SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. _____)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to section 240.14a-11(c) or
section 240.14a-12
United Heritage Corporation
______________________________________________________________________________
(Name of Registrant as Specified In Its Charter)
______________________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction
applies:_______________________________________________________
(2) Aggregate number of securities to which transaction
applies:_______________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on
which the filing fee is calculated and state how it was
determined):___________________________________________________
(4) Proposed maximum aggregate value of transaction:_______________
(5) Total fee paid:________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:________________________________________
(2) Form, Schedule or Registration Statement No.:__________________
(3) Filing Party:__________________________________________________
(4) Date Filed:____________________________________________________
<PAGE>
UNITED HERITAGE CORPORATION
2 NORTH CADDO STREET
CLEBURNE, TEXAS 76031
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held September 16, 1998
Notice is hereby given that pursuant to the call of its Board of
Directors, the Annual Meeting of Shareholders of United Heritage Corporation
(the "Company") will be held at the Company's executive offices at 2 North
Caddo Street, Cleburne, Texas on September 16, 1998, at 10:00 a.m., for the
purpose of considering and voting on the following matters:
1. To elect the five (5) persons listed in the Proxy Statement
dated July 29, 1998, accompanying this Notice, to serve as
directors of the Company;
2. To ratify the adoption of the 1998 Stock Option Plan of the
Company;
3. To authorize and give discretion to the Board of Directors to
either amend the Articles of Incorporation to effect a single
reverse stock split of not less than One-for-Two nor greater
than One-for-Ten of the issued and outstanding shares of
Common Stock, with no effect on the par value of such shares
or the number of authorized shares, if the Board believes that
a decrease in the number of shares of Common Stock outstanding
will enhance the acceptability and marketability of the Common
Stock by the financial community and investing public; or to
not effect a reverse stock split.
4. To approve the appointment of Weaver and Tidwell, L.L.P., or
such other firm appointed by the Board of Directors prior to
the meeting, as independent auditors of the Company for its
fiscal year ending March 31, 1999; and
5. To transact such other business as may properly come before the
Annual Meeting of Shareholders or any adjournment or
adjournments thereof.
Only those shareholders of record at the close of business on July 14,
1998 are entitled to notice of and to vote at the Annual Meeting of
Shareholders or at any adjournment or adjournments thereof.
All shareholders are urged to sign, date and return as promptly as
possible the enclosed proxy in the enclosed envelope. It is important that as
many shares as possible be represented at the Annual Meeting of Shareholders.
Consequently, whether or not you expect to be present, please execute and
return the enclosed proxy.
By Order of the Board of Directors,
Harold L. Gilliam, Secretary
July 29, 1998
Cleburne, Texas
<PAGE>
UNITED HERITAGE CORPORATION
2 NORTH CADDO STREET
CLEBURNE, TEXAS 76031
TELEPHONE 817-641-3681
PROXY STATEMENT FOR ANNUAL
MEETING OF SHAREHOLDERS
To Be Held September 16, 1998
The following information is furnished to the shareholders of UNITED
HERITAGE CORPORATION (the "Company") in connection with the solicitation by
the Board of Directors of the Company (the "Board") of proxies to be used at
the Annual Meeting of Shareholders of the Company to be held at the Company's
executive offices at 2 North Caddo Street, Cleburne, Texas on September 16,
1998, at 10:00 a.m., and at any adjournment or adjournments thereof. This
Proxy Statement and accompanying proxy are being mailed on or about July 29,
1998 to the shareholders of the Company.
GENERAL INFORMATION
The close of business on July 14, 1998 has been fixed as the record
date for determining the shareholders entitled to vote at the Annual Meeting
of Shareholders.
The Annual Meeting of Shareholders is called for the purposes of
(1) electing the directors of the Company to serve for the ensuing year;
(2) ratifying the adoption of the 1998 Stock Option Plan of the Company;
(3) giving discretion to the Board to amend the Articles of Incorporation
either to effect a single reverse stock split of not less than One-for-Two nor
greater than One-for-Ten of the issued and outstanding shares of Common Stock
(the "Reverse Split") or to not effect a Reverse Split; (4) approving the
appointment of Weaver and Tidwell, L.L.P., or such other firm appointed by the
Board of Directors prior to the meeting, as the independent auditors of the
Company for the fiscal year ending March 31, 1999; and (5) transacting such
other business as may properly come before the Annual Meeting of Shareholders
or any adjournment or adjournments thereto.
Any person executing the accompanying proxy may revoke it at any time
prior to the actual voting thereof by filing with the Secretary of the Company
a written revocation thereof or a duly executed proxy bearing a later date.
Shares represented by each signed proxy received by the Board will be
voted in accordance with the direction specified by the shareholder, and if no
direction is specified, such shares will be voted "FOR" each proposal of the
Board.
Pursuant to Utah law, shareholders will have no rights of appraisal in
connection with any matters to be voted on at the Annual Meeting of
Shareholders. The cost of soliciting proxies will be borne by the Company.
The solicitation will be made by mail. The Company will also supply brokerage
firms and other custodians, nominees and fiduciaries with such number of proxy
materials as they may require for mailing to beneficial owners, and will
reimburse them for their reasonable expenses in connection therewith. Certain
directors, officers and employees of the Company, not specifically employed for
the purpose, may solicit proxies, without remuneration therefore, by mail,
telephone, telegraph or personal interview.
OUTSTANDING SHARES AND VOTING RIGHTS
At the close of business on July 14, 1998, the record date for
determining the shareholders of the Company entitled to notice of and to vote
at the Annual Meeting of Shareholders, the Company had 97,400,512 shares of
common stock, $0.001 par value (the "Common Stock"), issued and outstanding.
The presence, in person or by proxy, of the holders of a majority of
the issued and outstanding shares of Common Stock of the Company is necessary
to constitute a quorum at the Annual Meeting of Shareholders.
Each holder of shares of Common Stock will be entitled to one vote, in
person or by proxy, for each share of Common Stock of the Company owned of
record at the close of business on July 14, 1998. Cumulative voting for
directors is not permitted.
<PAGE>
BOARD OF DIRECTORS
Various meetings of the Board are held each year, including an
organizational meeting following the conclusion of the Annual Meeting of
Shareholders. The Board has established a Stock Option Committee and an Audit
Committee, and does not presently have an executive, nominating, compensation
or other standing committee.
Stock Option Committee
Members: Walter G. Mize and Joe Martin.
The Stock Option Committee is responsible for the administration of the
1995 United Heritage Corporation Stock Option Plan, the 1996 Stock Option Plan
and the Stock Bonus Plan. See "EXECUTIVE COMPENSATION AND OTHER INFORMATION."
Audit Committee
Members: Walter G. Mize, Joe Martin and Theresa Turner.
The Audit Committee is responsible to recommend to the Board of
Directors the selection of independent public accountants to audit annually the
books and records of the Corporation, discuss with the independent auditors and
internal auditors the scope and results of audits, approve and review any
nonaudit services performed by the Corporation's independent auditing firm, and
review certain related party transactions.
Directors' Compensation
During the fiscal year ended March 31, 1998 neither the Company nor its
subsidiaries, National Heritage Sales Corporation, UHC Petroleum Corporation,
UHC Petroleum Services Corporation and Sovereign Communications Corporation
(the "Subsidiaries") paid any cash compensation to directors for attendance at
meetings of the Board or for attendance at meetings of the Stock Option or
Audit Committee.
Attendance at Board and Committee Meetings
During the fiscal year ended March 31, 1998 there was one meeting of
the Board, one meeting of the Stock Option Committee and one meeting of the
Audit Committee. In addition, action was taken by the Board by unanimous
written consent seven times in lieu of a meeting. Each director attended all
of the meetings of the Board and each Committee of the Board of which he or
she was a member during the fiscal year ended March 31, 1998.
