst with Legg Mason’s technology M&A group, where he was responsible for structuring and modeling M&A transactions. While at Legg Mason, he was the sole analyst, and heavily involved in drafting SEC offerings memos, for two lead-managed IPOs. Later, as an associate in the M&A and strategy group for IAC/InterActiveCorp (NASDAQ: IAC), Brian worked with dozens of IAC business units to define long-term strategic objectives, and based on those objectives, Brian would identify opportunities to acquire, invest, and partner with other companies to further IAC’s long-term strategy. Once an opportunity was identified, Brian managed a cross-function team of corporate employees to structure and execute the transaction. During his time at IAC, Brian became an expert on digital business models while working with the company’s 80 owned and operated businesses including Ticketmaster, Match.com, LendingTree, HSN, College Humor and many others.

In 2011, Brian moved on to work in venture-backed startups. From March 2011 through March 2016, he served as Vice President, General Manager (the company’s first non-technical executive) of PlayHaven, a mobile marketing platform for mobile app developers. At PlayHaven, Brian and his staff were broadly responsible for all non-technical functions including revenue, account management, data analysis and optimization, legal, finance, marketing, and board management and fundraising. From 2011 to 2016, the PlayHaven platform was integrated into 80% of the top 1,000 mobile apps in the world and 500 million mobile phones around the world. PlayHaven clients included top app developers Supercell, Disney, EA, King, and several others. Brian was instrumental in growing revenue from $0 to $45 million per year and expanding the team from five to 150 employees with offices around the world. Additionally, Brian helped lead the company through multiple VC-backed fundraising rounds and navigate a merger with analytics platform Kontagent.

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From February 2017 through June 2018, Brian served as Chief Operating Officer of Model VR, a virtual-reality hardware and software developer for the entertainment and video game industries. Brian’s responsibilities as Model VR were go-to-market strategy and fundraising.

Since April 2014, Brian has also been serving as the co-founder and Chief Financial Officer of LOHO Bride LLC, a high-end bridal brand with retail stores in Los Angeles and San Francisco and online e-commerce operations.

Chase Chamberlain, age 29, has been involved in the equine industry for more than 20 years. A national champion equestrian in both the United States and Canada, Chase has a deep understanding of acquiring and selecting bloodstock, veterinary care, equine performance management, nutrition, training and breeding. Since June 2013, Chase has served as an independent equine consultant, in which capacity he has personally been involved in brokering more than $3 million in bloodstock with American and foreign buyers.

Since May 2016, Chase has been a Digital Marketing Strategist and Head of Growth for Epipheo Inc., one of the world’s largest digital video agencies. During his time at Epipheo, Chase has been the leading contributor to the organization’s growth, producing over $25 million in award winning digital brand strategies and content for companies such as Google, Proctor and Gamble, Walmart, Amazon, Red Bull, Fifth Third Bank, Travelers, Nickelodeon, Disney, Microsoft, GlaxoSmithKline and many more. In this role, Chase has been responsible for helping clients large and small clarify complex business problems, architecting digital strategies to solve those problems and aligning the right team of world class creative talent to bring those strategies to life.

From June 2013 through December 2014, Chase worked as the Assistant Director, Business Development and Marketing with Great Nursing Care, Inc. In this role, Chase managed the development of a department and initiative responsible for re-branding, repositioning and growing the 20-year-old home health care organization, which operates in one of the United States’ most competitive markets. During this time, he led the development of strategic relationships with healthcare providers, insurance networks and other local partners.

Advisory Board

Responsibilities of the Advisory Board

The Advisory Board’s role will be to support the Company and the Manager and be available to provide guidance to the Manager with respect to the following matters:

● The strategy and progress of the Company;

● Material conflicts of interest that arise, or are reasonably likely to arise between the Manager, the Company, a series or a Unit Holder;

● Material transactions between the Company or a series and the Manager or any of its affiliates, another series or a Unit Holder, other than for the purchase of Units;

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● The appropriate levels of annual insurance costs and other operating expenses specific to each Thoroughbred asset; and

● Selection of trainers, bloodstock agents, veterinarians and other service providers to be appointed by the Manager in respect of Thoroughbred assets.

The Members of the Advisory Board will not be managers or officers of the Company or any series and do not have fiduciary or other duties to the Unit Holders of any series.

Compensation of the Advisory Board

Advisory Board members be compensated by the Manager; they will not be entitled to compensation by the Company or any series for their services. Members of the Advisory Board may be reimbursed by a series for out-of-pocket expenses they incur for services provided to a series (such as, for example, travel related to the evaluation of a Thoroughbred asset).

Members of the Advisory Board

We plan to continue to build the Advisory Board over time and are in advanced discussions with professionals in the Thoroughbred industry. We have already established an informal network of expert advisors who can support the Company in acquisition of Thoroughbreds, valuations, negotiations, training and racing schedules, and breeding matters.

COMPENSATION

Compensation of Executive Officers

The Company currently has no employees, nor do we currently intend to hire any employees who will be compensated directly by the Company. Each of the executive officers of the Manager manage our day-to-day affairs, oversee the review, selection and recommendation of acquisition and disposition opportunities, and monitor the development, health and training performance of acquired Thoroughbreds, consistent with our business objectives. In the future, each of these individuals may receive compensation from Commonwealth Markets Inc. for his services, including services performed for us on behalf of the Manager, although they have not received any such compensation to date. Although we will indirectly bear some of the costs of the compensation paid to these individuals, through fees we pay to the Manager, we do not intend to pay any compensation directly to these individuals.

Compensation of Manager

The Manager may receive Sourcing Fees and reimbursement for costs incurred relating to this and other offerings (such as Offering Expenses and Acquisition Expenses) and a Management Fee. Neither the Manager nor its affiliates will receive any selling commissions or dealer manager fees in connection with the offer and sale of the Units.

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The compensation of the Manager for from the date of the Company’s inception on June 12, 2019 through November 30, 2019 was as follows:

Name	Capacities in which compensation was received (e.g., Chief Executive Officer, director, etc.)	Cash compensation ($)	Other compensation ($)	Total compensation ($)
Commonwealth Markets Inc.	Manager	$0	$0	$0

To date, no Management Fees have been paid by any series and we do not expect to pay any Management Fees in Fiscal Year 2019.

A more complete description of the management of the Company is included in “Description of the Business” and “Management.”

PRINCIPAL INTEREST HOLDERS

As of November 30, 2019, the securities of the Company were beneficially owned as follows:

Unit Series	Name and Address of beneficial owner	Units Beneficially Owned	Percent of class
Series A1	Commonwealth Markets Inc. 1450 North Broadway Lexington, Kentucky 40505	50	100%
Series TF2019	Brian Doxtator (1) c/o Commonwealth Markets Inc. 1450 North Broadway Lexington, Kentucky 40505	150	100%
Series OL2018	Commonwealth Markets Inc. (2) 1450 North Broadway Lexington, Kentucky 40505	200	100%

(1) The Company purchased the Timido Filly from Mr. Doxtator, the Manager’s Chief Executive Officer, in exchange for a convertible promissory note in the principal amount of $7,500. The note bears interest at 1.91% per annum. The principal and interest payable on the note will convert automatically into Series TF2019 Units at the $50.00 offering price per Unit at the Series TF2019 Closing.

(2) $10,000 of the principal payable on the $20,000 convertible promissory note issued by the Company to the Manager to acquire the Orb Colt will convert into additional Series OL2018 Units at the $50 purchase price per Unit when the Series OL2018 Closing occurs.

Commonwealth Markets acquired 50 of the Company’s Series A1 Units in exchange for a capital contribution of $5,000. The Series A1 Units represent the Manager’s capital account in the Company, which is treated as a partnership or disregarded entity for all federal and state tax purposes, although each of the Company’s series offered to investors will elect to be taxed as a “C” corporation. See “Material United States Tax Considerations.”

Holders of Series A1 Units are not entitled to vote on matters submitted for the consent or approval of all of the Company’s member generally. No separate vote or consent of the holders of Series A1 Units is required to approve any matter, except as required by the Delaware Act or the Operating Agreement. The affirmative vote of the holders of a majority of the Series A1 Units then outstanding is required for:

• any amendment to the Operating Agreement that would adversely change the rights of the Series A1 Units;

• mergers, consolidations or conversions of Series A1 or the Company; and

• all such other matters that the Managing Member, in its sole discretion, determines require the approval of the holders of the outstanding Series A1 Units voting as a separate class.

Upon any liquidation of the Company, subject to the preferential rights, if any, of holders of any other class or series of units, all property held solely by the Company and not by a specific Series, and all amounts in excess of the amount required to discharge liabilities of the Company only (and not of a specific Series) will be distributed to the holders of the Series A1 Units on an equal per unit basis as provided in the Operating Agreement.

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Holders of Series A1 Units have no conversion, exchange, sinking fund, redemption or appraisal rights, no preemptive rights to subscribe for any securities of the Company and no preferential rights to distributions.

DESCRIPTION OF THE UNITS OFFERED

The following is a summary of the principal terms of, and is qualified by reference to the Operating Agreement, attached hereto as Exhibit 2.2, and the Subscription Agreement, attached hereto as Exhibit 4.1, relating to the purchase of the applicable Series of Units. This summary is qualified in its entirety by reference to the detailed provisions of those agreements, which should be reviewed in their entirety by each prospective Investor. If the provisions of this summary differ from the provisions of the Operating Agreement or the Subscription Agreement (as applicable), the provisions of the Operating Agreement or the Subscription Agreement (as applicable) shall apply. Capitalized terms used in this summary that are not defined herein shall have the meanings ascribed thereto in the Operating Agreement.

Description of the Units

The Company is a series limited liability company formed pursuant to Section 18-215 of the Delaware Limited Liability Company Act (the “LLC Act”). The purchase of membership units in any Series of the Company is an investment only in that Series and not an investment in the Company as a whole. In accordance with the LLC Act, the Series TF2019 and Series OL2018 Units are, and any other series of units if issued in the future will be, a separate series of units of limited liability company interest of the Company and not in a separate legal entity. The Company has not issued, and has no current intention to issue, any class or series of Units entitled to any preemptive, preferential or other rights that are not otherwise available to Investors purchasing Units in connection with the Series TF2019 and Series OL2018 Offerings.

Title to the Thoroughbred Assets will be held by, or for the benefit of, the applicable Series of Units. We intend that each Series will own its own Thoroughbred Asset(s). We do not anticipate that Series TF2019 will acquire any Thoroughbred other than the Timido Filly, or that Series TF2019 will acquire any Thoroughbred other than the Orb Colt. A new series will be issued for future Thoroughbred Assets. An Investor who invests in this Offering will not have any indirect interest in any other Thoroughbred Assets unless the Investor also participates in a separate offering associated with those other Thoroughbred Assets.

Section 18-215(b) of the LLC Act provides that, if certain conditions are met, (including that certain provisions are in the formation and governing documents of the series limited liability company, and if the records maintained for any such series account for the assets associated with such series separately from the assets of the limited liability company, or any other series), then the debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to a particular series shall be enforceable only against the assets of such series and not against the assets of the limited liability company generally or any other series. Accordingly, the Company expects the Manager to maintain separate, distinct records for each series and its associated assets and liabilities. As such, the assets of a series include only the horse associated with that series and other related assets (e.g., cash reserves). As noted in the “Risk Factors” section, the limitations on inter-series liability provided by Section 18-215(b) have never been tested in federal bankruptcy courts and it is possible that a bankruptcy court could determine that the assets of one series should be applied to meet the liabilities of the other series or the liabilities of the Company generally where the assets of such other series or of the Company generally are insufficient to meet the Company’s liabilities.

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Section 18-215(c) of the LLC Act provides that a series established in accordance with Section 18-215(b) may carry on any lawful business, purpose or activity, other than the business of banking, and has the power and capacity to, in its own name, contract, hold title to assets (including real, personal and intangible property), grant liens and security interests, and sue and be sued. The Company intends for each series to conduct its business and enter into contracts in its own name to the extent such activities are undertaken with respect to a particular series and title to the relevant Thoroughbred asset will be held by, or for the benefit of, the relevant series.

All Units offered by this Offering Circular will be duly authorized and validly issued. Upon payment in full of the consideration payable with respect to the Units of a Series, as determined by the Manager, the Unit Holders of that Series will not be liable to the Company to make any additional capital contributions with respect to the purchased Units (except for the return of distributions under certain circumstances as required by Sections 18-215, 18-607 and 18-804 of the LLC Act). Holders of the Units offered by this Offering Circular have no conversion, exchange, sinking fund, redemption or appraisal rights, no pre-emptive rights to subscribe for any Units and no preferential rights to distributions.

In general, Unit Holders (which may include the Manager or its affiliates) will participate in the available Free Cash Flow derived from racing, breeding and sales activities related to the Series Asset less expenses (as described in “Distribution Rights” below) as follows:

● 90% of Free Cash Flow until Series members have received aggregate distributions per Unit equal to the purchase price they paid per Unit; and thereafter

● 80% of Free Cash Flow from racing activities; and

● 70% of Free Cash Flow from breeding activities and asset sales.

The Manager, together with its affiliates of the Company, must own a minimum of 2% and a maximum of 10% of the units of each of the Company’s series acquired for the same price as all other Investors. The Manager may sell any of its Units from time to time after the Closing of an Offering.

The Manager has the authority under the Operating Agreement to cause the Company to issue Units to investors as well as to other persons or entities for such cost (or no cost) and on such terms as the Manager may determine, subject to the terms set forth in the applicable Series Designation.  The Series Designations are attached as Exhibits to the Offering Statement.

An Investor in this Offering will acquire an ownership interest in the Series in which the Investor purchased Units and not, for the avoidance of doubt, in (i) the Company, (ii) any other series if the Company’s Units, (iii) the Manager, (iv) the Commonwealth Platform or (v) the Series Asset or any underlying asset owned by any other series of interest. Our Units will not immediately be listed on a securities exchange and a liquid market in the Unit cannot be guaranteed. We currently have no plans to create our own trading market or partner with an existing platform to allow for trading of the Units. We encourage you to review the additional risks related to liquidity in the “Risk Factors” section.

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Further Issuance of Units

Only Series TF2019 Units and Series LO 2018 Units are being offered and sold pursuant to this Offering Circular. The Operating Agreement provides that the Manager may limit the number of beneficial owners of Units of each Series to no more than 2,000 qualified purchasers (no more than 500 of whom cannot be accredited investors). The Manager has the option to issue additional Units of a Series (in addition to those issued in connection with this Offering) on the same terms as the Units offered hereunder as is required from time to time in order to pay any Operating Expenses which exceed revenue generated from the Series Asset.

Distribution rights

The Manager has sole discretion in determining what distributions of Free Cash Flow, if any, are made to Unit Holders except as otherwise limited by law or the Operating Agreement. The Company expects the Manager to distribute any Free Cash Flow on a semi-annual basis as set forth below. However, the Manager may change the timing of distributions or determine that no distributions shall be made in its sole discretion.

Any Free Cash Flow generated by a Series from the utilization of the Series Asset will be applied, with respect to the Series, in the following order of priority:

(1) to repay any amounts outstanding under any Operating Expenses Reimbursement Obligation plus accrued interest;

(2) thereafter, to create such reserves as the Manager deems necessary, in its sole discretion, to meet future Operating Expenses;

(3) 90% of Free Cash Flow to Unit Holders and 10% of Free Cash Flow to the Manager in payment of the Management Fee until Unit Holders have received aggregate distributions per Unit equal to the purchase price they paid per Unit;

(4) Thereafter:

(a) 80% of Free Cash Flow from racing activities to Unit Holders and 20% of Free Cash Flow from racing activities to the Manager in payment of the Management Fee; and

(b) 70% of Free Cash Flow from breeding activities and sale of Series Assets to Unit Holders and 30% of such Free Cash Flow to the Manager in payment of the Management Fee

(each of (a) and (b) above, net of corporate income taxes applicable to the Series).

No Series will distribute a Series Asset in kind to its Unit Holders.

The LLC Act (Section 18-607) provides that a member who receives a distribution with respect to a series and knew at the time of the distribution that the distribution was in violation of the LLC Act will be liable to the series for the amount of the distribution for three years. Under the LLC Act, a series limited liability company may not make a distribution with respect to a series to a member if, after the distribution, all liabilities of such series, other than liabilities to members on account of their limited liability company interests with respect to such series and liabilities for which the recourse of creditors is limited to specific property of such series, would exceed the fair value of the assets of such series. For the purpose of determining the fair value of the assets of the series, the LLC Act provides that the fair value of property of the series subject to liability for which recourse of creditors is limited shall be included in the assets of such series only to the extent that the fair value of that property exceeds the nonrecourse liability. Under the LLC Act, an assignee who becomes a substituted member of a company is liable for the obligations of his assignor to make contributions to the company, except the assignee is not obligated for liabilities unknown to it at the time the assignee became a member and that could not be ascertained from the operating agreement.

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Redemption provisions

The Units are not redeemable.

Registration rights

There are no registration rights in respect of the Units.

Voting rights

The Manager is not required to hold an annual meeting of Unit Holders. The Operating Agreement provides that meetings of interest holders may be called by the Manager and a designee of the Manager shall act as chairman at such meetings. The Investor does not have any voting rights as an interest holder in the Company or a series except with respect to:

● the for-cause removal of the Manager;

● the dissolution of the Company upon the for-cause removal of the Manager, and

● an amendment to the Operating Agreement that would:

o enlarge the obligations of, or adversely affect, an interest holder in any material respect;

o reduce the voting percentage required for any action to be taken by the holders of units in the Company under the Operating Agreement;

o change the situations in which the Company and any series can be dissolved or terminated;

o change the term of the Company (other than the circumstances provided in the Operating Agreement); or

o give any person the right to dissolve the Company.

Each unit holder will be entitled to one vote per unit owned on all matters submitted to a vote of the unit holders of an applicable series or of the unit holders of all series of the Company, as applicable. The removal of the Manager as manager of the Company and all series of units must be approved by two-thirds of the votes that may be cast by all unit holders in any series of the Company. All other matters to be voted on by the unit holders must be approved by a majority of the votes cast by all unit holders in any series of the Company present in person or represented by proxy.

The consent of the holders of a majority of the units of a series is required to amend the Operating Agreement in a manner that would adversely change the rights of the units of the series, result in mergers, consolidations or conversions of the units of the series and for any other matter as the Manager, in its sole discretion, determines will require the approval of the holders of the units of the series voting as a separate class.

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The Manager and its affiliates (if they hold units of a series) may not vote as unit holders in respect of any matter put to the unit holders. However, the submission of any action of the Company or a series for a vote of the unit holders must first be approved by the Manager, and no amendment to the Operating Agreement may be made without the prior approval of the Manager if the amendment would decrease the rights of the Manager or increase the obligations of the Manager.

The Manager has broad authority to take action with respect to the Company and any series. See “Management” for more information. Except as set forth above, the Manager, in its sole discretion, may amend the Operating Agreement without the approval of the unit holders to, among other things, reflect the following:

● the merger of the Company with, or the conveyance of all its assets to, a newly formed entity if the sole purpose of that merger or conveyance is merely to change the legal form into another limited liability entity; 

● a change that the Manager determines to be necessary or appropriate to implement any state or federal statute, rule, guidance or opinion;

● a change that the Manager determines to be necessary, desirable or appropriate to facilitate the trading of units;

● a change that the Manager determines to be necessary or appropriate for the Company to qualify as a limited liability company under the laws of any state or to ensure that each series will continue to qualify as a corporation for U.S. federal income tax purposes;

● an amendment that the Manager determines, based upon the advice of counsel, to be necessary or appropriate to prevent the Company, the Manager, or the officers, agents or trustees from in any manner being subjected to the provisions of the Investment Company Act of 1940, the Investment Advisers Act of 1940 or “plan asset” regulations adopted under ERISA, whether or not substantially similar to plan asset regulations currently applied or proposed;

● any amendment that the Manager determines to be necessary or appropriate for the authorization, establishment, creation or issuance of any additional series;

● any amendment that the Manager determines to be necessary or appropriate for the formation by the Company of, or its investment in, any corporation, partnership or other entity, as otherwise permitted by the Operating Agreement;

● a change in the fiscal year or taxable year and related changes;

● a change in the name of the Company, the location of the Company’s principal place of business or the Company’s registered agent; and

● any other amendments which the Manager deems necessary or appropriate to enable the Manager to exercise its authority under the Operating Agreement.

In each case, the Manager may make such amendments to the Operating Agreement provided the Manager determines that those amendments do not adversely affect the unit holders (including any particular series of units as compared to other series) in any material respect.

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Furthermore, the Manager retains sole discretion to create and set the terms of any new series and will have the sole power to acquire, manage and dispose of underlying asset of each series.

Liquidation rights

The Operating Agreement provides that the Company will remain in existence until the earlier of the following: (i) the election of the Manager to dissolve it; (ii) the sale, exchange or other disposition of substantially all of the assets of the Company; (iii) the entry of a decree of judicial dissolution of the Company; (iv) at any time that the Company no longer has any members, unless the business is continued in accordance with the LLC Act; and (v) a vote by two-thirds of all unit holders of the Company following the for-cause removal of the Manager. In no circumstances may the Company be wound up pursuant to Section 18-801(a)(3) of the LLC Act upon the vote of members who hold more than two-thirds of the interests in the profits of the Company.

A series will remain in existence until the earlier of the following: (i) the dissolution of the Company, (ii) the election of the Manager to dissolve such series; (iii) the sale, exchange or other disposition of substantially all of the assets of the series; or (iv) at any time that the series no longer has any members, unless the business is continued in accordance with the LLC Act. In no circumstances may a series be wound up pursuant to Section 18-801(a)(3) of the LLC Act upon the vote of members who hold more than two-thirds of the interests in the profits of the series.

Upon the occurrence of one of the foregoing events, the Manager (or a liquidator selected by the Manager) is charged with winding up the affairs of the series or the Company as a whole, as applicable, and liquidating its assets. Upon the liquidation of a series or the Company as a whole, as applicable, the underlying assets will be liquidated and any after-tax proceeds distributed: (i) first, to any third party creditors, (ii) second, to any creditors that are the Manager or its affiliates (e.g., payment of any outstanding Operating Expenses Reimbursement Obligation), and thereafter, (iii) to the unit holders of the relevant series, allocated pro rata based on the number of units held by each unit holder (which may include the Manager and any of its affiliates and which distribution within a series will be made consistent with any preferences that may exist within such series).

Transfer restrictions

The Units are subject to restrictions on transferability. A Unit Holder may not transfer, assign or pledge its Units without the consent of the Manager. The Manager may withhold consent in its sole discretion, including when the Manager determines that such transfer, assignment or pledge would result in (a) there being more than 2,000 beneficial owners of the Series or more than 500 beneficial owners of the Series that are not “accredited investors”, (b) the assets of the Series being deemed “plan assets” for purposes of ERISA, (c) the transferee Unit Holder holding in excess of 19.9% of the Series, (d) a change of U.S. federal income tax treatment of the Company and the Series, or (e) the Company, the Series or the Manager being subject to additional regulatory requirements. The transferring Unit Holder is responsible for all costs and expenses arising in connection with any proposed transfer (regardless of whether such sale is completed) including any legal fees incurred by the Company or any broker or dealer, any costs or expenses in connection with any opinion of counsel and any transfer taxes and filing fees. The Manager may transfer all or any portion of the Units held by the Manager at any time and from time to time.

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Additionally, unless and until the Units of the Company are listed or quoted for trading, there are restrictions on the holder’s ability to the pledge or transfer the Units. We cannot assure you that we will, or will be able to, register the Units for resale. Therefore, Investors may be required to hold their Units indefinitely. Please refer to Exhibit 4.1 – Form of Subscription Agreement for additional information regarding these restrictions. To the extent certificated, the Units issued in this Offering will bear a legend setting forth these restrictions on transfer and any legends required by state securities laws.

Agreement to be Bound by the Operating Agreement; Power of Attorney

By purchasing Units, the Investor will be admitted as a member of the Company and will be bound by the provisions of, and deemed to be a party to, the Operating Agreement. Pursuant to the Operating Agreement, each Investor grants to the Manager a power of attorney to, among other things, execute and file documents required for the Company’s qualification, continuance or dissolution. The power of attorney also grants the Manager the authority to make certain amendments to, and to execute and deliver such other documents as may be necessary or appropriate to carry out the provisions or purposes of, the Operating Agreement.

Duties of officers

The Operating Agreement provides that, except as may otherwise be provided by the Operating Agreement, the property, affairs and business of each series of units will be managed under the direction of the Manager. The Manager has the power to appoint the officers and such officers have the authority and exercise the powers and perform the duties specified in the Operating Agreement or as may be specified by the Manager. Commonwealth Markets Inc. is the Manager of each series and manages the underlying assets.

The Company may decide to enter into separate indemnification agreements with the directors and officers of the Company, the Manager (including if the Manager appointed is not Commonwealth Markets Inc.). If entered into, each indemnification agreement is likely to provide, among other things, for indemnification to the fullest extent permitted by law and the Operating Agreement against any and all expenses, judgments, fines, penalties and amounts paid in settlement of any claim. The indemnification agreements may also provide for the advancement or payment of all expenses to the indemnitee and for reimbursement to the Company if it is found that such indemnitee is not entitled to such indemnification under applicable law and the Operating Agreement.

Books and reports

The Company is required to keep appropriate books of the business at its principal offices. The books will be maintained for both tax and financial reporting purposes on a basis that permits the preparation of financial statements in accordance with GAAP. For financial reporting purposes and tax purposes, the fiscal year and the tax year are the calendar year, unless otherwise determined by the Manager in accordance with the Internal Revenue Code. The Manager will file periodic reports of the Company with the SEC as required by 17 CFR §230.257.

Under the Securities Act, we must update this Offering Circular upon the occurrence of certain events, such as asset acquisitions. We will file updated offering circulars and offering circular supplements with SEC. We are also subject to the informational reporting requirements of the Exchange Act that are applicable to Tier 2 companies whose securities are registered pursuant to Regulation A, and accordingly, we will file annual reports, semiannual reports and other information with SEC. In addition, we plan to provide Unit Holders with periodic updates, including offering circulars, offering circular supplements, pricing supplements, information statements and other information.

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We will provide such documents and periodic updates electronically through the Commonwealth Platform. As documents and periodic updates become available, we will notify Unit Holders of this by sending the Unit Holders an email message or a message through the Commonwealth Platform that will include instructions on how to retrieve the periodic updates and documents. If our email notification is returned to us as “undeliverable,” we will contact the Unit Holder to obtain an updated email address. We will provide Unit Holders with copies via email or paper copies at any time upon request. The contents of the Commonwealth Platform are not incorporated by reference in or otherwise a part of this Offering Circular.

Exclusive jurisdiction; waiver of jury trial

To the fullest extent permitted by applicable law, any dispute in relation to the Operating Agreement is subject to the exclusive jurisdiction of the Court of Chancery of the State of Delaware, and each Investor will covenant and agree not to bring any such claim in any other venue. If a Unit Holder were to bring a claim against the Company or the Manager pursuant to the Operating Agreement, it would have to do so in the Delaware Court of Chancery. This exclusive forum provision will not apply to claims which are vested in the exclusive jurisdiction of a court or forum other than the Delaware Court of Chancery, or for which the Delaware Court of Chancery does not have subject matter jurisdiction. The Operating Agreement also contains a waiver of trial by jury, to the fullest extent permitted by applicable law, although that waiver is not intended to apply to claims or suits under federal securities laws.

Listing

None of the Units of any Series of the Company are currently listed or quoted for trading on any national securities exchange or national quotation system.

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MATERIAL UNITED STATES TAX CONSIDERATIONS

The following is a summary of the material United States federal income tax consequences of the ownership and disposition of the Units to United States holders but does not purport to be a complete analysis of all the potential tax considerations relating thereto. This summary is based upon the provisions of the Internal Revenue Code of 1986, as amended (the “Code”), Treasury regulations promulgated thereunder, administrative rulings and judicial decisions, all as of the date hereof. These authorities may be changed, possibly retroactively, so as to result in United States federal income tax consequences different from those set forth below. We have not sought any ruling from the Internal Revenue Service (the “IRS”), with respect to the statements made and the conclusions reached in the following summary, and we cannot assure you that the IRS will agree with such statements and conclusions.

This summary also does not address the tax considerations arising under the laws of any United States state or local or any non-United States jurisdiction or under United States federal gift and estate tax laws. In addition, this discussion does not address tax considerations applicable to an Investor’s particular circumstances or to Investors that may be subject to special tax rules, including, without limitation:

● banks, insurance companies or other financial institutions;

● persons subject to the alternative minimum tax;

● tax-exempt organizations;

● dealers in securities or currencies;

● traders in securities that elect to use a mark-to-market method of accounting for their securities holdings;

● persons that own, or are deemed to own, more than five percent of our Units (except to the extent specifically set forth below);

● certain former citizens or long-term residents of the United States;

● persons who hold our Units as a position in a hedging transaction, “straddle,” “conversion transaction” or other risk reduction transaction;

● persons who do not hold our Units as a capital asset within the meaning of Section 1221 of the Code (generally, for investment purposes); or

● persons deemed to sell our Units under the constructive sale provisions of the Code.

In addition, if a partnership, including any entity or arrangement, domestic or foreign, classified as a partnership for United States federal income tax purposes, holds Units, the tax treatment of a partner generally will depend on the status of the partner and upon the activities of the partnership. Accordingly, partnerships that hold Units, and partners in such partnerships, should consult their tax advisors.

You are urged to consult your tax advisor with respect to the application of the United States federal income tax laws to your particular situation, as well as any tax consequences of the purchase, ownership and disposition of our Units arising under the United States federal estate or gift tax rules or under the laws of any United States state or local or any foreign taxing jurisdiction or under any applicable tax treaty.

Definitions

U.S. Holder. A “U.S. Holder” includes a beneficial owner of the Units that is, for U.S. federal income tax purposes, an individual citizen or resident of the United States.

91

Taxation of each Series of Units as a “C” Corporation

The Company, although formed as a Delaware series limited liability company eligible for tax treatment as a “partnership,” has affirmatively elected for each series of its units, including the Series TF2019 and Series OL2018 Units, to be taxed as a “C” corporation under Subchapter C of the Code for all federal and state tax purposes. Thus, each series of units (other than the Series A1 Units held exclusively by the Manager) will be taxed at regular corporate rates on its income before making any distributions to Unit Holders as described below.

Taxation of Distributions to Investors

Distributions to U.S. Holders out of the Company’s current or accumulated earnings and profits will be taxable as dividends. A U.S. Holder who receives a distribution constituting “qualified dividend income” may be eligible for reduced federal income tax rates. U.S. Holders are urged to consult their tax advisors regarding the characterization of corporate distributions as “qualified dividend income”. Distributions in excess of the Company’s current and accumulated earnings and profits will not be taxable to a U.S. Holder to the extent that the distributions do not exceed the adjusted tax basis of the U.S. Holder’s units. Rather, such distributions will reduce the adjusted basis of such U.S. Holder’s units. Distributions in excess of current and accumulated earnings and profits that exceed the U.S. Holder’s adjusted basis in its Units will be taxable as capital gain in the amount of such excess if the Units are held as a capital asset.

Investors should note that Section 1411 of the Code imposes a 3.8% tax on certain investment income (the “3.8% NIIT”). In general, in the case of an individual, this tax is equal to 3.8% of the lesser of (i) the taxpayer’s “net investment income” or (ii) the excess of the taxpayer’s adjusted gross income over the applicable threshold amount ($250,000 for taxpayers filing a joint return, $125,000 for married individuals filing separate returns, $250,000 for qualifying widow(er)s with a dependent child and $200,000 for other taxpayers). In the case of an estate or trust, the 3.8% tax will be imposed on the lesser of (x) the undistributed net investment income of the estate or trust for the taxable year, or (y) the excess of the adjusted gross income of the estate or trust for such taxable year over a beginning dollar amount of the highest tax bracket for such year (for 2019, that amount is $12,750). U.S. Holders should note that dividends will be included as investment income in the determination of “net investment income” under Section 1411(c) of the Code.

Taxation of Dispositions of Units

Upon any taxable sale or other disposition of our Units, a U.S. Holder will recognize gain or loss for federal income tax purposes on the disposition in an amount equal to the difference between the amount of cash and the fair market value of any property received on such disposition; and the U.S. Holder’s adjusted tax basis in the Units. A U.S. Holder’s adjusted tax basis in the Units generally equals his or her initial amount paid for the Units and decreased by the amount of any distributions to the Investor in excess of the Company’s current or accumulated earnings and profits. In computing gain or loss, the proceeds that U.S. Holders receive will include the amount of any cash and the fair market value of any other property received for their Units, and the amount of any actual or deemed relief from indebtedness encumbering their Units. The gain or loss will be long-term capital gain or loss if the Units are held for more than one year before disposition. Long-term capital gains of individuals, estates and trusts currently are taxed at a maximum rate of 20% (plus any applicable state income taxes) plus the 3.8% NIIT. The deductibility of capital losses may be subject to limitation and depends on the circumstances of a particular U.S. Holder; the effect of such limitation may be to defer or to eliminate any tax benefit that might otherwise be available from a loss on a disposition of the Units. Capital losses are first deducted against capital gains, and, in the case of non-corporate taxpayers, any remaining such losses are deductible against salaries or other income from services or income from portfolio investments only to the extent of $3,000 per year.

92

Backup Withholding and Information Reporting

Generally, the Company must report annually to the IRS the amount of dividends paid to you, your name and address, and the amount of tax withheld, if any. A similar report will be sent to you.

Payments of dividends or of proceeds on the disposition of the Units made to you may be subject to additional information reporting and backup withholding at a current rate of 24% unless you establish an exemption. Notwithstanding the foregoing, backup withholding and information reporting may apply if either we or our paying agent has actual knowledge, or reason to know, that you are a United States person.

Backup withholding is not an additional tax; rather, the United States income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund or credit may generally be obtained from the IRS, provided that the required information is furnished to the IRS in a timely manner.

The preceding discussion of United States federal tax considerations is for general information only. It is not tax advice. Each prospective investor should consult its own tax advisor regarding the particular United States federal, state and local and foreign tax consequences, if applicable, of purchasing, holding and disposing of our Units, including the consequences of any proposed change in applicable laws.

93

WHERE TO FIND ADDITIONAL INFORMATION

The Manager will answer inquiries from potential Investors concerning the Series TF2019 and Series OL2018 Units, the Company, the Manager and other matters relating to the offer and sale of Units under this Offering Circular. The Company will afford the potential Investors in the Units the opportunity to obtain any additional information to the extent the Company possesses such information or can acquire such information without unreasonable effort or expense that is necessary to verify the information in this Offering Circular.

All potential Investors in the Units are entitled to review copies of any other agreements relating to the Units we are offering described in this Offering Circular, if any. In the Subscription Agreement, you will represent that you are completely satisfied with the results of your pre-investment due diligence activities.

Any statement contained in this Offering Circular or in any document incorporated into it by reference shall be deemed to be modified or superseded for purposes of this Offering Circular to the extent that a statement contained in this Offering Circular or in any other subsequently filed document that also is or is deemed to be incorporated by reference into this Offering Circular modifies or replaces such a prior statement. Any such statement so modified or superseded shall not be deemed to constitute a part of this Offering Circular, except as so modified or superseded.

Commonwealth Thoroughbreds LLC

1450 North Broadway

Lexington, Kentucky 40505

E-Mail: brian@joincommonwealth.com

Telephone: (859) 977-0124

Attention: Brian Doxtator

We will provide requested information to the extent that we possess such information or can acquire it without unreasonable effort or expense.

94

INDEX TO FINANCIAL STATEMENTS

Commonwealth Thoroughbreds LLC

	Page
Report of Independent Auditors	F-2
Balance Sheet as of August 31, 2019	F-4
Statement of Operations for the period from June 12, 2019 (Inception) through August 31, 2019	F-5
Statement of Changes in Member’s Equity for the period from June 12, 2019 (Inception) through August 31, 2019	F-6
Statement of Cash Flows for the period from June 12, 2019 (Inception) through August 31, 2019	F-7
Notes to Financial Statements	F-8

F-1

Report of Independent Auditors

Commonwealth Markets Inc. as Manager of Commonwealth Thoroughbreds LLC

Lexington, Kentucky

Report on the Financial Statements

We have audited the accompanying financial statements of Commonwealth Thoroughbreds LLC, which comprise the balance sheet as of August 31, 2019, the related statements of operations, changes in member’s equity and cash flows for the period from June 12, 2019 (inception) through August 31, 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 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-2

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Commonwealth Thoroughbreds LLC as of August 31, 2019, and the results of its operations and its cash flows for the period from June 12, 2019 (inception) through August 31, 2019 in accordance with accounting principles generally accepted in the United States of America.

Emphasis of Matter Regarding Going Concern

The accompanying financial statements have been prepared assuming that Commonwealth Thoroughbreds LLC will continue as a going concern. As discussed in Note 1 to the financial statements, Commonwealth Thoroughbreds LLC has not generated any profits, lacks liquidity to satisfy obligations as they come due, and expects to continue to incur losses which raises substantial doubt about its ability to continue as a going concern. Management's evaluation of the events and conditions and management’s plans regarding these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to this matter.

/s/ Dean Dorton Allen Ford, PLLC

Lexington, Kentucky

October 16, 2019, except for Notes 6 and 7, as to which the date is December 13, 2019.

F-3

Commonwealth Thoroughbreds LLC

Balance Sheet

As of August 31, 2019

ASSETS
Current assets
Cash	$	5,000
Total current assets		5,000
Long-term assets
Thoroughbred assets, net of accumulated depreciation		10,088
TOTAL ASSETS	$	15,088
LIABILITIES AND MEMBER'S EQUITY
Liabilities
Current liabilities
Accrued interest	$	5
Note payable Series TF2019		7,500
Total liabilities		7,505
Member's Equity
Membership interest		160,743
Retained deficit		(153,160	)
Total Member's Equity		7,583
TOTAL LIABILITIES AND MEMBER'S EQUITY	$	15,088

See Notes to Financial Statements

F-4

Commonwealth Thoroughbreds LLC

Statement of Operations

June 12, 2019 (Inception) through August 31, 2019

Revenues	$	0
Operating expenses
Stabling fees		116
Legal and professional services		152,500
General and administrative		427
Depreciation		112
Total operating expenses		153,155
Operating loss		(153,155	)
Other expenses
Interest expense		5
Net loss	$	(153,160	)
Net loss per unit:
Basic	$	(153,160	)
Weighted average number of units outstanding:
Basic		1

See Notes to Financial Statements

F-5

Commonwealth Thoroughbreds LLC

Statement of Changes in Member's Equity

June 12, 2019 (Inception) through August 31, 2019

Balance, June 12, 2019	$	0
Series A1 units issued		5,000
Member contribution		155,743
Net loss		(153,160	)
Balance, August 31, 2019	$	7,583

See Notes to Financial Statements

F-6

Commonwealth Thoroughbreds LLC

Statement of Cash Flows

June 12, 2019 (Inception) through August 31, 2019

OPERATING ACTIVITIES
Net loss	$	(153,160	)
Adjustments to reconcile net loss to net cash used in operations:
Membership contributions (Note 6)		150,500
Depreciation		112
Increase (decrease) in cash due to changes in:
Accrued Interest		5
Net cash used in operating activities		(2,543	)
INVESTING ACTIVITIES
Capital expenditures		(200	)
Net cash used in investing activites		(200	)
FINANCING ACTIVITIES
Units issued		5,000
Constructive member contributions (Note 6)		2,743
Net cash provided by financing activities		7,743
Net cash increase for period		5,000
Cash at beginning of period		0
Cash at end of period	$	5,000
Non cash investing and financing transactions:
Thoroughbred asset obtained through note payable	$	7,500
Legal services through member contributions for Thoroughbred asset acquisition		2,500

See Notes to Financial Statements

F-7

Commonwealth Thoroughbreds LLC

Notes to Financial Statements

June 12, 2019 (Inception) through August 31, 2019, continued

NOTE 1 - NATURE OF OPERATIONS

Description of Organization and Business Operations

Commonwealth Thoroughbreds LLC (the “Company”) is a Delaware series limited liability company formed on June 12, 2019 and headquartered in Lexington, Kentucky. The Company's fiscal year ends on December 31. Commonwealth Markets Inc. is the sole owner of units of membership interest of the Company. The Company was formed to engage in the business of acquiring and managing Thoroughbred racehorses and related equine breeding and sales activities. It is expected that the Company will create several separate series of membership interests (the “Series” or “Series”), including the Series TF2019, and different Thoroughbred assets will be owned by separate Series, and that the assets and liabilities of each Series will be separate in accordance with Delaware law. Investors will acquire units of membership interest (“Units”) of a Series and will be entitled to share in the return of that particular Series but will not be entitled to share in the return of any other Series.  

Commonwealth Markets Inc. (the “Manager”), a Delaware corporation formed on January 10, 2019, is a technology and marketing company that operates the Commonwealth Platform and App ("the Platform"). The Manager manages the Company, the assets owned by the Company and the assets of each Series.                     

The Company intends to sell Units in several separate and individual Series of the Company. Investors in any Series acquire a proportional share of the assets, income and liabilities pertaining to a particular Series. The Manager has the authority to conduct the ongoing operations of each Series in accordance with the Company’s limited liability company agreement, as amended and restated from time to time (the “Operating Agreement”). Unit holders have only the limited voting and management rights provided in the Operating Agreement or required by law.

Going Concern and Capital Resources 

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has not generated profits since inception. The Company has a net loss of $153,160 for the period from inception to August 31, 2019 and has member’s equity of $7,583 as of August 31, 2019. The Company lacks liquidity to satisfy obligations as they come due. All of the liabilities on the balance sheet as of August 31, 2019 are obligations to the Manager or its stockholders. All of these liabilities, other than for which the Manager does not seek reimbursement, will be covered through the proceeds of future offerings for the various Series.          

Through August 31, 2019, neither the Company nor its Series have recorded any revenues generated through the utilization of underlying Thoroughbred assets. The Company does not expect to generate any revenues for Series TF2019 from its current Thoroughbred foal for the first year of operations or longer. Series TF2019 will continue to incur operating expenses including, but not limited to, boarding, insurance, transportation and training expenses on an ongoing basis.               

From inception, the Company has financed the business activities of it and its Series through capital contributions from the Manager or its affiliates. The Company and each Series expect to continue to have access to ample capital financing from the Manager going forward. Until such time as the Series have the capacity to generate cash flows from operations, the Manager may cover any deficits through additional capital contributions or the issuance of additional Units in any individual Series. In addition, parts of the proceeds of future offerings may be used to create reserves for future Operating Expenses for individual series at the sole discretion of the Manager.

The Company’s ability to continue depends upon management’s plan to raise additional funds, capital contributions from the Manager and the ability to achieve profitable operations. These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period of time. The financial statements do not include any adjustments that might be necessary if the Company is not able to continue as a going concern.

F-8

Commonwealth Thoroughbreds LLC

Notes to Financial Statements

June 12, 2019 (Inception) through August 31, 2019, continued

NOTE 1 – NATURE OF OPERATIONS, CONTINUED

Initial Offering

The Company’s initial offering for Series TF2019 is described in the Offering Circular included in the Offering Statement on Form 1-A initially filed with the SEC on October 16, 2019. Proceeds from the offering of Series TF2019 Units will be used to repay the loan from an officer of the Manager (if not converted into Series TF2019 Units) (see Note 3) and pay for other offering related fees and expenses.  These include an $8,000 due diligence fee payable to the clearing broker upon the filing of the offering statement. Series TF2019 currently has not started operations and has no capitalization, assets or liabilities.

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"). In the opinion of management, all adjustments considered necessary for the fair presentation of the financial statements for the period presented have been included.

Use of Estimates 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.                    

Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from Company estimates.

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.

Cash

The Company considers short-term, highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. Cash consists of funds held in the Company’s checking account.

Offering Expenses

Offering Expenses relate to the offering for a specific Series and consist of underwriting, legal, accounting, escrow, compliance, filing and other expenses incurred through the balance sheet date that are directly related to a proposed offering and will generally be charged to member’s equity upon the completion of the proposed offering. Offering expenses that are incurred prior to the closing of an offering for that Series are being funded by the Manager and will generally be reimbursed through the proceeds of the offering related to the Series. However, the Manager has agreed to pay and not be reimbursed for more than $15,000 of Offering Expenses incurred with respect to the Series TF2019 Offering. Should the proposed offering prove to be unsuccessful, these costs, as well as additional expenses to be incurred, will be charged to the Manager.                         

F-9

Commonwealth Thoroughbreds LLC

Notes to Financial Statements

June 12, 2019 (Inception) through August 31, 2019, continued

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

In addition to the discrete Offering Expenses related to a particular series, the Manager has also incurred legal, accounting and compliance expenses of $152,500 through August 31, 2019 to set up the legal and financial framework and compliance infrastructure for the marketing and sale of the Series TF2019 Units and all subsequent offerings. The Manager will receive an Organizational Fee equal to 3.0% of the proceeds received from the offering of each series of units as reimbursement for these expenses.

As of August 31, 2019, the Manager had incurred Offering Expenses of $0 related to Series TF2019.

Operating Expenses               

Operating Expenses related to a particular horse include stabling, training, insurance, transportation (other than the initial transportation from the horse’s location to the Manager’s boarding facility prior to the offering, which is treated as an “Acquisition Expense”, as defined below), maintenance, annual audit and legal expenses and other equine-specific expenses as detailed in the Manager’s Allocation Policy. The Company distinguishes between pre-closing and post-closing Operating Expenses. Operating Expenses are expensed as incurred.

