UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement
Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Material
[ ] Note
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12.
HERITAGE MINES, LTD.
(Name of Registrant as specified in its charter)
Payment of Filing Fee (Check the Appropriate Box):
[ X ] No Fee Required.
<PAGE>
HERITAGE MINES, LTD.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Friday, November 21, 1997
TO THE STOCKHOLDERS OF HERITAGE MINES, LTD.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders
of Heritage Mines, Ltd. (the "Company"), a Colorado corporation, will
be held on Friday, November 21, 1997, at 10:00 a.m., local time, at the
Marriott Hotel, 900 Newport Center Drive, Newport Beach, California
92660, for the following purposes:
1. To elect directors to serve for the ensuing year and until their
successors are elected;
2. To ratify the adoption by the Board of Directors of the Heritage
Mines, Ltd., 1997 Stock Option Plan; and
3. To ratify the appointment of Raimondo, Pettit & Glassman,
CPAs, of Torrance, California, as independent auditors of the Company
for the fiscal year ending January 31, 1998;
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only shareholders of record at the close of business on October 13, 1997
are entitled to notice of and to vote at the meeting and any adjournment
thereof.
All shareholders are cordially invited to attend the meeting in person.
Any shareholder attending the meeting may vote in person even if such
stockholder previously signed and returned a proxy.
By Order of the Board of Directors
Gary S. Joiner
Corporate Secretary
<PAGE>
THE BOARD OF DIRECTORS
Durango, Colorado
October 27, 1997
IMPORTANT: WHETHER OR NOT YOU EXPECT TO ATTEND
THE MEETING, YOU ARE REQUESTED TO COMPLETE AND
PROMPTLY RETURN THE ENCLOSED PROXY IN THE
ENCLOSED ENVELOPE PROVIDED.
HERITAGE MINES, LTD.
1199 Main Avenue, Suite 221
DURANGO, COLORADO 81301
______________
PROXY STATEMENT FOR 1997
ANNUAL MEETING OF SHAREHOLDERS
______________
The enclosed Proxy is solicited on behalf of Heritage Mines, Ltd. (the
"Company") for use at the Annual Meeting of Shareholders to be held
on FRIDAY, NOVEMBER 21, 1997, at 10:00 A.M. local time, and at
any adjournment thereof, for the purposes set forth herein and in the
accompanying Notice of Annual Meeting of Shareholders. The Annual
meeting will be held at the Marriott Hotel, 900 Newport Center Drive,
Newport Beach, California 92660. The Company's principal executive
office is located at 1199 Main Avenue, Suite 221, Durango, CO 81301.
The Company's telephone number at that address is (970) 385-0374.
These proxy solicitation materials were mailed on or about October 27,
1997 to all shareholders entitled to vote at the meeting. A copy of the
Company's Report on Form 10KSB for its fiscal year ended January 31,
1997 accompanies this Proxy Statement.
INFORMATION CONCERNING SOLICITATION AND VOTING
Record Date
Shareholders of record at the close of business on OCTOBER 13, 1997
(the "Record Date") are entitled to notice of the meeting and to vote at
the meeting. As of the Record Date, 6,437,132 shares of the
Company's Common Stock were issued and outstanding and entitled to
vote at the Annual Meeting. There are no shares of Preferred Stock
outstanding.
Revocability of Proxies
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before its use by delivering to the Secretary
of the Company a written notice of revocation or a duly executed proxy
bearing a later date or by attending the Annual Meeting and voting in
person.
Voting and Solicitation
Every shareholder voting for the election of directors is entitled to one
vote for each share held for each of the five directors to be elected.
Shareholders do not have the right to cumulate their votes in the election
of directors. On all other matters, each share is likewise entitled to one
vote on each proposal or item that comes before the meeting.