PROPOSAL NO. 1: ELECTION OF DIRECTORS
The bylaws of the Company provide that the Board shall be comprised of
not less than three (3) nor more than nine (9) members and that each director
shall be elected to serve until the next Annual Meeting of Shareholders and
until his or her successor shall be elected and shall qualify. Any vacancies
on the Board may be filled by a majority vote of the Board and any director so
elected shall hold office for the unexpired term of his or her predecessor or
until the next election of directors by the shareholders of the Company.
Names of the nominees for directors and other information about them
appear in the following table. All of the nominees are now directors of the
Company and have consented to serve if elected. If for any unforeseen reason
a nominee is unable to serve if elected, the persons named in the accompanying
proxy may exercise their discretion to vote for a substitute nominee selected
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by the Board. However, the Board has no reason to anticipate that any of the
nominees will not be able to serve, if elected.
Name and Age of
Nominee; Years Principal Occupation for Past
Served as Director Five Years; Other Directorships
================== ===============================
Walter G. Mize Mr. Mize has served as Chairman of the Board,
Age 60 President and Chief Executive Officer of the Company
Director Since 1987 since September 1987. He has also served as
President, Chairman of the Board and Chief Executive
Officer of Heritage Cattle Corporation and National
Heritage Sales Corporation since September 1987. He
has been engaged in oil and gas exploration and
development, cattle ranching, real estate development,
banking and various other investment activities for
over thirty years.
Harold L. Gilliam Mr. Gilliam has served as Secretary, Treasurer and
Age 51 Chief Financial Officer of the Company since November
Director Since 1990 1990. He has been a partner in the firm of Gilliam,
Wharram & Co., P.C., Certified Public Accountants,
located in Cleburne, Texas, since August 1987, and
has been a Certified Public Accountant in the state
of Texas since 1972.
Joe Martin Dr. Martin is an optometrist partner in the Cleburne
Age 53 Eye Clinic, located in Cleburne, Texas, and has been
Director Since 1988 an optometrist for over twenty-five years.
C. Dean Boyd Mr. Boyd has been President of Colorado Community
Age 51 First National Bank, located in Louisville,
Director Since 1988 Colorado, since February 1997. He previously served
as President of Colorado Community First National
Bank, located in Fraser, Colorado, from 1988 to
February 1997. Mr. Boyd has been a Certified Public
Accountant in the state of Colorado since 1972.
Theresa D. Turner Ms. Turner has been President of Colorado Community
Age 38 First National Bank, located in Fraser, Colorado,
Director Since 1992 since February 1997. She previously served as
Senior Vice President of that bank from January 1993
to February 1997, and in various other capacities
since 1985.
No family relationships exist among the executive officers and
directors of the Company. No director of the Company is a director of
any company with a class of securities registered pursuant to Section 12
of the Securities Exchange Act of 1934, as amended, or subject to the
requirements of Section 15(d) of that Act or of any company registered as
an investment company under the Investment Corporation Act of 1940, as
amended.
Assuming the presence of a quorum, the affirmative vote of the
holders of a majority of the issued and outstanding shares of Common
Stock represented and entitled to vote at the Annual Meeting or any
adjournment(s) thereof is necessary for the election of directors.
Assuming the receipt by each such person of the affirmative vote of at
least a majority of the shares of Common Stock represented at the Annual
Meeting, the five (5) persons receiving the greatest number of votes will
be elected as directors.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE ELECTION
AS DIRECTORS OF THE FIVE (5) PERSONS NAMED ABOVE.
PROPOSAL NO. 2
RATIFICATION OF 1998 STOCK OPTION PLAN
On July 1, 1998 the Board adopted, subject to the approval of the
stockholders of the Company, the 1998 Stock Option Plan of United
Heritage Corporation (the "1998 Stock Plan").
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A brief summary of the material provisions of the 1998 Stock Plan is
set out below. The following summary is qualified in its entirety by
reference to the full text of the 1998 Stock Plan, a copy of which is
attached hereto as Exhibit A and by reference made a part hereof.
The purpose of the 1998 Stock Plan is to permit directors, officers,
consultants, and/or employees of the Company and/or its subsidiaries (now
existing or hereafter acquired) to acquire a proprietary interest in the
Company, thereby providing them with an additional incentive for further
promoting the success of the Company's business operations and
encouraging them to remain as directors, officers, consultants, and/or
employees of the Company and/or its subsidiaries. Subject to provisions
for proportionate adjustment occasioned by changes in the Company's
capital structure, a total of 2,000,000 shares of Common Stock have been
set aside under the 1998 Stock Plan for issuance upon exercise of options
granted thereunder. All directors, officers, consultants, and/or
employees of the Company are eligible to participate in the 1998 Stock
Plan.
The 1998 Stock Plan will be administered by the Stock Option
Committee (the "Committee") of the Board, which is comprised of two (2)
members of the Board. The number of members of the Committee will be
determined by the Board from time to time, but in no event may the number
of members of the Committee be less than two (2). The Committee is
empowered (a) to construe and interpret the Plan and all Options granted
thereunder and to determine the terms and provisions (and amendments
thereof) of the Options granted under the Plan (which need not be identi-
cal); (b) to define the terms used in the Plan and in the Options granted
thereunder; (c) to prescribe, amend and rescind rules and regulations
relating to the Plan; (d) to recommend the individuals to whom and the
time or times at which Options will be granted, the number of shares to
be subject to each Option and the Option exercise price, and to grant
such options; and (e) to make all other determinations necessary or
advisable for the administration of the Plan.
Options granted under the Plan will be subject to such exercise
price as may be determined by the Stock Option Committee except that in
no event shall the exercise price be less than the par value of the
Common Stock.
The 1998 Stock Plan also provides for the earlier termination of an
option in the event of the participant's termination of employment by
death or otherwise. Options granted under the 1998 Stock Plan are
nontransferable except by will or by the laws of descent and
distribution; thus, during the lifetime of a participant, options granted
to a participant may only be exercised by such participant.
Payment for any shares of Common Stock to be issued upon exercise of
an option granted under the 1998 Stock Plan may be tendered either in
cash or by certified or cashier's check, or by the tender of shares of
Common Stock of the Company having a fair market value as of the date of
exercise equal to the exercise price, if the Company is not then
prohibited from purchasing or acquiring shares of Common Stock.
Subject to the terms and conditions and within the limitations of
the 1998 Stock Plan, the Committee may modify, extend or renew
outstanding options granted under the 1998 Stock Plan, or accept the
surrender of outstanding options (to the extent not theretofore
exercised) and authorize the granting of new options in substitution
therefor (to the extent not theretofore exercised), including canceling
outstanding options and reissuing new options at a lower option exercise
price in the event that the fair market value per share of Common Stock
at any time prior to the date of exercise falls below the option exercise
price of options granted pursuant to the 1998 Stock Plan.
Notwithstanding the foregoing, however, no modification of an option
shall, without the consent of the participant, alter or impair any rights
or obligations under any option previously granted under the 1998 Stock
Plan.
The affirmative vote of the holders of a majority of outstanding
shares of Common Stock of the Company is required to ratify the adoption
of the 1998 Stock Plan of the Company.
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE APPROVAL
OF THE 1998 INCENTIVE STOCK OPTION PLAN OF THE COMPANY.
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<PAGE>
PROPOSAL NO. 3
TO AMEND THE ARTICLES OF INCORPORATION TO EFFECT A
REVERSE STOCK SPLIT
General
The Board of Directors of the Company has approved and directed that
the proposed Reverse Split, authorizing amendment of the Articles of
Incorporation of the Company (the "Articles") be submitted to the
Company's shareholders for consideration and action. The complete text
of the amendment to the Articles (the "Amendment to the Articles") for
the Reverse Split is set forth in Exhibit B to this Proxy Statement;
however, such text is subject to change as may be required by the Utah
Secretary of State.
