-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SbcRZMeqMRy09UcpixMeuD2BDrqTzvYz9Hu9AuDJMoWPZrrtWhs1tBndXpR7sdr2 4HveeD3sftcqdfC7Jm9nlg== 0001016193-03-000055.txt : 20030508 0001016193-03-000055.hdr.sgml : 20030508 20030508113229 ACCESSION NUMBER: 0001016193-03-000055 CONFORMED SUBMISSION TYPE: SB-2 PUBLIC DOCUMENT COUNT: 15 FILED AS OF DATE: 20030508 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OGDEN GOLF CO CORP CENTRAL INDEX KEY: 0001133818 IRS NUMBER: 870652870 STATE OF INCORPORATION: UT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SB-2 SEC ACT: 1933 Act SEC FILE NUMBER: 333-105075 FILM NUMBER: 03687447 BUSINESS ADDRESS: STREET 1: 1781 WASHINGTON BLVD CITY: OGDEN STATE: UT ZIP: 84404 BUSINESS PHONE: 8016274442 MAIL ADDRESS: STREET 1: 1781 WASHINGTON BLVD CITY: OGDEN STATE: UT ZIP: 84404 SB-2 1 sb2-2003.txt As filed with the Securities and Exchange Commission on May 8, 2003 Registration No. _____________ U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM SB-2 REGISTRATION STATEMENT Under The Securities Act of 1933 OGDEN GOLF CO. CORPORATION (Exact name of Small Business Issuer as specified in charter)
Utah (3949) 87-0652870 ---- ------ ---------- (State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer Incorporation or Organization) Classification Code Number Identification Number)
1781 Washington Blvd. Ogden, UT 84401 (801) 627-4442 Fax (801) 627-0605 (Address and telephone number of principal executive office) Paul Larsen 1781 Washington Blvd. Ogden, UT 84401 (801) 627-4442 (Name, address and telephone number of agent for service) with copies to: A.O. Headman, Jr., Esq. Cohne, Rappaport & Segal 525 East 100 South Fifth Floor (801) 532-2666 Salt Lake City, Utah 84102 Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [X] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] CALCULATION OF REGISTRATION FEE ================================================================================ Proposed Proposed Maximum Maximum Title of Each Amount Offering Aggregate Amount of Class of Securities Being Price Per Offering Registration Being Registered Registered Unit Price Fee - ------------------------------ ---------- ------------ ------------ ------------ Common Stock, no par value (1) 400,000 $ .50 $ 200,000 $ 66.67 - ------------------------------ ---------- ------------ ------------ ------------ Common Stock, no par value (2) 1,246,500 $ .50 $ 618,250 $ 206.09 - ------------------------------ ---------- ------------ ------------ ------------ Common Stock, no par value (3) 950,000 $ .50 $ 475,000 $ 158.33 ============================== ========== ============ ============ ============ Total 2,596,500 $1,293,250 $ 431.09 ============================== ========== ============ ============ ============ (1) Represents the shares offered by Ogden Golf Co. Corporation pursuant to this Registration Statement. The gross offering proceeds are estimated solely for the purpose of calculating the registration fee in accordance with Rule 457 under the Securities Act of 1933, as amended. (2) These shares are registered on behalf of selling shareholders and the offering price and gross offering proceeds are estimated solely for the purpose of calculating the registration fee in accordance with Rule 457 under the Securities Act of 1933, as amended. (3) Represents shares issuable upon the conversion into common stock of outstanding shares of Series A Preferred Stock issued by Ogden Golf Co. Corporation. These shares are registered on behalf of selling shareholders and the offering price and gross offering proceeds are estimated solely for the purpose of calculating the registration fee in accordance with Rule 457 under the Securities Act of 1933, as amended. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. CROSS REFERENCE SHEET Form SB-2 Item No. and Caption Prospectus Caption - ------------------------------ ------------------ Item 1. Front of Registration Statement and Outside Front Cover Outside Front Cover Page of Prospectus Item 2. Inside Front and Outside Back Cover Pages Inside Front and Outside of Prospectus Back Cover Pages Item 3. Summary Information and Risk Factors Prospectus Summary; Risk Factors Item 4. Use of Proceeds Use of Proceeds Item 5. Determination of Offering Price Item 6. Dilution Dilution Item 7. Selling Security Holders Selling Shareholders Item 8. Plan of Distribution Outside Front Cover Page; Plan of Distribution Item 9. Legal Proceedings Legal Proceedings Item 10. Directors, Executive Officers, Promoters Management and Control Persons Item 11. Security Ownership of Certain Beneficial Principal Stockholders Owners and Management Item 12. Description of Securities Outside Front Cover Page; Description of Securities Item 13. Interest of Named Experts and Counsel Legal Matters; Experts Item 14. Disclosure of Commission Position on Description of Securities; Indemnification for Securities Act Plan of Distribution Liabilities Item 15. Organization Within the Last Five Years Certain Transactions Item 16. Description of Business Business of Ogden Golf Co. Corporation Item 17. Management's Discussion and Analysis or Management's Discussion Plan of Operation and Analysis Item 18. Description of Property Business - Properties Item 19. Certain Relationships and Certain Transactions Transactions Related Item 20. Market for Common Equity and Related Price Range of Common Stock Stockholder Matters and Dividend Policy, Description of Securities Item 21. Executive Compensation Management - Executive Compensation Item 22. Financial Statements Financial Statements Item 23. Changes in and Disagreements with Not Applicable Accountants on Accounting and Financial Disclosure SUBJECT TO COMPLETION, DATED MAY 7, 2003 PRELIMINARY PROSPECTUS Up to 400,000 Shares Offered by OGDEN GOLF CO. CORPORATION and 2,196,500 Shares offered by Selling Shareholders This is our initial public offering. We are offering, on a "best efforts" basis, a minimum of 300,000 shares and a maximum of 400,000 shares of our common stock during the offering period. All funds will be held in escrow in an account with Irwin Union Bank until at least 300,000 shares are sold, at which time the initial closing of the sale of shares under this Prospectus will occur and the funds will be delivered to the Company. If the initial closing does not occur by 120 days from the effective date of this Registration Statement, we may extend the offering date for an additional thirty days. If at least 300,000 shares are not sold within the prescribed time, all funds placed in the escrow account will be promptly returned to subscribers, without interest or deduction. Subscribers will have no right to the return of their funds during the term of the escrow. Following the initial closing of the sale of the minimum number of shares, we may continue to offer the remaining shares on the same terms as set forth in this Prospectus for an additional 30 days from the date of the initial closing. We are also registering for our Selling Shareholders a total of 2,196,500 shares of common stock, including shares which may be issued upon the conversion of our Series A Preferred Stock into common stock. The Selling Shareholders may sell our common stock on the open market at market prices in ordinary broker transactions or in negotiated transactions, and they may pay broker commissions in connection with such transactions. We will not receive any of the proceeds from the sale of our common stock by Selling Shareholders. We will not pay any broker commissions in connection with sales of our common stock by Selling Shareholders. The concurrent offering of 2,196,500 shares of our common stock by the Selling Shareholders is separate from our offering of up to 400,000 shares. WE URGE YOU TO READ CAREFULLY THE "RISK FACTORS" SECTION BEGINNING ON PAGE 7 WHERE WE DESCRIBE SPECIFIC RISKS ASSOCIATED WITH AN INVESTMENT IN OGDEN GOLF, AND THESE SECURITIES BEFORE YOU MAKE YOUR INVESTMENT DECISION. THESE SHARES HAVE NOT BEEN APPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAVE THESE ORGANIZATIONS DETERMINED WHETHER THIS PROSPECTUS IS COMPLETE OR ACCURATE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. - -------------------------------------------------------------------------------- Price to Underwriting Proceeds Public Commission (1) to Company (2) - -------------------------------------------------------------------------------- Per Share $.50 $.055 $.445 Total Minimum 300,000 Shares(3) $150,000 $16,500 $133,500 Total Maximum 400,000 Shares $200,000 $22,000 $178,000 - -------------------------------------------------------------------------------- Underwriter: ACAP Financial, Inc. 47 West 200 South, Suite 101 Salt Lake City, Utah 84101 (801) 364-6650 THE DATE OF THIS PROSPECTUS IS ______________, 2003 1 (1) We have entered into an Underwriting Agreement with ACAP Financial, Inc. pursuant to which we have agreed to pay ACAP, subject to the sale of at least 300,000 of the shares offered hereby, a commission of 11% of the offering proceeds. ACAP Financial will also receive an accountable expense allowance of 1% of the gross offering proceeds. Additionally, assuming the sale of at least 300,000 shares, we will issue to ACAP for the sum of $100, Warrants to purchase shares of the our common stock, representing one share for every ten shares sold in the offering. The warrants will be exercisable at $.83 per share for a four (4) year period commencing one year after the effective date of this offering. To the extent that ACAP may profit from the exercise of the warrants, such profit may be deemed additional underwriting compensation. We have agreed to indemnify ACAP against certain civil liabilities including liabilities under the Securities Act of 1933, as amended. (See "Plan of Distribution.") (2) The proceeds we are to receive are shown before the deductions of offering expenses which include legal and accounting fees, printing expenses, ACAP's accountable expense allowance and other offering expenses estimated at $27,000 if the maximum offering is sold and $26,500 if only the minimum offering is sold. (3) The entire amount of the proceeds received under this offering will be promptly deposited (by noon of the next business day after receipt) in an escrow account with Irwin Union Bank, 15 West South Temple, Suite 950, Salt Lake City, Utah 84101. The minimum escrow amount of $150,000 must be deposited into escrow within 120 days (which may be extended for thirty days) from the effective date of this Prospectus. In the event that less than $150,000 is deposited into the escrow account within the offering period, all proceeds received will be refunded to purchasers without any deduction for commissions or other expenses and without interest thereon. All checks for the subscription of shares must be made payable to "Irwin Union Bank, Escrow Agent for Ogden Golf Co. Corporation." Investors in this offering will not have the use of their funds during the escrow period which may last up to one year. (See "Risk Factors.") The offering price of the Shares has been determined arbitrarily by the agreement of the Company and the Underwriter, is not based upon earnings, assets or book value of the Company and is not a representation that each Share has a market value of, or can be sold at, that price. The information in this Prospectus is not complete and may be changed. These securities may not be sold until the Registration Statement filed with the Securities and Exchange Commission is effective. This Prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR A SOLICITATION BY ANYONE TO ANY PERSON IN ANY STATE, TERRITORY, OR POSSESSION OF THE UNITED STATES IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED BY THE LAWS THEREOF, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. 2 PROSPECTUS SUMMARY This section summarizes what we believe are the material aspects of our offering. We encourage you to read this Prospectus in its entirety before making an investment decision. References in this Prospectus to "Ogden Golf," "we," "us," and "our" refer to Ogden Golf Co. Corporation . In some cases a reference to we or us will include Ogden Discount Golf, our wholly-owned subsidiary. Our Business We own and operate a retail golf equipment store in Ogden, Utah. We are a retailer of brand-name golf clubs, golf bags, apparel, golf balls and accessories. We intend to expand our operations by increasing our local advertising and by initiating advertising through the development and operation of a web site advertising our products. If we are successful, of which there can be no assurance, we may attempt to commence efforts to sell our products on an online basis as well as in our retail store. Our operations are conducted by our wholly-owned subsidiary, Ogden Discount Golf, Inc. We may consider acquisitions of, or combinations with, other golf related retail or wholesale operations as opportunities arise. In order to diversify our business operations, we may also consider acquisitions or business combinations with businesses in industries unrelated to the golf industry. We have not actively sought acquisitions of combinations with other golf or non-golf related businesses and intend to devote our efforts, in the foreseeable future, to our current operations. We have operated at a loss since our inception and there can be no assurance that we will operated at a profit in the future. Corporate Background We were incorporated on May 10, 2000. We were formed to acquire the assets and business operations of an existing retail golf shop which was owned by persons not affiliated with us or our management. The business we purchased had been in operation for several years prior to the time we purchased it. In January 2003, we formed Ogden Discount Golf, Inc. as our wholly-owned subsidiary. We intend to assign all of our retail golf operations, and related assets and liabilities to our subsidiary leaving us, for the time being, as a holding company. If we acquire other golf or non-golf related businesses in the future, we may form other subsidiaries to operate such businesses. Since our inception, in May 2000, through December 31, 2002, we have incurred a cumulative loss of $176,173. Offices Our retail store and our executive offices are at 1781 Washington Boulevard, Ogden, UT 84401, and our telephone number is (801) 627-4442. 3 The Offering of Shares by Ogden Golf This Prospectus relates to an offering by us of up to 400,000 shares of common stock at $.50 per share. We are offering, on a "best efforts" basis, 300,000 shares minimum and 400,000 shares maximum during the offering period. All funds will be held in escrow in an account with Irwin Union Bank until at least 300,0000 shares are sold. If 300,000 shares are sold within the offering period, there will be initial closing of the sale of shares under this Prospectus and the funds will be delivered to us by the escrow agent. If the initial closing does not occur by 120 days from the effective date of this Registration Statement, we may extend the initial offering date for an additional thirty days. If we do not sell at least 300,000 shares within the offering period, all funds placed in the escrow account will be promptly returned to investors, without interest or deduction. Subscribers will have no right to the return of their funds during the term of the escrow. Following the initial closing of the sale of the minimum number of shares, we may continue to offer the remaining shares on the same terms as set forth in this Prospectus for an additional 30 days from the date of the initial closing. We have entered into an Underwriting Agreement with ACAP Financial, Inc. which will use its best efforts to sell the 400,000 shares we are offering. We have agreed to pay ACAP Financial an underwriting commission of 11% if at least 300,000 shares are sold in the offering. If at least 300,000 shares are sold by ACAP Financial, we will also pay an accountable expense allowance to ACAP of 1% of the gross offering proceeds. If at least 300,000 shares are sold by ACAP Financial, we will also issue ACAP Financial a warrant to purchase up to 40,000 shares of our common stock (30,000 if only the minimum offering is reached), at the price of $.83 per share. Selling Shareholders This prospectus also relates to the possible resale of up to 2,196,500 shares of our common stock, including 950,000 shares which will be issued if our outstanding shares of Series A Preferred Stock are converted into common stock. The Selling Shareholders are not required to sell our common stock and sales of our common stock are entirely at the discretion of the Selling Shareholders. The Selling Shareholders may sell such stock either on the open market at market prices in ordinary broker transactions or in negotiated transactions, and they may pay broker commissions in connection with such transactions. The Selling Shareholders may offer their shares at a price that is lower than the price we offer our shares. We will not receive any of the proceeds of sale of our common stock by the Selling Shareholders. We will not receive any proceeds from the sale of our stock by Selling Shareholders who sell our common stock. We will not pay any broker commissions in connection with sale of our common stock by Selling Shareholders. Common Stock Common stock outstanding 1,246,500 shares Common stock issuable upon conversion of Series A Preferred Stock 950,000 shares Common stock offered by Ogden Golf 400,000 shares Common stock Offered by Selling Stockholders 2,196,500 shares * 4 *Includes all shares of common stock outstanding and 950,000 shares of common stock issuable upon the conversion of our Series A Preferred Stock into common stock. Use of Proceeds We will have net offering proceeds of approximately $151,000, if all 400,000 shares are sold and $107,000, if only 300,000 shares are sold. We intend to use the net offering proceeds to (1) fund our current operating losses; (2) increase our inventory; (3) increase print and radio advertising; (4) develop a web site; and (5) increase our working capital. We will not receive any proceeds from the sale of the shares of common stock by the Selling Shareholders. (See "Use of Proceeds.") SUMMARY FINANCIAL INFORMATION The following table shows selected summarized financial data for Ogden Golf at the dates and for the periods indicated. The data should be read in conjunction with the financial statements and notes included in this Prospectus beginning on page F-1. Statement of Operations Data: 6 Months Year Ended Year Ended Ended 6/30/02 6/30/01 12/31/02 ---------- ---------- ----------- Gross Profit $ 28,681 $ 33,203 $ 9,923 Expenses 78,107 90,123 37,982 Net (Loss) (63,143) (73,874) (34,588) Basic (Loss) per Share (0.06) (0.10) (0.03) Actual as Actual as Actual as of 6/30/02 of 6/30/01 of 12/31/02 ---------- ---------- ----------- Balance Sheet Date: Total Current Assets $ 58,268 $ 77,560 $ 49,234 Total Assets 177,868 200,277 167,276 Total Current Liabilities 54,439 42,805 54,838 Working Capital 3,829 34,755 (5,604) Shareholders' Equity (Deficit) 5,385 25,528 (2,203) 5 RISK FACTORS The shares offered in this Prospectus are speculative and involve a high degree of risk. If you purchase shares you may lose your entire investment. Prior to making an investment decision, you should carefully consider all of the information contained in this Prospectus, including the following risk factors. Risks Related to the Business We have Incurred Significant Operating Losses; There is no Assurance We Will be Profitable in the Future. We have incurred significant operating losses since our inception. At December 31, 2002, our accumulated deficit was more than $176,173. There can be no assurance that we will ever operate at a profit. We Expect Net Losses to Occur Through at Least 2003. We expect to continue experiencing losses through at least the end of the year 2003. Because we expect to continue to incur significant sales and marketing and administrative expenses, we will need to generate significant revenues to become profitable and sustain profitability on a quarterly or annual basis. We may not achieve or sustain our revenue or profit goals. To the extent that increases in operating expenses are not matched by increased revenue, our business, operating results and financial condition will be harmed. We Will Likely Need Additional Financing in Order to Fully Implement Our Business Plan. To date, we have had insufficient revenues to satisfy our ongoing expenses of operation and we have been funded, primarily by the sale of our securities in private transactions. Due to our history of losses, we cannot assure you that we will ever be profitable. If we do not become profitable or obtain additional financing, we will be unable to continue our current level of operations and fully implement our growth objectives outlined in our business plan. As a result, we cannot assure you we will have adequate capital to implement our business plan and to maintain our current level of operation. Our failure to obtain sufficient additional financing could result in the delay or abandonment of some or all of our operations, which could have a negative effect on us and on the value of our common stock. We May Not Be Able to Obtain Additional Financing. We currently have no commitments or understandings with any third parties to obtain any additional financing. We cannot assure you that we will be able to obtain any additional financing in the amounts or at the times we may require the financing, or if we do obtain any financing that it would be on acceptable terms. Moreover, our access to additional funds may be limited by: (1) market conditions affecting the business golf and recreation industries; and (2) specific factors affecting our attractiveness as a borrower or an investment vehicle including: (a) the potential commercial opportunities and risks associated with development of our business plan; (b) the market's perception of our performance and assets; and (c) the actual amount of cash we need to pursue our business strategy. 6 Our Success Depends on the Continued Popularity of Golf and the Growth of the Market for Golf-related Products. We generate substantially all of our net revenues from the sale of golf-related equipment and accessories. The demand for our golf products is directly related to the popularity of golf, the number of golf participants and the number of rounds of golf being played by these participants. If golf participation decreases, sales of our products would be adversely affected. In addition, the popularity of golf organizations, such as the Professional Golfers Association, also affects the sales of our golf equipment and golf-related apparel. We depend on the exposure of our brands to increase brand recognition and reinforce the quality of our products. Any significant reduction in television coverage of PGA or other golf tournaments, or any other significant decreases in either attendance at golf tournaments or viewership of golf tournaments, will reduce the visibility of our brand and could adversely affect our sales. In addition, we do not believe there has been any material increase in golf participation or the number of golf rounds played during the last three years. We believe that since 1997, the overall worldwide premium golf club market has experienced little growth in dollar volume from year to year. We cannot assure you that the overall dollar volume of the worldwide market for golf-related products will grow, or that it will not decline, in the future. A Reduction in Discretionary Consumer Spending Could Reduce Sales of Our Products. Our products are recreational in nature and are, therefore, discretionary purchases for consumers. Consumers are generally more willing to make discretionary purchases of golf products during favorable economic conditions. Discretionary spending is affected by many factors, including, among others, general business conditions, interest rates, the availability of consumer credit, taxation, and consumer confidence in future economic conditions. Our customers' purchases of discretionary items, including our products, could decline during periods when disposable income is lower, or periods of actual or perceived unfavorable economic conditions. Any significant decline in these general economic conditions or uncertainties regarding future economic prospects that adversely affect discretionary consumer spending could lead to reduced sales of our products. In addition, our sales could be adversely affected by a downturn in the economic conditions in the markets in which our retail business operates. The general slowdown in the United States economy and the uncertain economic outlook have adversely affected consumer spending habits, which has adversely affected our net revenues. A prolonged economic downturn could have a material adverse effect on our business, financial condition, and results of operations. We Have Limited Revenues and Cannot Predict When and If Revenues Will Increase. For the year ended June 30, 2002, we had total revenues of $108,095 and a loss of $63,043. For the six months ended December 31, 2002 we had total revenues of $40,001 and a loss of $34,588. Despite efforts we may take to increase sales at our retail store and to develop a website to market our products, there can be no assurance that our revenues will significantly increase or that we will operate at a profit. We Do Not Know If Our Internet Website Will Be Effective in Marketing Our Merchandise and Services. We are proposing to develop an internet website which will be able to showcase our golf merchandise and golf club repair services; however, potential customers will not be able to make purchases via the website due to cost constraints, at least initially. Actual purchases will have to be 7 made via telephone or e-mail ordering. Other companies with substantially greater financial resources, experience, and technical and marketing personnel may offer similar products through fully developed e-commerce websites. We believe that we can achieve and maintain a competitive advantage by providing good prices and personalized services, but may still be at a disadvantage in making the internet marketing of our products competitive. See "Description of Business." Our Sales and Profits May Be Adversely Affected If We and Our Suppliers Fail to Successfully Develop and Introduce New Products. Our future success will depend, in part, upon our and our suppliers' continued ability to develop and introduce innovative products in the golf equipment market. The success of new products depends, in part, upon the various subjective preferences of golfers, including a golf club's look and "feel," and the level of acceptance that a golf club has among professional and recreational golfers. The subjective preferences of golf club purchasers are difficult to predict and may be subject to rapid and unanticipated changes. If we or our suppliers fail to successfully develop and introduce innovative products on a timely basis, then our sales and profits may suffer. In addition, if we or our suppliers introduce new golf clubs too rapidly, it could result in close-outs of existing inventories. Close-outs can result in reduced margins on the sale of older products, as well as reduced sales of new products given the availability of older products at lower prices. These reduced margins and sales may adversely affect our results of operations. Our Sales and Profitability May Be Adversely Affected If New Competitors Enter the Golf Products Industry. Increased competition in our markets due to the entry of new competitors, including companies which currently supply us with products that we sell, could reduce our net revenues. Our competitors currently include other specialty retailers, mass merchandise retailers, conventional sporting goods retailers, on-course pro shops, and online retailers of golf equipment. These businesses compete with us in one or more product categories. In addition, traditional and specialty golf retailers are expanding more aggressively in marketing brand-name golf equipment, thereby competing directly with us for products, customers and locations. Some of these potential competitors have been in business longer than us and/or have greater financial or marketing resources than we do and may be able to devote greater resources to sourcing, promoting and selling their products. As a result of this competition, we may experience lower sales or greater operating costs, such as marketing costs, which would have an adverse effect on our profitability. If We Do Not Accurately Predict Our Sales During Our Peak Seasons and They Are Lower than We Expect, Our Profitability May Be Materially Adversely Affected. Our business is highly seasonal. Our sales during our second fiscal quarter of each year, which includes the Father's Day selling season, and the Christmas holiday selling season have historically contributed a disproportionate percentage of our net revenues and most of our net income for the entire year. We make decisions regarding merchandise well in advance of the season in which it will be sold, particularly for the Father's Day and Christmas holiday selling seasons. We incur significant additional expenses leading up to and during our second fiscal quarter and the month of December in anticipation of higher sales in those periods, including acquiring additional inventory, preparing and mailing our catalogs, advertising, creating in-store promotions 8 and hiring additional employees. If our sales during our peak seasons are lower than we expect for any reason, we may not be able to adjust our expenses in a timely fashion. As a result, our profitability may be materially adversely affected. If We Lose the Services of Key Members of Our Management, We May Not Be Able to Manage Our Operations and Implement Our Growth Strategy Effectively. Our future success depends, in large part, on the continued service of officers and directors. We do not maintain key-person insurance on any of our officers or managers. Any loss or interruption of the services of these individuals could significantly reduce our ability to effectively manage our operations and implement our growth strategy because we cannot assure you that we would be able to find appropriate replacements for our key executives and managers should the need arise. Paul Larsen is the only member of our management team that is employed by the Company on a full-time basis. If We Do Not Anticipate and Respond to the Changing Preferences of Our Customers, Our Revenues Could Significantly Decline and We Could Be Required to Take Significant Markdowns in Inventory. Our success depends, in large part, on our ability to identify and anticipate the changing preferences of our customers and stock our store with a wide selection of quality merchandise that appeals to their preferences. Our customers' preferences for merchandise and particular brands may vary significantly over time. We cannot guarantee that we will accurately identify or anticipate the changing preferences of our customers or stock our store with merchandise that appeals to them. If we do not accurately identify and anticipate our customers' preferences, we may lose sales or we may overstock merchandise, which may require us to take significant markdowns on our inventory. In either case, our revenues could significantly decline and our business and financial results may suffer. We Need to Build a Public Awareness of Our Retail Store. Our efforts to develop widespread Ogden Golf name recognition in our market area are likely to be expensive and may fail. The development of our name is important to our future success. If we fail to develop sufficient name recognition, our ability to attract customers may be impaired and our revenue will suffer. We Need to Increase Our Customer Base. The success of our business will depend on our ability to increase our customers in our retail store and potentially on an online basis. Our ability to grow our customer base depends largely on our marketing effort. Risks Related to Other Ventures In order to increase our revenues and the potential for returns to our shareholders, we may look to acquire other businesses engaged in the golf industry or businesses engaged in other industries. We have not identified any potential acquisitions and there is a possibility that we will never attempt to acquire any other business operation. No person should invest in the Company on the basis that we will acquire, or even attempt to acquire, any other business whether in the golf industry or outside of the golf industry. Our immediate plan is to attempt to expand the operations of our current retail golf store. However, if we do acquire, or attempt to acquire, one or more other business operations, whether in the golf industry or outside of the golf industry, it 9 will subject our shareholders, including the investors in this offering, to a variety of risks, including but not limited to the following: Any Future Acquisition May Be Made Without Shareholder Approval. If our management determines that it is in the best interest of the Company to acquire another business, any such acquisition may be completed without shareholder approval. Inasmuch as we have not identified any acquisition and have not concluded that we will even look for a possible acquisition, we cannot tell you what form a future acquisition will take or whether we will be required or elect to obtain shareholder approval of any such transaction. Prospective investors who invest in the Company will do so without an opportunity to evaluate the specific merits or risks of any one or more future acquisition. As a result, investors will be entirely dependent on the broad discretion and judgment of management in connection with acquisition matters. There can be no assurance that determinations ultimately made by our management, whether such determinations relate to acquiring or not acquiring another business, will permit us to bring value to our shareholders. Uncertain Structure of Business Combination. If we ultimately acquire another golf or non-golf business, the structure of an acquisition transaction cannot be determined at the present time and may take, for example, the form of a merger, an exchange of stock or an asset acquisition. The Company may form one or more subsidiary entities to effect an acquisition. We have not Identified any Acquisition Candidate; Unascertainable Risks. None of our directors or executive officers has had any contact or discussions with any entity or representatives of any entity regarding an acquisition. Accordingly, there is no basis for prospective investors to evaluate the possible merits or risks of any acquisition. Potential Dilution. If we do seek to acquire another business, we will likely effect an acquisition through the issuance of our securities. This will likely result in the dilution in your percentage ownership of the Company. It is also possible that the control shareholders of the Company may change as a result of an acquisition. The change of controlling shareholders could result in a change of management and ultimately a change in business direction. Risks Relate to the Offering There Is No Market for Our Common Stock. There is no trading market for our common stock and it is not anticipated that a trading market will develop in the foreseeable future. If no market develops, it may be difficult or impossible for you to resell your shares if you should desire to do so. Even if you are able to sell your shares, we cannot assure you that you will be able to resell your shares at the purchase price paid or at any price. Even If Market Develops, It Is Likely to Be Highly Volatile. Even if a market were to develop for our stock, the market price of our common stock is likely to be highly volatile, because the stock market in general, and the market for small companies in particular, have experienced significant volume and price fluctuations. You may not be able to resell your shares following periods of volatility because of the market's negative reaction to that volatility. 10 We Don't Anticipate That We Will Pay Any Dividend. We have never paid any cash dividends on our common stock and we do not anticipate paying cash dividends on our common stock in the future. The future payment of dividends is directly dependent upon our future earnings, capital requirements, financial requirements and other factors to be determined by our Board of Directors. It is anticipated that future earnings, if any, which may be generated from our operations will be used to finance our growth, and that cash dividends will not be paid to our stockholders. The Book Value of Your Investment Will Be Much Lower than the Share Price. Persons purchasing shares in this offering will suffer a substantial and immediate dilution to the net tangible book value of our common stock below the offering price. The book value of our shares at June 30, 2002 was approximately $.00485 per share. The book value of our common stock at December 31, 2002 was a negative $.00118, assuming all shares of Series A Preferred Stock are converted into shares of common stock. After sales of the minimum 300,000 shares, and assuming all shares of Series A. Preferred Stock are converted to common stock, the book value per share will be approximately $.04268, or a dilution to subscribers of approximately $.45732 per share. After sales of the maximum 400,000 shares, the book value per share will be approximately $.05822, or a dilution to subscribers of approximately $.44177 per share. (See "Dilution.") We May Issue More Stock Without Shareholder Input or Consent. Although we have no present plans to issue more stock, our Board of Directors has authority, without action by or vote of the shareholders, to issue all or part of the authorized but unissued shares. In addition, our Board of Directors has authority, without action by or vote of the shareholders, to fix and determine the rights, preferences, and privileges of the preferred stock, which may be given voting rights superior to that of the common stock in this offering. Any issuance of additional shares of common stock or preferred stock will dilute the ownership percentage of shareholders and may further dilute the book value of our shares. (See "Description of Capital Stock.") You Cannot Withdraw Your Funds Once Invested and You Will Not Receive a Refund Unless We Fail to Sell the Minimum Offering Amount of $150,000 After the Full Offering Period of Up to 120 Days From the Effective Date of the Prospectus. Investors do not have the right to withdraw invested funds. Subscription payments will be released from the escrow account to us, only if the minimum number of Shares is sold, or for the purpose of refunding subscription payments to the subscribers, if the minimum number of shares is not sold. Therefore, once you have invested, you will not have the use or right to return of such funds during the escrow period, which may last as long as 120 days from the effective date of this Prospectus. Future Financings Could Adversely Affect Your Ownership Interest and Rights in Comparison with Those of Other Shareholders. If additional funds are raised through the issuance of equity or convertible debt securities, the percentage ownership of our shareholders will be reduced and these newly-issued securities may have rights, preferences or privileges senior to those of existing shareholders, including those acquiring shares in this offering. Our Management Has Broad Discretion in the Application of the Net Proceeds from this Offering. Our management presently intends to utilize a substantial portion of the net proceeds of this offering for the specific purposes set forth in "Use of Proceeds." However, we have broad discretion with respect to 11 redirecting the application and allocation of the net proceeds of this offering in light of changes in circumstances and the availability of certain business opportunities. As a result, any return on investment to investors will be substantially dependent upon the discretion and judgment of our management with respect to the application and allocation of the net proceeds of the offering. (See "Use of Proceeds.") The Sale of Shares By Our Shareholders Could Hurt Our Trading Market if a Trading Market Ever Develops. We have never had a public market for our common stock. It is our intent to attempt to have a market develop in the future. The Registration Statement of which this Prospectus is a part, registers all of our issued and outstanding shares. Because all of our outstanding shares are currently available for sale if a market existed, we anticipate that when and if a market develops in the future, many shareholders will desire to liquidate their shares. In such event, we anticipate that our stock price may be hurt by future sales of our shares or the perception that such sales may occur. Conversion of Preferred Stock Increases Dilution in Both Percentage Ownership and Book Value. In the fourth quarter of 2002 and the first quarter of 2003, we sold 95,000 shares of our Series A Preferred Stock for a total of $19,000. Each share of Series A Preferred Stock is convertible into 10 shares of our common stock if certain financial conditions are met. If the minimum number of shares offered pursuant to this prospectus are sold, the Series A Preferred Stock will be convertible. Accordingly, if the Series A Preferred Stock is converted into common stock, a total of 950,000 shares of common stock will be issued to the Series A Preferred stockholders. This amounts to a purchase price of $.02 per share. This will result in dilution to all other common stockholders in both percentage ownership of the Company and per-share net tangible book value. Our Stock is a Penny Stock Which Creates Risks to Investors. Our common stock may be deemed to be "penny stock" as that term is defined in Reg. Section 240.3a51-1 of the Securities and Exchange Commission. Penny stocks are stocks (i) with a price of less than five dollars per share; (ii) that are not traded on a "recognized" national exchange; (iii) whose prices are not quoted on the NASDAQ automated quotation system (NASDAQ listed stocks must still meet requirement (i) above); or (iv) in issuers with net tangible assets less than $2,000,000 (if the issuer has been in continuous operation for at least three years) or $5,000,000 (if in continuous operation for less than three years), or with average revenues of less than $6,000,000 for the last three years. Subject to compliance with applicable listing standards, we plan to attempt to qualify for listing on the OTC Bulletin Board of NASD. Section 15(g) of the 1934 Act, as amended, and Reg. Section 240.15 g-2 of the Securities and Exchange Commission require broker-dealers dealing in penny stocks to provide potential investors with a document disclosing the risks of penny stocks and to obtain a manually signed and dated written receipt of the document before effecting any transaction in a penny stock for the investor's account. Potential investors in our common stock are urged to obtain and read such disclosures carefully before purchasing any shares that are deemed to be "penny stocks." Moreover, Reg. Section 240.15g-9 of the Securities and Exchange Commission requires broker-dealers in penny stocks to approve the account of any investor for transactions in such stocks before selling any penny stock to that investor. 12 This procedure requires the broker-dealer to (i) obtain from the investor information concerning his or her financial situation, investment experience and investment objectives; (ii) reasonably determine, based on that information, that transaction in penny stocks are suitable for the investor and that the investor has significant knowledge and experience to be reasonably capable of evaluating the risks of penny stock transactions; (iii) provide the investor with a written statement setting forth the basis on which the broker-dealer made the determination in (ii) above; and (iv) receive a signed and dated copy of such statement from such investor, confirming that it accurately reflects the investor's financial situation, investment experience and investment objects. Compliance with these requirements may make it more difficult for investors in our common stock to resell the shares to third parties or to otherwise dispose of them. USE OF PROCEEDS Our net proceeds from this offering, after deducting the 11% sales commission and offering expenses estimated to range from approximately $26,500 to $27,000 will be from $107,000 to $151,000 depending upon the number of shares sold. The offering is being made on a best-efforts basis, and we do not know how many shares will be sold in the offering. The primary purposes of this offering are to obtain additional capital, create a public market for the common stock, and facilitate future access to public markets. In general, we intend to use the net proceeds from this offering to provide us with working capital and to fund marketing efforts including the development of a website. We will not receive any proceeds from the sale of the shares of common stock offered by the Selling Shareholders pursuant to this Prospectus. The table below represents our best estimate of the allocation of the net proceeds, including the priorities for the use of the proceeds in descending order, based upon our current business plan. Minimum % Maximum % -------- -------- -------- ------- Gross Proceeds of Public Offering $150,000 100 $200,000 100 Less: Underwriting Commissions (1) 16,500 11.00 22,000 11.00 Other Costs of Issuance (2) 26,500 17.66 27,000 13.50 -------- -------- -------- ------- Net Proceeds to Company 107,000 71.33 151,000 75.50 -------- -------- -------- ------- Internet Website Development 15,000 10.00 25,000 12.50 Marketing and Sales Development 10,000 6.66 20,000 10.00 Working Capital (3) 82,000 54.66 106,000 53.00 -------- -------- -------- ------- TOTAL USE OF NET PROCEEDS $107,000 71.33 $151,000 75.50 (1).Subject to the sale of at least 300,000 shares, the underwriter will be paid an underwriter's commission of 11% of the gross offering proceeds. (See "Plan of Distribution.") 13 (2).Including a 1% non-accountable expense allowance paid to the underwriter and attorney's fees, accountant's fees, registration and filing fees, costs of printing this Prospectus and stock certificates, and registration and issuance of stock to public investors and other miscellaneous items. (3).We anticipate that working capital will be used to acquire inventory to fund operating losses, to comply with reporting requirements of the Securities Exchange Act of 1934, and to fund business development efforts. Business development may include efforts to acquire other golf-related operations or non-golf-related operations. The amounts set forth merely indicate the general application of net proceeds of the offering. Actual expenditures relating to the development of our internet website may differ from the estimates depending on change orders and/or increased time charges from third parties. We recognize that such proceeds may be insufficient to enable us to fully exploit our business plan and objectives and we may have to seek additional financing through loans, the sale of additional securities, or other financing arrangements. No such arrangements exist or are contemplated, and there can be no assurance that they may be available in the future should the need arise. All funds not being utilized by us for our proposed business will be held in interest-bearing accounts, short-term interest-bearing certificates of deposit, treasury bills, or other high grade short-term securities. Those funds received by us, other than from the offering, will be utilized for the purpose of paying any additional costs of this offering and funding our business operations. DILUTION AND COMPARATIVE INFORMATION Dilution is a reduction in the value of a purchaser's investment measured by the difference between the purchase price of the shares purchased and the net tangible book value of the shares after the purchase takes place. The book value of a share is equal to shareholder's equity, as shown on the balance sheet, divided by the number of shares outstanding. We currently have 1,246,500 shares of common stock issued and outstanding. We also have 95,000 shares of preferred stock issued and outstanding which are convertible into 950,000 shares of our common stock. For purposes of calculating dilution, we have assumed that all shares of Series A Preferred Stock have been converted into common stock. Therefore, we have assumed that 2,155,500 shares of common stock are outstanding prior to the issuance of shares in this offering. The unaudited book value of the Company, as of December 31, 2002 was a negative $2,203 or approximately a negative $.00118 per share assuming the Series A Preferred Stock is converted into common stock. The following table sets forth the dilution to persons purchasing common stock in this offering without taking into account any changes in the net tangible book value after December 31, 2002, the sale of the minimum and maximum shares of common stock offered at the public offering price and the receipt of a minimum $150,000 and a maximum $200,000 gross proceeds from the offering. The net tangible book value per share is determined by subtracting our total liabilities from our tangible assets and then dividing the remainder by the total number of shares of our stock outstanding. 14 Minimum Maximum Shares Shares Sold Sold ------------- ------------ Public offering price per share (1) (4) $0.50 $0.50 Net tangible book value per share before this offering (2) (4) ($0.00102) ($0.00102) Increase per share attributable to new investors (3) (4) $0.042 $0.057 Adjusted net tangible book value per share after this offering (4) $0.04268 $0.05822 Dilution per share to new investors $0.45732 $0.44177 Percentage dilution (4) 91.46% 88.35% Comparative Value The following tables summarize the number of shares to be purchased from Ogden Golf as a part of this offering, the number of shares purchased as a percentage of our total outstanding shares, the aggregate consideration for such shares, the aggregate consideration as a percentage of total consideration, and the average consideration paid per share for such shares by all existing shareholders and the investors in this offering.