Votes cast by proxy or in person at the Annual Meeting will be tabulated
by the Company's transfer agent which will serve as the Inspector of
Elections (the "Inspector"). The Inspector will also determine whether
or not a quorum is present. In general, the affirmative vote of a
majority of shares present in person or represented by proxy at a duly
held meeting at which a quorum is present is required under Colorado
law for approval of proposals presented to shareholders. The
Company's Articles of Incorporation provide that a quorum consists of
one-third of shares entitled to vote and present or represented by proxy
at the meeting. The Inspector will treat abstentions as shares that are
present and entitled to vote for purposes of determining the presence of
a quorum, but will not treat abstentions as votes in favor of approving
any matter submitted to shareholders for a vote. Any proxy that is
returned using the form of proxy enclosed and that is not marked as to
a particular item will be voted for the election of directors, for
ratification of the appointment of the designated independent auditors,
for ratification of adoption of the Heritage Mines, Ltd., 1997 Stock
Option Plan, and as the proxy holders deem advisable on other matters
that may come before the meeting, as the case may be with respect to
the item not marked. If a broker indicates on the enclosed proxy or its
substitute that it does not have discretionary authority as to certain shares
to vote on a particular matter ("broker non-votes"), those shares will not
be considered as present with respect to that matter. The Company
believes that the tabulation procedures to be followed by the Inspector
are consistent with the general statutory requirements in Colorado
concerning voting of shares and determination of a quorum.
The cost of this solicitation will be borne by the Company. The
Company may reimburse brokerage firms and other persons representing
beneficial owners of shares for their expenses in forwarding solicitation
material to such beneficial owners. Proxies also may be solicited by
certain of the Company's directors, officers, and employees, without
additional compensation, personally or by telephone, letter or facsimile.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
The Company anticipates that the next Annual Meeting of Shareholders
will be held in May or June, 1998. Therefore, proposals of shareholders
of the Company which are intended to be presented by such shareholders
at the Company's 1998 Annual Meeting of Shareholders must be
received by the Company no later than January 15, 1998, in order to be
considered for inclusion in the proxy statement and form of proxy
relating to that meeting.
PRINCIPAL SHARE OWNERSHIP
The following table sets forth the beneficial ownership of the Company's
Common Stock as of October 13, 1997, by each director, by all
directors and officers of the Company as a group, and by all persons
known to the Company to be the beneficial owners of more than 5% of
the Company's Common Stock:
<TABLE>
<CAPTION>
Shares Beneficially owned
Name Number Percent
<S> <C> <C>
Peter Wilson
3334 E. Coast Hwy. #412
Corona del Mar, CA 92625 1,886,836<F1> 29.31%
Heritage Acquisition Corp
3334 E. Coast Highway #412
Corona del Mar, CA 92625 723,370 11.24%
Douglas Drumwright
39 Harbour Ridge Drive
Newport Beach, CA 92660 80,943 1.25%
Gregory B. Sparks
420 Blue Ridge
Durango, CO 81301 500 0.01%
Gary S. Joiner
898 Rockway Place
Boulder, CO 80303 33,025 0.51%
Timothy Sadler
1401 W. 3rd Avenue
Durango, CO 81301 0 0.00%
Mark E. Gavard
P. O. Box 1
Forks of Salmon, CA 96031 1,321,650 20.37%
Mark A. Zane
215 Booker Street
Tonopah, NV 89049 1,163,466 17.93%
M.K. Bunker
23 Corporate Plaza, Suite 135
Newport Beach, CA 92260 390,000 6.01%
Telford Walker
17744 Skypark Circle, Ste. 220
Irvine, CA 92714 445,700 6.37%
All Officers and Directors
as a Group (6 in number) 3,322,954 51.62%
<FN>
<F1>Includes 723,370 shares owned by Heritage Acquisition Corp., of which
Mr. Wilson may be deemed to be the beneficial owner, and 1,163,466 shares
currently owned by Mark A. Zane, which shares are under contract to be
purchased by Heritage Acquisition Corp., and as to which Heritage Acquisition
Corp. has voting rights. Mr. Wilson may be deemed to be the beneficial owner
of the shares under contract to be purchased by Heritage Acquisition Corp.
COMPLIANCE WITH SECTION 16(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and executive officers and the holders
of 10% of the Company's Common Stock to file with the Securities and
Exchange Commission initial reports of ownership and reports of
changes in ownership of equity securities of the Company. Based on the
Company's review of copies of such reports received by it, or written
representations from reporting persons, the Company believes that as of
October 25, 1997, its officers and directors had filed all required
reports. However, Timothy Sadler failed to file an initial report of
ownership in a timely manner and such report was not filed until
October 25, 1997. The Company believes that this failure to file in a
timely manner was inadvertent and has implemented routine procedures
designed to periodically remind its officers and directors of the filing
requirements.