If the proposal for the Reverse Split is approved by the requisite
vote of the Company's shareholders, the Board will be given the
discretion to effect a single Reverse Split of not less than One-for-Two
nor greater than One-for-Ten of the issued and outstanding shares of
Common Stock or to effect no Reverse Split. The Board believes this
latitude is necessary, given the changing market price of the Common
Stock, to increase the trading price of the Common Stock to levels more
acceptable to investors and the securities industry. The Board will only
effect the Reverse Split if the Board determines that it is in the best
interests of the Company and its shareholders. In connection with any
determination by the Board that a Reverse Split is in the best interests
of the Company and its shareholders, the Board will also select, in its
discretion, one of the Reverse Splits based on its determination of which
of them results in the greatest marketability and liquidity of the Common
Stock, on prevailing market conditions, on the likely effect on the
market price of the Common Stock and other relevant factors. The
remaining alternative Reverse Splits would be abandoned by the Board
without further action by the shareholders of the Company.
Shareholders may approve or reject the proposed Reverse Stock Splits
in whole but not in part. If approved by the shareholders of the
Company, a Reverse Split would become effective on any date (the
"Effective Date") selected by the Board on or prior to the Company's next
Annual Meeting of Shareholders. If no Reverse Split is effected by such
date, the Board will be deemed to have abandoned the Reverse Splits. The
procedures for consummation of the Reverse Splits are set forth in
Exhibit B hereto.
Vote Required
The approval of each of the proposed Reverse Splits requires the
affirmative vote of a majority of the outstanding shares of Common Stock.
The Reverse Splits will be voted on as a group.
Purposes and Effects of the Reverse Split
The purpose of the Reverse Splits is to increase the marketability
and liquidity of the Common Stock.
Consummation of a Reverse Split will not alter the number of
authorized shares of Common Stock. Proportionate voting rights and other
rights of shareholders will not be altered by any Reverse Split, except
for the limited occasion where a small shareholder may own only a
fractional interest after the Reverse Split, in which event the small
shareholder will be paid for the fractional interest and will cease to be
a holder of the Company's Common Stock. Consummation of a Reverse Split
will have no material federal tax consequences to shareholders.
The Common Stock is listed for trading on the National Association
of Securities Dealers Automatic Quotation System ("NASDAQ") and the
Boston Stock Exchange. On the Record Date, the reported average of the
closing bid and asked prices of the Common Stock on NASDAQ was $0.77 per
share.
The Board believes that a decrease in the number of shares of Common
Stock outstanding without any material alteration of the proportionate
economic interest in the Company represented by individual shareholdings
may increase the trading price of such shares to a price more appropriate
for an exchange-listed security, although no assurance can be given that
the market price of the Common Stock will rise in proportion to the
reduction in the number of outstanding shares resulting from any Reverse
Split.
Additionally, although the Company has not yet experienced
identifiable problems in the marketability and liquidity of its Common
Stock, the Board believes that the current per share price of the Common
Stock may limit the effective marketability of the Common Stock because
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of the reluctance of many brokerage firms and institutional investors to
recommend lower-priced stocks to their clients or to hold them in their
own portfolios. Certain policies and practices of the securities
industry may tend to discourage individual brokers within those firms
from dealing in lower-priced stocks. Some of those policies and
practices involve time-consuming procedures that make the handling of
lower priced stocks economically unattractive. The brokerage commission
on a sale of lower-priced stock may also represent a higher percentage of
the sale price than the brokerage commission on a higher-priced issue.
Any reduction in brokerage commissions resulting from a Reverse Split may
be offset, however, in whole or in part, by increased brokerage
commissions required to be paid by shareholders selling "odd lots"
created by such Reverse Split.
The par value of the Common Stock will remain at $.001 following any
Reverse Split, and the number of shares of Common Stock outstanding will
be reduced. As a consequence, the aggregate par value of the outstanding
Common Stock will be reduced, while the aggregate capital in excess of
par value attributable to the outstanding Common Stock for statutory and
accounting purposes will be correspondingly increased. The resolution
approving the Reverse Split provides that this increase in capital in
excess of par value will be treated as capital for statutory purposes.
The conversion ratios of any shares of outstanding stock having a
conversion or redemption feature would be correspondingly adjusted upon
consummation of any Reverse Split.
The Reverse Split, if undertaken in the discretion of the Board,
would have the following effects upon the number of shares of Common
Stock outstanding (97,400,512 shares as of the Record Date), assuming
that no additional shares of Common Stock are issued by the Company after
the Record Date, and without taking into account any reduction in the
number of outstanding shares resulting from the procedures for treatment
of fractional shares described below. Because the Reverse Split, if
effected, may range from one-for-two to one-for-ten, existing
shareholders cannot now predict the number of shares of Common Stock that
they will hold after the Reverse Split, and cannot predict the total
number of shares of Common Stock that will be outstanding after the
Reverse Split. However, with the limited exception of small shareholders
who own only fractional share interests after a Reverse Split, the
proportionate ownership interests of holders of Common Stock will not be
affected by a Reverse Split. Shareholders holding ten or fewer shares of
Common Stock may, depending on the proportion of the Reverse Split, have
only a fractional share interest after the Reverse Split. As a result,
those shareholders would receive payment for their fractional interests
as set forth below, and would cease to be holders of the Company's Common
Stock.
Reverse Common Stock
Stock Split Outstanding
----------- ------------
1 for 2 48,700,256
1 for 3 32,466,837
1 for 4 24,350,128
1 for 5 19,480,102
1 for 6 16,233,418
1 for 7 13,914,358
1 for 8 12,175,064
1 for 9 10,822,279
1 for 10 9,740,051
At the Effective Date, each share of the Common Stock issued and
outstanding immediately prior thereto (the "Old Common Stock"), will be
reclassified as and changed into the appropriate fraction of a share of
the Company's Common Stock, par value $.001 (the "New Common Stock"),
subject to the treatment of fractional share interests as described
below. Shortly after the Effective Date, the Company will send
transmittal forms to the holders of the Old Common Stock to be used in
forwarding their certificates formerly representing shares of Old Common
Stock for surrender and exchange for certificates representing whole
shares of New Common Stock.
No certificates or script representing fractional share interests in
the New Common Stock will be issued, and no such fractional share
interest will entitle the holder thereof to vote, or to any rights as a
shareholder of the Company. In lieu of any such fractional share
interests, each holder of Old Common Stock who would otherwise be
entitled to receive a fractional share of New Common Stock will, at the
discretion of the Board, either be (i) paid cash by the Company upon
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surrender of certificates formerly representing Old Common Stock held by
such holder in an amount equal to the product of such fraction multiplied
by the closing bid price of the Old Common Stock on NASDAQ on the
Effective Date (or in the event that Common Stock is not so traded on the
Effective Date, such closing bid price on the next preceding day on which
such stock is traded on NASDAQ); or, alternatively, (ii) the Company will
make arrangements with, and provide assistance to, a third party who
shall pool said fractional share interests, sell the same, and return
appropriate payment to the holders of fractional share interests in the
amount described in (i) above.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE APPROVAL
OF THE PROPOSAL TO AUTHORIZE THE BOARD TO HAVE DISCRETION TO AMEND THE
ARTICLES OF INCORPORATION TO EFFECT NOT LESS THAN A 1-FOR-2 NOR MORE THAN
A 1-FOR-10 REVERSE STOCK SPLIT OF THE ISSUED AND OUTSTANDING SHARES OF
COMMON STOCK OR TO EFFECT NO REVERSE STOCK SPLIT.
PROPOSAL NO. 4:
APPROVAL OF APPOINTMENT OF INDEPENDENT AUDITORS
Subject to approval by the shareholders, the Board has selected the
firm of Weaver and Tidwell, L.L.P. as independent auditors of the Company
for its fiscal year ending March 31, 1999. Weaver and Tidwell, L.L.P.
has acted in such capacity for the Company since 1989 and has reported
that neither the firm nor any of its partners has any material direct or
indirect financial interest in the Company, other than as independent
auditors.
Representatives of Weaver and Tidwell, L.L.P. will be present at the
Annual Meeting of Shareholders with the opportunity to make a statement
if they desire to do so and are expected to be available to respond to
appropriate questions.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE APPROVAL
OF THE APPOINTMENT OF WEAVER AND TIDWELL, L.L.P. AS INDEPENDENT AUDITORS
OF THE COMPANY.