Assuming the Sale of All Shares Offered --------------------------------------- % Aggregate Average Shares Of Total Consideration Price Per Purchased Shares Paid % Share --------- -------- ------------- ----- --------- Present Shareholders 1,246,500 47% $ 162,545 42% $ .13 Preferred Stock Holders* 950,000 37% $ 19,000 5% $ .02 Investors in this Offering 400,000 16% $ 200,000 53% $ .50 --------- -------- ------------- ----- --------- TOTALS 2,555,500 100% $ 381,545 100% ========= ======== ============= =====
15
Assuming 300,000 Shares are Sold -------------------------------- % Aggregate Average Shares Of Total Consideration Price Per Purchased Shares Paid % Share --------- -------- ------------- ----- --------- Present Shareholders 1,246,500 48% $ 162,545 49% $ .13 Preferred Stock Holders * 950,000 39% $ 19,000 6% $ .02 Investors in this Offering 300,000 13% $ 150,000 45% $ .50 --------- -------- ------------- ----- --------- TOTALS 2,465,500 100% $ 331,545 100% ========= ======== ============= =====
o Assumes all Series A Preferred shares are converted into common shares at the rate of 10 shares of common stock for each preferred share. MARKET FOR COMMON STOCK AND DIVIDEND POLICY Market Currently, there is no market for our common stock. Subject to compliance with applicable listing standards, we plan to attempt to qualify for listing on the OTC Bulletin Board of NASD. Holders As of April 1, 2003, there were 1,246,500 shares of common stock outstanding and approximately 36 stockholders of record. As of March 25, 2003, there were 95,000 shares of our Series A Preferred Stock owned by three preferred stockholders. Dividends We have not paid any cash dividends since our inception and do not anticipate or contemplate paying dividends in the foreseeable future. It is the present intention of management to utilize all available funds for the development of our business. Furthermore, we anticipate that we will operate at a loss during the next year, in which case, we would not declare a dividend on our common stock. MANAGEMENT'S DISCUSSION AND ANALYSIS The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes, and the other financial information included in this Prospectus. This discussion and analysis contains forward-looking 16 statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of specified factors, including those set forth in the risk factors section of this Prospectus and elsewhere in this Prospectus. Results and Comparison for Fiscal Years Fiscal year ended June 30, 2002 resulted in a net loss of $63,143 compared to a net loss of $73,874 for the fiscal year ended June 30, 2001. The Basic and Diluted Loss per Share for fiscal year 2002 was $0.06, compared to a per-share loss of $.10 for fiscal year 2001. This decrease in the loss per share of $0.04 primarily results from (1) a decrease in general and administrative expenses; (2) a decrease in cost of goods sold; and (3) a decrease in interest expense. Details of changes in revenues and expenses can be found below. Revenues Revenues of $108,095 for fiscal year 2002 were down $11,453 or 9.58% from revenues of $119,548 for fiscal year 2001. Cost of Goods Sold As a result of our lower sales in fiscal 2002 compared to fiscal 2001, our cost of goods sold decreased to $79,414 which was $6,931 or 8.03%, from fiscal year 2001. This decrease is due to a decrease in sales. Operating Expenses Our operating expenses in 2002 of $78,107 represented a decrease of $12,016, or 13.33%, from fiscal year 2001, when operating expenses (including depreciation) were $90,123. The decrease in general and administrative expenses is a result of lower personnel and operating costs. Interest Expense We borrowed the funds necessary to purchase the building in which our retail store is located. Interest expense consists of interest accrued on the mortgage. We also incurred interest on the Company's credit card. Interest was $13,617 for the year ended June 30, 2002 compared to $16,854 for the year ended June 30, 2001. Results and Comparison for the Six Months Ended December 31Results and Comparison for the Six Months Ended December 31 The six months ended December 31, 2002 resulted in a net loss of $34,588, compared to a net loss of $28,479 for the six months ended December 31, 2001. The Basic and Diluted Loss per Share is $.03 and $.03 for the six months ended December 31, 2002 and 2001, respectively. 17 Revenues Revenues of $40,001 for six months ended December 31, 2002 were down by $14,554, or 27%, from the same period in 2001 when revenues were $54,555. Cost of Goods Sold As a result of our lower sales for the six months ended December 31, 2002 compared to the six months ended December 31, 2001, our cost of goods sold decreased $4,296, or approximately 12%, from for the six months ended December 31, 2001. This decrease is due to a decrease in sales. Operating Expenses Operating expenses decreased by $3,785, or 9%, from the six months ended December 31, 2001, when operating expenses (including depreciation) were $41,767, compared to the six months ended December 31, 2002 when operating expenses (including depreciation) were $37,982. The decrease in general and administrative expenses is a result of lower personnel and operating costs. Interest Expense Interest expense consists of interest accrued on the loan we obtained to purchase our building. Interest was $6,529 for the six months ended December 31, 2002 compared to $6,893 for the six months ended December 31, 2001. Liquidity and Capital Resources We are currently unable to finance our operations from operating activities and historically have relied on private placements of common stock and preferred stock to fund our operations. Since our inception, we have financed our operations through the sale of common stock ($159,970, net proceeds) and issuance of Series A Preferred Stock ($14,000 net proceeds). We anticipate that the net proceeds from this offering, together with the cash flow from operations, will be sufficient to fund our anticipated working capital and capital expenditures for the 12 months following completion of this offering. At June 30, 2001 we had total assets of $200,277 of which $15,444 was cash. At June 30, 2002 we had total assets of $177,868 of which $17,148 was cash. At December 31, 2002, we had total assets of $167,276, of which $15,652 was cash. Since November of 2002, we raised $29,200 from the sale of our securities in private transactions. Our total liabilities at June 30, 2001 were $174,749 including $136,071 for our mortgage. At June 30, 2002, our total liabilities were $172,483. At June 30, 2002, our mortgage had been reduced to $127,485 but our current liabilities had increased to $54,439 from the $42,805 in current liabilities at June 30, 2001. At December 31, 2002, our total liabilities were $169,479. Our stockholders' 18 equity at June 30, 2002 was $5,385 compared to stockholders' equity at June 30, 2001 of $25,528. Our stockholders equity at December 31, 2002 was a negative $2,203. Cash provided by financing activities was approximately $59,954 for the fiscal year ended June 30, 2001, and $39,407 for the fiscal year ended June 30, 2002. In each period, the cash provided by financing activities resulted primarily from the issuance of capital stock. Cash provided by financing activities was $31,891 for the six months ended December 31, 2002. We have sustained losses of $63,143 and $73,774 for the years ended June 30, 2002 and June 30, 2001, respectively. In addition, operating activities have used cash of $37,703 and $52,706 for the years ended June 30, 2002, and 2001, respectively. We have sustained losses of $34,588 and $28,479 for the six months ended December 31, 2002, and 2001, respectively. In addition, operating activities have used cash of $33,387 and $28,066 for the six months ended December 31, 2002, and 2001, respectively. Our ability to continue as a going concern is dependent upon our ability to generate sufficient cash flows to meet our obligations on a timely basis, to obtain additional financing, and ultimately to attain profitable operations. Management plans include obtaining additional equity financing and our management believes that profitability and cash flows from our operations will improve and will provide the necessary capital to fund operations due to the continued success of existing products and the introduction of new products. There is no assurance, however, that these efforts will result in profitable operations or in our Company's ability to meet obligations when due. Our working capital requirements and other capital requirements for the foreseeable future will be primarily funded through the issuance of equity securities until we are able to meet our working capital needs with positive cash flows provided from operations; after this point, we will likely increase expenditures so as to accelerate our revenue and profitability growth. We believe that proceeds from subsequent issuance of equity securities will enable us to establish profitable operations and positive cash flows from operations. However, there is no assurance that profitable operations or positive cash flows from our operations will ever be realized. We are currently, attempting to raise equity capital through the issuance of our common stock in this offering. There can be no assurance that any shares offered will be sold. There can be no assurance that we will be able to raise sufficient capital necessary to allow us to continue with our operations on our current scale. If additional funds are raised through the issuance of equity securities, the percentage of our shares owned by existing stockholders will be reduced, stockholders may experience additional dilution. Other Matters Our Board of Directors has concluded that the operation of a single retail golf outlet, even if such outlet operates at a profit, may not provide sufficient return on capital to provide a meaningful return to investors. We intend to attempt to increase our current operations through increased advertising on an online, internet basis as well as increasing our traditional advertising efforts in direct mailings, print media and radio. However, we may 19 ultimately also look for other opportunities in the golf business or in other businesses which may, when combined with our current operations, provide our shareholders with a greater potential to earn a return on their investment in the Company. We have not identified any other golf business or other business, and may never be able to acquire any other golf business or other business. If we do acquire another business it will likely be effected through the issuance of our securities in a merger, stock purchase or asset acquisition. There can be no assurance that our operations will ever be more than the operation of our current golf retail store. Recently Issued Accounting Standards We believe that recently issued financial standards will not have a significant impact on our results of operations, financial position, or cash flows. Inflation We do not expect the impact of inflation on operations to be significant. Forward-looking Statements Some of the statements contained in this Prospectus discuss future expectations, contain projections of results of operations or financial condition or state other "forward-looking" information. Those statements are subject to known and unknown risks, uncertainties and other factors that could cause the actual results to differ materially from those contemplated by the statements. The forward-looking information is based on various factors and was derived using numerous assumptions. Important factors that may cause actual results to differ from projections include, for example: o We have achieved limited revenues since our formation and there can be no assurance that our revenues will ever significantly increase. o We have incurred substantial losses and anticipate continued losses in the foreseeable future. o The golf equipment industry is highly competitive and is dominated by national firms selling equipment in retail stores or on an online, internet basis. o The golf industry in general is not currently experiencing growth. o We are subject to all of those risks set forth in the "Risk Factors" section of this Prospectus. 20 BUSINESS OF OGDEN GOLF CO. CORPORATION General Ogden Golf Co. Corporation was organized on May 10, 2000, under the laws of the State of Utah, by Paul W. Larsen, who currently is our president and controlling principal shareholder. In connection with our formation, Mr. Larsen purchased the assets of an existing retail golf shop from an unrelated third party through a combination of bank debt and personal funds. We acquired the assets totaling $188,517 and assumed liabilities totaling $142,047 in exchange for issuing Mr. Larsen 500,000 shares of our common stock. We are located in Ogden, Utah and are a retailer of brand-named golf clubs, bags, apparel, and accessories merchandise. In addition, we offer custom golf club-making, fitting, repair, and tune-up services to our customers throughout Northern Utah. Our retail business is seasonal, with the heaviest sales during March, April and May, when outdoor spring activities commence, and in November and December because of holiday gift purchases. We believe that the public demand for retail golf merchandise and custom golf club building and related services is growing and will continue to grow throughout the 21st century. As indicated below, we intend to aggressively market our merchandise and services to customers in an effort to expand our business and develop profitability. The Golf Industry in the United States The National Golf Foundation reports substantial information related to the business of golf each year and provides interested persons with answers to several frequently asked questions about the game and business of golf in the United States. Certain statistical information regarding the number of golfers and the growth of golf in the U.S. from 1986 through 1999 and how much those golfers spend on golf are provided below: o There are approximately 26.7 million golfers age 12 and over in the U.S. o Approximately 6.3 million are avid golfers; i.e., they plan 15 or more rounds per year. o More than 40% of all U.S. golfers (44% or 11.7 million) are between the ages of 18 and 39. Seniors (age 50 and over) comprise another 27% or 6.7 million. The rest of the golfer population falls into the forty-something and Junior (age 12-17) categories at 21% and 8%, respectively. o Today's typical golfer is male, just over 40 years old, has a household income of $71,558 and plays 22 rounds per year. 21 o Female golfers make up 19% (5.1 million) of the U.S. golfer population, up from 4.6 million in 1986. o Women spend about $6 billion on golf merchandise and playing fees. o The average woman golfer is 42 years old, has an average household income of $70,541, and play 18 rounds per year. o Since 1986 the number of golfers has increased 34%, from 19.9 million to 26.7 million. o Since 1986, the number of women playing golf has risen 11%, from 4.6 million to 5.1 million. o Since 1986, the number of junior golfers has increased 43% to 2.1 million. o The number of golf courses in the U.S. has increased 28% since 1986, from 13,353 to 17,108 courses. o About 30% of the courses built over the past five years have been additions to existing facilities. o The rate of new golf course construction has increased significantly over the past 15 years, from an average of about 150 a year to more than 400 a year. o Since 1986, overall golfer spending in the U.S. on fees and equipment has grown from $7.8 to $22.2 billion. o Golfers spent $22.2 billion in 1999 on equipment and fees. o They spent $16.3 billion on green fees and dues in 1999, which accounted for 73% of all spending and $2.5 billion on golf club purchases (11% of the total). o Avid golfers (25+ rounds annually) make up the smallest player segment (25%), but accounted for 53% of all golf-related spending in 1999. The national Golf Foundation, www.ngf.org/faq. The foregoing factors have been key to the golf industry's growth over the past several years. Individual participant interest in golf and the money spent enjoying the game have helped fuel an industry that accounts for over $22.2 billion in sales annually. The golf industry's past growth had fostered many new businesses to support that growth. The health of the golf industry, when judged over time, indicates that the industry will do very well in this decade, despite the recent economic slowdown. We believe the key to our success will be to please the customer though providing quality merchandise and service. 22 Merchandise and Services Through our retail store located in Ogden, Utah, we offer brand-named golf merchandise (i.e. Taylor Made, Ping, Footjoy, Nike, Datrek, Titleist, Maxfli, Spalding), including: o Golf club sets and individual drivers, woods, irons, wedges and putters. o Golf equipment and accessories, including bags, pull carts, towels, umbrellas, gloves, golf balls and tees. o Golf apparel, including shirts, sweaters, pullovers, wind and rain gear, shoes, hats and visors. In addition, we offer custom golf club-making, fitting, repair, and tune-up services. In connection with these services, we sell individual club components, including club heads, shafts, and grips. Because we believe that custom fitted clubs allow golfers to shoot lower scores, we take club-making and fitting very seriously. We believe that we can enhance our business by focusing our business on the custom club-making and fitting aspects because we have greater control over the cost of our custom products and services than we have over other brand-named products we might offer our customers. We use only top quality components to custom build clubs or repair clubs. We build custom clubs with dynamics that work within a golfer's swing and we do not expect golfers to try to change swings to match the clubs. We assemble our custom clubs to meet existing swing dynamics. In doing so, we utilize two different methods to fit golfers with custom clubs: dynamic and static. 1. Dynamic fitting is conducted in person by first evaluating a golfer's swingspeed, loading, and lie measurements, while the golfer is hitting his or her current clubs, our test clubs, and other demo clubs as we provide analytical observation. Our goal is to build an individual club or set of clubs that a golfer can use within current swing dynamics, in conjunction with an overall evaluation of the golfer's current golf game, equipment, and goals. 2. Static fitting also relies on an evaluation of the golfer's current golf game, equipment, and goals; however, we do not perform an individual analysis of swing dynamics. Benefits of our custom club-making services can include: o A golfer receives quality clubs built to his or her specifications at reasonable prices. o A golfer receives clubs with matching flex, torque, kick points, and swing weighting. o A golfer receives clubs built with quality components and 100% lifetime guarantee of workmanship. 23 o A golfer receives consultation and analysis of his or her game, clubs, grip and swing. o A golfer achieves added confidence and lower scoring. We also offer reshafting, head changes, and repairs for broken shafts and damaged club heads. In addition, we can regrip clubs with a multiple of different brand-named grips. Our reshafting and repair service is prompt and our work is 100% guaranteed. Marketing Strategy and Principal Market Our principal marketing strategy for our merchandise and services is three fold: 1. Continue to offer our customers high-quality, brand-named equipment, apparel and accessories. 2. Emphasize our custom club-making, fitting, and repair services to our current customer base with a focus of quality components, guaranteed workmanship and quick turnaround. 3. Expand our customer base outside of Northern Utah through radio and print media and by offering information regarding our products and services via an internet website. Web Site Development Although numerous golf-related internet sites have sprung up which attempt to entice golfers into ordering goods and services on line, thus far, to the best of our knowledge no web site has become a dominant market leader in the golf arena. All continue vying for the golfer's return interest by providing various types of golf "content," however, our focus will be to entice those using our site to either come to our store or contact us about ordering merchandise or our club-making, fitting and repair services. A portion of the proceeds of this offering will be utilized to purchase radio advertising spots on "sports" and "news" radio stations and newspaper advertising in the Northern Utah market and fund the initial development of our web site. We have obtained quotes and estimates for web site design from various local web site/database developers, who have provided bids ranging from $5,000 to $35,000. We have received a firm bid proposal from Utah Sports Information Systems, Inc., a Utah website and design service, for design, internet service and product database preparation for $6,400 with a $50 per hour maintenance fee. However, we will not begin to develop the website unless we receive the minimum amount of funds from investors in this offering. Once the minimum funds from this offering have been received, we believe that it will take approximately 45 days to develop our web site. As indicated above, the intent of the web site will be to quickly and efficiently showcase available merchandise and service, and provide e-mail and telephone contact information to potential purchasers. Should our efforts 24 succeed, our web site may be expanded and developed into an e-commerce site that will eventually enable our customers to purchase merchandise. However, the costs associated with the development of an e-commerce web site are substantial, and we do not intend to expand the website to accommodate actual purchases through the website until sales revenues are established and substantial additional funds are raised. We believe that although the convenience such an expanded website would provide customers is important, the single most important ingredient to our success will be the development of personal relationships with purchasers via the telephone, e-mail and/or in person. This key ingredient is crucial to our long-term success. Purchasing of Merchandise and Inventory Our merchandise is obtained from numerous manufacturers, based on purchase orders for specific products and quantities. We do not have any long-term supply agreements although certain suppliers require minimum purchase commitments. In addition, we do not believe that we are dependent on any one supplier and that there are alternate sources available. In connection with our retail sale of merchandise, certain manufacturers of brand-named products do prohibit us from advertising their products at a discounted price. There is no assurance that these brand-named manufacturers will supply us with merchandise as needed. We believe it is important to our business to continue to offer brand-named products to our customers. Competition We compete with general sporting goods stores, golf course pro shops, other golf merchandise and service stores, discount department stores such as K-Mart, catalog stores and other retailers. We believe that our greatest competition comes form the discount golf stores, the numbers of which have grown in recent years. We also compete with entities engaged in the sale of similar merchandise by telephone and mail order sales. The largest telephone and mail order competitor that advertises through catalogs is much larger and has greater financial resources than we do. Major competitors that advertise through national magazine advertisements are Nevada Bob's and Edwin Watts. Principal competitive factors faced by us in the sale of merchandise generally are price, quality, personal service, merchandise selection, convenience, and customer loyalty. Domain Name We have reserved the internet domain name "golfers-green.com." Such initial reservation is through September 2003 at a cost of $35.00 per year, and is easily renewed for extended periods thereafter. Of yet, we have not created a logo or any trademarks, but intend to do so as part of the graphics associated with our proposed web site. 25 Acquisitions In order to increase our revenues and the potential for returns to our shareholders, we may look to acquire other businesses engaged in the golf industry or businesses engaged in other industries. We have not identified any potential acquisitions and there is a possibility that we will never attempt to acquire any other business operation. No person should invest in the Company on the basis that we will acquire, or even attempt to acquire, any other business whether in the golf industry or outside of the golf industry. Our immediate plan is to attempt to expand the operations of our current retail golf store. If we do seek to acquire another business, we will likely effect an acquisition through the issuance of our securities. This will likely result in the dilution in your percentage ownership of the Company. It is also possible that the control shareholders of the Company may change as a result of an acquisition. The change of controlling shareholders could result in a change of management and ultimately a change in business direction. Regulation and Environmental Compliance Other than state and local business license requirements, we are not aware of any need for government approval for the sale of our merchandise or services, nor of any environmental laws relating to its proposed products and services. Employees As of June 30, 2002, we had one full-time employee. We have been able to hire a sufficient quantity of qualified sales and repair personnel from the local area to meet our staffing needs and seasonal demands so that no special training, other than orientation to our merchandise and club repair equipment, is required. Facilities We own the building in which our retail store is located. The building is located at 1781 Washington Boulevard, Ogden, Utah and consists of approximately 2,595 square feet. The building secures a loan to Barnes Bank in the amount of $139,539. We are required to make monthly payments of $1,608 on the loan amount. A balloon payment of $117,154 is due on September 20, 2005. MANAGEMENT The following table sets forth the name, address, age and position of each officer and director of the Company: 26 Name Age Position Mark A. Scharmann 44 President/Director Douglas P. Morris 47 Vice President Director Robert R. Peterson 47 Secretary/Treasurer/Director Paul Larsen 45 Director Curtis Kaminska 45 Director Background information concerning the Company's officers and directors is as follows: Paul Larsen. Mr. Larsen has operated Ogden Golf since April 2000. He is also president and a director of our subsidiary, Ogden Discount Golf from July 1982 to April 2000, Paul worked as senior information technology technician at Alliant Technologies (formerly Thiokol Corporation) in Promontory, Utah. He attended Weber State University in Ogden, Utah with an emphasis in Physical Education and Information Technology Systems. Douglas P. Morris. Mr. Morris was appointed as an officer and director of Ogden Golf Co. Corporation in November 2002. Mr. Morris since 1990 has also owned and operated H & M Capital Investments, Inc., (H & M). H & M is a privately held business consulting firm. H & M consults with privately held and publicly held corporations relating to management, merger and acquisitions, debt and equity financing, capital market access, and market support for publicly traded securities. He has been and continues to be a director and consultant for several operating public companies. Mr. Morris is an officer and director of Millennium Electronics, Inc., an inactive public company which was previously involved in the computer memory business. Mr. Morris is also an officer and director of Celtic Investment, Inc., a publicly traded financial services company. Mr. Morris has a BA from Brigham Young University and a Masters in Public Administration from the University of Southern California. Mark Scharmann. Mr. Scharmann was a founder of Ogden Golf and was reappointed to the Board of Directors in November 2002. Mr. Scharmann has been a private investor and business consultant since 1981. Mr. Scharmann became involved in the consulting business following his compilation and editing in 1980 of a publication called Digest of Stocks Listed on the Intermountain Stock Exchange. In 1981 he compiled and edited an 800 page publication called the OTC Penny Stock Digest. Mr. Scharmann has rendered consulting services to public and private companies regarding reverse acquisition transactions and other matters. Mr. Scharmann was vice president of OTC Communications, Inc. from March 1984 to January 1987. From 1982 to 1996, he was the president of Royal Oak Resources Corporation. In 1996, Royal Oak Resources completed an acquisition and in connection therewith changed its name to Hitcom Corporation. Mr. Scharmann was the President of Norvex, Inc., a blank check company which completed an acquisition and in connection therewith, changed its name to Capital Title Group, Inc. Mr. Scharmann is a promoter of Nightingale, Inc., a publicly-held corporation blank check company. He is also an officer and director of Pacific Alliance Corporation, a inactive public company which was previously in the television programming delivery business. He has also been an officer and director of several other blind pool companies. Mr. Scharmann graduated from Weber State University in 1997 with a Bachelors of Integrated Studies with emphasis in Business, Psychology and Health. 27 Curtis Kaminska. Mr. Kaminska has been a director of the Company since August 2002. He is also vice president and a director of our subsidiary, Ogden Discount Golf. Mr. Kaminska has been a pilot for Delta Airlines since 1987. He has over 20 years experience with Delta, the U.S. Air Force and the Utah National Guard. From 1999 to the present, he has owned and operated KEE, Inc., a business consulting company based in Ogden, Utah. He earned his BS Degree in Business with an emphasis in marketing from Utah State University, Logan, Utah in 1981, and an MBA degree from New Mexico Highlands University in 1986. Robert R. Peterson. Mr. Peterson has been a director of the Company since August 2002. He is also secretary/treasurer and an director of our subsidiary, Ogden Discount Golf. Mr. Peterson has been controller of Fresenius Medical Care, Ogden, Utah, since 1998. From 1997-98, he was controller of Weider Nutrition International, Salt Lake City, Utah. From 1995-97, he was controller of Autoliv, Ogden Utah. From 1989-95, he was Manager of Budgets and Pricing for Autoliv. From 1979-89, he was Senior Financial Analyst for Morton Thiokol, Promontory, Utah. He earned an MBA from the University of Phoenix in Salt Lake City in 1989, and a BS degree in Marketing and Economics from Utah State University, Logan, Utah in 1977. MANAGEMENT COMPENSATION The following table sets forth the aggregate cash compensation paid by the Company for services rendered during the last three years to the Company's Chief Executive Officer and to the Company's most highly compensated executive officers other than the CEO, whose annual salary and bonus exceeded $100,000: - ------------------------------------------------------------------------------- SUMMARY COMPENSATION TABLE Long Term Compensation
AnnualCompensation Awards Payouts ------------------ ------------------ ------- (a) (b) (c) (d) (e) (g) (h) (i) Other All Name and Year Annual Restrict Option/ LTIP Other Principal Ended ($) ($) Compen- Stock SAR's Payouts Compensa- Position 6/30 Salary(1) Bonus sation($) Award($) (#) ($) tion($) - -------------------------------------------------------------------------------------------- Paul Larsen* 2002 $39,800 -0- -0- -0- -0- $ -0- $ -0- President 2001 $47,750 -0- -0- -0- -0- -0- -0- - --------------------------------------------------------------------------------------------
* Mr. Larsen is no longer the President of the Company, but is the President of our wholly owned subsidiary. Options Grants in Last Fiscal Year There were no grants of stock options made during the fiscal year ended June 30, 2002 to our executive officers. 28 Stock Options Held at End of Fiscal 2002 No stock options or stock appreciation rights were owned by our officers and directors at June 30, 2002, the end of our last fiscal year. Compensation of Directors We do not currently compensate our directors for director services to the Company or our subsidiary. We anticipate that more formal compensation arrangements with our directors will be finalized within the next fiscal year. Employment Agreements We have no written employment agreements with our management. Currently, we are paying Paul Larsen, our president $35,000 per year. Stock Option Plans and Other Incentive Compensation Plans We have not adopted any option plans or other incentive compensation plans as of the date of this Prospectus. We anticipate that our Board of Directors will, in the near future, adopt incentive compensation plans to provide rewards and incentives to our employees, directors and agents. We have not granted any options to any person as of the date of this Prospectus. PRINCIPAL STOCKHOLDERS The following table sets forth information concerning the beneficial ownership of Ogden Golf common stock as of April 1, 2003, by each director and executive officer, all directors and officers as a group, and each person known to Ogden Golf to beneficially own 5% or more of its outstanding common stock. Name and Address Percentage of Beneficial Owner Shares Owned Owned(1) Paul Larsen 660,000 31% Douglas P. Morris (2) 712,500 33% Mark A. Scharmann (3) 260,000 12% Robert R. Peterson 10,000 .1% Curtis Kaminska 10,000 .1% All officers and Directors as a group 1,652,500 77% (5 persons) Total Shares of Common Stock Issued 1,246,500 100% Total Shares Issued (4) 2,165,500 100% 29 (1) Based upon shares of common stock issued and assuming all shares of preferred stock are converted into common stock. (2) Includes 12,500 shares of common stock owned by Hyacinth Resources, Inc., an affiliate of Mr. Morris and 700,000 shares of common stock issuable to Hyacinth Resources, Inc. upon the conversion of 70,000 shares of Series A. Preferred Stock into common stock. (3) Includes 60,000 shares of common stock owned by Scharmann and 200,000 shares of common stock issuable to Mr. Scharmann upon the conversion of 20,000 shares of Series A Preferred Stock into common stock. (4) Assumes all 95,000 shares of Series A Preferred Stock are converted into 950,000 shares of common stock. DESCRIPTION OF SECURITIES We are authorized to issue up to 100,000,000 shares of common stock, no par value and 5,000,0000 shares of preferred stock, no par value. As of March 26, 2003, there were 1,246,500 shares of our common stock issued and outstanding. We have designated 100,000 shares of our preferred stock as Series A Preferred Stock. As of March 26, 2003, there were 95,000 shares of Series A Preferred Stock issued and outstanding. All outstanding shares of our common stock and Series A Preferred Stock are fully paid and nonassessable and the shares of our common stock offered by this Prospectus will be, upon issuance, fully paid and nonassessable. The following is a summary of the material rights and privileges of our common stock and preferred stock. Common Stock Subject to the rights of the holders of any preferred stock which may be outstanding, each holder of common stock on the applicable record date is entitled to receive such dividends as may be declared by the Board of Directors out of funds legally available therefor, and in the event of liquidation, to share pro rata in any distribution of our assets after payment or providing for the payment of liabilities and the liquidation preference of any outstanding preferred stock. Each holder of common stock is entitled to one vote for each share held of record on the applicable record date on all matters presented to a vote of stockholders, including the election of directors. Holders of common stock have no cumulative voting rights or preemptive rights to purchase or subscribe for any stock or other securities. Except as disclosed herein, there are no conversion rights or redemption or sinking fund provisions with respect to the common stock. All outstanding shares of common stock are, and the shares of common stock offered hereby will be, when issued, fully paid and nonassessable. Preferred Stock Our Board of Directors is empowered, without approval of the stockholders, to cause shares of preferred stock to be issued in one or more series, with the 30 numbers of shares of each series to be determined by it. The Board of Directors is also authorized to fix and determine variations in the designations, preferences, and special rights (including, without limitation, special voting rights, preferential rights to receive dividends or assets upon liquidation, rights of conversion into common stock or other securities, redemption provisions and sinking fund provisions) between the preferred stock or any series thereof and the common stock. The shares of preferred stock or any series thereof may have full or limited voting powers or be without voting powers. Although we have no present intent to issue additional shares of preferred stock, the issuance of shares of preferred stock, or the issuance of rights to purchase such shares, could be used to discourage an unsolicited acquisition proposal. For instance, the issuance of a series of preferred stock might impede a business combination by including class voting rights that would enable the holders to block such a transaction, or such issuance might facilitate a business combination by including voting rights that would provide a required percentage vote of the stockholders. In addition, under certain circumstances, the issuance of preferred stock could adversely affect the voting power of the holders of the common stock. Although the Board of Directors is required to make any determination to issue such stock based on its judgment as to the best interests of our stockholders, the Board of Directors could act in a manner that would discourage an acquisition attempt or other transaction that some or a majority of the stockholders might believe to be in their best interests or in which stockholders might receive a premium for their stock over the then market price of such stock. Series A Preferred Stock In November 2002, our Board of Directors adopted a resolution designating a Series A Preferred Stock consisting of 100,000 shares. A total of 95,000 shares of Series A Preferred Stock have been issued. The following description of the Series A Preferred Stock is a summary only. Dividends. No dividends shall accrue or be payable on the Series A Preferred Stock. Liquidation Distribution upon Dissolution. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, then, before any distribution or payment shall be made to the holders of any junior stock, the holders of Series A Preferred Stock shall be entitled to be paid in full an amount equal to $.20 per share, together with accrued and unpaid dividends and any accumulated dividends to such distribution or payment date, whether earned or declared. Conversion of Series A Preferred Stock into Common Stock. The holders of the Series A Preferred Stock may convert their shares of Series A Preferred Stock into Common Stock pursuant to Section 8 above, only if one or both of the following events occurs: (a) The Company operates at a profit during any fiscal year ending prior to June 30, 2005; or 31 (b) On or before June 30, 2005, the Company's shareholders' equity increases by $100,000 or more over the Company's shareholders' equity as of September 30, 2002. If neither of the above-listed conditions occurs, the Series A Preferred Stock may not be converted into common stock and may, at the sole option of the Company, be redeemed at Stated Value. Subject to and upon compliance with the conditions described above, at the option of the holder thereof, any share of the Series A Preferred Stock may be converted into ten (10) shares of common stock ("Conversion Ratio"). Voting Rights. The holders of Series A Preferred Stock shall have no voting rights prior to conversion of the Series A Preferred Stock into common stock except as otherwise provided by the Utah Revised Business Corporations Act. Transfer Agent Our transfer agent is Fidelity Transfer, 1800 South West Temple, Salt Lake City, Utah 84115, telephone (801) 484-7222. Limitation of Liability and Indemnification of Directors and Officers Our Articles of Incorporation and our By-laws contain provisions that eliminate the personal liability of our directors to us or our stockholders for monetary damages for breach of their fiduciary duty as a director to the fullest extent permitted by the Utah Revised Business Corporations Act, except for liability for: o any breach of their duty of loyalty to us or our stockholders; o acts or omissions not in good faith or which involve intentional misconduct; o misconduct or a knowing violation of law; o unlawful payments of dividends or unlawful stock repurchases or redemptions; o any act or omission occurring prior to our incorporation; and o any transaction from which the director derived an improper personal benefit. Our Articles of Incorporation and By-laws also contain provisions that require us to indemnify our directors and permits us to indemnify our incorporators, directors and officers to the fullest extent permitted by Utah law, including circumstances where indemnification would be discretionary. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers, and persons controlling us in connection 32 with the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act, and is unenforceable. PLAN OF DISTRIBUTION Shares Offered By Ogden Golf We are offering to sell, on a best efforts basis, up to 400,000 newly issued shares of our common stock at $.50 per share. We have appointed ACAP Financial Inc. ("ACAP"), as our exclusive agent to sell up to 400,000 shares of common stock to the public on a "best efforts, all or none" basis for the first 300,000 shares and on a "best efforts" basis thereafter at the public offering price of $.50 per share. There can be no assurance that any of these shares will be sold. If ACAP fails to sell a minimum of 300,000 of the offered shares within 120 days (which may be extended for 30 days) from the effective date of this Prospectus, the offering will be terminated and the subscription proceeds will be refunded in full to subscribers, without interest thereon or any deductions therefrom. All subscription payments should be made payable to "Irwin Union Bank - Ogden Golf Co. Corporation., Escrow Account." All subscription payments will be deposited by noon of the business day following receipt and held in an escrow account at Irwin Union Bank, 15 West South Temple, Suite 950, Salt Lake City, Utah 84101, as escrow agent, pending the sale of a minimum of 300,000 shares within a 120 day period (unless extended for an additional 30 days). The subscription proceeds will be withdrawn from the escrow account only for the purpose of purchasing the shares offered hereby, if a minimum of 300,000 shares offered hereunder are sold or for the purpose of refunding subscription payments to the subscribers. Subject to the sale of at least 300,000 shares, prior to the termination of this offering, we have agreed to pay to ACAP an Underwriting Commission of 11% of the total offering price ($.055 per share) or a minimum of $16,500 and a maximum of $22,000. We have agreed to pay to ACAP an accountable expense allowance of 1% of the gross offering proceeds. ACAP's expenses, if any, which exceed the accountable expense allowance will be borne by ACAP. We will also pay for the expenses necessary to qualify the shares for sale in various states that the ACAP may designate. Underwriter's Warrants Subject to the sale of at least 300,000 of the shares we are offering through ACAP, we have agreed to sell to ACAP for a price of $100, payable at the time of closing, Warrants ("Underwriter Warrants") to purchase shares of our common stock (an amount equal to 10% of the total shares sold by ACAP pursuant to this offering). The Underwriter's Warrants may not be exercised, sold, transferred, assigned or hypothecated for a period of one year from the effective date of this offering, except that Warrants to be acquired by the Underwriter may be assigned or transferred to the officers of the Underwriter, 33 to participating dealers that sell shares in the offering, or to such participating dealers' officers. The Warrants will be exercisable for a period of four years commencing one year from the date of this Prospectus. If the Warrants are not exercised during their term, they shall automatically expire. The purchase price of the shares underlying the Warrants will be $.83 per share during the exercise period. We will set aside and at all times have available, a sufficient number of shares of its common stock to be issued upon the exercise of the Underwriter Warrants. Any transfer or assignment of the Warrants and the underlying shares by the Underwriter to any person, must be in accordance with the provisions of the Securities Act of 1933, as amended. During the period commencing one year after the date of the Prospectus and ending four years later, we will file, not more than once, a Registration Statement under the Securities Act of 1933, as amended, registering the shares acquired upon the exercise of the Underwriter's Warrants, at the request of the holders of at least a majority of such shares. All expenses of such registration will be borne by us. Further, in the event we register any of our securities during the five-year period following the effective date of this offering, the holders of the Underwriter's Warrants and/or underlying shares shall have the right to register all or part of the underlying shares in conjunction with the Company's Registration Statement. In such event, we shall bear the entire cost and expense of registration. The above registration rights will be available upon the exercise of the Warrants. It may be expected that the Underwriter's Warrants will be exercised only if it is advantageous to the holders of the Underwriter's Warrants. The value of our common stock may be diluted as a result of the exercise of the Warrants. Therefore, for the life of the Underwriter's Warrants, the holders thereof are given, at a nominal cost, the opportunity to profit from an increase in the market price of our Common Stock. The terms upon which we could obtain capital during the exercise period may be adversely affected. The holders of the Underwriter's Warrants might be expected to exercise the Warrants at a time when we would, in all likelihood, be able to obtain any additionally needed capital on terms more favorable than those provided for in the Underwriter's Warrants. Any gain realized by the Underwriter on the resale of the Underwriter's Warrants or the underlying shares may be deemed to be additional underwriting compensation. The Underwriter's Warrants will contain provisions protecting the holder against dilution of the equity interest represented thereby. Additional Matters ACAP may allow concessions to certain selected dealers who are members of the National Association of Securities Dealers, Inc., and that such dealers may reallow concessions to certain other dealers who are members of the National Association of Securities Dealers, Inc. The amount of such concessions will be determined through negotiations between the Underwriter and the selected dealers or such selected dealers and other dealers, as the case may be. We and ACAP have agreed to indemnify each other against certain liabilities, including liabilities arising under the Securities Act of 1933. We have been informed that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. 34 Our management may provide ACAP with a list of certain persons, including our officers, directors and affiliates and others, whom our management believes may be interested in purchasing shares of our common stock in the offering. ACAP may sell the shares to such persons if such persons reside in a state where our common stock can be sold and where ACAP can sell the our shares. Such sales may be made for the express purpose of making sure that all shares offered hereby are sold. Any purchases made by officers, directors or affiliates will be for investment purposes and not for further distribution. ACAP will distribute the Shares according to ACAP's best business judgment and ACAP has no obligation to sell any of the Shares to any person.. In no event will ACAP sell more than 10 percent of the Shares to our officers, directors or affiliates. Selling Shareholders The Selling Shareholders and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of common stock on any stock exchange market or trading facility on which our shares are traded or in private transactions. These sales may be at fixed or negotiated prices. The Selling Shareholders may use any one or more of the following methods when selling shares: o ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; o block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; o purchases by a broker-dealer as principal and resale by the broker-dealer for its account; o an exchange distribution in accordance with the rules of the applicable exchange; o privately negotiated transactions; o short sales; o broker-dealers may agree with the Selling Shareholders to sell a specified number of such shares at a stipulated price per share; o a combination of any such methods of sale; and o any other method permitted pursuant to applicable law. The Selling Shareholders may also sell shares under Rule 144 promulgated under the Securities Act, if available, rather than under this Prospectus. The Selling Shareholders may also engage in short sales against the box, puts and calls and other transactions in our securities or derivatives of our securities and may sell or deliver shares in connection with these trades. 35 The Selling Shareholders may pledge their shares to their brokers under the margin provisions of customer agreements. If a selling stockholder defaults on a margin loan, the broker may, from time to time, offer and sell the pledged shares. Broker-dealers engaged by the selling stockholder may arrange for other broker-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Shareholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. The Selling Shareholders and any broker-dealers or agents that are involved in selling the shares may be deemed to be "underwriters" within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. We have agreed to pay all fees and expenses incident to the registration of the shares, including certain fees and disbursements of counsel to the Selling Shareholders. We have agreed to indemnify the Selling Shareholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act. The Selling Shareholders have also agreed to indemnify us, our directors, officers, agents and representatives against certain liabilities, including certain liabilities under the Securities Act. The Selling Shareholders and other persons participating in the distribution of the shares offered hereby are subject to the applicable requirements of Regulation M promulgated under the Securities Exchange Act of 1934 in connection with the sales of the shares SELLING SHAREHOLDERS The following table details the name of each Selling Shareholder, the number of shares owned by the selling stockholder, and the number of shares that may be offered for resale under this Prospectus. Because each selling stockholder may offer all, some or none of the shares it holds, and because there are currently no agreements, arrangements, or understandings with respect to the sale of any of the shares, no definitive estimate as to the number of shares that will be held by each selling stockholder after the offering can be provided. The following table has been prepared on the assumption that all shares offered under this prospectus will be sold to parties unaffiliated with the Selling Shareholders. Except as indicated, none of the Selling Shareholders has had a significant relationship with us within the past three years, other than as a result of the ownership of our shares or other securities. Unless otherwise indicated, the Selling Shareholders have sole voting and investment power with their respective shares. Number of Common Shares Beneficially Common Shares Name of Selling Stockholder Owned Prior to Offering Offered Hereby (1) --------------------------- ----------------------- ------------------ Larsen, Paul 660,000 660,000 Scharmann, Mark A. 60,000 60,000 Knudson, David 50,000 50,000 Taylor, Elliott N. 50,000 50,000 36 Lehmberg, David 25,000 25,000 Stagg, Niel 25,000 25,000 Scharmann, Stephen 10,000 10,000 Scharmann, Darrell L. 20,000 20,000 Chapman Spira & Carson, LLC 12,500 12,500 David Anthony Investments 12,500 12,500 Witz, Barry 12,500 12,500 First Atlantis Trading Corp. 12,500 12,500 Hyacinth Resources 12,500 12,500 Roycemore Corp. 52,500 52,500 Grilz, Richard 10,000 10,000 Kaminska, Curtis 10,000 10,000 OM Capital Corp. 20,000 20,000 Grilz, Bill 10,000 10,000 Yamashita, Betty Hong 4,000 4,000 Dolan, John W. 4,000 4,000 Marriott, Rodney G. 4,000 4,000 Hall, Wade D. 10,000 10,000 George, Lawrence E. 10,000 10,000 Hanley, Lori 12,500 12,500 Petersen, Robert 10,000 10,000 Rubin, Mike 5,000 5,000 Maxfield, Brent 12,500 12,500 Warsinske, Michael 12,500 12,500 Croft Investments LTP 25,000 25,000 Rod H. Larsen 5,000 5,000 Richard S. Robinson 25,000 25,000 Dan Rich 5,000 5,000 Cory Powers 10,000 10,000 (1) The Selling Shareholders may, but are not required to, sell shares in connection with this offering. (2) The Selling Shareholders also include the following holders of our Series A Preferred Stock. Series A Convertible Common Preferred Into Shares Stock Common Offered --------- ----------- ------- Hyacinth Resources 70,000 700,000 700,000 Mark A. Scharmann 20,000 200,000 200,000 Northcliffe Consulting 5,000 50,000 50,000 37 CERTAIN TRANSACTIONS In connection with our formation, Paul Larsen our president, purchased the assets of an existing retail golf shop from an unrelated third party through a combination of bank debt and personal funds. We acquired the assets totaling $188,517 and assumed liabilities totaling $142,047 in exchange for issuing Mr. Larsen 500,000 shares of our common stock. In 2001, the Company loaned $12,480 to Paul Larsen, our president. Such loan is due December 31, 2003. Paul Larsen, the President of the Company, has personally guaranteed our loan from Barnes Bank. Hyacinth Resources, Inc., an affiliate of Douglas P. Morris, a director of the Company, purchased 70,000 shares of our Series A Preferred Stock from us for $14,000. The 70,000 shares of Series A Preferred Stock are convertible into 700,000 shares of our common stock if certain conditions are met. Mark A. Scharmann, an officer and director of the Company, purchased 20,000 shares of our Series A Preferred Stock from us for $4,000. The 20,000 shares of Series A Preferred Stock are convertible into 200,000 shares of our common stock if certain conditions are met. LEGAL PROCEEDINGS We are not a party to any material legal proceedings. SHARES ELIGIBLE FOR FUTURE SALE As of the date of this Prospectus, we have 1,236,500 shares of common stock issued and outstanding. We also have outstanding 95,000 shares of Series A Preferred Stock which is convertible into 950,000 shares of our common stock. All of these shares have been registered under the Securities Act for resale by the holders. We are unable to estimate the amount, timing or nature of future sales of outstanding common stock. Sales of substantial amounts of the common stock in the public market may hurt the stock's market price. EXPERTS Our June 30, 2002 and 2001 financial statements and schedule included in this Prospectus and in the Registration Statement have been audited by Wisan, Smith Racker & Prescott, LLP, CPA's, independent certified public accountants, to the extent and for the periods detailed in their reports, and which appear in this Prospectus and in the Registration Statement, and are included in reliance upon those reports given as a result of the authority of that firm as experts in accounting and auditing. 38 LEGAL MATTERS Certain legal matters in connection with this offering have been passed upon for us by the law firm of Cohne, Rappaport & Segal, attorneys at law, 525 East 100 South, Fifth Floor, Salt Lake City, Utah, 84102. Northcliffe Consulting, L.L.C., an affiliate of A.O. Headman, Jr., owns 5,000 shares of our Series A Preferred Stock. Mr. Headman is a shareholder in Cohne, Rappaport & Segal. DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by one of our directors, officers or controlling persons in the successful defense of any action, suit or proceeding) is asserted by that director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether that indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of that issue. WHERE YOU CAN FIND MORE INFORMATION This prospectus forms part of a Registration Statement on Form SB-2 that we filed with the SEC under the Securities Act with respect to the shares and contains all the information which we believe is significant to you in considering whether to make an investment in our common stock. We refer you to the Registration Statement for further information about us, our common stock and this offering, including the full texts of exhibits, some of which have been summarized in this Prospectus. At your request, we will provide you, without charge, a copy of any exhibits to the Registration Statement incorporated by reference in this Prospectus. If you want more information, write or call us at: 1781 Washington Boulevard, Ogden, Utah 84401, and our telephone number is (810) 627-4442; Attn: Paul Larsen. Upon the effectiveness of the Registration Statement of which this Prospectus forms a part, we will become subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and will file reports and other information with the SEC as required under the Exchange Act. Such reports and other information filed by the Hugo are available for inspection and copying at the public reference facilities of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20459, and at the SEC's Regional Offices located at 233 Broadway, New York, New York 10275 and Northwestern Atrium Center, 175 W. Jackson Boulevard, Chicago, Illinois 60604. Copies of such material may be obtained by mail from the Public Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public 39 reference rooms. The SEC also maintains a World Wide Web site on the Internet at http://www.sec.gov that contains reports, proxy and information statements and other information regarding registrants, that file electronically with the SEC. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR TO WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT. THIS DOCUMENT MAY BE USED ONLY WHERE IT IS LEGAL TO SELL THESE SECURITIES. THE INFORMATION IN THIS DOCUMENT MAY BE ACCURATE ONLY ON THE DATE OF THIS DOCUMENT. 40 OGDEN GOLF CO. CORPORATION INTERIM FINANCIAL STATEMENTS December 31, 2002 F-1 C O N T E N T S Page Interim Balance Sheets, December 31, 2002 and June 30, 2002......................................................... F-3 Interim Statements of Operations for the Three and Six Month Periods Ended December 31, 2002 And 2001............................ F-4 Interim Statements of Cash Flows .......................................... F-5 Notes to Interim Financial Statements ..................................... F-7 Independent Auditors' Report............................................... F-10 Balance Sheets, June 30, 2002 and 2001..................................... F-11 Statements of Operations for Years Ended June 30, 2002 and 2001.................................................... F-12 Statements of Stockholders' Equity for Years Ended June 30, 2002 and 2001.................................................... F-13 Statements of Cash Flows for Years Ended June 30 2002 and 2001..................................................... F-14 Notes to Financial Statements.............................................. F-15 General and Administrative Expenses for Years Ended June 30, 2002 and 2001.................................................... F-21 F-2 OGDEN GOLF CO. CORPORATION INTERIM BALANCE SHEETS December 31, 2002 and June 30, 2002 December June 30, 31, 2002 2002 (Unaudited) (Audited) ASSETS ----------- ----------- CURRENT ASSETS Cash and cash equivalents $ 15,652 $ 17,148 Inventories 33,123 40,719 Prepaid expenses 459 401 ----------- ----------- TOTAL CURRENT ASSETS 49,234 58,268 PROPERTY AND EQUIPMENT 100,536 101,874 OTHER ASSETS Stockholder notes receivable 12,480 12,480 Loan costs, net of accumulated amortization of $1,172 and $952, respectively 1,026 1,246 Investment in collectible assets 4,000 4,000 ----------- ----------- TOTAL ASSETS $ 167,276 $ 177,868 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 8,529 $ 14,809 Short-term liabilities 22,712 22,302 Accrued expenses 1,872 3,787 Unearned income 1,900 Current portion of long-term liabilities 9,825 9,441 Stockholder notes payable 10,000 2,500 Income taxes payable - 100 ----------- ----------- TOTAL CURRENT LIABILITIES 54,838 54,439 LONG-TERM LIABILITIES 114,641 118,044 STOCKHOLDERS' EQUITY Preferred stock, no par value 5,000,000 shares authorized 70,000 and 0 shares issued 14,000 Common stock, no par value 100,000,000 shares authorized 1,160,500 and 1,109,500 shares issued and outstanding 159,970 146,970 Retained deficit (176,173) (141,585) TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (2,203) 5,385 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 167,276 $ 177,868 =========== =========== The accompanying notes are an integral part of the interim financial statements. F-3 OGDEN GOLF CO. CORPORATION INTERIM STATEMENTS OF OPERATIONS Three-month periods ended December 31, 2002 and 2001 Six-month periods ended December 31, 2002 and 2001 (Unaudited)