Except as disclosed with respect to any future Series offering, expenses of this nature that are incurred prior to the closing of an offering of Series are funded by the Manager and are not reimbursed by the Company, Series or economic members. These are accounted for as capital contributions by the Manager for expenses related to the business of the Company or a Series.                         

Upon closing of an offering, a Series becomes responsible for these expenses and finances them either through revenues generated by a Series or available cash reserves at the Series. Should revenues or cash reserves not be sufficient to cover Operating Expenses the Manager may (a) pay such Operating Expenses and not seek reimbursement, (b) loan the amount of the Operating Expenses to the Series at a reasonable rate of interest and be entitled to reimbursement of such amount from future revenues generated by the Series (“Operating Expenses Reimbursement Obligation(s)”), and/or (c) cause additional units to be issued in order to cover such additional amounts.                         

As of August 31, 2019, the Manager had incurred $116 of pre-closing Operating Expenses related to Series TF2019. Operating expenses incurred prior to the offering’s closing will be borne by the Manager and not reimbursed.

Thoroughbred Assets

Thoroughbred assets are recorded at cost. The cost of the Thoroughbred includes the purchase price, including any deposits paid by the Manager, the Sourcing Fee, Brokerage Fee and “Acquisition Expenses”, including transportation of the asset to the Manager’s stables, pre-purchase medical examinations, pre-offering expenses, and other costs detailed in the Manager’s Allocation Policy.

The Brokerage Fee and Sourcing Fee are paid from the proceeds of any successfully closed offering. Should an offering be unsuccessful, these expenses do not occur. As of August 31, 2019, no offerings had closed, and no such fees were paid.

Acquisition Expenses related to a particular Series are initially funded by the Manager but may be reimbursed with the proceeds from an offering related to such Series, to the extent described in the applicable offering document. Acquisition Expenses are capitalized into the cost of the horse as per the table below. Should a proposed offering prove to be unsuccessful, the Company will not reimburse the Manager and these expenses will be accounted as capital contributions. At August 31, 2019, $10,200 of Acquisition Expenses were incurred, as shown in the following table.

F-10

Commonwealth Thoroughbreds LLC

Notes to Financial Statements

June 12, 2019 (Inception) through August 31, 2019, continued

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

Applicable Series	TF2019
Thoroughbred asset	Timido Foal (1)
Purchase price	$	7,500
Acquisition legal costs		2,500
Appraisal fee		200
Total Acquisition Expenses (capitalized)		10,200
Less accumulated depreciation		112
Total Thoroughbred Assets	$	10,088

(1) To be owned by the applicable Series as of the closing of the applicable offering. Currently owned by Commonwealth Thoroughbreds LLC and not by any series.

Depreciation is provided using the straight-line method based on useful lives of the asset. Thoroughbred assets are depreciated using the straight-line method over 36 months with no estimated salvage value. A horse is treated as placed in service upon its acquisition by the Company. The Company reviews the carrying value of Thoroughbred assets 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 use of the property, and the effects of health, demand, competition, and other economic factors.

Income Taxes 

The Company intends that the separate Series will elect and qualify to be taxed as a corporation under the Internal Revenue Code. The separate Series will comply with the accounting and disclosure requirement of Accounting Standards Codification (“ASC”) Topic 740, "Income Taxes," which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

The master series of the Company intends to be taxed as a “partnership” or a ”disregarded entity” for federal income tax purposes and will not make any election or take any action that could cause it to be separately treated as an association taxable as a corporation under Subchapter C of the Internal Revenue Code.

Earnings per Membership Unit

Upon completion of an offering, each Series intends to comply with accounting and disclosure requirement of ASC Topic 260, "Earnings per Share." For each Series, earnings per membership unit will be computed by dividing net income for that particular Series by the weighted average number of outstanding units in that particular Series during the period.

F-11

Commonwealth Thoroughbreds LLC

Notes to Financial Statements

June 12, 2019 (Inception) through August 31, 2019, continued

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

For a period of net loss, basic and diluted earnings per unit are the same as the assumed exercise of stock options and warrants and the conversion of convertible debt are anti-dilutive.

Recent Accounting Pronouncements 

The Financial Accounting Standards Board issues updates to amend the authoritative literature in ASC. There have been a number of updates to date 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 or (iv) are not expected to have a significant impact on the financial statements.

NOTE 3 – RELATED PARTY TRANSACTIONS

On August 20, 2019, the Company acquired the Thoroughbred asset to be assigned to Series TF2019 from a principal executive of the Manager in exchange for a convertible promissory note in the principal amount of $7,500, which accrues interest at a rate of 1.91% per annum. The purchase price was equal to the appraised value of the Thoroughbred provided by an independent third-party appraiser. Other key terms of the loan include (i) the requirement to repay the loan within 14 days of the Series TF2019 Offering closing and (ii) the ability for the Company to prepay the loan at any time. The promissory note initially provided that the holder could elect to convert the principal amount of the note plus accrued interest into Series TF2019 Units at the purchase price for Series TF2019 Units in this Offering. See Note 7 for subsequent events.

The Company received an initial $5,000 capital contribution for member units in the Company from the Manager in order to pay operating expenses incurred prior to the closing of the offering of Series TF2019 Units. The Manager may cover future operating expenses of the Company through additional capital contributions or a non-interest-bearing revolving credit to the Company.

When the Company acquired the Thoroughbred asset to be assigned to Series TF2019 on August 20, 2019, the monthly boarding expenses had already been paid by the Manager. The Manager will not seek reimbursement for the prorated $116 of boarding expense.

On July 16, 2019, the Manager paid $200 to Hyperion Thoroughbred Consultants to conduct an appraisal of the Thoroughbred asset to be assigned to Series TF2019. The Manager will not seek reimbursement.

The Manager has paid a total of $317 of rent expense for July and August 2019 on behalf of the Company. The Manager will not seek reimbursement.

Additionally, professional fees of $152,500 were incurred at the Manager level to support the Company.

The Manager expects to maintain cash reserves funded from offering proceeds on behalf of each of the Company’s series to cover the series’ operating expenses.

During the period from June 12, 2019 (inception) through August 31, 2019, executives of the Manager provided services to the Company for no compensation at the Manager level or Company level. Management expects in the future these executive services will be compensated through the management fee agreement (see Note 5).

NOTE 4 – REVENUE, EXPENSE AND COST ALLOCATION METHODOLOGY          

The Company distinguishes expenses and costs between those related to the purchase of a particular Thoroughbred asset and Operating Expenses related to the management of that asset.                    

F-12

Commonwealth Thoroughbreds LLC

Notes to Financial Statements

June 12, 2019 (Inception) through August 31, 2019, continued

NOTE 4 – REVENUE, EXPENSE AND COST ALLOCATION METHODOLOGY, CONTINUED          

Fees and expenses related to the purchase of an underlying Thoroughbred asset include the Offering Expenses, Acquisition Expenses, Brokerage Fee and Sourcing Fee.          

Within Operating Expenses, the Company distinguishes between Operating Expenses incurred prior to the closing of an offering and those incurred after the close of an offering. Although these pre- and post- closing Operating Expenses are similar in nature and consist of expenses such as stabling, training, insurance and transportation, pre-closing Operating Expenses are borne by the Manager and may or may not be reimbursed by the Company or the economic members of the series, as outlined within that particular Series Designation. Post-closing Operating Expenses are the responsibility of each Series and may be financed through (i) revenues generated by the Series or cash reserves at the Series; (ii) contributions made by the Manager, for which the Manager does not seek reimbursement; (iii) loans by the Manager, for which the Manager may charge a reasonable rate of interest; or (iv) issuance of additional Units in a Series.                         

Allocation of revenues and expenses and costs will be made amongst the various Series in accordance with the Manager's allocation policy. The Manager's allocation policy requires items that are related to a specific Series be charged to that specific Series. Items not related to a specific Series will be allocated pro rata based upon the value of the underlying Thoroughbred assets or the number of Thoroughbred assets, as stated in the Manager’s allocation policy and as reasonably determined by the Manager. The Manager may amend its allocation policy in its sole discretion from time to time.                         

● Revenue from racing, breeding and sales activities will be allocated to the Series owning the assets generating the revenue. No revenues have been generated to date.

● Organizational Expenses incurred by the Manager to set up the legal and financial framework and compliance infrastructure for the marketing and sale of offerings of each series of units will be reimbursed through an Organization fee equal to 3.0% of the offering proceeds received from the offering of each series of units. The Manager has incurred $152,500 in Organizational Expenses to date.

● Offering Expenses are funded by the Manager and generally reimbursed through the Series proceeds upon the closing of an offering. The Manager has incurred $0 in Offering Expenses to date.

● Acquisition Expenses are funded by the Manager and reimbursed from the Series proceeds upon the closing of an offering. The Manager had incurred $10,200 in Acquisition Expenses at August 31, 2019, including the $7,500 purchase price of the Series TF2019 Thoroughbred foal paid through the issuance of a promissory note in the principal amount of $7,500 to a principal executive of the Manager (see Note 3).

● The Sourcing Fee is paid to the Manager from the Series proceeds upon the close of an offering. The Manager expects to receive a Sourcing Fee of $750 at the time of the closing for the offering for Series TF2019.

● The Brokerage Fee is paid to the broker of record from the Series proceeds upon the closing of an offering.

● Operating Expenses (as described in Note 2), which include equine-specific expenses related to a particular horse such as stabling, training, insurance and transportation, are expensed as incurred:

o Pre-closing Operating Expenses are borne by the Manager and accounted for as capital contributions from the Manager to the Company and are not reimbursed. At August 31, 2019, $116 of pre-closing Operating Expenses were incurred.

o Post-closing Operating Expenses are the responsibility of each individual Series. At August 31, 2019, no closings had occurred.

F-13

Commonwealth Thoroughbreds LLC

Notes to Financial Statements

June 12, 2019 (Inception) through August 31, 2019, continued

NOTE 5 - DISTRIBUTIONS AND MANAGEMENT FEES

As compensation for the services provided by the Manager under the Management Services Agreement, the Manager will be paid a semi-annual fee equal to:

● 10% of any Free Cash Flow (as defined below) generated by the Series, until such time as Investors have received a return of their invested capital;

● 20% of any Free Cash Flow generated by the Series from racing activities thereafter; and

● 30% of any Free Cash Flow generated by the Series from breeding activities and sales of Series Assets after the Investors have received a return of their invested capital.

The Management Fee will only become due and payable at the time there is a distribution of Free Cash Flow to Unit Holders of the Series. For tax and accounting purposes the Management Fee will be accounted for as an expense on the books of the Series.                         

“Free Cash Flow” is defined as the net income (as determined under GAAP) generated by any Series plus any change in net working capital and depreciation and amortization (and any other non-cash Operating Expenses) and less any capital expenditures related to the relevant Series.          

As of August 31, 2019, no distributions or management fees had been paid by the Company or in respect of any Series.

NOTE 6 - MEMBER CONTRIBUTIONS

Member contributions primarily reflect the assumption of payables that support the Company’s operating results.  Constructive payments made by the member on behalf of the Company have been included in the statement of cash flows as financing activities.  The Company has treated the other member contributions as noncash activity to better reflect the actual cash movement that benefited the Company. The member contributions during the period from June 12, 2019 (inception) to August 31, 2019 were as follows:

Investing transaction for item paid directly by member	$	200	(a)
Non-cash investing transaction for amount incurred by member		2,500	(b)
Operating expenses paid directly by the member		2,543	(a)
Other operating expenses incurred by the member		150,500	(c)
Total	$	155,743

(a) Included in statement of cash flows.

(b) Disclosed as noncash investing transactions.

(c) Added back in operating section of the statement of cash flows to arrive at net cash used in operating activities.

Management has updated the statement of cash flows from a previously issued version to reflect items (a) above.  These changes had no impact on previously reported net loss or member’s equity.

NOTE 7 – SUBSEQUENT EVENTS

Management has evaluated subsequent events from August 31, 2019 through October 16, 2019 and through December 13, 2019, the dates the original and revised financial statements, respectively, were available to be issued. Based on this evaluation, other than the disclosure below, no additional material events were identified which require adjustment or disclosure in the financial statements.

On October 28, 2019, the Company entered into an Agreement of Purchase and Sale and Co-Ownership to acquire a 75% interest in a dark bay colt born in February 2018 by Orb out of Latique by Elusive Quality (“Orb Colt”) for a purchase price of $20,000.  The purchase price becomes payable within five days after the qualification of the Company’s Offering Statement or January 17, 2020, whichever occurs earlier.  The Manager has agreed to loan the $20,000 purchase price to the Company.  The Company intends to offer units of a new Series OL2018 and to transfer ownership of the Orb Colt to the new Series when the Series OL2018 Closing occurs.  Upon closing, the Manager will be paid $10,000 plus interest in cash from the offering proceeds and will be issued 200 Series OL2018 Units at the $50 offering price per Unit in full payment of the loan.  The 200 Units would represent 7.4% of the Series OL2018 Units outstanding if the maximum of 2,500 Units are sold in the Series OL2018 Offering. Upon payment of the cash and the issuance of the Units to the Manager, the Orb Colt will be owned by Series OL2018 and not subject to any liens or encumbrances.

On December 10, 2019, the parties amended the promissory note for the purchase of the Timido Filly (see Note 3) to convert automatically into Series TF2019 Units upon the closing of the offering of Series TF2019 Units and no longer at the election of the holder.

F-14

EXHIBIT INDEX

Exhibit 2.1 – Certificate of Formation*

Exhibit 2.2 – Amended and Restated Limited Liability Company Agreement*

Exhibit 3.1 – Series Designation for Series TF2019*

Exhibit 3.2 – Series Designation for Series OL2018*

Exhibit 4.1 – Form of Subscription Agreement*

Exhibit 6.1 – Form of Management Services Agreement*

Exhibit 6.2(a) – Amended and Restated Convertible Promissory Note and Security Agreement for Timido Filly*

Exhibit 6.2(b) – Convertible Promissory Note and Security Agreement for Orb Colt*

Exhibit 6.3(a) – Instrument of Transfer for Timido Filly*

Exhibit 6.3(b) – Purchase and Sale and Co-Ownership Agreement and Bill of Sale for Orb Colt*

Exhibit 6.4 – Broker Dealer Services Agreement with North Capital Private Securities Corporation*

Exhibit 8.1 – Form of Escrow Agreement with North Capital Private Securities Corporation*

Exhibit 11.1 – Consent of Dean Dorton Allen Ford, PLLC *

Exhibit 11.2 – Consent of Hyperion Thoroughbred Consultants*

Exhibit 11.3 – Consent of Frost Brown Todd LLC (included in opinion filed as Exhibit 12.1)

Exhibit 12.1 – Opinion of Frost Brown Todd LLC*

Exhibit 13.1 – Testing the Waters Materials**

__________________

* Filed herewith.

** To be filed by amendment.

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 the City of Lexington, Commonwealth of Kentucky, on December 13, 2019.

COMMONWEALTH THOROUGHBREDS LLC

By: Commonwealth Markets Inc., its Manager

/s/ Brian Doxtator 

Name: Brian Doxtator

Title: Chief Executive Officer

This offering statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Brian Doxtator                        Name: Brian Doxtator	Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer)	December 13, 2019
/s/ Chase Chamberlin                  Name: Chase Chamberlin	Chief Marketing Officer and Head of Equine Operations	December 13, 2019
Commonwealth Markets Inc. /s/ Brian Doxtator                        Name: Brian Doxtator Title: Chief Executive Officer	Manager	December 13, 2019

EX1A-2A CHARTER

Exhibit 2.1

Delaware Page 1

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 FORMATION OF “COMMONWEALTH THOROUGHBREDS LLC”, FILED IN THIS OFFICE ON THE TWELFTH DAY OF JUNE, A.D., 2019, AT 3:34 O’CLOCK P.M.

                 /s/ Jeffrey W. Bullock                

 Jeffrey W. Bullock, Secretary of State        

{SEAL}

7463714 8100	Authentication: 203016277
SR# 20195399771	Date: 06-13-19

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

State of Delaware

Secretary of State

Division of Corporations

Delivered 03:34 PM 06/12/2019

FILED 03:34 PM 06/12/2019

SR 20195399771 – File Number 7453714

STATE OF DELAWARE

LIMITED LIABILITY COMPANY

CERTIFICATE OF FORMATION

OF

COMMONWEALTH THOROUGHBREDS LLC

1. The name of the limited liability company is:

Commonwealth Thoroughbreds LLC

2. The Registered Office of the limited liability company in the State of Delaware is located at 160 Greentree Drive, Suite 101, in the City of Dover, Zip Code 19904. The name of the Registered Agent at such address upon whom process against this limited liability company may be served is National Registered Agents, Inc.

3. Notice is hereby given pursuant to Section 18.215(b) of the Delaware limited liability act that the debts, liabilities, and obligations incurred, contracted for, or otherwise existing with respect to a particular series of the limited liability company, shall be enforceable against the assets of such series only and not against the assets of the limited liability company generally, or any other series thereof, and none of the debts, liabilities, obligations, and expenses incurred, contracted for, or otherwise existing with respect to the limited liability company generally, or any other series thereof, shall be enforceable against the assets of such series.

IN WITNESS WHEREOF, the undersigned has executed this Certificate of Formation this 12^th day of June 2019.

/s/ E. Todd Wilkowski

_________________________________

E. Todd Wilkowski, Organizer

EX1A-2B BYLAWS

Exhibit 2.2

September 27, 2019

Commonwealth Thoroughbreds llc

Amended and Restated

Limited Liability Company Agreement

PROSPECTIVE INVESTORS ARE NOT TO CONSTRUE THE CONTENTS OF THIS AGREEMENT OR ANY PRIOR OR SUBSEQUENT COMMUNICATIONS FROM THE COMPANY, THE MANAGING MEMBER OR THEIR AFFILIATES, OR ANY PROFESSIONAL ASSOCIATED WITH THIS OFFERING, AS LEGAL, TAX OR INVESTMENT ADVICE. EACH INVESTOR SHOULD CONSULT WITH AND RELY ON HIS OR HER OWN ADVISORS AS TO THE LEGAL, TAX AND/OR ECONOMIC IMPLICATIONS OF THE INVESTMENT DESCRIBED IN THIS AGREEMENT AND ITS SUITABILITY FOR SUCH INVESTOR.

AN INVESTMENT IN THE SERIES OF UNITS CARRIES A HIGH DEGREE OF RISK AND IS ONLY SUITABLE FOR INVESTORS WHO CAN AFFORD LOSS OF THEIR ENTIRE INVESTMENT IN THE SERIES OF UNITS.

THE UNITS HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY OTHER STATE.  ACCORDINGLY, UNITS MAY NOT BE TRANSFERRED, SOLD, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT OR A VALID EXEMPTION FROM SUCH REGISTRATION.

TABLE OF CONTENTS

Page

ARTICLE I - DEFINITIONS			1
	Section 1.1	Definitions	1
	Section 1.2	Construction	7
ARTICLE II - ORGANIZATION			7
	Section 2.1	Formation	7
	Section 2.2	Name	7
	Section 2.3	Registered Office; Registered Agent; Principal Office; Other Offices	8
	Section 2.4	Purpose	8
	Section 2.5	Powers	8
	Section 2.6	Power of Attorney	8
	Section 2.7	Term	9
	Section 2.8	Title to Assets	9
	Section 2.9	Certificate of Formation	9
ARTICLE III - MEMBERS, SERIES AND UNITS			10
	Section 3.1	Members	10
	Section 3.2	Capital Contributions	11
	Section 3.3	Series of the Company	12
	Section 3.4	Authorization to Issue Units	14
	Section 3.5	Voting Rights of Units Generally	14
	Section 3.6	Record Holders	14
	Section 3.7	Splits	14
	Section 3.8	Agreements	15
ARTICLE IV - REGISTRATION AND TRANSFER OF UNITS			15
	Section 4.1	Maintenance of a Register	15
	Section 4.2	Ownership Limitations	15
	Section 4.3	Transfer of Units and Obligations of the Managing Member	17
	Section 4.4	Remedies for Breach	17
ARTICLE V - MANAGEMENT AND OPERATION OF THE COMPANY AND EACH SERIES			17
	Section 5.1	Power and Authority of Managing Member	17
	Section 5.2	Determinations by the Managing Member	19
	Section 5.3	Delegation	20

i

	Section 5.4	Advisory Board	20
	Section 5.5	Exculpation, Indemnification, Advances and Insurance	21
	Section 5.6	Duties of Officers	23
	Section 5.7	Standards of Conduct and Modification of Duties of the Managing Member	23
	Section 5.8	Reliance by Third Parties	24
	Section 5.9	Certain Conflicts of Interest	24
ARTICLE VI - FEES AND EXPENSES			24
	Section 6.1	Cost to Acquire the Series Asset; Brokerage Fee; Offering Expenses; Acquisition Expenses; Sourcing Fee	24
	Section 6.2	Operating Expenses; Dissolution Fees	24
	Section 6.3	Excess Operating Expenses; Further Issuance of Units; Operating Expenses Reimbursement Obligation(s)	25
	Section 6.4	Allocation of Expenses	25
	Section 6.5	Overhead of the Managing Member	25
ARTICLE VII - DISTRIBUTIONS			25
	Section 7.1	Application of Cash	25
	Section 7.2	Application of Amounts upon the Liquidation of a Series	25
	Section 7.3	Timing of Distributions	25
	Section 7.4	Distributions in Kind. Distributions in kind of the entire or part of a Series Asset to Members are prohibited	26
	Section 7.5	Distributions to Members of the Company	26
ARTICLE VIII			26
	Section 8.1	Allocation of Profits of the Company	26
	Section 8.2	Allocation of Losses of the Company	26
	Section 8.3	Miscellaneous Allocation Provisions	27
ARTICLE IX - BOOKS, RECORDS, ACCOUNTING AND REPORTS			27
	Section 9.1	Records and Accounting	27
	Section 9.2	Fiscal Year	28
ARTICLE X - TAX MATTERS			28
	Section 10.1	Tax Classification	28
	Section 10.2	Partnership Audit Rules	28
	Section 10.3	Capital Accounts	30
	Section 10.4	Withdrawal and Return of Capital	30
	Section 10.5	Revaluation of Company Property	30
	Section 10.6	Limitation on Losses	30
	Section 10.7	Qualified Income Offset	30

ii

	Section 10.8	Minimum Gain Chargeback	30
	Section 10.9	Partner Nonrecourse Deductions	30
	Section 10.10	Curative Allocations	30
	Section 10.11	Savings Clause	31
	Section 10.12	No Restoration of Deficit Capital Accounts	31
	Section 10.13	Contributed Property	31
	Section 10.14	Division Among Members	31
ARTICLE XI - REMOVAL OF THE MANAGING MEMBER			31
ARTICLE XII - DISSOLUTION, TERMINATION AND LIQUIDATION			32
	Section 12.1	Dissolution and Termination	32
	Section 12.2	Liquidator	32
	Section 12.3	Liquidation of a Series	33
	Section 12.4	Cancellation of Certificate of Formation	33
	Section 12.5	Return of Contributions	33
	Section 12.6	Waiver of Partition	34
	Section 12.7	Liquidation of the Company	34
ARTICLE XIII - AMENDMENT OF AGREEMENT, SERIES DESIGNATION			34
	Section 13.1	General	34
	Section 13.2	Certain Amendment Requirements	35
	Section 13.3	Amendment Approval Process	35
ARTICLE XIV - MEMBER MEETINGS			36
	Section 14.1	Meetings	36
	Section 14.2	Quorum	36
	Section 14.3	Chairman	36
	Section 14.4	Voting Rights	36
	Section 14.5	Extraordinary Actions	36
	Section 14.6	Managing Member Approval	36
	Section 14.7	Action by Members without a Meeting	36
	Section 14.8	Managing Member	36
ARTICLE XV - CONFIDENTIALITY			36
	Section 15.1	Confidentiality Obligations	36
	Section 15.2	Exempted Information	37
	Section 15.3	Permitted Disclosures	37
ARTICLE XVI - GENERAL PROVISIONS			38
	Section 16.1	Addresses and Notices	38

iii

Section 16.2	Further Action	38
Section 16.3	Binding Effect	38
Section 16.4	Integration	38
Section 16.5	Creditors	38
Section 16.6	Waiver	39
Section 16.7	Counterparts	39
Section 16.8	Applicable Law and Jurisdiction	39
Section 16.9	Invalidity of Provisions	39
Section 16.10	Consent of Members	40

iv

AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

OF

COMMONWEALTH THOROUGHBREDS LLC

This is the LIMITED LIABILITY COMPANY AGREEMENT OF COMMONWEALTH THOROUGHBREDS LLC (this Agreement) as amended and restated as of September 27, 2019. Capitalized terms used herein without definition shall have the respective meanings ascribed thereto in Section 1.1 below.

The Company was formed as a series limited liability company under Section 18-215 of the Delaware Act pursuant to a certificate of formation filed with the Delaware Secretary of State on June 12, 2019.

ARTICLE I - DEFINITIONS

Section 1.1     Definitions. The following definitions shall be for all purposes, unless otherwise clearly indicated to the contrary, applied to the terms used in this Agreement.

Abort Costs means all fees, costs and expenses incurred in connection with any Series Asset proposals pursued by the Company, the Managing Member or a Series that do not proceed to completion.

Acquisition Expenses means in respect of each Series, the following fees, costs and expenses allocable to such Series (or such Series pro rata share of any such fees, costs and expenses allocable to the Company) and incurred in connection with the evaluation, discovery, investigation, development and acquisition of a Series Asset, including brokerage and sales fees and commissions (but excluding the Brokerage Fee), appraisal fees, research fees, transfer taxes, third party industry and due diligence experts, bank fees and interest (if the Series Asset was acquired using debt prior to completion of the Initial Offering), auction house fees, Bloodstock Agent commissions or consulting fees and expenses, transportation costs including those related to the transport of the Series Asset from the acquisition location, travel and lodging for acquisition purposes, technology costs, and any blue sky filings required in order for such Series to be made available to Economic Members in certain states (unless borne by the Managing Member, as determined in its sole discretion) and similar costs and expenses incurred in connection with the evaluation, discovery, investigate on, development and acquisition of a Series Asset.

Additional Economic Member means a Person admitted as an Economic Member and associated with a Series in accordance with ARTICLE III as a result of an issuance of Units of such Series to such Person by the Company.

Advisory Board has the meaning assigned to such term in Section 5.4.

Affiliate means, with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with the Person in question. As used herein, the term control means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.

Aggregate Ownership Limit means, in respect of an Initial Offering or a Subsequent Offering, not more than 10% of the aggregate Outstanding Units of a Series, and in respect of a Transfer, not more than 19.9% of the aggregate Outstanding Units of a Series, or in both cases, such other percentage set forth in the applicable Series Designation or as determined by the Managing Member in its sole discretion and as may be waived by the Managing Member in its sole discretion.

1

Agreement has the meaning assigned to such term in the preamble.

Allocation Policy means the allocation policy of the Company adopted by the Managing Member in accordance with Section 5.1.

Broker means any Person who has been appointed by the Company (and as the Managing Member may select in its reasonable discretion) and specified in any Series Designation to provide execution and other services relating to an Initial Offering to the Company, or its successors from time to time, or any other broker in connection with any Initial Offering.

Bloodstock Agent means the person retained by the Managing Member to advise the Company about the acquisition, sale and management of certain Thoroughbred horses to be raced by the Company for which the Bloodstock Agent may be paid a commission, which customarily ranges from 2.5% to 5% of the purchase/sale price of a Thoroughbred.

Brokerage Fee means the fee payable to the Broker for the purchase by any Person of Units in an Initial Offering equal to an amount agreed between the Managing Member and the Broker from time to time and specified in any Series Designation.

Business Day means any day other than a Saturday, a Sunday or a day on which commercial banks in New York, New York are authorized or required to close.

Capital Contribution means with respect to any Member, the amount of cash and the initial Gross Asset Value of any other property contributed or deemed contributed to the capital of a Series by or on behalf of such Member, reduced by the amount of any liability assumed by such Series relating to such property and any liability to which such property is subject.

Certificate of Formation means the Certificate of Formation of the Company filed with the Delaware Secretary of State.

Code or IRC means the Internal Revenue Code of 1986, as amended and in effect from time to time. Any reference herein to a specific section or sections of the Code or IRC shall be deemed to include a reference to any corresponding provision of any successor law.

Company means Commonwealth Thoroughbreds LLC, a Delaware series limited liability company, and any successors thereto.

Conflict of Interest means any matter that the Managing Member believes may involve a conflict of interest that is not otherwise addressed by the Allocation Policy.

Delaware Act means the Delaware Limited Liability Company Act, 6 Del. C. Section 18 101, et seq.

DGCL means the General Corporation Law of Delaware, 8 Del. C. Section 101, et seq.

Economic Member means together, the Investor Members, Additional Economic Members (including any Person who receives Units in connection with any goods or services provided to a Series (including in respect of the sale of a Series Asset to that Series)) and their successors and assigns admitted as Additional Economic Members and Substitute Economic Members, in each case who is admitted as a Member of such Series, but shall exclude the Managing Member in its capacity as Managing Member. For the avoidance of doubt, the Managing Member or any of its Affiliates shall be an Economic Member to the extent it purchases Units in a Series.

ERISA means the Employee Retirement Income Security Act of 1974.

Exchange Act means the Securities Exchange Act of 1934.

2

Expenses and Liabilities has the meaning assigned to such term in Section 5.5(a).

Free Cash Flow means any available cash for distribution generated from the net income received by a Series, as determined by the Managing Member to be in the nature of income as defined by U.S. GAAP, plus (i) any change in the net working capital (as shown on the balance sheet of such Series) (ii) any amortization to the relevant Series Asset (as shown on the income statement of such Series) and (iii) any depreciation to the relevant Series Asset (as shown on the income statement of such Series) and (iv) any other non-cash Operating Expenses less (a) any capital expenditure related to the Series Asset (as shown on the cash flow statement of such Series) (b) any other liabilities or obligations of the Series, in each case to the extent not already paid or provided for and (c) upon the termination and winding up of a Series or the Company, all costs and expenses incidental to such termination and winding as allocated to the relevant Series in accordance with Section 6.4.

Form of Adherence means, in respect of an Initial Offering or Subsequent Offering, a subscription agreement or other agreement substantially in the form appended to the Offering Document pursuant to which an Investor Member or Additional Economic Member agrees to adhere to this Agreement’s terms or, in respect of a Transfer, a form of adherence or instrument of Transfer, each in a form satisfactory to the Managing Member from time to time, pursuant to which a Substitute Economic Member agrees to adhere to this Agreement’s terms.

Governmental Entity means any court, administrative agency, regulatory body, commission or other governmental authority, board, bureau or instrumentality, domestic or foreign and any subdivision thereof.

Gross Asset Value means, with respect to any asset contributed by an Economic Member to a Series, the gross fair market value of such asset as determined by the Managing Member.

Indemnified Person means (a) any Person who is or was an Officer of the Company or associated with a Series; (b) any Person who is or was a Managing Member or Liquidator, together with its officers, directors, members, shareholders, employees, managers, partners, controlling persons, agents or independent contractors; (c) any Person who is or was serving at the request of the Company as an officer, director, member, manager, partner, fiduciary or trustee of another Person; provided, that, except to the extent otherwise set forth in a written agreement between such Person and the Company or a Series, a Person shall not be an Indemnified Person by reason of providing, on a fee for services basis, trustee, fiduciary, administrative or custodial services; (d) any member of the Advisory Board appointed by the Managing Member pursuant to Section 5.4; and (e) any Person the Managing Member designates as an Indemnified Person for purposes of this Agreement.

Individual Aggregate Limit means, with respect to any individual holder, 10% of the greater of such holder’s annual income or net worth or, with respect to any entity, 10% of the greater of such holder’s annual revenue or net assets at fiscal year-end.

Initial Member means the Person identified in the Series Designation of such Series as the Initial Member associated therewith.

Initial Offering means the first offering or private placement and issuance of any Series, other than the issuance to the Initial Member.

Investment Advisers Act means the Investment Advisers Act of 1940.

Investment Company Act means the Investment Company Act of 1940.

Investor Members mean those Persons who acquire Units in the Initial Offering or Subsequent Offering and their successors and assigns admitted as Additional Economic Members.

Liquidator means one or more Persons selected by the Managing Member to perform the functions described in Section 12.2 as liquidating trustee of the Company or a Series, as applicable, within the meaning of the Delaware Act.

3

Managing Member means, as the context requires, the managing member of the Company or the managing member of a Series.

Management Fee means the percentage of Free Cash Flows of a Series pursuant to ARTICLE VII payable to the Managing Member as compensation for its services managing Series Assets as set forth in an Asset Management Agreement between the Managing Member and the Company.

Member means each member of the Company associated with a Series, including, unless the context otherwise requires, the Initial Member, the Managing Member, each Economic Member (as the context requires), each Substitute Economic Member and each Additional Economic Member.

National Securities Exchange means an exchange registered with the U.S. Securities and Exchange Commission under Section 6(a) of the Exchange Act.

Net Cash Flow means, for any fiscal year, (A) the sum of (i) all cash receipts of the Company from any sources for such period other than Capital Contributions or loan proceeds, plus (ii) any funds not otherwise expended and released into the general fund by the Managing Member from previously established reserves (referred to in (B)(ii) below) less (B) the sum of (i) all cash expenditures of the Company for such period not funded by Capital Contributions, loan proceeds or paid out of previously established reserves, plus (ii) any increases in reserves as reasonably determined by the Managing Member.

Offering Document means, with respect to any Series or the Units of any Series, the prospectus, offering memorandum, offering circular, offering statement, offering circular supplement, private placement memorandum or other offering documents related to the Initial Offering of such Units, in the form approved by the Managing Member and, to the extent required by applicable law, approved or qualified, as applicable, by any applicable Governmental Entity, including without limitation the U.S. Securities and Exchange Commission.

Offering Expenses means in respect of each Series, the following fees, costs and expenses allocable to such Series or such Series’ pro rata share (as determined by the Allocation Policy, if applicable) of any such fees, costs and expenses allocable to the Company incurred in connection with executing the Offering, consisting of underwriting, legal, accounting, escrow and compliance costs related to a specific offering.

Officer means any president, vice president, secretary, treasurer or other officer of the Company or any Series as the Managing Member may designate (who shall, in each case, constitute a “manager” within the meaning of the Delaware Act).

Operating Expenses means in respect of each Series, the following fees, costs and expenses allocable to such Series or such Series pro rata share (as determined by the Allocation Policy, if applicable) of any such fees, costs and expenses allocable to the Company:

(i)     any and all fees, costs and expenses incurred in connection with the management of a Series Asset, including without limitation, Bloodstock Agent commissions, transportation (other than those related to Acquisition Expenses), boarding, training and racing expenses (nomination fees, entry fees, jockey fees, pony fees, etc.), veterinarian fees, farrier charges, feed supplements and medications, physical therapy charges, equipment costs, research and database expenses, income taxes, title fees, periodic registration fees, marketing, security, valuation, perfection of title and utilization of the Series Asset;

(ii)     any fees, costs and expenses incurred in connection with preparing any reports and accounts of each Series of Units, including any blue sky filings required in order for a Series of Units to be made available to Investors in certain states and any annual audit of the accounts of such Series of Units (if applicable) and any reports to be filed with the U.S. Securities and Exchange Commission including periodic reports on Forms 1-K, 1-SA and 1-U.

4

(iii)     any and all insurance premiums or expenses, including director and officer liability insurance of the directors and officers of the Managing Member and equine mortality insurance, in connection with the Series Asset;

(iv)     any withholding or transfer taxes imposed on the Company or a Series or any of the Members as a result of its or their earnings, investments or withdrawals;

(v)     any governmental fees imposed on the capital of the Company or a Series or incurred in connection with compliance with applicable regulatory requirements;

(vi)     any legal fees and costs (including settlement costs) arising in connection with any litigation or regulatory investigation instituted against the Company or a Series in connection with the affairs of the Company or a Series;

(vii)     the fees and expenses of any administrator, if any, engaged to provide administrative services to the Company or a Series;

(viii)     all custodial fees, costs and expenses in connection with the holding of a Series Asset or Units;

(ix)     any fees, costs and expenses of a third-party registrar and transfer agent appointed by the Managing Member in connection with a Series;

(x)     the cost of the audit of the Company’s annual financial statements and the preparation of its tax returns and circulation of reports to Economic Members;

(xi)     the cost of any audit of a Series’ annual financial statements, the fees, costs and expenses incurred in connection with making of any tax filings on behalf of a Series and circulation of reports to Economic Members;

(xii)     any indemnification payments to be made pursuant to Section 5.5;

(xiii)     the fees and expenses of the Company’s or a Series counsel in connection with advice directly relating to the Company’s or a Series’ legal affairs;

(xiv)     the costs of any other outside appraisers, valuation firms, accountants, attorneys or other experts or consultants engaged by the Managing Member in connection with the operations of the Company or a Series; and

(xv)     any similar expenses that may be determined to be Operating Expenses, as determined by the Managing Member in its reasonable discretion.

Operating Expenses Reimbursement Obligation(s) has the meaning ascribed in Section 6.3.

Organizational Expenses means legal, accounting and compliance expenses incurred by the Managing Member of the Company to establish the legal and financial framework and compliance infrastructure for the marketing and sale of Units in Initial Offerings.

Organizational Fee means a fee of up to three percent (3%) of the proceeds received from each Initial Offering payable by the applicable Series to reimburse the Managing Member of the Company for Organizational Expenses until such time as the Managing Member has been reimbursed in full for all accrued Organizational Expenses.

Original LLC Agreement has the meaning set forth in this Agreement’s recitals.

5

Outstanding means all Units that are issued by the Company and reflected as outstanding on the Company’s books and records as of the date of determination.

Person means any individual, corporation, firm, partnership, joint venture, limited liability company, estate, trust, business association, organization, Governmental Entity or other entity.

Preference Designation has the meaning ascribed in Section 3.3(f).

Profits and Losses means, for each fiscal year (or other period for which Profits and Losses must be computed), the Company's taxable income or tax loss determined in accordance with IRC § 703(a), with the following adjustments:

   (i)   all items of income, gain, loss, deduction, or credit required to be stated separately pursuant to IRC § 703(a)(1) shall be included in computing Profits or Losses;

   (ii)   any tax-exempt income of the Company, not otherwise taken into account in computing Profits and Losses, shall be included in computing Profits or Losses;

   (iii)   any expenditures of the Company described in IRC § 705(a)(2)(B) (or treated as such pursuant to Treas. Reg. §1.704-1(b)(2)(iv)(i)) and not otherwise taken into account in computing Profits or Losses, shall be subtracted from Profits or Losses;

   (iv)   gain or loss resulting from any taxable disposition of Company property shall be computed by reference to the adjusted book value of the property disposed of, notwithstanding the fact that the adjusted book value differs from the adjusted basis of the property for federal income tax purposes;

   (v)   in lieu of the depreciation, amortization, or cost recovery deductions allowable in computing Profits or Losses, there shall be taken into account the depreciation computed based upon the adjusted book value of the asset; and

   (vi)   notwithstanding any other provision of this definition, any items which are specially allocated pursuant to the Regulatory Allocations shall not be taken into account in computing Profits or Losses.

Record Date means the date established by the Managing Member for determining (a) the identity of the Record Holders entitled to notice of, or to vote at, any meeting of Members associated with any Series or entitled to exercise rights in respect of any lawful action of Members associated with any Series or (b) the identity of Record Holders entitled to receive any report or distribution or to participate in any offer.

Record Holder or holder means the Person in whose name such Units are registered on the books of the Company as of the opening of business on a particular Business Day, as determined by the Managing Member in accordance with this Agreement.

Securities Act means the Securities Act of 1933.

Series has the meaning assigned to such term in Section 3.3(a).

Series Assets means, at any particular time, all assets, properties (whether tangible or intangible, and whether real, personal or mixed) and rights of any type contributed to or acquired by a particular Series and owned or held by or for the account of such Series, whether owned or held by or for the account of such Series as of the date of the designation or establishment thereof or thereafter contributed to or acquired by such Series.

Series Designation has the meaning assigned to such term in Section 3.3(a).

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Sourcing Fee means the sourcing fee which is paid to the Managing Member as consideration for conducting due diligence and assisting in the sourcing of each Series Asset and as specified in each Series Designation, to the extent not waived by the Managing Member in its sole discretion. The Sourcing Fee may be in the form of fees and/or Series Membership Units for which the Managing Member may receive Distributions, which shall be set forth in the Series Designation.

Subsequent Offering means any further issuance of Units in any Series, excluding any Initial Offering or Transfer.

Substitute Economic Member means a Person who is admitted as an Economic Member of the Company and associated with a Series pursuant to Section 4.1(b) as a result of a Transfer of Units to such Person.

Super Majority Vote means, the affirmative vote of the holders of Outstanding Units of all Series representing at least two thirds of the total votes that may be cast by all such Outstanding Units, voting together as a single class.

Transfer means, with respect to a Unit, a transaction by which the Record Holder of a Unit assigns such Unit to another Person who is or becomes a Member, and includes a sale, assignment, gift, exchange or any other disposition by law or otherwise, including any transfer upon foreclosure of any pledge, encumbrance, hypothecation or mortgage.

Unit means a unit of membership interest in a Series issued by the Company that evidences a Member’s rights, powers and duties with respect to the Company and such Series pursuant to this Agreement and the Delaware Act.

U.S. GAAP means United States generally accepted accounting principles consistently applied, as in effect from time to time.

Section 1.2     Construction. Unless the context requires otherwise: (a) any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa; (b) references to paragraphs, Articles and Sections refer to paragraphs, Articles and Sections of this Agreement; (c) the term include or includes means includes, without limitation, and including means including, without limitation, (d) the words herein, hereof and hereunder and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision, (e) or has the inclusive meaning represented by the phrase and/or, (f) unless the context otherwise requires, references to agreements and other documents shall be deemed to include all subsequent amendments and other modifications thereto, (g) references to any Person shall include all predecessors of such Person, as well as all permitted successors, assigns, executors, heirs, legal representatives and administrators of such Person, and (h) any reference to any statute or regulation includes any implementing legislation and any rules made under that legislation, statute or statutory provision, whenever before, on, or after the date of the Agreement, as well as any amendments, restatements or modifications thereof, as well as all statutory and regulatory provisions consolidating or replacing the statute or regulation. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted.

ARTICLE II - ORGANIZATION

Section 2.1     Formation. The Company has been formed as a series limited liability company pursuant to Section 18-215 of the Delaware Act. Except as expressly provided to the contrary in this Agreement, the rights, duties, liabilities and obligations of the Members and the administration, dissolution and termination of the Company and each Series shall be governed by the Delaware Act.

Section 2.2     Name. The Company’s name shall be Commonwealth Thoroughbreds LLC. The business of the Company and any Series may be conducted under any other name or names, as determined by the Managing Member. The Managing Member may change the Company’s name at any time and from time to time and shall notify the Economic Members of such change in the next regular communication to the Economic Members.

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Section 2.3     Registered Office; Registered Agent; Principal Office; Other Offices. Unless and until changed by the Managing Member in its sole discretion, the Company’s registered office in Delaware shall be located at 160 Greentree Drive, Suite 101, Dover, Delaware 19904, and the registered agent for service of process on the Company and each Series in Delaware at such registered office shall be National Registered Agents, Inc. The Company’s principal office shall be located at 1450 North Broadway, Lexington, Kentucky 40505. Unless otherwise provided in the applicable Series Designation, the principal office of each Series shall be located at 1450 North Broadway, Lexington, Kentucky 40505 or such other place as the Managing Member may from time to time designate by notice to the Economic Members associated with the applicable Series. The Company and each Series may maintain offices at such other place or places within or outside of Delaware as the Managing Member determines to be necessary or appropriate. The Managing Member may change registered office, registered agent or principal office of the Company or of any Series at any time and from time to time and shall notify the applicable Economic Members of such change in the next regular communication to such Economic Members.

Section 2.4     Purpose. The purpose of the Company and, unless otherwise provided in the applicable Series Designation, each Series shall be to (a) promote, conduct or engage in, directly or indirectly, any business, purpose or activity that lawfully may be conducted by a series limited liability company organized pursuant to the Delaware Act; (b) acquire interests in, raise, train, race, breed and sell Thoroughbreds and conduct other equine-related activities; (c) exercise all of the rights and powers conferred upon the Company and each Series with respect to its interests therein, and (d) conduct any and all activities related or incidental to the foregoing purposes.

Section 2.5     Powers. The Company, each Series and, subject to this Agreement’s terms, the Managing Member shall be empowered to do any and all acts and things necessary or appropriate for the furtherance and accomplishment of the purposes described in Section 2.4.

Section 2.6     Power of Attorney.