ACTION TO BE TAKEN UNDER THE PROXY
The accompanying proxy will be voted "FOR" the election of the five
(5) persons recommended by the Board and named under "PROPOSAL NO. 1:
ELECTION OF DIRECTORS" as nominees for directors of the Company; "FOR"
the ratification of the adoption of the 1998 Stock Option Plan of the
Company; "FOR" approval of the proposal to give the Board of Directors of
the Company authority to amend the Articles of Incorporation to effect a
single reverse stock split of not less than 1-for-2 nor more than 1-for-
10, or to not so amend the Articles of Incorporation; and "FOR" approval
of the appointment of Weaver and Tidwell, L.L.P. as the independent
auditors of the Company for its fiscal year ending March 31, 1999, unless
the proxy is marked in such a manner as to withhold authority to so vote.
The accompanying proxy will also be voted in connection with the
transaction of such other business as may properly come before the Annual
Meeting of Shareholders, or any adjournment or adjournments thereof.
Management knows of no other matters to be considered at the Annual
Meeting of Shareholders. If, however, any other matters properly come
before the Annual Meeting of Shareholders, or any adjournment or
adjournments thereof, the persons named in the accompanying proxy will
vote such proxy in accordance with their best judgment on any such
matter. The persons named in the accompanying proxy will also, if in
their judgment it is deemed to be advisable, vote to adjourn the meeting
from time to time.
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STOCK OWNERSHIP
By Management
The following table shows beneficial ownership of shares of Common
Stock of the Company by all current directors and nominees for director,
individually, and, together with all current executive officers of the
Company, as a group, at April 30, 1998.
Name of Individual
or Number of Amount and Nature of Percent
Persons in Group Beneficial Ownership (1) of Class (2)
- ------------------ ------------------------ ------------
Walter G. Mize 80,040,000 shares(3) 81.67%
Harold L. Gilliam 45,000 shares(4) *
Joe Martin 75,000 shares(5) *
C. Dean Boyd 85,500 shares(6) *
Theresa D. Turner 45,000 shares(7) *
All directors and
executive officers as
a group (5 persons) 80,290,500 shares(8) 81.85%
* Less than one percent (1%) of all of the issued and outstanding
shares of Common Stock.
(1) Based on information furnished by persons named and, except as
otherwise indicated below, each person has sole voting power and
investment power with respect to all shares of Common Stock owned by
such person.
(2) Based on 97,400,512 shares of Common Stock issued and outstanding as
of April 30, 1998, as adjusted for shares convertible or exercisable
within sixty (60) days of April 30, 1998 which are deemed
outstanding for a specific shareholder pursuant to Rule 13d-3(d)(1)
under the Securities Exchange Act of 1934.
(3) Represents 79,440,000 shares of Common Stock owned of record and
600,000 shares of Common Stock which Mr. Mize has the right to
acquire within sixty (60) days from the date hereof pursuant to
options granted to him under the 1995 Stock Option Plan of the
Company.
(4) Represents 25,000 shares of Common Stock owned of record and 20,000
shares of Common Stock which Mr. Gilliam has the right to acquire
within sixty (60) days from the date hereof pursuant to options
granted to him under the 1995 Stock Option Plan of the Company.
(5) Includes 30,000 shares of Common Stock owned of record; 10,000
shares of Common Stock owned by Dr. Martin's wife; and 35,000 shares
of Common Stock which Dr. Martin has the right to acquire within
sixty (60) days from the date hereof pursuant to options granted to
him under the 1995 Stock Option Plan of the Company.
(6) Includes 47,500 shares of Common Stock owned of record; 20,000
shares of Common Stock which Mr. Boyd has the right to acquire
within sixty (60) days from the date hereof pursuant to options
granted to him under the 1995 Stock Option Plan of the Company;
2,000 shares of Common Stock held by Mr. Boyd's IRA; and 16,000
shares of Common Stock owned by Mr. Boyd's wife.
(7) Represents 25,000 shares of Common Stock owned of record and 20,000
shares of Common Stock which Ms. Turner has the right to acquire
within sixty (60) days from the date hereof pursuant to options
granted to her under the 1995 Stock Option Plan of the Company.
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<PAGE>
(8) Includes 695,000 shares of Common Stock which the directors and
executive officers have the right to acquire within sixty (60) days
from the date hereof pursuant to options granted to them under the
1995 Stock Option Plan of the Company.
By Others
The following table sets forth certain information with respect to
shareholders of the Company who were known to be beneficial owners of
more than five percent (5%) of the outstanding shares of Common Stock as
of April 30, 1998.
Amount and Nature
Name and Address of of Beneficial Percent of
Beneficial Owner Ownership (1) Class
------------------- ----------------- ----------
Walter G. Mize
2 North Caddo Street
Cleburne, Texas 76033-1956 80,040,000(2) 81.67%
(1) Based on information furnished by the person named and, except as
otherwise indicated below, such person has sole voting power with
respect to all shares of Common Stock owned by such person.
(2) See footnote (3) under "STOCK OWNERSHIP - By Management."
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers, directors and persons who own more than ten
percent (10%) of a registered class of the Company's equity securities to
file reports of ownership with the Securities and Exchange Commission.
Based upon a review of Forms 4 and amendments thereto furnished to
the Company during the fiscal year ended March 31, 1998, and Forms 5 and
amendments thereto furnished to the Company with respect to the fiscal
year ended March 31, 1998, management of the Company has determined that,
during such fiscal year, the following directors, officers and/or ten
percent (10%) beneficial owners of Common Stock of the Company failed to
file on a timely basis with the Securities and Exchange Commission one or
more required report on Form 4 or 5 regarding transactions in securities
of the Company:
Reporting Number of Number of
Person Reports Transactions
- --------- --------- ------------
Walter G. Mize 1 4
Theresa D. Turner 1 1
To the best knowledge of management of the Company, during the
fiscal year ended March 31, 1998 no director, officer or ten percent
(10%) beneficial owner of Common Stock of the Company failed to file with
the Securities and Exchange Commission any required reports on Form 3, 4
or 5 regarding transactions in securities of the Company.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Summary of Cash and Certain Other Compensation
During the fiscal years ended March 31, 1996, 1997 and 1998 neither
the Company nor its Subsidiaries paid any cash compensation to the
Company's Chief Executive Officer, and no executive officer of the
Company received compensation in excess of $100,000.
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<PAGE>
The following table provides certain summary information concerning
compensation paid or accrued by the Company to or on behalf of the
Company's Chief Executive Officer for the fiscal years ended March 31,
1998, 1997 and 1996:
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
Awards
------------------------------ ----------------------
Name and Securities underlying
Principal Position Year Salary($) Bonus($) options(#)
- ------------------ ---- --------- -------- ---------------------
Walter G. Mize
Chairman of the Board, 1998 $ 0 $ 0 0
President and Chief 1997 $ 0 $ 0 0
Executive Officer 1996 $ 0 $ 0 1,000,000
Option Exercises and Holdings
The following table provides information with respect to the named
executive officer concerning the exercise of incentive stock options
during the last fiscal year and unexercised stock options held as of the
end of the last fiscal year under the 1995 Plan:
AGGREGATED OPTION EXERCISES
IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
Value of
Number of Unexercised
Unexercised In-the-Money
Options at Options at
FY-End (#) FY-End ($)
----------- -------------
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized($) Unexercisable Unexercisable(1)
- ---- --------------- ----------- ------------- ----------------
Walter G. Mize 0 $0 600,000/-0- $543,750/-0-
(1) Fair market value of underlying securities at the fiscal year-end
($1.15625), minus the exercise or base price ($0.25).