Three-Month Three-Month Six-Month Six-Month Period Ended Period Ended Period Ended Period Ended December 31, December 31, December 31, December 31, 2002 2001 2002 2001 ------------ ------------ ------------ ------------ INCOME Sales $ 10,856 $ 17,551 $ 40,001 $ 54,555 Cost of goods sold 6,991 12,486 30,078 34,374 ------------ ------------ ------------ ------------ GROSS PROFIT 3,865 5,065 9,923 20,181 EXPENSES General and administrative 13,242 17,467 36,424 40,208 Depreciation and amortization 779 780 1,558 1,559 ------------ ------------ ------------ ------------ 14,021 18,247 37,982 41,767 ------------ ------------ ------------ ------------ OPERATING LOSS (10,156) (13,182) (28,059) (21,586) OTHER INCOME (EXPENSE) Interest expense (3,237) (3,418) (6,529) (6,893) ------------ ------------ ------------ ------------ Loss before income taxes (13,393) (16,600) (34,588) (28,479) Income tax expense - - - - ------------ ------------ ------------ ------------ NET LOSS $ (13,393) $ (16,600) $ (34,588) $ (28,479) ============ ============ ============ ============ Basic and diluted loss per common share $ (0.01) $ (0.02) $ (0.03) $ (0.03) ============ ============ ============ ============ Weighted average number of shares outstanding 1,146,022 996,413 1,127,761 973,941 ============ ============ ============ ============
The accompanying notes are an integral part of the interim financial statements. F-4 OGDEN GOLF CO. CORPORATION INTERIM STATEMENTS OF CASH FLOWS Six-month periods ended December 31, 2002 and 2001 December December 31, 31, 2002 2001 (Unaudited) (Unaudited) ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (34,588) $ (28,479) Adjustments to reconcile net loss to net cash used by operating activities: Depreciation 1,338 1,339 Amortization 220 220 (Increase) decrease in assets: Inventories 7,596 11,920 Prepaid expenses (58) (13) Increase (decrease) in liabilities: Accounts payable (6,280) (10,827) Accrued expenses (1,915) (2,126) Unearned income 400 - Income taxes payable (100) (100) ----------- ----------- Net cash used by operating activities (33,387) (28,066) CASH FLOWS FROM FINANCING ACTIVITIES Cash received from stockholder loan 7,500 - Change in short-term liabilities 410 1,749 Cash paid to reduce long-term liabilities (3,019) (4,208) Cash received from issuance of preferred stock 14,000 - Cash received from issuance of common stock 13,000 22,500 ----------- ----------- Net cash flows from financing activities 31,891 20,041 ----------- ----------- NET DECREASE IN CASH AND CASH EQUIVALENTS (1,496) (8,025) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 17,148 15,444 ----------- ----------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 15,652 $ 7,419 =========== =========== The accompanying notes are an integral part of the interim financial statements. F-5 OGDEN GOLF CO. CORPORATION INTERIM STATEMENTS OF CASH FLOWS (CONTINUED) Six-month periods ended December 31, 2002 and 2001 SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION: December December 31, 31, 2002 2001 (Unaudited) (Unaudited) ----------- ----------- Cash paid for interest $ 6,529 $ 6,893 =========== =========== Cash paid for income $ 100 $ 100 =========== =========== taxes The accompanying notes are an integral part of the interim financial statements. F-6 OGDEN GOLF CO. CORPORATION NOTES TO INTERIM FINANCIAL STATEMENTS December 31, 2002 NOTE 1- BASIS OF PRESENTATION The accompanying interim financial statements of Ogden Golf Co. Corporation have been prepared in conformity with accounting principles generally accepted in the United States, consistent in all material respects with those applied in the Company's audited financial statements for the year ended June 30, 2002 included in its registration statement on Form SB-2. The interim financial information is unaudited, but reflects all normal adjustments, which are, in the opinion of management, necessary to provide a fair statement of results for the interim periods presented. Certain information and footnote disclosure normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been omitted. It is suggested that these interim financial statements be read in conjunction with the financial statements and notes thereto included in the Company's audited financial statements included in its registration statement on Form SB-2. The results of operations for the periods ended December 31, 2002 and 2001 are not necessarily indicative of the operating results for the full years. NOTE 2 - LIQUIDITY At June 30, 2002, the Company reported a retained deficit of $141,585, incurred a net loss of $63,143 and used $37,703 of cash in operations during the year ended June 30, 2002. For the six-month period ended December 31, 2002, the Company reported a retained deficit of $176,173, incurred a net loss of $34,588 and used $33,387 of cash in operations. The Company has secured commitments from certain individuals to provide equity funding to the Company during the coming year. The Company also plans to register with the Securities and Exchange Commission and list the Company's stock on a public exchange in order to attract additional investment capital. Management believes that such actions will have a positive effect on the Company's results of operations going forward and, as a result, believes it will have sufficient capital resources to meet its current obligations. In the event that cash from operations is insufficient to sustain ongoing operations, the Company may be required to seek additional external funding. There can be no assurance that such funding can be obtained on terms acceptable to the Company. NOTE 3 - STOCKHOLDER NOTES PAYABLE During the period ended December 31, 2002, the Company received loans from stockholders in exchange for consideration totaling $7,500. The notes bear interest at 10% per annum and will become due during 2003. F-7 OGDEN GOLF CO. CORPORATION NOTES TO INTERIM FINANCIAL STATEMENTS December 31, 2002 NOTE 4 - INCOME TAXES At December 31, 2002, the Company's deferred tax assets are offset by a valuation allowance. In assessing the realization of deferred tax assets based on the requirements of Statement of Financial Accounting Standards No. 109, management has considered whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which those temporary differences become deductible. Management has considered the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based on the projections for future taxable income over the periods that the deferred tax assets are deductible, management believes it is more likely than not that the Company will not realize the benefits of these deductible differences. NOTE 5 - PREFERRED STOCK During the period ended December 31, 2002, the Company issued 70,000 shares of preferred stock in exchange for consideration totaling $14,000. The preferred stock is non-voting and bears no dividends. It has a liquidation preference of $0.20 per share. The preferred stock is convertible to common stock at a ratio of 10 shares of common stock to 1 share of preferred stock if either of two contingencies occur: 1) The Company shows a net profit for any period through June 30, 2005; or 2) the total stockholders' equity balance of the Company increases more than $100,000 between June 30, 2002 and June 30, 2005. At December 31, 2002, neither of these contingencies had occurred. NOTE 6 - LOSS PER COMMON SHARE Basic and diluted loss per common share is calculated by dividing net loss by the weighted number of common shares outstanding during the period. Amounts applicable to common stockholders are not affected by the preferences of outstanding shares of preferred stock. Potential common shares (700,000 shares) from the future conversion of preferred stock were excluded from the calculation of diluted loss per share because their effect would reduce the loss per common share. F-8 NOTE 7 - SUBSEQUENT EVENTS In January 2003 the Company formed Ogden Discount Golf, Inc. as a wholly owned subsidiary. The Company intends to transfer its retail golf operations and related assets and liabilities to the subsidiary. F-9 INDEPENDENT AUDITORS' REPORT Board of Directors Ogden Golf Co. Corporation Ogden, Utah We have audited the accompanying balance sheets of Ogden Golf Co. Corporation (a Utah corporation) as of June 30, 2002 and 2001, and the related statements of operations, stockholders' equity and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with U.S. generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above, present fairly, in all material respects, the financial position of Ogden Golf Co. Corporation as of June 30, 2002 and 2001, and the results of its operations and its cash flows for the years then ended in conformity with U.S. generally accepted accounting principles. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplementary information in Schedule 1 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ Wisan Smith Racker & Prescott, LLP Salt Lake City, Utah September 12, 2002 F-10 OGDEN GOLF CO. CORPORATION BALANCE SHEETS June 30, 2002 and 2001 ASSETS 2002 2001 ---------- ---------- CURRENT ASSETS Cash and cash equivalents $ 17,148 $ 15,444 Inventories 40,719 58,718 Prepaid expenses 401 3,398 ---------- ---------- TOTAL CURRENT ASSETS 58,268 77,560 PROPERTY AND EQUIPMENT 101,874 104,552 OTHER ASSETS Stockholder notes receivable 12,480 12,480 Loan costs, net of accumulated amortization of $952 and $513, respectively 1,246 1,685 Investment in collectible assets 4,000 4,000 ---------- ---------- TOTAL ASSETS $ 177,868 $ 200,277 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 14,809 $ 13,844 Short-term liabilities 22,302 19,809 Accrued expenses 3,787 4,625 Unearned income 1,500 300 Current portion of long-term liabilities 9,441 4,127 Stockholder note payable 2,500 - Income taxes payable 100 100 ---------- ---------- TOTAL CURRENT LIABILITIES 54,439 42,805 LONG-TERM LIABILITIES 118,044 131,944 STOCKHOLDERS' EQUITY Preferred stock, no par value; authorized 5,000,000 shares, no shares outstanding - - Common stock, no par value; authorized 100,000,000 shares, 1,109,500 and 942,500 shares issued and outstanding 146,970 106,470 Stock subscriptions receivable - (2,500) Retained deficit (141,585) (78,442) ---------- ---------- TOTAL STOCKHOLDERS' EQUITY 5,385 25,528 ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 177,868 $ 200,277 ========== ========== The accompanying notes are an integral part of the financial statements. F-11 OGDEN GOLF CO. CORPORATION STATEMENTS OF OPERATIONS Years ended June 30, 2002 and 2001 2002 2001 ---------- ---------- INCOME Sales $ 108,095 $ 119,548 Cost of goods sold 79,414 86,345 GROSS PROFIT 28,681 33,203 EXPENSES General and administrative (Schedule 1) 74,990 87,035 Depreciation and amortization 3,117 3,088 OPERATING LOSS (49,426) (56,920) OTHER INCOME (EXPENSE) Interest expense (13,617) (16,854) Loss before income taxes (63,143) (73,774) Income tax expense 100 100 NET LOSS $ (63,143) $ (73,874) Basic and diluted earnings per share $ (0.06) $ (0.10) ========== ========== The accompanying notes are an integral part of the financial statements. F-12 OGDEN GOLF CO. CORPORATION STATEMENTS OF STOCKHOLDERS' EQUITY Years ended June 30, 2002 and 2001 Common Stock Retained Stock Subscriptions Earnings Shares Value Receivable (Deficit) Total --------- -------- ---------- --------- -------- Balance June 30, 2000 650,000 $ 61,470 - $ (4,568) $ 56,902 Issuance of common stock: Sale of common stock 280,000 42,500 - 42,500 Stock subscriptions 12,500 2,500 (2,500) - - Net loss for year - - - (73,874) (73,874) --------- -------- ---------- --------- -------- Balance June 30, 2001 942,500 106,470 (2,500) (78,442) 25,528 Issuance of common stock Sale of common stock 179,500 43,000 - - 43,000 Stock subscriptions (12,500) (2,500) 2,500 - - Net loss for year - - - (63,143) (63,143) --------- -------- ---------- --------- -------- Balance June 30, 2002 1,109,500 $ 46,970 $ - $(141,585) $ 5,385 ========= ======== ========== ========= ======== The accompanying notes are an integral part of the financial statements. F-13 OGDEN GOLF CO. CORPORATION STATEMENTS OF CASH FLOWS Years ended June 30, 2002 and 2001 2002 2001 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES Net loss $(63,143) $(73,874) Adjustments to reconcile net loss to net cash used by operating activities: Depreciation 2,677 2,648 Amortization 440 440 (Increase) decrease in assets: Inventories 17,999 10,335 Prepaid expense 2,997 1,216 Increase (decrease) in liabilities: Accounts payable 965 6,452 Accrued expenses (838) (223) Unearned income 1,200 300 --------- --------- Net cash used by operating activities (37,703) (52,706) CASH FLOWS FROM INVESTING ACTIVITIES Cash paid for purchases of equipment - (6,600) Cash loaned to stockholder - (12,480) --------- --------- Net cash used by investing activities - (19,080) CASH FLOWS FROM FINANCING ACTIVITIES Change in short-term liabilities 2,493 19,809 Cash received from stockholder loan 2,500 - Cash paid to reduce long-term liabilities (8,586) (2,355) Cash received from issuance of common stock 43,000 42,500 --------- --------- Net cash flows from financing activities 39,407 59,954 --------- --------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,704 (11,832) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR $ 15,444 27,276 --------- --------- CASH AND CASH EQUIVALENTS AT END OF YEAR $ 17,148 $ 15,444 ========= ========= SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION: Cash paid for interest $ 13,617 $ 16,854 Cash paid for income taxes $ 100 $ 100 Non-cash financing activities: Issuance of 12,500 shares of common stock in exchange for a promise to receive future consideration $ - $ 2,500 The accompanying notes are an integral part of the financial statements. F-14 OGDEN GOLF CO. CORPORATION NOTES TO FINANCIAL STATEMENTS June 30, 2002 and 2001 NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES The Company's accounting policies conform to U.S. generally accepted accounting principles. The following policies are considered to be significant: Business Activities The Company is engaged in the marketing and sales of golf equipment and supplies to customers generally located in the State of Utah. Cash and Cash Equivalents Cash equivalents are generally comprised of certain highly liquid investments with maturities of less than three months. Inventories Inventories are valued at the lower of cost or market (first-in, first-out), or net realizable value. Property and Equipment Depreciation expense is computed on the straight-line method in amounts sufficient to write off the cost of depreciable assets over their estimated useful lives. Normal maintenance and repair items are charged to costs and expenses as incurred. The cost and accumulated depreciation of property and equipment sold or otherwise retired are removed from the accounts and gain or loss on disposition is reflected in net income in the period of disposition. Loan Costs Amortization expense is computed on the straight-line method in amounts sufficient to write off loan costs over the life of the loan. Revenue Recognition Revenue is recognized at the point of sale or as goods are delivered to customers and are billable. Recognition of revenue from sale of gift certificates is deferred until the certificates are redeemed for merchandise or expire one year from date of purchase. Income Taxes The Company uses the asset and liability approach to financial accounting and reporting for income taxes. The difference between the financial statement and tax bases of assets and liabilities is determined annually. Deferred income tax assets and liabilities are computed for those differences that have future tax consequences using the currently enacted tax laws and rates that apply to the periods in which they are expected to affect taxable income. Valuation allowances are established, if necessary, to reduce deferred tax assets to the amount that will more likely than not be realized. Income tax expense is the current tax payable or refundable for the period plus or minus the net change in the deferred tax assets and liabilities. F-15 OGDEN GOLF CO. CORPORATION NOTES TO FINANCIAL STATEMENTS June 30, 2002 and 2001 NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Advertising and Promotion All costs associated with advertising and promoting the Company's goods and services are expensed in the period incurred. Use of Estimates in the Preparation of Financial Statements The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE 2 - LIQUIDITY At June 30, 2002, the Company reported a retained deficit of $141,585, incurred a net loss of $63,143 and used $37,703 cash in operations during 2002. The Company has secured commitments from certain individuals to provide equity funding to the Company during the coming year. The Company also plans to register with the Securities and Exchange Commission and list the Company's stock on a public exchange in order to attract additional investment capital. Management believes that such actions will have a positive effect on the Company's results of operations going forward and, as a result, believes it will have sufficient capital resources to meet its current obligations. In the event that cash from operations are insufficient to sustain ongoing operations, the Company may be required to seek additional external funding. There can be no assurance that such funding can be obtained on terms acceptable to the Company. NOTE 3 - CASH AND CASH EQUIVALENTS The Company maintains its cash in bank deposit accounts that, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk with cash and cash equivalents. NOTE 4 - PROPERTY AND EQUIPMENT Property and equipment as of June 30, 2002 and 2001 are detailed in the following summary: Cost: 2002 2001 --------- --------- Buildings and improvements $ 96,600 $ 96,600 Equipment 1,000 1,000 Land 10,000 10,000 --------- --------- 107,600 107,600 Less accumulated depreciation (5,726) (3,048) --------- --------- Net book value $ 101,874 $ 104,552 ========= ========= F-16 OGDEN GOLF CO. CORPORATION NOTES TO FINANCIAL STATEMENTS June 30, 2002 and 2001 NOTE 5 - STOCKHOLDER LOANS RECEIVABLE During the year ended June 30, 2001, the Company loaned $12,480 to one of its stockholders. The loans are noninterest-bearing loans with no specified repayment schedule. The loans have been classified as non-current assets as the Company does not expect to be repaid during the next fiscal year. NOTE 6 - INVESTMENT IN COLLECTIBLE ASSETS The Company owns 12 collectible sets of golf clubs that were purchased at a cost of $4,000. The Company has no intention to sell any of the collectible sets during the coming year. NOTE 7 - SHORT-TERM LIABILITIES During the year ended June 30, 2001, the Company opened and utilized a business credit bankcard with a financial institution. The bankcard has a $30,000 limit and bears interest at a variable rate of prime plus 8.75% (13.5% and 15.75% at June 30, 2002 and 2001, respectively). Payments during 2002 totaled $3,325 including interest of $2,904 ($1,881 including interest of $1,615 in 2001). NOTE 8 - UNEARNED INCOME At June 30, 2002, the Company had outstanding gift certificates totaling $1,500 ($300 in 2001). The gift certificates will expire on various dates throughout the coming year. NOTE 9- STOCKHOLDER NOTE PAYABLE During 2002, the Company executed a note payable to a stockholder in exchange for consideration totaling $2,500. The note bears interest at 10% per annum and will become due during 2003. NOTE 10 - INCOME TAXES The components of income tax expense related to continuing operations are as follows: 2002 2001 --------- --------- Current $ 100 $ 100 Deferred - - --------- --------- $ 100 $ 100 ========= ========= F-17 OGDEN GOLF CO. CORPORATION NOTES TO FINANCIAL STATEMENTS June 30, 2002 and 2001 NOTE 10 - INCOME TAXES (CONTINUED) Current income tax expense relates to state-required minimum income tax payable. The net deferred income taxes in the accompanying balance sheets include the following amounts of deferred income tax assets and liabilities: 2002 2001 ------- ------- Deferred income tax assets: Net operating loss carryforward $27,900 $ 1,300 Organization costs disallowed 100 300 Contributions disallowed 200 - ------- ------- 28,200 1,600 Valuation allowance (28,100) (1,500) ------- ------- Total deferred income tax assets 100 100 Less deferred income tax liabilities: Depreciation differences (100) (l00) ------- ------- Total deferred income tax liabilities (100) (l00) ------- ------- Net deferred income tax asset (liability) $ - $ - ======= ======= The federal net operating loss carryforwards expire beginning in 2020. At June 30, 2002 and 2001, the Company's deferred tax assets are offset by a valuation allowance. In assessing the realization of deferred tax assets, management has considered whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which those temporary differences become deductible. Management has considered the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based on the projections for future taxable income over the periods that the deferred tax assets are deductible, management believes it is more likely than not that the Company will not realize the benefits of these deductible differences. F-18 OGDEN GOLF CO. CORPORATION NOTES TO FINANCIAL STATEMENTS June 30, 2002 and 2001 NOTE 11 - LONG-TERM LIABILITIES The Company's long-term liabilities at June 30, 2002 and 2001 consist of the following: 2002 2001 -------- -------- Note to a bank, interest at 11.25%, due in monthly installments of $1 ,608, including interest, with a balloon payment due in September 2005, secured by property and equipment $127,485 $136,071 Less current portion of long-term liabilities (9,441) (4,127) -------- -------- Long-term liabilities excluding current portion $118,044 $131,944 ======== ======== The scheduled maturities of long-term liabilities as of June 30, 2002 are as follows: 2003 $ 9,441 2004 10,225 2005 11,074 2006 96,745 2007 - Thereafter - --------- $ 127,485 NOTE 12 - STOCKHOLDERS' EQUITY During the year ended June 30, 2001 the Company issued 12,500 shares of common stock to an individual in exchange for a promise to receive future consideration totaling $2,500. The right to receive this future consideration is reflected as stock subscriptions receivable on the balance sheet. During 2002, the Company received full payment of this receivable. NOTE 13 - EARNINGS PER SHARE The following table illustrates the annual computation of basic and diluted EPS for the years ended June 30,2002 and 2001: Income Shares Per-Share (Numerator) (Denominator) Amount ----------- ------------- --------- 2002 - ---- Basic and diluted EPS Net loss available to common stockholders $ (63,143) 1,022,204 $ (0.06) F-19 OGDEN GOLF CO. CORPORATION NOTES TO FINANCIAL STATEMENTS June 30,2002 and 2001 NOTE 13 - EARNINGS PER SHARE (CONTINUED) Income Income Shares Per-Share (Numerator) (Denominator) Amount ----------- ------------- --------- 2001 - ---- Basic and diluted EPS Net loss available to common stockholders $ (73,874) 761,320 $(0.10) =========== ============= ========= NOTE 14 - ADVERTISING The amount charged to advertising expense for the years ended June 30,2002 and 2001 totaled $4,813 and $2,618, respectively. F-20 OGDEN GOLF CO. CORPORATION SCHEDULE 1 GENERAL AND ADMINISTRATIVE EXPENSES Years ended June 30, 2002 and 2001 2002 2001 ------- ------- Accounting and legal $12,528 $12,795 Advertising 4,813 2,618 Bad debts - 516 Bank charges 3,263 2,180 Contributions 530 300 Insurance 1,472 1,661 Meals and entertainment - 401 Miscellaneous 2,635 2,458 Office supplies 498 1,614 Payroll taxes 3,120 4,166 Penalties 9 21 Repairs and maintenance - 1,122 Salaries 39,808 47,750 Security 325 269 Taxes and licenses 793 1,150 Telephone 2,156 3,665 Travel 407 1,915 Utilities 2,633 2,434 ------- ------- TOTAL GENERAL AND ADMINISTRATIVE EXPENSES $74,990 $87,035 ======= ======= F-21 Table of Contents Page Prospectus Summary....................3 Risk Factors..........................6 OGDEN GOLF CO. CORPORATION Use of Proceeds......................13 Dilution and Comparative Information.14 Market for Common Stock and Dividend Policy............................16 Managements Discussion and Analysis..17 Business of Ogden Golf Co. Corporation.......................21 Management...........................27 400,000 SHARES OF Management Compensation..............28 COMMON STOCK Principal Shareholders...............29 Description of Securities............30 -------------------- Plan of Distribution.................34 Selling Shareholders.................37 PROSPECTUS Certain Transactions.................38 Legal Proceedings....................39 -------------------- Shares Eligible for Future Sale......39 Experts..............................39 Legal Matters........................39 ___________, 2003 Disclosure of Commission Position on Indemnification for Securities Act Liabilities..................39 Where You Can Find More Information..40 Financial Statements.................41 UNTIL ____________, 2003, ____ DAYS AFTER THE DATE OF THIS PROSPECTUS, ALL DEALERS THAT BUY, SELL OR TRADE THE SHARES, WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAYBE REQUIRED TO DELIVER A PROSPECTUS. THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATIONS OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS. PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 24. Indemnification of Directors and Officers Sections 16-10a-901 through 909 of the Utah Revised Business Corporations Act empower a Utah corporation to indemnify officers, directors, employees and agents. Pursuant to this authorization, Ogden Golf Co. Corporation has adopted Bylaws which provide for indemnification. Article V of our Bylaws provide as follows: ss. 5.1. Indemnification of Directors' 5.1. Indemnification of Directors. The corporation shall indemnify any individual made a party to a proceeding because he is or was a director of the corporation, against liability incurred in the proceeding, but only if the corporation has authorized the payment in accordance with ss. 16-10a-906 of the Utah Revised Business Corporation Act and a determination has been made in accordance with the procedures set forth in such ss. 16-10a-906 that the director met the standards of conduct in paragraph (a), (b) and (c) below. A. Standard of Conduct. The individual shall demonstrate that: (1) he conducted himself in good faith; and (2) he reasonably believed that his conduct was in, or not opposed to, the corporation's best interests; (3) in the case of any criminal proceeding, he had no reasonable cause to believe his conduct was unlawful. B. No Indemnification Permitted in Certain Circumstances. The Corporation shall not indemnify a director under this ss. 5.1 of Article V: (1) in connection with a proceeding by or in the right of the corporation in which the director was adjudged liable to the corporation; or (2) in connection with any other proceeding charging improper personal benefit to him, whether or not involving action in his official capacity, in which he was adjudged liable on the basis that personal benefit was improperly received by him. C. Indemnification in Derivative Actions Limited. Indemnification permitted under this ss. 5.1 of Article V in connection with a proceeding by or in the right of the corporation is limited to reasonable expenses incurred in connection with the proceeding. II-1 ss. 5.2. Advance Expenses for Directors' 5.2. Advance Expenses for Directors. If a determination is made, following the procedures of ' 16-10a-906 of the Utah Revised Business Corporation Act that the director has met the following requirements; and if an authorization of payment is made, following the procedures and standards set forth in ss. 16-10a-906, then unless otherwise provided in the Articles of Incorporation, the company shall pay for or reimburse the reasonable expenses incurred by a director who is a party to a proceeding in advance of final disposition of the proceeding if: (1) The director furnishes the corporation a written affirmation of his good faith belief that he has met the standard of conduct described in ss. 5.1 of this Article V. (2) the director furnishes the corporation a written undertaking, executed personally or on his belief, to repay the advance if it is ultimately determined that he did not meet the standard of conduct (which undertaking must be in unlimited general obligation of the director but need not be secured and may be accepted without reference to financial ability to make repayment); and (3) a determination is made that the facts then known to those making the determination would not preclude indemnification under ss. 5.1 of this Article V or under the Utah Revised Business Corporation Act. ss. 5.3. Indemnification of Officers, Agents, and Employees Who Are Not Directors' 5.3. Indemnification of Officers, Agents, and Employees Who Are Not Directors. Unless otherwise provided in the Articles of Incorporation, the Board of Directors may indemnify and advance expenses to any officer, employee, or agent of the corporation, who is not a director of the corporation, to any extent consistent with public policy, as determined by the general or specific action of the Board of Directors. As to indemnification for liabilities arising under the Securities Act of 1933 for directors, officers or persons controlling the registrant, we have been informed that in the opinion of the Securities and Exchange Commission this indemnification is against public policy and unenforceable. See section entitled "Disclosure of Commission Position on Indemnification for Securities Act Liabilities." Item 25. Other Expenses of Issuance and Distribution We estimate that our expenses in connection with this registration statement will be as follows: Securities and Exchange Commission registration fee $ 426 Legal fees and expenses 20,000 Underwriters expense allowance 2,000 Accounting fees and expenses 3,000 Printing 1,000 Miscellaneous 574 -------- Total $ 27,000 Item 26. Recent Sales of Unregistered Securities During the last three years, Ogden Golf Co. Corporation sold the securities listed below in unregistered transactions. Each of the sale was sold in reliance on the exemption provided for in Section 4(2) of the Securities Act of 1933, as amended. No underwriting fee or other compensation was paid in connection with the issuance of shares. Consideration Name Date Shares Issued Paid - ---- ---- ------------- ---- Larsen, Paul 5/10/00 500,000 Scharmann, Mark A. 6/30/00 50,000 $0.10 Knudson, David 6/30/00 50,000 $0.10 Taylor, Elliott N. 6/30/00 50,000 $0.10 Larsen, Paul 10/11/00 50,000 $0.10 Lehmberg, David 11/18/00 25,000 $0.20 Stagg, Niel 5/3/01 25,000 $0.20 Scharmann, Stephen 5/29/01 10,000 $0.25 Scharmann, Darrell L. 2/21/01 20,000 $0.25 Larsen, Paul W. 10/11/00 100,000 $0.10 Chapman Spira & Carson, LLC 6/15/01 12,500 $0.20 David Anthony Investments 6/15/01 12,500 $0.20 Witz, Barry 6/15/01 12,500 $0.20 First Atlantis Trading Corp. 6/15/01 12,500 $0.20 Hyacinth Resources 9/1/01 10,000 $0.20 Roycemore Corp. 9/1/01 32,500 $0.25 Grilz, Richard 10/9/01 10,000 $0.25 Kaminska, Curtis 11/28/01 10,000 $0.25 OM Capital Corp. 11/28/01 20,000 $0.25 Roycemore Corp. 2/15/02 10,000 $0.25 Grilz, Bill 2/15/02 10,000 $0.25 Yamashita, Betty Hong 4/18/02 4,000 $0.25 Dolan, John W. 4/18/02 4,000 $0.25 Marriott, Rodney G. 4/18/02 4,000 $0.25 Hall, Wade D. 5/31/02 10,000 $0.25 George, Lawrence E. 5/31/02 10,000 $0.25 Hanley, Lori 8/24/01 10,000 $0.20 Larsen, Paul 1/30/02 10,000 $0.25 Scharmann, Mark A. 2/20/02 10,000 $0.25 Roycemore Corp 4/5/02 10,000 $0.25 Hyacinth Resources 9/1/01 2,500 $0.20 Hanley, Lori 8/24/01 2,500 $0.20 Petersen, Robert 10/15/02 10,000 $0.20 Rubin, Mike 10/18/02 5,000 $0.20 Warsinke, Michael 10/18/02 12,500 $0.20 Maxfield, Brent 10/18/02 10,000 $0.25 Richard S. Robinson 2/7/03 25,000 $0.20 II-3 Rod H. Larsen 2/7/03 5,000 $0.20 Dan C. Rich 2/15/03 1,000 $0.20 Croft Investments 2/7/03 25,000 $0.20 Cory Powers 4/1/03 10,000 $0.20 In December 2002, the Company sold shares of its Series A Preferred Stock to the following: Name Shares Consideration Paid - ---- ------ ------------- ---- Hyacinth Resources 70,000 $14,000.00 Mark A. Scharmann 20,000 4,000.00 Northcliffe Consulting 5,000 $ 1,000.00 in services Item 27. Exhibits. The following exhibits are filed as part of this registration statement. Exhibit numbers correspond to the exhibit requirements of Regulation S-B. Exhibit Number Description ------- ----------- 1.1 Underwriting Agreement 1.2 Form of Escrow Agreement 1.3 Underwriter Warrant Agreement 1.4 Participating Dealers' Agreement 3.1 Articles of Incorporation 3.2 Amendment to Articles of Incorporation 3.3 Bylaws 4.1 Specimen common stock certificate 5.1 Opinion Regarding Legality and Consent - Cohne, Rappaport & Segal 10.1 Promissory Note - Barnes Bank 10.2 Business Loan Agreement 10.3 Security Agreement 21.1 Subsidiaries of Registrant 23.1 Consent of Wisan, Smith, Rocker & Prescott, LLP 24.1 Power of Attorney (Included on Signature Page) 99.1 Certification of CEO 99.2 Certification of CFO Item 28. Undertakings. 1. To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement to: (i) include any prospectus required by Section 10 (a) (3) of the Securities Act; (ii) reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information set forth in the Registration Statement, and II-4 (iii) include any additional or changed material information with respect to the plan of distribution. 2. That for the purpose of determining any liability under the Securities Act, each post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. 3. To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. 4. That for the purpose of determining any liability under the Securities Act, to treat the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant under Rule 424(b)(1) or (4), or 497(h) under the Securities Act as part of this Registration Statement as of the time the Commission declared it effective. Insofar as indemnification for liabilities under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in a successful defense of any action, suit or proceeding) is asserted by a director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issuer. II-5 SIGNATURES In accordance with the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form SB-2 and authorizes this registration statement to be signed on its behalf by the undersigned, in the City of Ogden, State of Utah on May 7, 2003. OGDEN GOLF CO. CORPORATION By /s/ Mark A. Scharmann ------------------------------- Mark A. Scharmann President Principal Executive Officer By /s/ Robert R. Peterson ------------------------------- Robert R. Peterson Secretary/Treasurer Principal Financial Officer KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Mark A. Scharmann his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place, and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. In accordance with the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated. Date Title Signature May 7, 2003 President and /s/ Mark A. Scharmann Director Mark A. Scharmann May 7, 2003 Sec/Treas/and /s/ Robert R. Petersen Director Robert R. Petersen May 7, 2003 Vice President /s/ Douglas P. Morris Director Douglas P. Morris May 7, 2003 Director /s/ Paul Larsen Paul Larsen May 7, 2003 Director /s/ Curtis Kaminska Curtis Kaminska II-6 EX-1 3 ex1-1_2003.txt Exhibit 1.1 Form SB-2 Ogden Golf Co. Corporation OGDEN GOLF CO. CORPORATION 1782 Washington Boulevard Ogden, UT 84404 UNDERWRITING AGREEMENT March __, 2003 ACAP Financial, Inc. 47 West 200 South, Suite 101 Salt Lake City, Utah 84101 Gentlemen: Ogden Golf Co. Corporation, (the "Company"), a Utah corporation, proposes to issue and sell through you, (the "Underwriter"), up to 400,000 Shares of the Company's no par value Common Stock for $.50 per Share ("Share"). The offering will be a "best efforts all or none" offering for the first 300,000 Shares and a "best efforts" offering thereafter. The offering of the Shares is further described in the Registration Statement filed on Form SB-2 with the United States Securities and Exchange Commission (the "Commission"). 1. Representations and Warranties of the Company. In order to induce the Underwriter to enter into this Agreement, the Company represents and warrants as follows: A. The Company has filed, a Registration Statement on Form SB-2 relating to the Shares with the Commission pursuant to the Securities Act of 1933, (the "Act"), as amended. The Company has furnished to the Underwriter, copies of the Registration Statement together with all amendments and exhibits. As used in this Agreement, the term "Registration Statement" means the Registration Statement, including the Prospectus, the Exhibits, and the financial statements, and all amendments including any amendments after the effective date of the Registration Statement. The term "Prospectus" means the Prospectus filed as a part of Part I of the Registration Statement, including all pre-effective and post-effective amendments and supplements thereto. B. The Registration Statement and all other documents previously filed or filed after the date hereof with the Commission, conform and will conform with all of the requirements of the Act in all material respects. Neither the Registration Statement, the Prospectus, nor the other material filed or to be filed with the Commission, contain nor will contain any untrue statements of material fact nor are there or will there be any omissions of material facts required to be stated therein or that are necessary to make the statements therein not misleading. This warranty does not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by and with respect to you, or any dealer through you, expressly for use in the Registration Statement or Prospectus or any amendment or supplement thereto. C. The Company will obtain a CUSIP number for its Common Stock and the Company has used its best efforts to qualify the Shares for offering in every state reasonably designated by the Underwriter. The materials previously filed or filed after the date hereof with any state do not and will not contain any untrue statements of material fact nor are there or will there be any omissions of material facts required to be stated therein or that are necessary to make the statements therein not misleading. D. The outstanding capital stock of the Company has been duly and validly authorized, issued, and is fully paid and non-assessable and conforms to all statements made in the Registration Statement and Prospectus with respect thereto. The Shares have been duly and validly authorized and, when issued and delivered against payment as provided in E-1 this Agreement, will be validly issued, fully paid, and non assessable. The Shares, upon issuance, will not be subject to the pre-emptive rights of any shareholders of the Company. The Underwriter Warrants, as hereafter described, when sold and delivered, will constitute valid and binding obligations of the Company enforceable in accordance with their terms. A sufficient number of shares of Common Stock have been reserved for issuance upon exercise of the Underwriter Warrants. The Shares will conform to all statements in the Registration Statement and Prospectus. E. The Company has been legally incorporated and is now, and always during the period of the offering will be, a validly existing corporation under the laws of the State of Utah, lawfully qualified to conduct the business for which it was organized and which it proposes to conduct. The Company will always, during the period of the offering, be qualified to conduct business as a foreign corporation in each jurisdiction where the nature of its business requires such qualification. F. The Company has an authorization capitalization of 100,000,000 shares of Common Stock (no par value) and 5,000,000 shares of preferred stock. A total of 100,000 shares of preferred stock have been designated Series A Preferred Stock. A total of 1,174,500 shares of the Company's Common Stock is presently issued and outstanding. A total of 95,000 shares of Series A Preferred Stock are issued and outstanding. Subject to certain conditions, each share of Series A Preferred stock may be converted into 10 shares of common stock. There are no outstanding options, warrants, or other rights to purchase securities of the Company, however characterized, except as described in the Registration Statement. There are no securities of the Company, however characterized, held in its treasury. With respect to the offer to sell, offer to purchase, or purchase of any of its securities, the Company has not made any intentional or reckless violations of the anti-fraud provisions of the federal securities laws, rules, or regulations promulgated thereunder or the laws, rules, or regulations of any jurisdiction wherein such securities transactions or solicitations occurred. G. The Company's sole subsidiary is Ogden Discount Golf, Inc. H. The financial statements, together with related schedules and notes, included in the Registration Statement and Prospectus, present fairly the financial condition of the Company and are reported upon by independent public accountants according to generally accepted accounting principles. I. Except as disclosed in the Registration Statement and the Prospectus, the Company does not have any contingent claims or regulatory action. Further, except as disclosed in the Registration Statement and definitive Prospectus, and prior to the close of the offering: (i) there shall not be any material adverse change in the management or conditions, financial or otherwise, of the Company or in its business taken as a whole; (ii) there shall not have been any material transaction entered into by the Company other than transaction in the ordinary course of business; (iii) the Company shall not have incurred any material obligations, contingent or otherwise, which are not disclosed in the Registration Statement and the Prospectus; (iv) there shall not have been nor will there be any change in the capital or long-term debt of the Company; and (v) the Company has not and will not have paid or declared any dividends or other distributions on its common shares. J. The Company's securities, however characterized, are not subject to pre-emptive rights. K. The Company will have the legal right and authority to enter into this Underwriting Agreement upon its execution, to effect the proposed sale of the Shares, and to effect all other transactions contemplated by this Agreement. E-2 L. The Company knows of no person who rendered any services in connection with the introduction of the Company to the Underwriter. No broker's or other finder's fees are due and payable by the Company and none will be paid by it in connection with the sale of the Shares. M. The Company is eligible to use Form SB-2 for the offering of the Shares. N. The Company will not file any amendment or supplement to the Registration Statement, Prospectus, or Exhibits if the Underwriter and its counsel have not been previously furnished a copy, or if the Underwriter or its counsel, have objected in writing to the filing of the amendment or supplement. O. The Company has filed all tax returns required to be filed and is not in default in the payment of any taxes which have become due pursuant to any law or any assessment. P. All original documents and other information relating to the Company's affairs has and will continue to be made available upon request to the Underwriter and to its counsel at the office of the Company. Copies of any such documents will be furnished upon request to the Underwriter and to its counsel. Included within the documents made available, have been at least the Articles of Incorporation and any amendments, minutes of all of the meetings of the incorporators, directors, and shareholders, all financial statements and copies of all contracts, leases, patents, copyrights, licenses, or agreements to which the Company is a party or in which the Company has an interest. Q. The Company will use the proceeds from the sale of the Shares as set forth in the Registration Statement and Prospectus. R. There are no contracts or other documents required to be described in the Registration Statement or to be filed as Exhibits to the Registration Statement which have not been described or filed as required. S. The Company is not in material default under any of the contracts, leases, licenses, or agreements to which it is a party. The proposed offering of the Shares will not cause the Company to become in material default under any of its contracts, leases, subleases, patents, copyrights, licenses, or agreements nor will it create a conflict between the Company and any of the contracting parties to the contracts, leases, and other agreements. Further, the Company is not in material default in the performance of any obligation, agreement, or condition contained in any debenture, note, or other evidence of indebtedness or any indenture or loan agreement of the Company. The execution and delivery of this Agreement and the consummation of the transactions herein contemplated and compliance with the terms of this Agreement will not conflict with or result in a breach of any of the material terms, conditions, or provisions of, or constitute a material default under the Articles of Incorporation or Bylaws of the Company, as amended, or any note, indenture, mortgage, deed of trust, or other agreement or instrument to which the Company is a party or by which it or any of its property is bound, or any existing law, order, rule, regulation, writ, injunction, or decree of any government, governmental instrumentality, agency or body, arbitration tribunal, or court, domestic or foreign, having jurisdiction over the Company or its property. The consent, approval, authorization, or order of any court or governmental instrumentality, agency, or body is not required for the consummation of the transactions herein contemplated except such as may be required under the Act, under the blue sky or securities laws of any or jurisdiction, or the rules of the NASD. T. The Company has not made any representation, whether oral or in writing, to anyone whether an existing shareholder or not, that any of the Shares will be reserved for or directed to them during the proposed public offering. E-3 All of the above representations and warranties shall survive the performance or termination of this Agreement. 2. Representation and Warranties of the Underwriter. The Underwriter represents and warrants as follows: A. It is registered as a broker-dealer with the Commission, in good standing with the Utah Securities Division, and is registered, to the extent registration is required, with the appropriate governmental agency in each state in which it offers or sells the Shares and is a member of the National Association of Securities Dealers, Inc., ("NASD"), and will use its best efforts to maintain such registrations, qualifications, and memberships throughout the term of the offering. B. To the knowledge of the Underwriter, no action or proceeding is pending against the Underwriter or any of its officers or directors concerning the Underwriter's activities as a broker or dealer that would affect the Company's offering of the Shares. C. The Underwriter will offer the Shares only in those states and in the quantities that are identified in the blue sky memorandum from the Company's counsel to the Underwriter that the offering of the Shares has been qualified for sale under the applicable state statutes and regulations. The Underwriter, however, may offer the Shares in other states if (i) the transaction is exempt from the registration requirements in that state; (ii) the Company's counsel has received notice ten days prior to the proposed sale; and (iii) the Company's counsel does not object within said ten day period. D. The Underwriter, in connection with the offer and sale of the Shares and in the performance of its duties and obligations under this Agreement, agrees to use its best efforts to comply with all applicable federal laws; the laws of the states or other jurisdictions in which the Shares are offered and sold; and the rules and regulations of the NASD. E. The Underwriter is a corporation duly organized, validly existing, and in good standing under the laws of the State of Utah with all requisite power and authority to enter into this Agreement and to carry out its obligations hereunder. F. This Agreement has been duly authorized, executed, and delivered by the Underwriter and is a valid agreement on the part of the Underwriter. G. Neither the execution of this Agreement nor the consummation of the transactions contemplated hereby will result in any breach of any of the terms or conditions of, or constitute a default under, the Articles of Incorporation or Bylaws of the Underwriter or any indenture, agreement, or other instrument to which the Underwriter is a party or violate any order directed to the Underwriter of any court or any federal or state regulatory body or administrative agency having jurisdiction over the Underwriter or its affiliates. H. The Underwriter knows of no person who rendered any services in connection with the introduction of the Company to the Underwriter. No person acting by, through, or under the Underwriter will be entitled to receive from the Underwriter of from the Company any finder's fees or similar payments. I. The written information provided by the Under-writer for inclusion in the Registration Statement and Prospectus consists of certain information on the front and back Prospectus. E-4 J. The Underwriter will, reasonably promptly after the closing date, supply the Company with all information required from the Underwriter for the completion of Form SR and such additional information as the Company may reasonably request to be supplied to the securities commissions of such states in which the Shares have been qualified for sale. All of the above representations and warranties shall survive the performance or termination of this Agreement. 