(a)          Each Economic Member hereby constitutes and appoints the Managing Member and, if a Liquidator shall have been selected pursuant to Section 12.2, the Liquidator, and each of their authorized officers and attorneys in fact, as the case may be, with full power of substitution, as his or her true and lawful agent and attorney in fact, with full power and authority in his or her name, place and stead, to:

(i)     execute, swear to, acknowledge, deliver, file and record in the appropriate public offices: (A) all certificates, documents and other instruments (including this Agreement and the Certificate of Formation and all amendments or restatements hereof or thereof) that the Managing Member, or the Liquidator, determines to be necessary or appropriate to form, qualify or continue the existence or qualification of the Company as a series limited liability company in Delaware and in all other jurisdictions in which the Company or any Series may conduct business or own property; (B) all certificates, documents and other instruments that the Managing Member, or the Liquidator, determines to be necessary or appropriate to reflect, in accordance with its terms, any amendment, change, modification or restatement of this Agreement; (C) all certificates, documents and other instruments that the Managing Member or the Liquidator determines to be necessary or appropriate to reflect the dissolution, liquidation or termination of the Company or a Series pursuant to this Agreement’s terms; (D) all certificates, documents and other instruments relating to the admission, withdrawal or substitution of any Economic Member pursuant to, or in connection with other events described in, ARTICLE III or ARTICLE XI; (E) all certificates, documents and other instruments relating to the determination of the rights, preferences and privileges of any Series of Unit issued pursuant to Section 3.3; (F) all certificates, documents and other instruments that the Managing Member or Liquidator determines to be necessary or appropriate to maintain the separate rights, assets, obligations and liabilities of each Series; and (G) all certificates, documents and other instruments (including agreements and a certificate of merger) relating to a merger, consolidation or conversion of the Company; and

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(ii)     execute, swear to, acknowledge, deliver, file and record all ballots, consents, approvals, waivers, certificates, documents and other instruments that the Managing Member or the Liquidator determines to be necessary or appropriate to (A) make, evidence, give, confirm or ratify any vote, consent, approval, agreement or other action that is made or given by any of the Members hereunder or is consistent with this Agreement’s terms or (B) effectuate the terms or intent of this Agreement; provided, that when any provision of this Agreement that establishes a percentage of the Members or of the Members of any Series required to take any action, the Managing Member, or the Liquidator, may exercise the power of attorney made in this paragraph only after the necessary vote, consent, approval, agreement or other action of the Members or of the Members of such Series, as applicable.

Nothing contained in this Section shall be construed as authorizing the Managing Member, or the Liquidator, to amend, change or modify this Agreement except in accordance with ARTICLE XIII or as may be otherwise expressly provided for in this Agreement.

(b)     The foregoing power of attorney is hereby declared to be irrevocable and a power coupled with an interest, and it shall survive and, to the maximum extent permitted by law, not be affected by the subsequent death, incompetency, disability, incapacity, dissolution, bankruptcy or termination of any Economic Member and the transfer of all or any portion of such Economic Member’s Units and shall extend to such Economic Member’s heirs, successors, assigns and personal representatives. Each such Economic Member hereby agrees to be bound by any representation made by any officer of the Managing Member, or the Liquidator, acting in good faith pursuant to such power of attorney; and each such Economic Member, to the maximum extent permitted by law, hereby waives any and all defenses that may be available to contest, negate or disaffirm the action of the Managing Member, or the Liquidator, taken in good faith under such power of attorney in accordance with this Section. Each Economic Member shall execute and deliver to the Managing Member, or the Liquidator, within 15 days after receipt of the request therefor, such further designation, powers of attorney and other instruments as any of such Officers or the Liquidator determines to be necessary or appropriate to effectuate this Agreement and the purposes of the Company.

Section 2.7     Term. The term of the Company commenced on the day when the Certificate of Formation was filed with the Delaware Secretary of State pursuant to the provisions of the Delaware Act. The existence of each Series shall commence upon the effective date of the Series Designation establishing such Series, as provided in Section 3.3. The term of the Company and each Series shall be perpetual, unless and until it is dissolved or terminated in accordance with the provisions of ARTICLE XII. The existence of the Company as a separate legal entity shall continue until the cancellation of the Certificate of Formation as provided in the Delaware Act.

Section 2.8     Title to Assets. All Units shall constitute personal property of the owner thereof for all purposes and a Member has no interest in specific assets of the Company or applicable Series Assets. Title to any Series Assets, whether real, personal or mixed and whether tangible or intangible, shall be deemed to be owned by the Series to which such asset was contributed or by which such asset was acquired, and none of the Company, any Member, Officer or other Series, individually or collectively, shall have any ownership interest in such Series Assets or any portion thereof. Title to any or all of the Series Assets may be held in the name of the relevant Series or one or more nominees, as the Managing Member may determine. All Series Assets shall be recorded by the Managing Member as the property of the applicable Series in the books and records maintained for such Series, irrespective of the name in which record title to such Series Assets is held.

Section 2.9     Certificate of Formation. The Certificate of Formation has been filed with the Delaware Secretary of State, such filing being hereby confirmed, ratified and approved in all respects. The Managing Member shall use reasonable efforts to cause to be filed such other certificates or documents that it determines to be necessary or appropriate for the formation, continuation, qualification and operation of a series limited liability company in Delaware or any other state in which the Company or any Series may elect to do business or own property. To the extent that the Managing Member determines such action to be necessary or appropriate, the Managing Member shall, or shall direct the appropriate Officers, to file amendments to and restatements of the Certificate of Formation and do all things to maintain the Company as a series limited liability company under Delaware law or of any other state in which the Company or any Series may elect to do business or own property, and if an Officer is so directed, such Officer shall be an authorized person of the Company and, unless otherwise provided in a Series Designation, each Series within the meaning of the Delaware Act for purposes of filing any such certificate with the Delaware Secretary of State. The Company shall not be required, before or after filing, to deliver or mail a copy of the Certificate of Formation, any qualification document or any amendment thereto to any Member.

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ARTICLE III - MEMBERS, SERIES AND UNITS

Section 3.1     Members.

(a)     Subject to paragraph (b), a Person shall be admitted as an Economic Member and Record Holder either as a result of an Initial Offering, Subsequent Offering, a Transfer or at such other time as determined by the Managing Member, and upon (i) agreeing to be bound by this Agreement’s terms by completing, signing and delivering to the Managing Member, a completed Form of Adherence, which is then accepted by the Managing Member, (ii) the prior written consent of the Managing Member, and (iii) otherwise complying with the applicable provisions of ARTICLE III and ARTICLE IV.

(b)     The Managing Member may withhold its consent to the admission of any Person as an Economic Member for any reason, including when it determines in its reasonable discretion that such admission could: (i) result in there being 2,000 or more beneficial owners (as such term is used under the Exchange Act) or 500 or more beneficial owners that are not accredited investors (as defined under the Securities Act) of any Series of Units, as specified in Section 12(g)(1)(A)(ii) of the Exchange Act, (ii) cause such Person’s holding to be in excess of the Aggregate Ownership Limit, (iii) cause the Person’s investment in all Units (of all Series in the aggregate) to exceed the Individual Aggregate Limit, (iv) could adversely affect the Company or a Series or subject the Company, a Series, the Managing Member or any of their respective Affiliates to any additional regulatory or governmental requirements or cause the Company to be disqualified as a limited liability company, or subject the Company, any Series, the Managing Member or any of their respective Affiliates to any tax to which it would not otherwise be subject, (v) cause the Company to be required to register as an investment company under the Investment Company Act, (vi) cause the Managing Member or any of its Affiliates being required to register under the Investment Advisers Act, (vii) cause the assets of the Company or any Series to be treated as plan assets as defined in Section 3(42) of ERISA, or (viii) result in a loss of (a) partnership status by the Company for US federal income tax purposes or the termination of the Company for US federal income tax purposes or (b) corporation taxable as an association status for US federal income tax purposes of any Series or termination of any Series for US federal income tax purposes. A Person may become a Record Holder without the consent or approval of any of the Economic Members. A Person may not become a Member without acquiring a Unit.

(c)     The name and mailing address of each Member shall be listed on the books and records of the Company and each Series maintained for such purpose by the Company and each Series. The Managing Member shall update the books and records of the Company and each Series from time to time as necessary to reflect accurately the information therein.

(d)     Except as otherwise provided in the Delaware Act and subject to Sections 3.1(e) and 3.3 relating to each Series, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company, and the Members shall not be obligated personally for any such debt, obligation or liability of the Company solely by reason of being a Member.

(e)     Except as otherwise provided in the Delaware Act, the debts, obligations and liabilities of a Series, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of such Series, and not of any other Series. In addition, the Members shall not be obligated personally for any such debt, obligation or liability of any Series solely by reason of being a Member.

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(f)     Unless otherwise provided herein, and subject to ARTICLE XII, Members may not be expelled from or removed as Members of the Company. Members shall not have any right to resign or redeem their Units from the Company; provided that when a transferee of a Member’s Units becomes a Record Holder of such Units, such transferring Member shall cease to be a Member of the Company with respect to the Units so transferred and that Members of a Series shall cease to be Members of such Series when such Series is finally liquidated in accordance with Section 12.3.

(g)     Except as may be otherwise agreed between the Company or a Series, on the one hand, and a Member, on the other hand, any Member shall be entitled to and may have business interests and engage in business activities in addition to those relating to the Company or a Series, including business interests and activities in direct competition with the Company or any Series. None of the Company, any Series or any of the other Members shall have any rights by virtue of this Agreement in any such business interests or activities of any Member.

(h)     Commonwealth Markets Inc. was appointed as the Company’s Managing Member with effect from the date of the formation of the Company on June 12, 2019 and shall continue as Managing Member of the Company until the earlier of (i) the dissolution of the Company pursuant to Section 12.1(a), or (ii) its removal or replacement pursuant to Section 4.3 or ARTICLE XI. Except as otherwise set forth in the Series Designation, the Managing Member of each Series shall be Commonwealth Markets Inc. until the earlier of (i) the dissolution of the Series pursuant to Section 12.1(b) or (ii) its removal or replacement pursuant to Section 4.3 or ARTICLE XI. Unless otherwise set forth in the applicable Series Designation, the Managing Member or its Affiliates shall, as at the closing of any Initial Offering, hold at least 2.00% of the Units of the Series being issued pursuant to such Initial Offering. Unless provided otherwise in this Agreement, the Units held by the Managing Member or any of its Affiliates shall be identical to those of an Economic Member and will not have any additional distribution, redemption, conversion or liquidation rights by virtue of its status as the Managing Member; provided, that the Managing Member shall have the rights, duties and obligations of the Managing Member hereunder, regardless of whether the Managing Member shall hold any Units.

Section 3.2     Capital Contributions.

(a)     The minimum number of Units a Member may acquire is one (1) Unit or such higher or lesser amount as the Managing Member may determine from time to time and as specified in each Series Designation, as applicable. Persons acquiring Units through an Initial Offering or Subsequent Offering shall make a Capital Contribution to the Company in an amount equal to the per share price determined in connection with such Initial Offering or Subsequent Offering and multiplied by the number of Units acquired by such Person in such Initial Offering or Subsequent Offering, as applicable. Persons acquiring Units in a manner other than through an Initial Offering or Subsequent Offering or pursuant to a Transfer shall make such Capital Contribution as shall be determined by the Managing Member in its sole discretion.

(b)     Except as expressly permitted by the Managing Member, in its sole discretion (i) initial and any additional Capital Contributions to the Company or Series as applicable, by any Member shall be payable in cash and (ii) initial and any additional Capital Contributions shall be payable in one installment and shall be paid prior to the date of the proposed acceptance by the Managing Member of a Person’s admission as a Member to a Series (or a Member’s application to acquire additional Units) (or within five business days thereafter with the Managing Member’s approval). No Member shall be required to make an additional capital contribution to the Company or Series but may make an additional Capital Contribution to acquire additional Units at such Member’s sole discretion.

(c)     Except to the extent expressly provided in this Agreement (including any Series Designation): (i) no Member shall be entitled to the withdrawal or return of its Capital Contribution, except to the extent, if any, that distributions made pursuant to this Agreement or upon dissolution or termination of the Company or any Series may be considered as such by law and then only to the extent provided for in this Agreement; (ii) no Member holding any Series of any Units of a Series shall have priority over any other Member holding the same Series either as to the return of Capital Contributions or as to distributions; (iii) no interest shall be paid by the Company or any Series on any Capital Contributions; and (iv) no Economic Member, in its capacity as such, shall participate in the operation or management of the business of the Company or any Series, transact any business in the Company’s or any Series’ name or have the power to sign documents for or otherwise bind the Company or any Series by reason of being a Member.

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Section 3.3     Series of the Company.

(a)      Establishment of Series. Subject to this Agreement’s provisions, the Managing Member may, at any time and from time to time and in compliance with paragraph (c), cause the Company to establish in writing (each, a Series Designation) one or more series as such term is used under Section 18-215 of the Delaware Act (each a Series). The Series Designation shall relate solely to the Series established thereby and shall not be construed: (i) to affect the terms and conditions of any other Series, or (ii) to designate, fix or determine the rights, powers, authority, privileges, preferences, duties, responsibilities, liabilities and obligations in respect of Units associated with any other Series, or the Members associated therewith. The terms and conditions for each Series established pursuant to this Section shall be as set forth in this Agreement and the Series Designation, as applicable, for the Series. Upon approval of any Series Designation by the Managing Member, such Series Designation shall be attached to this Agreement as an Exhibit until such time as none of such Units of such Series remain Outstanding.

(b)      Series Operation. Each of the Series shall operate to the extent practicable as if it were a separate limited liability company.

(c)      Series Designation. The Series Designation establishing a Series may: (i) specify a name or names under which the business and affairs of such Series may be conducted; (ii) designate, fix and determine the relative rights, powers, authority, privileges, preferences, duties, responsibilities, liabilities and obligations in respect of Units of such Series and the Members associated therewith (to the extent such terms differ from those set forth in this Agreement) and (iii) designate or authorize the designation of specific Officers to be associated with such Series. A Series Designation (or any resolution of the Managing Member amending any Series Designation) shall be effective when a duly executed original of the same is included by the Managing Member among the permanent records of the Company, and shall be annexed to, and constitute part of, this Agreement (it being understood and agreed that, upon such effective date, the Series described in such Series Designation shall be deemed to have been established and the Units of such Series shall be deemed to have been authorized in accordance with the provisions thereof). The Series Designation establishing a Series may set forth specific provisions governing the rights of such Series against a Member associated with such Series who fails to comply with the applicable provisions of this Agreement (including, for the avoidance of doubt, the applicable provisions of such Series Designation). If there is a conflict between the terms and conditions of this Agreement and a Series Designation, the terms and conditions of the Series Designation shall prevail.

(d)       Assets and Liabilities Associated with a Series.

(i)     Assets Associated with a Series. All consideration received by the Company for the issuance or sale of Units of a particular Series, together with all assets in which such consideration is invested or reinvested, and all income, earnings, profits and proceeds thereof, from whatever source derived, including any proceeds derived from the sale, exchange or liquidation of such assets, and any funds or payments derived from any reinvestment of such proceeds, in whatever form the same may be (assets), shall, subject to this Agreement’s provisions, be held for the benefit of the Series or the Members associated with such Series, and not for the benefit of the Members associated with any other Series, for all purposes, and shall be accounted for and recorded upon the books and records of the Series separately from any assets associated with any other Series. Such assets are herein referred to as assets associated with that Series. If there are any assets in relation to the Company that, in the Managing Member’s reasonable judgment, are not readily associated with a particular Series, the Managing Member shall allocate such assets to, between or among any one or more of the Series, in such manner and on such basis as the Managing Member deems fair and equitable, and in accordance with the Allocation Policy, and any asset so allocated to a particular Series shall thereupon be deemed to be an asset associated with that Series. Each allocation by the Managing Member pursuant to the provisions of this paragraph shall be conclusive and binding upon the Members associated with each and every Series. Separate and distinct records shall be maintained for each and every Series, and the Managing Member shall not commingle the assets of one Series with the assets of any other Series.

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(ii)     Liabilities Associated with a Series. All debts, liabilities, expenses, costs, charges, obligations and reserves incurred by, contracted for or otherwise existing (liabilities) with respect to a particular Series shall be charged against the assets associated with that Series. Such liabilities are herein referred to as liabilities associated with that Series. If there are any liabilities in relation to the Company that, in the Managing Member’s reasonable judgment, are not readily associated with a particular Series, the Managing Member shall allocate and charge (including indemnification obligations) such liabilities to, between or among any one or more of the Series, in such manner and on such basis as the Managing Member deems fair and equitable and in accordance with the Allocation Policy, and any liability so allocated and charged to a particular Series shall thereupon be deemed to be a liability associated with that Series. Each allocation by the Managing Member pursuant to the provisions of this Section shall be conclusive and binding upon the Members associated with each and every Series. All liabilities associated with a Series shall be enforceable against the assets associated with that Series only, and not against the assets associated with the Company or any other Series, and except to the extent set forth above, no liabilities shall be enforceable against the assets associated with any Series prior to the allocation and charging of such liabilities as provided above. Any allocation of liabilities that are not readily associated with a particular Series to, between or among one or more of the Series shall not represent a commingling of such Series to pool capital for the purpose of carrying on a trade or business or making common investments and sharing in profits and losses therefrom. The Managing Member has caused notice of this limitation on inter-series liabilities to be set forth in the Certificate of Formation, and, accordingly, the statutory provisions of Section 18-215(b) of the Delaware Act relating to limitations on inter-series liabilities (and the statutory effect under Section 18-207 of the Delaware Act of setting forth such notice in the Certificate of Formation) shall apply to the Company and each Series. Notwithstanding any other provision of this Agreement, no distribution on or in respect of Units in a particular Series, including, for the avoidance of doubt, any distribution made in connection with the winding up of such Series, shall be effected by the Company other than from the assets associated with that Series, nor shall any Member or former Member associated with a Series otherwise have any right or claim against the assets associated with any other Series (except to the extent that such Member or former Member has such a right or claim hereunder as a Member or former Member associated with such other Series or in a capacity other than as a Member or former Member).

(e)       Ownership of Series Assets. Title to and beneficial interest in Series Assets shall be deemed to be held and owned by the relevant Series and no Member or Members of such Series, individually or collectively, shall have any title to or beneficial interest in specific Series Assets or any portion thereof. Each Member of a Series irrevocably waives any right that it may have to maintain an action for partition with respect to its interest in the Company, any Series or any Series Assets. Any Series Assets may be held or registered in the name of the relevant Series, in the name of a nominee or as the Managing Member may determine; provided, however, that Series Assets shall be recorded as the assets of the relevant Series on the Company’s books and records, irrespective of the name in which legal title to such Series Assets is held. Any corporation, brokerage firm or transfer agent called upon to transfer any Series Assets to or from the name of any Series shall be entitled to rely upon instructions or assignments signed or purporting to be signed by the Managing Member or its agents without inquiry as to the authority of the person signing or purporting to sign such instruction or assignment or as to the validity of any transfer to or from the name of such Series.

(f)       Prohibition on Issuance of Preference Units. No Units shall entitle any Member to any preemptive, preferential or similar rights unless such preemptive, preferential or similar rights are set forth in the applicable Series Designation on or prior to the date of the Initial Offering of any Units of such Series (the designation of such preemptive, preferential or similar rights with respect to a Series in the Series Designation, the Preference Designation).

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Section 3.4     Authorization to Issue Units.

(a)     The Company may issue Units, and options, rights and warrants relating to Units, for any Company or Series purpose at any time and from time to time to such Persons for such consideration (which may be cash, property, services or any other lawful consideration) or for no consideration and on such terms and conditions as the Managing Member shall determine, all without the approval of the Economic Members. Each Unit shall have the rights and be governed by the provisions set forth in this Agreement (including any Series Designation).

(b)     Subject to Section 6.3(a)(i), and unless otherwise provided in the applicable Series Designation, the Company is authorized to issue in respect of each Series an unlimited number of Units. All Units issued pursuant to, and in accordance with the requirements of, this ARTICLE III shall be validly issued Units in the Company, except to the extent otherwise provided in the Delaware Act or this Agreement (including any Series Designation).

Section 3.5     Voting Rights of Units Generally. Unless otherwise provided in this Agreement or any Series Designation, (i) each Record Holder of Units shall be entitled to one vote per Unit for all matters submitted for the consent or approval of Members generally, (ii) all Record Holders of Units (regardless of Series) shall vote together as a single class on all matters as to which all Record Holders of Units are entitled to vote, (iii) Record Holders of a particular Series of Units shall be entitled to one vote per Unit for all matters submitted for the consent or approval of the Members of such Series and (iv) the Managing Member or any of its Affiliates shall not be entitled to vote in connection with any Units they hold pursuant to Section 3.1(h) and no such Units shall be deemed Outstanding for purposes of any such vote.

Section 3.6     Record Holders. The Company shall be entitled to recognize the Record Holder as the owner of a Unit and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such Unit on the part of any other Person, regardless of whether the Company shall have actual or other notice thereof, except as otherwise provided by law or any applicable rule, regulation, guideline or requirement of any National Securities Exchange or over-the-counter market on which such Units are listed for trading (if ever). Without limiting the foregoing, when a Person (such as a broker, dealer, bank, trust company or clearing corporation or an agent of any of the foregoing) is acting as nominee, agent or in some other representative capacity for another Person in acquiring or holding Units, as between the Company on the one hand, and such other Persons on the other, such representative Person shall be the Record Holder of such Units.

Section 3.7     Splits.

(a)     Subject to paragraph (c) of this Section and Section 3.4, and unless otherwise provided in any Preference Designation, the Company may make a pro rata distribution of Units of a Series to all Record Holders of such Series, or may effect a subdivision or combination of Units of any Series, in each case, on an equal per Unit basis and so long as, after any such event, any amounts calculated on a per Unit basis or stated as a number of Units are proportionately adjusted.

(b)     Whenever such a distribution, subdivision or combination of Units is declared, the Managing Member shall select a date as of which the distribution, subdivision or combination shall be effective. The Managing Member shall send notice thereof at least 20 days prior to the date of such distribution, subdivision or combination to each Record Holder as of a date not less than 10 days prior to the date of such distribution, subdivision or combination. The Managing Member also may cause a firm of independent public accountants selected by it to calculate the number of Units to be held by each Record Holder after giving effect to such distribution, subdivision or combination. The Managing Member shall be entitled to rely on any certificate provided by such firm as conclusive evidence of the accuracy of such calculation.

(c)     Subject to Section 3.4 and unless otherwise provided in any Series Designation, the Company shall not issue fractional Units upon any distribution, subdivision or combination of Units. If a distribution, subdivision or combination of Units would otherwise result in the issuance of fractional Units, each fractional Unit shall be rounded to the nearest whole Unit (and a 0.5 Unit shall be rounded to the next higher Unit).

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Section 3.8     Agreements. The rights of all Members and the terms of all Units are subject to this Agreement’s provisions (including any Series Designation).

ARTICLE IV - REGISTRATION AND TRANSFER OF UNITS.

Section 4.1     Maintenance of a Register. Subject to the restrictions on Transfer and ownership limitations contained below:

(a)     The Company shall keep or cause to be kept on behalf of the Company and each Series a register that will set forth the Record Holders of each of the Units and information regarding the Transfer of each of the Units. The Managing Member is hereby initially appointed as registrar and transfer agent of the Units, provided that the Managing Member may appoint such third party registrar and transfer agent as it determines appropriate in its sole discretion, for the purpose of registering Units and Transfers of such Units as herein provided, including as set forth in any Series Designation.

(b)     Upon acceptance by the Managing Member of the Transfer of any Unit, each transferee of a Unit (i) shall be admitted to the Company as a Substitute Economic Member with respect to the Units so transferred to such transferee when any such transfer or admission is reflected in the books and records of the Company, (ii) shall be deemed to agree to be bound by this Agreement’s terms by completing a Form of Adherence to the reasonable satisfaction of the Managing Member in accordance with Section 4.2(g)(ii), (iii) shall become the Record Holder of the Units so transferred, (iv) grants powers of attorney to the Managing Member and any Liquidator of the Company and each of their authorized officers and attorneys in fact, as the case may be, as specified herein, and (v) makes the consents and waivers contained in this Agreement. The Transfer of any Units and the admission of any new Economic Member shall not constitute an amendment to this Agreement, and no amendment to this Agreement shall be required for the admission of new Economic Members.

(c)     Nothing contained in this Agreement shall preclude the settlement of any transactions involving Units entered into through the facilities of any National Securities Exchange or over-the-counter market on which such Units are listed for trading, if any.

Section 4.2     Ownership Limitations.

(a)     Any other provision of this Section 4.2 to the contrary notwithstanding, no person who is ineligible to be licensed as an owner of race horses in any North American jurisdiction shall own, directly or indirectly, any Unit or be assigned the economic benefits of ownership of any Unit unless this restriction is expressly waived by the Managing Member.

(b)     No Transfer of any Economic Member’s Unit, whether voluntary or involuntary, shall be valid or effective, and no transferee shall become a substituted Economic Member, unless the written consent of the Managing Member has been obtained, which consent may be withheld in its sole and absolute discretion as further described in this Section 4.2. In the event of any Transfer, all of the conditions of the remainder of this Section must also be satisfied. Notwithstanding the foregoing but subject to Sections 3.6 and 4.2(a), assignment of the economic benefits of ownership of Units may be made without the Managing Member’s consent, provided that the assignee is not an ineligible or unsuitable investor under applicable law.

(c)     No Transfer of any Economic Member’s Units, whether voluntary or involuntary, shall be valid or effective unless the Managing Member determines, after consultation with legal counsel acting for the Company, that such Transfer will not, unless waived by the Managing Member:

(i)     result in the transferee directly or indirectly owning in excess of the Aggregate Ownership Limit;

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(ii)     result in there being 2,000 or more beneficial owners (as such term is used under the Exchange Act) or 500 or more beneficial owners that are not accredited investors (as defined under the Securities Act) of any Series of Units, as specified in Section 12(g)(1)(A)(ii) of the Exchange Act, unless such Units have been registered under the Exchange Act or the Company is otherwise an Exchange Act reporting company;

(iii)     cause all or any portion of the assets of the Company or any Series to constitute plan assets for purposes of ERISA;

(iv)     adversely affect the Company or such Series, or subject the Company, the Series, the Managing Member or any of their respective Affiliates to any additional regulatory or governmental requirements or cause the Company to be disqualified as a limited liability company or subject the Company, any Series, the Managing Member or any of their respective Affiliates to any tax to which it would not otherwise be subject;

(v)     require registration of the Company, any Series or any Units under any securities laws of the United States of America, any state thereof or any other jurisdiction; or

(vi)     violate or be inconsistent with any representation or warranty made by the transferring Economic Member.

(d)     The transferring Economic Member, or such Economic Member’s legal representative, shall give the Managing Member prior written notice before making any voluntary Transfer and notice within thirty (30) days after any involuntary Transfer (unless such notice period is otherwise waived by the Managing Member), and shall provide sufficient information to allow legal counsel acting for the Company to make the determination that the proposed Transfer will not result in any of the consequences referred to in paragraphs (c)(i) through (c)(vi) above. If a Transfer occurs by reason of the death of an Economic Member or assignee, the notice may be given by the duly authorized representative of the estate of the Economic Member or assignee. The notice must be supported by proof of legal authority and valid assignment in form and substance acceptable to the Managing Member.

(e)     If any Transfer permitted by this Section shall result in beneficial ownership by multiple Persons of any Economic Member’s interest in the Company, the Managing Member may require one or more trustees or nominees to be designated to represent a portion of or the entire interest transferred for the purpose of receiving all notices which may be given and all payments which may be made under this Agreement, and for the purpose of exercising the rights which the transferor as an Economic Member had pursuant to this Agreement’s provisions.

(f)     A transferee shall be entitled to any future distributions attributable to the Units transferred to such transferee and to transfer such Units in accordance with this Agreement’s terms; provided, however, that such transferee shall not be entitled to the other rights of an Economic Member as a result of such Transfer until he or she becomes a Substitute Economic Member.

(g)     The Company and each Series shall incur no liability for distributions made in good faith to the transferring Economic Member until a written instrument of Transfer has been received by the Company and recorded on its books and the effective date of Transfer has passed.

(h)     Any other provision of this Agreement to the contrary notwithstanding, any Substitute Economic Member shall be bound by the provisions hereof. Prior to recognizing any Transfer in accordance with this Section, the Managing Member may require, in its sole discretion:

(i)     the transferring Economic Member and each transferee to execute one or more deeds or other instruments of Transfer in a form satisfactory to the Managing Member;

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(ii)     each transferee to acknowledge its assumption (in whole or, if the Transfer is in respect of part only, in the proportionate part) of the obligations of the transferring Economic Member by executing a Form of Adherence (or any other equivalent instrument as determined by the Managing Member);

(iii)     each transferee to provide all the information required by the Managing Member to satisfy itself as to anti-money laundering, counter-terrorist financing and sanctions compliance matters; and

(iv)     payment by the transferring Economic Member, in full, of the costs and expenses referred to in paragraph (i) below,

and no Transfer shall be completed or recorded in the books of the Company, and no proposed Substitute Economic Member shall be admitted to the Company as an Economic Member, unless and until each of these requirements has been satisfied or, at the sole discretion of the Managing Member, waived.

(i)     The transferring Economic Member shall bear all costs and expenses arising in connection with any proposed Transfer, whether or not the Transfer proceeds to completion, including any legal fees incurred by the Company or any broker or dealer, any costs or expenses in connection with any opinion of counsel, and any transfer taxes and filing fees.

Section 4.3     Transfer of Units and Obligations of the Managing Member.

(a)     The Managing Member may Transfer all Units acquired by the Managing Member (including all Units acquired by the Managing Member in the Initial Offering pursuant to Section 3.1(h)) at any time and from time to time following the closing of the Initial Offering.

(b)     The Economic Members hereby authorize the Managing Member to assign its rights, obligations and title as Managing Member to an Affiliate of the Managing Member without the prior consent of any other Person, and, in connection with such transfer, designate such Affiliate of the Managing Member as a successor Managing Member provided, that the Managing Member shall notify the applicable Economic Members of such change in the next regular communication to such Economic Members.

(c)     Except as set forth in Section 4.3(b) above, in the event of the resignation of the Managing Member of its rights, obligations and title as Managing Member, the Managing Member shall nominate a successor Managing Member and the vote of a majority of the Units held by Economic Members shall be required to elect such successor Managing Member. The Managing Member shall continue to serve as the Managing Member of the Company until such date as a successor Managing Member is elected pursuant to the terms of this Section 4.3(c).

Section 4.4     Remedies for Breach. If the Managing Member shall at any time determine in good faith that a Transfer or other event has taken place that results in a violation of this ARTICLE IV, the Managing Member shall take such action as it deems advisable to refuse to give effect to or to prevent such Transfer or other event, including, without limitation, causing the Company to redeem shares, refusing to give effect to such Transfer on the books of the Company or instituting proceedings to enjoin such Transfer or other event.

ARTICLE V - MANAGEMENT AND OPERATION OF THE COMPANY AND EACH SERIES

Section 5.1     Power and Authority of Managing Member. Except as explicitly set forth in this Agreement, the Managing Member, as appointed pursuant to Section 3.1(h) of this Agreement, shall have full power and authority to do, and to direct the Officers to do, all things and on such terms as it determines to be necessary or appropriate to conduct the business of the Company and each Series, to exercise all powers set forth in Section 2.5 and to carry out the purposes set forth in Section 2.4, in each case without the consent of the Economic Members, including but not limited to the following:

(a)     the making of any expenditures, the lending or borrowing of money, the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtedness, including entering into on behalf of a Series, an Operating Expenses Reimbursement Obligation, or indebtedness that is convertible into Units, and the incurring of any other obligations;

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(b)     the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Company or any Series (including, but not limited to, the filing of periodic reports on Forms 1-K, 1-SA and 1-U with the U.S. Securities and Exchange Commission), and the making of any tax elections;

(c)     the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or exchange of any or all of the assets of the Company or any Series or the merger or other combination of the Company with or into another Person and for the avoidance of doubt, any action taken by the Managing Member pursuant to this sub-paragraph shall not require the consent of the Economic Members;

(d)     (i) the use of the assets of the Company (including cash on hand) for any purpose consistent with this Agreement’s terms, including the financing of the conduct of the operations of the Company and the repayment of obligations of the Company and (ii) the use of the assets of a Series (including cash on hand) for any purpose consistent with this Agreement’s terms, including the financing of the conduct of the operations of such Series and the repayment of obligations of such Series;

(e)     the negotiation, execution and performance of any contracts, conveyances or other instruments (including instruments that limit the liability of the Company or any Series under contractual arrangements to all or particular assets of the Company or any Series);

(f)     the declaration and payment of distributions of Free Cash Flows or other assets to Members associated with a Series;

(g)     the election and removal of Officers of the Company or associated with any Series;

(h)     the selection, retention and dismissal of employees, agents, outside attorneys, accountants, consultants and contractors, and the determination of their compensation and other terms of employment, retention or hiring, and the payment of fees, expenses, salaries, wages and other compensation to such Persons;

(i)     the selection, retention and dismissal of trainers to train and race the Series’ Thoroughbreds;     

(j)     the solicitation of proxies from holders of any Series of Units issued on or after the date of this Agreement that entitles the holders thereof to vote on any matter submitted for consent or approval of Economic Members under this Agreement;

(k)     the maintenance of insurance for the benefit of the Company, any Series and the Indemnified Persons and the reinvestment by the Managing Member in its sole discretion, of any proceeds received by such Series from an insurance claim in a replacement Series Asset which is substantially similar to that which comprised the Series Asset prior to the event giving rise to such insurance payment;

(l)     the formation of, or acquisition or disposition of an interest in, and the contribution of property and the making of loans to, any limited or general partnership, joint venture, corporation, limited liability company or other entity or arrangement;

(m)     the placement of any Free Cash Flow funds in deposit accounts in the name of a Series or of a custodian for the account of a Series, or to invest those Free Cash Flow funds in any other investments for the account of such Series, in each case pending the application of those Free Cash Flow funds in meeting liabilities of the Series or making distributions or other payments to the Members (as the case may be);

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(n)     the control of any matters affecting the rights and obligations of the Company or any Series, including the bringing, prosecuting and defending of actions at law or in equity and otherwise engaging in the conduct of litigation, arbitration or remediation, and the incurring of legal expense and the settlement of claims and litigation, including in respect of taxes;

(o)     the indemnification of any Person against liabilities and contingencies to the maximum extent permitted by law;

(p)     the giving of consent of or voting by the Company or any Series in respect of any securities that may be owned by the Company or such Series;

(q)     the waiver of any condition or other matter by the Company or any Series;

(r)     the entering into of listing agreements with any National Securities Exchange or over-the-counter market and the delisting of some or all of the Units from, or requesting that trading be suspended on, any such exchange or market;

(s)     the issuance, sale or other disposition, and the purchase or other acquisition, of Units or options, rights or warrants relating to Units;

(t)     the registration of any offer, issuance, sale or resale of Units or other securities or any Series issued or to be issued by the Company under the Securities Act and any other applicable securities laws (including any resale of Units or other securities by Members or other security holders);

(u)     the execution and delivery of agreements with Affiliates of the Company or other Persons to render services to the Company or any Series;

(v)     the adoption, amendment and repeal of the Allocation Policy;

(w)     the selection of auditors for the Company and any Series;

(x)     the selection of any transfer agent or depositor for any securities of the Company or any Series, and the entry into such agreements and provision of such other information as shall be required for such transfer agent or depositor to perform its applicable functions; and

(y)     unless otherwise provided in this Agreement or the Series Designation, the calling of a vote of the Economic Members as to any matter to be voted on by all Economic Members of the Company or if a particular Series, as applicable.

The authority and functions of the Managing Member, on the one hand, and of the Officers, on the other hand, shall be identical to the authority and functions of the board of directors and officers, respectively, of a corporation organized under the DGCL in addition to the powers that now or hereafter can be granted to managers under the Delaware Act. No Economic Member, by virtue of its status as such, shall have any management power over the business and affairs of the Company or any Series or actual or apparent authority to enter into, execute or deliver contracts on behalf of, or to otherwise bind, the Company or any Series.

Section 5.2     Determinations by the Managing Member. In furtherance of the authority granted to the Managing Member pursuant to Section 5.1 of this Agreement, the determination as to any of the following matters, made in good faith by or pursuant to the direction of the Managing Member consistent with this Agreement, shall be final and conclusive and shall be binding upon the Company and each Series and every holder of Units:

(a)     the amount of Free Cash Flow of any Series for any period and the amount of assets at any time legally available for the payment of distributions on Units of any Series;

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(b)     the amount of paid-in surplus, net assets, other surplus, annual or other cash flow, funds from operations, net profit, net assets in excess of capital, undivided profits or excess of profits over losses on sales of assets; the amount, purpose, time of creation, increase or decrease, alteration or cancellation of any reserves or charges and the propriety thereof (whether or not any obligation or liability for which such reserves or charges shall have been created shall have been paid or discharged);

(c)     any interpretation of the terms, preferences, conversion or other rights, voting powers or rights, restrictions, limitations as to distributions, qualifications or terms or conditions of redemption of any Series;

(d)     the fair value, or any sale, bid or asked price to be applied in determining the fair value, of any asset owned or held by any Series or of any Units;

(e)     the number of Units within a Series;

(f)     any matter relating to the acquisition, holding and disposition of any assets by any Series;

(g)     the evaluation of any competing interests among the Series and the resolution of any conflicts of interests among the Series;

(h)     each of the matters set forth in Section 5.1(a) through Section 5.1(y); or

(i)     any other matter relating to the business and affairs of the Company or any Series or required or permitted by applicable law, this Agreement or otherwise to be determined by the Managing Member.

Section 5.3     Delegation. The Managing Member may delegate to any Person or Persons any of the powers and authority vested in it hereunder and may engage such Person or Persons to provide administrative, compliance, technological and accounting services to the Company, on such terms and conditions as it may consider appropriate.

Section 5.4     Advisory Board.

(a)     The Managing Member may establish an Advisory Board comprised of members of the Managing Member’s expert network and external advisors. The Advisory Board will be available to provide guidance to the Managing Member on the strategy and progress of the Company and with respect to the following matters: (i) material conflicts arising or that are reasonably likely to arise among or between the Managing Member, the Company, a Series or the Economic Members; (ii) any material transaction between the Company or a Series and the Managing Member or any of its Affiliates, another Series or an Economic Member (other than the purchase of Units in such Series); (iii) the appropriate levels of annual insurance costs and other operating expenses specific to each individual Series Asset; (iv) fees, expenses, assets, revenues and availability of funds for distribution with respect to each Series on an annual basis; and (vii) any service providers appointed by the Managing Member in respect of the Series Assets. In addition, the Managing Member may consult with the Advisory Board in connection with the acquisition and disposition of a Series Asset and may participate in an annual review of the Company’s acquisition policy.

(b)     If the Advisory Board determines that the interests of any member of the Advisory Board conflict to a material extent with the interests of a Series or the Company as a whole, such member of the Advisory Board shall be excluded from participating in any discussion of the matters to which that conflict relates and shall not participate in the provision of guidance to the Managing Member in respect of such matters, unless a majority of the other members of the Advisory Board determines otherwise.

(c)     The Advisory Board members shall not be entitled to compensation by the Company or any Series in connection with their role as members of the Advisory Board (including compensation for attendance at meetings of the Advisory Board), provided, however, the Company or any applicable Series shall reimburse a member of the Advisory Board for any out of pocket expenses or Operating Expenses actually incurred by it or any of its Affiliates on behalf of the Company or a Series when acting upon the Managing Member’s instructions or pursuant to a written agreement between the Company or a Series and such member of the Advisory Board or its Affiliates.

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(d)     The Advisory Board members shall not be deemed managers or other persons with duties to the Company or any Series (under Sections 18-1101 or 18-1104 of the Delaware Act or under any other applicable law or in equity) and shall have no fiduciary duty to the Company or any Series. The Managing Member shall be entitled to rely upon, and shall be fully protected in relying upon, reports and information of the Advisory Board to the extent the Managing Member reasonably believes that such matters are within the professional or expert competence of the Advisory Board members, and shall be protected under Section 18-406 of the Delaware Act in relying thereon.

Section 5.5     Exculpation, Indemnification, Advances and Insurance.

(a)     Subject to other applicable provisions of this ARTICLE V including Section 5.7, the Indemnified Persons shall not be liable to the Company or any Series for any acts or omissions by any of the Indemnified Persons arising from the exercise of their rights or performance of their duties and obligations in connection with the Company or any Series, this Agreement or any investment made or held by the Company or any Series, including with respect to any acts or omissions made while serving at the request of the Company or on behalf of any Series as an officer, director, member, partner, fiduciary or trustee of another Person, other than such acts or omissions that have been determined in a final, non-appealable decision of a court of competent jurisdiction to constitute fraud, willful misconduct or gross negligence. The Indemnified Persons shall be indemnified by the Company and, to the extent Expenses and Liabilities are associated with any Series, each such Series, in each case, to the fullest extent permitted by law, against all expenses and liabilities (including judgments, fines, penalties, interest, amounts paid in settlement with the approval of the Company and counsel fees and disbursements on a solicitor and client basis) (collectively, Expenses and Liabilities) arising from the performance of any of their duties or obligations in connection with their service to the Company or each such Series or this Agreement, or any investment made or held by the Company, each such Series, including in connection with any civil, criminal, administrative, investigative or other action, suit or proceeding to which any such Person may hereafter be made party by reason of being or having been a manager of the Company or such Series under Delaware law, an Officer of the Company or associated with such Series, a member of the Advisory Board or an officer, director, member, partner, fiduciary or trustee of another Person, provided that this indemnification shall not cover Expenses and Liabilities that arise out of the acts or omissions of any Indemnified Person that have been determined in a final, non-appealable decision of a court, arbitrator or other tribunal of competent jurisdiction to have resulted primarily from such Indemnified Person’s fraud, willful misconduct or gross negligence. Without limitation, the foregoing indemnity shall extend to any liability of any Indemnified Person, pursuant to a loan guaranty or otherwise, for any indebtedness of the Company or any Series (including any indebtedness which the Company or any Series has assumed or taken subject to), and the Managing Member or the Officers are hereby authorized and empowered, on behalf of the Company or any Series, to enter into one or more indemnity agreements consistent with the provisions of this Section in favor of any Indemnified Person having or potentially having liability for any such indebtedness. It is the intention of this paragraph that the Company and each applicable Series indemnify each Indemnified Person to the fullest extent permitted by law, provided that this indemnification shall not cover Expenses and Liabilities that arise out of the acts or omissions of any Indemnified Person that have been determined in a final, non-appealable decision of a court, arbitrator or other tribunal of competent jurisdiction to have resulted primarily from such Indemnified Person’s fraud, willful misconduct or gross negligence.

(b)     This Agreement’s provisions, to the extent they restrict the duties and liabilities of an Indemnified Person otherwise existing at law or in equity, including Section 5.7, are agreed by each Member to modify such duties and liabilities of the Indemnified Person to the maximum extent permitted by law.

(c)     Any indemnification under this Section (unless ordered by a court) shall be made by each applicable Series. To the extent, however, that an Indemnified Person has been successful on the merits or otherwise in defense of any action, suit or proceeding described above, or in defense of any claim, issue or matter therein, such Indemnified Person shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such Indemnified Person in connection therewith.

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(d)     Any Indemnified Person may apply to the Delaware Court of Chancery or any other court of competent jurisdiction in Delaware for indemnification to the extent otherwise permissible under paragraph (a) of this Section. The basis of such indemnification by a court shall be a determination by such court that indemnification of the Indemnified Person is proper in the circumstances because such Indemnified Person has met the applicable standards of conduct set forth in paragraph (a). Neither a contrary determination in the specific case under paragraph (c) of this Section, nor the absence of any determination thereunder, shall be a defense to such application or create a presumption that the Indemnified Person seeking indemnification has not met any applicable standard of conduct. Notice of any application for indemnification pursuant to this paragraph shall be given to the Company promptly upon the filing of such application. If successful, in whole or in part, the Indemnified Person seeking indemnification shall also be entitled to be paid the expense of prosecuting such application.

(e)     To the fullest extent permitted by law, expenses (including attorneys’ fees) incurred by an Indemnified Person in defending any civil, criminal, administrative or investigative action, suit or proceeding may, at the option of the Managing Member, be paid by each applicable Series in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such Indemnified Person to repay such amount if it shall ultimately be determined that such Indemnified Person is not entitled to be indemnified by each such Series as authorized in this Section.

(f)     The indemnification and advancement of expenses provided by or granted pursuant to this Section shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under this Agreement, or any other agreement (including without limitation any Series Designation), vote of Members or otherwise, and shall continue as to an Indemnified Person who has ceased to serve in such capacity and shall inure to the benefit of the heirs, successors, assigns and administrators of the Indemnified Person unless otherwise provided in a written agreement with such Indemnified Person or in the writing pursuant to which such Indemnified Person is indemnified, it being the policy of the Company that indemnification of the persons specified in paragraph (a) shall be made to the fullest extent permitted by law. The provisions of this Section shall not be deemed to preclude the indemnification of any person who is not specified in paragraph (a) but whom the Company or an applicable Series has the power or obligation to indemnify under the provisions of the Delaware Act.

(g)     The Company and any Series may, but shall not be obligated to, purchase and maintain insurance on behalf of any Person entitled to indemnification under this Section against any liability asserted against such Person and incurred by such Person in any capacity to which they are entitled to indemnification hereunder, or arising out of such Person’s status as such, whether or not the Company would have the power or the obligation to indemnify such Person against such liability under the provisions of this Section.

(h)     The indemnification and advancement of expenses provided by, or granted pursuant to, this Section shall, unless otherwise provided when authorized or ratified, inure to the benefit of the heirs, executors and administrators of any person entitled to indemnification under this Section.

(i)     The Company and any Series may, to the extent authorized from time to time by the Managing Member, provide rights to indemnification and to the advancement of expenses to employees and agents of the Company or such Series.

(j)     If this Section or any portion of this Section shall be invalidated on any ground by a court of competent jurisdiction, each applicable Series shall nevertheless indemnify each Indemnified Person as to expenses (including attorneys’ fees), judgments, fines, and amounts paid in settlement with respect to any action, suit, proceeding or investigation, whether civil, criminal or administrative, including a grand jury proceeding or action or suit brought by or in the right of the Company, to the full extent permitted by any applicable portion of this Section that shall not have been invalidated.