CERTAIN TRANSACTIONS
Loan from an Affiliate
On August 5, 1997 the Company obtained an unsecured revolving line
of credit in the amount of $300,000 from ALMAC Financial Corporation
("ALMAC"), a company owned by Walter G. Mize, Chairman of the Board,
President and Chief Executive Officer of the Company. The line of
credit bears interest at the rate of six percent (6%) per annum, and
will terminate on August 5, 1998. The line of credit was paid in full
on December 12, 1997 from the proceeds of a private securities offering.
As of the date of this Proxy Statement, there is no outstanding balance
on the line of credit. The Company believes the terms of this loan are
as favorable to the Company as could be obtained from an unaffiliated
third party.
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<PAGE>
Other Transactions
During the fiscal year ended March 31, 1998 the Company received
the use of office space and equipment from Walter G. Mize without
charge. Management of the Company estimates the value of the use of the
office space and equipment at approximately $18,000 for the fiscal year
ended March 31, 1998. Mr. Mize is under no obligation to provide the
use of the office space or equipment to the Company.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the next
Annual Meeting of Shareholders must be received by the Company at its
principal executive offices not later than April 29, 1999 for inclusion
in the Company's Proxy Statement and accompanying proxy relating to the
next Annual Meeting of Shareholders.
ANNUAL REPORTS
A copy of the Company's 1998 Annual Report on Form 10-K, including
the financial statements and schedules thereto, required to be filed
with the Securities and Exchange Commission, may be obtained without
charge (except for exhibits to such Annual Report, which will be
furnished upon payment of the Company's reasonable expenses in
furnishing such exhibits) by any shareholder whose proxy is solicited
upon written request to:
United Heritage Corporation
P.O.Box 1956
Cleburne, Texas 76033
Attention: Mr. Harold L. Gilliam
BY ORDER OF THE BOARD OF DIRECTORS
By:
Harold L. Gilliam, Secretary
July 29, 1998
Cleburne, Texas
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<PAGE>
Exhibit A
1998 STOCK OPTION PLAN
OF UNITED HERITAGE CORPORATION
This is the 1998 Stock Option Plan (the "Plan") of UNITED HERITAGE
CORPORATION, a Utah corporation (the "Company"), under which stock
options (the "Options") may be granted to the directors, officers,
consultants, and/or employees of the Company and/or its subsidiaries to
purchase shares of the Company's $0.001 par value common stock (the
"Common Stock").
Section 1. PURPOSE. The purpose of the Plan is to permit direc-
tors, officers, consultants, and/or employees of the Company and/or its
subsidiaries (now existing or hereafter acquired) to acquire a propri-
etary interest in the Company, thereby providing them with an additional
incentive for further promoting the success of the Company's business
operations, to encourage them to remain as directors, officers,
consultants, and/or employees of the Company and/or its subsidiaries and
to assist the Company and its subsidiaries in attracting and retaining
key personnel through the grant of Options under the Plan. For purposes
of this Plan, the terms "employment" or "employ" shall also include
serving as a director, officer, or consultant to the Company and/or its
subsidiaries, and the term "employee" shall include any of such persons.
Section 2. ADMINISTRATION OF PLAN. The Plan will be administered
by a committee (the "Stock Option Committee") consisting of two members
to be appointed by the Company's Board of Directors. Each member of the
Stock Option Committee must be an active Director of the Company. Any
member of the Stock Option Committee may at any time be removed by the
Company's Board of Directors with or without cause. Upon the removal,
resignation or inability to serve of any member of the Stock Option
Committee, a successor (who must be an active Director of the Company)
shall be selected by the Company's Board of Directors. At its initial
meeting, the members of the Stock Option Committee shall select one from
among them to act as chairman of the Stock Option Committee. A quorum
of the Stock Option Committee will consist of at least two members of
the Committee, and no action may be taken by the Stock Option Committee
unless a quorum is present and concurs in that action. The Stock Option
Committee shall meet at such times and places as it may determine to
consider the granting of Options under the Plan. Subject to the
provisions of the Plan, the Stock Option Committee will have authority
in its discretion: (a) to construe and interpret the Plan and all
Options granted hereunder and to determine the terms and provisions (and
amendments thereof) of the Options granted under the Plan (which need
not be identical); (b) to define the terms used in the Plan and in the
Options granted hereunder; (c) to prescribe, amend and rescind rules and
regulations relating to the Plan; (d) to recommend the individuals to
whom and the time or times at which Options will be granted, the number
of shares to be subject to each Option and the Option exercise price,
and to grant such options; and (e) to make all other determinations
necessary or advisable for the administration of the Plan. All
determinations and interpretations made by the Stock Option Committee
will be binding and conclusive on all persons to whom Options are
granted and on their legal representatives and beneficiaries.
<PAGE>
Section 3. SHARES SUBJECT TO PLAN. Subject to adjustment as
provided in Section 8 hereof, the shares to be offered under the Plan
will be in whole or in part, as the Board of Directors of the Company
may from time to time determine, authorized but unissued shares of the
Company's Common Stock or issued shares of the Company's Common Stock
which have been reacquired by the Company. The aggregate number of
shares of Common Stock to be delivered upon exercise of all Options
granted under the Plan may not exceed 2,000,000 shares of Common Stock.
If any Option granted under the Plan expires or terminates for any
reason without having been exercised in full, the unpurchased shares of
Common Stock subject thereto will (unless the Plan has been terminated)
again be available for other Options to be granted under the Plan.
Section 4. SELECTION OF OPTIONEES. Options may be granted under
the Plan to present and future directors, officers, consultants, and/or
employees of the Company and/or its subsidiaries (whether now existing
or hereafter acquired), all such persons being hereafter referred to as
"Optionees." In determining the persons to whom Options will be granted
and the number of shares of Common Stock to be covered by each Option,
the Stock Option Committee shall take into account the nature of the
services rendered by such persons, their present and potential
contributions to the success of the Company and such other factors as
the Stock Option Committee in its discretion may deem relevant. An
Optionee who has been granted an Option under the Plan may be granted an
additional Option or Options under the Plan if the Stock Option
Committee so determines.
Section 5. OPTION PRICE. Options granted under the Plan will be
subject to such exercise price as may be determined by the Stock Option
Committee except that in no event shall the exercise price be less than
the par value of the Common Stock (the "Option Price").
Section 6. TERM OF OPTIONS. The date of the granting of each
Option will be deemed to be the date such Option is granted by the Stock
Option Committee. As of such date the Optionee and the Company shall
execute a Stock Option Agreement in the form attached hereto as Annex 1.
Every Option granted pursuant to the Plan must be exercised within the
number of years after the date of granting of such Option as determined
by the Stock Option Committee and allowed in the Stock Option Agreement,
in the amounts and time periods allowed in the Stock Option Agreement,
which may provide that a period of time must elapse after the date of
grant before such Options are exercisable; provided, however, that the
Option may not be exercised as to less than 100 shares at any one time
(or the remaining shares then purchasable under the Option, if less than
100 shares). The Stock Option Agreement may contain such other
provisions as the Stock Option Committee may, from time to time, deem
advisable.
Section 7. METHOD OF EXERCISING OPTIONS.
(a) Provided all of the provisions of the Plan have been fully
complied with, each Option may be exercised by forwarding to the
Company's business office in Cleburne, Texas, by certified letter or
hand delivery, a written instrument stating that the option is being
exercised and giving the number of shares with respect to which it is
being exercised. Such written instrument shall be signed by the person
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<PAGE>
exercising the Option and shall be accompanied by a certified check or
cashier's check for the full amount of the Option Price. In lieu of
paying the Option Price in cash, and subject to the ability of the
Company to repurchase its Common Stock under Utah corporate law, the
optionee may tender and deliver to the Company with proper stock powers
and required endorsements so many shares of the Company's issued and
outstanding common stock previously acquired, owned and held by the
Optionee, the sale of which is allowable under securities laws, and
which have a fair market value equal to the Option Price. In the event
a person or persons other than an Optionee attempts to exercise the
Option, such written statement mailed to the Company shall demonstrate
compliance with Section 11 hereof and be accompanied by such proof of
right to ownership as is required by the Texas Business and Commercial
Code to be given to transfer agents in connection with the transfer of
securities. The Company shall issue a certificate representing the
shares being received upon exercise of the Option. All shares
represented by any such certificate shall be fully paid and non-
assessable. Subject to the limitations set forth in the Plan, each
Option may be exercised at one time or on several successive occasion;
however, each Option may not be exercised in an amount less than one
hundred shares at any one time (unless such exercise is being made as to
the entire portion of Common Stock which may be purchased pursuant to
the Plan).