PROPOSAL ONE
ELECTION OF DIRECTORS
A board of five directors is to be elected at the Annual Meeting of
Shareholders. Unless otherwise instructed, the proxy holders will vote
the proxies received by them for the Company's five nominees named
below, four of whom are presently directors of the Company. In the
event that any nominee of the Company is unable or declines to serve as
a director at the time of the Annual Meeting of Shareholders, the proxies
will be voted for any nominee who shall be designated by the present
Board of Directors to fill the vacancy. It is not expected that any
nominee will be unable or will decline to serve as a director. The term
of office of each person elected as a director will continue until the next
Annual Meeting of Shareholders or until a successor has been elected
and qualified.
</TABLE>
<TABLE>
<CAPTION>
NAME OF PRINCIPAL DIRECTOR
NOMINEE AGE OCCUPATION SINCE
<S> <C> <C> <C>
Gregory B. Sparks 47 President and CEO of March, 1997
Heritage Mines, Ltd.
Peter Wilson 45 Entrepreneur March, 1995
Douglas Drumwright 52 Business Consultant March, 1995
Gary S. Joiner 47 Attorney September, 1997
Robert K. Hanson 57 Investment Banker -
</TABLE>
GREGORY B. SPARKS has been President and Chief Executive Officer
of the Company since March, 1997. He is a Registered Professional
Mining Engineer, and has held executive and other senior management
positions with companies such as Echo Bay Mines, Standard Metals
Corporation, American Mine Services and Tenneco Minerals/American
Borate. His extensive experience included prospect evaluations, acquisi-
tion negotiations, infrastructure establishment, environmental
consultations and due diligence reviews of both surface and underground
mining of base and precious metals.
DOUGLAS DRUMWRIGHT has served as a Director of the Company
since March, 1995, and as Chief Financial Officer since September,
1997. He served as Vice President and Chief Financial Officer of
Homestake Mining Company from 1980-1983. Homestake is the largest
producer of precious metals in the United States, operating both base and
precious metal mining operation domestically and internationally.
Homestake is the fifth oldest company on the New York Stock
Exchange. While at Homestake, Mr. Drumwright supervised the
placement of substantial equity and pollution control bond financing, as
well as the establishment of revolving credit lines in the United States
and Europe. During his tenure, the company's shares were split twice
and were listed on the London, Zurich and Frankfurt Exchanges. Since
leaving Homestake, Mr. Drumwright has been actively engaged as a
consultant and principal in various start up and turn around situations.
In this connection in the last five years he has served as CEO of
numerous public and private companies, including Care Enterprises, Inc.
(NYSE), Tustin, CA; Maxum Health Corp. (NASDAQ), Dallas, TX;
and United Western Medical Centers, Santa Anna, CA.
PETER WILSON became a Director of the Company in March, 1995.
Mr. Wilson has been involved in the founding and management of
Molson Development Company, a residential real estate firm, as will as
Quicksilver USA, Inc. and Barely Legal, Inc., both of which are major
sportswear manufacturers and distributors. In 1989, Mr. Wilson
founded Electrosci, Inc., a California corporation that purchased the
worldwide patents for an electrolytic process. Mr. Wilson graduated
from the University of Southern California with a degree in architecture.
GARY S. JOINER became Secretary and a Director of the Company in
September, 1997. He has also served as legal counsel for the Company
since its formation. He is an officer, director, and shareholder of
Frascona, Joiner & Goodman, P.C., a law firm located in Boulder,
Colorado.
ROBERT K. HANSON is currently Chairman of RKH Limited (financial
and business consultants) and Senior Vice President and a Director of
United Tri-Star Resources, Ltd. From 1993 to 1996, Mr. Hanson was
Vice President of Emtech, Ltd. and Executive Director of Marketing for
Energy Device Alliance. From 1989 to 1993, Mr. Hanson was a
Director, President and CEO of Battery Technologies, Inc., and a
Director of Battery Technologies (International) Limited, Ireland.