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(k)     Each of the Indemnified Persons may, in the performance of his, her or its duties, consult with legal counsel, accountants, and other experts, and any act or omission by such Person on behalf of the Company or any Series in furtherance of the interests of the Company or such Series in good faith in reliance upon, and in accordance with, the advice of such legal counsel, accountants or other experts will be full justification for any such act or omission, and such Person will be fully protected for such acts and omissions; provided that such legal counsel, accountants, or other experts were selected with reasonable care by or on behalf of such Indemnified Person.

(l)     An Indemnified Person shall not be denied indemnification in whole or in part under this Section because the Indemnified Person had an interest in the transaction with respect to which the indemnification applies if the transaction was otherwise permitted by this Agreement’s terms.

(m)     Any liabilities which an Indemnified Person incurs as a result of acting on behalf of the Company or any Series (whether as a fiduciary or otherwise) in connection with the operation, administration or maintenance of an employee benefit plan or any related trust or funding mechanism (whether such liabilities are in the form of excise taxes assessed by the Internal Revenue Service, penalties assessed by the Department of Labor, restitutions to such a plan or trust or other funding mechanism or to a participant or beneficiary of such plan, trust or other funding mechanism, or otherwise) shall be treated as liabilities indemnifiable under this Section, to the maximum extent permitted by law.

(n)     The Managing Member shall, in the performance of its duties, be fully protected in relying in good faith upon the records of the Company and any Series and on such information, opinions, reports or statements presented to the Company by any of the Officers or employees of the Company or associated with any Series, or by any other Person as to matters the Managing Member reasonably believes are within such other Person’s professional or expert competence (including, without limitation, the Advisory Board).

(o)     Any amendment, modification or repeal of this Section or any provision hereof shall be prospective only and shall not in any way affect the limitations on the liability of or other rights of any indemnitee under this Section as in effect immediately prior to such amendment, modification or repeal with respect to claims arising from or relating to matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when such claims may arise or be asserted and provided such Person became an indemnitee hereunder prior to such amendment, modification or repeal.

Section 5.6     Duties of Officers.

(a)     Except as set forth in Sections 5.5 and 5.7, as otherwise expressly provided in this Agreement or required by the Delaware Act, (i) the duties and obligations owed to the Company by the Officers shall be the same as the duties and obligations owed to a corporation organized under DGCL by its officers, and (ii) the duties and obligations owed to the Members by the Officers shall be the same as the duties and obligations owed to the stockholders of a corporation under the DGCL by its officers.

(b)     The Managing Member shall have the right to exercise any of the powers granted to it by this Agreement and perform any of the duties imposed upon it thereunder either directly or by or through the duly authorized Officers of the Company or associated with a Series, and the Managing Member shall not be responsible for the misconduct or negligence on the part of any such Officer duly appointed or duly authorized by the Managing Member in good faith.

Section 5.7     Standards of Conduct and Modification of Duties of the Managing Member. Notwithstanding anything to the contrary herein or under any applicable law, including, without limitation, Section 18-1101(c) of the Delaware Act, the Managing Member, in exercising its rights hereunder in its capacity as the managing member of the Company, shall be entitled to consider only such interests and factors as it desires, including its own interests, and shall have no duty or obligation (fiduciary or otherwise) to give any consideration to any interest of or factors affecting the Company, any Series or any Economic Members, and shall not be subject to any other or different standards imposed by this Agreement, any other agreement contemplated hereby, under the Delaware Act or under any other applicable law or in equity. The Managing Member shall not have any duty (including any fiduciary duty) to the Company, any Series, the Economic Members or any other Person, including any fiduciary duty associated with self-dealing or corporate opportunities, all of which are hereby expressly waived. This Section shall not in any way reduce or otherwise limit the specific obligations of the Managing Member expressly provided in this Agreement or in any other agreement with the Company or any Series.

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Section 5.8     Reliance by Third Parties. Notwithstanding anything to the contrary in this Agreement, any Person dealing with the Company or any Series shall be entitled to assume that the Managing Member and any Officer of the Company or any Series has full power and authority to encumber, sell or otherwise use in any manner any and all assets of the Company or such Series and to enter into any contracts on behalf of the Company or such Series, and such Person shall be entitled to deal with the Managing Member or any Officer as if it were the Company’s or such Series’ sole party in interest, both legally and beneficially. Each Economic Member hereby waives, to the fullest extent permitted by law, any and all defenses or other remedies that may be available against such Person to contest, negate or disaffirm any action of the Managing Member or any Officer in connection with any such dealing. In no event shall any Person dealing with the Managing Member or any Officer or its representatives be obligated to ascertain that this Agreement’s terms have been complied with or to inquire into the necessity or expedience of any act or action of the Managing Member or any Officer or its representatives. Each and every certificate, document or other instrument executed on behalf of the Company or any Series by the Managing Member or any Officer or its representatives shall be conclusive evidence in favor of any and every Person relying thereon or claiming thereunder that (a) at the time of the execution and delivery of such certificate, document or instrument, this Agreement were in full force and effect, (b) the Person executing and delivering such certificate, document or instrument was duly authorized and empowered to do so for and on behalf of the Company or any Series and (c) such certificate, document or instrument was duly executed and delivered in accordance with the terms and provisions of this Agreement and is binding upon the Company or the applicable Series.

Section 5.9     Certain Conflicts of Interest. The resolution of any Conflict of Interest approved by the Advisory Board shall be conclusively deemed to be fair and reasonable to the Company and the Members and not a breach of any duty hereunder at law, in equity or otherwise.     

ARTICLE VI - FEES AND EXPENSES

Section 6.1     Cost to Acquire the Series Asset; Brokerage Fee; Offering Expenses; Acquisition Expenses; Sourcing Fee; Organizational Fee. The following fees, costs and expenses in connection with any Initial Offering and the sourcing and acquisition of a Series Asset shall be borne by the relevant Series (except in the case of an unsuccessful Offering in which case all Abort Costs shall be borne by the Managing Member, and except to the extent assumed by the Managing Member in writing):

(a)     Cost to acquire the Series Asset;

(b)     Brokerage Fee;

(c)     Offering Expenses

(d)     Acquisition Expenses;

(e)     Sourcing Fee; and

(f)     Organizational Fee.

Section 6.2     Operating Expenses; Dissolution Fees. Each Series shall be responsible for its Operating Expenses, all costs and expenses incidental to the termination and winding up of such Series and its share of the costs and expenses incidental to the termination and winding up of the Company as allocated to it in accordance with Section 6.4.

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Section 6.3     Excess Operating Expenses; Further Issuance of Units; Operating Expenses Reimbursement Obligation(s). If there are not sufficient cash reserves of, or revenues generated by, a Series to meet its Operating Expenses, the Managing Member may:

(a)     issue additional Units in such Series in accordance with Section 3.4. Economic Members shall be notified in writing at least 10 Business Days in advance of any proposal by the Managing Member to issue additional Units pursuant to this Section; and/or

(b)     pay such excess Operating Expenses and not seek reimbursement; and/or

(c)     enter into an agreement pursuant to which the Managing Member loans to the Company an amount equal to the remaining excess Operating Expenses (the “Operating Expenses Reimbursement Obligation(s)”). The Managing Member, in its sole discretion, may impose a reasonable rate of interest (a rate no less than the Applicable Federal Rate (as defined in the Code)) on any Operating Expenses Reimbursement Obligation. The Operating Expenses Reimbursement Obligation(s) shall become repayable when cash becomes available for such purpose in accordance with ARTICLE VII.

Section 6.4     Allocation of Expenses. Any Brokerage Fee, Offering Expenses, Acquisition Expenses, Sourcing Fee and Operating Expenses shall be allocated by the Managing Member in accordance with the Allocation Policy.

Section 6.5     Overhead of the Managing Member. The Managing Member shall pay and the Economic Members shall not bear the cost of: (i) any annual administration fee to the Broker or such other amount as is agreed between the Broker and the Managing Member from time to time, (ii) all of the ordinary overhead and administrative expenses of the Managing Member including, without limitation, all costs and expenses on account of rent, utilities, insurance, office supplies, office equipment, secretarial expenses, stationery, charges for furniture, fixtures and equipment, payroll taxes, travel, entertainment, salaries and bonuses, but excluding any Operating Expenses, (iii) any Abort Costs, and (iv) such other amounts in respect of any Series as it shall agree in writing or as is explicitly set forth in any Offering Document.

ARTICLE VII - DISTRIBUTIONS

Section 7.1     Application of Cash. Subject to Section 7.3, ARTICLE XII, any Free Cash Flows of each Series after (i) repayment of any amounts outstanding under Operating Expenses Reimbursement Obligations including any accrued interest as there may be and (ii) the creation of such reserves as the Managing Member deems necessary, in its sole discretion, to meet future Operating Expenses, shall be applied and distributed as set forth in the applicable Preference Designation by way of distribution to the Members of such Series (pro rata to their Units and which, for the avoidance of doubt, may include the Managing Member or its Affiliates), and to the Managing Member in payment of the Management Fee, except to the extent waived in the sole discretion of the Managing Member.

Section 7.2     Application of Amounts upon the Liquidation of a Series. Subject to Section 7.3 and ARTICLE XII, and except as otherwise set forth in the Preference Designation, any amounts available for distribution following the liquidation of a Series, net of any fees, costs and liabilities (as determined by the Managing Member in its sole discretion), shall be applied and distributed 100% to the Members (pro rata to their Units and which, for the avoidance of doubt, may include the Managing Member and its Affiliates).

Section 7.3     Timing of Distributions.

(a)     Subject to the applicable provisions of the Delaware Act and except as otherwise provided herein, the Managing Member shall pay distributions to the Members associated with such Series pursuant to Section 7.1, at such times as the Managing Member shall reasonably determine, and pursuant to Section 7.2, as soon as reasonably practicable after the relevant amounts have been received by the Series; provided that, the Managing Member shall not be obliged to make any distribution pursuant to this Section (i) unless there are sufficient amounts available for such distribution or (ii) which, in the reasonable opinion of the Managing Member, would or might leave the Company or such Series with insufficient funds to meet any future contemplated obligations or contingencies including to meet any Operating Expenses and outstanding Operating Expenses Reimbursement Obligations (and the Managing Member is hereby authorized to retain any amounts within the Company to create a reserve to meet any such obligations or contingencies), or which otherwise may result in the Company or such Series having unreasonably small capital for the Company or such Series to continue its business as a going concern. Subject to the terms of any Series Designation (including, without limitation, the preferential rights, if any, of holders of any other class of Units of the applicable Series), distributions shall be paid to the holders of the Units of a Series on an equal per Unit basis as of the Record Date selected by the Managing Member. Notwithstanding any provision to the contrary contained in this Agreement, the Company shall not be required to make a distribution to any Member on account of its Units of any Series if such distribution would violate the Delaware Act or other applicable law.

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(b)     Notwithstanding Section 7.2 and Section 7.3(a), in the event of the termination and liquidation of a Series, all distributions shall be made in accordance with, and subject to the terms and conditions of, ARTICLE XII.

(c)     Each distribution in respect of any Units of a Series shall be paid by the Company, directly or through any other Person or agent, only to the Record Holder of such Units as of the Record Date set for such distribution. Such payment shall constitute full payment and satisfaction of the Company’s and such Series’ liability in respect of such payment, regardless of any claim of any Person who may have an interest in such payment by reason of an assignment or otherwise.

Section 7.4     Distributions in Kind. Distributions in kind of the entire or part of a Series Asset to Members are prohibited.

Section 7.5     Distributions to Members of the Company. Subject to the tax classification elections for each Series made as provided in Section 10.1:

(a)     The Company's Net Cash Flow will be distributed among Members, pro rata with their Units, at the discretion of the Managing Member; and

(b)     Distributions of cash or other property not otherwise falling within the scope of Section 7.5(a) will be made among Members pro rata with their Units.

ARTICLE VIII      

Section 8.1     Allocation of Profits of the Company. Subject to the tax classification elections for each Series and the application of the regulatory tax allocation provisions set forth in ARTICLE X, Profits of the Company will be allocated among Members in the following order of priority:

(a)     First, among Members in proportion to any prior allocation of Losses to them pursuant to section 8.2(a) until such time as the allocations provided for in this section 8.1(a) in all years equals the Losses so allocated; and

(b)     Second, among Members pro rata with their Units.

Section 8.2     Allocation of Losses of the Company. Subject to the application of the regulatory tax allocation provisions set forth in ARTICLE X, Losses of the Company will be allocated among Members in the following order of priority:

(a)     First, among Members pro rata with their positive Capital Account balances; and

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(b)     Second, among Members pro rata with their Units.

Section 8.3     Miscellaneous Allocation Provisions.

(a)     Allocations of Profits and Losses provided for in this ARTICLE VIII shall generally be made on a daily, monthly or other basis, as determined by the Managing Member using any permissible method under IRC § 706 and the Treasury Regulations promulgated thereunder.

(b)      All items of Company income, gain, loss, deduction, and any other allocations (including allocations of credits) not otherwise provided for will be divided among Members in the same proportions as they share Profits or Losses, as the case may be, for the applicable fiscal year.

ARTICLE IX - BOOKS, RECORDS, ACCOUNTING AND REPORTS

Section 9.1     Records and Accounting.

(a)     The Managing Member shall keep or cause to be kept at the principal office of the Company or such other place as determined by the Managing Member appropriate books and records with respect to the business of the Company and each Series, including all books and records necessary to provide to the Economic Members any information required to be provided pursuant to this Agreement or applicable law. Any books and records maintained by or on behalf of the Company or any Series in the regular course of its business, including the record of the Members, books of account and records of Company or Series proceedings, may be kept in such electronic form as may be determined by the Managing Member; provided, that the books and records so maintained are convertible into clearly legible written form within a reasonable period of time. The books of the Company shall be maintained, for tax and financial reporting purposes, on an accrual basis in accordance with U.S. GAAP, unless otherwise required by applicable law or other regulatory disclosure requirement.

(b)     Each Member shall have the right, upon reasonable demand for any purpose reasonably related to the Member’s Units as a member of the Company (as reasonably determined by the Managing Member) to such information pertaining to the Company as a whole and to each Series in which such Member has a Unit, as provided in Section 18-305 of the Delaware Act; provided, that prior to such Member having the ability to access such information, the Managing Member shall be permitted to require such Member to enter into a confidentiality agreement in form and substance reasonably acceptable to the Managing Member. For the avoidance of doubt, except as may be required pursuant to ARTICLE XI, a Member shall only have access to the information (including any Series Designation) referenced with respect to any Series in which such Member has a Unit and not to any Series in which such Member does not have a Unit.

(c)     Except as otherwise set forth in the applicable Series Designation, within 120 calendar days after the end of the fiscal year and 90 calendar days after the end of the semi-annual reporting date, the Managing Member shall use its commercially reasonable efforts to circulate to each Economic Member electronically by e-mail or made available via an online platform:

(i)     a financial statement of such Series prepared in accordance with U.S. GAAP, which includes a balance sheet, profit and loss statement and a cash flow statement; and

(ii)     confirmation of the number of Units in each Series Outstanding as of the end of the most recent fiscal year;

provided, that notwithstanding the foregoing, if the Company or any Series is required to disclose financial information pursuant to the Securities Act or the Exchange Act (including without limitations periodic reports under the Exchange Act or under Rule 257 under Regulation A of the Securities Act), then compliance with such provisions shall be deemed compliance with this Section 9.1(c) and no further or earlier financial reports shall be required to be provided to the Economic Members of the applicable Series with such reporting requirement.

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Section 9.2     Fiscal Year. Unless otherwise provided in a Series Designation, the fiscal year for tax and financial reporting purposes of each Series shall be a calendar year ending December 31 unless otherwise required by the Code. The fiscal year for financial reporting purposes of the Company shall be a calendar year ending December 31.

ARTICLE X - TAX MATTERS

Section 10.1     Tax Classification. The Company intends to be taxed as a partnership or a disregarded entity for federal income tax purposes and will not make any election or take any action that could cause it to be treated as an association taxable as a corporation under Subchapter C of the Code. The Company will make an election on IRS Form 8832 for each Series that is a protected series or a registered series pursuant to Section 18-215 of the Delaware Act to be treated as an association taxable as a corporation under Subchapter C of the Code and not as a partnership under Subchapter K of the Code.

Section 10.2     Partnership Audit Rules.

(a)     The new partnership audit rules codified under IRC §§ 6221 through 6234 as part of the Bipartisan Budget Act of 2015 (the “New Audit Rules”) shall apply to the Company and its tax returns, and the current and Former Members of the Company as set forth in this Agreement and under the New Audit Rules. Consistent with the New Audit Rules, each Member shall treat on his income tax return each item of income, loss or credit attributable to the Company in a manner consistent with the treatment of those items on the Company’s tax returns.

(b)     The Managing Member shall have the right to appoint, remove and replace the Company’s “partnership representative” (as referred to in the New Audit Rules) (the “Partnership Representative”) in the Managing Member’s sole discretion. The Partnership Representative shall have the right to extend the statute of limitations and settle tax audits. The Partnership Representative shall also have the right to hire outside tax advisors to assist in the audit (at the Company’s expense). The Company shall indemnify the Partnership Representative pursuant to Section 5.5, and all expenses and liabilities of the Partnership Representative in the performance of its duties shall be subject to indemnification under Section 5.5 or other indemnification rights applicable to Company management. The Managing Member and the Partnership Representative will be entitled to rely conclusively on the advice of the Company’s independent accountant or other professional tax advisors or tax counsel in making any determination in respect of the New Audit Rules. Neither the Managing Member nor the Partnership Representative shall be required to indemnify a Member or the Company with respect to any taxes or Tax Liabilities incurred under the New Audit Rules.

(c)     The Managing Member will have the power and authority to cause the Company to elect out of the New Audit Rules for one or more Fiscal Years, and each Member agrees to cooperate to execute any instrument necessary or desirable to effect such opt-out election. Each Member hereby grants to the Managing Member an irrevocable power of attorney, coupled with an interest, to execute any instrument on such Member’s behalf and in such Member’s name necessary or desirable to effect such opt-out election. No Member shall Transfer or otherwise assign Units to an assignee, including without limitation, partnerships, multiple-member LLCs, trusts or disregarded entities (including single-member LLCs), which would cause the Company to not qualify for making an opt-out election, without the prior written consent of the Managing Member. Any attempted Transfer or assignment in violation of the preceding sentence shall be void ab initio.

(d)     The Managing Member shall have the power and authority to decide, in its sole discretion, whether or not the Company makes a “push-out” election under IRC § 6226, or to decide that the Company will remain liable, consistent with the New Audit Rules, for any underpayment, and any applicable interest, penalties, addition to tax or additional amounts (collectively, the “Tax Liabilities”) determined pursuant to the New Audit Rules. If the Managing Member elects to make a “push-out” election, each Member or former Member (for the applicable fiscal year) agrees to calculate such Person’s liability and pay such Person’s share of the Tax Liabilities. The Managing Member agrees to take into consideration any reduction in Tax Liabilities resulting from information provided to the IRS with respect to specific Members that are either tax-exempt or in lower tax brackets (such information may include whether or not a Member is tax-exempt or subject to capital gains, qualified dividend, corporate or other tax rates that may be lower than the highest rate under IRC § 1). Members acknowledge, however, that they may be liable pursuant to this Agreement for Tax Liabilities if a “push-out” election is made by the Managing Member even though a Member may be otherwise exempt from U.S. taxes.

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(e)     The Managing Member will have the authority to demand that Members, including Persons who are no longer Members but were Members during a fiscal year subject to adjustment under the New Audit Rules make additional Capital Contributions to fund the Company’s payment of Tax Liabilities. The Managing Member will have the discretion to make such capital call from each current or former Member in an amount equal to the Member’s share of the Tax Liabilities for the applicable Fiscal Year(s), as determined by the Managing Member in his sole discretion. The Managing Member will also have the discretion to make capital calls from current Members pro rata with such Member’s Units. Upon receipt by a current or former Member of written notice from the Managing Member of a capital call to fund the payment of Tax Liabilities and the amount of such capital call payable by such Member, each current or former Member agrees to immediately make the required Capital Contribution in the amount demanded by the Manager. Neither the assignment of Units by a Member nor the redemption of Units by the Company shall relieve a former Member of his obligations under this Section 10.2. In the event that Units are assigned, both the assignor Member and the assignee Member shall be jointly and severally liable for the obligations of the assignor Member under this Section 10.2 or the New Audit Rules.

(f)     The Managing Member shall have the discretion to amend this Agreement as reasonably necessary to conform this Section 10.2 to any regulations or other guidance or rules issued by the IRS with respect to the New Audit Rules without approval of the Members or the Company, except to the extent that such amendment would have a material adverse effect on the economic rights of Members (as determined by the Managing Member in his reasonable discretion). The Members hereby grant the Managing Member their power of attorney to execute any such amendment on behalf of the Members.

(g)     If reasonably requested by the Managing Member or the Partnership Representative, each current and former Member shall deliver to the Managing Member or Partnership Representative (i) any certificates, forms or instruments requested by the Managing Member or Partnership Representative relating to such Member’s status under any tax laws, including evidence of the filing of tax returns and/or payment of tax, and (ii) any information reasonably requested by the Managing Member in connection with the New Audit Rules; provided, that no Member shall be required to provide copies of actual tax returns. Each current and former Member shall cooperate with the Managing Member and Partnership Representative to the extent reasonably requested by it in connection with any audit of or involved, or tax filing or other interactions with, any taxing authority on behalf of the Company or any of its existing or former investments.

(h)     To the extent that any state or local jurisdiction adopts partnership audit rules similar to the New Audit Rules, the rights and obligations of the Managing Member, the Partnership Representative and current and former Members under this Agreement with respect to the New Audit Rules shall apply equally with respect to such state or local partnership audit rules.

(i)     The obligations under this Section 10.2 shall survive the Transfer or termination of a membership interest in the Company, as well as the termination, dissolution, liquidation and winding up of the Company.

(j)     The Members agree that they shall be responsible for the reasonable expenses of the Managing Member and the Partnership Representative incurred in connection with the performance of duties pursuant to this Section, and the reasonable fees and expenses of legal and accounting services, and such Members agree to pay and contribute to the Company their pro rata share (proportionate with such each Member’s share of the proposed Tax Liabilities or the Member’s membership interest, as reasonably determined by the Managing Member) of any such expenses incurred by the Company.

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Section 10.3     Capital Accounts. The Company's accountants shall cause a capital account ("Capital Account") to be maintained by the Company for each Member in accordance with the applicable provisions of Treasury Regulation § 1.704.   

Section 10.4     Withdrawal and Return of Capital. Except as expressly provided in this Agreement, no Member shall be entitled to (i) withdraw any part of his Capital Contributions or Capital Account, or (ii) receive any distribution from the Company.

Section 10.5     Revaluation of Company Property. If there shall occur (i) an acquisition of a membership interest from the Company (other than a de minimis membership interest), (ii) a distribution to a Member in redemption of an membership interest of the Company (other than a de minimis membership interest), or (iii) the issuance of a membership interest in exchange for services, then the Company shall revalue the assets of the Company at their then fair market value and adjust the Capital Accounts in the same manner as in the case of a property distribution.   

Section 10.6     Limitation on Losses. Notwithstanding the general allocation of Profits and Losses described in ARTICLE VIII, no Member shall be allocated Losses in excess of the aggregate of such Member's positive Capital Account balance, Partnership Minimum Gain (within the meaning of Treas. Reg. § 1.704-2(b)(2)), and Partner Nonrecourse Debt Minimum Gain (within the meaning of Treas. Reg. § 1.704-2(i)(3)) (the "Adjusted Capital Account"), until such time as no Member has a positive Adjusted Capital Account balance, whereupon subsequent allocations of Losses shall again be allocated among Members pro rata with their Units. Furthermore, no Member shall be allocated Losses where it is reasonably anticipated that such Member's Adjusted Capital Account shall be negative at the end of the fiscal year in which the Losses arise or at the end of the subsequent fiscal year, as a result of distributions of Net Cash Flow during such periods, until such time as no Member would have a positive Adjusted Capital Account balance after such reasonably anticipated distributions of Net Cash Flow, whereupon subsequent allocations of Losses shall again be allocated among Members pro rata with their Units. Losses not allocated to a Member under this Section 10.6 shall be reallocated among those Members with positive Adjusted Capital Account balances pro rata with their Units.

Section 10.7     Qualified Income Offset. If a Member receives any adjustment, allocation, or distribution described in Treas. Reg. §§ 1.704-1(b)(2)(ii)(d)(4), (5), or (6), then items of Profits shall be specially allocated to such Member in an amount and manner sufficient to eliminate the deficit balance in such Member's Adjusted Capital Account as quickly as possible. It is the intention of the parties that this provision constitute a "qualified income offset" within the meaning of Treas. Reg. § 1.704-1(b)(2)(ii)(d), and this provision shall be so construed.

Section 10.8     Minimum Gain Chargeback. If there is a net decrease in Partnership Minimum Gain (within the meaning of Treas. Reg. § 1.704-2(b)(2)) or Partner Nonrecourse Debt Minimum Gain (within the meaning of Treas. Reg. § 1.704-2(i)(3)) during any fiscal year of the Company, each Member shall be specially allocated, before any other allocations under this ARTICLE X, items of income and gain for such fiscal year (and subsequent fiscal years, if necessary) in an amount equal to such Member's share (determined in accordance with Treas. Reg. §§ 1.704-2(g) and 1.704-2(i)(5), as applicable) of the net decrease in Partnership Minimum Gain or Partner Nonrecourse Debt Minimum Gain, as applicable, for such fiscal year, provided, however, that no such allocation shall be required if any of the exceptions set forth in Treas. Reg. § 1.704-2(f) apply. It is the intention of the parties that this provision constitutes a "minimum gain chargeback" within the meaning of Treas. Reg. §§ 1.704-2(f) and 1.704-2(i)(4), and this provision shall be so construed.   

Section 10.9     Partner Nonrecourse Deductions. Notwithstanding anything in this Agreement to the contrary, the Company's Partner Nonrecourse Deductions (within the meaning of Treas. Reg. § 1.704-2(i)(2)) shall be allocated solely to Members who have the economic risk of loss with respect to the partner nonrecourse liability related thereto in accordance with the provisions of Treas. Reg. § 1.704-2(i)(1).

Section 10.10    Curative Allocations. The allocations set forth in Sections 10.6 through 10.9 are intended to comply with certain requirements of the Treasury Regulations ("Regulatory Allocations"). It is the intention of Members that, to the extent possible, all Regulatory Allocations shall be offset either with other Regulatory Allocations or with special allocations of other items of Profits or Losses pursuant to this Section 10.10. Therefore, notwithstanding any other provision of this ARTICLE X (other than Regulatory Allocations), the Manager shall make such offsetting special allocations of Profits and Losses in whatever manner the Manager determines appropriate so that, after such offsetting allocations are made, each Member's Capital Account balance is, to the extent possible, equal to the Capital Account balance such Member would have had if Regulatory Allocations were not part of the Agreement and all Profits and Losses were allocated pursuant to ARTICLE VIII.

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Section 10.11    Savings Clause. It is the intention of Members that the allocations provided for in this Agreement will result in the Capital Accounts of Members at the time of the liquidation of the Company being consistent with the distributions to which Members are entitled pursuant to ARTICLE XII. If the Capital Accounts are not so consistent, then the Manager has the authority to alter the tax allocations provided for in this Agreement so that the Capital Accounts of Members are consistent to the extent possible with the distributions provided for in ARTICLE XII.

Section 10.12    No Restoration of Deficit Capital Accounts. No Member is required under any circumstances (either during the period of the Company's operation or upon the Company's dissolution and termination) to restore a deficit in such Member's Capital Account or, except as explicitly provided in this Agreement, otherwise make any contribution of cash or property to the Company without such Member's consent, which may be withheld in such Member's sole and absolute discretion.

Section 10.13     Contributed Property. In accordance with the rules of IRC § 704(c) and the Treasury Regulations promulgated thereunder, items of income, gain, loss, and deduction with respect to any property contributed to the capital of the Company shall, solely for tax purposes, be allocated among Members so as to take account of any variation between the adjusted basis of such property to the Company for federal income tax purposes and its fair market value at the time of contribution. In connection with any contribution (or deemed contribution) of appreciated property, the Manager, in consultation with the Company's tax advisors, will select an allocation method from among the permitted methods available under the applicable provisions of Treasury Regulation § 1.704.

Section 10.14     Division Among Members. If there is a change in a Member's membership interest during a fiscal year, any allocations pursuant to this Agreement shall be made so as to take into account the varying interests of Members during the period to which the allocation relates, using the interim closing of the books method for determining such allocations, or upon the unanimous agreement of Members (including any former Member affected by such allocations), using any method for determining such allocations that is provided in IRC § 706(d) and the Treasury Regulations promulgated thereunder.

ARTICLE XI - REMOVAL OF THE MANAGING MEMBER

Economic Members of the Company, acting by way of a Super Majority Vote, may elect to remove the Managing Member at any time if the Managing Member is found by a non-appealable judgment of a court of competent jurisdiction to have committed fraud in connection with a Series or the Company and which has a material adverse effect the Company. The Managing Member shall call a meeting of all of the Economic Members of the Company within 30 calendar days of such final non-appealable judgment of a court of competent jurisdiction, at which the Economic Members may (i) by Super Majority Vote, remove the Managing Member of the Company and each relevant Series in accordance with this ARTICLE XI and (ii) if the Managing Member is so removed, by a plurality, appoint a replacement Managing Member or the liquidation and dissolution and termination the Company and each of the Series in accordance with ARTICLE XII. If the Managing Member fails to call a meeting as required by this Article XI, then any Economic Member shall have the ability to demand a list of all Record Holders of the Company pursuant to Section 9.1(b) and to call a meeting at which such a vote shall be taken. In the event of its removal, the Managing Member shall be entitled to receive all amounts that have accrued and are then currently due and payable to it pursuant to this Agreement but shall forfeit its right to any future distributions. Prior to its admission as a Managing Member of any Series, any replacement Managing Member shall acquire the Units held by the departing Managing Member in such Series for fair market value and in cash immediately payable on the Transfer of such Units. For the avoidance of doubt, if the Managing Member is removed as Managing Member of the Company it shall also cease to be Managing Member of each of the Series.

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ARTICLE XII - DISSOLUTION, TERMINATION AND LIQUIDATION

Section 12.1     Dissolution and Termination.

(a)     The Company shall not be dissolved by the admission of Substitute Economic Members or Additional Economic Members or the withdrawal of a transferring Member following a Transfer associated with any Series. The Company shall dissolve, and its affairs shall be wound up, upon:

(i)     an election to dissolve the Company by the Managing Member;

(ii)     the sale, exchange, retirement or other disposition of all or substantially all of the assets and properties of all Series and the subsequent election to dissolve the Company by the Managing Member;

(iii)     the entry of a decree of judicial dissolution of the Company pursuant to the provisions of the Delaware Act;

(iv)     at any time that there are no Members of the Company, unless the business of the Company is continued in accordance with the Delaware Act; or

(v)     a vote by the Economic Members to dissolve the Company following the for-cause removal of the Managing Member in accordance with ARTICLE XI.

(b)      A Series shall not be terminated by the admission of Substitute Economic Members or Additional Economic Members or the withdrawal of a transferring Member following a Transfer associated with any Series. Unless otherwise provided in the Series Designation, a Series shall terminate, and its affairs shall be wound up, upon:

(i)     the dissolution of the Company pursuant to Section 12.1(a);

(ii)     the sale, exchange, retirement or other disposition of all or substantially all of the assets and properties of such Series and the subsequent election to dissolve the Company by the Managing Member. The termination of the Series pursuant to this sub-paragraph shall not require the consent of the Economic Members;

(iii)     an event set forth as an event of termination of such Series in the Series Designation establishing such Series;

(iv)     an election to terminate the Series by the Managing Member; or

(v)     at any time that there are no Members of such Series, unless the business of such Series is continued in accordance with the Delaware Act.

(c)      The dissolution of the Company or any Series pursuant to Section 18-801(a)(3) of the Delaware Act shall be strictly prohibited.

Section 12.2     Liquidator.

(a)     Upon dissolution of the Company or termination of any Series, the Managing Member shall select one or more Persons (which may be the Managing Member) to act as Liquidator.

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(b)     In the case of a dissolution of the Company, (i) the Liquidator shall be entitled to receive compensation for its services as Liquidator; (ii) the Liquidator shall agree not to resign at any time without 15 days prior notice to the Managing Member and may be removed at any time by the Managing Member; (iii) upon dissolution, death, incapacity, removal or resignation of the Liquidator, a successor and substitute Liquidator (who shall have and succeed to all rights, powers and duties of the original Liquidator) shall within 30 days be appointed by the Managing Member. The right to approve a successor or substitute Liquidator in the manner provided herein shall be deemed to refer also to any such successor or substitute Liquidator approved in the manner herein provided. Except as expressly provided in this ARTICLE XII, the Liquidator approved in the manner provided herein shall have and may exercise, without further authorization or consent of any of the parties hereto, all of the powers conferred upon the Managing Member under this Agreement’s terms (but subject to all of the applicable limitations, contractual and otherwise, upon the exercise of such powers) necessary or appropriate to carry out the duties and functions of the Liquidator hereunder for and during the period of time required to complete the winding up and liquidation of the Company as provided for herein. In the case of a termination of a Series, other than in connection with a dissolution of the Company, the Managing Member shall act as Liquidator.

Section 12.3     Liquidation of a Series. In connection with the liquidation of a Series, whether as a result of the dissolution of the Company or the termination of such Series, the Liquidator shall proceed to dispose of the assets of such Series, discharge its liabilities, and otherwise wind up its affairs in such manner and over such period as determined by the Liquidator, subject to Sections 18-215 and 18-804 of the Delaware Act, the terms of any Series Designation and the following:

(a)     Subject to Section 12.3(c), the assets may be disposed of by public or private sale on such terms as the Liquidator may determine. The Liquidator may defer liquidation for a reasonable time if it determines that an immediate sale or distribution of all or some of the assets would be impractical or would cause undue loss to the Members associated with such Series.

(b)     Liabilities of each Series include amounts owed to the Liquidator as compensation for serving in such capacity (subject to the terms of Section 12.2) as well as any outstanding Operating Expenses Reimbursement Obligations and any other amounts owed to Members associated with such Series otherwise than in respect of their distribution rights under ARTICLE VII. With respect to any liability that is contingent, conditional or unmatured or is otherwise not yet due and payable, the Liquidator shall either settle such claim for such amount as it thinks appropriate or establish a reserve of Free Cash Flows or other assets to provide for its payment. When paid, any unused portion of the reserve shall be applied to other liabilities or distributed as additional liquidation proceeds.

(c)     Subject to the terms of any Series Designation (including, without limitation, the preferential rights, if any, of holders of any other class of Units of the applicable Series), all property and all Free Cash Flows in excess of that required to discharge liabilities as provided in Section 12.3(b) shall be distributed to the holders of the Units of the Series on an equal per Unit basis.

Section 12.4     Cancellation of Certificate of Formation. In the case of a dissolution of the Company, upon the completion of the distribution of all Free Cash Flows and property in connection the termination of all Series (other than the reservation of amounts for payments in respect of the satisfaction of liabilities of the Company or any Series), the Certificate of Formation and all qualifications of the Company as a foreign limited liability company in jurisdictions other than Delaware shall be canceled and such other actions as may be necessary to terminate the Company shall be taken by the Liquidator or the Managing Member, as applicable.

Section 12.5     Return of Contributions. None of any Member, the Managing Member or any Officer of the Company or associated with any Series or any of their respective Affiliates, officers, directors, members, shareholders, employees, managers, partners, controlling persons, agents or independent contractors will be personally liable for, or have any obligation to contribute or loan any monies or property to the Company or any Series to enable it to effectuate, the return of the Capital Contributions of the Economic Members associated with a Series, or any portion thereof, it being expressly understood that any such return shall be made solely from Series Assets.

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Section 12.6     Waiver of Partition. To the maximum extent permitted by law, each Member hereby waives any right to partition of the Company or Series Assets.

Section 12.7     Liquidation of the Company.

(a)     If the Company is dissolved pursuant to this ARTICLE XII, as promptly as possible after dissolution and again after final liquidation, the Liquidator shall cause a proper accounting to be made by a recognized firm of certified public accountants of the Company's assets, liabilities and operations through the last day of the calendar month in which the dissolution occurs or the final liquidation is completed, as applicable.

(b)     Subject to the right of the Liquidator to set up such cash reserves as may be deemed reasonably necessary for any contingent or unforeseen liabilities or obligations of the Company, the proceeds of the liquidation and any other funds of the Company shall be distributed to:

(i)     creditors, in the order of priority as provided by law; including, to the extent permitted by law, Members who are creditors;

(ii)     Members as creditors, to the extent they did not receive distributions pursuant to paragraph 12.7(b)(i), and to Members in satisfaction of the Company's liability for distributions; and

(iii)     Members in accordance with the priorities set forth in Section 7.5.

ARTICLE XIII - AMENDMENT OF AGREEMENT, SERIES DESIGNATION

Section 13.1     General. Except as provided in Section 13.2, the Managing Member may amend any of this Agreement’s terms or any Series Designation as it determines in its sole discretion and without the consent of any of the Economic Members. Without limiting the foregoing, the Managing Member, without the approval of any Economic Member, may amend any provision of this Agreement or any Series Designation, and execute, swear to, acknowledge, deliver, file and record whatever documents may be required in connection therewith, to reflect:

(a)     a change that the Managing Member determines to be necessary or appropriate in connection with any action taken or to be taken by the Managing Member pursuant to the authority granted in ARTICLE V of this Agreement;

(b)     a change in the name of the Company, the location of the principal place of business of the Company, the registered agent of the Company or the registered office of the Company;

(c)     the admission, substitution, withdrawal or removal of Members in accordance with this Agreement or any Series Designation;

(d)     a change that the Managing Member determines to be necessary or appropriate to qualify or continue the qualification of the Company as a limited liability company under the laws of any state or to ensure that each Series will continue to be taxed as an entity for U.S. federal income tax purposes;

(e)     a change that the Managing Member determines to be necessary or appropriate to satisfy any requirements, conditions or guidelines contained in any opinion, directive, order, ruling or regulation of any federal or state agency or judicial authority or contained in any federal or state statute (including the Delaware Act);

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(f)     a change that the Managing Member determines to be necessary, desirable or appropriate to facilitate the trading of the Units (including, without limitation, the division of any class or classes or series of Outstanding Units into different classes or Series to facilitate uniformity of tax consequences within such classes or Series) or comply with any rule, regulation, guideline or requirement of any National Securities Exchange or over-the-counter market on which Units are or will be listed for trading, compliance with any of which the Managing Member deems to be in the best interests of the Company and the Members;

(g)     a change that is required to carry out the intent expressed in any Offering Document or the intent of this Agreement’s provisions or any Series Designation or is otherwise contemplated by this Agreement or any Series Designation;

(h)     a change in the fiscal year or taxable year of the Company or any Series and any other changes that the Managing Member determines to be necessary or appropriate;

(i)     an amendment that the Managing Member determines, based on the advice of counsel, to be necessary or appropriate to prevent the Company, the Managing Member, any Officers or any trustees or agents of the Company from in any manner being subjected to the provisions of the Investment Company Act, the Investment Advisers Act, or plan asset regulations adopted under ERISA, regardless of whether such regulations are substantially similar to plan asset regulations currently applied or proposed by the United States Department of Labor;

(j)     an amendment that the Managing Member determines to be necessary or appropriate in connection with the establishment or creation of additional Series pursuant to Section 3.3 or the authorization, establishment, creation or issuance of any class or series of Units of any Series pursuant to Section 3.4 and the admission of Additional Economic Members;

(k)     any other amendment other than an amendment expressly requiring consent of the Economic Members as set forth in Section 13.2; and

(l)     any other amendments substantially similar to the foregoing.

Section 13.2     Certain Amendment Requirements. Notwithstanding the provisions of Section 13.1, no amendment to this Agreement shall be made without the consent of the Economic Members holding a majority of the Outstanding Units, that:

(a)     decreases the percentage of Outstanding Units required to take any action hereunder;

(b)     materially adversely affects the rights of any of the Economic Members (including adversely affecting the holders of any particular Series of Units as compared to holders of other series of Units);

(c)     modifies Section 12.1(a) or gives any Person the right to dissolve the Company; or

(d)     modifies the term of the Company.

Section 13.3     Amendment Approval Process. If the Managing Member desires to amend any provision of this Agreement or any Series Designation, other than as permitted by Section 13.1, then it shall first adopt a resolution setting forth the amendment proposed, declaring its advisability, and then call a meeting of the Members entitled to vote in respect thereof for the consideration of such amendment. Amendments to this Agreement or any Series Designation may be proposed only by or with the consent of the Managing Member. Such meeting shall be called and held upon notice in accordance with ARTICLE XIV of this Agreement. The notice shall set forth such amendment in full or a brief summary of the changes to be implemented thereby, as the Managing Member shall deem advisable. At the meeting, a vote of Members entitled to vote thereon shall be taken for and against the proposed amendment. A proposed amendment shall be effective upon its approval by the affirmative vote of the holders of not less than a majority of the Units of all Series then Outstanding, voting together as a single class, unless a greater percentage is required under this Agreement or by Delaware law. The Company shall deliver to each Member prompt notice of the adoption of every amendment made to this Agreement or any Series Designation pursuant to this ARTICLE XIII.

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ARTICLE XIV - MEMBER MEETINGS

Section 14.1     Meetings. The Company shall not be required to hold an annual meeting of the Members. The Managing Member may, whenever it thinks fit, convene meetings of the Company or any Series. The non-receipt by any Member of a notice convening a meeting shall not invalidate the proceedings at that meeting.

Section 14.2     Quorum. No business shall be transacted at any meeting unless a quorum of Members is present at the time when the meeting proceeds to business; in respect of meetings of the Company, Members holding 50% of the Units, and in respect of meetings of any Series, Members holding 50% of the Units in such Series, present in person or by proxy shall be a quorum. If a quorum for a meeting is not present, the Managing Member may adjourn or cancel the meeting, as it determines in its sole discretion.

Section 14.3     Chairman. Any designee of the Managing Member shall preside as chairman of any meeting of the Company or any Series.

Section 14.4     Voting Rights. Subject to the provisions of any class or series of Units of any Series then Outstanding, the Members shall be entitled to vote only on those matters provided for under this Agreement’s terms.

Section 14.5     Extraordinary Actions. Except as specifically provided in this Agreement, notwithstanding any provision of law permitting or requiring any action to be taken or authorized by the affirmative vote of the holders of a greater number of votes, any such action shall be effective and valid if taken or approved by the affirmative vote of holders of Units entitled to cast a majority of all the votes entitled to be cast on the matter.

Section 14.6     Managing Member Approval. Other than as provided for in ARTICLE XI, the submission of any action of the Company or a Series to Members for their consideration shall first be approved by the Managing Member.

Section 14.7     Action by Members without a Meeting. Any Series Designation may provide that any action required or permitted to be taken by the holders of the Units to which such Series Designation relates may be taken without a meeting by the written consent of such holders or Members entitled to cast a sufficient number of votes to approve the matter as required by statute or this Agreement, as the case may be.

Section 14.8     Managing Member. Unless otherwise expressly provided in this Agreement, the Managing Member or any of its Affiliates who hold any Units shall not be entitled to vote in its capacity as holder of such Units on matters submitted to the Members for approval, and no such Units shall be deemed Outstanding for purposes of any such vote.

ARTICLE XV - CONFIDENTIALITY

Section 15.1     Confidentiality Obligations.

(a)     All information contained in the accounts and reports prepared in accordance with ARTICLE IX and any other information disclosed to an Economic Member under or in connection with this Agreement is confidential and non-public. Each Economic Member further acknowledges that as a consequence of his or her relationship with the Company, any Series, any Economic Member and any Series Assets, including in connection with such Economic Member’s rights to information under Section 15.2 or his or her right to inspect the books and records and obtain other information under Section 9.1 and the Delaware Act, trade secrets and information of a proprietary or confidential nature relating to the business of the Company or one or more Series will be disclosed to and developed by such Economic Member, including, without limitation, information about the condition, health, fitness, soundness of the Thoroughbred assets owned by the Series and plans, information regarding the financial status, customers, profits, profit margins, and any other information about the Company or any Series that may not be known generally or publicly outside of the Company, the Series and the Economic Members, in any format whatsoever (including oral, written, electronic or any other form or medium) (collectively, “Confidential Information”).

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(b)     Each Economic Member undertakes to hold all Confidential Information in confidence. No Economic Member shall, and each Economic Member shall ensure that every person connected with or associated with that Economic Member shall not, disclose to any person or use to the detriment of the Company, any Series, any Economic Member or any Series Assets any Confidential Information which may have come to its knowledge concerning the affairs of the Company, any Series, any Economic Member, any Series Assets or any potential Series Assets, and each Economic Member shall use any such Confidential Information exclusively for the purposes of monitoring and evaluating its investment in the Company. This Section 15.1 is subject to Section 15.2 and Section 15.3.

Section 15.2     Exempted Information. The obligations set out in Section 15.1 shall not apply to any information which:

(a)     is public knowledge and readily publicly accessible as of the date of such disclosure;

(b)     becomes public knowledge and readily publicly accessible, other than as a result of a breach of this ARTICLE XV; or

(c)     has been publicly filed with the U.S. Securities and Exchange Commission.