3. Employment of the Underwriter. In reliance upon the representations and warranties and subject to the terms and conditions of this Agreement: A. The Company employs the Underwriter as its exclusive agent to sell for the Company's account the Shares, on a cash basis only, at a price of $.50 per Share. The Underwriter shall offer the Shares solely as an agent for the Company. The Underwriter agrees to use its best efforts, as agent for the Company, to sell the Shares subject to the terms and conditions set forth in this Agreement. It is understood between the parties that there is no firm commitment by the Underwriter to purchase any or all or the Shares. B. The obligation of the Underwriter to offer the Shares is subject to receipt by it of written advice from the Commission that the Registration Statement is effective, is subject to the Shares being qualified for offering under applicable laws in the states as may be reasonably designated by the Underwriter, is subject to the absence of any prohibitory action by any governmental body, agency, or official, and is subject to the terms and conditions contained in this Agreement and in the Registration Statement covering the offering to which this Agreement relates. C. The Company and the Underwriter agree that unless a minimum of 300,000 Shares are sold within one year after the Effective Date, the agency between the Company and the Underwriter will terminate. The parties agree that the maximum number of Shares to be sold is 400,000. If the agency between the Company and the Underwriter terminates, prior to the sale of 300,000 Shares of the Company's Common Stock, the full proceeds which have been paid for the Shares hall be returned to the purchasers. Prior to the sale of all of the Shares to be offered, all proceeds received from the sale of the Shares will be deposited in an escrow account entitled "Ogden Golf Co. Corporation, Escrow Account" with Irwin Bank , Salt Lake City, Utah. D. The Company, the Underwriter, and Irwin Bank , Salt Lake City, Utah, will, prior to the beginning of the offering of the Shares, enter into a fund escrow agreement in form satisfactory to the parties. The parties mutually agree to faithfully perform their obligations under the fund escrow agreement. The Underwriter will transmit by twelve noon of the next business day following receipt the funds into the escrow account in accordance with Rule 15(c)2-4 of the Securities Exchange Act of 1934, as amended. The parties agree that all checks for subscription of Shares in the offering will be made payable to "Irwin Bank, Escrow Agent for Ogden Golf Co. Corporation. E. The Underwriter shall have the right to associate with other underwriters and dealers as it may determine and shall have the right to grant such persons such concessions out of the commissions to be received by the Underwriter as the Underwriter may determine, under and pursuant to a Participating Dealer Agreement in the form filed as an Exhibit to the Registration Statement. F. Subject to the sale of at least 300,000 Shares, the Company agrees to pay to the Underwriter an underwriting commission computed at the rate of $.055 (11% of the public offering price) for each of the Shares sold by the Under-writer at the public offering price of $.50 per Share. This E-5 commission shall be payable in certified funds upon the release of the funds which have been deposited in the escrow account. G. Subject to the sale of at least 300,000 Shares, the Company will pay the Underwriter an accountable expense allowance equal to 1% of the gross offering proceeds. Such expense allowances shall be paid at the break of escrow. In the event the offering is terminated, the Underwriter will be reimbursed only for its actual, accountable out-of-pocket expenses. 4. Expenses of the Company. The Company agrees that it will pay the following fees and expenses: A. All fees and expenses of its legal counsel who will be engaged to prepare certain information, documents, and papers for filing with the Commission and with state or local securities authorities; B. All fees and expenses of its accountants incurred in connection with the offering of the Shares and the preparation of all documents and filings made as part of the offering; C. All costs in issuing and delivering the Shares; D. All costs of printing and delivering to the Underwriter and dealers as many copies of the Registration Statement and amendments, preliminary Prospectuses, and definitive Prospectuses as reasonably requested by the Underwriter; E. All of the Company's mailing, telephone, travel, clerical, and other office costs incurred or to be incurred in connection with the offering of the Shares; F. All fees and costs which may be imposed by the Commission, the various state or local securities authorities, and the NASD for review of the offering of the Shares; G. All other expenses incurred by the Company in performance of its obligations under this Agreement. 5. Warrants. A. Subject to the sale of a minimum of 300,000 Shares, the Company agreed to sell to the Underwriter Warrants to purchase Common Stock, ("Warrants"), for a purchase price of $100, entitling the Underwriter to purchase one Share of the Company's Common Stock for each ten shares sold in the offering. B. The Warrants may not be exercised for a period of 12 months following the effective date. The Warrants will be exercisable for a period of four years, such period to begin 12 months after the effective date. If the Warrants are not exercised during their term, they will by their terms, automatically expire. The purchase price of the shares underlying the Warrants will be $.83 per share during the period that the Warrants are exercisable. The Company will set aside and at all times have available, a sufficient number of shares of its Common Stock to be issued upon the exercise of the Warrants. The shares underlying the Warrants are hereinafter called "Warrant Shares" which term shall include all shares of Common Stock that have been issued upon the exercise of the Warrants and all unissued shares of Common Stock underlying the Warrants. The Warrants may not be sold, transferred, assigned, or hypothecated for a period of 12 months after the effective date except to officers of the Underwriter, to participating dealers, and to officers of participating dealers. E-6 C. The Warrants will be evidenced by a Warrant Agreement executed by the Company and delivered to the Underwriter, which shall contain such terms and conditions as are required by the Underwriter, including anti-dilution provisions reasonably acceptable to the Underwriter relating to stock splits, stock dividends, and other like matters. Any transfer of the Warrants by the Underwriter to any person must be made in compliance with the Act. D. Upon written request of the holder(s) of at least 67% of the Warrant Shares, whether issued or not, made at any time within the period beginning one year and ending five years after the effective date, the Company will file, no more than once, a Registration Statement or Regulation A Offering Statement under the Act, registering or qualifying the Warrants and Warrant Shares. The Company will use its best efforts to qualify or register the Warrants and Warrants Shares for sale in at least the same states as the Shares were registered or qualified. The Company must file a Registration Statement if all Warrants and Warrant Shares cannot be sold under a Regulation A Offering Statement because of the limited exemption. If Warrants are registered or qualified, the Company agrees to take whatever actions are necessary so that during the next 12 months after the effective date of such registration or qualification, a current Registration Statement or Regulation A Offering Statement relating to the Warrant Shares will be effective with the Commission. The Company agrees to use its best efforts to cause the Registration Statement or Regulation A Offering Statement to become effective. All expenses of such registration or qualification including, but not limited to, legal, accounting, and printing fees, will be borne by the Company. E. The Company agrees that, if at any time within the period beginning one year and ending five years after the effective date, it should file a Registration Statement with the Commission pursuant to the Act or file a Regulation A Offering Statement under the Act, regardless of whether some of the holder(s) of the Warrants and Warrant Shares have availed itself (themselves) of the right provided in paragraph 5(e) above, the Company, at its own expense, will offer the holder(s) the opportunities to register or qualify the Warrants and Warrant Shares, limited in the case of a Regulation A offering to the amount of the available exemption. The Company's obligations pursuant to this paragraph 5(e), shall only be in effect if the holders of at least 50% of the Warrant Shares accept the Company's offer. This paragraph is not applicable to a Registration Statement filed by the Company with the Commission on Form S-4 or Form S-8, or any other inappropriate form. F. In addition, the Company will cooperate, within the period beginning one year and ending five years after the effective date, with the then holder(s) of at least 50% of the Warrant Shares in preparing and signing any Registration Statement or Regulation A Offering Statement, in addition to the Registration Statements and Regulation A Offering Statements discussed above, required in order to sell or transfer the Warrants or Warrant Shares and will supply all information required, but such additional Registration Statement or Offering Statement shall be at the then holder(s)' cost and expense. G. The Company will not be required to pay any under-writing commissions, discounts, or similar expenses relating to the Warrants and/or Warrant Shares that are registered or qualified pursuant to paragraph 5(d), (e), or (f) of this Agreement. 6. Threat of Regulatory Action. The Company and the Underwriter agree to advise each other immediately and confirm in writing the receipt of any threat of or the initiation of any steps or procedures which would impair or prevent the right to offer the Shares or the issuance of any "suspension orders" or other prohibitions preventing or impairing the proposed offering of the Shares. In the case of the happening of any such event, neither the Company nor the Underwriter will acquiesce in such steps, procedures, or suspension orders if such acquiescence would adversely affect the other party and, in such event, each party agrees to actively defend any such actions or orders unless both E-7 parties agree in writing to acquiesce in such actions or orders or unless counsel for each party advises the parties that the probability of successfully defending against such action or orders is remote. 7. Further Agreements of the Company. The Company further agrees with the Underwriter as follows: A. The Company will use its best efforts to cause the Registration Statement and any Post-Effective Amendment subsequently filed, to become effective as promptly as reasonably practicable and will promptly advise the Underwriter, and will confirm such advice in writing, of the following: (i) when the Registration Statement shall have become effective and when any Amendment thereto shall have become effective and when any Amendment of or supplement to the Prospectus shall be filed with the Commission; (ii) when the Commission shall make a request or suggestion for any amendment to the Registration Statement or the Prospectus or for additional information and the nature and substance thereof; (iii) of the issuance by the Commission of an order suspending the effectiveness of the Registration Statement pursuant to Section 8 of the Act or of the initiation of any proceedings for that purpose; (iv) of the happening of any event which in the judgment of the Company makes any material statement in the Registration Statement or Prospectus untrue or which required the making of any changes in the Registration Statement or Prospectus in order to make the statements therein not misleading; and (v) of the refusal to qualify or the suspension of the qualification of the Shares for offering or sale in any jurisdiction, or of the institution of any proceedings for any of such purposes. The Company will use every reasonable effort to prevent the issuance of any such order or of any order preventing or suspending such use, to prevent any such refusal to qualify or any such suspension and to obtain as soon as possible a lifting of any such order, the reversal of any such refusal and the termination of any such suspension. B. The Company will prepare and file promptly with the Commission, upon request of the Underwriter, such amendments or supplements to the Registration Statement or Prospectus, in form satisfactory to counsel to the Company, as in the opinion of counsel to the Underwriter may be necessary or advisable in connection with the offering or distribution of the Shares and will use its best efforts to cause the same to become effective as promptly as possible. C. The Company will use its best efforts to qualify or register the Shares for sale under the securities or "blue sky" laws of such jurisdictions as the Underwriter may reasonably designate and will make such applications and furnish such information as may be required for that purpose and to comply with such laws, provided the Company shall not be required to qualify as a foreign corporation or a dealer in securities or to execute a general consent to service of process in any jurisdiction in any action other than one arising out of the offering or sale of the Shares. The Company will, from time to time, prepare and file such statements and reports as are or may be required to continue such qualification in effect for so long a period as the Underwriter may reasonably request for the purposes of distribution of the Shares. D. The Company will provide the Underwriter and its counsel with copies of all applications for the registration of Shares filed with the various state authorities and will provide the Underwriter and its counsel with copies of all comments and orders received from these authorities. E. The Company will deliver to the Underwriter and to other broker-dealers as requested by the Underwriter as many copies of the definitive Prospectus as the Underwriter may reasonably request during the period of the offering. F. The Company will furnish the Underwriter for so long as the Company's Common Stock is subject to the periodic reporting requirements of the Securities Exchange Act of 1934, and for so long as the Underwriter is a principal market-maker in such Common Stock with: E-8 (i) Within 90 days after the close of each fiscal year of the Company, a financial report of the Company and its subsidiaries, if any, on a consolidated basis, such report to include such information in such form as the Company shall be required to include in reports for that fiscal year to be filed with the Commission and such report to be certified by independent public accountants; (ii) Within 60 days after the end of each quarterly fiscal period of the Company other than the last quarterly fiscal period in any fiscal year, copies in printable form of the financial statements of the Company and its subsidiaries, if any, on a consolidated basis, for that period and as of the end of that period, which financial statements shall include a narrative discussion of such financial statements and of the business conducted by the Company and its subsidiaries, if any, during such fiscal quarter and such information in such form as the Company shall be required to include in reports for that period to be filed with the Commission, all subject to year-end adjustment, signed by the principal financial or accounting officer of the Company; (iii) As soon as is available, a copy of each report of the Company mailed to shareholders or filed with the Commission; (iv) Copies of all news, press, or public information releases when made; (v) Upon request in writing from the Underwriter, such other information as may reasonably be requested concerning the properties, business, and affairs of the Company and its subsidiaries, if any. G. The Company agrees to notify the Underwriter immediately within the 90 day period after the effective date and such longer period if the offering is still continuing, of any event that materially affects the Company or its securities and that should be set forth in an amendment or supplement to the Prospectus in order to make the statements made therein not misleading. Similarly, the Company agrees to, as soon as possible thereafter, prepare and furnish to the Underwriter as many copies as the Underwriter may request of an amended Prospectus or a supplement to the Prospectus in order that the Prospectus as amended or supplemented will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or that is necessary in order to make the statements made therein not misleading. H. The Company will file with the Commission the required reports on Form SR and will file with the appropriate state securities commissioners any sales and other reports required by the rules and regulations of such agencies and will supply copies to the Underwriter. I. Except with the Underwriter's approval, the Company agrees that the Company will not do the following until (i) the completion of the offering of the Shares, (ii) the termination of this Agreement, or (iii) 90 days after the effective date, whichever occurs later: (i) Undertake or authorize any change in its capital structure or authorize, issue, or permit any public or private offering of additional securities; (ii) Authorize, create, issue, or sell any funded obligations, notes, or other evidences of indebtedness, except in the ordinary course of business and within 12 months of their creation; (iii) Consolidate or merge with or into any other corporation; or E-9 (iv) Create any mortgage or any lien upon any of its properties or assets except in the ordinary course of its business. J. For so long as the Company is a reporting company under either Section 12(g) or 15(d) of the Securities Exchange Act of 1934, the Company will, at its expense: (i) as promptly as possible after each annual fiscal period, render and distribute annual reports to its shareholders prepared in accordance with the Securities Exchange Act of 1934, and the rules and regulations promulgated thereunder, which will include audited statements of its operations and changes of financial position during such period and its balance sheet as of the end of such period, as to which statements the Company's independent certified public accountants shall have rendered an opinion; and (ii) as promptly as possible after each quarterly fiscal period, other than the last quarterly fiscal period of each year, render and distribute quarterly reports to its shareholders which will include at least the same information which is included in the Company's quarterly reports filed with the Commission under wither Section 13 and 15 (d) of the Securities Exchange Act of 1934, and the rules and regulations promulgated thereunder. In the event the Company has an active subsidiary or subsidiaries, the financial statements contained in all such reports shall be on a consolidated basis to the extent such consolidation is applicable. K. The Company has appointed Fidelity Transfer Company, Salt Lake City, Utah, as transfer agent for the Company's Common Stock. L. Within 30 days after the successful termination of the offering of the Shares, the Company agrees to submit information about the Company to be included in various securities manuals, including Moody's, Over-The-Counter Manual, or Standard & Poor's, Standard Corporation Records, to facilitate secondary trading in the Company's Common Stock. M. The Company agrees to cause the stock certificates of all of the current shareholders of the Company and of any future officers or directors of the Company to be clearly legended as being restricted against transfer without compliance with the Act and to cause the Company's transfer agent to put stop transfer instructions against such stock certificates. 8. Company's Indemnification. A. The Company agrees to indemnify, defend, and hold harmless the Underwriter and each person who controls the Underwriter within the meaning of Section 15 of the Act, from and against any and all losses, claims, damages, liabilities, and expenses (including reasonable legal or other expenses) incurred by the Underwriter in connection with defending or investigating any such claims of liabilities, whether or not resulting in any liability to the Underwriter, which the Underwriter may incur under the federal or state securities laws and regulations thereunder, state statutes or at common law or otherwise, but only to the extent that such losses, claims, damages, liabilities, and expenses shall arise out of or be based upon a violation of alleged violation of the federal or state securities laws or regulations promulgated thereunder, a state statute, or the common law resulting from any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or in any application or other papers filed with the various state securities authorities (hereinafter collectively called "Blue Sky Applications") or shall arise out of or be based upon any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided, however, that this indemnity agreement shall not apply to any such losses, claims, damages, liabilities, or expenses arising out of or based upon any such violation based upon a statement or omission made in reliance upon written information furnished for use in the Registration Statement or in a Blue Sky Application by the Underwriter. E-10 B. The foregoing indemnity of the Company in favor of the Underwriter shall not be deemed to protect the Underwriter against any liability to which the Underwriter would otherwise be subject by reason of willful misfeasance, bad faith, or gross negligence in the performance of the Underwriter's obligations and duties under the Act or this Agreement. C. The Underwriter agrees to give the Company an opportunity to participate in the defense or preparation of the defense of any action brought against the Underwriter to enforce any such claim or liability and the Company shall have the right so to participate. The agreement of the Company under the foregoing indemnity is expressly conditioned upon notice of any such action having been sent by the Underwriter to the Company, by letter or telegram (addressed as provided in this Agreement), promptly after the receipt of written notice of such action against the Underwriter such notice either being accomplished by copies of papers served or filed in connection with such action or by a statement of the nature of the action to the extent known to Underwriter. Failure to notify the Company as herein provided shall not relieve it from any liability which it may have to the Underwriter other than on account of the indemnity agreement contained in this paragraph 7. 9. Underwriter's Indemnification. A. The Underwriter likewise agrees to indemnify, defend, and hold harmless the Company and each person who controls the Company within the meaning of Section 15 of the Act, against any and all losses, claims, damages, expenses, and liabilities to which the Company may become subject, arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or in any Blue Sky Application or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, resulting from the use of written information furnished to the Company by the for use in the preparation of the Registration Statement or in any Blue Sky Application. B. The Company agrees to give the Underwriter an opportunity to participate in the defense or preparation of the defense of any action brought against the Company to enforce any such claim or liability and the Underwriter shall have the right to so participate. The Underwriter's liability under the foregoing indemnity is expressly conditioned upon notice of any such action having been sent by the Company to the Underwriter by letter or telegram (addressed as provided for in this Agreement), promptly after the receipt by the Company of written notice of such action against the Company, such notice either being accompanied by copies of papers served or filed in connection with such action or by a statement of the nature of the action to the extent known to the Company. Failure to notify the Underwriter as herein provided shall not relieve the Underwriter from any liability which the Underwriter may have to the Company other than on account of the indemnity agreement contained in this paragraph. C. The provisions of paragraphs 7 and 8 shall not in any way prejudice any right or rights which the Underwriter may have against the Company or the Company may have against the Underwriter under any statute, including the Act, at common law or otherwise. D. The indemnity agreements contained in paragraph 7 and 8 shall survive the termination of this Agreement and shall inure to the benefit of the Company, the Underwriter, their respective successors, and the persons specified in Section 16 below, and their respective heirs, personal representatives, and successors and shall be valid irrespective of any investigation made by or on behalf of the Underwriter or the Company. 10. Conditions Precedent to the Obligations of the Underwriter. All obligations of the Underwriter under this Agreement are subject to the following conditions precedent: 11 A. The Underwriter shall have completed a review of the form and content of the Registration Statement and Prospectus, of the organization and present legal status of the Company and of the legality and validity of the authorization and issuance of the issued and outstanding stock of the Company and of the Shares. B. The Company shall have performed all of its obligations under this Agreement. All of the statements, representations, and warranties contained in this Agreement shall be complete and true. C. From the date of this Agreement until the completion of the offering, no material adverse changes shall have occurred in the business, properties, nor assets of the Company other than changes occurring in the ordinary course of business. D. From the date of this Agreement until the completion of the offering, no claims or litigation shall have been instituted or threatened against the Company for substantial amounts or which would materially adversely affect the Company, its business, or its property, and no reasonable basis exists for such claims or threats. Further, no proceeding shall have been instituted or threatened against the Company before any regulatory body wherein an unfavorable ruling would have a material adverse effect on the Company. E. From the date of this Agreement until the completion of the offering of the Shares, no material adverse change shall have occurred in the operation, financial condition, management, or credit of the Company or in any conditions affecting the prospectus of its business. F. From the date of this Agreement until the completion of the offering, the Company shall not have sustained any loss on account of fire, flood, accident, or calamity of such character as materially adversely affects its business or property, regardless or whether or not the loss has been insured. G. On the date of the release of the funds in the Escrow Account to the Company, the Underwriter shall have received from the president or vice president and the treasurer of the Company, certificates dated as of such date, in form satisfactory to the Underwriter, to the effect that: (i) The representations and warranties of the Company contained in paragraph 1 of this Agreement are complete and true. (ii) All of the conditions precedent in this Agreement have been performed and the representations of these conditions precedent are true. (iii) No stop order or other proceedings have been instituted or threatened by the Commission or any state authority which would adversely affect the offering of the Shares. (iv) This Agreement has been duly authorized and executed and constitutes a valid agreement of the Company and is binding and enforceable according to its terms. (v) The respective signers have each carefully examined the Registration Statement and definitive Prospectus and any amendments and supplements, and to the best of their knowledge, the Registration Statement and definitive Prospectus and any amendments and supplements contain all statements required to be stated therein. All statements contained therein are true and correct, neither the Registration Statement, definitive Prospectus, or any amendment, supplement, or sticker thereto includes any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading. Since the E-12 effective date of the Registration Statement, there has occurred no event required to be set forth in an amended or supplemented Prospectus which has not been so set forth. H. On the effective date and on the closing date, the Underwriter shall have received from the Company's legal counsel, a blue sky memorandum setting forth the states in which the Shares may be sold and the number of Shares that may be sold in each such state. 11. Termination. A. This Agreement may be terminated by the Underwriter by notice to the Company in the event that the Company shall have failed or been unable to comply with any of the terms, conditions, or provisions of this Agreement on the part of the Company to be performed, complied with, or fulfilled within the respective times herein provided for, unless compliance therewith or performance or satisfaction thereof shall have been expressly waived by the Underwriter in writing. B. This Agreement may be terminated by the Underwriter by notice to the Company if the Underwriter believes in is sole judgment that any adverse changes have occurred in the management of the Company, that material adverse changes have occurred in the financial condition or obligations of the Company, or if the Company shall have sustained a loss by strike, fire, flood, accident, or other calamity of such a character as, in the sole judgment of the Underwriter, may interfere materially with the conduct of the Company's business and operations regardless of whether or not such loss shall have been insured. C. This Agreement may be terminated by the Underwriter by notice to the Company at any time if, in the sole judgment of the Underwriter, payment for and delivery of the Shares is rendered impracticable or inadvisable because (i) additional material governmental restrictions not in force and effect on the date hereof shall have been imposed upon the trading in securities generally, or (ii) a war or other national calamity shall have occurred, or (iii) substantial and material changes in the condition of the market (either generally or with reference to the sale of the Shares to be offered hereby) beyond normal fluctuations are such that it would be undesirable, impracticable, or inadvisable in the sole judgment of the Underwriter to proceed with this Agreement or with the public offering or (iv) of any matter materially adversely affecting the Company. D. In the event any action or proceeding shall be instituted or threatened against the Underwriter, either in any court of competent jurisdiction, before the Commission or any state securities commission concerning its activities as a broker or dealer that would prevent the Underwriter from acting as such, at any time prior to the effective date hereunder, or in any court pursuant to any federal, state, local, or municipal statute, a petition in bankruptcy or insolvency or for reorganization or for the appointment of a receiver or trustee of the Underwriter's assets or if the Underwriter makes an assignment for the benefit of creditors, the Company shall have the right on three days' written notice to the Underwriter to terminate this Agreement without any liability to the Underwriter of any kind. E. Any termination of this Agreement pursuant to this Section shall be without liability of any character (including, but not limited to, loss of anticipated profits or consequential damages) on the part of any party thereto. F. In the event the offering is terminated, the Underwriter will be reimbursed only for actual, accountable out-of-pocket expenses incurred in connection with the offering. E-13 12. Notices. All notices shall be in writing and shall be delivered at or mailed to the following addresses or sent by telegram to the following addresses with written confirmation thereafter: To the Company: Ogden Golf Co. Company 1782 Washington Boulevard Ogden, UT 84404 To the Underwriter: ACAP Financial, Inc. 47 West 200 South, Suite 101 Salt Lake City, Utah 84101 13. Binding Effect. This Agreement shall inure to the benefit of and be binding upon the Company and the Underwriter (including the participating dealers as provided for herein) and their successors. Nothing expressed in this Agreement is intended to give any person other than the persons mentioned in the preceding sentence any legal or equitable right, remedy, or claim under this Agreement. However, the representations, warranties, and indemnity and defense obligations of the Company included in this Agreement also inure to the benefit of any person who controls the Underwriter and participating dealers within the meaning of Section 15 of the Act. 14. Miscellaneous Provisions. A. Time shall be of the essence of this Agreement. B. This Agreement shall be construed according to the laws of the State of Utah. C. The representations and warranties made in this Agreement shall survive the termination of this Agreement and shall continue in full force and effect regardless of any investigation made by the party relying upon any such representation or warranty. D. This Agreement is made solely for the benefit of the Company and its officers, directors, and controlling persons within the meaning of Section 15 of the act and of the Underwriter and its officers, directors, and controlling persons within the meaning and personal representative, and no other person shall acquire or have any right under or by virtue of this Agreement. The term "successor" as used in this Agreement shall not include any purchaser, as such, of the Shares. E. The Underwriter will provide upon closing a list of all the names and addresses of all participating dealers and shall provide the Company with such changes of the address or name of such participating dealers as occur and of which the Underwriter is notified. Further, the Underwriter shall use its best efforts to maintain the current name and address of all participating dealers during the terms of this Agreement. E-14 If this Agreement correctly sets forth our understanding please indicate your acceptance in the space provided below for that purpose. Very truly yours, Ogden Golf Co. Corporation a Utah corporation By: ____________________________ Mark A. Scharmann, President Confirmed and accepted as of the date of this Agreement: ACAP FINANCIAL, INC., a Utah corporation By: _______________________________ Kirk Ferguson, President E-15 EX-1 4 ex1-2_2003.txt Exhibit 1.2 Form SB-2 Ogden Golf Co. Corporation ESCROW AGREEMENT This ESCROW AGREEMENT ("Agreement"), made and entered into as of __________, 2002, by and among ACAP FINANCIAL, INC., a Utah corporation (the "Underwriter"), Ogden Golf Co. Corporation, a Utah corporation ("Ogden Golf"), and Irwin Union Bank, a Utah banking corporation (the "Escrow Agent"). R E C I T A L S: A. Ogden Golf proposes to sell up to 400,000 shares (the "Shares") of OGDEN GOLF's common stock, par value $.001 per share (the "Common Stock"), to the public at a price of $.50 per share (the "Offering"). B. OGDEN GOLF has retained the Underwriter, as selling agent for OGDEN GOLF on a best efforts basis, to sell the Shares in the Offering, and the Underwriter has agreed to sell the Shares as OGDEN GOLF's selling agent on a best efforts basis in the Offering, the terms of which relationship are set forth in an Underwriting Agreement between OGDEN GOLF and the Underwriter (the "Underwriting Agreement"). C. The Underwriter will enter into agreements with other brokers/dealers (the "Selected Dealers" or individually, the "Selected Dealer") to assist in the sale of the Shares. D. The Escrow Agent is willing to hold the proceeds from the Offering in escrow pursuant to this Agreement. NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements contained in this Agreement, it is hereby agreed as follows: 1. Establishment of the Escrow Account. The Underwriter and OGDEN GOLF hereby appoint Escrow Agent to serve as escrow agent for purposes of the Underwriting Agreement, and Escrow Agent hereby accepts the appointment as escrow agent hereunder and agrees to act on the terms and conditions set forth in this Agreement. On or prior to the date of commencement of the Offering, the parties shall establish an account with the Escrow Agent, which escrow account shall be entitled "Ogden Golf Co. Corporation Escrow Account" (the "Escrow Account"). This Agreement is being executed and the Escrow Account is being established to, and the parties hereto will, comply with SEC Rule 15c2-4. 2. Escrow Period. The escrow period (the "Escrow Period") shall begin with the commencement of the Offering and shall terminate upon the Closing Date (as defined in Section 5 of this Agreement), or ___________, 2003, whichever first occurs. During the Escrow Period, OGDEN GOLF is aware and understands that it is not entitled to any funds received into escrow and no amounts deposited by the Escrow Agent shall become property of OGDEN GOLF or any other entity, or be subject to the debts of OGDEN GOLF or any other entity. E-16 3. Deposits into the Escrow Account. Funds received from purchasers by the Underwriter, or Selected Dealers shall be deposited in the Escrow Account in compliance with SEC Rule 15c2-4. All money so deposited in the Escrow Account is hereinafter referred to as the "Escrow Funds". Until termination of this Escrow Agreement, all funds collected by the Underwriter from subscription for the purchase of Shares in the subject offering shall be payable to the Escrow Agent, and deposited promptly with the Escrow Agent, but in any event by 12:00 noon of the next business day after receipt by the Underwriter of such funds. The Underwriter may allow certain selected dealers to assist it in the offering of the Shares, which selected dealers shall similarly deposit with or transmit to the Escrow Agent all funds received on subscription for the Units by noon of the next business day following receipt. The amount transmitted shall include all cash payments received, together with all funds collected on checks honored by the paying bank. Concurrently with transmitting funds to the Escrow Agent, the Underwriter shall also deliver to the Escrow Agent a schedule setting forth the name and address of each subscriber whose funds are included in such transmittal, the number of Units subscribed to, and the dollar amount paid. All funds so deposited shall remain the property of the subscriber and shall not be subject to any lien or charges by the Escrow Agent, or judgment or creditors' claims against the Corporation until released to it in the manner hereinafter provided. 4. Delivery of Escrow Account Proceeds. Upon the Closing Date (as defined in Section 5 of this Agreement), the Underwriter and OGDEN GOLF shall provide the Escrow Agent with written directions for the distribution of the Escrow Funds, and the Escrow Agent agrees to distribute the Escrow Funds pursuant to such written directions. If no direction is received on or before 5:00 p.m., __________, 2003 (unless such time shall be extended by written agreement of the Underwriter, OGDEN GOLF and the Escrow Agent), the Escrow Agent shall return the Escrow Funds, without interest thereon, to the parties that made payments to the Escrow Account and this Agreement shall be of no further force or effect. As an additional consideration for and as an inducement for the Escrow Agent to act hereunder, it is understood and agreed that, in the event of any disagreement between the parties to this Agreement or among them or any other person(s) resulting in adverse claims and demands being made in connection with or for any money or other property involved in or affected by this Agreement, the Escrow Agent shall be entitled, at the option of the Escrow Agent, to refuse to comply with the demands of such parties, or any of such parties, so long as such disagreement shall continue. In such event, the Escrow Agent shall make no delivery or other disposition of the Escrow Funds or any part of such Escrow Funds. Anything herein to the contrary notwithstanding, the Escrow Agent shall not be or become liable to such parties or any of them for the failure of the Escrow Agent to comply with the conflicting or adverse demands of such parties or any of such parties. The Escrow Agent shall be entitled to continue to refrain and refuse to deliver or otherwise dispose of the Escrow Account or any part thereof or to otherwise act hereunder, as stated above, unless and until: E-17 (a) the rights of such parties have been finally sealed by binding arbitration or duly adjudicated in a court having jurisdiction of the parties and the Escrow Account; or (b) the parties have reached an agreement resolving their differences and have notified the Escrow Agent in writing of such agreement and have provided the Escrow Agent with indemnity satisfactory to the Escrow Agent against any liability, claims or damages resulting from compliance by the Escrow Agent with such agreement. In the event of a disagreement between such parties as described above, the Escrow Agent shall have the right, in addition to the rights described above and at the option of the Escrow Agent, to tender into the registry or custody of any court having jurisdiction, all money and property comprising the Escrow Account and may take such other legal action as may be appropriate or necessary, in the opinion of the Escrow Agent. Upon such tender, the parties hereto agree that the Escrow Agent shall be discharged from all further duties under this Agreement; provided, however, that the filing of any such legal proceedings shall not deprive the Escrow Agent of its compensation hereunder earned prior to such filing and discharge of the Escrow Agent of its duties hereunder. 5. Closing Date. The "Closing Date" shall be that date specified in the Underwriting Agreement. The Underwriter will notify the Escrow Agent of the Closing Date. 6. Investment of Escrow Account. The Escrow Agent shall deposit all subscription funds it receives in the Escrow Account, which shall be a non-interest-bearing bank account at Escrow Agent. The Escrow Funds in the Escrow Account shall not be invested. The Underwriter and OGDEN GOLF each warrant to and agree with the Escrow Agent that, unless otherwise expressly set forth in this Agreement, there is no security interest in the Escrow Account; no financing statement under the Uniform Commercial Code of any jurisdiction is on file in any jurisdiction claiming a security interest in or describing, whether specifically or generally, the Escrow Account; and the Escrow Agent shall have no responsibility at any time to ascertain whether or not any security interest exists in the Escrow Account or to file any financing statement under the Uniform Commercial Code of any jurisdiction with respect to the Escrow Account. 7. Compensation of Escrow Agent. The Underwriter shall pay the Escrow Agent a fee for its services hereunder in an amount equal to $___________, which amount shall be paid on the Closing Date. In the event that the Offering is canceled for any reason, the Underwriter shall pay the Escrow Agent its fee within 10 days after all of the Escrow Funds have been refunded to the parties that made payment to the Escrow Account. In addition, the Underwriter agrees to pay to the Escrow Agent its further expenses incurred in connection with this Agreement, including but not limited to the actual cost of legal services in the event the Escrow Agent deems it necessary to retain counsel. Such expenses shall be paid to the Escrow Agent within 30 days following receipt by the Underwriter of a written statement setting forth such expenses. The Underwriter agrees that, in the event any controversy arises under or in connection with this Agreement or the Escrow Account or the Escrow Agent is made a party to or intervenes in any litigation pertaining to this Agreement or the Escrow Account, to pay to the E-18 Escrow Agent reasonable compensation for its extraordinary services and to reimburse the Escrow Agent for all costs and expenses associated with such controversy or litigation. No such fee, expenses or any other monies whatsoever shall be paid out of or chargeable to the funds on deposit in the Escrow Account. 8. Duties and Rights of the Escrow Agent. The foregoing agreements and obligations of the Escrow Agent are subject to the following provisions: (a) The Escrow Agent's duties hereunder are limited solely to the safekeeping of the Escrow Account and the delivery of the Escrow Account in accordance with the terms of this Agreement and no additional duties or obligations shall be implied hereunder. It is agreed that the duties of the Escrow Agent are only such as herein specifically provided, being purely of a ministerial nature, and the Escrow Agent shall incur no liability whatsoever except for gross negligence or willful misconduct. The Escrow Agent shall have no duty with respect to the Shares. (b) The Escrow Agent is authorized to rely on any document believed by the Escrow Agent to be authentic in making any delivery of the Escrow Account or otherwise acting under this Agreement. It shall have no responsibility for the genuineness or the validity of any document or any other item deposited with it, and it shall be fully protected in acting in accordance with this Agreement or instructions received. The Escrow Agent shall in no event incur any liability with respect to any action taken or omitted to be taken in good faith upon advice of legal counsel, which may be counsel to any party hereto, given with respect to any question relating to the duties and responsibilities of the Escrow Agent hereunder. Escrow Agent shall not be bound in any way by any agreement or contract between the Underwriter and OGDEN GOLF, including the Underwriting Agreement, whether or not the Escrow Agent has knowledge of any such agreement or contract. (c) OGDEN GOLF and the Underwriter hereby waive any suit, claim, demand or cause of action of any kind that they may have or may assert against the Escrow Agent arising out of or relating to the execution or performance by the Escrow Agent of this Agreement, unless such suit, claim, demand or cause of action is based upon the gross negligence or willful misconduct of the Escrow Agent. (d) The Escrow Agent shall have no obligation to take any legal action in connection with this Agreement or towards its enforcement, or to appear in, prosecute or defend any action or legal proceeding which would or might involve it in any cost, expense, loss or liability unless security and indemnity, as provided in this subsection, shall be furnished. The Underwriter and OGDEN GOLF jointly and severally agree to indemnify the Escrow Agent and its officers, directors, employees and agents and save the Escrow Agent and its officers, directors, employees and agents harmless from and against any and all Claims (as hereinafter defined) and Losses (as hereinafter defined) which may be incurred by the E-19 Escrow Agent or any of such officers, directors, employees or agents as a result of Claims asserted against the Escrow Agent or any of such officers, directors, employees or agents as a result of or in connection with the Escrow Agent's capacity as such under this Agreement by any person or entity. For the purposes hereof, the term "Claims" shall mean all claims, lawsuits, causes of action or other legal actions and proceedings of whatever nature brought against (whether by way of direct action, counterclaim, cross action or impleader) the Escrow Agent or any such officer, director, employee or agent, even if groundless, false or fraudulent, so long as the claim, lawsuit, cause of action or other legal action or proceeding is alleged or determined, directly or indirectly, to arise out of, result from, relate to or be based upon, in whole or in part: (a) the acts or omissions of the Underwriter and OGDEN GOLF, (b) the appointment of the Escrow Agent as escrow agent under this Agreement, or (c) the performance by the Escrow Agent of its powers and duties under this Agreement; and the term "Losses" shall mean losses, costs, damages, expenses, judgments and liabilities of whatever nature (including but not limited to attorneys', accountants' and other professionals' fees, litigation and court costs and expenses and amounts paid in settlement), directly or indirectly resulting from, arising out of or relating to one or more Claims. Upon the written request of the Escrow Agent or any such officer, director, employee or agent (each referred to hereinafter as an "Indemnified Party"), the Underwriter and OGDEN GOLF jointly and severally agree to assume the investigation and defense of any Claim, including the employment of counsel acceptable to the applicable Indemnified Party and the payment of all expenses related thereto and, notwithstanding any such assumption, the Indemnified Party shall have the right, and the Underwriter and OGDEN GOLF jointly and severally agree to pay the cost and expense thereof, to employ separate counsel with respect to any such Claim and participate in the investigation and defense thereof in the event that such Indemnified Party shall have been advised by counsel that there may be one or more legal defenses available to such Indemnified Party which are different from or additional to those available to either the Underwriter or OGDEN GOLF. The Underwriter and OGDEN GOLF hereby agree that the indemnifications and protections afforded Escrow Agent in this subsection shall survive the termination of this Agreement. (e) In order to induce and as partial consideration for the Escrow Agent's acceptance of this Agreement, the Underwriter and OGDEN GOLF acknowledge that the Escrow Agent is serving as escrow agent for the limited purposes set forth herein and each represent, covenant and warrant to the Escrow Agent that no statement or representation, whether oral or in writing, has been or will be made to any prospective subscribers for any of the Shares to the effect that Escrow Agent has investigated the desirability or advisability of investment in the Shares or approved, endorsed or passed upon the merits of such investment or is otherwise involved in any manner with the transactions or events contemplated in the offering documents for the Shares being used by the Underwriter or OGDEN GOLF other than as the Escrow Agent under this Agreement. It is further agreed that no party shall in any way use the name "Irwin Union Bank" in any sales presentation or literature except in the context of the duties of the Escrow Agent as escrow agent of the offering of the Shares in the strictest sense. Any breach or violation of this subsection shall be grounds for immediate termination of the Agreement by the Escrow Agent. E-20 Without limitation to any release, indemnification or hold harmless provision in favor of the Escrow Agent as elsewhere provided in this Agreement, the Underwriter and OGDEN GOLF jointly and severally covenant and agree to indemnify the Escrow Agent and its officers, directors, employees and agents and to hold the Escrow Agent and such officers, directors, employees and agents harmless from and against all liability, cost, losses and expenses, including but not limited to attorneys' fees and expenses which are suffered or incurred by the Escrow Agent or any such officer, director, employee or agent as a direct or indirect result of the threat or the commencement of any claim or proceeding against the Escrow Agent or any such officer, director, employee or agent based in whole or in part upon the allegation of a misrepresentation or an omission of a material or significant fact in connection with the sale or subscription of any one or more of the Shares. The Escrow Agent shall have no responsibility for approving or accepting on behalf of the Underwriter or OGDEN GOLF any proceeds delivered to it hereunder, nor shall Escrow Agent be responsible for authorizing issuance of the Shares or for determining the qualification of any purchaser or the accuracy of the information contained in any offering documents for the Shares being used by the Underwriter or OGDEN GOLF. (f) The Escrow Agent may resign at any time from its obligations under this Agreement by providing written notice to the parties hereto. Such resignation shall be effective on the date set forth in such written notice which shall be no earlier than 30 days after such written notice has been given. In the event no successor escrow agent has been appointed on or prior to the date such resignation is to become effective, the Escrow Agent shall be entitled to tender into the custody of a court of competent jurisdiction all assets then held by it hereunder and shall thereupon be relieved of all further duties and obligations under this Agreement. The Escrow Agent shall have no responsibility for the appointment of a successor escrow agent hereunder. (g) The Escrow Agent will not be responsible for tax reporting of any income on the Escrow Account. 