(b) Anything herein to the contrary notwithstanding, upon the
occurrence of an event described in Section 8(b) below which accelerates
the time for exercising any Option held by an Optionee (a "Triggering
Event") an Option granted under the Plan, to the extent it remains
unexercised at the time of a Triggering Event, may be exercised, in
whole or in part.
Section 8. CHANGES IN CAPITAL STRUCTURE.
(a) Subject to any required action by the shareholders, the number
of shares of Common Stock covered by each outstanding Option, the price
per share of each such Option, and the aggregate number of shares
remaining available under the Plan shall be proportionately adjusted for
any increase or decrease in the number of issued shares of Common Stock
of the Company resulting from a subdivision or consolidation of shares,
the payment of a stock dividend (but only on the Common Stock), or any
other increase or decrease in the number of such shares effected without
receipt of consideration by the Company, provided that no fractional
shares shall be subject to any Option and each Option shall be adjusted
downward to the nearest full share.
(b) Subject to any required action by the shareholders, if the
Company is the surviving corporation in any merger or consolidation,
each outstanding Option will pertain to and apply to the securities to
which a holder of the number of shares of Common Stock subject to the
Option would have been entitled. A dissolution or liquidation of the
Company, or a merger or consolidation in which the Company is not the
surviving corporation, will cause each outstanding Option to terminate,
provided that in such event each Optionee may (immediately prior to such
dissolution or liquidation, or merger or consolidation in which the
Company is not the surviving corporation) exercise such Optionee's
Option, subject to the terms and provisions of Section 7 hereof.
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<PAGE>
(c) In the event of a conversion or exchange of all of the
Company's Common Stock with par value into the same number of shares
with a different par value or without par value, the shares resulting
from any such conversion or exchange shall be deemed to be Common Stock
within the meaning of the Plan.
(d) To the extent that the foregoing adjustments relate to stock
or securities of the Company, such adjustments shall be made by the
Stock Option Committee whose determination in that respect shall be
final, binding and conclusive. Notwithstanding any of the foregoing
adjustments, no adjustment may be made in the minimum number of shares
which may be purchased at any one time as provided in Section 7(a)
above.
(e) Except as hereinbefore expressly provided in this Section 8,
an Optionee will have no rights by reason of any subdivision or
consolidation of shares of stock of any class, the payment of any stock
dividend or any other increase or decrease in the number of shares of
stock of any class resulting from a dissolution, liquidation, merger,
consolidation or other reorganization with another corporation. Any
issue by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number
or price of shares of Common Stock subject to the Option.
(f) The grant of an Option pursuant to the Plan will not affect in
any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes in its capital or business
structure; nor affect in any way the right or power of the Company to
merge, consolidate, dissolve, liquidate, sell or otherwise transfer all
or any part of its business or assets.
Section 9. TERMS AND CONDITIONS RELATING TO EMPLOYMENT.
(a) A primary reason for the Company's granting the Options under
the Plan is to encourage each Optionee to remain directors, officers,
consultants, and/or employees of the Company and/or its subsidiaries.
Accordingly, if such status as director, officer, consultant, and/or
employee is terminated for any reason other than upon the completion of
a contract with a specified term or with and upon the written consent of
the Company, which consent may be granted or withheld solely in the
discretion of the Company, then such Optionee's Option granted hereunder
and then held by such Optionee (to the extent of the unexercised portion
thereof) will be deemed to have expired on the same date as such
termination occurred (or 90 days prior thereto if an Optionee attempts
to exercise such Optionee's Option in anticipation of such termination).
The failure of the Company to promptly declare that such Option is
deemed to have expired after the occurrence of any such event will not
constitute a waiver of such right, and the Company may at any time
thereafter declare such Option to have expired regardless of its actions
during the interim period. Under no circumstances may an Optionee's
Option be in any way affected by any change of the Optionee's
activities, title or position within the group consisting of the Company
and its subsidiaries. An Optionee who terminates his employment with
the Company qualifying him for Options hereunder with the written
consent of the Company may exercise his Option within three (3) months
following the date of such termination.
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<PAGE>
(b) The Stock Option Committee may, in its discretion, include in
any Option granted under the Plan a condition that the Optionee shall
agree to remain in the employ of the Company or any of its subsidiaries
for a period of time (specified in the Stock Option Agreement) following
the date the Option is granted. No such agreement shall impose upon the
Company or any of its subsidiaries, however, any obligation to employ
the Optionee for any period of time.
Section 10. DEATH OF OPTIONEE. If an Optionee dies while in the
employ of the Company or one of its subsidiaries, then the unexercised
portion (to the extent then unexercised) of such Optionee's Option may
be exercised in full at any time (to the extent that the Optionee shall
have been entitled to do so at the date of his death) within one (1)
year after the date of such Optionee's death, but only if exercised by
an heir, devisee or personal representative of the deceased Optionee's
estate who acquired the Option directly from the Optionee through the
latter's will or pursuant to the applicable laws of descent and
distribution.
Section 11. NONTRANSFERABILITY. No Option may be sold, pledged,
assigned, hypothecated, transferred or disposed of in any manner other
than by will or by the laws of descent and distribution, or pursuant to
a qualified domestic relations order as defined by the Internal Revenue
Code of 1986, as amended, or Title I of the Employee Retirement Income
Security Act, or the rules thereunder. Each Option is exercisable,
during the lifetime of an Optionee, only by the Optionee. Any attempted
assignment, transfer, pledge, hypothecation or other encumbrance of any
Option contrary to the provisions hereof, and any execution, attachment
or similar process upon any Option, will be null, void and of no effect.
Section 12. RIGHTS AS SHAREHOLDER. No Optionee may have any
rights as a shareholder with respect to any shares of the Company's
Common Stock covered by these Options until the date of issuance of a
stock certificate to such Optionee for such shares after exercise.
Except as is otherwise provided in Section 8 above, no adjustment will
be made for dividends (ordinary or extraordinary and whether in cash,
securities or other property) or distributions or other rights for which
the record date is prior to the date such stock certificate is issued.
Section 13. COMPANY'S OBLIGATIONS. The Company agrees to maintain
at all times sufficient authorized but unissued or reacquired stock to
meet the requirements of the Plan. The proceeds received by the Company
from the sale of the Common Stock pursuant to these Options shall be
used for general corporate purposes. The Company further agrees to pay
all fees and expenses necessarily incurred by the Company in connection
with these Options. Although the Company shall in no event be obligated
to register any securities covered hereby pursuant to the Securities Act
of 1933, as amended (the "Act"), it will use its best efforts to comply
with all laws and regulations which, in the opinion of the Company's
counsel, are applicable thereto. The inability of the Company to obtain
from any regulatory body having jurisdiction the authority deemed
necessary by counsel for the Company for the lawful issuance and sale of
Common Stock hereunder shall relieve the Company of any liability in
respect of the failure to issue or sell Common Stock as to which the
requisite authority has not been obtained.
-5-
<PAGE>
Section 14. REQUIREMENTS OF LAW.
(a) The Company shall not be required to sell or issue any shares
of Common Stock subject to the Options if the issuance of such shares
shall constitute a violation of any provision of any law or regulation
of any governmental authority. Specifically, in connection with the
Act, upon exercise of an Option, unless a registration statement under
the Act is in effect with respect to the shares of Common Stock covered
by the Option, the Company shall not be required to issue such shares of
Common Stock unless the Company has received an opinion of counsel that
registration of such shares is not required. Any reasonable
determination in this connection by the Company shall be final, binding
and conclusive. If required by the Act or applicable state law in the
opinion of counsel for the Company, an appropriate legend shall be
placed on certificates representing shares of Common Stock issued
pursuant to the exercise of an Option.