Section 15.3     Permitted Disclosures. The restrictions on disclosing confidential information set out in Section 15.1 shall not apply to the disclosure of confidential information by an Economic Member:

(a)     to any person, with the prior written consent of the Managing Member (which may be given or withheld in the Managing Members sole discretion);

(b)     if required by law, rule or regulation applicable to the Economic Member (including without limitation disclosure of the tax treatment or consequences thereof), or by any Governmental Entity having jurisdiction over the Economic Member, or if requested by any Governmental Entity having jurisdiction over the Economic Member, but in each case only if the Economic Member (unless restricted by any relevant law or Governmental Entity): (i) provides the Managing Member with reasonable advance notice of any such required disclosure; (ii) consults with the Managing Member prior to making any disclosure, including in respect of the reasons for and content of the required disclosure; and (iii) takes all reasonable steps permitted by law that are requested by the Managing Member to prevent the disclosure of confidential information (including (a) using reasonable endeavors to oppose and prevent the requested disclosure and (b) returning to the Managing Member any confidential information held by the Economic Member or any person to whom the Economic Member has disclosed that confidential information in accordance with this Section); or

(c)     to its trustees, officers, directors, employees, legal advisers, accountants, investment managers, investment advisers and other professional consultants who would customarily have access to such information in the normal course of performing their duties, but subject to the condition that each such person is bound either by professional duties of confidentiality or by an obligation of confidentiality in respect of the use and dissemination of the information no less onerous than this ARTICLE XV.

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ARTICLE XVI - GENERAL PROVISIONS

Section 16.1     Addresses and Notices.

(a)      Any notice to be served in connection with this Agreement shall be served in writing (which, for the avoidance of doubt, shall include e-mail) and any notice or other correspondence under or in connection with this Agreement shall be delivered to the relevant party at the address given in this Agreement (or, in the case of an Economic Member, in its Form of Adherence) or to such other address as may be notified in writing for the purposes of this Agreement to the party serving the document and that appears in the books and records of the relevant Series. The Company intends to make transmissions by electronic means to ensure prompt receipt and may also publish notices or reports on a secure electronic application owned by the Managing Member or an Affiliate of the Managing Member to which all Members have access, and any such publication shall constitute a valid method of serving notices under this Agreement.

(b)      Any notice or correspondence shall be deemed to have been served as follows:

(i)     in the case of hand delivery, on the date of delivery if delivered before 5:00 p.m. on a Business Day and otherwise at 9:00 a.m. on the first Business Day following delivery;

(ii)     in the case of service by U.S. registered mail, on the third Business Day after the day on which it was posted;

(iii)     in the case of email (subject to oral or electronic confirmation of receipt of the email in its entirety), on the date of transmission if transmitted before 5:00 p.m. on a Business Day and otherwise at 9:00 a.m. on the first Business Day following transmission; and

(iv)     in the case of notices published on an electronic application, on the date of publication if published before 5:00 p.m. on a Business Day and otherwise at 9:00 a.m. on the first Business Day following publication.

(c)      In proving service (other than service by e-mail), it shall be sufficient to prove that the notice or correspondence was properly addressed and left at or posted by registered mail to the place to which it was so addressed.

(d)      Any notice to the Company (including any Series) shall be deemed given if received by any member of the Managing Member at the principal office of the Company designated pursuant to Section 2.3. The Managing Member and the Officers may rely and shall be protected in relying on any notice or other document from an Economic Member or other Person if believed by it to be genuine.

Section 16.2     Further Action. The parties to this Agreement shall execute and deliver all documents, provide all information and take or refrain from acting as may be necessary or appropriate to achieve the purposes of this Agreement.

Section 16.3     Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their heirs, executors, administrators, successors, legal representatives and permitted assigns.

Section 16.4     Integration. This Agreement, together with the applicable Form of Adherence and applicable Series Designation, constitute the entire agreement among the parties hereto pertaining to the subject matter hereof and supersedes all prior agreements and understandings pertaining thereto.

Section 16.5     Creditors. None of this Agreement’s provisions shall be for the benefit of, or shall be enforceable by, any creditor of the Company or any Series.

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Section 16.6     Waiver. No failure by any party to insist upon the strict performance of any covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof shall constitute waiver of any such breach of any other covenant, duty, agreement or condition.

Section 16.7     Counterparts. This Agreement may be executed in counterparts, all of which together shall constitute an agreement binding on all the parties hereto, notwithstanding that all such parties are not signatories to the original or the same counterpart. Each party shall become bound by this Agreement immediately upon affixing its signature hereto (which signature may be provided electronically) or, in the case of a Person acquiring a Unit, upon acceptance of its Form of Adherence.

Section 16.8     Applicable Law and Jurisdiction.

(a)     This Agreement and the rights of the parties shall be governed by and construed in accordance with Delaware law. Non-contractual obligations (if any) arising out of or in connection with this agreement (including its formation) shall also be governed by Delaware law. The rights and liabilities of the Members in the Company and each Series and as between them shall be determined pursuant to the Delaware Act and this Agreement. To the extent the rights or obligations of any Member are different by reason of any provision of this Agreement than they would otherwise be under the Delaware Act in the absence of any such provision, or even if this Agreement is inconsistent with the Delaware Act, this Agreement shall control, except to the extent the Delaware Act prohibits any particular provision of the Delaware Act to be waived or modified by the Members, in which event any contrary provisions hereof shall be valid to the maximum extent permitted under the Delaware Act.

(b)     To the fullest extent permitted by applicable law, any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with this Agreement, or the transactions contemplated hereby shall be brought in Delaware Chancery Court, and each Member hereby consents to the exclusive jurisdiction of the Delaware Chancery Court (and of the appropriate appellate courts therefrom) in any suit, action or proceeding, and irrevocably waives, to the fullest extent permitted by applicable law, any objection which it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding which is brought in any such court has been brought in an inconvenient forum. To the fullest extent permitted by applicable law, each Member hereby waives the right to commence an action, suit or proceeding seeking to enforce any provisions of, or based on any matter arising out of or in connection with this Agreement, or the transactions contemplated hereby or thereby in any court outside of the Delaware Chancery Court except to the extent otherwise explicitly provided herein. The provisions of this Section 16.8(b) shall not be applicable to an action, suit or proceeding to the extent it pertains to a matter as to which the claims are exclusively vested in the jurisdiction of a court or forum other than the Delaware Chancery Court, or if the Delaware Chancery Court does not have jurisdiction over such matter.

(c)     Process in any suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any court. Without limiting the foregoing, each party agrees that service of process on such party by written notice pursuant to Section 16.1 will be deemed effective service of process on such party.

(d)     TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EVERY PARTY TO THIS AGREEMENT AND ANY OTHER PERSON WHO BECOMES A MEMBER OR HAS RIGHTS AS AN ASSIGNEE OF ANY PORTION OF ANY MEMBER’S MEMBERSHIP INTEREST HEREBY WAIVES ANY RIGHT TO A JURY TRIAL AS TO ANY MATTER UNDER THIS AGREEMENT OR IN ANY OTHER WAY RELATING TO THE COMPANY OR THE RELATIONS UNDER THIS AGREEMENT OR OTHERWISE AS TO THE COMPANY AS BETWEEN OR AMONG ANY SAID PERSONS.

Section 16.9     Invalidity of Provisions. If any provision of this Agreement is or becomes invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not be affected thereby.

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Section 16.10     Consent of Members. Each Member hereby expressly consents and agrees that, whenever in this Agreement it is specified that an action may be taken upon the affirmative vote or consent of less than all of the Members, such action may be so taken upon the concurrence of less than all of the Members and each Member shall be bound by the results of such action.

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Signature page to Limited Liability Company Agreement of

Commonwealth Thoroughbreds LLC

IN WITNESS WHEREOF, this Agreement has been executed as of the date first written above.

MANAGING MEMBER:
COMMONWEALTH MARKETS INC.
By:	/s/ Brian Doxtator
Brian Doxtator
Chief Executive and Chief Financial Officer
COMPANY:
COMMONWEALTH THOROUGHBREDS LLC
By: Commonwealth Markets Inc., its managing member
By:	/s/ Brian Doxtator
Brian Doxtator
Chief Executive and Chief Financial Officer

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EX1A-3 HLDRS RTS

Exhibit 3.1

Exhibit TF2019

Series Designation of

Series TF2019, a series of Commonwealth Thoroughbreds LLC

In accordance with the Limited Liability Company Agreement of Commonwealth Thoroughbreds LLC (the “Company”) dated as of August 30, 2019 (the “LLC Agreement”) and upon the execution of this Exhibit TF2019 by the Company and Commonwealth Markets Inc. in its capacity as Managing Member of the Company and Initial Member of Series TF2019, a series of Commonwealth Thoroughbreds LLC (“Series TF2019”), this exhibit shall be attached to, and deemed incorporated in its entirety into, the LLC Agreement as “Exhibit TF2019”.

References to Sections and Articles set forth herein are references to Sections and Articles of the LLC Agreement, as in effect as of the effective date of establishment set forth below.

Name of Series	Series TF2019, a series of Commonwealth Thoroughbreds LLC
Effective date of establishment	September 13, 2019
Managing Member	Commonwealth Markets Inc., was appointed as the Managing Member of Series TF2019 with effect from the date of the LLC Agreement and shall continue to act as the Managing Member of Series TF2019 until dissolution of Series TF2019 pursuant to Section 12.1(b) or its removal and replacement pursuant to Section 4.3 or ARTICLE XI.
Initial Member	Commonwealth Markets Inc.
Series Asset	The Series Assets of Series TF2019 shall comprise a Thoroughbred filly born in April 2019 by Justin Phillip out of Timido by Gio Ponti, which will be acquired by Series TF2019 upon the close of the Initial Offering and any assets and liabilities associated with such asset and such other assets and liabilities acquired by Series TF2019 from time to time, as determined by the Managing Member in its sole discretion

Management Fee	The following percentages of Free Cash Flow distributed to Series members in accordance with Section 7.1 during the preceding quarter:
	●	10% of Free Cash Flow until Series members have received aggregate distributions per Unit equal to the purchase price they paid per Unit; and thereafter
	●	20% of Free Cash Flow from Racing Activities; and
	●	30% of Free Cash Flow from Breeding Activities and Asset Sales.

Purpose	As stated in Section 2.4
Issuance	Subject to Section 6.3(a)(i), the maximum number of Series TF2019 Units the Company can issue is 3,465.
Number of Series TF2019 Units held by the Managing Member and its Affiliates	The Managing Member, together with its affiliates, must hold a minimum of 2% and a maximum of 10% of the Series TF2019 Units as of the closing of the Initial Offering.
Broker	North Capital Private Securities Corporation
Brokerage Fee	Up to 1.0% of the purchase price of the Units from Series TF2019 sold at the Initial Offering of the Series TF2019 Units (excluding the Series TF2019 Units acquired by any Person other than Investor Members)

Preference Designation

No Preference Designation shall be required in connection with the issuance of Series TF2019 Units.

Voting

Subject to Section 3.5, the Series TF2019 Units shall entitle the Record Holders thereof to one vote per Unit on any and all matters submitted to the consent or approval of Members generally. No separate vote or consent of the Record Holders of Series TF2019 Units shall be required for the approval of any matter, except as required by the Delaware Act or as provided elsewhere in the LLC Agreement (including this Series Designation).

The affirmative vote of the holders of not less than a majority of the Series TF2019 Units then Outstanding shall be required for:
●	any amendment to the LLC Agreement (including this Series Designation) that would adversely change the rights of the Series TF2019 Units;
●	mergers, consolidations or conversions of Series TF2019 or the Company; and
●	all such other matters as the Managing Member, in its sole discretion, determines shall require the approval of the holders of the Outstanding Series TF2019 Units voting as a separate class.

	Notwithstanding the foregoing, the separate approval of the holders of Series TF2019 Units shall not be required for any of the other matters specified under Section 13.1.
Splits	There shall be no subdivision of the Series TF2019 Units other than in accordance with Section 3.7.
Sourcing Fee	10% of the total cost to acquire the Series Asset, payable in cash or Series TF2019 Units, which may be waived by the Managing Member in its sole discretion.
Organizational Fee	3% of the proceeds received from the offering of the Series TF2019 Units payable to reimburse the to the Manager for legal, accounting and compliance expenses incurred by the Manager to set up the legal and financial framework and compliance infrastructure for the marketing and sale of the Series TF2019 Units and all subsequent offerings.
Other rights	Holders of Series TF2019 Units shall have no conversion, exchange, sinking fund, redemption or appraisal rights, no preemptive rights to subscribe for any securities of the Company and no preferential rights to distributions of Series TF2019 Units.
Officers	There shall initially be no specific officers associated with Series TF2019, although, the Managing Member may appoint Officers of Series TF2019 from time to time, in its sole discretion.
Aggregate Ownership Limit	As stated in Section 1.1
Minimum Units	One (1) Unit per Member
Fiscal Year	As stated in Section 9.2

Information Reporting	As stated in Section 9.1(c)
Termination	As stated in Section 12.1(b)
Liquidation	As stated in Section 12.3
Amendments to this Exhibit TF2019	As stated in Article XIII

Executed as of as of the 13^th day of September 2019.

COMMONWEALTH THOROUGHBREDS LLC
By: Commonwealth Markets Inc., as managing member
By:	/s/ Brian Doxtator
Title: Chief Executive and Chief Financial Officer

EX1A-3 HLDRS RTS

Exhibit 3.2

Exhibit OL2018

Series Designation of

Series OL2018, a series of Commonwealth Thoroughbreds LLC

In accordance with the Amended and Restated Limited Liability Company Agreement of Commonwealth Thoroughbreds LLC (the “Company”) dated as of September 27, 2019 (the “LLC Agreement”) and upon the execution of this Exhibit OL2018 by the Company and Commonwealth Markets, Inc. in its capacity as Managing Member of the Company and Initial Member of Series OL2018, a series of Commonwealth Thoroughbreds LLC (“Series OL2018”), this exhibit shall be attached to, and deemed incorporated in its entirety into, the LLC Agreement as “Exhibit OL2018”.

References to Sections and Articles set forth herein are references to Sections and Articles of the LLC Agreement, as in effect as of the effective date of establishment set forth below.

Name of Series	Series OL2018, a series of Commonwealth Thoroughbreds LLC
Effective date of establishment	December 10, 2019
Managing Member	Commonwealth Markets, Inc., is hereby appointed as the Managing Member of Series OL2018 and shall continue to act as the Managing Member of Series OL2018 until dissolution of Series OL2018 pursuant to Section 12.1(b) or its removal and replacement pursuant to Section 4.3 or ARTICLE XI.
Initial Member	Commonwealth Markets, Inc.
Series Asset	The Series Assets of Series OL2018 shall comprise a 75% interest in a yearling colt born in February 2018 by Orb out of Latique by Elusive Quality, which will be acquired by Series OL2018 upon the close of the Initial Offering and any assets and liabilities associated with such asset and such other assets and liabilities acquired by Series OL2018 from time to time, as determined by the Managing Member in its sole discretion
Management Fee	The following percentages of Free Cash Flow distributed to Series members in accordance with Section 7.1 during the preceding quarter:
	●	10% of Free Cash Flow until Series members have received aggregate distributions per Unit equal to the purchase price they paid per Unit; and thereafter
	●	20% of Free Cash Flow from Racing Activities; and
	●	30% of Free Cash Flow from Breeding Activities and Asset Sales.
Purpose	As stated in Section 2.4
Issuance	Subject to Section 6.3(a)(i), the maximum number of Series OL2018 Units the Company can issue is 2,970.
Number of Series OL2018 Units held by the Managing Member and its Affiliates	The Managing Member, together with its affiliates, must hold a minimum of 2% and a maximum of 10% of the Series OL2018 Units as of the closing of the Initial Offering.
Broker	North Capital Private Securities Corporation
Brokerage Fee	Up to 1.0% of the purchase price of the Units from Series OL2018 sold at the Initial Offering of the Series OL2018 Units (excluding the Series OL2018 Units acquired by any Person other than Investor Members)

Preference Designation	No Preference Designation shall be required in connection with the issuance of Series OL2018 Units.
Voting	Subject to Section 3.5, the Series OL2018 Units shall entitle the Record Holders thereof to one vote per Unit on any and all matters submitted to the consent or approval of Members generally. No separate vote or consent of the Record Holders of Series OL2018 Units shall be required for the approval of any matter, except as required by the Delaware Act or as provided elsewhere in the LLC Agreement (including this Series Designation).
	The affirmative vote of the holders of not less than a majority of the Series OL2018 Units then Outstanding shall be required for:
	●	any amendment to the LLC Agreement (including this Series Designation) that would adversely change the rights of the Series OL2018 Units;
	●	mergers, consolidations or conversions of Series OL2018 or the Company; and
	●	all such other matters as the Managing Member, in its sole discretion, determines shall require the approval of the holders of the Outstanding Series OL2018 Units voting as a separate class.
	Notwithstanding the foregoing, the separate approval of the holders of Series OL2018 Units shall not be required for any of the other matters specified under Section 13.1.
Splits	There shall be no subdivision of the Series OL2018 Units other than in accordance with Section 3.7.
Sourcing Fee	10% of the total cost to acquire the Series Asset, payable in cash or Series OL2018 Units, which may be waived by the Managing Member in its sole discretion.
Organizational Fee	3% of the proceeds received from the offering of the Series OL2018 Units payable to reimburse the to the Manager for legal, accounting and compliance expenses incurred by the Manager to set up the legal and financial framework and compliance infrastructure for the marketing and sale of the Series OL2018 Units and all subsequent offerings.
Other rights	Holders of Series OL2018 Units shall have no conversion, exchange, sinking fund, redemption or appraisal rights, no preemptive rights to subscribe for any securities of the Company and no preferential rights to distributions of Series OL2018 Units.
Officers	There shall initially be no specific officers associated with Series OL2018, although, the Managing Member may appoint Officers of Series OL2018 from time to time, in its sole discretion.
Aggregate Ownership Limit	As stated in Section 1.1
Minimum Units	One (1) Unit per Member
Fiscal Year	As stated in Section 9.2

Information Reporting	As stated in Section 9.1(c)
Termination	As stated in Section 12.1(b)
Liquidation	As stated in Section 12.3
Amendments to this Exhibit OL2018	As stated in Article XIII

Executed as of as of the 10th day of December 2019.

COMMONWEALTH THOROUGHBREDS LLC
By:	Commonwealth Markets, Inc., as managing member
By	/s/ Brian Doxtator
Title:	Chief Executive and Chief Financial Officer

EX1A-4 SUBS AGMT

Exhibit 4.1

COMMONWEALTH THOROUGHBREDS LLC

a Delaware series limited liability company

SUBSCRIPTION AGREEMENT

for

SERIES [ • ]

The undersigned (“Subscriber”) understands that Series [ • ] (the “Series”) of Commonwealth Thoroughbreds LLC, a Delaware series limited liability company (the “Company”), having its principal place of business at 1450 North Broadway, Lexington, Kentucky 40505, is offering for sale (the “Offering”) on a best-efforts basis up to [____] membership Units (each a “Unit” and collectively the “Units”) at the purchase price of $[___] per Unit (the “Purchase Price”), upon the terms and conditions set forth in this subscription agreement (“Agreement”) and the Company’s Amended and Restated Limited Liability Company Agreement dated as of September 27, 2019, and the Series Designation for Series [ • ] dated as of [date], each as supplemented from time to time (collectively, the “Operating Agreement”).

1.      Subscription for Units.

a.     Subject to the terms and conditions of this Agreement, Subscriber hereby irrevocably subscribes for and agrees to purchase from the Series the number of Units indicated on the signature page attached hereto (the “Units”), for the aggregate Purchase Price set forth on the signature page (the “Aggregate Purchase Price”).

b.     Subscriber agrees to be bound hereby upon execution and delivery of the signature page to this Agreement Subscriber to the Series.

c.      It is understood and agreed that the Series has the sole right, at its complete discretion, to accept or reject this Subscription, in whole or in part, for any reason, and that this Subscription will be accepted by the Series only when it is signed by a duly authorized officer of the Series and delivered to Subscriber. Subscriptions for Units need not be accepted in the order received, and the Units may be allocated among subscribers. The Series reserves the right to terminate any offering for which there fewer than 35 subscribers. Notwithstanding anything in this Agreement to the contrary, the Series will have no obligation to issue any of the Units to any person who is a resident of a jurisdiction in which the issuance of such Units would constitute a violation of the applicable securities laws or who is ineligible to own a race horse under applicable statutes, rules or regulations of a governing authority.

2.      Offering Documents. Subscriber represents and warrants that it has received and has carefully read and understood all documents and information provided to Subscriber on the Commonwealth Thoroughbreds website or otherwise transmitted to Subscriber, including but not limited to the Company’s Offering Circular dated [date], (the “Offering Circular”), the Operating Agreement, Series Designation and any other information which Subscriber has reasonably requested and the Series has provided in connection with the Offering.

3.      Series Representations and Warranties. The Series represents and warrants that as of the date of this Agreement:

a.      The Series is a series of a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware, entitled to own its property of a material nature and to carry on its business of a material nature as and in places where such property is now owned or operated and such business is conducted except where the failure to so qualify will not have a material adverse effect on the Series.

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b.      The Series, by appropriate and required corporate action, has duly authorized the execution of this Agreement, and the issuance and delivery of the Units.

4.      Subscriber Representations, Acknowledgements and Agreements. Subscriber hereby represents, warrants to and acknowledges and agrees with the Series as follows:

a.      Subscriber is aware that an investment in the Series [ • ] involves a significant degree of risk and has received and carefully read the Company’s Offering Circular, and in particular its “Risk Factors” section. Among other things, Subscriber understands that (i) the Company is subject to all the risks applicable to early-stage companies and (ii) participation in owning, racing and breeding Thoroughbred horses is a high risk, speculative activity in which enjoying the experience of Thoroughbred horse ownership and racing may be the only significant benefits received in exchange for the consideration paid to purchase Units. Subscriber is satisfied that Subscriber has received adequate information with respect to all matters which it or its advisors, if any, consider material to its decision to make this investment.

b.      Subscriber acknowledges that the Series [ • ] Units are subject to restrictions on transferability and resale and may not be transferred or resold except as permitted by the Operating Agreement.

c.      In evaluating the suitability of an investment in the Series [ • ] Units, Subscriber has not relied upon any representation or information (oral or written) other than as set forth in the Offering Circular, the Operating Agreement and this Subscription Agreement.

d.      Subscriber, together with Subscriber‘s advisors, if any, has such knowledge and experience in financial, tax, and business matters, and, in particular, investments in securities, so as to enable Subscriber to evaluate the merits and risks of an investment in the Series [ • ] Units and the Company and to make an informed investment decision with respect thereto. Subscriber has adequate means of providing for Subscriber’s current financial needs and foreseeable contingencies and has no need for liquidity of its investment in the Series [ • ] Units for an indefinite period of time.

e.      Subscriber is not relying on the Company, the Manager or any of their respective employees or agents with respect to the legal, tax, economic and related considerations of an investment in the Series [ • ] Units, other than with respect to the opinion of legality of legal counsel provided at Exhibit [##] to the Offering Circular, and Subscriber has relied on the advice of, or has consulted with, only its own advisors, if any, whom Subscriber has deemed necessary or appropriate in connection with its purchase of the Series [ • ] Units.

f.      Subscriber acknowledges the offering and sale of the Series [ • ] Units have not been registered under the Securities Acts of 1933, as amended (the “Securities Act”), or any state securities laws and are being offered and sold in reliance on exemptions from the registration requirements of the Securities Act and applicable state securities laws. Subscriber understands that the offering and sale of the Series [ • ] Units is intended to be exempt from registration, by virtue of Tier 2 of Regulation A under the Securities Act, based, in part, upon the representations, warranties and agreements of Subscriber contained in this Subscription Agreement, including, without limitation, the investor qualification (“Investor Qualification and Attestation”) immediately following the signature page of this Subscription Agreement. Subscriber is purchasing the Series [ • ] Units for its own account for investment purposes only and not with a view or intent to resell or distribute them in violation of any applicable securities laws.

g.     Subscriber acknowledges that Subscriber’s responses to the investor qualification questions posed in the Commonwealth Platform and reflected in the Investor Qualification and Attestation, are complete and accurate as of the date hereof.

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h.      Subscriber, as set forth in the Investor Certification attached to this Agreement, as of this date is a “qualified purchaser” as that term is defined in Regulation A (a “Qualified Purchaser”). Subscriber agrees to promptly provide the Manager and its respective agents with such other information as may be reasonably necessary for them to confirm the Qualified Purchaser status of Subscriber.

i.     Subscriber represents and warrants that Subscriber is eligible to be licensed as a Thoroughbred race horse owner by state racing commissions and/or racing boards and is not the subject of any pending disciplinary or legal proceedings which may result in ineligibility for licensure, including without limitation, Subscriber has not been convicted of a crime, nor is the subject of an administrative ruling, of a nature likely to render the Subscriber ineligible for licensure currently or in the future. Subscriber hereby agrees that if, (i) there are 35 or fewer subscribers for the Units offered by the Series; (ii) the amount subscribed for by Subscriber results in an ownership percentage in the Thoroughbred(s) owned by the Series is such that a racing jurisdiction requires such Subscriber to be licensed; or (ii) in order to be eligible for certain perquisites associated with ownership, it may be necessary for Subscriber to obtain a Thoroughbred owner’s license, Subscriber will provide to the Company upon reasonable request any such additional information as may be necessary for the Company to properly obtain a license for Subscriber.

j.     Any information which Subscriber has previously furnished or is furnishing to the Company with this Agreement is true, complete and accurate and may be relied upon by the Manager and the Company in determining the availability of an exemption from registration under federal and state securities laws in connection with the Offering and Subscriber’s eligibility for a Thoroughbred racing owner’s license. Subscriber further represents and warrants that it will promptly notify and supply corrective information to the Company immediately upon the occurrence of any material change in the information previously furnished by Subscriber.

k.      Except as previously disclosed in writing to the Company, Subscriber has taken no action that would give rise to any claim by any person for brokerage commissions, finders’ fees or the like relating to this Subscription Agreement or the transactions contemplated hereby, and in all instances Subscriber will be solely liable for any such fees and must indemnify the Company with respect thereto pursuant to paragraph 6 of this Subscription Agreement.

l.      Subscriber is either (i) a natural person resident in the United States, (ii) a partnership, corporation or limited liability company organized under the laws of the United States, (iii) an estate of which any executor or administrator is a U.S. person, (iv) a trust of which any trustee is a U.S. person, (v) an agency or branch of a foreign entity located in the United States, (vi) a non-discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary for the benefit or account of a U.S. person, or (vii) a partnership or corporation organized or incorporated under the laws of a foreign jurisdiction that was formed by a U.S. person principally for the purpose of investing in securities not registered under the Securities Act, unless it is organized or incorporated, and owned, by accredited investors who are not natural persons, estates or trusts.

m.      Subscriber’s capacity and authority.

(i)      if a natural person, Subscriber has reached the age of 21 (or 18 in states with such applicable age limit) and has full power and authority to execute and deliver this Subscription Agreement and all other related agreements or certificates and to carry out the provisions hereof and thereof; or

(ii)      if a corporation, partnership, or limited liability company or other entity, Subscriber represents that such entity was not formed for the specific purpose of acquiring the Series [ • ] Units, such entity is duly organized, validly existing and in good standing under the laws of the state of its organization, the consummation of the transactions contemplated hereby is authorized by, and will not result in a violation of state law or its charter or other organizational documents, such entity has full power and authority to execute and deliver this Subscription Agreement and all other related agreements or certificates and to carry out the provisions hereof and thereof and to purchase and hold the Series [ • ] Units, the execution and delivery of this Subscription Agreement has been duly authorized by all necessary action, this Subscription Agreement has been duly executed and delivered on behalf of such entity and is a legal, valid and binding obligation of such entity; or

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(iii)      if executing this Subscription Agreement in a representative or fiduciary capacity, Subscriber represents that it has full power and authority to execute and deliver this Subscription Agreement in such capacity and on behalf of the subscribing individual, ward, partnership, trust, estate, corporation, or limited liability company or partnership, or other entity for whom Subscriber is executing this Subscription Agreement, and such individual, partnership, ward, trust, estate, corporation, or limited liability company or partnership, or other entity has full right and power to perform pursuant to this Subscription Agreement and make an investment in the Company, and represents that this Subscription Agreement constitutes a legal, valid and binding obligation of such entity.

In all cases, the execution and delivery of this Subscription Agreement will not violate or conflict with any order, judgment, injunction, agreement or controlling document to which Subscriber is a party or by which it is bound.

n.      No consent, approval, authorization or order of any court, governmental agency or body or arbitrator having jurisdiction over Subscriber or any of Subscriber's affiliates is required for the execution of this Subscription Agreement or the performance of Subscriber's obligations hereunder, including, without limitation, the purchase of the Series [ • ] Units by Subscriber.

o.      Subscriber has its primary residence (if a natural person) or principal place of business (if an entity) in the jurisdiction set forth on the signature page of this Subscription Agreement. Subscriber first learned of the offer and sale of the Series [ • ] Units in that jurisdiction, and Subscriber intends that the securities laws of that state shall govern the purchase of Subscriber’s Series [ • ] Units.

p.      Within five (5) days after receipt of a written request from the Manager, Subscriber will provide such information and deliver such documents as may reasonably be necessary to comply with any and all laws and ordinances to which the Company is subject.

q.     Subscriber is not, nor is it acting on behalf of, a “benefit plan investor” within the meaning of 29 C.F.R. § 2510.3-101(f)(2), as modified by Section 3(42) of the Employee Retirement Income Security Act of 1974 (such regulation, the “Plan Asset Regulation”, and a benefit plan investor described in the Plan Asset Regulation, a “Benefit Plan Investor”). For the avoidance of doubt, the term Benefit Plan Investor includes all employee benefit plans subject to Part 4, Subtitle B, Title I of ERISA, any plan to which Section 4975 of the Code applies and any entity, including any insurance company general account, whose underlying assets constitute “plan assets”, as defined under the Plan Asset Regulation, by reason of a Benefit Plan Investor’s investment in such entity.      

r.      If Subscriber is affiliated with a non-U.S. banking institution (a “Foreign Bank”), or if Subscriber receives deposits from, makes payments on behalf of, or handles other financial transactions related to a Foreign Bank, Subscriber represents and warrants to the Company that: (1) the Foreign Bank has a fixed address, other than solely an electronic address, in a country in which the Foreign Bank is authorized to conduct banking activities; (2) the Foreign Bank maintains operating records related to its banking activities; (3) the Foreign Bank is subject to inspection by the banking authority that licensed the Foreign Bank to conduct banking activities; and (4) the Foreign Bank does not provide banking services to any other Foreign Bank that does not have a physical presence in any country and that is not a regulated affiliate.

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s.      Each of the representations and warranties of the parties hereto set forth in this Section 4 and made as of the date hereof shall be true and accurate as of the Closing applicable to the subscription made hereby as if made on and as of the date of Closing.

t.      Subscriber acknowledges the Series [ • ] Units have not been approved or disapproved by the U.S. Securities and Exchange Commission, any state securities commission on regulatory authority, or any other regulatory authority. Subscriber acknowledges that none of those authorities have passed upon or endorsed the merits of this Offering or the accuracy or adequacy of the Offering Circular or this Subscription Agreement. Any representation to the contrary is a criminal offense.

5.      Subscriber Undertakings. Subscriber understands, acknowledges and agrees with the Series as follows:

a.     This Subscription is irrevocable. Except as required by law, Subscriber is not entitled to cancel, terminate or revoke this Agreement, and this Agreement shall survive the death or disability of Subscriber and shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors, legal representatives and permitted assigns.

b.     If more than one person is subscribing for Series [ • ] Units, then the obligations of the joint Subscribers under this Agreement shall be joint and several and the agreements, representations, warranties and acknowledgments made in this Agreement shall be deemed to be made by and be binding upon each such person and his or her heirs, executors, administrators, successors, legal representatives and permitted assigns.

6.      Indemnification. Subscriber shall indemnify and hold harmless the Series and each officer, director or control person of the Series from any and all damages, losses, liabilities obligations, commitments and expenses (including attorneys’ fees and expenses) incurred by any of such persons by reason of or arising from the breach of any representation, warranty or covenant of Subscriber contained in this Agreement.

7.      Ownership Records. You understand and acknowledge that the ownership of your Units will be reflected by registration in electronic form (also known as “book entry”).

8.      Miscellaneous.

a.      Except as set forth elsewhere in this Agreement, any notice or demand to be given or served in connection with this subscription shall be deemed to be sufficiently given or served for all purposes by being sent as registered or certified mail, return receipt requested, postage prepaid, in the case of the Series, addressed to it at the address set forth below:

Company:

Commonwealth Thoroughbreds LLC

1450 North Broadway

Lexington, Kentucky 40505

Attention: Chief Executive Officer

Subscriber:

Address provided in the subscription process.

b.      All issues and questions concerning the rights and obligations of Subscriber arising out of this Agreement, the Operating Agreement and Series Designation, and the application, construction, validity, interpretation and enforcement of this Agreement, the Operating Agreement and Series Designation shall be governed by and construed in accordance with the internal laws of the state of Delaware, without giving effect to any choice or conflict of law provision or rule (whether of the state of Delaware or any other jurisdiction) that would cause the application of laws of any jurisdiction other than those of the state of Delaware. Each party to this Agreement hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this agreement or the transactions contemplated hereby.

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c.      This Agreement shall be binding upon the parties hereto and their respective heirs, estate, legal representatives, successors and assigns. If any provision of this Agreement is invalid or unenforceable under any applicable statute or law, then such provision shall be deemed inoperative and shall be deemed to be modified to conform to such statute or law. Any provision of this Agreement that may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision hereof.

d.      In any action, proceeding or counterclaim brought to enforce any of the provisions of this Agreement or to recover damages, costs and expenses in connection with any breach of the Agreement, the prevailing party shall be entitled to be reimbursed by the opposing party for all of the prevailing party’s attorneys’ fees, costs and other out-of-pocket expenses incurred in connection with such action, proceeding or counterclaim.

e.      This Agreement (including exhibits attached hereto) constitutes the entire agreement among the parties hereto with respect to its subject matter. There are no restrictions, promises, warranties or undertakings, other than those set forth in this Agreement. This Agreement supersedes all prior agreements and understandings, oral or written, between the parties hereto with respect to the subject matter hereof.

f.      The section and other headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.

9.      Acceptance of Delivery. All questions as to the validity, form, eligibility (including time of receipt) and acceptance of the completed Agreement will be determined by the Series, which determination will be final and binding. The Series reserves the absolute right to reject any completed Agreement, in its sole and absolute discretion. The Series also reserves the right to waive any irregularities in, or conditions of, the submission of completed Subscription Agreements, and the Series’ interpretation of the terms and conditions for the purchase of the Units (including these instructions) shall be final and binding. The Series shall be under no duty to give any notification of irregularities in connection with any attempted subscription for the Units or incur any liability for failure to give such notification. Until such irregularities have been cured or waived, no subscription for the Units shall be deemed to have been made. Any Subscription Agreement that is not properly completed and as to which defects have not been cured or waived will be returned by the Series to Subscriber as soon as practicable.

[Signature Page follows]

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SUBSCRIPTION AGREEMENT SIGNATURE PAGE

By signing this Signature Page, you are agreeing to the Subscription Agreement and certifying that all information you are providing is true and correct. This Signature Page may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission (including clicking “Agree” on the Commonwealth Platform website) shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

The undersigned Subscriber hereby certifies (i) agrees to all the terms and conditions of this Agreement, (ii) is an accredited investor, and (ii) is a resident of the state or foreign jurisdiction indicated below.

The undersigned irrevocably subscribes for Series membership Units.

The Aggregate Purchase Price of membership Units subscribed for, at $_______.00 per share, is $_________________.

This Subscription Agreement is executed by Subscriber on ______________________________, 20__.

	If other than Individual check one and indicate capacity of signatory under the signature
Name of Subscriber (Print)
	•	☐ Trust
	•	☐ Estate
Name of Joint Subscriber (if any) (Print)	•	☐ Uniform Gifts to Minors Act of State of ______
	•	☐ Limited liability company
	•	☐ Corporation
Signature of Subscriber	•	☐ Other ________________________________
Capacity of Signatory (if applicable)	If Joint Ownership, check one:
	•	☐ Joint Tenants with Right of Survivorship
	•	☐ Tenants in Common
Social Security or Taxpayer Identification Number	•	☐ Tenants by Entirety
	•	☐ Community Property
Residence Address or Entity Principal Address	Backup Withholding Statement:
	Please check this box only if the investor is subject to:
City           State          Zip Code	•	☐ Backup withholding.
	Foreign Person:
Telephone (   )__________________	Please check this box only if the investor is a:
E-mail address: _________________	•	☐ Nonresident alien, foreign corporation, foreign Company, foreign trust or foreign estate

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As required by the regulations issued pursuant to the U.S. Internal Revenue Code, Subscriber certifies under penalty of perjury that (1) the Social Security Number or Taxpayer Identification Number and address provided above is correct, (2) Subscriber is not subject to backup withholding (unless the Backup Withholding Statement box above is checked) either because Subscriber has not been notified that Subscriber is subject to backup withholding as a result of a failure to report all interest or dividends or because the Internal Revenue Service has notified Subscriber that Subscriber is no longer subject to backup withholding and (3) Subscriber (unless the Foreign Person box above is checked) is not a nonresident alien, foreign partnership, foreign trust or foreign estate.

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INVESTOR QUALIFICATION AND ATTESTATION

Check the applicable box:

☐	I am an “accredited investor”, and have checked the appropriate box on the attached Certificate of Accredited Investor Status indicating the basis of such accredited investor status, which Certificate of Accredited Investor Status is true and correct; or
☐	The amount set forth on the first page of this Subscription Agreement, together with any previous investments in Units pursuant to this offering, does not exceed 10% of the greater of my net worth or annual income.

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CERTIFICATE OF ACCREDITED INVESTOR STATUS

The signatory hereto is an “accredited investor”, as defined in Regulation D under the Securities Act. I have checked the box below indicating the basis on which I am representing my status as an “accredited investor”:

☐	A natural person whose net worth[1], either individually or jointly with my spouse, at the time of my purchase, exceeds $1,000,000;
☐	A natural person who had individual income in excess of $200,000, or joint income with my spouse in excess of $300,000, in the previous two calendar years and reasonably expects to reach the same income level in the current calendar year;
☐	A director, executive officer, or general partner of the Company or Commonwealth Markets, Inc.;
☐	A bank as defined in section 3(a)(2) of the Act, or any savings and loan association or other institution as defined in section 3(a)(5)(A) of the Act whether acting in its individual or fiduciary capacity; any broker or dealer registered pursuant to section 15 of the Securities Exchange Act of 1934; any insurance company as defined in section 2(a)(13) of the Act; any investment company registered under the Investment Company Act of 1940 or a business development company as defined in section 2(a)(48) of that Act; any Small Business Investment Company licensed by the U.S. Small Business Administration under section 301(c) or (d) of the Small Business Investment Act of 1958; any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000; any employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 if the investment decision is made by a plan fiduciary, as defined in section 3(21) of such act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors;
☐	A private business development company as defined in section 202(a)(22) of the Investment Advisers Act of 1940;
☐	A trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Units offered, whose purchase is directed by a sophisticated person as described in § 230.506(b)(2)(ii) under the Act; or
☐	An entity in which all of the equity owners are accredited investors as described above.

¹ In calculating your net worth: (i) your primary residence shall not be included as an asset; (ii) indebtedness that is secured by your primary residence, up to the estimated fair market value of the primary residence at the time of entering into this Subscription Agreement, may not be included as a liability (except that if the amount of such indebtedness outstanding at the time of entering into this Subscription Agreement exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of the primary residence, the amount of such excess must be included as a liability); and (iii) indebtedness that is secured by your primary residence in excess of the estimated fair market value of the primary residence at the time of entering into this Subscription Agreement must be included as a liability. In calculating your net worth jointly with your spouse, your spouse’s primary residence (if different from your own) and indebtedness secured by such primary residence should be treated in a similar manner.

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EX1A-6 MAT CTRCT

Exhibit 6.1

MANAGEMENT SERVICES AGREEMENT

This is a Management Services Agreement (the "Agreement"), dated as of ______________, 20__, between Commonwealth Markets Inc., a Delaware corporation ("Markets"), and Series [ • ] (the “Series”), a series of Commonwealth Thoroughbreds LLC, a Delaware series limited liability company (the “Company”).

Recitals

A.        The Company is engaged in the business of acquiring, owning and selling interests in, breeding, raising, training, and racing Thoroughbred horses, which it conducts through its series, including Series [ • ], in accordance with the terms and conditions of the Amended and Restated Limited Liability Company Agreement, dated September 27, 2019, of Commonwealth Thoroughbreds LLC, together with the Series Designation of Series [ • ] setting forth the terms of the Series, in each case as amended and restated from time to time (the “Operating Agreement”).

B.     Markets was appointed as the Company’s managing member with effect from the date of the formation of the Company and, except as otherwise set forth in the certificate of designations of a series, will be the managing member of each of the Company’s series.

C.     The Operating Agreement provides that the managing member of the Series shall have full power and authority to do all things and on such terms as it determines to be necessary or appropriate to conduct the business of the Company and the Series, to exercise all powers and to effectuate the purposes set forth in the Operating Agreement.

D.     The Series desires to appoint Markets to serve as its managing member with the responsibility for the Series Asset and any other equine assets acquired and owned by the Series, providing breeding, racing management, consultation and bloodstock services (pedigree consultation, selection of horses for purchase and sale, etc.), and otherwise managing and administering the Series’ business.

E.     Markets desires to provide such services and license its Platform to the Company in return for the consideration set forth in this Agreement.

F.     The Company also desires to license from Markets the right to use Market’s Commonwealth Platform (as defined below).

Agreement

THE PARTIES, INTENDING TO BE LEGALLY BOUND, AGREE AS FOLLOWS:

1.       Appointment of Markets; Acceptance of Appointment. The Series hereby appoints Markets as managing member of the Series for the purpose of managing the Series Asset, and Markets hereby accepts such appointment.

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2.       Services to be Provided.

(a)     Markets’ Duties. Markets will have the responsibility and authority to provide care and maintenance of the Series Asset (wherever stabled) as well as all breeding and racing management, consultation and bloodstock services (including without limitation, pedigree consultation, selection of horses for purchase and sale, management of the training and competing of the horses, etc.) necessary for the operation of the Series’ business (the “Services”). Markets shall perform the Services for the account of and as exclusive agent of the Company and the Series using commercially reasonable efforts. The Services shall include, but shall not be limited to, the following matters:

(1)     managing the breeding and racing business operations of the Company and the Series, including assisting with preparation of business plans and operating budgets and attending to all bloodstock, breeding and racing matters reasonably necessary to afford the Company and the Series the opportunity to realize their business goals;

(2)     communicating with the Company with respect to financial and business matters, and all activities and developments relating to the acquisition, breeding, racing, retirement and/or sale of the Thoroughbreds;

(3)     selecting and acquiring in the name of the Company or the Series suitable Thoroughbreds for breeding and racing as well as other equine assets necessary to operate the Series’ business and execute the Series’ business plan;

(4)      developing and implementing short-term and long-term strategies for each Thoroughbred acquired by the Company’s series, including the Series Asset, with the intent to maximize its potential value and appreciation;

(5)     securing the services of professional trainers to train and compete the Thoroughbreds of Company’s series, including the Series Asset;

(6)     entering into a written agreement with any bloodstock agent or veterinarian engaged on behalf of the Company or the Series, which shall comply with state laws regulating private and public sales of Thoroughbred assets;

(7)     advising the Company with respect to the selection of the stallions to which mares owned by the Company’s series will be bred;

(8)     selecting the breeding and racing incentive programs to which the Thoroughbreds produced or owned by the Company’s series, including the Series Asset, shall be nominated;

(9)     purchasing liability and other insurance to protect the business and property of the Company and the Series;

(10)     selling or otherwise disposing of assets of the Company or the Series in the ordinary course of business approved in advance by the Company, consistent with the Company’s business plan, and executing on behalf of the Company all instruments and documents, providing for the acquisition, or disposition of the Company's property necessary, in Markets’ reasonable discretion, to the successful operation of the business;

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(11)     paying reasonable fees and or commissions consistent with industry standards to unaffiliated agencies such as trainers, sales agencies, or consignors upon any purchase or sale of Thoroughbreds by the Series;

(12)     providing general administration services, including office administration, reception, scheduling, clerical services, managing inventory and overhead, negotiating contracts, and administering and paying accounts payable of the Company and the Series;

(13)     purchasing, at the Company’s expense, all equipment and any related software necessary for the operation of the Company’s business and maintain the same, pursuant to the approved operating budget;

(14)     providing financial services including, but not limited to, bookkeeping, record creation and maintenance, collection, banking, accounting, budget development, auditing and tax return preparation (provided this shall not include personal income tax returns), as well as such other accounting services as are reasonably required;

(15)     providing billing and collection services for the Company and the Series, managing their cash, and making payments on their behalf, including any Management Fees that become payable under this Agreement;

(16)     taking primary responsibility with respect to personnel and employment matters; and                    

(17)     obtaining or renewing all necessary licenses and permits, and otherwise assisting in the compliance with all applicable federal, state and local laws, rules and regulations, with any fees payable by the Company.

(b)     Rights of the Company. Markets understands and acknowledges that the Company reserves the right to make all material decisions, with input from Markets, about the implementation of the Company’s business plan, the acquisition of services or assets and the use and/or disposition of assets. Markets shall provide the Services in consultation with, for the benefit, and at the direction, of the Company.

3.     Management Fee. In consideration for the Services provided pursuant to Section 1, on the first day of each calendar quarter the Company shall pay Markets the percentage of Free Cash Flow distributed to Series members during the preceding quarter set forth below (the “Management Fee”).

(a)     10% of Free Cash Flow until Series members have received aggregate distributions per Unit equal to the purchase price they paid per Unit; and thereafter

(b)     20% of Free Cash Flow from Racing Activities; and

(c)     30% of Free Cash Flow from Breeding Activities and Asset Sales.