9. Notices. All notices given hereunder will be in writing, served by registered or certified mail, return receipt requested, postage prepaid, or by hand-delivery, to the parties at the following addresses: To OGDEN GOLF: Ogden Golf Co. Corporation 1782 Washington Boulevard Ogden, UT 84404 Attention: Paul Larsen Telephone: (801) 627-4442 Facsimile: (801) 627-0605 E-21 To the Underwriter: ACAP Financial, Inc. 47 West 200 South, Suite 101 Salt Lake City, Utah 84101 Attn: Kirk Ferguson Telephone: (801) 364-6650 Facsimile: (801) 364-6657 To the Escrow Agent: Irwin Union Bank 15 West South Temple, Suite 950 Salt Lake City, UT 84101 Attention:____________________ Telephone: (801) _________ Facsimile: (801) _________ 10. Miscellaneous. (a) This Agreement shall be binding upon, inure to the benefit of and be enforceable by the parties hereto and their respective successors and assigns. (b) If any provision of this Agreement shall be held invalid by any court of competent jurisdiction, such holding shall not invalidate any other provision hereof. (c) This Agreement shall be governed by the applicable laws of the State of Utah. (d) This Agreement may not be modified except in writing signed by the parties hereto. (e) All demands, notices, approvals, consents, requests and other communications hereunder shall be given in the manner provided in this Agreement. (f) This Agreement may be executed in several counterparts, each of which counterparts shall be deemed an original, but all such counterparts together shall constitute one and the same instrument. (g) This Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous writings, understandings, agreements, solicitation documents and representations, express or implied. By execution of this Agreement, the Escrow Agent shall not be deemed or considered to be a party to any other document, including the Underwriting Agreement. E-22 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in their respective names, all as of the date first above written. ACAP FINANCIAL, INC. By:__________________________________________ Kirk Ferguson President OGDEN GOLF CO. CORPORATION By:__________________________________________ Mark A. Scharmann President IRWIN UNION BANK By:__________________________________________ ______________________ Trust Officer E-22 EX-1 5 ex1-3_2003.txt Exhibit 1.3 Form SB-2 Ogden Golf Co. Corporation THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT MADE UNDER THE SECURITIES ACT OF 1933, (THE "ACT"), OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT. Warrant No. 1 Void after 5:00 p.m., Mountain Time, on ___________, 2008. Warrant to Purchase ____________Shares of Common Stock UNDERWRITER WARRANT TO PURCHASE COMMON STOCK OGDEN GOLF CO. CORPORATION This is to certify that, for One Hundred Dollars ($100.00) and other good and valuable consideration, the receipt of which is hereby acknowledged, ACAP Financial, Inc. or its registered assigns ("Holder"), is entitled to purchase, subject to the provisions of this Warrant, from Ogden Golf Co Corporation, a Utah corporation, ("Company"), at any time on or after ________, 2004, and not later than 5:00 p.m., Mountain Time on _______, 2008, ________ shares of Common Stock, no par value per share, of the Company ("Common Stock") at a purchase price per share of $.83. The number of shares of Common Stock to be received upon the exercise of this Warrant and the price to be paid for a share of Common Stock may be adjusted from time to time as hereinafter set forth. The shares of Common Stock deliverable upon such exercise, and as adjusted from time to time, are hereinafter sometimes referred to as "Warrant Stock" and the exercise price to purchase a share of Common Stock in effect at any time, and as adjusted from time to time, is hereinafter sometimes referred to as the "Exercise Price". (A) Exercise of Warrant. Subject to the provisions of Section (I) hereof, this Warrant may be exercised in whole or in part at any time, or from time to time, on or after _________, 2004, but not later than 5:00 p.m., Mountain Time, on __________, 2008, or if _______, 2008, is a day on which banking institutions are authorized by law in the State of Utah to close, then on the next succeeding day which shall not be such a day, by presentation and surrender hereof to the Company at its offices or at the office of its stock transfer agent, if any, with the Purchase Form annexed hereto duly executed and accompanied by payment of the Exercise Price for the number of shares specified in such form, together with all federal and state taxes applicable upon such exercise. If this Warrant should be exercised in part only, the Company shall, upon surrender of this Warrant for cancellation, execute and deliver a new Warrant evidencing the right of the holder to purchase the balance of the shares purchasable hereunder. Upon receipt by the Company of this Warrant at the office or agency of the Company, in proper form for exercise, the Holder shall be deemed to be the holder of record of the shares of Warrant Stock issuable upon such exercise, notwithstanding that the stock transfer books of the Company shall then be E-23 closed or that certificates representing such shares of Warrant Stock shall not then be actually delivered to the Holder. (B) Reservation of Shares. The Company hereby agrees that at all times there shall be reserved for issuance and/or delivery upon exercise of this Warrant, such number of shares of Warrant Stock as shall be required for issuance or delivery upon exercise of this Warrant. (C) Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. With respect to any fraction of a share called for upon any exercise hereof, the Company shall pay to the Holder an amount in cash equal to such fraction multiplied by the current market value of such fractional share, determined as follows: (1) If the Common Stock is listed on a national securities exchange or admitted to unlisted trading privileges on such exchange, the current value shall be the last reported sale price of the Common Stock on such exchange on the last business day prior to the date of exercise of this Warrant or if no such sale is made on such day, the average closing bid and asked prices for such day on such exchange; or (2) If the Common Stock is not so listed or admitted to unlisted trading privileges, the current value shall be the mean of the last reported bid and asked prices reported by the National Association of Securities Dealers Automated Quotation System (or, if not so quoted on NASDAQ, by the National Quotation Bureau, Inc.) on the last business day prior to the date of exercise of this Warrant; or (3) If the Common Stock is not so listed or admitted to unlisted trading privileges, and bid and asked prices are not so reported, the current value shall be an amount, not less than book value, determined in such reasonable manner as may be prescribed by the Board of Directors of the Company, such determination to be final and binding on the Holder. (D) Exchange, Assignment or Loss of Warrant. This Warrant is exchangeable, without expense, at the option of the Holder, upon presentation and surrender hereof to the Company at its offices or at the office of its stock transfer agent, for other Warrants of different denominations entitling the holder thereof to purchase in the aggregate the same number of shares of Warrant Stock purchasable hereunder. This Warrant may not be sold, transferred, assigned, or hypothecated until ________, 2004, except that prior to __________, 2004, it may be (i) assigned in whole or in part to or among the officers of ACAP Financial Inc., the Underwriter, and to officers and partners of members of the selling group of the Company's public offering pursuant to the Registration Statement on Form SB-2 declared effective on __________________, 2003, and/or their officers or partners, (ii) transferred by operation of law as a result of the death of any transferred to whom this Warrant may be transferred, and (iii) transferred to any successor to the business of ACAP Financial, Inc., or any assignee of the Warrant pursuant to clause (i) above, and thereafter, until _________, 2004 this Warrant may be split and/or transferred provided the transfer is in accordance E-24 with the provisions of the Securities Act of 1933, as amended (the "Act"). Any such assignment or transfer shall be made by surrender of this Warrant to the Company at its offices or at the office of its stock transfer agent with the Assignment Form annexed hereto duly executed and funds sufficient to pay any transfer fee; whereupon the Company shall, without charge, execute and deliver a new Warrant in the name of the assignee named in such instrument of assignment and this Warrant shall promptly be canceled. This Warrant may be divided or combined with other Warrants which carry the same rights upon presentation hereof at the office of the Company or at the office of its stock transfer agent together with a written notice specifying the names and denominations in which new Warrants are to be issued and signed by the Holder hereof. The term "Warrant" as used herein includes any Warrants issued in substitution for or replacement of this Warrant, or into which this Warrant may be divided or exchanged. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction, or mutilation of this Warrant, and (in the case of loss, theft, or destruction) of reasonably satisfactory indemnification, and upon surrender and cancellation of this Warrant, if mutilated, the Company will execute and deliver a new Warrant of like tenor and date. Any such new Warrant executed and delivered shall constitute an additional contractual obligation on the part of the Company, whether or not this Warrant is lost, stolen, destroyed, or mutilated shall be at any time enforceable by anyone. (E) Rights of the Holder. The Holder shall not, by virtue hereof, be entitled to any rights of a shareholder in the Company, either at law or equity, and the rights of the Holder are limited to those expressed in this Warrant and are not enforceable against the Company except to the extent set forth herein. (F) Adjustments of Exercise Price and Either Shares Purchasable or Number of Warrants. The Exercise Price and either the number of Shares purchasable upon exercise of each Warrant or the number of Warrants outstanding shall be subject to adjustment from time to time as provided in this Section. (1) In case, prior to the expiration of the Warrants by exercise of by their terms, the Company shall issue any shares of its Common Stock as a stock dividend or shall subdivide the number of outstanding shares of its Common Stock into a greater number of shares, then, in either of such cases, the then applicable purchase price per share of the Shares of Common Stock purchasable pursuant to the Warrants in effect at the time of such action shall be proportionately reduced and the number of Shares at that time purchasable pursuant to the Warrants shall be proportionately increased; and, conversely, in the event that the Company shall reduce the number of outstanding shares of Common Stock by combining such shares into a smaller number of shares, then, in such case, the then applicable purchase price per Share of the Shares of Common Stock purchasable pursuant to the Warrants in effect at the time of such action shall be proportionately increased and the number of Shares of Common Stock at that time purchasable pursuant to the Warrants shall be proportionately decreased. Any dividend paid or distributed upon the Common Stock in stock of any other class or securities convertible into shares of Common Stock shall be treated as a dividend paid in Common Stock to the extent that shares of Common Stock are issuable upon the conversion thereof. E-25 (2) In case, prior to the expiration of the Warrants by exercise of by their terms, the Company shall be recapitalized or in case the Company or a successor corporation shall consolidate or merge with or convey all or substantially all of its, or of any successor corporation's property and assets to any other corporation or corporations (any such other corporation being included within the meaning of the term "successor corporation" hereinbefore used) in the event of any consolidation, merger, or conveyance, lawful and adequate provision shall be made whereby the holders of the Warrants shall thereafter have the right to purchase, upon the basis and upon the terms and conditions specified in the Warrants, in lieu of the shares of Common Stock of the Company theretofore purchasable upon the exercise of the Warrants, such shares of stock, securities, or assets as may be issued or payable with respect to or in exchange for the number of shares of Common Stock of the Company theretofore purchasable upon the exercise of the Warrants had such recapitalization, consolidation, merger, or conveyance not taken place; and in any such event, the rights of the holders of the Warrants to any adjustment in the number of shares of Common Stock purchasable upon the exercise of the Warrants, as hereinbefore provided, shall continue and be preserved in respect of any stock which the holders become entitled to purchase. (3) Anything in this Section F to the contrary notwithstanding, the Company shall not be required to give effect to any adjustment in the exercise price unless and until the net effect of one or more adjustments determined as above provided, shall have required a change of the exercise price by at least $.05, but when the cumulative net effect of more than one adjustment so determined shall be to change the actual exercise price by at least $.05, such change in the exercise price shall thereupon be given effect. (4) For purposes of this Section F, no adjustment shall be made by virtue of the issuance of shares of Common Stock or convertible securities or rights or options to purchase such Common Stock or convertible securities pursuant to any stock purchase plan, stock option plan, employee savings or profit sharing plan, or other incentive or benefit plan of the Company now in existence or hereafter created for the benefit of employees. (G) Officer's Certificate. Whenever the Exercise Price shall be adjusted as required by the provisions of Section (F) hereof, the Company shall forthwith file in the custody of its secretary or an assistant secretary at its principal office, and with its stock transfer agent, if any, an officer's certificate showing the adjusted Exercise Price determined as herein provided and setting forth in reasonable detail the facts requiring such adjustment. Each such officer's certificate shall be made available at all reasonable times for inspection by the Holder and the Company shall, forthwith after each such adjustment, deliver a copy of such certificate to the Holder. Such certificate shall be conclusive as to the correctness of such adjustment. (H) Notices to Warrant Holders. So long as this Warrant shall be outstanding and unexercised (i) if the Company shall pay any dividend or make any distribution upon the Common Stock or (ii) if the Company shall offer to the holders of Common Stock for subscription or purchase by them any shares of stock E-26 of any class or any other rights or (iii) if any capital reorganization of the Company, reclassification of the capital stock of the Company, consolidation or merger of the Company with or into another corporation, sale, lease, or transfer of all or substantially all of the property and assets of the Company to another corporation, or voluntary or involuntary dissolution, liquidation or winding up of the Company shall be effected, then, in any such case, the Company shall cause to be delivered to the Holder, at least ten days prior to the date specified herein, a notice containing a brief description of the proposed action and stating the date on which (i) a record is to be taken for the purpose of such dividend, distribution, or rights, or (ii) such reclassification, reorganization, consolidation, merger, conveyance, lease, dissolution, liquidation, or winding up is to take place and the date, if any, is to be fixed, as of which the holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such reclassification, reorganization, consolidation, merger, conveyance, dissolution, liquidation, or winding up. (I) Registration Under the Securities Act of 1933. (1) In the event that during the period commencing one year after and ending five years from the effective date of the offering, the Company files a Registration Statement under the Securities Act of 1933, as amended, (the "Act") which relates to a current offering of securities of the Company (except in connection with an offering to employees on Form S-8 or an offering of Form S-4), or files a Notification on Form 1-A under the Act for a public offering of securities, the Company shall offer to the Holder of this Warrant and/or Warrant Stock acquired upon the exercise of this Warrant, the opportunity to register or qualify, at the Company's expense, this Warrant and Warrant Stock issued and/or issuable upon the exercise of this Warrant under any such Registration Statement or Notification on Form 1-A which relates to, and meets the requirements of the Act with respect to any public offering of the Company's Securities so as to permit the public sale thereof in compliance with the Act. The Company shall give written notice by registered mail to said Holder of its intention to file a Registration Statement or a Notification on Form 1-A under the Act relating to a current offering of the securities of the Company, 30 or more business days prior to the filing of such Registration Statement, and said Holder shall have 15 days to notify the Company of its desire to have the Warrants and/or Warrant Stock included in such Registration Statement or Notification on Form 1-A. Neither the delivery of such notice by the Company nor by said Holder shall in any way obligate the Company to file such Registration Statement and notwithstanding the filing of such Registration Statement, the Company may, at any time prior to the effective date thereof, determine not to offer the securities to which such Registration Statement relates, without liability to the Holder, except that the Company shall pay such expenses as are contemplated to be paid by it under subsection (4) of this Section. (2) In addition, upon written request, at any time after one year from the effective date of the offering, and for a period of four years thereafter, from any 51% Holder (as defined in Subsection (6) of this Section) the Company shall file, within 20 business days after receipt of E-27 such request, a Registration Statement or Notification on Form 1-A with the Securities and Exchange Commission under the Act registering or qualifying this Warrant and/or Warrant Stock issued and or issuable upon the exercise of this Warrant. Within ten days after receiving any such notice, the Company shall give notice to any other Holder of this Warrant and/or Warrant Stock advising that the Company is proceeding with such Registration Statement or Notification and offering to include therein the Warrants and/or Warrant Stock of any such Holder. The Company shall not be obligated to any such other Holder unless such other Holder shall accept such offer by notice in writing to the Company within ten days thereafter. The Company must file a Registration Statement if this Warrant and/or Warrant Stock issued and/or issuable upon the exercise of this Warrant held by such 51% Holder and any other Holder cannot be sold under a Notification on Form 1-A because of the limited nature of such Notification. The Company shall bear the expenses in connection with the exercise of the rights granted pursuant to this subsection. (3) The Company and the holder hereby agree that the Holder has only one right to demand registration of the Warrants and/or Warrant Stock at the Company's expense, whether such demand is pursuant to the registration described in Section (I) (l) or Section (I) (2). (4) In each instance in which, pursuant to subsections (1) and (2) of this Section, the Company shall take any action to permit a public offering or sale or other distribution, the Company shall: (a) Use its best efforts to cause any such Registration Statement or Notification to become effective. (b) Supply to ACAP Financial, Inc. as representatives of the Holder intending to make a public distribution of its Warrant and/or Warrant Stock (the Holder by his receipt of this Warrant hereby acknowledging his appointment of Alliance Capital Incorporated, as his representative for purposes of this Warrant), two executed copies of each Registration Statement or Notification and a reasonable number of copies of the preliminary, final and other prospectus or offering circular in conformity with requirements of the Act and the Rules and Regulations promulgated thereunder and such other documents as Alliance Capital Incorporated, shall reasonably request. (c) Cooperate in taking such action as may be necessary to register or qualify this Warrant and/or Warrant Stock under the securities acts or "blue sky" laws of at least the same jurisdictions under which the Company's shares, which were the subject of the Regist-ration Statement declared effective on ___________, 2003, were registered or qualified, and to do any and all other acts and things which may be necessary or advisable to enable the Holder of such Warrant and/or Warrant Stock to consummate such proposed sale or other deposition of this Warrant and/or Warrant Stock in any such jurisdiction. (d) Take whatever actions are necessary so that, during all times E-28 this Warrant is exercisable, a current Registration Statement or Notification relating to this Warrant and/or Warrant Stock will be effective with the Securities and Exchange Commission, after the initial effectiveness thereof, and do any and all other acts and things for such period as may be necessary to permit the public sale or other disposition of such Warrant and/or Warrant Stock by such Holder. (e) Indemnify and hold harmless each such Holder and each Underwriter, within the meaning of the Act, who may purchase from or sell for any such Holder, any Warrant and/or Warrant Stock, from and against any and all losses, claims, damages, and liabilities (including, but not limited to, any and all expenses whatsoever reasonably incurred in investigating, preparing, defending, or settling any claim) arising from (i) any untrue or alleged untrue statement of a material fact contained in any Registration Statement or Notification furnished pursuant to clause (b) of this subsection, or any prospectus or offering circular included therein or (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading (unless such untrue statement or omission or such alleged untrue statement or omission was based upon information furnished or required to be furnished in writing to the Company by such Holder or underwriter expressly for use therein), which indemnification shall include each person, if any, who controls any such Holder or underwriter within the meaning of the Act; provided, however, that the Company shall not be so obligated to indemnify any such Holder or underwriter or controlling person unless such Holder and underwriter shall at the same time indemnify the Company, its directors, each officer signing any Registration Statement or Notification or any amendment to any Registration Statement or Notification, and each person, if any, who controls the Company within the meaning of the Act, from and against any and all losses, claims, damages, and liabilities (including, but not limited to, any and all expenses whatsoever reasonably incurred in investigation, preparing, defending, or settling any claim) arising from (i) any untrue statement of a material fact contained in any Registration Statement or Notification and any amendment to any Registration Statement or Notification or prospectus or offering circular furnished pursuant to clause (b) of this subsection, or (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, but the indemnity of such Holder, Underwriter, or controlling person shall be limited to liability based upon information furnished, or required to be furnished, in writing to the Company by such Holder or underwriter or controlling person expressly for use therein. The indemnity agreement of the Company herein shall not inure to the benefit of any such underwriter (or to the benefit of any person who controls such Underwriter) on account of any losses, claims, damages, liabilities, (or actions or proceedings in respect thereof) arising from the sale of any of such Warrant and/or Warrant Stock by such underwriter to any person if such underwriter failed to send or give a copy of the prospectus or offering circular furnished pursuant to clause (b) of this subsection, as the same may then be supplemented or amended (if such supplement or amendment shall have been furnished to Alliance Capital Incorporated, pursuant to said clause (b), to such person with or prior to the written confirmation of the sale involved. (5) The Company shall comply with the requirements of subsection (1) E-29 and subsection (2) of this Section, including the related requirements of subsection (4) of this Section, at its own expense, subject to the provisions of subsection (2), including the expense of filing such Registration Statement or Notification with the Securities and Exchange Commission and such states as provided in subsection 4 hereof; legal, accounting, and printing fees; and all other expenses incident thereto (except selling commissions and fees of the Holder's legal counsel which shall be paid by the Holder selling the Warrant and/or Warrant Stock). The Company's obligation under said subsections (1) and (2) shall be conditioned as to each such public offering, upon a timely receipt by the Company in writing of: (a) Information as to the terms of such public offering furnished by or on behalf of each Holder intending to make a public distribution of his or its Warrant and/or Warrant Stock; and (b) Such other information as the Company may reasonably require from such Holder, or any underwriter for any of them, for inclusion in such Registration Statement or Notification or Post-Effective Amendment. (6) The term "51% Holder" as used in this Section shall include any owner or combination of owners of Warrants and/or Warrant Stock in any combination if the holding of the aggregate principal amount of: (a) the Warrants held by him or among them, plus (b) the Warrants which he or they would be holding if the Warrants for the Warrant Stock owned by him or among then had not been exercised would constitute 51% of the Warrants originally issued. The Company's agreements with respect to the Warrant and Warrant Stock in this section will continue in effect regardless of the exercise or surrender of this Warrant. (7) The Company's agreements with respect to the Warrant and Warrant Stock in this section will continue in effect regardless of the exercise or surrender of this Warrant. (8) Any notices or certificates by the Company to the Holder and by the Holder to the Company shall be deemed delivered if in writing and delivered personally or sent by certified mail, to the Holder, addressed to him in care of ACAP Financial, Inc., 47 West 200 South, Suite 101, Salt Lake City, UT 84101, or, if the Holder has designated, by notice in writing to the Company, any other address, to such other address, and, if to the Company, addressed to Ogden Golf Co. Corporation, 1781 Washington Boulevard, Ogden, UT 84401. The Company may change its address by written notice to ACAP Financial, Inc., and ACAP Financial Inc., may change its address by written notice to the Company. E-30 (J) Transfer and Compliance with the Securities Act of 1933. (1) This Warrant or the Warrant Stock or any other security issued or issuable upon exercise of this Warrant may not be sold, transferred, or otherwise disposed of except to a person who, in the opinion of counsel for the Company, is a person to whom this Warrant or such Warrant Stock may legally be transferred without registration and the delivery of a current prospectus under the Act or without an exemption from the registration requirements of the Act with respect thereto and then only against receipt of an agreement of such person to comply with the provisions of this Warrant Certificate with respect to any resale or other disposition of such securities. (2) The Company may cause the following legend to be set forth on each certificate representing Warrant Stock or any other security issued or issuable upon exercise of this Warrant not theretofore distributed to the public or sold to underwriters for distribution to the public unless counsel for the company is of the opinion as to any such certificate that such legend is unnecessary. The securities represented by this certificate may not be offered for sale, sold, or otherwise transferred except pursuant to an effective Registration Statement made under the Securities Act of 1933, (the "Act"), or pursuant to an exemption from registration under the Act, the availability of which is to be established to the satisfaction of the Company. (K) Applicable law. This Warrant shall be governed by and construed in accordance with the laws of the State of Utah. OGDEN GOLF CO. CORPORATION By ____________________________ Its President Dated: ____________________ E-31 PURCHASE FORM (To be signed to exercise all or a portion of the Warrant.) Ogden Golf Co. Corporation 1781 Washington Boulevard Ogden, UT 84401 The undersigned Holder hereby irrevocably elects to exercise the right of purchase represented by the within Warrant for, and to purchase thereunder, shares of Warrant Stock (the "Shares") provided for therein, and requests that certificates for the Shares be issued in the name of: (Please Print Name, Address, and Social Security Number) and, if said number of Shares shall not be all the Shares purchasable hereunder, that a new Warrant for the balance remaining of the Shares purchasable under the within Warrant be registered in the name of the undersigned Holder or his assignee as below indicated and delivered to the address stated below. DATED:____________________ Name of Holder or assignee: __________________________________ (Please Print) Address: ________________________________________________________ Signature: ___________________________________ Signature Guaranteed: E-32 ASSIGNMENT FORM (To be signed only upon assignment of all or a portion of the Warrant.) FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers unto ___________________________________________________________________________ (Name and Address of Assignee Must be Printed or Typewritten) of the within Warrant, hereby irrevocably constituting and appointing true and lawful attorney to transfer or assign said portion of the within Warrant on the books of the Company, with full power of substitution in the premises. Dated: ______________________ __________________________________ Signature of Registered Holder Signature Guaranteed: THE SIGNATURE TO THE PURCHASE OR THE ASSIGNMENT FORM MUST CORRESPOND TO THE NAME AS IT APPEARS ON THE FACE OF THE WITHIN WARRANT IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE GUARANTEED BY A COMMERCIAL BANK OR TRUST COMPANY OR A MEMBER FIRM OF THE AMERICAN STOCK EXCHANGE, NEW YORK STOCK EXCHANGE, PACIFIC STOCK EXCHANGE. E-33 EX-1 6 ex1-4_2003.txt Exhibit 1.4 Form SB-2 Ogden Golf Co. Corporation ACAP FINANCIAL, INC. Underwriting of 400,000 Shares OGDEN GOLF CO. CORPORATION COMMON STOCK PARTICIPATING DEALERS AGREEMENT ACAP Financial, Inc., 47 West 200 South, Suite 101, Salt Lake City, Utah 84101, telephone (801) 364-6650, ("Underwriter"), as Underwriter for Ogden Golf Co. Corporation, a Utah corporation, ("Company"), invites your participation as a Participating Dealer, ("Participating Dealer"), in an offering of 400,000 Shares of the $.001 par value Common Stock of the Company and Common Stock Purchase Warrants to be offered to the public at $.50 per Share. The Underwriter is offering the shares subject to the terms of (i) its Underwriting Agreement with the Company, (ii) this Agreement, and (iii) the Underwriter's instructions which may be forwarded to the Participating Dealers from time to time. The terms of the offering and the shares are more fully described in the enclosed Prospectus. This invitation is made by the Underwriter only if the Company's Shares may be lawfully offered to dealers in the state(s) in which the Participating Dealer is registered as a broker/dealer. The terms and conditions of this invitation are as follows: 1. Acceptance of Orders. Orders received from the Participating Dealer will be accepted only at the price, in the amounts, and on the terms which are set forth in the Company's current Prospectus, the Underwriting Agreement, and this Agreement. 2. Selling Commission. As a Participating Dealer, you will be allowed, on all shares sold by you, a commission of __% of the total sales price as shown in the Company's current Prospectus, provided that a minimum of 300,000 Shares are sold in the offering. 3. Status of Dealer. The Participating Dealer agrees to purchase the Company's Shares for its customers through the Underwriter, and all purchases shall be made only upon orders already received by the Dealer from its customers. In all sales of the Shares to the public, the Participating Dealer shall confirm as agent for another. The Participating Dealer agrees that it will make no sales to any accounts over which it exercises discretionary authority. 4. Acceptance. The Participating Dealer will promptly transmit by 12:00 noon of the next business day to the Escrow Agent, all funds received from purchasers and a confirmation and a record of each sale which sets forth the name, address, social security number of each individual beneficial purchaser, the number of Shares purchased, and, if there is more than one registered owner, whether the certificate or certificates evidencing the shares purchased are to be issued to the purchasers in joint tenancy or otherwise. A copy of such information will be sent to the Underwriter by the Participating Dealer. All checks for subscription of Shares shall be made payable to Irwin Union Bank, the Escrow Agent. E-34 5. Blue Sky Approval and Rejection of Sales. The Shares have been approved for sale only in certain states as shall be described by the Underwriter to the Participating Dealer under separate cover or as an Exhibit hereto. Each Participating Dealer shall report in writing, to the Underwriter, the number of the Company's Shares which have been sold in each state and the number of persons in each such state who purchased Company shares through the Participating Dealer. Each sale may be rejected by the Underwriter for any reason, and if rejected, the Escrow Agent will return to you all funds paid by the purchaser which have been received by the Underwriter. In such event, the Participating Dealer will return to the purchaser within five (5) business days after actual receipt from the Underwriter, the full purchase price paid by the purchaser. 6. Escrow of Proceeds. The proceeds from the sale of all of the Shares offered in the offering will be deposited into the Escrow Account. If the proceeds, in cleared funds, from the sale of a minimum of 300,000 Shares have not been deposited with the Escrow Agent within one year from the date of the Company's definitive Prospectus, the full amount paid will be refunded to the purchasers. No certificates evidencing the Shares will be issued unless and until the escrow amount has been deposited with the Escrow Agent, and such funds have been released and the net proceeds thereof delivered to the Company. If the escrow amount is deposited within the time period provided above, all amounts so deposited will be delivered to the Company except that the Underwriter may deduct its underwriting commissions from the proceeds of the offering prior to delivery of such proceeds to the Company. No commissions will be paid by the Company or commissions allowed by the Underwriter unless and until proceeds, in cleared funds, from the sale of at least 300,000 Shares, have been deposited with the Escrow Agent and such funds have been released and the net proceeds thereof delivered to the Company. 7. Delivery and Payment. Delivery of shares shall be made on or about ___________, 2003, or such later date as we may advise, at the office of ACAP Financial, Inc., 47 West 200 South, Suite 101, Salt Lake City, Utah 84101, or at such other place as we shall specify on not less than one day's notice to you. Subject to the sale of the minimum number of Shares offered, payment for the shares is to be made, against delivery, at the fully authorized, public offering price stated above, or, if we shall so advise you, at the public offering price, less the dealer's selling commission stated above, by wire transfer to the credit of Alliance Capital Incorporated, at the Escrow Account at Irwin Union Bank, 15 West South Temple, Suite 950, Salt Lake City, Utah 84101, opened under the name "Utah Bank & Trust, Escrow Account for Ogden Golf Co. Corporation." 8. Dealer's Undertakings. A. No person is authorized to make any representations concerning the Company's shares except those contained in the Company's then current Prospectus. The Participating Dealer agrees to comply with the Prospectus delivery requirements of the Securities act of 1933 and Regulations thereunder. The Participating Dealer agrees not to use any supplemental sales literature of any kind without prior written approval of the Underwriter unless it is furnished by the Underwriter for such purpose. In offering and selling the shares, the Participating Dealer will rely solely E-35 on the representations contained in the Company's current Prospectus. Additional copies of the then current Prospectus will be supplied by the Underwriter in reasonable quantities upon request. B. The Participating Dealer will comply with the preliminary and definitive Prospectus delivery requirements of Rule 15c2-8 adopted under the Securities Exchange Act of 1934. The Participating Dealer will not sell the shares pursuant to this Agreement unless a preliminary or final Prospectus is furnished to the purchaser at least 48 hours prior to the mailing of the confirmation of sale or is sent to such person under such circumstances that it would be received by him 48 hours prior to his receipt of a confirmation of sale. In addition, the Participating Dealer understands and agrees that during the 90-day period after the first date upon which the shares are first offered to the public, all dealers effecting transactions in the shares may be required to deliver the Company's then current Prospectus to any purchasers thereof prior to or concurrent with the receipt of the confirmation of sale. Additional copies of the then current Prospectus will be supplied by the Underwriter in reasonable quantities upon request for such purposes. C. The Participating Dealer will comply with all applicable provisions of federal and state securities laws in connection with the sale of the shares to its customers. In furtherance of this undertaking, the Participating Dealer agrees not to engage in any "parking arrangements" or "multiple tying arrangements" or accept any after market orders for the Company's Common Stock prior to the closing of the offering. 9. Conditions of Offering. All sales will be subject to delivery by the Company of certificates evidencing its $.001 par value Common Stock and Common Stock Warrants. The Underwriter shall have full authority to take such action as it deems advisable in respect of all matters pertaining to the offering or arising thereunder. The Underwriter shall incur no liabilities to the Participating Dealer except as may be incurred under the Securities Act of 1933, the Rules and Regulations thereunder, for lack of good faith, or for obligations assumed in this Agreement. 10. Failure of Order. If an Order is rejected or if a payment is received which proves insufficient or worthless, any compensation paid to the Participating Dealer shall be returned either by the Participating Dealer's remittances in cash or by a charge against the account of the Participating Dealer, as the Underwriter may elect. 11. Representations and Agreements of Dealer. By accepting this Agreement, the Participating Dealer represents that it is registered as a broker/dealer under the Securities Exchange Act of 1934, as amended; is qualified to act as a Dealer in the states or other jurisdictions in which it offers the Company's shares; is a member in good standing of the National Association of Securities Dealers, Inc.; and will maintain such registrations, qualifications, and memberships throughout the term of this Agreement. Further, the Participating Dealer agrees to comply with all applicable federal laws and laws of the states or other jurisdictions concerned; and the Rules and Regulations of the National Association of Securities Dealers, Inc. Further, the Participating Dealer agrees that it will not offer or sell the Company's shares in any state or jurisdiction except those specified in Paragraph 5 hereof. The Participating Dealer shall not be entitled to any compensation during any period in which it has been suspended E-36 or expelled from membership in the National Association of Securities Dealers, Inc. The Participating Dealer hereby agrees to comply with Sections 8, 23, 24, 25, and 36 of the Rules of Fair Practice as promulgated by the N.A.S.D. 12. Dealer's Representatives. By accepting this Agreement, the Participating Dealer has assumed full responsibility for thorough and proper training of its representatives concerning the selling methods to be used in connection with the offer and sale of the shares, giving special emphasis to the principles of full and fair disclosure to prospective investors and the full N.A.S.D. prohibitions against "Free-Riding and Withholding". 13. Company's Indemnification. The Company has agreed in the Underwriting Agreement to indemnify, defend, and hold the Underwriter, the Participating Dealer, and each person, if any, who controls the Underwriter and Participating Dealer within the meaning of Section 15 of the Act, free and harmless from and against any and all losses, claims, demands, liabilities, and expenses (including reasonable legal or other expense incurred by each such person in connection with defending or investigating any such claims or liabilities, whether or not resulting in any liability to such person), which the Underwriter, Participating Dealer, or controlling person may incur under the federal or state securities law or otherwise, but only to the extent that such losses, claims, demands, liabilities, and expenses shall arise out of or be based upon a violation or alleged violation of the federal or state securities laws and regulations thereunder, state statutes, or the common law, including any untrue statement or alleged untrue statement of material fact contained in the Registration Statement, or in any Amendment or Amendments to the Registration Statement, or in any application or other papers, hereinafter collectively called Blue Sky Applications, or shall arise out of or be based upon any omission or alleged omission to state therein a material fact required to be stated in the Registration Statement, in any Amendment or Amendments, in any Blue Sky Application, or necessary to make the statements in any thereof not misleading, provided, however, that the indemnity agreement shall not apply to any such losses, claims, demands, liabilities, or expenses arising out of or based upon such violation, statement, or omission made in reliance upon information furnished to the Company by the Underwriter or Participating Dealer in writing expressly for use in the Registration Statement or in any Amendment or Amendments or in a Blue Sky Application. The Underwriter or Participating Dealer agrees to give the Company an opportunity to participate in the defense or preparation of the defense of any action brought against the Underwriter or Participating Dealer or controlling person, as the case may be, to the Company, by letter or telegram, promptly after the commencement of such action against the Underwriter, Participating Dealer, or controlling persons, such notice either being accompanied by copies of papers served or filed in connection with such action or by a statement of the nature of the actions to the extent known to the Underwriter or Participating Dealer. Failure to notify the Company within a reasonable amount of time of any such action shall relieve the Company of its liabilities under the foregoing indemnity, but failure to notify the Company as herein provided shall not relieve it from any liability which it may have to the Under-writer, Participating Dealer, or controlling persons other than on account of the indemnity agreement. 14. Participating Dealer's Indemnification. The Participating Dealer hereby agrees to indemnify and to hold harmless the Underwriter, the Company, and each person, if any, who controls the Underwriter or the Company within the meaning of Section 15 of the Act, from and against any and all losses, claims, damages, E-37 or liabilities to which the Company or the Underwriter may become subject under the Act, or otherwise, insofar as such losses, claims, damages, or liabilities, (or actions in respect thereof), arise out of or are based upon information contained in the Registration Statement, or other document filed with the Securities and Exchange Commission to the extent such information is supplied by the Participating Dealer to the Underwriter or the Company for inclusion therein, or are based upon alleged misrepresentations or omissions to state material facts in connection with statements made by the Participating Dealer or the Participating Dealer's salesmen orally or by other means; and the Participating Dealer will reimburse the Company and the Underwriter for any legal or other expenses reasonably incurred in connection with the investigation of or the defending of any such action or claim. The Underwriter shall, after receiving the first summons or other legal process disclosing the nature of the action being served upon it or the Company, in any proceeding in respect of which indemnity may be sought by the Company or the Underwriter hereunder, promptly notify the Participating Dealer in writing of the commencement thereof. In case any such litigation be brought against the Company or the Underwriter, the Underwriter shall notify the Participating Dealer of the commencement thereof and the Participating Dealer shall be entitled to participate in (and, to the extent the Participating Dealer shall wish to direct) the defense thereof at the Participating Dealer's own expense, but such defense shall be conducted by counsel of good standing satisfactory to the Company and the Underwriter. If the Participating Dealer shall fail to provide such defense, the Company may defend such action at the Participating Dealer's cost and expense. The Participating Dealer's obligation under this paragraph shall survive the termination of this Agreement. 15. Expenses. No expenses will be charged to or reimbursed to the Participating Dealers. 16. Communications. All communications to the Underwriter should be sent to the address shown in the opening paragraph of this Agreement. Any notice to the Participating Dealer shall be properly given if mailed or telephoned to the Participating Dealer below. This Agreement shall be construed according to the laws of Utah. 17. Assignment and Termination. This Agreement may not be assigned by the Participating Dealer without the Company's consent. This Agreement will terminate upon the termination of the offering of the shares except that either party may terminate this Agreement at any time by giving written notice to the other. 18. Acceptance. This Agreement shall be accepted upon receipt by the Underwriter of a copy of the Agreement executed by the Participating Dealer in the space provided which furnishes the other information requested. ACAP FINANCIAL, INC. By _____________________________ ______________________ E-38 Accepted on _____________, 2003 Firm Name: _______________________________ By ____________________________ Address: ______________________ _______________________________ Telephone No.: ________________ IRS Employer Identification No.: _______________________________ Share Allocation: _____________ E-39 EX-3 7 ex3-1_2003.txt Exhibit 3.1 Form SB-2 Ogden Golf Co. Corporation ARTICLES OF INCORPORATION OF OGDEN GOLF CO. CORPORATION The undersigned incorporators, desiring to form a corporation under the laws and constitution of the State of Utah, do hereby sign and deliver, in duplicate, to the Division of Corporations and Commercial Code of the State of Utah these Articles of Incorporation for Ogden Golf Co. Corporation (hereinafter referred to as the "Corporation"): ARTICLE I NAME The name of the Corporation shall be: Ogden Golf Co. Corporation ARTICLE II PERIOD OF DURATION The Corporation shall continue in existence perpetually unless sooner dissolved according to law. ARTICLE III PURPOSES The Corporation is organized for the purchase conducting any lawful business for which a corporation may be organized under the Utah Revised Business Corporation Act. ARTICLE IV AUTHORIZED SHARES The Corporation is authorized to issue a total of 105,000,000 shares, consisting of 100,000,000 shares of common stock, no par value per share (hereinafter referred to as "Common Stock"), and 5,000,000 shares of preferred stock, no par value per share (hereinafter referred to as "Preferred Stock"). The board of directors is vested with the authority to fix and determine the powers, qualifications, limitations, restrictions, designations, rights, preferences, or other variations of each class or series within each class which the Corporation is authorized to issue. The above-described authority of the board of directors to fix and determine may be exercised by corporate resolution from time to time as the board of directors sees fit. E-40 ARTICLE V NON-ACCESSIBILITY FOR DEBTS OF CORPORATION After the amount of the subscription price, the purchase price, or the par value of the stock of any class or series is paid into the Corporation, owners or holders of shares of any stock in the Corporation may never be assessed to pay the debts of the Corporation. ARTICLE VI NO CUMULATIVE VOTING Except as may otherwise be required by law, these articles of incorporation, or the provisions of the resolution or resolutions as may be adopted by the board of directors pursuant to Article IV of these articles of incorporation, in all matters as to which the vote or consent of stockholders of the Corporation shall be required to be taken, the holders of Common Stock shall have one vote per share of Common Stock held. Cumulative Voting on the election of directors or on any other matter submitted to the stockholders shall not be permitted. ARTICLE VII NO PREEMPTIVE RIGHTS No holder of any of the shares of any class or series of stock or of options, warrants, or other rights to purchase shares of any class or series of stock or of other securities of the Corporation shall have any preemptive right to purchase or subscribe for any unissued stock of any class or series of any additional shares of any class or series to be issued by reason of any increase of the authorized capital stock of the Corporation of any class or series, or bonds, certificates of indebtedness, debentures, or other securities convertible into or exchangeable for stock of the Corporation of any class or series, or carrying any rights to purchase stock of any class or series, but any such unissued stock, additional authorized issue of shares of any class or series of stock, or securities convertible into or exchangeable for stock carrying any right to purchase stock may be issued and disposed of pursuant to an appropriate resolution of the board of directors to such persons, firms, corporations, or associations and on such terms as may be deemed advisable by the board of directors in the exercise of its sole discretion. ARTICLE VIII TRANSACTIONS WITH OFFICERS AND DIRECTORS No contract or other transaction between the Corporation and any other person or business shall be affected by the fact that a director or officer of the Corporation has an interest in, or is a director or officer of, or employee of, such other person or business. Any officer or director, individually or with others, may be a party to, or may have an interest in, any transaction of the Corporation or any transaction in which the Corporation is a party or has an interest. Each person who is not or who may become an officer or director of the Corporation is hereby relieved from liability that he or she might otherwise incur in the event such officer or director contracts with the Corporation, individually or in behalf of another person or business, in which he or she may have an interest, provided; E-41 (a) Such officer or director acts in good faith, and (b) The contract or transaction is fair as to the Corporation at the time it is authorized or approved. ARTICLE IX INDEMNIFICATION OF OFFICERS, DIRECTORS, AND OTHERS The Corporation shall indemnify each director and officer of the Corporation and their respective heirs, administrators, and executors against all liabilities and expenses reasonably incurred in connection with any action, suit, or proceeding to which he may be made a party by reason of the fact that he is or was a director or officer of the Corporation, to the full extent permitted by the laws of the State of Utah now existing or as such laws may hereafter be amended. The expenses of officers and directors incurred in defending a civil or criminal action, suit, or proceeding shall be paid by the Corporation as they are incurred and in advance of the final disposition of the action, suit, or proceeding, upon receipt of an undertaking by or on behalf of the director or officer to repay the amount if it is ultimately determined by a court of competent jurisdiction that he is not entitled to be indemnified by the Corporation. The Corporation may indemnify each director, officer, employee, or agent of the Corporation and their respective heirs, administrators, and executors against all liabilities and expenses reasonably incurred in connection with any action, suit, or proceeding to which such person may be made a party by reason of such person being, or having been, a director, officer, employee, or agent of the Corporation, to the full extent permitted by the laws of the State of Utah now existing or as such laws may hereafter be amended. ARTICLE X LIMITATION ON DIRECTORS LIABILITY To the fullest extent permitted by the Utah Revised Business Corporation Act or any other applicable law as now in effect or as it may hereafter be amended, a director of the Corporation shall have no personal liability to the Corporation or its shareholders for monetary damages for any action taken or any failure to take any action as a director. ARTICLE XI NO LIMITATIONS ON VOTING RIGHTS To the extent permissible under the applicable law of any jurisdiction to which the Corporation may become subject by reason of the conduct of business, the ownership of assets, the residence of shareholders, the location of offices or facilities, or any other item, the Corporation elects not to be governed by the provisions of any statute that (i) limits, restricts, modifies, suspends, terminates, or otherwise effects the rights of any shareholder to cast one vote for each share of Common Stock registered in the name of such shareholder on the books of the Corporation, without regard to whether such shares were acquired directly from the Corporation or from any other person and without regard to whether such shareholder has the power to exercise or direct the exercises of voting power over any specific fraction of the shares of Common Stock of the E-42 Corporation issued and outstanding or (ii) grants to any shareholder the right to have his or her stock redeemed or purchased by the Corporation or any other shareholder of the Corporation. ARTICLE XII PRINCIPAL OFFICE AND REGISTERED AGENT The address of the Corporation in the State of Utah is 3514 North 375 East, North Ogden, UT 84414. The name and address of the Corporation's initial resident agent is Paul Larsen. Either the principal office or the registered agent may be changed in the manner provided by law. ARTICLE XIII AMENDMENTS The Corporation reserves the right to amend, alter, change, or repeal all or any portion of the provisions contained in these articles of incorporation from time to time in accordance with the laws of the State of Utah; and all rights conferred herein on stockholders are granted subject to this reservation. ARTICLE XIV ADOPTION AND AMENDMENT OF BYLAWS The initial bylaws of the Corporation shall be adopted by the board of directors. The power to alter, amend, or repeal the bylaws or adopt new bylaws shall be vested in the board of directors. The bylaws may contain any provisions for the regulation or management of the affairs of the Corporation not inconsistent with these articles of incorporation and the laws of the State of Utah now or hereafter existing. ARTICLE XV GOVERNING BOARD The governing board of the Corporation shall be known as the "board of directors." The board of directors must have at least one director, but not more than nine directors or as otherwise specified in its bylaws or directors' resolutions. The names and addresses of the persons who are to serve as directors until the first annual meeting of the stockholders and until such persons' successor are elected and shall qualify is as follows: NAME ADDRESS Paul Larsen 3514 North 375 East, Ogden, UT 84414 E-43 ARTICLE XVI POWERS OF GOVERNING BOARD The governing board of the Corporation is specifically granted by these articles of incorporation all powers permitted to be vested in the governing board of a corporation by the applicable provisions of the laws of the State of Utah now or hereafter existing. ARTICLE XVII INCORPORATORS The name and mailing address of the incorporators signing these articles of incorporation is as follows: NAME ADDRESS Paul Larsen 3514 North 375 East, Ogden, UT 84414 The undersigned, being the incorporator of the Corporation herein before named, hereby makes and files these articles of incorporation, declaring and certifying that the facts contained herein are true. DATED this 10th day of May, 2000. /s/ Paul Larsen, Incorporator CERTIFICATE OF ACCEPTANCE OF APPOINTMENT BY REGISTERED AGENT IN THE MATTER OF OGDEN GOLF CO. CORPORATION, Paul Larsen, hereby certifies that on the ____ day of May 2000, he accepted appointment as Resident Agent of the above-entitled corporation. Furthermore, that the principal office of the Corporation in this State is located at 3514 North 375 East, Ogden, UT 84414. IN WITNESS WHEREOF he has hereunto set his hand this ____ day of May, 2000. By: /s/ Paul Larsen, Registered Agent E-44 EX-3 8 ex3-2_2003.txt Exhibit 3.2 Form SB-2 Ogden Golf Co. Corporation ARTICLES OF AMENDMENT TO THE ARTICLES OF INCORPORATION OF OGDEN GOLF CO. CORPORATION Authority is expressly granted to the Board of Directors of Ogden Golf Co. Corporation (the "Company"), at any time and from time to time, to issue the preferred shares of the Company in one or more series with such designations and characteristics as determined by the Board of Directors. The President and Secretary of the Company do hereby certify that, pursuant to authority conferred upon the Board of Directors by the Company's Articles of Incorporation and pursuant to the provisions of Section 16-10a-602 of the Utah Revised Business Corporation Act, the Company's Board of Directors, pursuant to unanimous written consent in lieu of a meeting dated November ___, 2003, duly adopted a resolution providing for the designation of a series of preferred stock consisting of 100,000 shares of the Company's preferred stock to be known as "Series A Preferred Stock." Such resolution is as follows: RESOLVED, that pursuant to the authority expressly granted and invested in the Board of Directors of this Company in accordance with the provisions of its Articles of Incorporation, a series of preferred stock of the Company is hereby given the distinctive designation of "Series A Preferred Stock." Said series shall consist of 100,000 shares of the Company's no par value preferred stock. Each share of Series A Preferred Stock shall have a "Stated Value" of Twenty Cents ($.20). The Board of Directors hereby designates the preferences and characteristics of the Series A Preferred Stock as follows: 1. Designation. This series of Preferred Stock shall be known as the "Series A Preferred Stock," no par value (the "Series A Preferred Stock"). The Series A Preferred Stock shall consist of up to 100,000 shares, which number shall not be increased but may be decreased (but not below the number of shares of Series A Preferred Stock then outstanding) from time to time by a resolution or resolutions of the Board of Directors. Shares of Series A Preferred Stock redeemed by the Company or converted into Common Stock shall be canceled and shall revert to authorized but unissued shares of preferred stock designated as to series or class upon compliance with the applicable provisions of law. 2. Ranking. The Series A Preferred Stock shall rank senior to the Common Stock as to the distribution of assets on liquidation, dissolution and winding up of the affairs of the Company. Each share of Series A Preferred Stock shall rank on a parity with or senior to each other series of preferred stock, other than any Junior Stock, which may be hereafter issued by the Company in the payment of dividends and in the distribution of assets on any liquidation, dissolution or winding up of the Company. 