(b) As a condition to the exercise of any portion of an Option,
the Company may require the Optionee exercising such Option to represent
and warrant at the time of such exercise that any shares of Common Stock
acquired at exercise are being acquired only for investment and without
any present intention to sell or distribute such shares, if, in the
opinion of counsel for the Company, such a representation is required
under the Act or any other applicable law, regulation or rule of any
governmental agency.
Section 15. RELIANCE ON REPORTS. Each member of the Stock Option
Committee and each member of the Board of Directors shall be fully
justified in relying or acting in good faith upon any report made by the
independent public accountants of the Company and its subsidiaries and
upon any other information furnished in connection with the Plan by any
person or persons other than himself. In no event shall any person who
is or shall have been a member of the Stock Option Committee or of the
Board of Directors be liable for any determination made or other action
taken or any omission to act in reliance upon any such report or
information or for any action, including the furnishing of information,
taken or failure to act, if in good faith.
Section 16. AMENDMENT OR TERMINATION OF PLAN. The Company's Board
of Directors may at any time amend the provisions of the Plan for the
purpose of complying with applicable corporate, securities, or federal
tax laws. Further, the Board of Directors may at any time amend, alter
or discontinue the Plan, except that no amendment or alteration may be
made which would impair the rights of any Optionee under any Option
previously granted without such Optionee's consent.
Section 17. MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS.
Subject to the terms and conditions and within the limitations of the
Plan, the Stock Option Committee may modify, extend or renew outstanding
options granted under the Plan, or accept the surrender of outstanding
options (to the extent not theretofore exercised) and authorize the
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<PAGE>
granting of new options in substitution therefor (to the extent not
theretofore exercised), including canceling outstanding options and
reissuing new options at a lower Option Price in the event that the fair
market value per share of Common Stock at any time prior to the date of
exercise falls below the Option Price of options granted pursuant to the
Plan. Notwithstanding the foregoing, however, no modification of an
option shall, without the consent of the participant, alter or impair
any rights or obligations under any option theretofore granted under the
Plan.
Section 18. EFFECTIVE DATE. The Plan shall become effective as of
the date of its adoption by the Board of Directors of the Company.
The Secretary of the Company hereby certifies that the Plan was
adopted by the Board of Directors effective the __th day of _________,
1998.
/s/Harold L. Gilliam
Harold L. Gilliam, Secretary
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<PAGE>
Annex 1
STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT ("Agreement") is made this ___ day of
__________, 199___ between United Heritage Corporation, a Utah corpo-
ration (the "Company"), and ________________, hereinafter called the
Optionee.
The Company desires, by affording the Optionee an opportunity to
purchase shares of its $0.001 par value common stock (the "Common
Stock"), as hereinafter provided, to carry out the purpose of the 1998
Stock Option Plan of United Heritage Corporation (the "Plan"), approved
and adopted by its directors.
NOW, THEREFORE, in consideration of the mutual covenants
hereinafter set forth and for other good and valuable consideration, the
parties hereto agree as follows:
1. Grant of Option. The Company hereby irrevocably grants to the
Optionee the right and option (the "Option") to purchase all or any part
of an aggregate of ______ shares of Common Stock (such number being
subject to adjustment as provided in Section 8 of the Plan) on the terms
and conditions herein set forth and subject further to all of the terms
and provisions of the Plan which are incorporated herein by reference
for all purposes. For purposes of the Plan and this Agreement, the
terms "employment" or "employ" shall also include serving as a director,
officer, or consultant to the Company and/or its subsidiaries, and the
term "employee" shall include any of such persons.
2. Purchase Price. The purchase price of the Common Stock
covered by the Option shall be $_________ per share.
3. Term of Option. Subject to earlier termination as provided in
paragraphs 5 and 6 hereof, the term of the Option, and any limitations
on number of shares or time periods that it may be exercised are as
follows:
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
Unless otherwise stated above, the Options may be exercised, prior to
expiration or termination, at any time or from time to time, as to any
part or all of the shares covered thereby; provided, however, that the
Option may not be exercised as to less than 100 shares at any one time
(or the remaining shares then purchasable under the Option, if less than
100 shares). The purchase price of the shares as to which the Option
shall be exercised shall be paid in full in cash, or by the delivery of
other shares of Common Stock of the Company, at the time of exercise and
as provided by the Plan. Except as provided in paragraphs 5 and 6
hereof, the Option may not be exercised at any time unless the Optionee
shall have been in the continuous employ of the Company and/or of one or
more of its subsidiaries, from the date hereof to the date of the
exercise of the Option. The holder of the Option shall not have any of
the rights of a shareholder with respect to the shares covered by the
Option except to the extent that one or more certificates for such
shares shall be delivered to him upon the due exercise of the Option.
The Option may not be exercised unless at the date of exercise a
registration statement on Form S-8 under the Securities Act of 1933, as
amended (the "Act"), relating to the shares covered by the Option shall
be in effect, or if, in the opinion of counsel for the Company, the
exercise and issuance of Common Stock would be exempt from registration
requirements under the Act and under applicable securities laws. The
Company is under no obligation to register the shares covered by the
Option under the Act.
<PAGE>
4. Nontransferability. The Option shall not be transferable
otherwise than by will or the laws of descent and distribution, or
pursuant to a qualified domestic relations order as defined by the
Internal Revenue Code of 1986, as amended, or Title I of the Employee
Retirement Income Security Act, or the rules thereunder, and the Option
may be exercised, during the lifetime of the Optionee, only by him.
More particularly (but without limiting the generality of the
foregoing), the Option may not be assigned, transferred (except as
provided above), pledged or hypothecated in any way, shall not be
assignable by operation of law, and shall not be subject to execution,
attachment or similar process. Any attempted assignment, transfer,
pledge, hypothecation or other disposition of the Option contrary to the
provisions hereof, and they levy of any execution, attachment or similar
process upon the Option, shall be null and void and without effect.
5. Termination of Employment. In the event the employment of the
Optionee shall be terminated, other than with and upon the written
consent of the Company, which consent may be granted or withheld solely
in the discretion of the Company, or pursuant to completion of an agree-
ment containing a specific term duration, then such Optionee's Option
granted hereunder and then held by such Optionee (to the extent of the
unexercised portion thereof) will be deemed to have expired on the same
date as such termination occurred (or 90 days prior thereto if an
Optionee attempts to exercise such Optionee's Option in anticipation of
such termination). The failure of the Company to promptly declare that
such Option is deemed to have expired after the occurrence of any such
event will not constitute a waiver of such right, and the Company may at
any time thereafter declare such Option to have expired regardless of
its actions during the interim period. Nothing in this Agreement shall
confer upon the Optionee any right to continue in the employ of the
Company or of any of its subsidiaries or interfere in any way with the
right of the Company or any such subsidiaries to terminate his
employment at any time.
6. Death of Optionee. If the Optionee shall die while he shall
be employed by the Company or one or more of its subsidiaries, the
Option may be exercised (to the extent that the Optionee shall have been
entitled to do so at the date of his death) by a legatee or legatees of
the Optionee under his last will, or by his personal representatives or
distributees, at any time within one (1) year after his death.
7. Method of Exercising Option. This Option may be exercised by
written notice to the Company.
8. Subsidiary. As used herein, the term "subsidiary" shall mean
any present or future corporation which would be a "subsidiary
corporation" of the Company, as that term is defined in Section 425 of
the Internal Revenue Code of 1986.