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For purposes of this paragraph 3, “Free Cash Flow” means any available cash for distribution generated from the net income received by a Series of the Company, as determined by Markets to be in the nature of income as defined by U.S. GAAP, plus (i) any change in the net working capital (as shown on the balance sheet of such Series) (ii) any amortization to the Series’ assets (as shown on the income statement of such Series) and (iii) any depreciation to the Series’ Assets (as shown on the income statement of such Series) and (iv) any other non-cash Operating Expenses less (a) any capital expenditure related to the Series’ assets (as shown on the cash flow statement of such Series) (b) any other liabilities or obligations of the Series, in each case to the extent not already paid or provided for and (c) upon the termination and winding up of a Series or the Company, all costs and expenses incidental to such termination and winding as allocated to the relevant Series.

4.     License. In consideration of the compensation set forth in Section 3, Markets hereby grants to the Company, during the term of this Agreement, a personal, limited, non-transferable, non-sublicensable, non-exclusive license to access and use Market’s Commonwealth Platform (the “Platform”) in connection with the Company’s business and operations.

5.       Limitation of Liability; Indemnification.

(a) None of Markets, its affiliates, or any of their respective directors, members, stockholders, partners, officers, employees or controlling persons (collectively, “Managing Parties”) shall be liable to the Series or the Company for (i) any act or omission performed or failed to be performed by any Managing Party (other than any criminal wrongdoing) arising from the exercise of such Managing Party’s rights or obligations hereunder, or for any losses, claims, costs, damages, or liabilities arising therefrom, in the absence of criminal wrongdoing, willful misfeasance or gross negligence on the part of such Managing Party, (ii) any tax liability imposed on the Series or the Series Asset, or (iii) any losses due to the actions or omissions of the Series or any brokers or other current or former agents or advisers of the Series.

(b) To the fullest extent permitted by applicable law, the Series will indemnify Markets and its Managing Parties against any and all losses, damages, liabilities, judgments, costs and expenses (including, without limitation, reasonable attorneys’ fees and disbursements) and amounts paid in settlement (collectively, “Losses”) to which such person may become subject in connection with any matter arising out of or in connection with this Agreement, except to the extent that any such Loss results solely from the acts or omissions of a Managing Party that have been determined in a final, non-appealable decision of a court, arbitrator or other tribunal of competent jurisdiction to have resulted primarily from such Managing Party’s fraud, willful misconduct or gross negligence. If this paragraph 5 or any portion hereof shall be invalidated on any ground by a court of competent jurisdiction, the Series shall nevertheless indemnify the Managing Party for any Losses incurred to the full extent permitted by any applicable portion of this Section that shall not have been invalidated.

(c) Markets gives no warranty as to the performance or profitability of the Series Asset or as to the performance of any third party engaged by Markets hereunder.

(d) Markets may rely upon and shall be protected in acting or refraining from action upon any instruction from, or document signed by, any authorized person of the Series or other person reasonably believed by the Markets to be authorized to give or sign the same whether or not the authority of such person is then effective.

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6.       Term; Termination.

(a)     The initial term of this Agreement shall commence as of the date of this Agreement and have a term of one (1) year unless earlier terminated as provided for in this paragraph 6 (the "Initial Term"). Thereafter, this Agreement shall continue for consecutive one-year terms (each a "Renewal Term") until it is terminated in accordance with this paragraph 6. Either party may terminate this Agreement at the end of the Initial Term or any applicable Renewal Term by providing the other party with thirty (30) days written notice prior to the expiration of the then effective term. Notwithstanding the forgoing provisions, this Agreement may be terminated any time during the Initial Term and any Renewal Term by written agreement signed by both parties to this Agreement. The provisions of paragraph 6 shall survive any termination.

(b)     Either party shall be in default if it fails to perform any material term of this Agreement and that failure is not cured within thirty (30) days after receipt of written notification of such failure from the party not in default. In the event of such a failure to cure, the non-defaulting party shall have the right to terminate this Agreement immediately by written notice to the other party. This Agreement shall also terminate if Markets is terminated as the Company’s Managing Member pursuant to the Operating Agreement.

7.     Independent Contractor. The Company acknowledges and agrees that Markets is to act as an independent contractor of the Company in providing the services specified in this Agreement. Nothing in the Agreement shall be construed to constitute either party as the joint venturer of the other. Neither party has the right to bind the other party or make any promises or representations on behalf of the other party except as specifically set forth in this Agreement or the Operating Agreement.

8.       No Breach; Consents and Approvals.

(a)     The Company hereby represents and warrants to Markets that the execution and delivery of this Agreement by the Company does not, and the consummation of the transactions contemplated hereby will not (i) violate or conflict with Operating Agreement or (ii) constitute a breach or default (or an event that with notice or lapse of time or both would become a breach or default) of, or give rise to any lien, third party right of termination, cancellation, material modification or acceleration, under any material agreement, understanding or undertaking to which the Company or any affiliate of the Company is a party or by which it or any of them is bound or violate or conflict with any law, rule, regulation, judgment, decree or order to which it or any of them is subject.

(b)     Markets hereby represents and warrants to the Company that the execution and delivery of this Agreement by Markets does not, and the consummation of the transactions contemplated hereby will not (i) violate or conflict with its Certificate of Formation or its Operating Agreement or (ii) constitute a breach or default (or an event that with notice or lapse of time or both would become a breach or default) of, or give rise to any lien, third party right of termination, cancellation, material modification or acceleration, under any material agreement, understanding or undertaking to which Markets or any Affiliate of Markets is a party or by which it or any of them is bound or violate or conflict with any law, rule, regulation, judgment, decree or order to which it or any of them is subject.

9.       Amendment. This Agreement may not be amended except by a written instrument signed by all of the parties to this Agreement.

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10.     Entire Agreement. This Agreement constitutes the entire agreement between the parties and supersede all prior agreements, representations, warranties, statements, promises, information, arrangements and undertakings, whether oral or written, express or implied, with respect to the subject matter of this Agreement.

11.     Severability. If any provision of this Agreement shall be waived, or be invalid or unenforceable, the remaining provisions of this Agreement shall be unaffected thereby and shall remain binding and in full force and effect, and in the case any provision is found to be invalid or unenforceable, each of the parties shall use its best efforts to find and employ an alternative means to achieve the same or substantially the same results as that contemplated by such provision.

12.     Remedies Cumulative. Any rights or remedies of either party in the event of default are intended to be cumulative rather than exclusive. Moreover, if either party chooses not to insist upon strict performance of any provision of this Agreement, that choice shall not impair its rights to insist on strict performance in the event of subsequent acts of default, and the waiver by a party of any breach of any provision of this Agreement by the non-breaching party shall not operate or be construed as a waiver of any subsequent breach by that party.

13.      Governing Law. This Agreement shall be governed by and be construed in accordance with the laws of the Commonwealth of Kentucky, without regard to or application of its conflicts of law rules. Jurisdiction and venue for any litigation or arbitration arising out of this agreement shall lie in Fayette County Kentucky.

14.       Headings. The underlined headings of paragraphs in this Agreement are included for reference only and are not a part of this Agreement.

15.    Counterparts. This Agreement may be executed in counterparts, each of which when so executed shall be deemed to be an original, and such counterparts together shall constitute one and the same agreement.

16.     Assignment. Neither of the parties hereto shall have the right to assign, transfer or convey any of its rights or interest under this Agreement, or to delegate any of its duties or obligations under this Agreement, without the prior written approval of the other party, which consent may be withheld at the other party’s sole and absolute discretion.

[Signatures on the following page]

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Signature Page to Management Services Agreement

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

COMMONWEALTH MARKETS INC.
By
Title:	Chief Executive Officer
COMMONWEALTH THOROUGHBREDS LLC
By:	Commonwealth Markets Inc., as managing member
By
Title:	Chief Executive Officer
SERIES [ • ], a series of Commonwealth
Thoroughbreds LLC
By:	Commonwealth Markets Inc., as managing member
By
Title:	Chief Executive Officer

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EX1A-4 SUBS AGMT

Exhibit 6.2(a)

THE SECURITIES REPRESENTED BY THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO SELL OR DISTRIBUTE THEM. THE SECURITIES MAY NOT BE TRANSFERRED, SOLD OR DISTRIBUTED UNLESS REGISTERED UNDER THE ACT OR THE COMPANY RECEIVES AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT ANY SUCH TRANSFER, SALE OR DISTRIBUTION IS EXEMPT FROM REGISTRATION UNDER THE ACT.

AMENDED AND RESTATED

CONVERTIBLE PROMISSORY NOTE AND SECURITY AGREEMENT

$7,500.00	August 20, 2019
	Lexington, Kentucky

FOR VALUE RECEIVED, Commonwealth Thoroughbreds LLC, a Delaware series limited liability company (the “Company”), promises to pay to Brian Doxtator (the “Holder”), the principal sum of $7,500.00, together with (i) interest on the unpaid balance of this Amended and Restated Convertible Promissory Note (the “Note”) from time to time outstanding at the “Applicable Federal Rate” (as defined in the Internal Revenue Code) of 1.91% per annum, and (ii) unpaid Profit Participation (as defined below) thereof. Simple interest on this Note will be computed on the basis of the actual number of days elapsed and a year of 365 days. This Note is subject to the following terms and conditions:

1. Background; Use of Funds; Definitions. This Note amends and restates the Convertible Promissory Note dated August 20, 2019 made by the Company to modify the terms on which principal and interest payable on this Note will be converted into units of membership interest of Series TF 2019. The proceeds of this Note shall be used for the purpose of (a) acquiring the 2019 Thoroughbred filly by Justin Phillip out of Timido by Gio Ponti (the “Series Asset”) from Holder and (b) associated acquisition, boarding and training expenses, if any. Upon creation of the Series TF2019 (as defined below), title to the Series Asset will be assigned from the Company to the Series TF2019, subject to the terms and conditions of this Note. As used in this Note, the following terms shall have the following definitions:

(a) “Distributable Cash” shall mean net proceeds after any management fee and sufficient working capital and related reserves. The Series TF2019 Managing Member shall evaluate Distributable Cash quarterly or at more frequent intervals, in its sole discretion. The amount of Distributable Cash shall be determined in the sole discretion of the Series Managing Member. Distributions of Distributable Cash to members of Series TF2019, when made, will be allocated among them in proportion to their Units in the Series.

(b) “Unit(s)” shall mean each Series TF2019 member’s interest in the Series TF2019 which is represented by units of membership interest, each having identical rights and privileges except as otherwise provided in the Series TF2019 series designation.

(c) “Offering” shall mean the offer and sale of Series TF2019 Units.

(d) “Offering Funding Date” shall mean the date on which the Offering for the Series TF2019 is fully funded through the Offering conducted by the Company.

(e) “Offering Price” shall mean the price per unit at which Series TF2019 Units are sold in the Offering.

(f) “Profit Participation” shall mean a percentage of the Distributable Cash equal to the number of Units into which the Note Balance may be converted.

(g) “Series TF2019” shall mean a series of the Company created for purposes of holding the Series Asset.

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2. Maturity. Subject to the conversion of this Note in accordance with Section 3 below, all principal and any accrued interest (the “Note Balance”) under this Note shall be due and payable within ten (10) business days of the Offering Funding Date or, in the absence of an Offering Funding Date, the termination of the Offering (the “Maturity Date”).

3. Conversion.

(a) Automatic Conversion. The Note Balance shall be converted as of the Offering Funding Date into the number of Series TF2019 Units equal to the sum of the Note Balance plus the unpaid Profit Participation, if any, divided by the Offering Price. Upon conversion of this Note, the Holder hereby agrees to execute and deliver to the Company all transaction documents related to the Offering, including a subscription agreement, operating agreement and other ancillary agreements and having the same terms and conditions as those agreements entered into by the other purchasers of the Units.

(b) Mechanics and Effect of Conversion. Upon conversion of this Note pursuant to this Section 3, the Holder shall surrender this Note, duly endorsed, at the principal offices of the Company or any transfer agent of the Company. Upon conversion of this Note, the Company will be forever released from all of its obligations and liabilities under this Note with regard to that portion of the principal amount and accrued interest being converted including without limitation the obligation to pay such portion of the principal amount, Profit Participation and accrued interest.

4. Profit Participation. If at any time from the date of this Note through the Offering Funding Date the Series TF2019 generates Distributable Cash, the Holder shall receive a percentage of the Distributable Cash equal to the Profit Participation. The Profit Participation shall be earned as of the date proceeds are generated. Notwithstanding any other provision of this Note, in no event shall Holder be liable to Company for any loss in value on the Series Asset. If at any time it is calculated, the Profit Participation shall be a negative amount, Holder shall not be liable in any way for such amount nor shall there be any reduction in the principal amount of the Note, or accrued interest due hereunder.

5. Payment; Prepayment. All payments shall be made in lawful money of the United States of America at such place as the Holder hereof may from time to time designate in writing to the Company. Payment shall be credited first to Holder’s collection expenses, next to late charges, next to unpaid Profit Participation, then to accrued interest then due and payable and the remainder applied to principal. This Note may be prepaid in whole or in part at any time without penalty.

6. Grant of Security Interest and Security Agreement. The security interests created by the Company hereby secure the payment and performance of all of the Holder’s obligations under this Promissory Note and Security Agreement. The Company hereby grants to the Holder a first lien and security interest in all of the Company’s right, title and interest in and to the Series Asset. The Company further grants to the Holder a security interest in any the proceeds from the sale of the Series Asset, to which the Company may be entitled as a result of ownership of the Series Asset. The rights of any transferee of any or all of the Series Asset shall be subject to the rights of the Holder under this Security Agreement and to the security interest in the Series Asset. The Company grants a further security interest to the Holder in the proceeds and products or any other property, the proceeds of any insurance (including without limitation, care, custody and control, first year infertility and/or mortality, AS&D) received by the Company arising out of or through any sale, exchange, collection, death, disability or other disposition of the Series Asset or any part thereof.

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7. Events of Default; Remedies.

(a) The occurrence of any one or more of the following events shall be deemed an “Event of Default”:

(i) The failure to pay any amounts when due hereunder.

(ii) The Company shall:

(1) Admit in writing its inability to pay its debts generally as they become due;

(2) Make an assignment for the benefit of its creditors; or

(3) Consent to the appointment of a receiver of itself or of the whole or any substantial part of its property.

(iii) The Company shall file a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law or statute of the United States or any state or district or territory thereof.

(iv) A court of competent jurisdiction shall enter an order, judgment or decree appointing, without the consent of Company, a receiver for Company or of the whole or any substantial part of its property, or approving a petition filed against the Company seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law or statute of the United States of America or any state or district or territory thereof, and such order, judgment or decree shall not be vacated or set aside or stayed within thirty (30) days from the date of the entry thereof.

(v) Under the provisions of any other law for the relief or aid of debtors, any court of competent jurisdiction shall assume custody or control of the Company or of the whole or any substantial part of their property, and such custody or control shall not be terminated or stayed within thirty (30) days from the date of assumption of such custody or control.

(vi) A final judgment or order for the payment of money, or any final order granting equitable relief, shall be entered against the Company and such judgment or order has or will have a materially adverse effect on the financial condition of the Company.

(b) Upon the happening of one or more Events of Default, the right to possession and control of the Series Asset shall vest in and be exercised solely by the Holder. In addition, if an Event of Default occurs, the Holder may proceed to exercise with respect to the Series Asset all rights, options and remedies of a secured party upon default as provided for under the Uniform Commercial Code as adopted in the Commonwealth of Kentucky (the “Uniform Commercial Code”). The rights of Holder upon an Event of Default shall include, without limitation, any and all rights and remedies in any and all other documents, instruments, agreements and other writings between Holder and the Company, all rights and remedies as provided by law, in equity or otherwise, and in addition thereto, the following:

(i)     The right to require the Company to make the Series Asset available to the Holder at a place or places to be designated by Holder which is reasonably convenient to Holder and the Company, if the Company has the power to make the Series Asset available.

(ii)     The right to require the Company to board and care for the Series Asset, at the Company’s own cost and risk, on behalf of Holder after Holder has taken possession of the Series Asset. Care shall be in such manner as to prevent any diminution in value of the Series Asset and shall be for a reasonable time pending the sale or other disposition of the Series Asset.

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(iii)     The right to sell the Series Asset at public or private sale in one or more lots in accordance with Uniform Commercial Code. Holder may bid upon and purchase the Series Asset, or any interest therein, at any public sale thereof and shall be entitled to apply the unpaid portion of the debt under the Promissory Note (the “Debt”) as a credit against the purchase price. Holder’s purchase of the Series Asset, or any interest therein, shall extinguish the Company’s rights under the Uniform Commercial Code upon application of the unpaid portion of the Debt. Holder shall be entitled to apply the proceeds of any such sale to the satisfaction of the Debt and to expenses incurred in realizing upon the Series Asset in accordance with the Uniform Commercial Code.

(iv)     The right to recover the reasonable expenses of taking possession of any of the Series Asset that may be reduced to possession, preparing the Series Asset for sale, selling the Series Asset, and other like expenses.

(v)     The right to recover all of Holder’s expenses of collection, including, without limitation, court costs and attorneys’ fees and disbursements incurred in realizing upon the Series Asset or enforcing or attempting to enforce any provision of this Security Agreement.

(vi)     The right to retain the Series Asset and become the owner thereof, in accordance with the provisions of the Uniform Commercial Code.

(vii)     The right to proceed by appropriate legal process at law or in equity to enforce any provision of this Security Agreement or in aid of the execution of any power of sale, or for foreclosure of the security interests of Holder, or for the sale of the Series Asset under the judgment or decree of any court.

(viii)     The right to enter any premises controlled by the Company where the Series Asset may be located for the purpose of taking possession or removing the same.

(ix)     The omission or failure of the Holder to take advantage or avail himself of any Event of Default shall not constitute a waiver of the right to take advantage or avail himself of one or more subsequent Events of Default.

(c)     The Company shall perform any and all steps requested by the Holder to create, perfect, maintain and protect in favor of the Holder a valid first security interest in, or lien upon, all of the Company’s right, title and interest in the Series Asset, including without limitation the delivery to the Holder of the Jockey Club Certificates of Foal Registration for the Series Asset, the ownership by the Company of which is greater than fifty percent (50%). Holder shall make such certificates available to the Company upon request so that the Company may effectuate the sale of the Series Asset, or any interest therein. The Company hereby authorizes the Holder to sign and file one or more financing statements at any time with respect to such Series Asset without the signature of the Company. The Company shall, however, at any time the Holder requests, sign financing statements, security agreements and other agreements with respect to the Series Asset. Upon the failure of the Company to do so, the Holder is appointed as the agent and attorney-in-fact for the Company to sign any such instrument. The rights and remedies of Holder shall be deemed to be cumulative, and any exercise of any right or remedy shall not be deemed to be an election of that right or remedy to the exclusion of any other right or remedy.

8. Transfer; Successors and Assigns. The terms and conditions of this Note shall inure to the benefit of and be binding upon the respective successors and assigns of the parties. Notwithstanding the foregoing, the Holder may not assign, pledge, or otherwise transfer this Note without the prior written consent of the Company. This Note may be transferred by Holder only upon surrender of the original Note for registration of transfer, duly endorsed, or accompanied by a duly executed written instrument of transfer in form satisfactory to the Company. Thereupon, a new note for the same principal amount and interest will be issued to, and registered in the name of, the transferee. Interest and principal are payable only to the registered holder of this Note.

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9. Representations, Warranties and Covenants of the Company. The Company hereby represents and warrants to the Holder as follows:

(a) Organization, Good Standing and Qualification. The Company is a series limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware. The Company has the requisite corporate power to own and operate its properties and assets and to carry on its business as now conducted and as proposed to be conducted. 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) Corporate Power. The Company will have, as of the date of this Note, all requisite corporate power to execute and deliver this Note and to carry out and perform its obligations under the terms of this Note and under the terms of each Note.

(c) Authorization. This Note, when executed and delivered by the Company, shall constitute valid and binding obligations of the Company enforceable in accordance with their terms, subject to laws of general application relating to bankruptcy, insolvency, the relief of debtors and, with respect to rights to indemnity, subject to federal and state securities laws. The securities issued upon conversion of this Note (the “Conversion Securities”), when issued in compliance with the provisions of this Note, will be validly issued, fully paid and nonassessable and free of any liens or encumbrances and issued in compliance with all applicable federal and securities laws.

10. Representations and Warranties of the Holder. The Holder hereby represents and warrants the following:

(a) Purchase for Own Account. The Holder represents that it is acquiring the Note and the Conversion Securities (collectively, the “Securities”) solely for its own account and beneficial interest for investment and not for sale or with a view to distribution of the Securities or any part thereof, has no present intention of selling (in connection with a distribution or otherwise), granting any participation in, or otherwise distributing the same, and does not presently have reason to anticipate a change in such intention.

(b) Information and Sophistication. Without lessening or obviating the representations and warranties of the Company set forth in Section 8, the Holder hereby: (i) acknowledges that it has received all the information it has requested from the Company and it considers necessary or appropriate for deciding whether to acquire the Securities, (ii) represents that it has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Securities and to obtain any additional information necessary to verify the accuracy of the information given the Holder and (iii) further represents that it has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risk of this investment.

(c) Ability to Bear Economic Risk. The Holder acknowledges that investment in the Securities involves a high degree of risk, and represents that it is able, without materially impairing its financial condition, to hold the Securities for an indefinite period of time and to suffer a complete loss of its investment.

(d) Further Limitations on Disposition. Without in any way limiting the representations set forth above, the Holder further agrees not to make any disposition of all or any portion of the Securities unless and until:

i. There is then in effect a Registration Statement under the Act covering such proposed disposition and such disposition is made in accordance with such Registration Statement; or

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ii. The Holder shall have notified the Company of the proposed disposition and shall have furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition, and if reasonably requested by the Company, such Holder shall have furnished the Company with an opinion of counsel, reasonably satisfactory to the Company, that such disposition will not require registration under the Act or any applicable state securities laws, provided that no such opinion shall be required for dispositions in compliance with Rule 144 under the Act, except in unusual circumstances.

iii. Notwithstanding the provisions of paragraphs (i) and (ii) above, no such registration statement or opinion of counsel shall be necessary for a transfer by such Holder to a partner (or retired partner) or member (or retired member) of such Holder in accordance with partnership or limited liability company interests, or transfers by gift, will or intestate succession to any spouse or lineal descendants or ancestors, if all transferees agree in writing to be subject to the terms hereof to the same extent as if they were Holders hereunder.

(e) Accredited Investor Status. The Holder is an “accredited investor” as such term is defined in Rule 501 under the Act.

(f) Further Assurances. The Holder agrees and covenants that at any time and from time to time it will promptly execute and deliver to the Company such further instruments and documents and take such further action as the Company may reasonably require in order to carry out the full intent and purpose of this Note and to comply with state or federal securities laws or other regulatory approvals.

11. Governing Law. This Note and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the Commonwealth of Kentucky, without giving effect to principles of conflicts of law.

12.  Notices. Any notice required or permitted by this Agreement shall be in writing and shall be deemed sufficient upon receipt, when delivered personally or by courier, overnight delivery service or confirmed facsimile, or 48 hours after being deposited in the U.S. mail as certified or registered mail with postage prepaid, if such notice is addressed to the party to be notified at such party’s address or facsimile number as set forth below or as subsequently modified by written notice.

13. Amendments and Waivers. Except as expressly provided in this Note, the Company does hereby waive presentment and demand for payment, protest, notice of protest and nonpayment, and notice of the intention to accelerate, and agrees that its liability on this Note shall not be affected by any renewal or extension in the time of payment hereof, by any indulgences, or by any release or change in any security for the payment of this Note. No term of this Note may be amended only with the written consent of the Company and the Holder. No provision of this Note may be amended, waived or otherwise modified unless such amendment, waiver or other modification is in writing and is signed or otherwise approved by the Company and Holder.

14. Members and Managers Not Liable. In no event shall any member, manager or employee of the Company or Manager be liable for any amounts due or payable pursuant to this Note.

15. Counterparts. This Note may be executed in any number of counterparts, each of which will be deemed to be an original and all of which together will constitute a single agreement.

16. Action to Collect on Note. If action is instituted to collect on this Note, the Company promises to pay all costs and expenses, including reasonable attorney’s fees, incurred in connection with such action.

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17. Loss of Note. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Note or any Note exchanged for it, and indemnity satisfactory to the Company (in case of loss, theft or destruction) or surrender and cancellation of such Note (in the case of mutilation), the Company will make and deliver in lieu of such Note a new Note of like tenor.

18. Maximum Interest Rate. Notwithstanding anything to the contrary contained herein, under no circumstances shall the aggregate amount paid or agreed to be paid hereunder exceed the highest lawful rate permitted under applicable usury law (the “Maximum Rate”) and the payment obligations of Company under this Note are hereby limited accordingly. If under any circumstances, whether by reason of advancement or acceleration of the maturity of the unpaid principal balance hereof or otherwise, the aggregate amounts paid on this Note shall include amounts which by law are deemed interest and which would exceed the Maximum Rate, Company stipulates that payment and collection of such excess amounts shall have been and will be deemed to have been the result of a mistake on the part of both Company and Holder, and the party receiving such excess payments shall promptly credit such excess (to the extent only of such payments in excess of the Maximum Rate) against the unpaid principal balance hereof and any portion of such excess payments not capable of being so credited shall be refunded to Company.

 The parties have executed this Convertible Promissory Note as of the date first set forth above.

COMPANY:
COMMONWEALTH THOROUGHBREDS LLC
By: Commonwealth Markets Inc., its Manager
By:	/s/ Chase Chamberlin
Name:	Chase Chamberlin
Title:	CMO & Director of Racing
Address: 1450 North Broadway  Lexington, Kentucky 40505

AGREED TO AND ACCEPTED:

THE HOLDER:

BRIAN DOXTATOR

/s/ Brian Doxtator                                                       

Address:

1450 North Broadway

Lexington, Kentucky 40505

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EX1A-6 MAT CTRCT

Exhibit 6.2(b)

THE SECURITIES REPRESENTED BY THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO SELL OR DISTRIBUTE THEM. THE SECURITIES MAY NOT BE TRANSFERRED, SOLD OR DISTRIBUTED UNLESS REGISTERED UNDER THE ACT OR THE COMPANY RECEIVES AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT ANY SUCH TRANSFER, SALE OR DISTRIBUTION IS EXEMPT FROM REGISTRATION UNDER THE ACT.

CONVERTIBLE PROMISSORY NOTE AND SECURITY AGREEMENT

$20,000.00	October 28, 2019
	Lexington, Kentucky

FOR VALUE RECEIVED, Commonwealth Thoroughbreds LLC, a Delaware series limited liability company (the “Company”), promises to pay to Commonwealth Markets Inc., a Delaware corporation (the “Holder”), the principal sum of $20,000.00, together with (i) interest on the unpaid balance of this Convertible Promissory Note (the “Note”) from time to time outstanding at the “Applicable Federal Rate” (as defined in the Internal Revenue Code) of 1.69% per annum, and (ii) unpaid Profit Participation (as defined below) thereof. Simple interest on this Note will be computed on the basis of the actual number of days elapsed and a year of 365 days. This Note is subject to the following terms and conditions:

1. Use of Funds; Definitions. The proceeds of this Note shall be used for the purpose of (a) acquiring a 75% interest in the 2018 Thoroughbred colt by Orb out of Latique by Elusive Quality (the “Series Asset”) from Holder and (b) associated acquisition, boarding and training expenses, if any. Upon creation of the Series OL2018 (as defined below), title to the Series Asset will be assigned from the Company to the Series OL2018, subject to the terms and conditions of this Note. As used in this Note, the following terms shall have the following definitions:

(a) “Conversion Price” shall mean the price per unit at which Series OL2018 Units are sold in the Offering.

(b) “Distributable Cash” shall mean net proceeds after any management fee and sufficient working capital and related reserves. The Series OL2018 Managing Member shall evaluate Distributable Cash quarterly or at more frequent intervals, in its sole discretion. The amount of Distributable Cash shall be determined in the sole discretion of the Series Managing Member. Distributions of Distributable Cash to members of Series OL2018, when made, will be allocated among them in proportion to their Units in the Series.

(c) “Unit(s)” shall mean each Series OL2018 member’s interest in the Series OL2018 which is represented by units of membership interest, each having identical rights and privileges except as otherwise provided in the Series OL2018 series designation.

(d) “Offering” shall mean the offer and sale of Series OL2018 Units.

(e) “Offering Funding Date” shall mean the date on which the Offering for the Series OL2018 is fully funded through the Offering conducted by the Company.

(e) “Profit Participation” shall mean a percentage of the Distributable Cash equal to the number of Units into which the Note Balance may be converted.

(g) “Series OL2018” shall mean a series of the Company created for purposes of holding the Series Asset.

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2. Maturity. Subject to the conversion of this Note in accordance with Section 3 below, all principal and any accrued interest (the “Note Balance”) under this Note shall be due and payable within ten (10) business days of the Offering Funding Date or, in the absence of an Offering Funding Date, the termination of the Offering (the “Maturity Date”).

3. Conversion.

(a) Automatic Conversion. As of the Offering Funding Date, $10,000 of the Note Balance, plus the unpaid Profit Participation, if any, shall be converted into Series OL2018 Units at the Conversion Price. Upon conversion of this Note, the Holder hereby agrees to execute and deliver to the Company all transaction documents related to the Offering, including a subscription agreement, operating agreement and other ancillary agreements and having the same terms and conditions as those agreements entered into by the other purchasers of the Units.

(b) Mechanics and Effect of Conversion. Upon conversion of this Note pursuant to this Section 3, the Holder shall surrender this Note, duly endorsed, at the principal offices of the Company or any transfer agent of the Company. Upon conversion of this Note, the Company will be forever released from all of its obligations and liabilities under this Note with regard to that portion of the principal amount and accrued interest being converted including without limitation the obligation to pay such portion of the principal amount, Profit Participation and accrued interest.

4. Profit Participation. If at any time from the date of this Note through the Offering Funding Date the Series OL2018 generates Distributable Cash, the Holder shall receive a percentage of the Distributable Cash equal to the Profit Participation. The Profit Participation shall be earned as of the date proceeds are generated. Notwithstanding any other provision of this Note, in no event shall Holder be liable to Company for any loss in value on the Series Asset. If at any time it is calculated, the Profit Participation shall be a negative amount, Holder shall not be liable in any way for such amount nor shall there be any reduction in the principal amount of the Note, or accrued interest due hereunder.

5. Payment; Prepayment. All payments shall be made in lawful money of the United States of America at such place as the Holder hereof may from time to time designate in writing to the Company. Payment shall be credited first to Holder’s collection expenses, next to late charges, next to unpaid Profit Participation, then to accrued interest then due and payable and the remainder applied to principal. This Note may be prepaid in whole or in part at any time without penalty.

6. Grant of Security Interest and Security Agreement. The security interests created by the Company hereby secure the payment and performance of all of the Holder’s obligations under this Promissory Note and Security Agreement. The Company hereby grants to the Holder a first lien and security interest in all of the Company’s right, title and interest in and to the Series Asset. The Company further grants to the Holder a security interest in any the proceeds from the sale of the Series Asset, to which the Company may be entitled as a result of ownership of the Series Asset. The rights of any transferee of any or all of the Series Asset shall be subject to the rights of the Holder under this Security Agreement and to the security interest in the Series Asset. The Company grants a further security interest to the Holder in the proceeds and products or any other property, the proceeds of any insurance (including without limitation, care, custody and control, first year infertility and/or mortality, AS&D) received by the Company arising out of or through any sale, exchange, collection, death, disability or other disposition of the Series Asset or any part thereof.

7. Events of Default; Remedies.

(a) The occurrence of any one or more of the following events shall be deemed an “Event of Default”:

(i) The failure to pay any amounts when due hereunder.

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(ii) The Company shall:

(1) Admit in writing its inability to pay its debts generally as they become due;

(2) Make an assignment for the benefit of its creditors; or

(3) Consent to the appointment of a receiver of itself or of the whole or any substantial part of its property.

(iii) The Company shall file a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law or statute of the United States or any state or district or territory thereof.

(iv) A court of competent jurisdiction shall enter an order, judgment or decree appointing, without the consent of Company, a receiver for Company or of the whole or any substantial part of its property, or approving a petition filed against the Company seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law or statute of the United States of America or any state or district or territory thereof, and such order, judgment or decree shall not be vacated or set aside or stayed within thirty (30) days from the date of the entry thereof.

(v) Under the provisions of any other law for the relief or aid of debtors, any court of competent jurisdiction shall assume custody or control of the Company or of the whole or any substantial part of their property, and such custody or control shall not be terminated or stayed within thirty (30) days from the date of assumption of such custody or control.

(vi) A final judgment or order for the payment of money, or any final order granting equitable relief, shall be entered against the Company and such judgment or order has or will have a materially adverse effect on the financial condition of the Company.

(b) Upon the happening of one or more Events of Default, the right to possession and control of the Series Asset shall vest in and be exercised solely by the Holder. In addition, if an Event of Default occurs, the Holder may proceed to exercise with respect to the Series Asset all rights, options and remedies of a secured party upon default as provided for under the Uniform Commercial Code as adopted in the Commonwealth of Kentucky (the “Uniform Commercial Code”). The rights of Holder upon an Event of Default shall include, without limitation, any and all rights and remedies in any and all other documents, instruments, agreements and other writings between Holder and the Company, all rights and remedies as provided by law, in equity or otherwise, and in addition thereto, the following:

(i)     The right to require the Company to make the Series Asset available to the Holder at a place or places to be designated by Holder which is reasonably convenient to Holder and the Company, if the Company has the power to make the Series Asset available.

(ii)     The right to require the Company to board and care for the Series Asset, at the Company’s own cost and risk, on behalf of Holder after Holder has taken possession of the Series Asset. Care shall be in such manner as to prevent any diminution in value of the Series Asset and shall be for a reasonable time pending the sale or other disposition of the Series Asset.

(iii)     The right to sell the Series Asset at public or private sale in one or more lots in accordance with Uniform Commercial Code. Holder may bid upon and purchase the Series Asset, or any interest therein, at any public sale thereof and shall be entitled to apply the unpaid portion of the debt under the Promissory Note (the “Debt”) as a credit against the purchase price. Holder’s purchase of the Series Asset, or any interest therein, shall extinguish the Company’s rights under the Uniform Commercial Code upon application of the unpaid portion of the Debt. Holder shall be entitled to apply the proceeds of any such sale to the satisfaction of the Debt and to expenses incurred in realizing upon the Series Asset in accordance with the Uniform Commercial Code.

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(iv)     The right to recover the reasonable expenses of taking possession of any of the Series Asset that may be reduced to possession, preparing the Series Asset for sale, selling the Series Asset, and other like expenses.

(v)     The right to recover all of Holder’s expenses of collection, including, without limitation, court costs and attorneys’ fees and disbursements incurred in realizing upon the Series Asset or enforcing or attempting to enforce any provision of this Security Agreement.

(vi)     The right to retain the Series Asset and become the owner thereof, in accordance with the provisions of the Uniform Commercial Code.

(vii)     The right to proceed by appropriate legal process at law or in equity to enforce any provision of this Security Agreement or in aid of the execution of any power of sale, or for foreclosure of the security interests of Holder, or for the sale of the Series Asset under the judgment or decree of any court.

(viii)     The right to enter any premises controlled by the Company where the Series Asset may be located for the purpose of taking possession or removing the same.

(ix)     The omission or failure of the Holder to take advantage or avail himself of any Event of Default shall not constitute a waiver of the right to take advantage or avail himself of one or more subsequent Events of Default.

(c)     The Company shall perform any and all steps requested by the Holder to create, perfect, maintain and protect in favor of the Holder a valid first security interest in, or lien upon, all of the Company’s right, title and interest in the Series Asset, including without limitation the delivery to the Holder of the Jockey Club Certificates of Foal Registration for the Series Asset, the ownership by the Company of which is greater than fifty percent (50%). Holder shall make such certificates available to the Company upon request so that the Company may effectuate the sale of the Series Asset, or any interest therein. The Company hereby authorizes the Holder to sign and file one or more financing statements at any time with respect to such Series Asset without the signature of the Company. The Company shall, however, at any time the Holder requests, sign financing statements, security agreements and other agreements with respect to the Series Asset. Upon the failure of the Company to do so, the Holder is appointed as the agent and attorney-in-fact for the Company to sign any such instrument. The rights and remedies of Holder shall be deemed to be cumulative, and any exercise of any right or remedy shall not be deemed to be an election of that right or remedy to the exclusion of any other right or remedy.

8. Transfer; Successors and Assigns. The terms and conditions of this Note shall inure to the benefit of and be binding upon the respective successors and assigns of the parties. Notwithstanding the foregoing, the Holder may not assign, pledge, or otherwise transfer this Note without the prior written consent of the Company. This Note may be transferred by Holder only upon surrender of the original Note for registration of transfer, duly endorsed, or accompanied by a duly executed written instrument of transfer in form satisfactory to the Company. Thereupon, a new note for the same principal amount and interest will be issued to, and registered in the name of, the transferee. Interest and principal are payable only to the registered holder of this Note.

9. Representations, Warranties and Covenants of the Company. The Company hereby represents and warrants to the Holder as follows:

(a) Organization, Good Standing and Qualification. The Company is a series limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware. The Company has the requisite corporate power to own and operate its properties and assets and to carry on its business as now conducted and as proposed to be conducted. 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.

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(b) Corporate Power. The Company will have, as of the date of this Note, all requisite corporate power to execute and deliver this Note and to carry out and perform its obligations under the terms of this Note and under the terms of each Note.

(c) Authorization. This Note, when executed and delivered by the Company, shall constitute valid and binding obligations of the Company enforceable in accordance with their terms, subject to laws of general application relating to bankruptcy, insolvency, the relief of debtors and, with respect to rights to indemnity, subject to federal and state securities laws. The securities issued upon conversion of this Note (the “Conversion Securities”), when issued in compliance with the provisions of this Note, will be validly issued, fully paid and nonassessable and free of any liens or encumbrances and issued in compliance with all applicable federal and securities laws.

10. Representations and Warranties of the Holder. The Holder hereby represents and warrants the following:

(a) Purchase for Own Account. The Holder represents that it is acquiring the Note and the Conversion Securities (collectively, the “Securities”) solely for its own account and beneficial interest for investment and not for sale or with a view to distribution of the Securities or any part thereof, has no present intention of selling (in connection with a distribution or otherwise), granting any participation in, or otherwise distributing the same, and does not presently have reason to anticipate a change in such intention.

(b) Information and Sophistication. Without lessening or obviating the representations and warranties of the Company set forth in Section 8, the Holder hereby: (i) acknowledges that it has received all the information it has requested from the Company and it considers necessary or appropriate for deciding whether to acquire the Securities, (ii) represents that it has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Securities and to obtain any additional information necessary to verify the accuracy of the information given the Holder and (iii) further represents that it has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risk of this investment.

(c) Ability to Bear Economic Risk. The Holder acknowledges that investment in the Securities involves a high degree of risk, and represents that it is able, without materially impairing its financial condition, to hold the Securities for an indefinite period of time and to suffer a complete loss of its investment.

(d) Further Limitations on Disposition. Without in any way limiting the representations set forth above, the Holder further agrees not to make any disposition of all or any portion of the Securities unless and until:

i. There is then in effect a Registration Statement under the Act covering such proposed disposition and such disposition is made in accordance with such Registration Statement; or

ii. The Holder shall have notified the Company of the proposed disposition and shall have furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition, and if reasonably requested by the Company, such Holder shall have furnished the Company with an opinion of counsel, reasonably satisfactory to the Company, that such disposition will not require registration under the Act or any applicable state securities laws, provided that no such opinion shall be required for dispositions in compliance with Rule 144 under the Act, except in unusual circumstances.

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iii. Notwithstanding the provisions of paragraphs (i) and (ii) above, no such registration statement or opinion of counsel shall be necessary for a transfer by such Holder to a partner (or retired partner) or member (or retired member) of such Holder in accordance with partnership or limited liability company interests, or transfers by gift, will or intestate succession to any spouse or lineal descendants or ancestors, if all transferees agree in writing to be subject to the terms hereof to the same extent as if they were Holders hereunder.

(e) Accredited Investor Status. The Holder is an “accredited investor” as such term is defined in Rule 501 under the Act.

(f) Further Assurances. The Holder agrees and covenants that at any time and from time to time it will promptly execute and deliver to the Company such further instruments and documents and take such further action as the Company may reasonably require in order to carry out the full intent and purpose of this Note and to comply with state or federal securities laws or other regulatory approvals.

11. Governing Law. This Note and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the Commonwealth of Kentucky, without giving effect to principles of conflicts of law.

12.  Notices. Any notice required or permitted by this Agreement shall be in writing and shall be deemed sufficient upon receipt, when delivered personally or by courier, overnight delivery service or confirmed facsimile, or 48 hours after being deposited in the U.S. mail as certified or registered mail with postage prepaid, if such notice is addressed to the party to be notified at such party’s address or facsimile number as set forth below or as subsequently modified by written notice.

13. Amendments and Waivers. Except as expressly provided in this Note, the Company does hereby waive presentment and demand for payment, protest, notice of protest and nonpayment, and notice of the intention to accelerate, and agrees that its liability on this Note shall not be affected by any renewal or extension in the time of payment hereof, by any indulgences, or by any release or change in any security for the payment of this Note. No term of this Note may be amended only with the written consent of the Company and the Holder. No provision of this Note may be amended, waived or otherwise modified unless such amendment, waiver or other modification is in writing and is signed or otherwise approved by the Company and Holder.

14. Members and Managers Not Liable. In no event shall any member, manager or employee of the Company or Manager be liable for any amounts due or payable pursuant to this Note.

15. Counterparts. This Note may be executed in any number of counterparts, each of which will be deemed to be an original and all of which together will constitute a single agreement.

16. Action to Collect on Note. If action is instituted to collect on this Note, the Company promises to pay all costs and expenses, including reasonable attorney’s fees, incurred in connection with such action.

17. Loss of Note. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Note or any Note exchanged for it, and indemnity satisfactory to the Company (in case of loss, theft or destruction) or surrender and cancellation of such Note (in the case of mutilation), the Company will make and deliver in lieu of such Note a new Note of like tenor.

18. Maximum Interest Rate. Notwithstanding anything to the contrary contained herein, under no circumstances shall the aggregate amount paid or agreed to be paid hereunder exceed the highest lawful rate permitted under applicable usury law (the “Maximum Rate”) and the payment obligations of Company under this Note are hereby limited accordingly. If under any circumstances, whether by reason of advancement or acceleration of the maturity of the unpaid principal balance hereof or otherwise, the aggregate amounts paid on this Note shall include amounts which by law are deemed interest and which would exceed the Maximum Rate, Company stipulates that payment and collection of such excess amounts shall have been and will be deemed to have been the result of a mistake on the part of both Company and Holder, and the party receiving such excess payments shall promptly credit such excess (to the extent only of such payments in excess of the Maximum Rate) against the unpaid principal balance hereof and any portion of such excess payments not capable of being so credited shall be refunded to Company.

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 The parties have executed this Convertible Promissory Note as of the date first set forth above.

COMPANY:

COMMONWEALTH THOROUGHBREDS LLC

By: Commonwealth Markets, Inc., its Manager

By: /s/ Brian Doxtator                                            

Name: Brian Doxtator                                             

Title: CEO                                                                      

Address:

1450 North Broadway 

Lexington, Kentucky 40505

AGREED TO AND ACCEPTED:

THE HOLDER:

COMMONWEALTH MARKETS INC.

By:	/s/ Brian Doxtator
Name:	Brian Doxtator
Title:	CEO

Address:

1450 North Broadway

Lexington, Kentucky 40505

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EX1A-6 MAT CTRCT

Exhibit 6.3(a)

INSTRUMENT OF TRANSFER

This is an Instrument of Transfer effective as of August 20^th, 2019, between Brian Doxtator, individually (the "Transferor"), and Commonwealth Thoroughbreds LLC (the "Transferee”).

Recital

Brian Doxtator, an individual residing at 142 S Clark Dr, Los Angeles, CA 90048, is the sole owner of the 2019 Thoroughbred filly by Justin Phillip out of Timido by Gio Ponti (the “2019 Timido Foal”).

NOW, THEREFORE, in exchange for the Transferee’s convertible promissory note dated August 20^th, 2019 in the principal amount of SEVEN THOUSAND FIVE HUNDRED DOLLARS ($7,500.00), and other good and valuable consideration, receipt of which is hereby acknowledged, the undersigned on this day hereby transfers all of his right, title and interest in the 2019 Timido Foal to Commonwealth Thoroughbreds LLC, a Kentucky limited liability company with its principal place of business at 1450 North Broadway, Lexington, Kentucky 40505.

The Transferor represents and warrants that the property described above in this Instrument of Transfer is free from any and all encumbrances, liens or adverse claims and that the Transferor has full power, capacity and right to and hereby does convey, sell, transfer and deliver such property to the Transferee free from any and all encumbrances, liens or adverse claims.

IN WITNESS WHEREOF, the parties have signed this Instrument of Transfer effective as of the date set forth above, but actually on the dates set forth below.