3. Definitions. As used herein with respect to Series A Preferred Stock, the following terms shall have the following meanings: E-45 (a) the term "Junior Stock" shall mean the Common Stock and any other class or series of stock of the Company hereafter authorized or issued over which Series A Preferred Stock has preference or priority in (i) the payment of dividends and (ii) the distribution of assets on any liquidation, dissolution or winding up of the Company. (b) the term "Common Stock" shall mean the class of stock designated as the common stock, par value $.001 per share, of the Company at the date of the adoption of this resolution or any other class of stock resulting from successive changes or reclassifications of such common stock. 4. Dividends. No dividends shall accrue or be payable on the Series A Preferred Stock. 5. Liquidation Preference ($.20 per share). (a) In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, then, before any distribution or payment shall be made to the holders of any Junior Stock, the holders of Series A Preferred Stock shall be entitled to be paid in full an amount equal to $.20 per share, together with accrued and unpaid dividends and any accumulated dividends to such distribution or payment date, whether earned or declared. (b) If, upon any liquidation, dissolution or winding up of the Company, such payment referred to in Section (a) above shall have been made in full to holders of Series A Preferred Stock, the remaining assets and funds of the Company shall be distributed among the holders of the Junior Stock, according to their respective rights and preferences and in each case according to their respective shares. If, upon any liquidation, dissolution or winding up of the Company, such payment referred to in Section (a) above shall not have been made in full to the holders of all outstanding shares of Series A Preferred Stock, the holders of Series A Preferred Stock and all other classes or series of stock of the Company ranking on a parity therewith in the distribution of assets, shall share ratably in any distribution of assets in proportion to the full amounts to which they would otherwise be respectively entitled. Neither the consolidation nor the merger of the Company with or into any other corporation or corporations, nor a reorganization of the Company alone, nor the sale or transfer of all or any part of its assets, shall be deemed a liquidation, dissolution or winding up of the Company within the meaning of this Section 5. 6. Notice of Liquidation. Written notice of any voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, stating a payment date and the place where the distributable amounts shall be payable and containing a statement of or reference to the conversion right set forth in Section 8 shall be given by the Company to the holders or holders of the Series A Preferred Stock. 7. Redemption. In the event the condition precedent to the conversion of the Series A Preferred Stock into Common Stock, as provided for in Section 10 of this Designation, the Company may, at its sole option, redeem the Series A Preferred Stock at its stated value. E-46 8. Conversion Right. Subject to and upon compliance with the provisions of this Section 8, at the option of the holder thereof, any share of the Series A Preferred Stock may be converted into ten (10) shares of Common Stock ("Conversion Ratio"). To convert shares of Series A Preferred Stock into Common Stock, the holder thereof shall surrender at the office of any transfer agent for the Series A Preferred Stock (or, if there be no transfer agent, at the principal office of the Company) the certificate or certificates therefor, duly endorsed or assigned to the Company, and give written notice to the Company that such holder elects to convert such shares. Such notice of conversion shall specify (i) the number of shares of Series A Preferred Stock to be converted and the name or names in which such holder wishes the certificate or certificates for Common Stock and for any shares of Series A Preferred Stock not be so converted to be issued and (ii) the address to which such holder wishes delivery to be made of such new certificates to be issued upon such conversion. Shares of Series A Preferred Stock shall be deemed to have been converted immediately prior to the close of business on the day of the surrender of such shares for conversion in accordance with the foregoing provisions, and the person or persons entitled to receive the Common Stock issuable upon conversion shall thereupon be treated for all purposes as the record holder or holders of the Common Stock. As promptly as practicable on or after the conversion date, the Company shall issue and shall deliver a certificate or certificates for the number of full shares of Common Stock issuable upon conversion, together with payment in lieu of any fractional share, as hereinafter provided, to the person or persons entitled to receive the same. In the event that there shall have been surrendered a certificate or certificates representing shares of Series A Preferred Stock, only part of which are to be converted, the Company shall issue and deliver to such holder or such holder's designee a new certificate or certificates representing the number of shares of Series A Preferred Stock which shall not have been converted. 9. Adjustment of Conversion Ratio. The Conversion Ratio in effect at any time and the number and kind of securities purchasable upon the conversion of equal share of the Series A Preferred Stock shall be subject to adjustment from time to time upon the happening of certain events at any time after December 1, 2002 as follows: (a) Distributions, Subdivision or Reclassification of Common Stock. In case the Company shall (i) make a distribution on its outstanding Common Stock in shares of Common Stock; (ii) subdivide or reclassify its outstanding shares of Common Stock into a greater number of shares; or (iii) combine or reclassify its outstanding shares of Common Stock into a smaller number of shares, then the Conversion Ratio in effect at the time of the record date for such distribution or the effective date of such subdivision, combination or reclassification shall be proportionately adjusted; and E-47 (b) Condition Precedent in Extraordinary Transaction. In case of any reclassification, capital reorganization or other similar activity which results in a change in the outstanding shares of Common Stock or in case of the merger or consolidation of the Company with another entity or any sale, assignment, lease or conveyance to another entity of all or substantially all of the property or assets of the Company in one or a series of transactions, the Company shall, as a condition precedent to such transaction, cause effective provisions to be made so that the holders of Preferred Stock shall have the right thereafter, by converting the Series A Preferred Stock at any time prior to the date of mandatory redemption of the Series A Preferred Stock, to purchase the kind and amount of shares and other securities and property receivable upon such reclassification, capital reorganization or similar activity, change, merger or consolidation, or sale, assignment, lease or conveyance which would have been received had the Series A Preferred Stock been converted immediately prior to such reclassifications, capital reorganization, similar activity, change, merger or consolidation, or sale, assignment, lease or conveyance. Any such provision shall include provision for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for herein. 10. Condition Precedent to Conversion. The holders of the Series A Preferred Stock may convert their shares of Series A Preferred Stock into Common Stock pursuant to Section 8 above, only if one or both of the following events occurs: (a) The Company operates at a profit during any fiscal year ending prior to June 30, 2005; or (b) On or before June 30, 2005, the Company's shareholders' equity increases by $100,000 or more over the Company's shareholders' equity as of September 30, 2002. If neither of the above-listed conditions occurs, the Series A Preferred may not be converted into Common Stock and may, at the sole option of the Company, be redeemed at Stated Value. E-48 11. Notice of Certain Corporate Action. In case: (i) the Company shall declare a dividend on its Common Stock payable otherwise than in cash out of its earned surplus; or (ii) the Company shall authorize the granting to the holders of its Common Stock of rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any other rights; (iii) the Company shall reclassify the Common Stock of the Company (excluding a subdivision or combination of its outstanding shares of Common Stock); or (iv) of any consolidation or merger to which the Company is a party and for which approval of any stockholders of the Company is required, or of the sale or transfer of all or substantially all of the assets of the Company; or (v) of the voluntary or involuntary dissolution, liquidation or winding up of the Company; then the Company shall cause to be filed with the transfer agent (if any) for the Series A Preferred Stock, and shall cause to be mailed to all holders of record of the Series A Preferred Stock, at least 20 days (or 10 days in any case specified in clause (i) or (ii) above) prior to the applicable record date hereinafter specified, a notice stating (1) the record date, or (2) the date on which such reclassification, merger, sale, transfer, dissolution, liquidation or winding up is expected to become effective, and the date as of which it is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities, cash or other property deliverable upon such reclassification, merger, sale, transfer, dissolution, liquidation or winding up. 12. Company to Reserve Common Stock. For the purpose of effecting the conversion of the Series A Preferred Stock, the Company shall at all times reserve and keep available, free from preemptive rights, out of its authorized but unissued Common Stock, the full number of shares of Common Stock then issuable upon the conversion of all outstanding Preferred Stock. 13. Covenant as to Common Stock. The Company covenants that all shares of Common Stock, which may be issued upon conversion of the Series A Preferred Stock, will upon issue be fully paid and nonassessable, and the Company will pay all taxes, liens and charges with respect to the issue thereof. Each share of Common Stock, which may be issued upon conversion of the Series A Preferred Stock, shall have one vote. 14. Voting. The holders of Series A Preferred Stock shall have no voting rights prior to conversion of the Series A Preferred Stock into Common Stock except as otherwise provided by the Utah Revised Business Corporations Act. IN WITNESS WHEREOF, the undersigned president and secretary, having been thereunto duly authorized, have executed the foregoing Articles of Amendment to the Articles of Incorporation for the corporation this _____ day of November, 2002. OGDEN GOLF CO. CORPORATION By ____________________________________ Paul Larsen President Attest: _________________________ Robert R. Peterson Secretary E-49 EX-3.(II) 9 ex3-3_2003.txt Exhibit 3.3 Form SB-2 Ogden Golf Co. Corporation BYLAWS OF OGDEN GOLF CO. CORPORATION E-50 TABLE OF CONTENTS ARTICLE I. OFFICES......................................................... 1 ss. 1.1. Business Office............................................... 1 ss. 1.2. Registered Office............................................. 1 ARTICLE II. SHAREHOLDERS................................................... 1 ss. 2.1. Annual Shareholder Meeting.................................... 1 ss. 2.2. Special Shareholder Meetings.................................. 1 ss. 2.3. Place of Shareholder Meeting.................................. 1 ss. 2.4. Notice of Shareholder Meeting................................. 1 ss. 2.5. Fixing of Record Date......................................... 3 ss. 2.6. Shareholder List.............................................. 3 ss. 2.7. Shareholder Quorum and Voting Requirements.................... 4 ss. 2.8. Proxies....................................................... 4 ss. 2.9. Voting of Shares.............................................. 4 ss. 2.10. Corporation's Acceptance of Votes............................. 5 ss. 2.11. Informal Action by Shareholders............................... 6 ss. 2.12. Voting for Directors.......................................... 6 ss. 2.13. Shareholder's Rights to Inspect Corporate Records............. 6 ss. 2.14. Financial Statements Shall Be Furnished to the Shareholders... 8 ss. 2.15. Dissenters' Rights............................................. 8 ARTICLE III. BOARD OF DIRECTORS............................................. 8 ss. 3.1. General Powers................................................. 8 ss. 3.2. Number, Tenure, and Qualifications of Directors................ 8 ss. 3.3. Regular Meetings of the Board of Directors..................... 8 ss. 3.4. Special Meetings of the Board of Directors..................... 9 ss. 3.5. Notice of, and Waiver of Notice for, Special Director Meeting.. 9 ss. 3.6. Director Quorum................................................ 9 ss. 3.7. Directors, Manner of Acting.................................... 9 ss. 3.8. Director Action Without a Meeting.............................. 10 ss. 3.9. Removal of Directors........................................... 10 ss. 3.10. Board of Director Vacancies.................................... 10 ss. 3.11. Director Compensation.......................................... 10 ss. 3.12. Director Committees............................................ 11 ARTICLE IV. OFFICERS........................................................ 12 E-51 ss. 4.1. Number of Officers............................................. 12 ss. 4.2. Appointment and Term of Office................................. 12 ss. 4.3. Removal of Officers............................................ 12 ss. 4.4. President...................................................... 12 ss. 4.5. The Vice-Presidents............................................ 12 ss. 4.6. The Secretary.................................................. 13 ss. 4.7. The Treasurer.................................................. 13 ss. 4.8. Assistant Secretaries and Assistant Treasurers................. 13 ss. 4.9. Salaries....................................................... 13 ARTICLE V. INDEMNIFICATION OF DIRECTORS, OFFICERS, AGENTS AND EMPLOYEES..................................................... 13 ss. 5.1. Indemnification of Directors................................... 13 ss. 5.2. Advance Expenses for Directors................................. 14 ss. 5.3. Indemnification of Officers, Agents, and Employees Who Are Not Directors.................................................... 15 ARTICLE VI. CERTIFICATE FOR SHARES AND THEIR TRANSFER....................... 15 ss. 6.1. Certificates for Shares........................................ 15 ss. 6.2. Shares Without Certificates.................................... 16 ss. 6.3. Registration of the Transfer of Shares......................... 16 ss. 6.4. Restrictions on Transfer of Shares Permitted................... 16 ss. 6.5. Acquisition of Shares.......................................... 17 ARTICLE VII. DISTRIBUTIONS.................................................. 17 ss. 7.1. Distributions.................................................. 17 ARTICLE VIII. GENERAL PROVISIONS............................................ 18 ss. 8.1. Corporate Seal................................................. 18 ss. 8.2. Fiscal Year.................................................... 18 ss. 8.3. Evidence of Authority.......................................... 18 ss. 8.4. Articles of Incorporation...................................... 18 ss. 8.5. Pronouns....................................................... 18 ARTICLE IX. EMERGENCY BYLAWS............................................... 18 ss. 9.1. Emergency Bylaws............................................... 18 ARTICLE X. AMENDMENTS....................................................... 19 ss. 10.1. Amendments..................................................... 19 E-52 BYLAWS OF OGDEN CO. CORPORATION ARTICLE I. OFFICES ss. 1.1. Business Office. The Principal office of the corporation shall be located at any place either within or outside the State of Utah as designated in the company's most current Annual Report filed with the Department of Commerce of the State of Utah. The corporation may have such other offices, either within or without the State of Utah as the Board of Directors may designate or as the business of the corporation may require from time to time. The corporation shall maintain at its principal office a copy of certain records, as specified in ss. 2.13 of Article II. ss. 1.2. Registered Office. The registered office of the corporation, required by ss.16-10a-501, Utah Code Ann., shall be located within the State of Utah and may be, but need not be, identical with the principal office of the corporation. The address of the registered office may be changed from time to time. ARTICLE II. SHAREHOLDERS ss. 2.1. Annual Shareholder Meeting. The annual meeting of the shareholders shall be held at such time and on such date as shall be fixed by the Board of Directors, for the purpose of electing directors and for the transaction of such other business as may come before the meeting. ss. 2.2. Special Shareholder Meetings. Special meetings of the shareholders, for any purpose or purposes, described in the notice of meeting, may be called by the president, or by the Board of Directors or by the Chairman of the Board of Directors, and shall be called by the President at the request of the holders of not less than one-tenth of all outstanding votes of the corporation entitled to be cast on any issue at the meeting. ss. 2.3. Place of Shareholder Meeting. The Board of Directors may designate any place, either within or outside of the State of Utah as the place of meeting for any Annual or any Special Meeting of the Shareholders. ss. 2.4. Notice of Shareholder Meeting. A. Required Notice. Written notice stating the place, day and hour of any annual or special shareholder meeting shall be delivered not less than 10 nor more than 60 days before the date of the meeting, either personally or by mail, by or at the direction of the President, the Board of Directors, or other persons calling the meeting, to each shareholder of record, entitled to vote at such meeting and to any other shareholder entitled by the Utah Revised Business Corporation Act or the Articles of Incorporation to receive notice of the meeting. Notice shall be deemed to be effective at the earlier of: (1) when deposited in the United States mail, addressed to the shareholder at his address as it appears on the stock transfer books of the corporation, with postage thereon prepaid; (2) E-53 on the date shown on the return receipt if sent by registered or certified mail, return receipt requested, and the receipt is signed by or on behalf of the addressee; (3) when received; or (4) 5 days after deposit in the United States mail, if mailed postpaid and correctly addressed to an address other than that shown in the corporation's current record of shareholders. B. Adjourned Meeting. If any shareholder meeting is adjourned to a different date, time, or place, notice need not be given of the new date, time, and place, if the new date, time, and place is announced at the meeting before adjournment and such new date is within thirty (30) days from the originally scheduled meeting date. If a new record date for the adjourned meeting is, or must be fixed then notice must be given pursuant to the requirements of paragraph (a) of this ss. 2.4, to those persons who are shareholders as of the new record date. C. Waiver of Notice. The shareholder may waive notice of the meeting (or any notice required by the Act, Articles of Incorporation, or Bylaws), by a writing signed by the shareholder entitled to the notice, which is delivered to the corporation (either before or after the date and time stated in the notice) for inclusion in the minutes or filing with the corporate records. A shareholder's attendance at a meeting: 1. waives objection to lack of notice or defective notice of the meeting, unless the shareholder at the beginning of the meeting objects to holding the meeting or transacting business at the meeting; 2. waives objection to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, unless the shareholder objects to considering the matter when it is presented. D. Contents of Notice. The notice of each special shareholder meeting shall include a description of the purpose or purposes for which the meeting is called. Except as provided in this ss. 2.4(d), or as provided in the corporation's Articles of Incorporation, or otherwise in the Utah Revised Business Corporation Act, the notice of an Annual Shareholder Meeting need not include a description of the purpose or purposes for which the meeting is called. If a purpose of any shareholder meeting is to consider either: (1) a proposed amendment to the Articles of Incorporation (including any Restated Articles requiring shareholder approval); (2) a plan of merger or share exchange; (3) the sale, lease, exchange or other disposition of all, or substantially all of the corporation's property; (4) the dissolution of the corporation; or (5) the removal of a director, the notice must so state and be accompanied by respectively a copy or summary of the: (1) Articles of Amendment; (2) Plan of Merger or Share Exchange; or (3) transaction for disposition of all the corporation's property. If the proposed corporate action created dissenters' rights, the notice must state that shareholders are, or may be entitled to assert dissenters' rights, and must be accompanied by a copy of Part 13 of Utah Revised Business Corporation Act. If the corporation issues, or authorizes theissuance of shares for E-54 promissory notes or for promises to render services in the future, the corporation shall report in writing to all the shareholders the number of shares authorized or issued, and the consideration received with or before the notice of the next shareholder meeting. Likewise, if the corporation indemnifies or advances expenses to a director, this shall be reported to all the shareholders with or before notice of the next shareholder's meeting. ss. 2.5. Fixing of Record Date. For the purpose of determining shareholders of any voting group entitled to notice of or to vote at any meeting of shareholders, or shareholders entitled to receive payment of any distribution or dividend, or in order to make a determination of shareholders for any other proper purpose, the Board of Directors may fix in advance a date as the record date. Such record date shall not be more than 70 days prior to the date on which the meeting or the particular action, requiring such determination of shareholders is to be taken. If no record date is so fixed by the Board for the determination of shareholders entitled to notice of, or to vote at a meeting of shareholders, or shareholders entitled to receive a share dividend or distribution, the record date for determination of such shareholders shall be at the close of business on: 1. With respect to an Annual Shareholder Meeting or any Special Shareholder Meeting called by the Board of Directors or any person specifically authorized by the Board or these Bylaws to call a meeting, the day before the first notice is delivered to shareholders; 2. With respect to a Special Shareholder's Meeting demanded by the shareholders, the date the first shareholder signs the demand; 3. With respect to the payment of a share dividend, the date the board authorizes the share dividend; 4. With respect to actions taken in writing without a meeting (pursuant to Article II, ss. 2.11), the date the first shareholder signs a consent; 5. And with respect to a distribution to shareholders, (other than one involving a repurchase or reacquisition of shares), the date the Board authorizes the distribution. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, such determination shall apply to any adjournment thereof unless the Board of Directors fixes a new record date which it must do if the meeting is adjourned to a date more than 120 days after the date fixed for the original meeting. ss. 2.6. Shareholder List. The officer or agent having charge of the stock transfer books for shares of the corporation shall make a complete record of the shareholders entitled to vote at each meeting of shareholders thereof, arranged in alphabetical order, with the address of and the number of shares held by each. The list must be arranged by voting group (if such exists, see Art. II. ss. 2.7) and within each voting group by class or series of shares. The E-55 shareholder list must be available for inspection by any shareholder, beginning two business days after notice of the meeting is given for which the list was prepared and continuing through the meeting. The list shall be available in the corporation's principal office or at a place identified in the meeting notice in the city where the meeting is to be held. A shareholder, his agent, or attorney is entitled on written demand to inspect and, subject to the requirements of ss. 2.13 of this Article II, to copy the list during regular business hours and at his expense, during the period it is available for inspection. The corporation shall maintain the shareholder list in written form or in another form capable of conversion into written form within a reasonable time. ss. 2.7. Shareholder Quorum and Voting Requirements. If the Articles of Incorporation or the Utah Revised Business Corporation Act provides for voting by a single voting group on a matter, action on that matter is taken when voted upon by that voting group. Shares entitled to vote as a separate voting group may take action on a matter at a meeting only if a quorum of those shares exists with respect to that matter. Unless the Articles of Incorporation, the Bylaws, or the Utah Revised Business Corporation Act provide otherwise, a majority of the votes entitled to be cast on the matter by the voting group constitutes a quorum of that voting group for action on that matter. If the Articles of Incorporation or the Utah Revised Business Corporation Act provide for voting by two or more voting groups on a matter, action on that matter is taken only when voted upon by each of those voting groups counted separately. Action may be taken by one voting group on a matter even though no action is taken by another voting group entitled to vote on the matter. Once a share is represented for any purpose at a meeting, it is deemed present for quorum purposes for the remainder of the meeting and for any adjournment of that meeting unless a new record date is or must be set for that adjourned meeting. If a quorum exists, action on a matter (other than the election of directors) by a voting group is approved if the votes cast within the voting group favoring the action exceed the votes cast opposing the action. ss. 2.8. Proxies. At all meetings of shareholders, a shareholder may vote in person, or by a proxy which is executed in writing by the shareholder or which is executed by his duly authorized attorney-in-fact. Such proxy shall be filed with the Secretary of the corporation or other person authorized to tabulate votes before or at the time of the meeting. No proxy shall be valid after 11 months from the date of its execution unless otherwise provided in the proxy. A shareholder may appoint a proxy by transmitting or authorizing the transmission of a telegram, teletype, telecopy or other electronic transmission. ss. 2.9. Voting of Shares. Unless otherwise provided in the Articles of Incorporation, each outstanding share shall be entitled to one vote upon each matter submitted to a vote at a meeting of shareholders. E-56 Except as provided by specific court order, no shares held by another corporation, if a majority of the shares entitled to vote for the election of directors of such other corporation are held by the corporation, shall be voted at any meeting or counted in determining the total number of outstanding shares at any given time for purposes of any meeting. Provided, however, the prior sentence shall not limit the power of the corporation to vote any shares, including its own shares, held by it in a fiduciary capacity. Redeemable shares are not entitled to vote after notice of redemption is mailed to the holders and a sum sufficient to redeem the shares has been deposited with a bank, trust company, or other financial institution under an irrevocable obligation to pay the holders the redemption price on surrender of the shares. ss. 2.10. Corporation's Acceptance of Votes. A. If the name signed on a vote, consent, waiver, or proxy appointment corresponds to the name of a shareholder, the corporation if acting in good faith, is entitled to accept the vote, consent, waiver, or proxy appointment and give it effect as the act of the shareholder. B. If the name signed on a vote, consent, waiver, or proxy appointment does not correspond to the name of its shareholder, the corporation, if acting in good faith, is nevertheless entitled to accept the vote, consent, waiver, or proxy appointment and give it effect as the act of the shareholder if: 1. the shareholder is an entity and the name signed purports to be that of an officer or agent of the entity; 2. the name signed purports to be that of an administrator, executor, guardian, or conservator representing the shareholder and, if the corporation requests, evidence of fiduciary status acceptable to the corporation has been presented with respect to the vote, consent, waiver, or proxy appointment; 3. the name signed purports to be that of a receiver or trustee in bankruptcy of the shareholder and, if the corporation requests, evidence of this status acceptable to the corporation has been presented with respect to the vote, consent, waiver, or proxy appointment; 4. the name signed purports to be that of a pledgee, beneficial owner, or attorney-in-fact of the shareholder and, if the corporation requests, evidence acceptable to the corporation of the signatory's authority to sign for the shareholder has been presented with respect to the vote, consent, waiver, or proxy appointment; or E-57 5. two or more persons are the shareholder as co-tenants or fiduciaries and the name signed purports to be the name of at lease one of the co-owners and the person signing appears to be acting on behalf of all the co-owners. C. The corporation is entitled to reject a vote, consent, waiver, or proxy appointment if the secretary or other officer or agent authorized to tabulate votes, acting in good faith, has reasonable basis for doubt about the validity of the signature on it or about the signatory's authority to sign for the shareholder. D. The corporation and its officer or agent who accepts or rejects a vote, consent, waiver, or proxy appointment in good faith and in accordance with the standards of this section, are not liable in damages to the shareholder for the consequences of the acceptance or rejection. E. Corporate action based on the acceptance or rejection of a vote, consent, waiver, or proxy appointment under this section is valid unless a court of competent jurisdiction determines otherwise. ss. 2.11. Informal Action by Shareholders. Any action required or permitted to be taken at a meeting of the shareholders may be taken without a meeting if one or more consents in writing, setting forth the action, shall be signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take the action at a meeting at which all shares entitled to vote thereon were present and voted. If written consents of less than all the shareholders have been obtained, notice of such shareholder approval by written consent shall be given at least ten (10) days before the consummation of the action authorized by such written consent to those shareholders entitled to vote who have not consented in writing and to any non-voting shareholders. Such notice shall contain or be accompanied by the same material that would have been required if a formal meeting had been called to consider the action. A consent signed under this section has the effect of a vote at a meeting and may be described as such in any document. ss. 2.12. Voting for Directors. Unless otherwise provided in the Articles of Incorporation, directors are elected by a plurality of the votes cast by the shares entitled to vote in the election at a meeting at which a quorum is present. Shareholders do not have a right to cumulate their votes. ss. 2.13. Shareholder's Rights to Inspect Corporate Records. A. Minutes and Accounting Records. The corporation shall keep as permanent records minutes of all meetings of its shareholders and Board of Directors, a record of all actions taken by the shareholders or board of directors without a meeting, and a record of all actions taken by a committee of the Board of Directors. The corporation shall maintain appropriate accounting records. B. Absolute Inspection Rights of Records Required at Principal Office. If he gives the corporation written notice of his demand at least five E-58 business days before the date on which he wishes to inspect and copy, a shareholder (or his agent or attorney) has the right to inspect and copy, during regular business hours any of the following records, all of which the corporation is required to keep at its principal office: 1. its Articles or Restated Articles of Incorporation and all amendments to them currently in effect; 2. its Bylaws or Restated Bylaws and all amendments to them currently in effect; 3. resolutions adopted by its Board of Directors creating one or more classes or series of shares, and fixing their relative rights, preferences, and limitations, if shares issued pursuant to those resolutions are outstanding; 4. the minutes of all shareholders' meetings, and records of all action taken by shareholders without a meeting, for the past three years; 5. all written communications to shareholders generally within the past three years, including the financial statements furnished for the past three years to the shareholders; 6. a list of the names and business addresses of its current directors and officers; and 7. its most recent Annual Report delivered to the Department of Commerce. C. Conditional Inspection. In addition, if he gives the corporation a written demand made in good faith and for a proper purpose at least five business days before the date on which he wishes to inspect and copy, in which he describes with reasonable particularity his purpose and the records he desires to inspect, and the records are directly connected with his purpose, a shareholder of the corporation (or his agent or attorney) is entitled to inspect and copy, during regular business hours at a reasonable location specified by the corporation, any of the following records of the corporation: 1. excerpts from minutes of any meeting of the Board of Directors, records of any action of the Board of Directors or a committee of the Board of Directors on behalf of the corporation, minutes of any meeting of the shareholders, and records of action taken by the shareholders or Board of Directors and without a meeting, to the extent not subject to inspection under paragraph A of this ss. 2.13. 2. accounting records of the corporation; and E-59 3. the record of shareholders (compiled no earlier than the date of the shareholder's demand). D. Copy Costs. The right to copy records includes, if reasonable, the right to receive copies made by photographic, xerographic, or other means. The corporation may impose a reasonable charge, covering the costs of labor and material, for copies of any documents provided to the shareholder. The charge may not exceed the estimated cost of production or reproduction of the records. E. Shareholder Includes Beneficial Owner. For purposes of this ss. 2.13, the terms "shareholder" shall include a beneficial owner whose shares are held in a voting trust or by a nominee on his behalf. ss. 2.14. Financial Statements Shall Be Furnished to the Shareholders. Upon the written request of any shareholder, the corporation shall mail to him its most recent annual or quarterly financial statements. ss. 2.15. Dissenters' Rights. Each shareholder shall have the right to dissent from and obtain payment for his shares when so authorized by the Utah Revised Business Corporation Act, Articles of Incorporation, these Bylaws, or in a resolution of the Board of Directors. ARTICLE III. BOARD OF DIRECTORS ss. 3.1. General Powers. All corporate powers shall be exercised by or under the authority of, and the business and affairs of the corporation shall be managed under the direction of the Board of Directors. ss. 3.2. Number, Tenure, and Qualifications of Directors. The number of directors which shall constitute the whole Board of Directors shall be determined by resolution of the stockholders or the resolution of the Board of Directors, but in no event shall be less than three, provided, however, that in the event the number of shareholders of the Company is less than three the number of directors may be less than three but must be equal to or more than the number of shareholders. The number of directors may be increased by resolution of the shareholders or the Board of Directors. The number of directors may be decreased at any time either by the shareholders or by a majority of the directors then in office, but only to eliminate vacancies existing by reason of the death, resignation, removal or expiration of the term of one or more directors. Each director shall hold office until the next annual meeting of shareholders or until removed. However, if his term expires, he shall continue to serve until his successor shall have been elected and qualified or until there is a decrease in the number of directors. Directors need not be residents of the State of Utah or shareholders of the corporation. ss. 3.3. Regular Meetings of the Board of Directors. A regular meeting of the Board of Directors shall be held without other notice than this bylaw immediately after, and at the same place as, the Annual Meeting of Shareholders. The Board of Directors may provide, by resolution, the time and place for the E-60 holding of addition regular meetings without other notice than such resolution. Any such regular meeting may be held by telephone. ss. 3.4. Special Meetings of the Board of Directors. Special meetings of the Board of Directors may be called by or at the request of the President or any one director. The person authorized to call Special Meetings of the Board of Directors may fix any place, (but only within the county where this corporation has its principal office) as the place for holding any Special Meeting of the Board of Directors, or such meeting may be held by telephone. ss. 3.5. Notice of, and Waiver of Notice for, Special Director Meeting. Notice of any special director meeting shall be given at least two days previously thereto either orally or in writing. If mailed, notice of any director meeting shall be deemed to be effective at the earlier of: (1) when received; (2) five days after deposited in the United States mail, addressed to the director's business office, with postage thereon prepaid; or (3) the date shown on the return receipt if sent by registered or certified mail, return receipt requested, and the receipt is signed by or on behalf of the director. Any director may waive notice of any meeting. Except as provided in the next sentence, the waiver must be in writing, signed by the director entitled to the notice, and filed with the minutes or corporate records. The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business and at the beginning of the meeting (or promptly upon his arrival) objects to holding the meeting or transacting business at the meeting, and does not thereafter vote for or abstain to action taken at the meeting. Unless required by the Articles of Incorporation, neither the business to be transacted at, nor the purpose of, any Special Meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting. ss. 3.6. Director Quorum. A majority of the whole Board of Directors shall constitute a quorum at all meetings of the Board of Directors. ss. 3.7. Directors, Manner of Acting. The act of the majority of the directors present at a meeting at which a quorum is present when the vote is taken shall be the act of the Board of Directors. Unless the Articles of Incorporation provide otherwise, any or all directors may participate in a regular or special meeting by, or conduct the meeting through the use of, any means of communication by which all directors participating may hear each other during the meeting. A director participating in a meeting by this means is deemed to be present in person at the meeting. A director who is present at a meeting of the Board of Directors or a committee of the Board of Directors when corporate action is taken is deemed to have assented to the action taken unless: (1) he objects at the beginning of the meeting (or promptly upon his arrival) to holding it or transacting business at the meeting; or (2) his dissent or abstention from the action taken is entered in the minutes of the meeting; or (3) he delivers written notice of his dissent or abstention to the presiding officer of the meeting before its adjournment or E-61 to the corporation immediately after adjournment of the meeting. The right of dissent or abstention is not available to a director who votes in favor of the action taken. ss. 3.8. Director Action Without a Meeting. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee of the Board of Directors may be taken without a meeting, if all members of the Board of Directors or committee, as the case may be, consent to the action in writing, and the written consents are filed with the minutes of proceedings of the Board of Directors or committee. ss. 3.9. Removal of Directors. The shareholders may remove one or more directors at a meeting called for that purpose if notice has been given that a purpose of the meeting is such removal. The removal may be with or without cause. A director may be removed only if the number of votes cast to remove him exceeds the number of votes cast not to remove him. ss. 3.10. Board of Director Vacancies. If a vacancy occurs on the Board of Directors, including a vacancy resulting from an increase in the number of directors: (1) the shareholders may fill the vacancy; (2) the Board of Directors may fill the vacancy; or (3) if the directors remaining in office constitute fewer than a quorum of the Board, they may fill the vacancy by the affirmative vote of a majority of all the directors remaining in office. A vacancy that will occur at a specific later date (by reason of a resignation effective at a later date) may be filled before the vacancy occurs but the new director may not take office until the vacancy occurs. The term of a director elected to fill a vacancy expires at the next shareholders' meeting at which directors are elected. However, if his term expires, he shall continue to serve until his successor is elected and qualifies or until there is a decrease in the number of directors. ss. 3.11. Director Compensation. Unless otherwise provided by resolution of the Board of Directors, each director may be paid his expenses, if any, of attendance at each meeting of the Board of Directors, and may be paid a stated salary as director or a fixed sum for attendance at each meeting of the Board of Directors or both. No such payment shall preclude any director from serving the corporation in any capacity and receiving compensation therefor. E-62 ss. 3.12. Director Committees. (a) Creation of Committees. The Board of Directors may create one or more committees and appoint members of the Board of Directors to serve on them. Each committee must have two or more members, who serve at the pleasure of the Board of Directors. (b) Selection of Members. The creation of a committee and appointment of members to it must be approved by a majority of all the directors in office when the action is taken. (c) Required Procedures. Sections 3.4, 3.5, 3.6, 3.7, and 3.8 of this Article III, which govern meetings, action without meetings, notice and waiver of notice, quorum and voting requirements of the Board of Directors, apply to committees and their members. (d) Authority. Each committee may exercise those aspects of the authority of the Board of Directors which the Board of Directors confers upon such committee in the resolution creating the committee. Provided, however, a committee may not: (1) authorize distributions; (2) approve or propose to shareholders action that the Utah Revised Business Corporation Act requires to be approved by shareholders; (3) fill vacancies on the Board of Directors or on any of its committees; (4) amend the Articles of Incorporation pursuant to the authority of directors to do so granted by ss.16-10a-1002 of the Utah Revised Business Corporation Act. (5) adopt, amend, or repeal Bylaws; (6) approve a plan of merger not requiring shareholder approval; (7) authorize or approve reacquisition of shares, except according to a formula or method prescribed by the Board of Directors; or (8) authorize or approve the issuance or sale or contract for sale of shares or determine the designation and relative rights, preferences, and limitations of a class or series of shares, except that the board of directors may authorize a committee (or a senior executive officer of the corporation) to do so within limits specifically prescribed by the Board of Directors. E-63 ARTICLE IV. OFFICERS ss. 4.1. Number of Officers. The officers of the corporation shall be a President, a Secretary, and a Treasurer, each of whom shall be appointed by the Board of Directors. Such other officers and assistant officers as may be deemed necessary, including any vice-presidents, may be appointed by the Board of Directors. If specifically authorized by the Board of Directors, an officer may appoint one or more officers or assistant officers. The same individual may simultaneously hold more than one office in the corporation. ss. 4.2. Appointment and Term of Office. The officers of the corporation shall be appointed by the Board of Directors for a term as determined by the Board of Directors. (The designation of a specified term grants to the officer no contract rights, and the board can remove the officer at any time prior to the termination of such term.) If no term is specified, an officer shall hold office until he resigns, dies, or until he is removed in the manner provided in ss. 4.3 of this Article IV. ss. 4.3. Removal of Officers. Any officer or agent may be removed by the Board of Directors at any time, with or without cause. Such removal shall be without prejudice to the contract rights, if any, of the person so removed. Appointment of an officer or agent shall not of itself create contract rights. ss. 4.4. President. The President shall be the principal executive officer of the corporation and subject to the control of the Board of Directors, shall in general supervise and control all of the business and affairs of the corporation. He shall, when present, preside at all meetings of the shareholders and of the Board of Directors. He may sign, with the Secretary or any other proper officer of the corporation authorized by the Board of Directors, certificates for shares of the corporation and deeds, mortgages, bonds, contracts, or other instruments which the Board of Directors has authorized to be executed, except in cases where the signing and execution thereof shall be expressly delegated by the Board of Directors or by these Bylaws to some other officer or agent of the corporation, or shall be required by law to be otherwise signed or executed; and in general shall perform all duties incident to the office of President and such other duties as may be prescribed by the Board of Directors from time to time. ss. 4.5. The Vice-Presidents. If appointed, in the absence of the President or in the event of his death, inability or refusal to act, the Vice-President (or in the event there be more than one Vice-President, the Vice-Presidents in the order designated at the time of their election, or in the absence of any designation, then in the order of their appointment) shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. (If there is no Vice-President, then the Treasurer shall perform such duties of the President.) Any Vice-President may sign, with the Secretary or an Assistant Secretary, certificates for shares of the corporation the issuance of which have been authorized by resolution of the Board of Directors; and shall perform such other duties as from time to time may be assigned to him by the President or by the Board of Directors. E-64 ss. 4.6. The Secretary. The Secretary shall: (a) keep the minutes of the proceedings of the shareholders and of the Board of Directors in one or more minute books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these Bylaws or as required by law; (c) be custodian of the corporate records and of any seal of the corporation and if there is a seal of the corporation, see that it is affixed to all documents the execution of which on behalf of the corporation under its seal is duly authorized; (d) when requested or required, authenticate any records of the corporation; (e) keep a register of the post office address of each shareholder which shall be furnished to the Secretary by such shareholder; (f) sign with the President, or a Vice-President, certificates for shares of the corporation, the issuance of which shall have been authorized by resolution of the Board of Directors; (g) have general charge of the stock transfer books of the corporation; and (h) in general perform all duties incident to the office of Secretary and such other duties as from time to time may be assigned to him by the President or by the Board of Directors. ss. 4.7. The Treasurer. The Treasurer shall: (a) have charge and custody of and be responsible for all funds and securities of the corporation; (b) receive and give receipts for moneys due and payable to the corporation from any source whatsoever, and deposit all such moneys in the name of the corporation in such banks, trust companies, or other depositories as shall be selected by the Board of Directors; and (c) in general perform all of the duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him by the President or by the Board of Directors. If required by the Board of Directors, the Treasurer shall give a bond for the faithful discharge of his duties in such sum and with such surety or sureties as the Board of Directors shall determine. ss. 4.8. Assistant Secretaries and Assistant Treasurers. The Assistant Secretaries, when authorized by the Board of Directors, may sign with the President or a Vice-President certificates for shares of the corporation the issuance of which shall have been authorized by a resolution of the Board of Directors. The assistant treasurers shall respectively, if required by the Board of Directors. The Assistant Treasurers shall respectively, if required the Board of Directors, give bonds for the faithful discharge of their duties in such sums and with such sureties as the Board of Directors shall determine. The Assistant Secretaries and Assistant Treasurers, in general, shall perform such duties as shall be assigned to them by the Secretary or the Treasurer, respectively, or by the President or the Board of Directors. ss. 4.9. Salaries. The salaries of the officers shall be fixed from time to time by the Board of Directors. ARTICLE V. INDEMNIFICATION OF DIRECTORS, OFFICERS, AGENTS