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<PAGE>
9. Other Matters. The Optionee acknowledges receipt of a copy of
the Plan, a copy of which is annexed hereto, and represents that the
Optionee is familiar with the terms and provisions thereof. The
Optionee hereby accepts this Option subject to all of the terms and
provisions of the Plan. The Optionee hereby agrees to accept as
binding, conclusive and final all decisions and interpretations of the
Board of Directors and, where applicable, the Stock Option Committee,
upon any questions arising under the Plan or this Agreement. As a
condition to the issuance of shares of Common Stock of the Company under
this Agreement, the Optionee authorizes the Company to withhold in
accordance with applicable law from any regular cash compensation
payable to him any taxes required to be withheld by the Company under
federal, state or local law as a result of his exercise of this Option.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
duly executed by its officers thereunto duly authorized, and the
Optionee has hereunto set his hand, all on the date and year first above
written.
COMPANY: UNITED HERITAGE CORPORATION
Attest:
By:
___________________, ______________________,
___________ ___________
OPTIONEE:
_________________________
(Address)
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<PAGE>
Exhibit B
THE REVERSE STOCK SPLIT PROPOSAL
RESOLVED, that, prior the Company's 1999 Annual Meeting of
Shareholders, on the condition that no other amendment to the Company's
Articles of Incorporation shall have been filed subsequent to Septem-
ber 16, 1998, effecting a reverse stock split of the Common Stock, at
the sole discretion of the Board of Directors of the Company, Article IV
of the Company's Articles of Incorporation be amended by addition of the
following provision, with the appropriate substitutions in the bolded
language (illustrating a One-for-Two split) to indicate whether the re-
verse stock split is to be One-for-Two, One-for-Ten, or another ratio
within that range:
(c) Simultaneously with the effective date of this amendment
(the "Effective Date"), each share of the Company's Common Stock,
par value $.001 per share, issued and outstanding immediately prior
to the Effective Date (the "Old Common Stock") shall automatically
and without any action on the part of the holder thereof be
reclassified as and changed into one-half (1/2) of a share of the
Company's Common Stock, par value equal to the par value of the Old
Common Stock (the "New Common Stock"), subject to the treatment of
fractional share interests as described below. Each holder of a
certificate or certificates which immediately prior to the
Effective Date represented outstanding shares of Old Common Stock
(the "Old Certificates," whether one or more) shall be entitled to
receive upon surrender of such Old Certificates to the Company's
Transfer Agent for cancellation, a certificate or certificates (the
"New Certificates," whether one or more) representing the number of
whole shares of the New Common Stock into which and for which the
shares of the Old Common Stock formerly represented by such Old
Certificates so surrendered, are reclassified under the terms
hereof. From and after the Effective Date, Old Certificates shall
represent only the right to receive New Certificates (and, where
applicable, cash in lieu of fractional shares, as provided below)
pursuant to the provisions hereof. No certificates or scrip
representing fractional share interests in New Common Stock will be
issued, and no such fractional share interest will entitle the
holder thereof to vote, or to any rights of a shareholder of the
Company. A holder of Old Certificates shall receive, in lieu of
any fraction of a share of New Common Stock to which the holder
would otherwise be entitled, a cash payment therefor on the basis
of the closing bid price of the Old Common Stock on the National
Association of Securities Dealers Automatic Quotation System
("NASDAQ") Stock Market on the Effective Date, as reported on the
NASDAQ Stock Market (or in the event the Company's Common Stock is
not so traded on the Effective Date, such closing bid price on the
next preceding day on which such stock was traded on the NASDAQ
Stock Market). The Company may retain a third party to collect and
pool fractional share interests, sell the same, and return payment
to the holders of the interests. If more than one Old Certificate
shall be surrendered at one time for the account of the same share-
holder, the number of full shares of New Common Stock for which New
Certificates shall be issued shall be computed on the basis of the
aggregate number of shares represented by the Old Certificates so
surrendered. In the event that the Company's Transfer Agent
determines that a holder of Old Certificates has not tendered all
his certificates for exchange, the Transfer Agent shall carry
forward any fractional share until all certificates of that holder
have been presented for exchange such that payment for fractional
shares to any one person shall not exceed the value of one share.
If any New Certificate is to be issued in a name other than that in
which the Old Certificates surrendered for exchange are issued, the
<PAGE>
Old Certificates so surrendered shall be properly endorsed and
otherwise in proper form for transfer, and the person or persons
requesting such exchange shall affix any requisite stock transfer
tax stamps to the Old Certificates surrendered, or provide funds
for their purchase, or establish to the satisfaction of the
Transfer Agent that such taxes are not payable. From and after the
Effective Date the amount of capital represented by the shares of
the New Common Stock into which and for which the shares of the Old
Common Stock are reclassified under the terms hereof shall be the
same as the amount of capital represented by the shares of Old
Common Stock so reclassified, until thereafter reduced or increased
in accordance with applicable law.
FURTHER RESOLVED, that at any time prior to the filing of the
foregoing amendment to the Company's Articles of Incorporation effecting
a not less than One-for-Two nor greater than One-for-Ten Reverse Stock
Split, notwithstanding authorization of the proposed amendment by the
shareholders of the Company, the board of directors may abandon such
proposed amendment without further action by the shareholders.
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<PAGE>
UNITED HERITAGE CORPORATION
Proxy Solicited on Behalf of the Board of Directors
of the Corporation
For Annual Meeting of Shareholders
September 16, 1998
The undersigned hereby constitutes and appoints Walter G. Mize and
Harold L. Gilliam, and each of them, proxies with full power of substitution,
to vote, as directed below, all the shares of common stock of United Heritage
Corporation (the "Corporation") held of record by the undersigned at the
close of business on July 14, 1998, at the Annual Meeting of Shareholders to
be held at United Heritage Corporation, 2 North Caddo Street, Cleburne,
Texas, at 10:00 a.m. on September 16, 1998, and at any adjournment or
adjournments thereof.
1. ELECTION OF DIRECTORS -- Nominees: Walter G. Mize, C. Dean Boyd,
Harold L. Gilliam, Joe Martin, and Theresa D. Turner
MARK ONLY ONE BOX [ ] VOTE FOR all nominees listed above,
except vote to be withheld from the
following nominees, if any:
___________________________________
[ ] VOTE TO BE WITHHELD from all nominees.
2. RATIFICATION OF 1998 STOCK OPTION PLAN. Proposal to ratify the adoption
of the 1998 Stock Option Plan of the Company.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. TO AUTHORIZE THE BOARD TO AMEND THE ARTICLES OF INCORPORATION TO
EFFECT A REVERSE STOCK SPLIT. Proposal to authorize the Board to
effect a reverse stock split of not less than One-for-Two nor
greater than One-for-Ten of the issued and outstanding shares of
Common Stock or to effect no reverse split.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. APPROVAL OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS. Proposal
to approve the appointment of Weaver and Tidwell, L.L.P. as
independent public accountants of the Corporation for the fiscal
year ending March 31, 1999.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
5. OTHER BUSINESS. In their discretion upon such other business as may
properly come before the meeting, or any adjournment or adjournments
thereof.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
This proxy when properly executed will be voted as directed herein
by the undersigned. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
all the nominees listed above and FOR proposals 2, 3 and 4 and, in the
discretion of the persons named herein as proxies, upon such other business
as may come before the meeting and any adjournment or adjournments thereof.
The undersigned hereby revokes any proxy or proxies heretofore given and
hereby confirms all that said attorneys and proxies, or any of them, or their
substitutes may do by virtue hereof. In addition, receipt of the 1998 Annual
Report, the Notice of Annual Meeting and the Proxy Statement of United
Heritage Corporation dated July 29, 1998 is hereby acknowledged.
SHARES OF COMMON STOCK: _______________ DATED _______________, 1998
___________________________
___________________________
Signature of Shareholder(s)
___________________________
Street Address
___________________________
City, State, Zip Code
Please date this proxy and sign your name exactly as it appears hereon, and
mail today. When signing on behalf of a corporation, partnership, estate,
trust, or the like, indicate title of persons signing. For joint accounts,
each joint owner should sign.
NOTE: I _____ WILL _____ WILL NOT ATTEND THE SHAREHOLDERS' MEETING ON
SEPTEMBER 16, 1998