		“Transferor”
Date:	8/22/2019	/s/ Brian Doxtator
		Brian Doxtator
		“Transferee”
		COMMONWEALTH THOROUGHBREDS LLC
		By:	Commonwealth Markets Inc. as Manager
Date:	8/22/2019	By:	/s/ Chase Chamberlin
		Chase Chamberlin, CMO

EX1A-4 SUBS AGMT

Exhibit 6.3(b)

LATIQUE 2018 COLT by ORB PURCHASE AND SALE

and CO-OWNERSHIP AGREEMENT and BILL OF SALE

THIS AGREEMENT OF PURCHASE AND SALE AND CO-OWNERSHIP, made and entered into this 28th day of October, 2019, by and between:

Commonwealth Thoroughbreds LLC

1450 N Broadway

Lexington, KY 40505

(hereinafter referred to as the “Buyer”)

and

Mineola Farm II, LLC

2301 Bryan Station Road

Lexington, KY 40516

and

Silent Grove Farms, LLC

3131 Custer Drive, Suite 8

Lexington, KY 40517

(hereinafter collectively referred to as the “Seller”).

WITNESSETH:

1.     Recital. The Seller is the owner of the unnamed dark bay or brown yearling Thoroughbred Colt by ORB out of LAT1QUE by ELUSIVE QUALITY (the “Colt”). The Seller has agreed to sell a seventy five percent (75.00%) interest (the “Interest”) in the Colt to Buyer, and Buyer has agreed to purchase the Interest in Colt from Seller, all for the price and upon the terms and conditions hereinafter provided.

2.     Agreement to Buy and Sell. Seller hereby sells to Buyer, and Buyer hereby purchases the Interest in and to the Colt from Seller, for the price and upon the terms and conditions hereinafter provided.

3.     Purchase Price. Payment and Other Consideration.

3.1.     Price. The full purchase price to be paid by Buyer to Seller, for the Interest in the Colt, shall be the sum of TWENTY THOUSAND U.S. Dollars ($20,000 U.S.)(“Purchase Price”).

3.2.     Retained Interest: Seller shall retain a twenty-five percent (25%) interest in and to the Colt (the “Retained Interest.”) If at any time subsequent to the date hereof the Colt is sold in its entirety by the Buyer and Seller as a racing or stallion prospect, any such sale being specifically subject to Paragraph 5.2, below, Seller shall be entitled to twenty-five percent (25%) interest of the net proceeds, as well as any other rights of the sale with respect to the Retained Interest in the Colt.

3.3.     Payment. Payment of the purchase price is to be sent by wire transfer to an account designated by the Seller upon a) satisfaction or waiver of all the conditions set forth herein below and b) within five (5) days following the qualification of the Buyer’s Offering Statement with the Securities and Exchange Commission (filed October 16, 2019) or January 17, 2020, whichever first occurs, time being of the essence.

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4.     Representations, Warranties. and Covenants of Seller.

4.1.     Title and Encumbrances. The Seller represents and warrants to Buyer that it owns the Interest in and to the Colt, free and clear of all liens, claims, charges or encumbrances whatsoever, has the good right and full power to sell and transfer the Interest in and to the Colt as contemplated by this Agreement and has not transferred, pledged or encumbered in any fashion whatsoever any present or future right to which the Seller is entitled with respect to the Colt.

4.2.     Authority. The Seller has the right and full authority to execute and deliver this Agreement and all other necessary or appropriate documentation in connection with the transactions contemplated hereby.

4.3.     Taxes. Seller warrants that there are no unpaid taxes of any kind whatsoever due and payable with respect to the ownership of the Colt by the Seller. The Colt is transferred to Buyer by Seller free of any such claims.

4.4.     Disclaimer of Warranties.

SELLER MAKES NO REPRESENTATIONS OR WARRANTIES EXCEPT AS ARE SPECIFICALLY SET FORTH IN THE AGREEMENT OF PURCHASE AND SALE EXECUTED BY THE PARTIES IN CONNECTION WITH THIS TRANSACTION AND THIS BILL OF SALE AND NO IMPLIED WARRANTY AS TO THE MERCHANTABILITY OR AS TO THE FITNESS OF THE COLT FOR RACING OR BREEDING PURPOSES OR FOR ANY PARTICULAR PURPOSE SHALL ARISE BY VIRTUE OF THIS TRANSACTION AND ARE HEREBY SPECIFICALLY DISCLAIMED. BUYER ACCEPTS THE COLT AS IS, WHERE IS AND WITH ALL FAULTS.

4.5.     Kentucky Bred Eligibility. The Seller represents and warrants that the Colt is properly registered as a Kentucky Bred Thoroughbred, is eligible to compete in all races restricted to Kentucky bred Thoroughbred horses and is entitled to all other rights and privileges, including without limitation the right to receive all awards, purse supplements, or other benefits associated with such valid registration.

4.6.     Survival of Representation and Warranties. All representations, warranties and agreements made by the Seller and Buyer in this Agreement are made as of the date of Closing, shall survive the Closing and shall remain in full force and effect.

4.7.     Veterinarian’s Certificate of Soundness and Insurability/Consultants Evaluation, Blood Screen and Reports. Within ten (10) days after the execution of this Agreement by Buyer and Seller, the Buyer will cause the Colt to be examined by a licensed veterinarian acceptable to Buyer and Buyer’s insurance company and will obtain from said veterinarian an opinion certifying that the Colt is fully insurable. Within said ten (10) day period, Buyer has the right to draw blood from the Colt for analysis for any medications or foreign substances present as set forth in more detail below. If the results of the blood screen indicate the presence of any medications or other foreign substances which would constitute a violation of the Kentucky Racing Commission’s race day medication rules, the Buyer shall have the right to rescind this Agreement by providing written notification to Seller of his intent to do so together with a copy of the blood screen positive findings within 48 hours of receipt by Buyer of such blood screen results. If Buyer notifies the Seller of the exercise of his right to rescind the purchase of the Colt, the Buyer shall promptly return the Colt to the Seller. Within 48 hours following notification by Buyer of his decision to rescind this Agreement, the Seller shall refund to Buyer the Purchase price if previously paid by Buyer together with his out of pocket expenses for the care and maintenance of the Colt paid by Buyer prior to rescission.

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5.     Post-purchase Management.

5.1.     Training/Other Expenses. Buyer and Seller agree that all costs associated with all reasonable board, care (veterinary, farrier, transportation and other such expenses) and training fees incurred to care for, train and race the Colt, shall be borne pro-rata by the Buyer (75%) and Seller (25%) from October 10, 2019 forward and thereafter for so long as the Colt is co-owned by Buyer and Seller. Any failure by Buyer to pay the Colt’s expenses billed prior to Closing of this transaction shall be considered a default hereof and, if not cured within five (5) days written notice by Seller to Buyer, shall render this agreement null and void and of no further force and effect thereafter and Buyer shall forfeit any and all sums paid for its share of expenses.

5.2.    Training/Racing Management/Sale. The Colt will be trained, raced and cared for under the exclusive management of Commonwealth Thoroughbreds LLC so long as Commonwealth Thoroughbreds LLC owns in excess of (50%) of the Colt. If Commonwealth Thoroughbreds LLC ceases to act in the management of the Colt, a new manager will be selected by the owners of fifty one percent (51%) of the ownership in the Colt. All decisions related to the Colt’s’ training, racing and care will be made by Commonwealth Thoroughbreds LLC so long as they manage the Colt. Commonwealth Thoroughbreds LLC, or any successor manager, will not charge Seller any fees for their management services. The Colt shall run with the Owner listed in the track program and the Daily Racing Form as Commonwealth Thoroughbreds LLC, Mineola Farm II, LLC and Silent Grove Farms, LLC. The Colt will be broken for training by Tony Everard and trained by H. Graham Motion. Only upon the agreement of the owners of eighty percent (80%) of the ownership in the Colt may the Colt be entered in any claiming race; Tony Everard and/or H. Graham Motion be replaced; the Colt be sold in its entirety or privately or at public auction.

5.3.     Division of Purses. All purse monies, (including without limitation any and all Kentucky bred supplements, bonuses, payments or awards earned by the Colt for the Owner) and expenses shall be allocated on a pro-rata basis (75% to Commonwealth Thoroughbreds LLC and 25% to Mineola Farm II, LLC and Silent Grove Farms, LLC, collectively) between the Co-Owners. All racetracks at which the Colt races will be instructed to send separate checks to each Co-Owner for its pro-rata share of such purse earnings (net appropriate deduction for expenses normally deducted by the racetrack). In the event that only one check can be received, then Commonwealth Thoroughbreds LLC shall be the Co-Owner designated to receive the check and shall send Mineola Farm II, LLC and Silent Grove Farms, LLC its twenty-five percent (25%) share of the purse, with a detailed statement of all earnings and deductions therefrom, within ten (10) business days of receipt of those funds.

5.4.     Colors. Subsequent to the date of this Agreement the Colt will run in Commonwealth Thoroughbreds LLC’s colors.

5.5.     Awards. If and when the Colt is awarded any trophy, plaque or other tangible personal property (an “Award”) other than purse monies, bonuses or supplements, as a result of participating in a race, Commonwealth Thoroughbreds LLC shall be entitled to the original Award and Mineola Farm 11, LLC and Silent Grove Farms, LLC shall be entitled to a duplicate to be paid for seventy five percent (75%) by Mineola Farm II, LLC and Silent Grove Farms, LLC and twenty-five percent (25%) by Commonwealth Thoroughbreds LLC.

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5.6.     Right of First Refusal.

(a)     Sales by Mineola Farm II, LLC and Silent Grove Farms, LLC and Commonwealth Thoroughbreds LLC. No Interest owned by either Mineola Farm II, LLC and Silent Grove Farms, LLC or fraction thereof, shall be sold without offering Commonwealth Thoroughbreds LLC the first right to purchase any interest which Mineola Farm II, LLC and/or Silent Grove Farms, LLC may desire to sell. Buyer may sell fractions of its interest in Commonwealth Thoroughbreds LLC without first offering them to the Seller, but should the Buyer desire to accept an offer for twenty percent (20%) or more of its entire interest in and to the Colt, such interest in the Colt shall not be sold without first offering the Seller the first right to purchase the Interest on the same terms and conditions as Buyer is willing to accept.

(b)     Procedure. Should Mineola Farm II, LLC and Silent Grove Farms, LLC or Commonwealth Thoroughbreds LLC receive an offer to purchase an interest, (or with respect to Commonwealth Thoroughbreds LLC, its entire Interest) which it or they is/are willing to accept shall notify the other party(ies) in writing, stating the terms of the offer and enclosing a photocopy of the offer, which notice shall constitute an offer to Commonwealth Thoroughbreds LLC, Mineola Farm II, LLC and Silent Grove Farms, LLC to exercise the first right hereby granted to purchase such interest on the same terms. Should any party hereto desire to accept the offer, it shall, within five (5) days of the sending of such offer, so notify the other party(ies) in writing. If such offer is not accepted, or in the absence of such notice in writing, the notifying party may then sell the interest to the person making the offer upon the terms stated in the offer (subject, however, to all the terms and conditions of this Agreement), which rejection shall not be unreasonably delayed.

5.7.     Purchase Offers. In the event that a written offer to purchase one hundred percent (100%) of the Colt or a majority of interest owned by Commonwealth Thoroughbreds LLC is received by Commonwealth Thoroughbreds LLC which they desire to accept, such an offer shall be immediately sent to the Seller, which if Seller exercises its right of first refusal pursuant to Paragraph 5.6, above, then Commonwealth Thoroughbreds LLC is hereby granted drag along rights. If the proposed sale is for less than the entire Colt, Seller can force Commonwealth Thoroughbreds LLC to include Purchaser’s ownership percentage in the sale and are granted tag along rights.

6.     The Closing.

6.1.     Time and Place. Upon the satisfaction or waiver by Buyer of all the conditions set forth in this Agreement, the Buyer shall wire transfer the purchase price to the Seller when due pursuant to Paragraph 3.3, above.

6.2.     Transfer of Title and Risk of Loss. Risk of loss and possession of the Colt shall pass to Buyer upon signing of this Agreement. Title to the interest being purchased by Buyer shall pass to Buyer upon receipt of the Purchase Price by Seller, whereupon Seller shall deliver to Buyer an executed copy of the Bill of Sale, a copy of which is attached hereto and made a part hereof. Each Co-Owner is responsible to obtain insurance, if any, for its respective Interest in the Colt.

7.     Advice of Counsel. Each party hereto represents and warrants that it has read and understands the terms of this Agreement, that they enter into it upon the legal advice of attorneys of their own choice and that they have been advised concerning the terms of this Agreement by their respective attorneys. Each of the parties represents that they have read and understand the contents of this Agreement, that they have executed it voluntarily and that they have not been unduly influenced by any person, persons or attorney acting on behalf of anyone.

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8.     Miscellaneous.

8.1.     Binding Effect of Agreement. This Agreement shall be binding upon and shall inure to the benefit of the parties to this Agreement and their respective heirs, personal representatives, administrators, successors, assigns and transferees, whether with or without consideration.

8.2.     Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which together shall constitute one in the same instrument.

8.3.     Attorneys Fees and Costs. In the event of any litigation arising out of this Agreement, the prevailing party shall be entitled to recover all reasonable costs incurred together with reasonable attorney’s fees, including any attorney fees and costs incurred incidental to a successful appeal.

8.4.     Entire Agreement. This Agreement represents the entire agreement between the parties regarding the subject matter hereof. Any and all prior or contemporaneous oral agreements or written offers or agreements regarding the subject matter hereof are hereby revoked and are superseded by this Agreement in all respects. This Agreement may not be amended except by the execution of a written amendment signed by both parties.

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IN WITNESS WHEREOF, the undersigned have executed or caused to be executed this Agreement effective as of the day and year first above written, but actually on the dates indicated below.

		SELLER: Mineola Farm II, LLC
Date:	10/28/19	/s/ Jack G. Jones, Jr., Managing Member
		By: Jack G. Jones, Jr., Member
		SELLER: Mineola Farm II, LLC
Date:	10/28/19	/s/ David R. Houchin
		By: David R. Houchin, Member
		BUYER: Mineola Farm II, LLC
Date:	10/28/19	/s/ Brian Doxtator
		Brian Doxtator, Member

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BILL OF SALE

KNOW ALL MEN BY THESE PRESENTS:

That Mineola Farm II, LLC and Silent Grove Farms, LLC, (hereinafter “Seller”) is the owner of the unnamed dark bay or brown yearling Thoroughbred Colt by ORB out of LATIQUE by ELUSIVE QUALITY (the “Colt”). The Seller has agreed to sell a seventy five percent (75.00%) interest (the “Interest”) in the Colt to Buyer, and Buyer has agreed to purchase the Interest in Colt from Seller, all for the price and upon the terms and conditions hereinafter provided.

That for and in consideration of the Purchase Price of TWENTY THOUSAND U.S. Dollars ($20,000 U.S.) and other good and valuable consideration, receipt of which is hereby acknowledged, the Seller on this day hereby bargains, sells and transfers all of its right, title and interest in and to a seventy five percent (75%) Interest in the Colt (the “Interest”) to Commonwealth Thoroughbreds LLC (hereinafter “Buyer”).

The Seller represents and warrants to the Buyer that it owns the Interest in and to the Colt free and clear of all liens, charges or encumbrances whatsoever, and has the good right and full power to sell and transfer the Interest in and to the Colt as contemplated by this Bill of Sale. Title to, risk of loss and possession of the Colt shall pass to Buyer upon payment of the Purchase Price and delivery of the Jockey Club Certificate of Foal Registration endorsed to the Buyer together with the fully executed original Agreement of Purchase and Sale and Bill of Sale executed by the Parties.

SELLER MAKES NO REPRESENTATIONS OR WARRANTIES EXCEPT AS ARE SPECIFICALLY SET FORTH IN THE PURCHASE AND SALE AND CO-OWNERSHIP AGREEMENT EXECUTED BY THE PARTIES IN CONNECTION WITH THIS TRANSACTION AND THIS BILL OF SALE AND NO IMPLIED WARRANTY AS TO THE MERCHANTABILITY OR AS TO THE FITNESS. OF THE COLT FOR RACING OR BREEDING PURPOSES OR FOR ANY PARTICULAR PURPOSE SHALL ARISE BY VIRTUE OF THIS TRANSACTION AND ARE HEREBY SPECIFICALLY DISCLAIMED. BUYER ACCEPTS THE COLT AS IS, WHERE IS AND WITH ALL FAULTS.

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IN WITNESS WHEREOF, the Seller has executed this Bill of Sale and had caused it to be delivered to Buyer this       day of                , 20     .

	SELLER: Mineola Farm II, LLC
Date:
	By: Jack G. Jones, Jr., Member
	SELLER: Mineola Farm II, LLC
Date:
	By: David R. Houchin, Member
	BUYER: Mineola Farm II, LLC
Date:
	Brian Doxtator, Member

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EX1A-4 SUBS AGMT

Exhibit 6.4

Broker Dealer Services Agreement

This Broker Dealer Services Agreement (this “Agreement”), effective as of December 10, 2019 (“Effective Date”), is entered into by Commonwealth Thoroughbreds LLC, a Delaware limited liability company (“Company”), and North Capital Private Securities Corporation, a Delaware corporation (“NCPS”, together with Company, the “Parties”, and each, a “Party”). Effective as of the Effective Date this Agreement amends and restates in its entirety that certain Solicitation Agreement – Private Debt, Equity, and Hybrid Securities, dated as of August 22, 2019 and amended as of September 4, 2019, by and between the Parties (the “Prior Agreement”).

The following Exhibits are incorporated into this Agreement by reference:

Exhibit A – Services

Exhibit B – Fees

Exhibit C – Form of Escrow Agreement

Terms

1.     Services; Investment Process.

1.1.     Company is offering securities directly to the public in an offering exempt from registration under Regulation A+ (the “Offering”). In connection with the Offering during the Term, subject to the terms and conditions of this Agreement and pursuant to the procedures set forth in Section 1.2 below, NCPS agrees to provide to Company the services described in Exhibit A as requested by Company from NCPS from time to time hereunder (the “Services”). For purposes of this Agreement, reference to “Offering” includes the offering of units of membership interest of a single series of Company (“Units”), as well as the offering of Units of all of Company’s series, inclusive, as the context requires, as contemplated by the Offering Materials (as defined below), and reference to a “closing” means the closing of an Offering of the Units of a single series (as the closing of the Offering of the Units of each series will occur without regard to the Offering of Units of any other series), each as the context requires, as contemplated by the Offering Materials.

1.2.     Once an investor submits a purchase order via ACH in respect of the Offering through Company’s licensed online platform technology (“Platform Technology”) or completes investment documentation for the Offering through the Platform Technology, including any proposed investment in a pooled investment entity formed for the purpose of investing in the Offering, or in a pooled nominee account, Company will have three days to reject (the “Rejection Period”) such purchase order or proposed investment (collectively, “Proposed Subscription”) by delivering written notice of rejection to NCPS and such investor (each, a “Subscribing Investor”). After the expiration of the Rejection Period, Company will accept such Proposed Subscription and issue the applicable securities to such Subscribing Investor unless: (a) the Offering fails and no closing is held; (b) Subscriber withdraws such Proposed Subscription before it is accepted; (c) it receives written notice from NCPS to reject such Proposed Subscription; (d) such Subscribing Investor fails to complete investor qualification in a timely manner, as determined in the sole discretion of NCPS; (e) such Subscribing Investor fails to complete all documentation or payment for the Proposed Subscription in a timely manner, each as determined in the sole discretion of NCPS. Each applicable Subscribing Investor will be an intended third party beneficiary of this provision. Company shall not accept a Proposed Subscription unless and until it receives confirmation from NCPS of its completion of applicable Services with respect thereto (as determined in its sole discretion).

2.     Fees.

2.1.     Company shall pay NCPS for the Services as outlined in Exhibit B, which may be updated from time to time by mutual written agreement of the Parties (which may be via email). Company shall make all payments to NCPS in US dollars in immediately available funds.

2.2.     Company also shall reimburse NCPS for out-of-pocket expenses incurred by NCPS in performance of the Services in connection with this Agreement as outlined in Exhibit B. Upon Company’s request, NCPS will provide Company with copies of all relevant invoices, receipts or other evidence of such expenses.

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2.3.     All fees and expenses will be invoiced by NCPS to Company monthly by the 5^th of the month and will be charged automatically by NCPS on the 15^th of each month to the credit card or other payment method indicated by Company on the signature page to this Agreement or Exhibit B. Company consents to NCPS retaining and using Company’s payment information for future invoices and as provided in this Agreement. Company agrees and acknowledges that NCPS and its third party vendors may retain and use Company’s payment information to facilitate the payments provided for in this Agreement. Company agrees to provide NCPS written notice (which may be via email) of any update or changes to Company’s payment information. Absent current payment information, Company shall make all payments to NCPS within 10 days of receiving an invoice therefor.

2.4.     If Company fails to make any payment when due then, in addition to all other remedies that may be available: (a) NCPS may charge interest on the past due amount at the rate of 1.5% per month, calculated daily and compounded monthly, or if lower, the highest rate permitted under applicable law, rule, regulation, code or order (“Law”); such interest may accrue after as well as before any judgment relating to collection of the amount due; (b) Company shall reimburse NCPS for all costs incurred by NCPS in collecting any late payments or interest, including attorneys’ fees, court costs and collection agency fees; and (c) if such failure continues for 10 days following written notice thereof, NCPS may suspend performance of the Services until all past due amounts and interest thereon have been paid, without incurring any obligation or liability to Company or any other person or entity by reason of such suspension; provided that cumulative late payments are subject to the overall limits set forth in Exhibit B.

2.5.     Except as set forth on Exhibit B, all amounts payable to NCPS under this Agreement shall be paid by Company to NCPS in full without any setoff, recoupment, counterclaim, deduction, debit or withholding for any reason (other than any deduction or withholding of tax as may be required by Law).

3.     Term. The initial term of this Agreement commences as of the Effective Date and, unless terminated earlier pursuant any of the Agreement’s express provisions, will continue in effect for one year (the “Initial Term”). This Agreement will automatically renew for additional successive one-year terms unless earlier terminated pursuant to this Agreement’s express provisions or either Party gives the other Party written notice of non-renewal at least 90 days prior to the expiration of the then-current term (each a “Renewal Term” and, collectively with the Initial Term, the “Term”).

4.     Termination.

4.1.     Company may terminate this Agreement immediately without notice to NCPS upon: (a) fraud, malfeasance or willful misconduct by NCPS or any of its affiliates; (b) any material breach by NCPS of this Agreement if such breach is not cured within five days of receipt of written notice thereof (to the extent it can be cured); or (c) if NCPS ceases regular operations or files any petition or commences any case or proceeding under any provision or chapter of the Federal Bankruptcy Act, the Federal Bankruptcy Code, or any other federal or state law relating to insolvency, bankruptcy or reorganization; the adjudication that NCPS is insolvent or bankrupt or the entry of an order for relief under the Federal Bankruptcy Code with respect to NCPS; an assignment for the benefit of creditors; the convening by NCPS of a meeting of its creditors, or any class thereof, for purposes of effecting a moratorium upon or extension or composition of its debts; or the failure of NCPS generally to pay its debts on a timely basis.

4.2.     NCPS may terminate this Agreement immediately without notice to Company upon: (a) fraud, malfeasance or willful misconduct by Company or any issuer or any of their affiliates (including, without limitation, any dual personnel); (b) conduct by Company or any issuer or any of their affiliates (including, without limitation, any dual personnel) that may jeopardize NCPS’s current business, prospective business or professional reputation; (c) any material breach by Company of this Agreement if such breach is not cured within five days of receipt of written notice thereof (to the extent it can be cured), including, but not limited to, any failure to pay any fee due under this Agreement within 30 days of the date the fee was due; or (d) if Company ceases regular operations or files any petition or commences any case or proceeding under any provision or chapter of the Federal Bankruptcy Act, the Federal Bankruptcy Code, or any other federal or state law relating to insolvency, bankruptcy or reorganization; the adjudication that Company is insolvent or bankrupt or the entry of an order for relief under the Federal Bankruptcy Code with respect to Company; an assignment for the benefit of creditors; the convening by Company of a meeting of its creditors, or any class thereof, for purposes of effecting a moratorium upon or extension or composition of its debts; or the failure of Company generally to pay its debts on a timely basis.

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4.3.     This Agreement can be terminated by either Party for any other reason with 90 days prior written notice to the other Party.

4.4.     Fees that would have become payable had the Agreement remained in effect until expiration of the Term will become immediately due and payable upon termination, and Company shall pay such amounts, together with all previously-accrued but not yet paid fees, on receipt of NCPS’s invoice therefor.

4.5.     Notwithstanding the foregoing, upon a Change of Control of Company, NCPS shall have the sole exclusive right to terminate this Agreement and require Company to remove any references to NCPS from any material prepared by Company. “Change of Control” of Company is defined as, in a single transaction or a series of related transactions: (a) a merger or consolidation of Company in which the stockholders of Company immediately prior to such transaction would own, in the aggregate, less than 50% of the total combined voting power of all classes of capital stock of the surviving entity normally entitled to vote for the election of directors of the surviving entity; or (b) the sale, lease or exclusive license by Company of all or substantially all of Company’s assets.

5.     Disclaimer of Advice.

5.1.     Any advice or opinions provided by NCPS to Company may not be disclosed or referred to publicly or to any third party, except in accordance with NCPS’s prior written consent. Company acknowledges that any advice or opinions provided by NCPS are intended solely for the benefit and use of Company and Company agrees that no other person or entity shall be entitled to make use of or rely upon the advice of NCPS, and no such opinion or advice shall be used for any other purpose.

5.2.     Company agrees that NCPS is not undertaking to provide any legal, accounting or tax advice in connection with NCPS’s engagement hereunder or its provision of the Services. Company understands that it will be solely responsible for ensuring that the Offering and any sale of securities complies with all Law.

5.3.     Company acknowledges and agrees that Company will rely on Company’s own judgment in using the Services. NCPS (a) makes no representations with respect to the quality of any investment opportunity or of any issuer; (b) does not guarantee the performance to and of any investor; (c) does not guarantee the performance of any party or facility that provides connectivity to NCPS; and (d) 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.

6.     Company Covenants.

6.1.     Company shall at all times: (a) (i) comply with requests of NCPS in relation to NCPS’s performance of the Services, and (ii) use its reasonable best efforts to cause all of its third party service providers in connection with the Offering to comply with requests of NCPS in relation to NCPS’s performance of the Services; (b) maintain all required registrations and licenses, including foreign qualification, if necessary; (c) pay all related reasonable fees and expenses (including the FINRA Corporate Filing Fee); and (d) pay all federal state and local taxes, in each case that are necessary or appropriate to permit NCPS to perform its obligations under this Agreement.

6.2.     Company shall provide NCPS with an offering circular that truthfully, accurately and completely describes the Offering. Company shall also provide forms of definitive subscription and governance documents, any documents and disclosures required by Law, and any other documents and information, including comprehensive risk factors, that would generally be provided to qualified prospective investors for the purpose of evaluating and consummating an investment in Company. The materials in this Section 6.2, including any promotional material developed by or on behalf of Company and provided to NCPS or prospective investors, constitute the “Offering Materials”. The Offering Materials provided by Company will not contain any misstatement of a material fact or omission of any material fact necessary to make the statements therein not misleading. Company will promptly notify NCPS in writing if it discovers any material misstatement of fact in, or the omission of a material fact from, the Offering Materials. Company shall promptly supplement or amend the Offering Materials and will promptly correct its statements whenever necessary to do so in order to comply with Law and to ensure truthfulness, accuracy and fairness in the presentation of the Offering.

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6.3.     Company shall take all actions necessary or appropriate to protect the brand and customer relationships of NCPS.

6.4.     Company shall protect and maintain all confidential information provided by NCPS to Company.

6.5.     Neither Company nor its manager, nor any of their officers, directors, employees or affiliates is or has been, in any domestic or foreign jurisdiction: (a) indicted for or convicted of any felony or any securities or investment related offense of any kind; (b) enjoined, barred, suspended, censured, sanctioned or otherwise restricted with respect to any securities or investment-related business or undertaking; or (c) the subject or target of any securities or investment-related investigation by any regulatory authority. None of Company, any of its predecessors, any affiliated issuer, any director, executive officer, other officer of Company participating in the Offering, any beneficial owner of 20% or more of Company’s outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the Securities Act of 1933, as amended, the “Securities Act”) connected with Company in any capacity at the time of sale (each, an “Issuer Covered Person”) is subject to any of the “Bad Actor” disqualifications described in Rule 262 under the Securities Act (a “Disqualification Event”). Company has exercised reasonable care to determine whether any Issuer Covered Person is subject to a Disqualification Event and has disclosed every Disqualification Event to NCPS.

6.6.     In its statements and meetings with prospective investors, Company will not make any misstatement of a material fact and will not omit any material fact necessary to make the statements therein not misleading. Company shall treat all prospective investors fairly and with the utmost integrity.

6.7.     Company has, at its own expense, filed (or will file) Form 1-A and will take all other actions necessary to qualify for the exemption provided in Regulation A of the Securities Act (or any applicable respective successor provision) in connection with the Offering and to make any and all related state “blue-sky” filings and take all other actions necessary to perfect such federal and state exemptions, and to provide copies of such filings to NCPS.

6.8.     To the extent Company will be sharing personal or financial information of a third party with NCPS in connection with this Agreement, Company shall maintain and obtain the agreement of each such third party, which shall permit Company to share such third party’s information with NCPS and its affiliates and service providers for NCPS and its affiliates and service providers to use, disclose and retain it in connection with this Agreement and the provision of the services hereunder and as required by Law. NCPS shall be a third party beneficiary to such agreement.

6.9.     In effecting the Offering, Company shall comply in all material respects with all Law in connection with the Offering, including, without limitation, applicable provisions of the Act and any regulations thereunder and any applicable laws, rules, regulations and requirements (including, without limitation, all U.S. state law and all national, provincial, city or other legal requirements of any applicable foreign jurisdiction). Company agrees that any and all representations and warranties made by it to any investor in the Offering will be deemed also to be made to NCPS for its benefit.

6.10.     Company shall: (a) cooperate with all due diligence efforts by NCPS and satisfy all due diligence requests made by NCPS (including by its vendors) in a timely manner; (b) cooperate with all accredited investor verification requests and processes of NCPS in a timely manner; (c) provide complete, final and executed transaction documents to NCPS for the Offering within 30 days of each closing of the Offering; (d) will keep NCPS reasonably informed about the status of communications with prospective investors in the Offering; and (e) not provide investment technology for the purpose of avoiding payment of fees or otherwise.

6.11.     Company shall not engage any person to perform services similar to those provided by NCPS without NCPS’s prior written consent, although NCPS may render such services of the kind contemplated herein for persons and entities other than Company.

6.12.     At such time as deemed appropriate by NCPS, the Parties will execute one or more escrow agreements governing NCPS’s escrow of investor funds in connection with the Offering, in substantially the form attached hereto as Exhibit C (an “Escrow Agreement”).

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7.     Company’s Representations and Warranties. Company represents and warrants to NCPS as of the Effective Date and during the Term:

7.1.     Company is a company duly organized, validly existing and in good standing under the laws of the state where it was formed. Company has all requisite power and authority to own those properties and conduct those businesses presently owned or conducted by it. Company is duly qualified to do business and is in good standing in all jurisdictions in which its ownership of property or the character of its business requires such qualification except where the failure to so qualify would not have a material adverse effect on Company.

7.2.     Company has full power and authority to enter into and perform this Agreement. This Agreement has been duly executed by Company and constitutes the legal, valid, binding, and enforceable obligation of Company, enforceable against Company in accordance with its terms. The execution and delivery of this Agreement does not and will not: (a) conflict with or violate any of the terms of the articles of organization, operating agreement or any Law; or (b) conflict with, or result in a breach or termination of any of the terms of, or result in the acceleration of any indebtedness or obligations under, any agreement, obligation or instrument by which Company is bound or to which any property of Company is subject, or constitute a default thereunder.

7.3.     Company acknowledges that the Services will not satisfy all of Company’s requirements for making private placement offerings. Furthermore, Company understands that, despite NCPS’s efforts, the Services may not be uninterrupted or error-free. EXCEPT FOR THE WARRANTIES EXPRESSLY SET FORTH IN THIS SECTION, THE SERVICES PROVIDED UNDER THIS AGREEMENT ARE PROVIDED “AS IS” WITHOUT ANY EXPRESS OR IMPLIED WARRANTY OF ANY KIND, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF MERCHANTABILITY, DESCRIPTION, NON-INFRINGEMENT OR FITNESS FOR A PARTICULAR PURPOSE.

8.     NCPS’s Representations and Warranties. NCPS represents and warrants to Company as of the Effective Date and during the Term:

8.1.     NCPS is a company duly organized, validly existing and in good standing under the laws of the state where it was formed. NCPS has full power and authority to enter into and perform this Agreement. This Agreement has been duly executed by NCPS and constitutes the legal, valid, binding, and enforceable obligation of NCPS, enforceable against NCPS in accordance with its terms.

8.2.     The execution and delivery of this Agreement does not and will not: (a) conflict with or violate any of the terms of the articles of organization, operating agreement or any Law; or (b) conflict with, or result in a breach or termination of any of the terms of, or result in the acceleration of any indebtedness or obligations under, any agreement, obligation or instrument by which NCPS is bound or to which any property of NCPS is subject, or constitute a default thereunder.

8.3.     NCPS is an SEC-registered Broker-Dealer in good standing, a member of FINRA and a member of SIPC.

8.4.     Neither NCPS nor any of its officers, directors, employees or agents is or has been, in any domestic or foreign jurisdiction, (a) indicted for or convicted of any felony or any securities or investment related offense of any kind, (b) enjoined, barred, suspended, censured, sanctioned or otherwise restricted with respect to any securities or investment-related business or undertaking or (c) the subject or target of any securities or investment-related investigation by any regulatory authority.

9.     Intellectual Property. All trademarks, service marks, patents, copyrights, trade secrets, confidential information, and other proprietary rights of each Party shall remain the exclusive property of that Party, whether or not specifically recognized or perfected under Law.

10.     Exclusion of Damages. NCPS shall not be liable to Company or to any third party for any special, exemplary, indirect, incidental, consequential or punitive damages of any kind or for any costs of procurement of substitution of services or any lost profits, lost business, loss of use of data or interruption of business arising out of this Agreement, including, without limitation, any breach of this Agreement or any services performed by any Party.

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11.     Indemnification.

11.1.     Company agrees to indemnify and hold harmless NCPS and its affiliates (within the meaning of the Securities Act of 1933, as amended (the “Securities Act”)), the respective partners, directors, officers, agents, consultants and employees of NCPS and its affiliates and each other controlling person of NCPS and its affiliates (within the meaning of the Securities Act) and each of their respective successors and assigns, to the fullest extent permitted by law, from and against any Losses (as defined below), joint or several, and all actions (including equity owner actions), claims, inquiries, proceedings, investigations and other legal process (“Actions”) (a) related to any rejection of a Proposed Subscription and (b) as a direct result of Company’s material breach of this Agreement or material violation of applicable law or regulation, and will reimburse NCPS and any other party entitled to be indemnified hereunder for all expenses (including counsel fees) as they are incurred by NCPS or any other person entitled to indemnification by Company in connection with investigating, preparing or defending any such action or claim whether or not in connection with pending or threatened litigation in which NCPS is a party. Company will not, however, be responsible for any claims, liabilities, losses, damages or expenses that are finally judicially determined to have resulted primarily from NCPS’s bad faith or gross negligence, and NCPS agrees to immediately refund any payments made to an Indemnified Person (as defined below) upon such finding. “Losses” means any and all losses, damages, liabilities, deficiencies, claims, actions, judgments, settlements, interest, awards, penalties, fines, costs or expenses of whatever kind, including, without limitation, reasonable attorneys’ fees, the costs of enforcing any right hereunder, the costs of pursuing any insurance providers and the costs of defending against or appearing as a witness. Each Subscribing Investor will be an intended third-party beneficiary with respect to (a) above.

11.2.     NCPS agrees to indemnify and hold harmless Company and its affiliates, the respective partners, directors, officers, agents, consultants and employees of Company and its affiliates and each other controlling persons of Company and its affiliates and each of their respective successors and assigns to the fullest extent permitted by law, from and against any Losses, and all Actions as a direct result of NCPS’s material breach of this Agreement or material violation of applicable law or regulation, and will reimburse Company and any other party entitled to be indemnified hereunder for all expenses (including counsel fees) as they are incurred by Company or any other person entitled to indemnification by NCPS in connection with investigating, preparing or defending any such action or claim whether or not in connection with pending or threatened litigation in which Company is a party. NCPS will not, however, be responsible for any Losses that are finally judicially determined to have resulted primarily from Company’s bad faith or gross negligence, and Company agrees to immediately refund any payments made to an Indemnified Person (as defined below) upon such finding.

11.3.     With respect to any Action in which a person entitled to indemnification under this Agreement (an “Indemnified Person”), Company or NCPS, as applicable (the “Indemnifying Party”), shall be entitled to assume the defense of any such action or proceeding with counsel reasonably satisfactory to the Indemnified Person. Upon assumption by the Indemnifying Party of the defense of any such action or proceeding, the Indemnified Person shall have the right to participate in such action or proceeding and to retain its own counsel, but the Indemnifying Party shall not be liable for any legal expenses of other counsel subsequently incurred by such Indemnified Person in connection with the defense thereof unless (a) the Indemnifying Party has agreed to pay such fees and expenses, (b) the Indemnifying Party shall have failed to employ counsel reasonably satisfactory to the Indemnified Person in a timely manner, or (c) the Indemnified Person shall have been advised by counsel that there are actual or potential conflicting interests between the Indemnifying Party and the Indemnified Person, including situations in which there are one or more legal defenses available to the Indemnified Person that are different from or additional to those available to the Indemnifying Party; provided, however, that the Indemnifying Party shall not, in connection with any one such action or proceeding or separate but substantially similar actions or proceedings arising out of the same general allegations, be liable for the fees and expenses of more than one separate firm of attorneys at any time for all Indemnified Persons, including NCPS, except to the extent that local counsel, in addition to its regular counsel, is required in order to effectively defend against such action or proceeding. In any other action or proceeding brought against more than one Indemnified Person, the Indemnified Persons shall use a single firm of legal counsel, selected by the Indemnifying Party and reasonably satisfactory to the Indemnifying Party unless an Indemnified Person shall have been advised by counsel that there are actual or potential conflicting interests between it and other Indemnified Persons, including situations in which there are one or more legal defenses available to the Indemnified Person that are different from or additional to those available to the other Indemnified Persons.

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11.4.     If the indemnification provided for herein is judicially determined to be unavailable (other than in accordance with the terms hereof) to any Indemnified Person in respect of any Losses, then in lieu of indemnifying such person hereunder, Company shall contribute to the amount paid or payable by such person as a result of such Losses: (a) in such proportion as is appropriate to reflect the relative benefits to Company, on the one hand, and NCPS, on the other hand, of the engagement provided for in this Agreement; or (b) if the allocation provided for in clause (a) above is not available, in such proportion as is appropriate to reflect not only the relative benefits referred to in such clause (a) but also the relative fault of each of Company and NCPS, as well as any other relevant equitable considerations; provided, however, in no event shall the aggregate contribution of NCPS and its other Indemnified Persons to the amount paid or payable exceed the Transaction Fee (as defined in Exhibit B) paid to NCPS under this Agreement. For the purposes of this Agreement, the relative benefits to Company and to NCPS of the engagement under this Agreement shall be deemed to be in the same proportion as (a) the total value paid or contemplated to be paid or received or contemplated to be received by Company or Company's shareholders, as the case may be, in the Offering or Offerings that are the subject of the engagement hereunder, whether or not any such Offering is consummated, bears to (b) the fees paid or to be paid to NCPS under this Agreement.

11.5.     For the sole purpose of enforcing and otherwise giving effect to the provisions of Section 11, Company hereby consents to personal jurisdiction and service and venue in any court in which any claim that is subject to this Agreement is brought against any Indemnified Person.

11.6.     If an Action relating to NCPS’s engagement is commenced or threatened against Company and is ultimately settled, Company shall use its best efforts to cause NCPS, by name, and the other Indemnified Persons, by description, to be included in any release or settlement agreement, whether or not NCPS and the other Indemnified Persons are named as defendants in such Action. In no event will either Party agree to a settlement of a claim or dispute that is subject to the indemnification and other cost-sharing provisions hereunder without the prior consent of the other Party, which shall not be unreasonably withheld.

11.7.     All amounts due under this Section 11 shall be payable promptly after written demand therefor.

12.     Force Majeure. In no event will either Party be liable or responsible to the other Party, or be deemed to have defaulted under or breached this Agreement, for any failure or delay in fulfilling or performing any term of this Agreement (except for any payment obligation) when and to the extent such failure or delay is caused by any circumstances beyond such Party’s reasonable control (a “Force Majeure Event”), including acts of God, flood, fire, earthquake or explosion, war, terrorism, invasion, riot or other civil unrest, embargoes or blockades in effect on or after the date of this Agreement, national or regional emergency, strikes, labor stoppages or slowdowns or other industrial disturbances, passage of Law or any action taken by a governmental or public authority, including imposing an embargo, export or import restriction, quota or other restriction or prohibition or any complete or partial government shutdown, or national or regional shortage of adequate power or telecommunications or transportation. In the event of any failure or delay caused by a Force Majeure Event, the affected Party shall give prompt written notice to the other Party stating the period of time the occurrence is expected to continue and use commercially reasonable efforts to end the failure or delay and minimize the effects of such Force Majeure Event.

13.     Confidentiality.

13.1.     While performing under this Agreement, each Party will be exposed to information about the other Party (“Disclosing Party”) or its affiliates or their business, which information is not known publicly (“Confidential Information”, as defined more specifically below). The Party being exposed to the information (including those to whom such Party discloses such information on a need-to-know basis in connection with a Party’s rights or obligations hereunder, “Recipient”) shall not disclose or use Confidential Information for any reason other than to further the specific activities permitted by this Agreement.

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13.2.     As used herein, “Confidential Information” refers to matters relating to the Disclosing Party’s or its affiliates’ operations, performance, internal procedures, operations and finances, including, but not limited, to current, future and proposed products and product prototypes and samples, methodologies, technology, manufacturing techniques, trade secrets, financial and customer information, information from, by or about entities seeking to become, or have become, issuers, accredited investor information and documentation, procurement requirements, sales, merchandising and marketing plans, whether tangible or intangible, printed or electronic, disclosed directly or indirectly through one or more intermediaries, in writing, orally or by inspection of tangible objects. “Confidential Information” also includes confidential or proprietary information of third parties that the Disclosing Party is permitted to disclose to the other Party. The Parties agree that all non-public information relating to exclusive (i.e., non-syndicated) securities offerings is Confidential Information.

13.3.     “Confidential Information” shall not include any information that: (a) is at the time of disclosure, or subsequently, becomes publicly known otherwise than by an act or omission of the Recipient; (b) is already in the Recipient’s possession without any obligation of confidentiality at the time of disclosure, as shown by the Recipient’s written records in existence before the date of disclosure; (c) is independently developed by the Recipient without use of or reference to the Disclosing Party’s Confidential Information, as shown by the Recipient’s written records in existence before the date of disclosure; or (d) the Recipient is required by Law to disclose, so long as the Recipient gives the Disclosing Party prior written notice and helps the Disclosing Party obtain a court order protecting the information from disclosure.

13.4.     NCPS and Company agree not to disclose, reproduce, transfer or use the Confidential Information, except: (a) as required under this Agreement; and (b) as reasonably necessary for the performance of this Agreement. Nothing in this Section 13 shall prevent NCPS from retaining and disclosing any Confidential Information it deems necessary to retain or disclose to federal, state or other regulatory or self-regulatory authorities or in connection with legal, financial or regulatory filings, audits or examinations or pursuant to any other legal process. Both Parties agree to further abide by any Law of any federal, state or self-regulatory body governing the confidentiality obligations of Broker-Dealers.

13.5.     If, within six months prior to the start of this Agreement, the Parties previously entered into a non-disclosure agreement (“NDA”), then in the event of a conflict between such NDA and this Agreement, the terms of the NDA will prevail; provided that the term of the Parties’ confidentiality obligations shall extend through the later of the termination or expiration date as provided in the NDA or this Agreement.

13.6.     Neither Party shall issue or release any announcement, statement, press release or other publicity or marketing materials relating to this Agreement or otherwise use the other Party’s trademarks, service marks, trade names, logos, domain names or other indicia of source, affiliation or sponsorship, in each case, without the prior written consent of the other Party, which consent shall not be unreasonably withheld, conditioned or delayed; provided, however, that NCPS may, without Company’s consent, include Company’s and its affiliates’ names and logos in NCPS’s promotional and marketing materials.

13.7.     Company and NCPS 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 hereunder, unless such notification is expressly prohibited by the applicable governmental authority.

14.     Survival. Notwithstanding the expiration or termination of this Agreement, the Parties shall continue to be bound by the provisions of this Agreement that reasonably require some action or forbearance after such expiration or termination, including, but not limited to, those related to fees and expenses, indemnities, warranties and confidentiality, and such provisions shall survive.

15.     Assignment. Neither Party shall assign or otherwise transfer any of its rights, or delegate or otherwise transfer any of its obligations or performance, under this Agreement, in each case whether voluntarily, involuntarily, by operation of law or otherwise, without the prior written consent of the other Party. Any purported assignment, delegation or transfer in violation of this Section 15 is void. Subject to this Section 15, this Agreement is binding upon and inures to the benefit of the Parties and their respective successors and permitted assigns.

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16.     Entirety. This Agreement incorporates by reference NCPS’s and its affiliates’ data privacy policies and website terms of use, as posted on NCPS’s and its affiliates’ website from time to time, with which Company agrees, and shall cause issuers to agree, to comply. This Agreement (including the NDA, all Exhibits and NCPS’s and its affiliates’ data privacy policies and website terms of use) constitutes the sole and entire agreement between the Parties with respect to the subject matter of this Agreement and supersedes and merges all prior and contemporaneous proposals, understandings, agreements, representations and warranties, both written and oral, between the Parties relating to such subject matter (including, without limitation, the amendment and restatement of the Prior Agreement as set forth in the introductory paragraph).