AND EMPLOYEES ss. 5.1. Indemnification of Directors. The corporation shall indemnify any individual made a party to a proceeding because he is or was a director of the corporation, against liability incurred in the proceeding, but only if the corporation has authorized the payment in accordance with ss.16-10a-906 of the Utah Revised Business Corporation Act and a determination has been made in E-65 accordance with the procedures set forth in such ss.16-10a-906 that the director met the standards of conduct in paragraph (a), (b) and (c) below. A. Standard of Conduct. The individual shall demonstrate that: (1) he conducted himself in good faith; and (2) he reasonably believed that his conduct was in, or not opposed to, the corporation's best interests; (3) in the case of any criminal proceeding, he had no reasonable cause to believe his conduct was unlawful. B. No Indemnification Permitted in Certain Circumstances. The Corporation shall not indemnify a director under this ss. 5.1 of Article V: (1) in connection with a proceeding by or in the right of the corporation in which the director was adjudged liable to the corporation; or (2) in connection with any other proceeding charging improper personal benefit to him, whether or not involving action in his official capacity, in which he was adjudged liable on the basis that personal benefit was improperly received by him. C. Indemnification in Derivative Actions Limited. Indemnification permitted under this ss. 5.1 of Article V in connection with a proceeding by or in the right of the corporation is limited to reasonable expenses incurred in connection with the proceeding. ss. 5.2. Advance Expenses for Directors. If a determination is made, following the procedures of ss. 16-10a-906 of the Utah Revised Business Corporation Act that the director has met the following requirements; and if an authorization of payment is made, following the procedures and standards set forth in ss. 16-10a-906, then unless otherwise provided in the Articles of Incorporation, the company shall pay for or reimburse the reasonable expenses incurred by a director who is a party to a proceeding in advance of final disposition of the proceeding if: (1) The director furnishes the corporation a written affirmation of his good faith belief that he has met the standard of conduct described in ss. 5.1 of this Article V. (2) the director furnishes the corporation a written undertaking, executed personally or on his belief, to repay the advance if it is ultimately determined that he did not meet the standard of conduct (which undertaking must be in unlimited general obligation of the director E-66 but need not be secured and may be accepted without reference to financial ability to make repayment); and (3) a determination is made that the facts then known to those making the determination would not preclude indemnification under ss. 5.1 of this Article V or under the Utah Revised Business Corporation Act. ss. 5.3. Indemnification of Officers, Agents, and Employees Who Are Not Directors. Unless otherwise provided in the Articles of Incorporation, the Board of Directors may indemnify and advance expenses to any officer, employee, or agent of the corporation, who is not a director of the corporation, to any extent consistent with public policy, as determined by the general or specific action of the Board of Directors. ARTICLE VI. CERTIFICATE FOR SHARES AND THEIR TRANSFER ss. 6.1. Certificates for Shares. (a) Content. Certificates representing shares of the corporation shall at minimum, state on their face the name of the corporation and that it is formed under the laws of Utah; the name of the person to whom issued; and the number and class of shares and the designation of the series, if any, the certificate represents; and be in such form as determined by the Board of Directors. Such certificates shall be signed (either manually or by facsimile) by the President or a Vice-President and by the Secretary or an Assistant Secretary and may be sealed with a corporate seal or a facsimile thereof. Each certificate for shares shall be consecutively numbered or otherwise identified. (b) Legend as to Class or Series. If the corporation is authorized to issue different classes of shares or different series within a class, the designation, relative rights, preferences, and limitations applicable to each class and the variations in rights, preferences, and limitations determined for each series (and the authority of the Board of Directors to determine variations for future series) must be summarized on the front or back of each certificate. Alternatively, each certificate may state conspicuously on its front or back that the corporation will furnish the shareholder this information on request in writing and without charge. (c) Shareholder List. The name and address of the person to whom the shares represented thereby are issued, with the number of shares and date of issue, shall be entered on the stock transfer books of the corporation. (d) Transferring Shares. All certificates surrendered to the corporation for transfer shall be canceled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and canceled, except that in case of a lost, destroyed, or mutilated certificate a new one may be issued therefor upon such terms and indemnity to the corporation as the Board of Directors may prescribe. E-67 ss. 6.2. Shares Without Certificates. (a) Issuing Shares Without Certificates. Unless the Articles of Incorporation provide otherwise, the Board of Directors may authorize the issue of some or all the shares of any or all of its classes or series without certificates. The authorization does not affect shares already represented by certificates until they are surrendered to the corporation. (b) Information Statement Required. Within a reasonable time after the issue or transfer of shares without certificates, the corporation shall send the shareholder a written statement containing at minimum: (1) the name of the issuing corporation and that it is organized under the law of the state of Utah; (2) the name of the person to whom issued; and (3) the number and class of shares and the designation of the series, if any, of the issued shares. If the corporation is authorized to issue different classes of shares or different series within a class, the written statement shall describe the designations, relative rights, preferences, and limitations applicable to each class and the variation in rights, preferences, and limitations determined for each series (and the authority of the Board of Directors to determine variations for future series). ss. 6.3. Registration of the Transfer of Shares. Registration of the transfer of shares of the corporation shall be made only on the stock transfer books of the corporation. In order to register a transfer, the record owner shall surrender the shares to the corporation for cancellation, properly endorsed by the appropriate person or persons with reasonable assurances that the endorsements are genuine and effective. Unless the corporation has established a procedure by which a beneficial owner of shares held by a nominee is to be recognized by the corporation as the owner, the person in whose name the shares stand on the books of the corporation shall be deemed by the corporation to be the owner thereof for all purposes. ss. 6.4. Restrictions on Transfer of Shares Permitted. The Board of Directors (or shareholders) may impose restrictions on the transfer or registration of transfer of shares (including any security convertible into, or carrying a right to subscribe for or acquire shares). A restriction does not affect shares issued before the restriction was adopted unless the holders of the shares are parties to the restriction agreement or voted in favor of the restriction. A restriction on the transfer or registration of transfer of shares may be authorized: E-68 (1) to maintain the corporation's status when it is dependent on the number or identity of its shareholders' (2) to preserve exemptions under federal or state securities law; (3) for any other reasonable purpose. A restriction on the transfer or registration of transfer or shares may: (1) obligate the shareholder first to offer the corporation or other persons (separately, consecutively, or simultaneously) an opportunity to acquire the restricted shares; (2) obligate the corporation or other persons (separately, consecutively, or simultaneously) to acquire the restricted shares; (3) require the corporation, the holders or any class of its shares, or another person to approve the transfer of the restricted shares, if the requirement is not manifestly unreasonable; (4) prohibit the transfer of the restricted shares to designated persons or classes of persons, if the prohibition is not manifestly unreasonable. A restriction on the transfer or resignation of transfer of shares is valid and enforceable against the holder or a transferee of the holder if the restriction is authorized by this section and its existence is noted conspicuously on the front or back of the certificate or is contained in the information statement required by ss. 6.2 of this Article VI with regard to shares issued without certificates. Unless so noted, a restriction is not enforceable against a person without knowledge of the restriction. ss. 6.5. Acquisition of Shares. The corporation may acquire its own shares and unless otherwise provided in the Articles of Incorporation, the shares so acquired constitute authorized but unissued shares. ARTICLE VII. DISTRIBUTIONS ss. 7.1. Distributions. The Board of Directors may authorize, and the corporation may make, distributions (including dividends on its outstanding shares) in the manner and upon the terms and conditions provided by law and in the corporation's Articles of Incorporation. E-69 ARTICLE VIII. GENERAL PROVISIONS ss. 8.1. Corporate Seal. The Board of Directors may provide for a corporate seal which may be circular in form and have inscribed thereon any designation including the name of the corporation, Utah as the state of incorporation, and the words "Corporate Seal". The corporation shall not be required to have a corporate seal. ss.8.2. Fiscal Year. The fiscal year of the Corporation shall be determined by the Board of Directors. ss.8.3. Evidence of Authority. A certificate by the Secretary, or an Assistant Secretary, or a temporary secretary, as to any action taken by the shareholders, directors, a committee or any officer of representative of the corporation shall as to all persons who rely on the certificate in good faith be conclusive evidence of such action. ss.8.4. Articles of Incorporation. All references in these Bylaws to the Articles of Incorporation shall be deemed to refer to the Articles of Incorporation of the Corporation, as amended and in effect from time to time. ss.8.5. Pronouns. All pronouns used in these Bylaws shall be deemed to refer to the masculine, feminine or neuter, singular or plural, as the identity of the person or persons may require. ARTICLE IX. EMERGENCY BYLAWS ss. 9.1. Emergency Bylaws. Unless the Articles of Incorporation provide otherwise, the following provisions of this Article IX, ss. 9.1 "Emergency Bylaws" shall be effective during an emergency which is defined as when a quorum of the corporation's directors cannot be readily assembled because of some catastrophic event. During such emergency: (a) Notice of Board Meetings. Any one member of the Board of Directors or any one of the following officers; President, any Vice-President, Secretary, or Treasurer, may call a meeting of the Board of Directors. Notice of such meeting need be given only to those directors whom it is practicable to reach, and may be given in any practical manner, including by publication and radio. Such notice shall be given at least six hours prior to commencement of the meeting. (b) Temporary Directors and Quorum. One or more officers of the corporation present at the emergency board meeting, may be deemed to de directors for the meeting, in order of rank and within the same rank in order of seniority as is necessary to achieve a quorum. In the event that less than quorum (as determined by Article III, ss. 3.6) of the directors are present (including any officers who are to serve as directors for the meeting), those directors present (including the officers serving as directors) shall constitute a quorum. (c) Actions Permitted to Be Taken. The board as constituted in paragraph (b), and after notice as set forth in paragraph (a) may: E-70 (1) Officers' Powers. Prescribe emergency powers to any officer of the corporation; (2) Delegation of Any Power. Delegate to any officer or director, any of the powers of the Board of Directors; (3) Lines of Succession. Designate lines of succession of officers and agents, in the event that any of them are unable to discharge their duties; (4) Relocate Principal Place of Business. Relocate the principal place of business, or designate successive or simultaneous principal places of business; (5) All Other Action. Take any other action, convenient, helpful, or necessary to carry on the business of the corporation. ARTICLE X. AMENDMENTS ss. 10.1. Amendments. The corporation's Board of Directors may amend or repeal the corporation's Bylaws unless: (1) the Articles of Incorporation or the Utah Revised Business Corporation Act reserve this power exclusively to the shareholders in whole or part; or (2) the shareholders in adopting, amending or repealing a particular Bylaw provide expressly that the Board of Directors may not amend or repeal that Bylaw; or The corporation's shareholders may amend or repeal the corporation's Bylaws even though the Bylaws may also be amended or repealed by its Board of Directors. ADOPTED THIS ___ day of ______________, 2002 _________________________________ President ATTEST: ____________________________________ Secretary E-71 CERTIFICATE OF SECRETARY KNOW ALL MEN BY THESE PRESENTS: That the undersigned does hereby certify that the undersigned is the secretary of the aforesaid Corporation, duly organized and existing under and by virtue of the laws of the State of Utah; that the above and foregoing Bylaws of said Corporation were duly and regularly adopted as such by the board of directors of said Corporation. DATED this ___ day of _____________ 2002. ________________________________ Secretary E-72 EX-4 10 ex4-1_2003.txt Exhibit 4.1 Form SB-2 Ogden Golf Co. Corporation Specimen Stock Certificate INCORPORATED UNDER THE LAWS OF THE STATE OF UTAH NUMBER SHARES idi OGDEN GOLF CO. CORPORATION. 100,000,000 AUTHORIZED SHARES NO PAR VALUE NON-ASSESSABLE This Certifies that is the record holder of shares of OGDEN GOLF CO. CORPORATION Common Stock transferable on the books of the Corporation by the holder hereof in person or by duly authorized attorney upon surrender of this Certificate properly endorsed. This Certificate is not valid until countersigned by the Transfer Agent and registered by the Registrar. Witness the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers. Dated: OGDEN GOLF CO. CORPORATION CORPORATE SEAL STATE OF UTAH /s/ Mark A. Scharmann President /s/ Robert R. Peterson Secretary E-73 EX-5 11 ex5-1_2003.txt Exhibit 5.1 Form SB-2 Ogden Golf Co. Corporation [LETTERHEAD OF COHNE, RAPPAPORT & SEGAL] May 7, 2003 Board of Directors Ogden Golf Co. Corporation. 1781 Washingto Boulevard Ogden, UT 84401 Re: Ogden Golf Co. Corporation Registration Statement on Form SB-2 Gentlemen: We have acted as special counsel Ogden Golf Co. Corporation (the "Company") in connection with the proposed registration of shares (the "Shares") of the Company's common stock, no par value (the "Common Stock"), on a registration statement on Form SB-2 filed by the Company with the Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended (the "Securities Act"). This registration statement, as it may be amended or supplemented from time to time, including all exhibits thereto, is referred to hereinafter as the "Registration Statement." The Shares consist of up to (i) 400,000 shares offered by the Company, (ii) 950,000 shares of Common Stock issuable upon conversion of the Company's Series A Convertible Preferred Stock (the "Conversion Shares") and (iii) 1,236,500 shares of Common Stock offered by Selling Shareholders. In this regard, we have examined: (i) the Company's Articles of Incorporation and Bylaws, each as amended and as presently in effect; (ii) the Registration Statement; and (iii) such officers' certificates, resolutions, minutes, corporate records and other documents as we have deemed necessary or appropriate for purposes of rendering the opinions expressed herein. In rendering such opinions, we have assumed the authenticity of all documents and records examined, the conformity with the original documents of all documents submitted to us as copies and the genuineness of all signatures. The opinions expressed herein are based solely upon our review of the documents and other materials expressly referred to above. We have not reviewed any other documents in rendering such opinions. Such opinions are therefore qualified by the scope of that document examination. E-74 The opinions expressed herein are based solely upon our review of the documents and other materials expressly referred to above. We have not reviewed any other documents in rendering such opinions. Such opinions are therefore qualified by the scope of that document examination. Based upon and subject to the foregoing, and on such other examinations of law and fact as we have deemed necessary or appropriate in connection herewith, we are of the opinion that, the shares offered by the Company when issued and the shares that will be issued upon conversion of the Series A Convertible Preferred Stock, all in accordance with the terms thereof, will be, duly authorized, validly issued, fully paid and nonassessable shares of Common Stock. This opinion is limited to the law of the State of Utah and the federal securities laws of the United States. Except as expressly otherwise noted herein, this opinion is given as of the date hereof. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement. By giving such consent, we do not hereby admit that we fall within the category of persons whose consent is required pursuant to Section 7 of the Securities Act. Very truly yours, /s/ Cohne, Rappaport & Segal. E-75 EX-10 12 ex10-1_2003.txt Exhibit 10.1 Form SB-2 Ogden Golf Co. Corporation PROMISSORY NOTE
- ------------------------------------------------------------------------------------------- Principal Loan Date Maturity Loan No. Call Collateral Account Officer Initials $139,539.02 09-20-2000 09-20-2005 664000346 1E 154 SLW - -------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the applicability of this document to any particular loan or item. Any item above containing "***" has been omitted due to text length limitations. - -------------------------------------------------------------------------------- Borrower: Ogden Golf Co. Corporation Lender: Barnes BankingCompany (TIN: 87-0652870) South Ogden 1781 Washington Blvd. 1840 East Skyline Drive Ogden, UT 84401 South Ogden, UT 84403 ================================================================================ Principal Amount: $139,539.02 Initial Rate: 11.250% Date of Note: September 20,2000 PROMISE TO PAY. OGDEN GOLF CO. CORPORATION ("Borrower") promises to pay to BARNES BANKING COMPANY ("Lender"), or order, in lawful money of the United States of America, the principal amount of One Hundred Thirty-Nine Thousand Five Hundred Thirty-Nine & 02/l00 Dollars ($139,539.02), together with interest on the unpaid principal balance from September 20, 2000, until paid in full. The interest rate will not increase above 18.000%. PAYMENT. Subject to any payment changes resulting from changes in the Index, Borrower will pay this loan on demand. Payment in full is due immediately upon Lender's demand. If no demand is made, Borrower will pay this loan in 59 regular payments of $1,608.25 each and one irregular last payment estimated at $117,154.17. Borrower's first payment is due October 20, 2000, and all subsequent payments are due on the same day of each month after that. Borrower's final payment will be due on September 20, 2005, and will be for all principal and all accrued interest not yet paid. Payments include principal and interest. Unless otherwise agreed or required by applicable law, payments will be applied first to any unpaid collection costs and any late charges, then to any unpaid interest, and any remaining amount to principal. Interest on this Note is computed on a 365/365 simple interest basis; that is, by applying the ratio of the annual interest rate over the number of days in a year, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding. Borrower will pay Lender at Lender's address shown above or at such other place as Lender may designate in writing. VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from time to time based on changes in an independent index which is the THE NEW YORK PRIME RATE ADVERTISED IN THE WALL STREET JOURNAL (the "Index"). The index is not necessarily the lowest rate charged by Lender on its loans. If the Index becomes unavailable during the term of this loan, Lender may designate a substitute index after notice to Borrower. Lender will tell Borrower the current Index rate upon Borrower's request. The interest rate charge will not occur more often than each MONTH. Borrower understands that Lender may make loans based on other rates as well. The Index currently is 9.500% per annum. The interest rate to be applied to the paid principal balance of this Note will be at a rate of 1.750 percentage points over the Index, resulting in an initial rate of 11.250% per annum. Notwithstanding the foregoing, the variable interest rate or rates provided for in this Note will be subject to the following minimum and maximum rates. NOTICE: Under no circumstances will the interest rate on this Note be less than 5.000% per annum or more than the lesser of 18.000% per annum or the E-76 maximum rate allowed by applicable law. Whenever increases occur in the interest rate, Lender, at its option, may do one or more of the following: (A) increase Borrower's payments to ensure Borrower's loan will pay off by its original final maturity date, (B) increase Borrower's payments to cover accruing interest, (C) increase the number of Borrower's payments, and (D) continue Borrower's payments at the same amount and increase Borrower's final payment. PREPAYMENT. Borrower agrees that all loan fees and other prepaid finance charges are earned fully as of the date of the loan and will not be subject to refund upon early payment (whether voluntary or as a result of default), except as otherwise required by law. Except for the foregoing, Borrower may pay without penalty all or a portion of the amount owed earlier than it is due. Early payments will not, unless agreed to by Lender in writing, relieve Borrower of Borrower's obligation to continue to make payments under the payment schedule. Rather, early payments will reduce the principal balance due and may result in Borrower's making fewer payment. Borrower agrees not to send Lender payments marked "paid in full," "without recourse," or similar language. If Borrower sends such a payment, Lender may accept it without losing any of Lender's rights under this Note, and Borrower will remain obligated to pay any further amount owed to Lender. All written communications concerning disputed amounts, including any check or other payment instrument that indicates that the payment constitutes "payment in full" of the amount owed or that is tendered with other conditions or limitations or as full satisfaction of a disputed amount must be mailed or delivered to: BARNES BANKING COMPANY, SOUTH OGDEN, 1840 EAST SKYLINE DRIVE, SOUTH OGDEN, UT 84403. LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged $100.00. INTEREST AFTER DEFAULT. Upon default, including failure to pay upon final maturity, the total sum due under this Note will bear interest from the date of acceleration or maturity at the variable interest rate on this Note. The interest rate will not exceed the minimum rate permitted by applicable law. DEFAULT. Each of the following shall constitute an event of default ("Event of Default") under this Note: Payment Default. Borrower fails to make any payment when due under this Note. Other Defaults. Borrower fails to comply with or to perform an other term, obligation, covenant or condition contained in this Note or in any of the related documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower. False Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower's behalf under this Note or the related documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter. Insolvency. The dissolution or termination of Borrower' s existence as a going business, the insolvency of Borrower, the appointment of a receiver E-77 for any part of Borrower's property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower. Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the loan. This includes a garnishment of any of Borrower's accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or resonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute. Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the indebtedness or any Guarantor dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any guaranty of the indebtedness evidenced by this Note. In the event of a death, Lender, at its option, may, but shall not be required to, permit the Guarantor's estate to assume unconditionally the obligations arising under the guaranty in a manner satisfactory to Lender, and, in doing so, cure any Event of Default. Change in Ownership. Any change in ownership of twenty-five percent (25%) or more of the common stock of Borrower. Adverse Change. A material adverse change occurs in Borrower's financial condition, or Lender believes the prospect of payment or performance of this Note is impaired. Cure Provisions. If any default, other than a default in payment is curable and if Borrower has not been given a notice of a breach of the same provision of this Note within the preceding twelve (12) months, it may be cured (and no event of default will have occurred) if Borrower, after receiving written notice from Lender demanding cure of such default: (1) cures the default within fifteen (15) days; or (2) if the cure requires more than fifteen (15) days, immediately initiates steps which Lender deems in Lender`s sole discretion to be sufficient to cure the default and thereafter continues and completes all reasonable and necessary steps sufficient to produce compliance as soon as reasonably practical. LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal balance on this Note and all accrued unpaid interest immediately due, and then Borrower will pay that amount. ATTORNEYS' FEES; EXPENSES. Lender may hire or pay someone else to help collect this Note if Borrower does not pay. Borrower will pay Lender that amount. This includes, subject to any limits under applicable law, Lender's reasonable attorneys' fees and Lender's legal expenses, whether or not there is a lawsuit, including without limitation all reasonable attorneys' fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic E-78 stay or injunction), and appeals. If not prohibited by applicable law, Borrower also will pay any court costs, in addition to all other sums provided by law. GOVERNING LAW. This Note will be governed by, construed and enforced in accordance with federal law and the laws of the State of Utah. This Note has been accepted by Lender in the State of Utah. CHOICE OF VENUE. If there is a lawsuit, Borrower agrees upon Lender's request to submit to the jurisdiction of the courts of WEBER County, State of Utah. RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower's accounts with Lender (whether checking, savings, or some other account). This includes all accounts Borrower holds jointly with someone else and all accounts Borrower may open in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law. Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the indebtedness against any and all such accounts. COLLATERAL. Borrower acknowledges this Note is secured by a Deed of Trust dated September 20,2000, in the amount of $139,539.02, to a trustee in favor of lender of real property located at 1781 Washington Blvd., Ogden, Weber, Utah 84401, all terms and conditions of which are hereby incorporated and made a part of this Note. Also secured by all inventory now owned or hereafter acquired. SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower, and upon Borrower's heirs, personal representatives, successors and assigns, and shall inure to the benefit of Lender and its successors and assigns. GENERAL PROVISIONS. This Note and [sic] is payable on demand. The inclusion of specific default provisions or rights of Lender shall not preclude Lender's right to declare payment of this Note on its demand. Lender may delay or forgo enforcing any of its rights or remedies under this Note without losing them. Borrower and any other person who signs, guarantees or endorses this Note, to the extent allowed by law, waive presentment, demand for payment, and notice of dishonor. Upon any change in the terms of this Note, and unless otherwise expressly stated in writing, no party who signs this Note, whether as maker, guarantor, accommodation maker or endorser, shall be released from liability. All such parties agree that Lender may renew or extend (repeatedly and for any length of time) this loan or release any party or guarantor or collateral; or impair, fail to realize upon or perfect Lender's security interest in the collateral; and take any other action deemed necessary by Lender without the consent of or notice to anyone. All such parties also agree that Lender may modify this loan without the consent of or notice to anyone other than the party with whom the modification is made. The obligations under this Note are joint and several. E-79 PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO THE TERMS OF THE NOTE. BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE. BORROWER: OGDEN GOLF CO. CORPORATION BY:________________________________ Paul Larsen, President of Ogden Golf Co. Corporation E-80 EX-10 13 ex10-2_2003.txt Exhibit 10.2 Form SB-2 Ogden Golf Co. Corporation BUSINESS LOAN AGREEMENT
- -------------------------------------------------------------------------------------------- Principal Loan Date Maturity Loan No. Call Collateral Account Officer Initials $139,539.02 09-20-2000 09-20-2005 664000346 1E 154 SLW - ---------------------------------------------------------------------- --------------------
References in the shaded area are for Lender's use only and do not limit the applicability of this document to any particular loan or item. Any item above containing "***" has been omitted due to text length limitations. - -------------------------------------------------------------------------------- Borrower: Ogden Golf Co. Corporation Lender: Barnes Banking Company (TIN: 87-0652870) South Ogden 1781 Washington Blvd. 1840 East Skyline Drive Ogden, UT 84401 South Ogden, UT 84403 ================================================================================ THIS BUSINESS LOAN AGREEMENT dated September 20, 2000, is made and executed between OGDEN GOLF CO. CORPORATION ("Borrower") and BARNES BANKING COMPANY ("Lender") on the following terms and conditions. Borrower has received prior commercial loans from Lender or has applied to Lender for a commercial loan or loans or other financial accommodations, including those which may be described on any exhibit or schedule attached to this Agreement ("Loan"). Borrower understands and agrees that: (A) in granting, renewing, or extending any Loan, Lender is relying upon Borrower's representations, warranties, and agreements as set forth in this Agreement, and (B) all such Loans shall be and remain subject to the terms and conditions of this Agreement. TERM. This Agreement shall be effective as of September 20, 2000, and shall continue in full force and effect until such time as all of Borrower's Loans in favor of Lender have been paid in full, including principal, interest, costs, expenses, attorneys' fees, and other fees and charges, or until September 20, 2005. CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make the initial Advance and each subsequent Advance under this Agreement shall be subject to the fulfillment to Lender's satisfaction of all of the conditions set forth in this Agreement and in the Related Documents. Loan Documents. Borrower shall provide to Lender the following documents for the Loan: (1) the Note; (2) Security Agreements granting to Lender security interests in the Collateral; (3) financing statements perfecting Lender's Security Interests; (4) evidence of insurance as required below; (5) guaranties; (6) together with all such Related Documents as Lender may require for the Loan; all in form and substance satisfactory to Lender and Lender's counsel. Borrower's Authorization. Borrower shall have provided in form and substance satisfactory to Lender properly certified resolutions, duly authorizing the execution and delivery of this Agreement, the Note and the Related Documents. In addition, Borrower shall have provided such other resolutions, authorizations, documents and instruments as Lender or its counsel, may require. E-81 Payment of Fees and Expenses. Borrower shall have paid to Lender all fees, charges, and other expenses which are then due and payable as specified in this Agreement or any Related Document. Representations and Warranties. The representations and warranties set forth in this Agreement, in the Related Documents, and in any document or certificate delivered to Lender under this Agreement are true and correct. No Event of Default. There shall not exist at the time of any Advance a condition which would constitute an Event of Default under this Agreement or under any Related Document. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as of the date of this Agreement, as of the date of each disbursement of loan proceeds, as of the date of any renewal, extension or modification of any Loan, and at all times any Indebtedness exists: Organization. Borrower is a corporation for profit which is, and at all times shall be, duly organized, validly existing, and in good standing under and by virtue of the laws of the State of Utah. Borrower is duly authorized to transact business in all other states in which Borrower is doing business, having obtained all necessary filings, governmental licenses and approvals for each state in which Borrower is doing business. Specifically, Borrower is, and at all times shall be, duly qualified as a foreign corporation in all states in which the failure to so qualify would have a material adverse effect on its business or financial condition. Borrower has the full power and authority to own its properties and to transact the business in which it is presently engaged or presently proposes to engage. Borrower maintains its principle [sic] office at 1781 Washington Blvd., Ogden, UT 84401. Unless Borrower has designated otherwise in writing, this is the principle office at which Borrower keeps its books and records including its records concerning the Collateral. Borrower will notify Lender of any change in the location of Borrower's principle office. Borrower shall do all things necessary to preserve and to keep in full force and effect its existence, rights and privileges, and shall comply with all regulations, rules, ordinances, statutes, orders and decrees of any governmental or quasi-governmental authority or court applicable to Borrower and Borrower's business activities. Assumed Business Names. Borrower has filed or recorded all documents or filings required by law relating to all assumed business names used by Borrower. Excluding the name of Borrower, the following is a complete list of all assumed business names under which Borrower does business: None. Authorization. Borrower's execution, delivery, and performance of this Agreement and all the Related Documents have been duly authorized by all necessary action by Borrower and do not conflict with, result in a violation of, or constitute a default under (1) any provision of borrower's articles of incorporation or organization, or bylaws, or any agreement or other instrument binding upon Borrower or (2) any law, governmental regulation, court decree, or order applicable to Borrower or to Borrower's properties. E-82 Financial Information. Each of Borrower's financial statements supplied to Lender truly and completely disclosed Borrower's financial condition as of the date of the statement, and there has been no material adverse change in Borrower's financial condition subsequent to the date of the most recent financial statement supplied to Lender. Borrower has no material contingent obligations except as disclosed in such financial statements. Legal Effect. This Agreement constitutes, and any instrument or agreement Borrower is required to give under this Agreement when delivered will constitute legal, valid, and binding obligations of Borrower enforceable against Borrower in accordance with their respective terms. Properties. Except as contemplated by this Agreement or as previously disclosed in Borrower's financial statements or in writing to Lender and as accepted by Lender, and except for property tax liens for taxes not presently due and payable, Borrower owns and has good title to all of Borrower's properties free and clear of all Security Interests, and has not executed any security documents or financing statements relating to such properties. All of Borrower's properties are titled in Borrower's legal name, and Borrower has not used, or filed a financing statement under, any other name for at least the last five (5) years. Hazardous Substances. Except as disclosed to and acknowledged by Lender in writing, Borrower represents and warrants that: (1) During the period of Borrower's ownership of Borrower's Collateral, there has been no use, generation, manufacture, storage, treatment, disposal, release or threatened release of any Hazardous Substance by any person on, under, about or from any of the Collateral. (2) Borrower has no knowledge of or reason to believe that there has been (a) any breach or violation of any Environmental Laws; (b) any use, generation, manufacture, storage, treatment, disposal, release or threatened release of any Hazardous Substance on, under, about or from the Collateral by any prior owners or occupants of any of the Collateral; or (c) any actual or threatened litigation or claims of any kind by any person relating to such matters. (3) Neither Borrower nor any tenant, contractor, agent or other authorized user of any of the Collateral shall use, generate, manufacture, store, treat, dispose of or release any Hazardous Substance on, under, about or from any of the Collateral; and any such activity shall be conducted in compliance with all applicable federal, state, and local laws, regulations, and ordinances, including without limitation all Environmental Laws. Borrower authorizes Lender and its agents to enter upon the Collateral to make such inspections and tests as Lender may deem appropriate to determine compliance of the Collateral with this section of the Agreement. Any inspections or tests made by Lender shall be at Borrower's expense and for Lender's purposes only and shall not be construed to create any responsibility or liability on the part of Lender to Borrower or to any other person. The representations and warranties contained herein are based on Borrower's due diligence in investigating the Collateral for hazardous waste and Hazardous Substances. Borrower hereby (1) releases and waives any future claims against Lender for indemnity or contribution in the event Borrower becomes liable for cleanup or other costs under any such laws, and (2) agrees to indemnify and hold harmless Lender against any and all claims, losses, liabilities, damages, penalties, and expenses which Lender may directly or indirectly sustain or suffer resulting from a breach of this section of the Agreement or as a consequence of any use, generation, manufacture, storage, disposal, release or threatened release of a E-83 hazardous waste or substance on the Collateral. The provisions of this section of the Agreement, including the obligation to indemnify, shall survive the payment of the Indebtedness and the termination, expiration or satisfaction of this Agreement and shall not be affected by Lender's acquisition of any interest in any of the Collateral, whether by foreclosure or otherwise. Litigation and Claims. No litigation, claim, investigation, administrative proceeding or similar action (including those for unpaid taxes) against Borrower is pending or threatened, and no other event has occurred which may materially adversely affect Borrower's financial condition or properties, other than litigation, claims, or other events, if any, that have been disclosed to and acknowledged by Lender in writing. Taxes. To the best of Borrower's knowledge, all of Borrower's tax returns and reports that are or were required to be filed, have been filed, and all taxes, assessments and other governmental charges have been paid in full, except those presently being or to be contested by Borrower in good faith in the ordinary course of business and for which adequate reserves have been provided. Lien Priority. Unless otherwise previously disclosed to Lender in writing, Borrower has not entered into or granted any Security Agreements, or permitted the filing or attachment of any Security Interests on or affecting any of the Collateral directly or indirectly securing repayment of Borrower's Loan and Note, that would be prior or that may in any way be superior to Lender's Security Interests and rights in and to such Collateral. Binding Effect. This Agreement, the Note, all Security Agreements (if any), and all Related Documents are binding upon the signers thereof, as well as upon their successors, representatives and assigns, and are legally enforceable in accordance with their respective terms. AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, so long as this Agreement remains in effect, Borrower will: Notices of Claims and Litigation. Promptly inform Lender in writing of (1) all material adverse changes in Borrower's financial condition, and (2) all existing and all threatened litigation, claims, investigations, administrative proceedings or similar actions affecting Borrower or any Guarantor which could materially affect the financial condition of Borrower or the financial condition of any Guarantor. Financial Records. Maintain its books and records in accordance with GAAP, applied on a consistent basis, and permit Lender to examine and audit Borrower's books and records at all reasonable times. Financial Statements. Furnish Lender with such financial statements and other related information at such frequencies and in such detail as Lender may reasonably request. E-84 Additional Information. Furnish such additional information and statements, as Lender may request from time to time. Insurance. Maintain fire and other risk insurance, public liability insurance, and such other insurance as Lender may require with respect to Borrower's properties and operations, in form, amounts, coverages and with insurance companies acceptable to Lender. Borrower, upon request of Lender, will deliver to Lender from time to time the policies or certificates of insurance in form satisfactory to Lender, including stipulations that coverages will not be cancelled or diminished without at least thirty (30) days prior written notice to Lender. Each insurance policy also shall include an endorsement providing that coverage in favor of Lender will not be impaired in any way by any act, omission or default of Borrower or any other person. In connection with all policies covering assets in which Lender holds or is offered a security interest for the Loans, Borrower will provide Lender with such Lender's loss payable or other endorsements as Lender may require. Insurance Reports. Furnish to Lender, upon request of Lender, reports on each existing insurance policy showing such information as Lender may reasonably request, including without limitation the following: (1) the name of the insurer; (2) the risks insured; (3) the amount of the policy; (4) the properties insured; (5) the then current property values on the basis of which insurance has been obtained, and the manner of determining those values; and (6) the expiration date of the policy. In addition, upon request of Lender (however not more often than annually), Borrower will have an independent appraiser satisfactory to Lender determine as applicable, the actual cash value or replacement cost of any Collateral. The cost of such appraisal shall be paid by Borrower. Guaranties. Prior to disbursement of any Loan proceeds, furnish executed guaranties of the Loans in favor of Lender, executed by the guarantor named below, on Lender's forms, and in the amount and under the conditions set forth in those guaranties. Name of Guarantor Amount ----------------- ------ PAUL LARSEN $139,539.02 Other Agreements. Comply with all terms and conditions of all other agreements, whether nor or hereafter existing, between Borrower and any other party and notify Lender immediately in writing of any default in connection with any other such agreements. Loan Proceeds. Use all loan proceeds solely for Borrower's business operations, unless specifically consented to the contrary by Lender in writing. Taxes, Charges and Liens. Pay and discharge when due all of its indebtedness and obligations, including without limitation all assessments, taxes, governmental charges, levies and liens, of every kind and nature, imposed upon Borrower or its properties, income, or profits, prior to the date on which penalties would attach, and all lawful claims that, if unpaid, might become a lien or charge upon any of Borrower's properties, income, or profits. E-85 Performance. Perform and comply, in a timely manner, with all terms, conditions, and provisions set forth in this Agreement, in the Related Documents, and in all other instruments and agreements between Borrower and Lender. Borrower shall notify Lender immediately in writing of any default in connection with any agreement. Operations. Maintain executive and management personnel with substantially the same qualifications and experience as the present executive and management personnel; provide written notice to Lender of any change in executive and management personnel; conduct its business affairs in a reasonable and prudent manner. Environmental Studies. Promptly conduct and complete, at Borrower's expense, all such investigations, studies, samplings and testings as may be requested by Lender or any governmental authority relative to any substance, or any waste or by-product of any substance defined as toxic or a hazardous substance under applicable federal, state, or local law, rule, regulation, order or directive, at or affecting any property or any facility owned, leased or used by Borrower. Compliance with Governmental Requirements. Comply with all laws, ordinances, and regulations, now or hereafter in effect, of all governmental authorities applicable to the conduct of Borrower's properties, businesses and operations, and to the use or occupancy of the Collateral, including without limitation, the Americans With Disabilities Act. Borrower may contest in good faith any such law, ordinance, or regulation and withhold compliance during any proceeding, including appropriate appeals, so long as Borrower has notified Lender in writing prior to doing so and so long as, in Lender's sole opinion, Lender's interests in the Collateral are not jeopardized. Lender may require Borrower to post adequate security or a surety bond, reasonably satisfactory to Lender, to protect Lender's interest. Inspection. Permit employees or agents of Lender at any reasonable time to inspect any and all Collateral for the Loan or Loans and Borrower's other properties and to examine or audit Borrower's books, accounts, and records and to make copies and memoranda of Borrower's books, accounts, and records. If Borrower now or at any time hereafter maintains any records (including without limitation computer generated records and computer software programs for the generation of such records) in the possession of a third party, Borrower, upon request of Lender, shall notify such party to permit Lender free access to such records at all reasonable times and to provide Lender with copies of any records it may request, all at Borrower's expense. Compliance Certificates. Unless waived in writing by Lender, provide Lender at least annually and at the time of each disbursement of Loan proceeds, with a certificate executed by Borrower's chief financial officer, or other officer or person acceptable to Lender, certifying that the representations and warranties set forth in this Agreement are true and correct as of the date of the certificate and further certifying that, as of the date of the certificate, no Event of Default exists under this Agreement. E-86 Environmental Compliance and Reports. Borrower shall comply in all respects with any and all Environmental Laws; not cause or permit to exist, as a result of an intentional or unintentional action or omission on Borrower's part or on the part of any third party, on property owned and/or occupied by Borrower, any environmental activity where damage may result to the environment, unless such environmental activity is pursuant to and in compliance with the conditions of a permit issued by the appropriate federal, state or local governmental authorities; shall furnish to Lender promptly and in any event within thirty (30) days after receipt thereof a copy of any notice, summons, lien, citation, directive, letter or other communication from any governmental agency or instrumentality concerning any intentional or unintentional action or omission on Borrower's part in connection with any environmental activity whether or not there is damage to the environment and/or other natural resources. Additional Assurances. Make, execute and deliver to Lender such promissory notes, mortgages, deeds of trust, security agreements, assignments, financing statements, instruments, documents and other agreements as Lender or its attorneys may reasonably request to evidence and secure the loans and to perfect all Security Interests. LENDER'S EXPENDITURES. If any action or proceeding is commenced that would materially affect Lender's interest in the Collateral or if Borrower fails to comply with any provision of this Agreement or any Related Documents, including but not limited to Borrower's failure to discharge or pay when due any amounts Borrower is required to discharge or pay under this Agreement or any Related Documents, Lender on Borrower's behalf may (but shall not be obligated to) take any action that Lender deems appropriate, including but not limited to discharging or paying all taxes, liens, security interests, encumbrances and other claims, at any time levied or placed on any Collateral and paying all costs for insuring, maintaining and preserving any Collateral. All such expenditures incurred or paid by Lender for such purposes will then bear interest at the rate charged under the Note from the date incurred or paid by Lender to the date of repayment by Borrower. All such expenses will become a part of the Indebtedness and, at Lender's option, will (A) be payable on demand; (B) be added to the balance of the Note and be apportioned among and be payable with any installment payments to become due during either (1) the term of any applicable insurance policy; or (2) the remaining term of the Note; or (C) be treated as a balloon payment which will be due and payable at the Note's maturity. NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this Agreement is in effect, Borrower shall not, without the prior written consent of Lender: Indebtedness and Liens. (1) Except for trade debt incurred in the normal course of business and indebtedness to Lender contemplated by this Agreement, create, incur or assume indebtedness for borrowed money, including capital leases, (2) sell, transfer, mortgage, assign, pledge, lease, grant a security interest in, or encumber any of Borrower's assets (except as allowed as Permitted Liens), or (3) sell with recourse any of Borrower's accounts, except to Lender. Continuity of Operations. (1) Engage in any business activities substantially different than those in which Borrower is presently engaged, (2) cease operations, liquidate, merge, transfer, acquire or consolidate E-87 with any other entity, change its name, dissolve or transfer or sell Collateral out of the ordinary course of business, or (3) pay any dividends on Borrower's stock (other than dividends payable in its stock), provided, however that notwithstanding the foregoing, but only so long as no Event of Default has occurred and is continuing or would result from the payment of dividends, if Borrower is a "Subchapter S Corporation" (as defined in the Internal Revenue Code of 1986, as amended), Borrower may pay cash dividends on its stock to its shareholder from time to time in amounts necessary to enable the shareholders to pay income taxes and make estimated income tax payments to satisfy their liabilities under federal and state law which arise solely from their status as Shareholders of a Subchapter S Corporation because of their ownership of shares of Borrower's stock, or purchase or retire any of Borrower's outstanding shares or alter or amend Borrower's capital structure. Loans, Acquisitions and Guaranties. (1) Loan, invest in or advance money or assets, (2) purchase, create or acquire any interest in any other enterprise or entity, or (3) incur any obligation as surety or guarantor other than in the ordinary course of business. CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to Borrower, whether under this Agreement or under any other agreement, Lender shall have no obligation to make Loan Advances or to disburse Loan proceeds if: (A) Borrower or any Guarantor is in default under the terms of this Agreement or any of the Related Documents or any other agreement that Borrower or any Guarantor has with Lender; (B) Borrower or any Guarantor dies, becomes incompetent or becomes insolvent, files a petition in bankruptcy or similar proceedings, or is adjudged a bankrupt; (C) there occurs a material adverse change in Borrower's financial condition, in the financial condition of any Guarantor, or in the value of any Collateral securing any Loan; or (D) any Guarantor seeks, claims or otherwise attempts to limit, modify or revoke such Guarantor's guaranty of the Loan or any other loan with Lender. RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower's accounts with Lender (whether checking, savings, or some other account). This includes all accounts Borrower holds jointly with someone else and all accounts Borrower may open in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law. Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the Indebtedness against any and all such accounts. DEFAULT. Each of the following shall constitute an Event of Default under this Agreement. Payment Default. Borrower fails to make any payment when due under the Loan. Other Defaults. Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Agreement or in any of the Related Documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower. E-88 False Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower's behalf under this Agreement, the Note, or the Related Documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter. Insolvency. The dissolution or termination of Borrower's existence as a going business, the insolvency of Borrower, the appointment of a receiver for any part of Borrower's property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower. Defective Collateralization. This Agreement or any of the Related Documents ceases to be in full force and effect (including failure of any collateral document to create a valid and perfected security interest or lien) at any time and for any reason. Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the Loan. This includes a garnishment of any of Borrower's accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute. Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the Indebtedness or any Guarantor dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any Guaranty of the Indebtedness. In the event of a death, Lender, at its option, may, but shall not be required to, permit the Guarantor's estate to assume unconditionally the obligations arising under the guaranty in a manner satisfactory to Lender, and, in doing so, cure any Event of Default. Change in Ownership. Any change in ownership of twenty-five percent (25%) or more of the common stock of Borrower. Adverse Change. A material adverse change occurs in Borrower's financial condition, or Lender believes the prospect of payment or performance of the Loan is impaired. Right to Cure. If any default, other than a default on Indebtedness, is curable and if Borrower or Grantor, as the case may be, has not been given a notice of a similar default within the preceding twelve (12) months, it may be cured (and no Event of Default will have occurred) if Borrower or Grantor, as the case may be, after receiving written notice from Lender demanding cure of such default: (1) cure the default within fifteen (15) days, immediately initiate steps which Lender deems in Lender's sole discretion to be sufficient to cure the default and thereafter continue and E-89 complete all reasonable and necessary steps sufficient to produce compliance as soon as reasonably practical. EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where otherwise provided in this Agreement or the Related Documents, all commitments and obligations of Lender under this Agreement or the Related Documents or any other agreement immediately will terminate (including any obligation to make further Loan Advances or disbursements), and, at Lender's option, all Indebtedness immediately will become due and payable, all without notice of any kind to Borrower, except that in the case of an Event of Default of the type described in the "Insolvency" subsection above, such acceleration shall be automatic and not optional. In addition, Lender shall have all the rights and remedies provided in the Related Documents or available at law, in equity, or otherwise. Except as may be prohibited by applicable law, all of Lender's rights and remedies shall be cumulative and may be exercised singularly or concurrently. Election by Lender to pursue any remedy shall not exclude pursuit of any other remedy, and an election to make expenditures or to take action to perform an obligation of Borrower or of any Grantor shall not affect Lender's right to declare a default and to exercise its rights and remedies. MISCELLENEOUS PROVISIONS. The following miscellaneous provisions are a part of this Agreement. Amendments. This Agreement, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Agreement. No alteration of or amendment to this Agreement shall be effective unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment. Attorneys' Fees; Expenses. Borrower agrees to pay upon demand all of Lender's costs and expenses, including Lender's reasonable attorneys' fees and Lender's legal expenses, incurred in connection with the enforcement of this Agreement. Lender may hire or pay someone else to help enforce this Agreement, and Borrower shall pay the costs and expenses of such enforcement. Costs and expenses include Lender's reasonable attorneys' fees and legal expenses whether or not Lender's salaried employee and whether or not there is a lawsuit, including reasonable attorneys' fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals, and any anticipated post-judgment collection services. Borrower also shall pay all court costs and such additional fees as may be directed by the court. Caption Headings. Caption headings in this Agreement are for convenience purposes only and are not to be used to interpret or define the provisions of this Agreement. Consent to Loan Participation. Borrower agrees and consents to Lender's sale or transfer, whether now or later, of one or more participation interests in the Loan to one or more purchasers, whether related or unrelated to Lender. Lender may provide, without any limitation whatsoever, to any one or more purchasers, or potential purchasers, any information or knowledge Lender may have about Borrower or about any other matter relating to the Loan, and Borrower hereby waives any rights to privacy Borrower may E-90 have with respect to such matters. Borrower additionally waives any and all notices of sale of participation interests, as well as all notices of any repurchase of such participation interests. Borrower also agrees that the purchasers of any such participation interests will be considered as the absolute owners of such interest in the Loan and will have all the rights granted under the participation agreement or agreements governing the sale of such participation interests. Borrower further waives all rights of offset or counterclaim that it may have now or later against Lender or against any purchaser of such a participation interest and unconditionally agrees that either Lender or such purchaser may enforce Borrower's obligation under the Loan irrespective of the failure or insolvency of any holder of any interest in the Loan. Borrower further agrees that the purchaser of any such participation interests may enforce its interests irrespective of any personal claims or defenses that Borrower may have against Lender. Governing Law. This Agreement will be governed by, construed and enforced in accordance with federal law and the laws of the State of Utah. This Agreement has been accepted by Lender in the State of Utah. Choice of Venue. If there is a lawsuit, Borrower agrees upon Lender's request to submit to the jurisdiction of the courts of WEBER county, State of Utah. No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Agreement unless such waiver is given in writing and signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right. A waiver by Lender of a provision of this Agreement shall not prejudice or constitute a waiver of Lender's right otherwise to demand strict compliance with that provision or any other provision of this Agreement. No prior waiver by Lender, nor any course of dealing between Lender and Borrower, or between Lender and any Grantor, shall constitute a waiver of any of Lender's rights or of any of Borrower's or any Grantor's obligations as to any future transactions. Whenever the consent of Lender is required under this Agreement, the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in the sole discretion of Lender. Notices. Unless otherwise provided by applicable law, any notice required to be given under this Agreement or required by law shall be given in writing, and shall be effective when actually delivered in accordance with the law or with this Agreement, when actually received by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnight courier, or, if mailed, when deposited in the United States mail, as first class, certified or registered mail postage prepaid, directed to the addresses shown near the beginning of this Agreement. Any party may change its address for notices under this Agreement by giving formal written notice to the other parties, specifying that the purpose of the notice is to change the party's address. For notice purposes, Borrower agrees to keep Lender informed at all times of Borrower's current address. Unless otherwise provided by applicable law, if there is more than one Borrower, any notice given by Lender to any Borrower is deemed to be notice given to all Borrowers. E-91 Severability. If a court of competent jurisdiction finds any provision of this Agreement to be illegal, invalid, or unenforceable as to any circumstance, that finding shall not make the offending provision illegal, invalid, or unenforceable as to any other circumstance. If feasible, the offending provision shall be considered modified so that it becomes legal, valid and enforceable. If the offending provision cannot be so modified, it shall be considered deleted from this Agreement. Unless otherwise required by law, the illegality, invalidity, or unenforceability of any provision of this Agreement shall not affect the legality, validity or enforceability of any other provision of this Agreement. Subsidiaries and Affiliates of Borrower. To the extent the context of any provisions of this Agreement makes it appropriate, including without limitation any representation, warranty or covenant, the word "Borrower" as used in this Agreement shall include all of Borrower's subsidiaries and affiliates. Notwithstanding the foregoing however, under no circumstances shall this Agreement be construed to require Lender to make any Loan or other financial accommodation to any of Borrower's subsidiaries or affiliates. Successors and Assigns. All covenants and agreements contained by or on behalf of Borrower shall bind Borrower's successors and assigns and shall inure to the benefit of Lender and its successors and assigns. Borrower shall not, however, have the right to assign Borrower's rights under this Agreement or any interest therein, without the prior written consent of Lender. Survival of Representations and Warranties. Borrower understands and agrees that in making the Loan, Lender is relying on all representations, warranties, and covenants made by Borrower in this Agreement or in any certificate or other instrument delivered by Borrower to Lender under this Agreement or the Related Documents. Borrower further agrees that regardless of any investigation made by Lender, all such representations, warranties and covenants will survive the making of the Loan and delivery to Lender of the Related Documents, shall be continuing in nature, and shall remain in full force and effect until such time as Borrower's Indebtedness shall be paid in full, or until this Agreement shall be terminated in the manner provided above, whichever is the last to occur. Time is of the Essence. Time is of the essence in the performance of this Agreement. DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Agreement. Unless specifically stated to the contrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms used in the singular shall include the plural, and the plural shall include the singular, as the context may require. Words and terms not otherwise defined in this Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code. Accounting words and terms not otherwise defined in this Agreement shall have the meanings assigned to them in accordance with generally accepted accounting principles as in effect on the date of this Agreement. Advance. The word "Advance" means a disbursement of Loan funds made, or to be made, to Borrower or on Borrower's behalf on a line of credit or multiple advance basis under the terms and conditions of this Agreement. E-92 Agreement. The word "Agreement" means this Business Loan Agreement, as this Business Loan Agreement may be amended or modified from time to time, together with all exhibits and schedules attached to this Business Loan Agreement from time to time. Borrower. The word "Borrower" means OGDEN GOLF CO. CORPORATION, and all other persons and entities signing the Note in whatever capacity. Collateral. The word "Collateral" means all property and assets granted as collateral security for a Loan, whether real or personal property, whether granted directly or indirectly, whether granted now or in the future, and whether granted in the form of a security interest, mortgage, collateral mortgage, deed of trust, assignment, pledge, chattel mortgage, crop pledge, chattel mortgage, collateral chattel mortgage, chattel trust, factor's lien, equipment trust, conditional sale, trust receipt, lien, charge, lien or title retention contract, lease or consignment intended as a security device, or any other security or lien interest whatsoever, whether created by law, contract, or otherwise. Environmental Laws. The words "Environmental Laws" mean any and all state, federal and local statutes, regulations and ordinances relating to the protection of human health or the environment, including without limitation the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499 ("SARA"), the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., or other applicable state or federal laws, rules, or regulations adopted pursuant thereto. Event of Default. The words "Event of Default" mean any of the Events of Default set forth in this Agreement in the Default section of this Agreement. GAAP. The word "GAAP" means generally accepted accounting principles. Grantor. The word "Grantor" means each and all of the persons or entities granting a Security Interest in any Collateral for the Loan, including without limitation all Borrowers granting such a Security Interest. Guarantor. The word "Guarantor" means any guarantor, surety, or accommodation party of any or all of the Loan. Guaranty. The word "Guaranty" means the guaranty from Guarantor to Lender, including without limitation a guaranty of all or part of the Note. Hazardous Substances. The words "Hazardous Substances" mean materials that, because of their quantity, concentration or physical, chemical or infectious characteristics, may cause or pose a present or potential hazard to human health or the environment when improperly used, treated, stored, disposed of, generated, manufactured, transported or otherwise handled. The E-93 words "Hazardous Substances" are used in their very broadest sense and include without limitation any and all hazardous or toxic substances, materials or waste as defined by or listed under the Environmental Laws. The term "Hazardous Substances" also includes, without limitation, petroleum and petroleum by-products or any fraction thereof and asbestos. Indebtedness. The word "Indebtedness" means the indebtedness evidenced by the Note or Related Documents, including all principal and interest together with all other indebtedness and costs and expenses for which Borrower is responsible under this Agreement or under any of the Related Documents. Lender. The word "Lender" means BARNES BANKING COMPANY, its successors and assigns. Loan. The word "Loan" means any and all loans and financial accommodations from Lender to Borrower whether now or hereafter existing, and however evidenced, including without limitation those loans and financial accommodations described herein or described on any exhibit or schedule attached to this Agreement from time to time. Note. The word "Note" means the Note executed by Borrower in the principal amount of $139,539.02 dated September 20, 2000, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of, and substitutions for the note or credit agreement. Permitted Liens. The words "Permitted Liens" mean (1) liens and security interests securing Indebtedness owed y Borrower to Lender; (2) liens for taxes, assessments, or similar charges either not yet due or being contested in good faith; (3) liens of materialmen, mechanics, warehousemen, or carriers, or other like liens arising in the ordinary course of business and securing obligations which are not yet delinquent; (4) purchase money liens or purchase money security interests upon or in any property acquired or held by Borrower in the ordinary course of business to secure indebtedness outstanding on the date of this Agreement or permitted to be incurred under the paragraph of this Agreement titled "Indebtedness and Liens;" (5) liens and security interests which, as of the date of this Agreement, have been disclosed to and approved by the Lender in writing; and (6) those liens and security interests which in the aggregate constitute an immaterial and insignificant monetary amount with respect to the net value of Borrower's assets. Related Documents. The words "Related Documents" mean all promissory notes, credit agreements, loan agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements and documents, whether now or hereafter existing, executed in connection with the loan. Security Agreement. The words "Security Agreement" mean and include without limitation any agreements, promises, covenants, arrangements, understandings or other agreements, whether created by law, contract, or otherwise, evidencing, governing, representing, or creating a Security Interest. E-94 Security Interest. The words "Security Interest" mean, without limitation, any and all types of collateral security, present and future, whether in the form of a lien, charge, encumbrance, mortgage, deed of trust, security deed, assignment, pledge, crop pledge, chattel mortgage, collateral chattel mortgage, chattel trust, factor's lien, equipment trust, conditional sale, trust receipt, lien or title retention contract, lease or consignment intended as a security device, or any other security or lien interest whatsoever whether created by law, contract, or otherwise. FINAL AGREEMENT. Borrower understands that this Agreement and the related loan documents are the final expression of the agreement between Lender and Borrower and may not be contradicted by evidence of any alleged oral agreement. BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN AGREEMENT AND BORROWER AGREES TO ITS TERMS. THIS BUSINESS LOAN AGREEMENT IS DATED SEPTEMBER 20, 2000. BORROWER: OGDEN GOLF CO. CORPORATION BY:________________________________ Paul Larsen, President of Ogden Golf Co. Corporation LENDER: BARNES BANKING COMPANY X__________________________________ Authorized Signer E-95 EX-10 14 ex10-3_2003.txt Exhibit 10.3 Form SB-2 Ogden Golf Co. Corporation COMMERCIAL SECURITY AGREEMENT
- -------------------------------------------------------------------------------------------- Principal Loan Date Maturity Loan No. Call Collateral Account Officer Initials $139,539.02 09-20-2000 09-20-2005 664000346 1E 154 SLW - --------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the applicability of this document to any particular loan or item. Any item above containing "***" has been omitted due to text length limitations. - -------------------------------------------------------------------------------- Grantor: Ogden Golf Co. Corporation Lender: Barnes Banking Company (TIN: 87-0652870) South Ogden 1781 Washington Blvd. 1840 East Skyline Drive Ogden, UT 84401 South Ogden, UT 84403 ================================================================================ THIS COMMERCIAL SECURITY AGREEMENT dated September 20, 2000, is made and executed between OGDEN GOLF CO. CORPORATION ("Grantor") and BARNES BANKING COMPANY ("Lender"). GRANT OF SECURITY INTEREST. For valuable consideration, Grantor grants to Lender a security interest in the Collateral to secure the Indebtedness and agrees that Lender shall have the rights stated in this Agreement with respect to the Collateral, in addition to all other rights which Lender may have by law. COLLATERAL DESCRIPTION. The word "Collateral" as used in this Agreement means the following described property, whether now owned or hereafter acquired, whether now existing or hereafter arising, and wherever located, in which Grantor is giving to Lender a security interest for the payment of the Indebtedness and performance of all other obligations under the Note and this Agreement: All Inventory now owned or hereafter acquired. In addition, the word "Collateral" also includes all the following, whether now owned or hereafter acquired, whether now existing or hereafter arising, and wherever located: (A) All accessions, attachments, accessories, tools, parts, supplies, replacements and additions to any of the collateral described herein, whether added now or later. (B) All products and produce of any of the property described in this Collateral section. (C) All accounts, general intangibles, instruments, rents, monies, payments, and all other rights, arising out of a sale, lease, or other disposition of any of the property described in this Collateral section. (D) All proceeds (including insurance proceeds) from the sale, destruction, loss, or other disposition of any of the property described in this Collateral section, and sums due from a third party who has damaged or destroyed the Collateral or from that party's insurer, whether due to judgment, settlement or other process. E-96 (E) All records and data relating to any of the property described in this Collateral section, whether in the form of a writing, photograph, microfilm, microfiche, or electronic media, together with all of the Grantor's right, title, and interest in and to all computer software required to utilize, create, maintain, and process any such records or data on electronic media. Despite any other provision of this Agreement, Lender is not granted, and will not have, a nonpurchase money security interest in household goods, to the extent such a security interest would be prohibited by applicable law. In addition, if because of the type of any Property, Lender is required to give a notice of the right to cancel under Truth in Lending for the Indebtedness, then Lender will not have a security interest in such Collateral unless and until such a notice is given. RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Grantor's accounts with Lender (whether checking, savings, or some other account). This includes all accounts Grantor holds jointly with someone else and all accounts Grantor may open in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law. Grantor authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the Indebtedness against any and all such accounts. GRANTOR'S REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COLLATERAL. With respect to the Collateral, Grantor represents and promises to Lender that: Perfection of Security Interest. Grantor agrees to execute financing statements and to take whatever other actions are requested by Lender to perfect and continue Lender's security interest in the Collateral. Upon request of Lender, Grantor will deliver to Lender any and all of the documents evidencing or constituting the Collateral, and Grantor will note Lender's interest upon any and all chattel paper if not delivered to Lender for possession by Lender. Notices to Lender. Grantor will promptly notify Lender in writing at Lender's address shown above (or such other addresses as Lender may designate from time to time) prior to any (1) change in Grantor's name; (2) change in Grantor's assumed business name(s); (3) change in management of the corporation Grantor; (4) change in the authorized signer(s); (5) change in Grantor's principal office address; (6) conversion of Grantor to a new or different type of business entity; or (7) change in any other aspect of Grantor that directly or indirectly relates to any agreements between Grantor and Lender. No change in Grantor's name will take effect until after Lender has been notified. No Violation. The execution and delivery of this Agreement will not violate any law or agreement governing Grantor or to which Grantor is a party, and its certificate or articles of incorporation and bylaws do not prohibit any term or condition of this Agreement. Enforceability of Collateral. To the extent the Collateral consists of accounts, chattel paper, or general intangibles, as defined by the Uniform Commercial Code, the Collateral is enforceable in accordance with its terms, is genuine, and fully complies with all applicable laws and E-97 regulations concerning form, content and manner of preparation and execution, and all persons appearing to be obligated on the Collateral have authority and capacity to contract and are in fact obligated as they appear to be on the Collateral. There shall be no setoffs or counterclaims against any of the Collateral, and no agreement shall have been made under which any deductions or discounts may be claimed concerning the Collateral except those disclosed to Lender in writing. Location of the Collateral. Except in the ordinary course of Grantor's business, Grantor agrees to keep the Collateral at Grantor's address shown above or at such other locations as are acceptable to Lender. Upon Lender's request, Grantor will deliver to Lender in form satisfactory to Lender a schedule of real properties and Collateral locations relating to Grantor's operations, including without limitation the following: (1) all real property Grantor owns or is purchasing; (2) all real property Grantor is renting or leasing; (3) all storage facilities Grantor owns, rents, leases, or uses; and (4) all other properties were Collateral is or may be located. Removal of the Collateral. Except in the ordinary course of Grantor's business, including the sales of inventory, Grantor shall not remove the Collateral from its existing location without Lender's prior written consent. To the extent that the Collateral consists of vehicles, or other titled property, Grantor shall not take or permit any action which would require application for certificates of title for the vehicles outside the State of Utah, without Lender's prior written consent. Grantor shall, whenever requested, advise Lender of the exact location of the Collateral Transactions Involving Collateral. Except for inventory sold or accounts collected in the ordinary course of Grantor's business, or as otherwise provided for in this Agreement, Grantor shall not sell, offer to sell, or otherwise transfer or dispose of the Collateral. While Grantor is not in default under this Agreement, Grantor may sell inventory, but only int he ordinary course of its business and only to buyers who qualify as a buyer in the ordinary course of business. A sale in the ordinary course of Grantor's business doe s not include a transfer in partial or total satisfaction of a debt or any bulk sale. Grantor shall not pledge, mortgage, encumber or otherwise permit the Collateral to be subject to any lien, security interest, encumbrance, or charge, other than the security interest provided for in this Agreement, without the prior written consent of Lender. This includes security interests even if junior in right to the security interests granted under this Agreement. Unless waived by Lender, all proceeds from any disposition of the Collateral (for whatever reason) shall be held in trust for Lender and shall not be commingled with any other funds; provided however, this requirement shall not constitute consent by Lender to any sale or other disposition. Upon receipt, Grantor shall immediately deliver any such proceeds to Lender. Title. Grantor represents and warrants to Lender that Grantor holds good and marketable title to the Collateral, free and clear of all liens and encumbrances except for the lien of this Agreement. No financing statement covering any of the Collateral is on file in any public office other than those which reflect the security interest created by this Agreement or to which Lender has specifically consented. Grantor shall defend Lender's rights in the Collateral against the claims and demands of all other persons. E-98 Repairs and Maintenance. Grantor agrees to keep and maintain, and to cause others to keep and maintain, the Collateral in good order, repair and condition at all times while this Agreement remains in effect. Grantor further agrees to pay when due all claims for work done on, or services rendered or material furnished in connection with the Collateral so that no lien or encumbrance may ever attach to or be filed against the Collateral. Inspection of Collateral. Lender and Lender's designated representatives and agents shall have the right at all reasonable times to examine and inspect the Collateral wherever located. Taxes, Assessments and Liens. Grantor will pay when due all taxes, assessments and liens upon the Collateral, its use or operation, upon this Agreement, upon any promissory note or notes evidencing the Indebtedness, or upon any of the other Related Documents. Grantor may withhold any such payment or may elect to contest any lien if Grantor is in good faith conducting an appropriate proceeding to contest the obligation to pay and so long as Lender's interest in the Collateral is not jeopardized in Lender's sole opinion. If the Collateral is subjected to a lien which is not discharged within fifteen (15) days, Grantor shall deposit with Lender cash, a sufficient corporate surety bond or other security satisfactory to Lender in an amount adequate to provide for the discharge of the lien plus any interest, costs, reasonable attorneys' fees or other charges that could accrue as a result of foreclosure or sale of the Collateral. In any contest Grantor shall defend itself and Lender and shall satisfy any final adverse judgment before enforcement against the Collateral. Grantor shall name Lender as an additional obligee under any surety bond furnished in the contest proceedings. Grantor further agrees to furnish Lender with evidence that such taxes, assessments, and governmental and other charges have been paid in full and in a timely manner. Grantor may withhold any such payment or may elect to contest any lien if Grantor is in good faith conducting an appropriate proceeding to contest the obligation to pay and so long as Lender's interest in the Collateral is not jeopardized. Compliance with Governmental Requirements. Grantor shall comply promptly with all laws, ordinances, rules and regulations of all governmental authorities, now or hereafter in effect, applicable to the ownership, production, disposition, to use of the Collateral. Grantor may contest in good faith any such law, ordinance or regulation and withhold compliance during any proceeding, including appropriate appeals, so long as Lender's interest in the Collateral, in Lender's opinion, is not jeopardized. Hazardous Substances. Grantor represents and warrants that the Collateral never has been, and never will be so long as this Agreement remains a lien on the Collateral, used in violation of any Environmental Laws or for the generation, manufacture, storage, transportation, treatment, disposal, release or threatened release of any Hazardous Substance. The representations and warranties contained herein are based on Grantor's due diligence in investigating the Collateral for Hazardous Substances. Grantor hereby (1) releases and waives any future claims against Lender for indemnity or contribution in the event Grantor becomes liable for cleanup or other costs under any Environmental Laws, and (2) agrees to indemnify and hold harmless Lender against any and all claims and losses resulting E-99 from a breach of this provision of this Agreement. This obligation to indemnify shall survive the payment of the Indebtedness and the satisfaction of this Agreement. Maintenance of Casualty Insurance. Grantor shall procure and maintain all risks insurance, including without limitation fire, theft and liability coverage together with such other insurance as Lender may require with respect to the Collateral, in form, amounts, coverages and basis reasonably acceptable to Lender and issued by a company or companies reasonably acceptable to Lender. Grantor, upon request of Lender, will deliver to Lender from time to time the policies or certificates of insurance in form satisfactory to Lender, including stipulations that coverages will not be cancelled or diminished without at least thirty (30) days' prior written notice to Lender and not including any disclaimer of the insurer's liability for failure to give such a notice. Each insurance policy also shall include an endorsement providing that coverage in favor of Lender will not be impaired in any way by any act, omission or default of Grantor or any other person. In connection with all policies covering assets in which Lender holds or is offered a security interest, Grantor will provide Lender with such loss payable or other endorsements as Lender may require. If Grantor at any time fails to obtain or maintain any insurance as required under this Agreement, Lender may (but shall not be obligated to) obtain such insurance as Lender deems appropriate, including if Lender so chooses "single interest insurance," which will covers only Lender's interest in the Collateral. Application of Insurance Proceeds. Grantor shall promptly notify Lender of any loss or damage to the Collateral. Lender may make proof of loss if Grantor fails to do so within fifteen (15) days of the casualty. All proceeds of any insurance on the Collateral, including accrued proceeds thereon, shall be held by Lender as part of the Collateral. If Lender consents to repair or replacement of the damaged or destroyed Collateral, Lender shall, upon satisfactory proof of expenditure, pay or reimburse Grantor from the proceeds for the reasonable cost of repair or restoration. If Lender does not consent to repair or replacement of the Collateral, Lender shall retain a sufficient amount of the proceeds to pay all of the Indebtedness, and shall pay the balance to Grantor. Any proceeds which have not been disbursed within six (6) months after their receipt and which Grantor has not committed to the repair or restoration of the Collateral shall be used to prepay the Indebtedness. Insurance Reserves. Lender may require Grantor to maintain with Lender reserves for payment of insurance premiums, which reserves shall be created by monthly payments from Grantor of a sum estimated by Lender to be sufficient to produce, at least fifteen (15) days before the premium due date, amounts at least equal to the insurance premiums to be paid. If fifteen (15) days before payment is due, the reserve funds are insufficient, Grantor shall upon demand pay any deficiency to Lender. The reserve funds shall be held by Lender as a general deposit and shall constitute a non-interest-bearing account which Lender may satisfy by payment of the insurance premiums required to be paid by Grantor as they become due. Lender does not hold the reserve funds in trust fort Grantor, and Lender is not the agent of Grantor for payment of the insurance premiums required to be paid by Grantor. The responsibility for the payment of premiums shall remain Grantor's sole responsibility. E-100 Insurance Reports. Grantor, upon request of ender, shall furnish to Lender reports on each existing policy of insurance showing such information as Lender may reasonably request including the following: (1) the name of the insurer; (2) the risks insured; (3) the amount of the policy; (4) the property insured; (5) the then current value on the basis of which insurance has been obtained and the manner of determining that value; and (6) the expiration date of the policy. In addition, Grantor shall upon request by Lender (however not more often than annually) have an independent appraiser satisfactory to Lender determine, as applicable, the cash value or replacement cost of the Collateral. GRANTOR'S RIGHT TO POSSESSION. Until default, Grantor may have possession of the tangible personal property and beneficial use of all the Collateral and may use it in any lawful manner not inconsistent with this Agreement or the Related Documents, provided that Grantor's right to possession and beneficial use shall not apply to any Collateral where possession of the Collateral by Lender is required by law to perfect Lender's security interest in such Collateral. If Lender at any time has possession of any Collateral, whether before or after an Event of Default, Lender shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral if Lender takes such action for that purpose as Grantor shall request or as Lender, in Lender's sole discretion, shall deem appropriate under the circumstances, but failure to honor any request by Grantor shall not of itself be deemed to be a failure to exercise reasonable care. Lender shall not be required to take any steps necessary to preserve any rights in the Collateral against prior parties, nor to protect, preserve or maintain any security interest given to secure the Indebtedness. LENDER'S EXPENDITURES. If any action or proceeding is commenced that would materially affect Lender's interest in the Collateral or if Grantor fails to comply with any provision of this Agreement or any Related Documents, including but not limited to Grantor's failure to discharge or pay when due any amounts Grantor is required to discharge or pay under this Agreement or any Related Documents, Lender on Grantor's behalf may (but shall not be obligated to ) take any action that Lender deems appropriate, including but not limited to discharging or paying all taxes, liens, security interests, encumbrances and other claims, at any time levied or placed on the Collateral and paying all costs for insuring, maintaining and preserving the Collateral. All such expenditures incurred or paid by Lender for such purposes will then bear interest at the rate charged under the Note from the date incurred or paid by Lender to the date of repayment by Grantor. All such expenses will become a part of the Indebtedness and, at Lender's option, will (A) be payable on demand; (B) be added to the balance of the Note and be apportioned among and be payable with any installment payments to become due during either (1) the term of any applicable insurance policy; or (2) the remaining term of the Note; or (C) be treated as a balloon payment which will be due and payable at the Note's maturity. The Agreement also will secure payment of these amounts. Such right shall be in addition to all other rights and remedies to which Lender may be entitled upon Default. DEFAULT. Each of the following shall constitute an Event of Default under this Agreement: Payment Default. Grantor fails to make any payment when due under the Indebtedness. Other Defaults. Grantor fails to comply with or to perform any other term, obligation, covenant or condition contained in this Agreement or in any of E-101 the Related Documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Grantor. False Statements. Any warranty, representation or statement made or furnished to Lender by Grantor or on Grantor's behalf under this Agreement, the Note, or the Related Documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter. Defective Collateralization. This Agreement or any of the Related Documents ceases to be in full force and effect (including failure of any collateral document to create a valid and perfected security interest or lien) at any time and for any reason. Insolvency. The dissolution or termination of Grantor's existence as a going business, the insolvency of Grantor, the appointment of a receiver for any part of Grantor's property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Grantor. Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Grantor or by any governmental agency against any collateral securing the Indebtedness. This includes a garnishment of any of Grantor's accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Grantor as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Grantor gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute. Events Affecting Guarantor. Any of the preceding events occurs with respect to Guarantor of any of the Indebtedness or Guarantor dies or becomes incompetent or revokes or disputes the validity of, or liability under, any Guaranty of the Indebtedness. Adverse Change. A material adverse change occurs in Grantor's financial condition, or Lender believes the prospect of payment or performance of the Indebtedness is impaired. Cure Provisions. If any default, other than a default in payment is curable and if Grantor has not been given a notice of a breach of the same provision of this Agreement within the preceding twelve (12) months, it may be cured (and no event of default will have occurred) if Grantor, after receiving written notice from Lender demanding cure of such default: (1) cures the default within fifteen (15) days; or (2) if the cure requires more than fifteen (15) days, immediately initiates steps which Lender deems in Lender's sole discretion to be sufficient to cure the default and thereafter continues and completes all reasonable and necessary steps sufficient to produce compliance as soon as reasonably practical. RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this Agreement, at any time thereafter, Lender shall have all the rights of a secured party under the Utah Uniform Commercial Code. In addition and without limitation, Lender may exercise any oen or more of the following rights and remedies: E-102 Accelerated Indebtedness. Lender may declare the entire Indebtedness, including any prepayment penalty which Grantor would be required to pay, immediately due and payable, without notice of any kind to Grantor. Assemble Collateral. Lender may require Grantor to deliver to Lender all or any portion of the Collateral and any and all certificates of title and other documents relating to the Collateral. Lender may require Grantor to assemble the Collateral and make it available to Lender at a place to be designated by Lender. Lender also shall have full power to enter upon the property of Grantor to take possession of and remove the Collateral. If the Collateral contains other goods not covered by this Agreement at the time of repossession, Grantor agrees Lender may take such other goods, provided that Lender makes reasonable efforts to return them to Grantor after repossession. Sell the Collateral. Lender shall have full power to sell, lease, transfer, or otherwise deal with the Collateral or proceeds thereof in Lender's own name or that of Grantor. Lender may sell the Collateral at public auction or private sale. Unless the Collateral threatens to decline speedily in value or is of a type customarily sold on a recognized market, Lender will give Grantor reasonable notice of the time after which any private sale or any other intended disposition of the Collateral is to be made. The requirements of reasonable notice shall be met if such notice is given at least fifteen (15) days before the time of the sale or disposition. All expenses relating to the disposition of the Collateral, including without limitation the expenses of retaking, holding, insuring, preparing for sale and selling the Collateral, shall become a part of the Indebtedness secured by this Agreement and shall be payable on demand, with interest at the Note rate from date of expenditure until repaid. Appoint Receiver. Lender shall have the right to have a receiver appointed to take possession of all or any part of the Collateral, with the power to protect and preserve the Collateral, to operate the Collateral preceding foreclosure or sale, and to collect the Rents from the Collateral and apply the proceeds, over and above the cost of the receivership, against the Indebtedness. grantor hereby waives any requirement that the receiver be impartial and disinterested as to all of the parties and agrees that employment by Lender shall not disqualify a person from serving as a receiver. Collect Revenues, Apply Accounts. Lender, either itself or through a receiver, may collect the payments, rents, income, and revenues from the Collateral. Lender may at any time in Lender's discretion transfer any Collateral into Lender's own name or that of Lender's nominee and receive the payments, rents, income, and revenues therefrom and hold the same as security for the Indebtedness or apply it to payment of the Indebtedness in such order of preference as Lender may determine. Insofar as the Collateral consists of accounts, general intangibles, insurance policies, instruments, chattel paper, choses in action, or similar property, Lender may demand, collect, receipt for, settle, compromise, adjust, sue for, foreclose, or realize on the Collateral as Lender may determine, whether or not Indebtedness or Collateral is then due. For these purposes, Lender may, on behalf of and in the name of Grantor, receive, open and dispose of mail addressed to Grantor; change any address to which mail and payments are to be sent; and endorse notes, checks, drafts, money orders, documents of title, instruments and items pertaining to payment, shipment, or storage of E-103 any collateral. To facilitate collection, Lender may notify account debtors and obligors on any Collateral to make payments directly to Lender. Obtain Deficiency. If Lender chooses to sell any or all of the Collateral, Lender may obtain a judgment against Grantor for any deficiency remaining on the Indebtedness due to Lender after application of all amounts received from the exercise of the rights provided in this Agreement. Grantor shall be liable for a deficiency even if the transaction described in this subsection is a sale of accounts or chattel paper. Other Rights and Remedies. Lender shall have all the rights and remedies of a secured creditor under the provisions of the Uniform Commercial Code, as may be amended from time to time. In addition, Lender shall have and may exercise any or all other rights and remedies it may have available at law, in equity, or otherwise. Election of Remedies. Except as may be prohibited by applicable law, all of Lender's rights and remedies, whether evidenced by this Agreement, the Related Documents, or by any other writing, shall be cumulative and may be exercised singularly or concurrently. Election by Lender to pursue any remedy shall not exclude pursuit of any other remedy, and an election to make expenditures or to take action to perform an obligation of Grantor under this Agreement, after Grantor's failure to perform, shall not affect Lender's right to declare a default and exercise its remedies. MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of this Agreement. Amendments. This Agreement, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Agreement. No alteration of or amendment to this Agreement shall be effective unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment. Attorneys' Fees; Expenses. Grantor agrees to pay upon demand all of Lender's costs and expenses, including Lender's reasonable attorneys' fees and Lender's legal expenses, incurred in connection with the enforcement of this Agreement. Lender may hire or pay someone else to help enforce this Agreement, and Grantor shall pay the costs and expenses of such enforcement. Costs and expenses include Lender's reasonable attorneys' fees and legal expenses whether or not Lender's salaried employee and whether or not there is a lawsuit, include reasonable attorneys' fees and legal expenses of bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals, and any anticipated post-judgment collection services. Grantor also shall pay all court costs and such additional fees as may be directed by the court. Caption Headings. Caption headings in this Agreement are for convenience purposes only and are not to be used to interpret or define the provisions of this Agreement. Governing Law. This agreement will be governed by, construed and enforced in accordance with federal law and the laws of the State of Utah. This Agreement has been accepted by Lender in the State of Utah. E-104 Choice of Venue. If there is a lawsuit, Grantor agrees upon Lender's request to submit to the jurisdiction of the courts of WEBER county, State of Utah. No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Agreement unless such waiver is given in writing and signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right. A waiver by Lender of a provision of this Agreement shall not prejudice or constitute a waiver of Lenders right otherwise to demand strict compliance with that provision or any other provision of this Agreement. No prior waiver by Lender, nor any course of dealing between Lender and Grantor, shall constitute a waiver of any of Lender's rights or of any of Grantor's obligations as to any future transactions. Whenever the consent of Lender is required under this Agreement, the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in the sole discretion of Lender. Notices. Unless otherwise provided by applicable law, any notice required to be given under this Agreement or required by law shall be given in writing, and shall be effective when actually delivered in accordance with the law or with this Agreement, when actually received by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnight courier, or, if mailed, when deposited in the United States mail, as first class, certified or registered mail postage prepaid, directed to the addresses shown near the beginning of this Agreement. Any party may change its address for notices under this Agreement by giving formal written notice to the other parties, specifying that the purpose of the notice is to change the party's address. For notice purposes, Grantor agrees to keep Lender informed at all times of Grantor's current address. Unless otherwise provided by applicable law, if there is more than one Grantor, any notice given by Lender to any Grantor is deemed to be notice given to all Grantors. Power of Attorney. Grantor hereby appoints Lender as Grantor's irrevocable attorney-in-fact for the purpose of executing any documents necessary to perfect or to continue the security interest granted in this Agreement. Lender may at any time, and without further authorization from Grantor, file a carbon, photographic or other reproduction of any financing statement or of this Agreement for use as a financing statement. Grantor will reimburse Lender for all expenses for the perfection and the continuation of the perfection of Lender's security interest in the Collateral. Severability. If a court o competent jurisdiction finds any provision of this Agreement to be illegal, invalid, or unenforceable as to any circumstance, that finding shall not make the offending provision illegal, invalid, or unenforceable as to any other circumstance. If feasible, the offending provision shall be considered modified so that it becomes legal, valid and enforceable. If the offending provision cannot be so modified, it shall be considered deleted from this Agreement. Unless otherwise required by law, the illegality, invalidity, or unenforceability of any provision of this Agreement shall not affect the legality, validity or enforceability of any other provision of this Agreement. E-105 Successors and Assigns. Subject to any limitations stated in this Agreement on transfer of Grantor's interest, this Agreement shall be binding upon and inure to the benefit of the parties, their successors and assigns. If ownership of the Collateral becomes vested in a person other than Grantor, Lender, without notice to Grantor, may deal with Grantor's successors with reference to this Agreement and the Indebtedness by way of forbearance or extension without releasing Grantor from the obligations of this Agreement or liability under the Indebtedness. Survival of Representations and Warranties. All representations, warranties, and agreements made by Grantor in this Agreement shall survive the execution and delivery of this Agreement, shall be continuing in nature, and shall remain in full force and effect until such time as Grantor's Indebtedness shall be paid in full. Time is of the Essence. Time is of the essence in the performance of this Agreement. DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Agreement. Unless specifically stated to the contrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms used in the singular shall include the plural, and the plural shall include the singular, as the context may require. Words and terms not otherwise defined in this Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code: Agreement. The word "Agreement" means this Commercial Security Agreement, as this Commercial Security Agreement may be amended or modified from time to time, together with all exhibits and schedules attached to this Commercial Security Agreement from time to time. Borrower. The word "Borrower" means OGDEN GOLF CO. CORPORATION, and all other persons and entities signing the Note in whatever capacity. Collateral. The word "Collateral" means all of Grantor's right, title and interest in and to all the Collateral as described in the Collateral Description section of this Agreement. Default. The word "Default" means the Default set forth in this Agreement in the section titled "Default." Environmental Laws. The words "Environmental Laws" mean any and all state, federal and local statutes, regulations and ordinances relating to the protection of human health or the environment, including without limitation the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499 ("SARA"), the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., or other applicable state or federal laws, rules, or regulations adopted pursuant thereto. Event of Default. The words "Event of Default" mean any of the Events of Default set forth in this Agreement in the Default section of this Agreement. E-106 Grantor. The word "Grantor" means OGDEN GOLF CO. CORPORATION. Guarantor. The word "Guarantor" means any guarantor, surety, or accommodation party of any or all of the Indebtedness. Guaranty. The word "Guaranty" means the guaranty from Guarantor to Lender, including without limitation a guaranty of all or part of the Note. Hazardous Substances. The words "Hazardous Substances" mean materials that, because of their quantity, concentration or physical, chemical or infectious characteristics, may cause or pose a present or potential hazard to human health or the environment when improperly used, treated, stored, disposed of, generated, manufactured, transported or otherwise handled. The words "Hazardous Substances" are used in their very broadest sense and include without limitation any and all hazardous or toxic substances, materials or waste as defined by or listed under the Environmental Laws. The term "Hazardous Substances" also includes, without limitation, petroleum and petroleum by-products or any faction thereof and asbestos. Indebtedness. The word "Indebtedness" means the indebtedness evidenced by the Note or Related Documents, including all principal and interest together with all other indebtedness and costs and expenses for which Grantor is responsible under this Agreement or under any of the Related Documents. Lender. The word "Lender means BARNES BANKING COMPANY, it successors and assigns. Note. The word "Note" means the Note executed by Grantor in the principal amount of $139,539.02 dated September 20, 2000, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of, and substitutions for the note or credit agreement. Related Documents. The words "Related Documents" mean all promissory notes, credit agreements, loan agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements and documents, whether now or hereafter existing, executed in connection with the Indebtedness. GRANTOR HAS READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS COMMERCIAL SECURITY AGREEMENT AND AGREES TO ITS TERMS. THIS AGREEMENT IS DATED SEPTEMBER 20, 2000. GRANTOR: OGDEN GOLF CO. CORPORATION BY:________________________________ Paul Larsen, President of Ogden Golf Co. Corporation E-107 EX-21 15 ex21-1_2003.txt Exhibit 21.1 Form SB-2 Ogden Golf Co. Corporation LIST OF SUBSIDIARIES OF REGISTRANT Ogden Discount Golf, Inc. E-108 EX-23 16 ex23-1_2003.txt Exhibit 23.1 Form SB-2 Ogden Golf Co. Corporation CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the use in the Prospectus constituting a part of this Registration Statement of our report dated September 12, 2002, relating to the financial statements of Ogden Golf Co. Corporation, as of June 30, 2002 and 2001 and for the years then ended. We also consent to the reference to us under the caption "Experts" in the Prospectus. /s/ Wisan, Smith, Racker & Prescott, LLP Salt Lake City, Utah May 7, 2003 E-109 -----END PRIVACY-ENHANCED MESSAGE-----