17.     Amendment; Waiver. Except as set forth herein, no amendment to or modification of this Agreement will be effective unless it is in writing and signed by an authorized representative of each Party. No waiver by any Party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the Party so waiving. Except as otherwise set forth in this Agreement, no failure to exercise, or delay in exercising, any rights, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

18.     Compliance with Law; Further Assurances. The Parties expressly agree that, to the extent that the existing law relating to this Agreement changes, and such change affects this Agreement, they will reform the affected portion of this Agreement to comply with the change. Each Party agrees to perform such further acts and execute such further documents as are necessary to effectuate the purposes of this Agreement.

19.     Choice of Law, Jurisdiction and Dispute Resolution.

19.1.     This Agreement shall be governed by and construed under the laws of the State of Delaware, without giving effect to its choice of law, conflict of laws or “borrowing”, statutes, rules, principles and precedent. Both Parties consent to the exclusive jurisdiction of the state and federal courts located in the State of Delaware.

19.2.     Notwithstanding, the Parties agree that in the event a dispute arises between NCPS and Company in connection with or as a result of the execution of this Agreement or the transactions contemplated hereby, such disputes shall be resolved through arbitration by FINRA, and agree to submit such disputes for resolution to FINRA in Salt Lake City, Utah within five days after receiving a written request from the other Party to do so. The Parties acknowledge and agree that the result of the arbitration proceeding shall be final and binding, and by agreeing to arbitration, each Party hereby waives its right to seek remedies in court and the use of a court of applicable jurisdiction for the enforcement of any arbitration award.

19.3.     Prior to instituting any proceeding, Company and NCPS each agrees to first attempt in good faith to informally resolve any dispute for a period of 30 days prior to instituting an arbitration proceeding in accordance with Section 19.2. The 30-day period shall commence upon written notice in accordance with Section 20 of this Agreement detailing the nature of the dispute, remedy sought and all relevant facts. In the event the Parties are unable to resolve the dispute through such informal discussions, either Party may elect to have such dispute exclusively and finally resolved through binding arbitration in accordance with this Section 19. Notwithstanding the foregoing, any claim for injunctive relief shall not be subject to the above provision. In addition, except as otherwise provided in this Agreement, the Parties may litigate in court to compel arbitration, stay proceeding pending arbitration, or to confirm, modify, vacate or enter judgment on the award entered in any arbitration proceeding under this Section 19.

19.4.     Each Party agrees that any arbitration shall be limited to disputes between Company and NCPS individually. To the full extent permitted by Law, no arbitration or other proceeding shall be joined with any other or decided on a class-action basis.

19.5.     Notwithstanding the above agreement to arbitrate, each Party acknowledges and agrees that a breach or threatened breach by a Party of any of its obligations under this Agreement may cause the other Party irreparable harm for which monetary damages may not be an adequate remedy and agrees that, in the event of such breach or threatened breach, the other Party will be entitled to seek equitable relief, including a restraining order, an injunction, specific performance and any other relief that may be available from any court, without any requirement to post a bond or other security, or to prove actual damages or that monetary damages are not an adequate remedy. Such remedies are not exclusive and are in addition to all other remedies that may be available at law, in equity or otherwise.

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19.6.     THE COLLECTIVE AGGREGATE LIABILITY OF NCPS UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ITS SUBJECT MATTER, UNDER ANY LEGAL OR EQUITABLE THEORY, INCLUDING BREACH OF CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY, BREACH OF WARRANTY, MISREPRESENTATIONS OR OTHERWISE, SHALL BE LIMITED TO THE TRANSACTION FEE PAID TO AND RETAINED BY NCPS UNDER THIS AGREEMENT.

19.7.     Each party irrevocably and unconditionally waives any right it may have to a trial by jury in respect of any ACTION arising out of or relating to this Agreement or the transactions contemplated hereby.

19.8.     Subject to Section 19.6, in any Action, by which one Party either seeks to enforce this Agreement or seeks a declaration of any rights or obligations under this Agreement, the non-prevailing Party will pay the prevailing Party’s costs and expenses, including, but not limited to, reasonable attorneys’ fees.

19.9.     A default under this Agreement by Company shall constitute a default by Company or its affiliates under all other agreements any of them have then in effect with NCPS or its affiliates.

20.     Notices. All notices, requests, consents, claims, demands, waivers and other communications under this Agreement have binding legal effect only if in writing and addressed to a Party as set forth on the signature page hereto (or to such other address that such Party may designate from time to time in accordance with this Section 20). Notices sent in accordance with this Section 20 will be deemed effectively given: (a) when received, if delivered by hand, with signed confirmation of receipt; (b) when received, if sent by a nationally recognized overnight courier, signature required; or (c) on the third day after the date mailed by certified or registered mail, return receipt requested, postage prepaid.

21.     Severability. If any provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement or invalidate or render unenforceable such provision in any other jurisdiction. Upon such determination that any provision is invalid, illegal or unenforceable, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated by this Agreement be consummated as originally contemplated to the greatest extent possible.

22.     Relationship of the Parties. The relationship between the Parties is that of independent contractors. Nothing contained in this Agreement shall be construed as creating any agency, partnership, joint venture or other form of joint enterprise, employment or fiduciary relationship between the Parties, and neither Party shall have authority to contract for or bind the other Party in any manner whatsoever. Nothing occurring pursuant to this Agreement shall give NCPS any ownership interest in Company, nor Company any ownership interest in NCPS.

23.     No Third Party Beneficiaries. Except as otherwise set forth in this Agreement, this Agreement is for the sole benefit of the Parties and, subject to Section 11 and Section 15, their respective successors and assigns, nothing herein, express or implied, is intended to or shall confer upon any other person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. Indemnified Persons shall be third party beneficiaries as set forth in Section 11.

24.     Interpretation; Headings. The Parties intend this Agreement to be construed without regard to any presumption or rule requiring construction or interpretation against the Party drafting an instrument or causing any instrument to be drafted. Further, the headings used in this Agreement are for convenience only and are not intended to be used as an aid to interpretation.

25.     Counterparts. This Agreement may be executed in counterparts, each of which is deemed an original, but all of which together are deemed to be one and the same agreement; provided that neither Party shall be bound by this Agreement until both Parties have executed a counterpart. A signed copy of this Agreement by facsimile, email or other means of electronic transmission is deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

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In witness whereof, the Parties have executed this Agreement as of the Effective Date.

Company:		NCPS:
Commonwealth Thoroughbreds LLC		North Capital Private Securities Corporation
By:	Commonwealth Markets Inc., its Manager
By:	/s/ Brian Doxtator	By:	/s/ James P. Dowd
	(Signature)		(Signature)
Name:	Brian Doxtator	Name:	James P. Dowd
Title:	Chief Executive Officer	Title:	Chief Executive Officer
Date:	December 10, 2019	Date:	12/12/2019
Email:	brian@joincommonwealth.com	Email:	jdowd@northcapital.com

With a copy to:		amacdonald@fbtlaw.com	With a copy to:		gnelson@northcapital.com
Address:	1450 North Broadway		Address:	623 E. Fort Union Boulevard, Suite 101
	Lexington, Kentucky 40505			Midvale, Utah 84047

Company payment information:

Credit Card

Name on Card:

Credit Card Number:

Expiration Date (MM/YY):

Security Code:

Billing Address:

ACH Draw

Bank Name:

Account Holder Name:

Routing Number:

Account Number:

Account Type (Checking/Savings):

Billing Contact Person
Name:	Brian Doxtator
Email:	brian@joincommonwealth.com
Telephone Number:		415.730.9946

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Exhibit A – Services

Below is a description of the Services:

1. basic due diligence of Company and the Offering;

2. review of investor information, including know-your-client (“KYC”) data;

3. perform anti-money laundering (“AML”), Office of Foreign Assets Control (“OFAC”) and other compliance background checks;

4. determine suitability of investors in the Offering as required by the registration or exemption thereto applicable to the Offering;

5. review of investor subscription agreements for completeness;

6. liaise with Company and investors for additional information gathering and clarification in order to complete sections 1-5 above; and

7. serve as the broker of record for the Offering.

NCPS is not providing Company any placement agent or solicitation services in connection with the Offering.

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Exhibit B – Fees*

As compensation for the Services, Company shall pay NCPS:

1. $10,000.00 in accountable due diligence fees with respect to the first series of the Offering to be paid by Company to NCPS via the credit card or other payment method indicated by Company on the signature page to this Agreement (or as otherwise agreed by the Parties);

2. Beginning after the third series, a $1,000.00 accountable due diligence fee with respect to each additional series of the Offering to be paid by Company to NCPS via the credit card or other payment method indicated by Company on the signature page to this Agreement (or as otherwise agreed by the Parties);

3. the escrow fees, pursuant to Escrow Agreements executed with NCPS in connection with the Offering; and

4. a fee equal to 100 basis points on the aggregate amount raised by Company in the Offering during the Term to be paid to NCPS at the closing of the Offering (“Transaction Fee”).

Upon Company’s request, NCPS will provide an accounting of actual fees and expenses incurred by NCPS in connection with the Offering from time to time during the Term, including as set forth in sections 1-3 above (“Offering Expenses”), and a final statement of expenses at closing or prior to the termination of the Offering.

Company agrees that any Offering Expenses owed to NCPS may be deducted from the Offering proceeds at closing; however, Company’s obligation to pay or reimburse NCPS for the Offering Expenses included on the final statement of expenses is not conditioned upon a successful closing of the Offering.

*The fees payable under this Agreement, plus the other relevant fees attributable to any public offering (including any interest thereon), shall be capped at an aggregate amount not to exceed as permitted by applicable FINRA rules.

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Exhibit C – Form of Escrow Agreement

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EX1A-8 ESCW AGMT

Exhibit 8.1

ESCROW AGREEMENT

FOR

CONTINGENT SECURITIES OFFERING

THIS ESCROW AGREEMENT, effective as of _______, 2019 (“Escrow Agreement”), is by, between and among North Capital Private Securities Corporation, a Delaware corporation, registered Broker-Dealer, member of FINRA and SIPC, located at 623 E. Ft. Union Blvd, Suite 101, Salt Lake City, UT 84047 (“NCPS”) acting hereunder as escrow agent (in such capacity “Escrow Agent”) and as placement agent (in such capacity ‘Placement Agent”); and Commonwealth Thoroughbreds LLC, a Delaware series limited liability company (“Issuer”) located at 1450 North Broadway, Lexington, Kentucky 40505.

SUMMARY

A.     Issuer has engaged Placement Agent/Platform to offer for sale on its affiliated intermediary platform up to $________________ of units of membership interest in one or more of Issuer’s series (the “Units”) on a “best efforts” basis, in an offering pursuant to Regulation A under the Securities Act of 1933, as amended.

B.      In accordance with the Form 1-A (“Offering Document”), subscribers to the Units (the “Subscribers” and individually, a “Subscriber”) will be required to submit full payment for their respective investments at the time they enter into subscription agreements.

C.      In accordance with the Offering Document, all payments in connection with subscriptions for Units shall be sent directly to NCPS, and NCPS has agreed to accept, hold, and disburse such funds deposited with it thereon in accordance with the terms of this Escrow Agreement and in compliance with the Securities Exchange Act of 1934 Rule 15(c)2-4 and related SEC guidance and FINRA rules.

D.      In order to establish the escrow of funds and to effect the provisions of the Offering Document, the parties hereto have entered into this Escrow Agreement.

E.      The parties to this agreement agree to the Transmittal of Funds for Deposit Into the Escrow Account procedures located in Exhibit B.

STATEMENT OF AGREEMENT

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, for themselves, their successors and assigns, hereby agree as follows:

1.     Definitions. In addition to the terms defined above, the following terms shall have the following meanings when used herein:

“Business Days” shall mean days when banks are open for business in the State of Delaware.

“Cash Investment” shall mean the number of Units to be purchased by any Subscriber multiplied by the offering price per Share as set forth in the Offering Document.

“Cash Investment Instrument” shall mean wire or ACH made payable to or endorsed to NCPS in the manner described in Section 3(c) hereof, in full payment for the Units to be purchased by any Subscriber.

“Escrow Funds” shall mean the funds deposited with NCPS pursuant to this Escrow Agreement.

“Expiration Date” means the date so designated on Exhibit A.

“Minimum Offering” shall mean the number of Units so designated on Exhibit A hereto.

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“Minimum Offering Notice” shall mean a written notification, signed by Placement Agent, pursuant to which the Placement Agent shall represent (1) that subscriptions for the Minimum Offering have been received, (2) that, to the best of Placement Agent’s knowledge after due inquiry and review of its records, Cash Investment Instruments in full payment for that number of Units equal to or greater than the Minimum Offering have been received, deposited with and collected by NCPS, (3) and that such subscriptions have not been withdrawn, rejected or otherwise terminated, and (4) that the Subscribers have no statutory or regulatory rights of rescission without cause or all such rights have expired.

“Subscription Accounting” shall mean an accounting of all subscriptions for Units received and accepted by Placement Agent as of the date of such accounting, indicating for each subscription the Subscriber’s name, social security number and address, the number and total purchase price of subscribed Units, the date of receipt by Placement Agent of the Cash Investment Instrument, and notations of any nonpayment of the Cash Investment Instrument submitted with such subscription, any withdrawal of such subscription by the Subscriber, any rejection of such subscription by Placement Agent, or other termination, for whatever reason, of such subscription.

2.      Appointment of and Acceptance by NCPS. Issuer and Placement Agent hereby appoint NCPS to serve as Escrow Agent hereunder, and NCPS hereby accepts such appointment in accordance with the terms of this Escrow Agreement.

3.      Deposits into Escrow.

a.     All Cash Investment Instruments shall be delivered directly to NCPS for deposit into the Escrow Account described on Exhibit A hereto. Each such deposit shall be accompanied by the following documents:

(1)     a report containing such Subscriber’s name, social security number or taxpayer identification number, address and other information required for withholding purposes;

(2)     a Subscription Accounting; and

(3)     written instructions regarding the investment of such deposited funds in accordance with Section 6 hereof.

ALL FUNDS SO DEPOSITED SHALL REMAIN THE PROPERTY OF THE SUBSCRIBERS ACCORDING TO THEIR RESPECTIVE INTERESTS AND SHALL NOT BE SUBJECT TO ANY LIEN OR CHARGE BY NCPS OR BY JUDGMENT OR CREDITORS' CLAIMS AGAINST ISSUER UNTIL RELEASED OR ELIGIBLE TO BE RELEASED TO ISSUER IN ACCORDANCE WITH SECTION 4(a) HEREOF.

b.      Placement Agent and Issuer understand and agree that all Cash Investment Instruments received by NCPS hereunder are subject to collection requirements of presentment and final payment, and that the funds represented thereby cannot be drawn upon or disbursed until such time as final payment has been made and is no longer subject to dishonor. Upon receipt, NCPS shall process each Cash Investment Instrument for collection, and the proceeds thereof shall be held as part of the Escrow Funds until disbursed in accordance with Section 4 hereof. If, upon presentment for payment, any Cash Investment Instrument is dishonored, NCPS’s sole obligation shall be to notify Placement Agent of such dishonor and to return such Cash Investment Instrument to the Subscriber should NCPS have Subscriber information sufficient to effect such a return or to Placement Agent should sufficient Subscriber information be unavailable. Notwithstanding the foregoing, if for any reason any Cash Investment Instrument is uncollectible after payment or disbursement of the funds represented thereby has been made by NCPS, Issuer shall immediately reimburse NCPS upon receipt from NCPS of written notice thereof.

Upon receipt of any Cash Investment Instrument that represents payment of an amount less than or greater than the Cash Investment, NCPS's sole obligation shall be to notify Issuer and Placement Agent, depending upon the source of the of the Cash Investment Instrument, of such fact and to return such Cash Investment Instrument to the Subscriber should NCPS have Subscriber information sufficient to effect such a return or to Placement Agent should sufficient Subscriber information be unavailable.

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c.      All Cash Investment Instruments shall be made payable to the order of, or endorsed to the order of, “NCPS / Commonwealth Thoroughbreds [Series Name] - Escrow Account,” and NCPS shall not be obligated to accept, or present for payment, any Cash Investment Instrument that is not payable or endorsed in that manner.

4.      Disbursements of Escrow Funds.

a.      Completion of Minimum Offering. Subject to the provisions of Section 10 hereof, NCPS shall pay to Issuer the liquidated value of the Escrow Funds, by Automated Clearing House (“ACH”), no later than one (1) business day following receipt of the following documents:

(1)	A Minimum Offering Notice;
(2)	Subscription Accounting Spreadsheet substantiating the sale of the Minimum Offering and maintained by the Placement Agent;
(3)	Instruction Letter (as defined below); and
(4)	Such other certificates, notices or other documents as NCPS shall reasonably require.

NCPS shall disburse the Escrow Funds by ACH from the Escrow Account in accordance with joint written instructions signed by both the Issuer and Placement Agent as to the disbursement of such funds (the “Instruction Letter”) in accordance with this Section 4(a). Notwithstanding the foregoing, NCPS shall not be obligated to disburse the Escrow Funds to Issuer if NCPS has reason to believe that (a) Cash Investment Instruments in full payment for that number of Units equal to or greater than the Minimum Offering have not been received, deposited with and collected by NCPS, or (b) any of the certifications and opinions set forth in the Minimum Offering Notice are incorrect or incomplete.

After the initial disbursement of Escrow Funds to Issuer pursuant to this Section 4(a), NCPS shall pay to Issuer any additional funds received with respect to the Units, by ACH, no later than one (1) business day after receipt.

It is understood that any ACH transaction must comply with U. S. laws and NACHA rules. However, NCPS is not responsible for errors in the completion, accuracy, or timeliness of any transfer properly initiated by NCPS in accordance with joint written instructions occasioned by the acts or omissions of any third party financial institution or a party to the transaction, or the insufficiency or lack of availability of funds on deposit in an external account.

b.      Rejection of Any Subscription or Termination of the Offering. No later than three (3) business days after (i) receipt by NCPS of written notice from Issuer that the Issuer intends to reject a Subscriber’s subscription, (ii) receipt by NCPS of written notice from Issuer or Placement Agent that there will be no closing of the sale of Units to Subscribers, or (iii) NCPS is notified or made aware that the Securities and Exchange Commission or any other federal or state regulatory authority that a stop or similar order has been issued with respect to the Offering Document and has remained in effect for at least twenty (20) days, NCPS shall pay to the applicable Subscriber(s), by ACH, the amount of the Cash Investment paid by each Subscriber.

c.      Expiration of Offering Period. Notwithstanding anything to the contrary contained herein, if NCPS shall not have received a Minimum Offering Notice on or before the Expiration Date, NCPS shall, within three (3) business days after such Expiration Date and without any further instruction or direction from Placement Agent or Issuer, return to each Subscriber, by ACH, the Cash Investment made by such Subscriber.

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5.      Suspension of Performance or Disbursement Into Court. If, at any time, (i) there shall exist any dispute between Placement Agent, Issuer, NCPS, any Subscriber or any other person with respect to the holding or disposition of all or any portion of the Escrow Funds or any other obligations of NCPS hereunder, or (ii) if at any time NCPS is unable to determine, to NCPS’s reasonable satisfaction, the proper disposition of all or any portion of the Escrow Funds or NCPS’s proper actions with respect to its obligations hereunder, or (iii) if Placement Agent and Issuer have not within 30 days of the furnishing by NCPS of a notice of resignation pursuant to Section 7 hereof appointed a successor NCPS to act hereunder, then NCPS may, in its reasonable discretion, take either or both of the following actions:

a.      suspend the performance of any of its obligations (including without limitation any disbursement obligations) under this Escrow Agreement until such dispute or uncertainty shall be resolved to the sole satisfaction of NCPS or until a successor Escrow Agent shall have been appointed (as the case may be); or

b.      petition (by means of an interpleader action or any other appropriate method) any court of competent jurisdiction in any venue convenient to NCPS, for instructions with respect to such dispute or uncertainty, and to the extent required or permitted by law, pay into such court all funds held by it in the Escrow Funds for holding and disposition in accordance with the instructions of such court.

NCPS shall have no liability to Placement Agent, Issuer, any Subscriber or any other person with respect to any such suspension of performance or disbursement into court, specifically including any liability or claimed liability that may arise, or be alleged to have arisen, out of or as a result of any delay in the disbursement of the Escrow Funds or any delay in or with respect to any other action required or requested of NCPS.

6.      Investment of Funds. NCPS will not commingle Escrow Funds received by it in escrow with funds of others and shall not invest such Escrow Funds. The Escrow Funds will be held in a non-interest bearing account.

7.     Resignation of NCPS. NCPS may resign and be discharged from the performance of its duties hereunder at any time by giving ten (10) days prior written notice to the Placement Agent and the Issuer specifying a date when such resignation shall take effect. Upon any such notice of resignation, the Placement Agent and Issuer jointly shall appoint a successor NCPS hereunder prior to the effective date of such resignation. The retiring Escrow Agent shall transmit all records pertaining to the Escrow Funds and shall pay all Escrow Funds to the successor Escrow Agent, after making copies of such records as the retiring Escrow Agent deems advisable. After any retiring Escrow Agent’s resignation, the provisions of this Escrow Agreement shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Escrow Agent under this Escrow Agreement. Any corporation or association into which NCPS may be merged or converted or with which it may be consolidated shall be the Escrow Agent under this Escrow Agreement without further act.

8.      Liability of NCPS. This Section 8 shall apply to NCPS and any successor Escrow Agent solely in its capacity as Escrow Agent and not in any other capacity in connection with an offering of Issuer’s Units.

a.      NCPS undertakes to perform only such duties as are expressly set forth herein and no duties shall be implied. NCPS shall have no liability under and no duty to inquire as to the provisions of any agreement other than this Escrow Agreement, including without limitation the Offering Document. NCPS shall not be liable for any action taken or omitted by it in good faith except to the extent that a court of competent jurisdiction determines that NCPS’s gross negligence or willful misconduct was the primary cause of any loss to the Issuer, Placement Agent or any Subscriber. NCPS’s sole responsibility shall be for the safekeeping and disbursement of the Escrow Funds in accordance with the terms of this Escrow Agreement. NCPS shall have no implied duties or obligations and shall not be charged with knowledge or notice of any fact or circumstance not specifically set forth herein. NCPS may rely upon any notice, instruction, request or other instrument, not only as to its due execution, validity and effectiveness, but also as to the truth and accuracy of any information contained therein, which NCPS shall believe to be genuine and to have been signed or presented by the person or parties purporting to sign the same. In no event shall NCPS be liable for incidental, indirect, special, consequential or punitive damages (including, but not limited to lost profits), even if NCPS has been advised of the likelihood of such loss or damage and regardless of the form of action. NCPS shall not be obligated to take any legal action or commence any proceeding in connection with the Escrow Funds, any account in which Escrow Funds are deposited, this Escrow Agreement or the Offering Document, or to appear in, prosecute or defend any such legal action or proceeding. Without limiting the generality of the foregoing, NCPS shall not be responsible for or required to enforce any of the terms or conditions of any subscription agreement with any Subscriber or any other agreement between Issuer, Placement Agent and/or any Subscriber. NCPS shall not be responsible or liable in any manner for the performance by Issuer or any Subscriber of their respective obligations under any subscription agreement nor shall NCPS be responsible or liable in any manner for the failure of Issuer, Placement Agent or any third party (including any Subscriber) to honor any of the provisions of this Escrow Agreement. NCPS 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.

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b.      NCPS is authorized, in its sole discretion, to comply with orders issued or process entered by any court with respect to the Escrow Funds, without determination by NCPS of such court's jurisdiction in the matter. If any portion of the Escrow Funds is at any time attached, garnished or levied upon under any court order, or in case the payment, assignment, transfer, conveyance or delivery of any such property shall be stayed or enjoined by any court order, or in case any order, judgment or decree shall be made or entered by any court affecting such property or any part thereof, then and in any such event, NCPS is authorized, in its reasonable discretion, to rely upon and comply with any such order, writ, judgment or decree which it is advised by legal counsel selected by it is binding upon it without the need for appeal or other action; and if NCPS complies with any such order, writ, judgment or decree, it shall not be liable to any of the parties hereto or to any other person or entity by reason of such compliance even though such order, writ, judgment or decree may be subsequently reversed, modified, annulled, set aside or vacated. Notwithstanding the foregoing, NCPS shall provide the Issuer, Placement Agent with immediate notice of any such court order or similar demand and the opportunity to interpose an objection or obtain a protective order.

9.      Indemnification of Escrow Agent.

a.     From and at all times after the date of this Escrow Agreement, Issuer shall, to the fullest extent permitted by law, defend, indemnify and hold harmless Escrow Agent and each director, officer, employee, attorney, agent and affiliate of Escrow Agent (collectively, the “Indemnified Parties”) against any and all actions, claims (whether or not valid), losses, damages, liabilities, costs and expenses of any kind or nature whatsoever (including without limitation reasonable attorneys’ fees, costs and expenses) incurred by or asserted against any of the Indemnified Parties from and after the date hereof, whether direct, indirect or consequential, as a result of or arising from or in any way relating to any claim, demand, suit, action or proceeding (including any inquiry or investigation) by any person, including without limitation Issuer, Placement Agent, whether threatened or initiated, asserting a claim for any legal or equitable remedy against any person under any statute or regulation, including, but not limited to, any federal or state securities laws, or under any common law or equitable cause or otherwise, arising from or in connection with the negotiation, preparation, execution, performance or failure of performance of this Escrow Agreement or any transactions contemplated herein, whether or not any such Indemnified Party is a party to any such action, proceeding, suit or the target of any such inquiry or investigation; provided, however, that no Indemnified Party shall have the right to be indemnified hereunder for any liability finally determined by a court of competent jurisdiction, subject to no further appeal, to have resulted from the gross negligence or willful misconduct of such Indemnified Party. The obligations of Issuer under this Section 9 shall survive any termination of this Escrow Agreement and the resignation or removal of Escrow Agent.

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b.     With respect to any action or proceeding brought by an Indemnified Party, Issuer shall be entitled to assume the defense of any such action or proceeding with counsel reasonably satisfactory to the Indemnified Party. Upon assumption by Issuer of the defense of any such action or proceeding, the Indemnified Party shall have the right to participate in such action or proceeding and to retain its own counsel, but Issuer shall not be liable for any legal expenses of other counsel subsequently incurred by such Indemnified Party in connection with the defense thereof unless (i) Issuer has agreed to pay such fees and expenses, (ii) Issuer shall have failed to employ counsel reasonably satisfactory to the Indemnified Party in a timely manner, or (iii) the Indemnified Party shall have been advised by counsel that there are actual or potential conflicting interests between Issuer and the Indemnified Party, including situations in which there are one or more legal defenses available to the Indemnified Party that are different from or additional to those available to Issuer; provided, however, that Issuer shall not, in connection with any one such action or proceeding or separate but substantially similar actions or proceedings arising out of the same general allegations, be liable for the fees and expenses of more than one separate firm of attorneys at any time for all Indemnified Parties, including NCPS, except to the extent that local counsel, in addition to its regular counsel, is required in order to effectively defend against such action or proceeding. In any other action or proceeding brought against more than one Indemnified Party, the Indemnified Parties shall use a single firm of legal counsel, selected by Issuer and reasonably satisfactory to Issuer unless an Indemnified Party shall have been advised by counsel that there are actual or potential conflicting interests between it and other Indemnified Parties, including situations in which there are one or more legal defenses available to the Indemnified Party that are different from or additional to those available to the other Indemnified Parties.

c.     For the avoidance of doubt, the indemnification rights set forth in this Section 9 are afforded to NCPS solely in its capacity as Escrow Agent and not in any other capacity in which NCPS may serve in connection with an offering of Issuer’s Units.

10.      Compensation to NCPS.

a.      Fees and Expenses. Issuer shall compensate NCPS for its services solely in its capacity as Escrow Agent hereunder in accordance with Exhibit A attached hereto and, in addition, shall reimburse NCPS for all of its reasonable pre-approved out-of-pocket expenses, including attorneys’ fees, travel expenses, telephone and facsimile transmission costs, postage (including express mail and overnight delivery charges), copying charges and the like. The additional provisions and information set forth on Exhibit A are hereby incorporated by this reference, and form a part of this Escrow Agreement. All of the compensation and reimbursement obligations set forth in this Section 10 shall be payable by Issuer upon demand by NCPS. The obligations of Issuer under this Section 10 shall survive any termination of this Escrow Agreement and the resignation or removal of NCPS.

b.      Disbursements from Escrow Funds to Pay NCPS. NCPS is authorized to and may disburse from time to time, to itself or to any Indemnified Party from the Escrow Funds (but only to the extent of Issuer’s rights thereto), the amount of any compensation and reimbursement of out-of-pocket expenses due and payable hereunder. NCPS shall notify Issuer of any disbursement from the Escrow Funds to itself or to any Indemnified Party in respect of any compensation or reimbursement hereunder and shall furnish to Issuer copies of all related invoices and other statements.

c.      Security and Offset. Issuer hereby grants to NCPS a security interest in and lien upon the Escrow Funds (to the extent of Issuer’s rights thereto) to secure all obligations hereunder, and NCPS shall have the right to offset the amount of any compensation or reimbursement due any of them hereunder against the Escrow Funds (to the extent of Issuer’s rights thereto.) If for any reason the Escrow Funds available to NCPS pursuant to such security interest or right of offset are insufficient to cover such compensation and reimbursement, Issuer shall promptly pay such amounts to NCPS upon receipt of an itemized invoice.

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11.      Representations and Warranties.

a.      Each of Placement Agent and Issuer respectively makes the following representations and warranties to NCPS:

(1)      It is a corporation or limited liability company 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 Escrow Agreement and to perform its obligations hereunder.

(2)      This Escrow Agreement has been duly approved by all necessary corporate action, including any necessary shareholder or membership approval, has been executed by its duly authorized officers, and constitutes its valid and binding agreement, enforceable in accordance with its terms.

(3)      The execution, delivery, and performance of this Escrow Agreement will not violate, conflict with, or cause a default under its articles of incorporation, articles of organization or bylaws, operating agreement or other organizational documents, as applicable, any applicable law 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 to which it is a party or any of its property is subject. The execution, delivery and performance of this Escrow Agreement is consistent with and accurately described in the Offering Document as set forth in Sections 4(b) and 4(c) hereof, has been properly described therein.

(4)      It hereby acknowledges that the status of Escrow Agent is that of agent only for the limited purposes set forth herein, and hereby represents and covenants that no representation or implication shall be made that Escrow Agent has investigated the desirability or advisability of investment in the Units or has approved, endorsed or passed upon the merits of the investment therein and that the name of Escrow Agent has not and shall not be used in any manner in connection with the offer or sale of the Units other than to state that Escrow Agent has agreed to serve as escrow agent for the limited purposes set forth herein.

(5)      All of the representations and warranties of Issuer and Placement Agent, respectively, contained herein are true and complete as of the date hereof and will be true and complete at the time of any deposit to or disbursement from the Escrow Funds.

b.      Issuer further represents and warrants to NCPS that no party other than the parties hereto and the prospective Subscribers have, 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.

c.      Placement Agent further represents and warrants to Escrow Agreement that the deposit with Escrow Agent by Placement Agent of Cash Investment Instruments pursuant to Section 3 hereof shall be deemed a representation and warranty by Placement Agent that such Cash Investment Instrument represents a bona fide sale to the Subscriber described therein of the amount of Units set forth therein, subject to and in accordance with the terms of the Offering Document.

12.      Identifying Information. Issuer, Placement Agent acknowledges that a portion of the identifying information set forth on Exhibit A is being requested by Escrow Agent in connection with the USA Patriot Act, Pub.L.107-56 (the “Act”). To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. For a non-individual person such as a business entity, a charity, a Trust, or other legal entity, Escrow Agent asks for documentation to verify its formation and existence as a legal entity. Escrow Agent may also ask to see financial statements, licenses, identification and authorization documents from individuals claiming authority to represent the entity or other relevant documentation.

13.      Consent to Jurisdiction and Venue. In the event that any party hereto commences a lawsuit or other proceeding relating to or arising from this Escrow Agreement, the parties hereto agree that the United States District Court for the State of Delaware shall have the sole and exclusive jurisdiction over any such proceeding. If such court lacks federal subject matter jurisdiction, the parties agree that the Circuit Court in and for State of Delaware shall have sole and exclusive jurisdiction. Any of these courts shall be proper venue for any such lawsuit or judicial proceeding and the parties hereto waive any objection to such venue. The parties hereto consent to and agree to submit to the jurisdiction of any of the courts specified herein and agree to accept service of process to vest personal jurisdiction over them in any of these courts.

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14.      Notice. All notices, approvals, consents, requests, and other communications hereunder shall be in writing and shall be deemed to have been given when the writing is delivered if given or delivered by hand, overnight delivery service or facsimile transmission (with confirmed receipt) to the address or facsimile number set forth on Exhibit A hereto, or to such other address as each party may designate for itself by like notice, and shall be deemed to have been given on the date deposited in the mail, if mailed, by first-class, registered or certified mail, postage prepaid, addressed as set forth on Exhibit A hereto, or to such other address as each party may designate for itself by like notice.

15.      Amendment or Waiver. This Escrow Agreement may be changed, waived, discharged or terminated only by a writing signed by Placement Agent, Issuer and Escrow Agent. No delay or omission by any party in exercising any right with respect hereto shall operate as a waiver. A waiver on any one occasion shall not be construed as a bar to, or waiver of, any right or remedy on any future occasion.

16.      Severability. To the extent any provision of this Escrow Agreement is prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Escrow Agreement.

17.      Governing Law. This Escrow Agreement shall be construed and interpreted in accordance with the internal laws of the State of Delaware without giving effect to the conflict of laws principles thereof.

18.      Entire Agreement. This Escrow Agreement constitutes the entire agreement between the parties relating to the acceptance, collection, holding, investment and disbursement of the Escrow Funds and sets forth in their entirety the obligations and duties of NCPS with respect to the Escrow Funds.

19.     Binding Effect. All of the terms of this Escrow Agreement, as amended from time to time, shall be binding upon, inure to the benefit of and be enforceable by the respective successors and assigns of Placement Agent, Issuer and Escrow Agent.

20.      Execution in Counterparts. This Escrow Agreement may be executed in two or more counterparts, which when so executed shall constitute one and the same agreement.

21.     Termination. Upon the first to occur of the disbursement of all amounts in the Escrow Funds or deposit of all amounts in the Escrow Funds into court pursuant to Section 5 or Section 8 hereof, this Escrow Agreement shall terminate and Escrow Agent shall have no further obligation or liability whatsoever with respect to this Escrow Agreement or the Escrow Funds.

22.      Dealings. NCPS and any stockholder, director, officer or employee of NCPS may buy, sell, and deal in any of the securities of the Issuer and become pecuniary interested in any transaction in which the Issuer may be interested, and contract and lend money to the Issuer and otherwise act as fully and freely as though it were not NCPS under this Escrow Agreement. Nothing herein shall preclude NCPS from acting in any other capacity for the Issuer or any other entity.

[Signature page follows]

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SIGNATURE PAGE TO ESCROW AGREEMENT

IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement to be executed under seal as of the date first above written.

ISSUER

Commonwealth Thoroughbreds LLC

By: _______________________________

Name:

Title: 

PLACEMENT AGENT:

North Capital Private Securities Corporation

By: ______________________________

Name: Stephanie Holt

Title: COO

ESCROW AGENT:

North Capital Private Securities Corporation

By: ______________________________

Name: Stephanie Holt

Title: COO

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EXHIBIT A

1. Definitions.	“Minimum Offering” means ____________________ (including offline investments).
	“Expiration Date” means twelve months from the effective date of this Agreement.

2. Wire Instructions For North Capital Private Securities, Inc.

Institution: TriState Capital Bank

ABA: 043019003

Account Name: North Capital Private Securities

Account Number: 0220003339

FFC: [Offering Name – Subscriber Name]

(Instructions should be requested from NCPS prior to any international wire is initiated.)

3.     NCPS Fees.

Escrow Administration Fee:	$500 per sub account
Out-of-Pocket Expenses:	Billed at cost
Transactional Costs:	$100.00 for each additional escrow break
	$100.00 for each escrow amendment
Wire Disbursements:	$25.00 per domestic wire (incoming/outgoing)
	$45.00 per international wire (incoming/outgoing)

The Escrow Administration Fee is payable upon execution of the escrow documents. In the event the escrow is not funded, the Fee and all related expenses, including attorneys’ fees, remain due and payable, and if paid, will not be refunded. Annual fees cover a full year in advance, or any part thereof, and thus are not pro-rated in the year of termination.

The fees quoted in this schedule apply to services ordinarily rendered in the administration of an Escrow Account and are subject to reasonable adjustment based on final review of documents, or when NCPS is called upon to undertake unusual duties or responsibilities, or as changes in law, procedures, or the cost of doing business demand. Services in addition to and not contemplated in this Escrow Agreement, including, but not limited to, document amendments and revisions, non-standard cash and/or investment transactions, calculations, notices and reports, and legal fees, will be billed as extraordinary expenses.

Extraordinary fees are payable to NCPS for duties or responsibilities not expected to be incurred at the outset of the transaction, not routine or customary, and not incurred in the ordinary course of business. Payment of extraordinary fees is appropriate where particular inquiries, events or developments are unexpected, even if the possibility of such things could have been identified at the inception of the transaction. Such extraordinary fees and expenses shall be capped at $5,000.

Unless otherwise indicated, the above fees relate to the establishment of one escrow account. Additional sub-accounts governed by the same Escrow Agreement may incur an additional charge. Transaction costs include charges for wire transfers, internal transfers and securities transactions.

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4.      Notice Addresses.

If to Issuer at:	Commonwealth Thoroughbreds, LLC
	1450 North Broadway
	Lexington, Kentucky 40505
	ATTN: ________________________
	Telephone: ____________________
	E-mail: ________________________
If to NCPS at:	North Capital Private Securities Corp
	623 E Ft. Union Blvd, Suite 101
	Salt Lake City, UT 84047
	ATTN: Stephanie Holt
	Telephone: (415) 315-9917
	E-mail: sholt@northcapital.com

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EXHIBIT B

Transmittal of Funds for Deposit Into the Escrow Account

The Selected Dealer agrees that it is bound by the terms of the Escrow Agreement executed by North Capital Private Securities, ______________________________________________________________. ACH and wire transfers are the only aceptible methods of payment for this offering. ACH transfers or wires should be sent directly to the Escrow Agent.

The delivery instructions are as follows:

ACH / Wire Instructions for North Capital Private Securities, Inc.

Institution: TriState Capital Bank

ABA: 043019003

Account Name: North Capital Private Securities

Account Number: 0220003339

FFC: [Offering Name – Subscriber Name]

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EX1A-11 CONSENT

Exhibit 11.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTING FIRM

To: Commonwealth Markets Inc. as Manager of Commonwealth Thoroughbreds LLC

We hereby consent to the inclusion in the Offering Circular filed under Regulation A tier 2 on Form 1-A of our report dated October 16, 2019 (December 13, 2019 as to Notes 6 and 7), with respect to our audit of the balance sheet of Commonwealth Thoroughbreds LLC as of August 31, 2019 and the related statements of operations, changes in member's equity and cash flows for the period from June 12, 2019 (inception) through August 31, 2019, and the related notes to the financial statements.

/s/ Dean Dorton Allen Ford, PLLC

Lexington, Kentucky
December 13, 2019

EX1A-11 CONSENT

Exhibit 11.2

September 27, 2019

Commonwealth Thoroughbreds LLC

1450 North Broadway

Lexington, Kentucky 40505

Re:     Offering Statement on Form 1-A of Commonwealth Thoroughbreds LLC

Ladies and Gentlemen:

We hereby consent to the use of our name under the heading “Initial Appraisal” in the Offering Circular included in the Offering Statement on Form 1-A of Commonwealth Thoroughbreds LLC and in any amendment or supplement thereto.

Very truly yours, HYPERION THOROUGHBRED CONSULTANTS
By:	/s/ Jim Schenck

Print Name: Jim Schenck

Title: President

EX1A-12 OPN CNSL

Exhibit 12.1

Frost Brown Todd LLC

400 W. Market Street

32nd Floor

Louisville, KY 40202-3363

502-589-5400

December 13, 2019

Commonwealth Thoroughbreds LLC

c/o Commonwealth Markets Inc.

1450 North Broadway

Lexington, Kentucky 40505

Re: Offering Statement on Form 1-A

Ladies and Gentlemen:

We have acted as special counsel to Commonwealth Thoroughbreds LLC, a Delaware series limited liability company (the “Company”) in connection with the filing with the Securities and Exchange Commission (the “Commission”) of an Offering Statement on Form 1-A (the “Offering Statement”) pursuant to 17 CFR Part 230.251 et. seq. (“Regulation A”) promulgated under the Securities Act of 1933, as amended (the “Securities Act”).  The Offering Statement relates to the proposed offer and sale by the Company (each, an “Offering”) of units of membership interest (the “Units”) in each of the applicable series of the Company as set forth in Schedule 1 hereto (each, a “Series”).  We understand that each Series of Units would be sold as described in the Offering Statement and pursuant to a Subscription Agreement, substantially in the form filed as an exhibit to the Offering Statement, to be entered into by and between the Company and each of the purchasers of the Units (the “Subscription Agreement”).

For purposes of rendering this opinion, we have examined originals or copies, certified or otherwise identified to our satisfaction, of (i) the Certificate of Formation of the Company filed with the Secretary of State of Delaware on June 12, 2019; (ii) the Amended and Restated Limited Liability Company Agreement of the Company dated as of September 27, 2019 (the “Operating Agreement”); (iii) the Series Designation of each Series; (iv) corporate proceedings, including the resolutions of the manager of the Company, with respect to the Offerings; and (v) such other documents, instruments and records as we have deemed necessary to enable us to render the opinions contained therein.  We have also relied upon certificates and other assurances of officers of the manager of the Company and others as to certain factual matters without having independently verified such factual matters.  We have also reviewed the Offering Statement and form of Subscription Agreement as filed with the Commission.  In our examination, we have assumed the authenticity of all documents submitted to us as originals, the conformity with the originals of all documents submitted to us as copies, the authenticity of the originals of such documents, the completeness of all records and other information made available to us by the Company on which we have relied, the genuineness of all signatures, the legal capacity of all signatories who are natural persons and the due execution and delivery of all documents.

We have assumed that (i) the statements of the Company contained in the Offering Statement are true and correct as to all factual matters stated therein, (ii) the Offering Statement will be and remain qualified under the Securities Act, and (iii) the Company will receive the required consideration for the issuance of Units of each Series at or prior to the issuance thereof.  We have relied upon certificates of, and information received from, the Company and/or representatives of the Company when relevant facts were not otherwise independently established.  We also have relied on information obtained from public officials and other sources believed by us to be reliable as to other questions of fact.  We have made no independent investigation of the facts stated in such certificates or as to any information received from the Company, representatives of the Company and/or public officials and do not opine as to the accuracy of such factual matters.

Members of our firm involved in the preparation of this opinion are licensed to practice law in the Commonwealth of Kentucky and we do not purport to be experts on, or to express any opinion herein concerning, the laws of any jurisdiction other than the laws of the Commonwealth of Kentucky, the federal law of the United States, and the Delaware Limited Liability Company Act (the “Delaware Act”).

Our opinions below are qualified to the extent that they may be subject to or affected by (i) applicable bankruptcy, insolvency, reorganization, receivership, moratorium, usury, fraudulent conveyance or similar laws affecting the rights of creditors generally, and (ii) by general equitable principles and public policy considerations, whether such principles and considerations are considered in a proceeding at law or at equity.

Based upon and subject to the foregoing, and the other qualifications and limitations contained herein, we are of the opinion that (i) each Series of Units has been authorized by all necessary series limited liability company action of the Company; (ii) when issued and sold in accordance with the terms set forth in the Operating Agreement, the applicable Series Designation and Subscription Agreement against payment therefor in the manner contemplated in the Offering Statement, the Units of each Series will be legally issued under the Delaware Act; and (iii) purchasers of Units of each Series will have no obligation under the Delaware Act to make payments or contributions to the Company (other than their purchase price for the Units and except for any obligation that may arise in the future to repay any funds wrongfully distributed to them as provided under the Delaware Act) solely by reason of their ownership of the Units or their status as members of the Company, and no personal liability for the debts, obligations and liabilities of the Company or the applicable Series, whether arising in contract, tort or otherwise, solely by reason of being members of the Company.

The opinion expressed herein is rendered as of the date hereof and is based on existing law, which is subject to change. Where our opinion expressed herein refers to events to occur at a future date, we have assumed that there will have been no changes in the relevant law or facts between the date hereof and such future date. We do not undertake to advise you of any changes in the opinion expressed herein from matters that may hereafter arise or be brought to our attention or to revise or supplement such opinion should the present laws of any jurisdiction be changed by legislative action, judicial decision or otherwise.

Our opinion expressed herein is limited to the matters expressly stated herein, and no opinion is implied or may be inferred beyond the matters expressly stated.

We hereby consent to the filing of this opinion with the Commission as an exhibit to the Offering Statement and to any and all references to our firm in the prospectus that is a part of the Offering Statement. In giving this consent, we do not admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act, or the rules and regulations of the Commission.

Very truly yours,

/s/ Frost Brown Todd LLC

FROST BROWN TODD LLC

SCHEDULE 1

Series	Maximum Membership Interests	Maximum Offering Size
#TF2019	3,000	$150,000
#OL2018	2,500	$125,000