Board Meetings and Committees
The Board of Directors held numerous informal and telephonic meetings
during the fiscal year ended January 31, 1997 and during the first two
quarters of the fiscal year ending January 31, 1998. The current Board
of Directors held one (1) formal meeting during the third quarter of the
current fiscal year, and has scheduled quarterly meetings for the
following year.
The Board of Directors currently has no separate committees.
Accordingly, the entire Board of Directors functions as the Audit
Committee, the Compensation Committee, and the Nominating
Committee for purposes of dealing with issues in those areas. Individual
members of the Board of Directors do not participate in discussions and
abstain from voting on matters as to which they have potential conflicts
of interest.
All of the current directors other than Mark Gavard attended the formal
meeting of directors held during the third quarter of the current fiscal
year.
Compensation of Directors
On September 26, 1997, the Board approved a cash compensation plan
for non-employee directors' attendance at Board meetings. Non-
employee directors receive $1,000 for meetings attended in person, but
payment of such fees will be waived until the Company has become
adequately capitalized. Gary Joiner will receive legal fees of $1,000 per
meeting, in lieu of directors fees, during the period of time in which
directors fees are being waived.
On September 26, 1997, the Board of Directors approved a plan to grant
outside directors (i.e. directors who are non-employees and who are also
not substantial shareholders of the Company) options to purchase
160,000 shares. Such options vest on the following schedule:
10,000 shares upon appointment
20,000 shares vesting at 1st anniversary
25,000 shares vesting at 2nd anniversary
30,000 shares vesting at 3rd anniversary
35,000 shares vesting at 4th anniversary
40,000 shares vesting at 5th anniversary
The options to be granted to outside directors are for a ten-year term at
an exercise price of $1.67 per share. Options granted to outside
directors may be exercised only while the optionee is serving as a
director on the Board, or within 6 months after ceasing to serve as a
director as a result of resignation or non-election, and within 12 months
after termination by death or disability.
On September 26, 1997, the Board of Directors approved the granting
of options on the foregoing basis to Mr. Drumwright and Mr. Joiner, the
two current outside directors.
Gregory B. Sparks, the President and CEO, who is also a director of the
Company, and Timothy Sadler, the Vice President of Operations, were
also granted Statutory Stock Options on September 26, 1997 in
conjunction with approval of their employment contracts with the
Company. The terms of such options are described below (See
Compensation of Executive Officers - Employment Contracts).
All previously outstanding stock options granted under the Company's
1996 Stock Option Plan were cancelled as a result of the adoption of the
1997 Stock Option Plan and the granting of options thereunder.
Vote required; Recommendation of the Board of Directors
With respect to the election of directors, the five candidates receiving the
highest number of "for" votes shall be elected to the Company's Board
of Directors. An abstention will have the same effect as a vote withheld
for the election of directors, and a broker non-vote will not be treated as
voting in person or by proxy on the proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THE NOMINEES SET FORTH HEREIN.
COMPENSATION OF EXECUTIVE OFFICERS
Summary of Cash and Other Compensation
The following table sets forth the compensation provided by the
Company to James Stout, the Company's President and Chief Executive
Officer, for services rendered in all capacities to the Company during the
fiscal years ended January 31, 1997 and 1996. No other executive
officer received compensation in excess of $100,000 for services
rendered in all capacities to the Company during the fiscal years ended
January 31, 1997 and 1996.
<PAGE>
<TABLE>
<CAPTION>
Fiscal
Name Year Salary
<S> <C> <C>
James D. Stout 1997 $95,000 <F1>
1996 $50,000 <F2>
<FN>
<F1> $75,000 was paid in cash and $20,000 was contributed to capital during
the year ended January 31, 1997.
<F2> $20,000 was paid in cash. $30,000 in accrued compensation at January
31, 1996 was contributed to capital during the year ended January 31, 1997.
</FN>
</TABLE>
Employment Contracts. On March 13, 1997, effective as of March
1, 1997, the Company entered into an employment agreement with
Gregory B. Sparks, its new President and Chief Executive Officer for a
term expiring December 31, 1997. Such contract was reaffirmed by the
Board of Directors on September 26, 1997. It provides for a base salary
of $180,000 per year, with 5% annual increases at each anniversary
date, and an annual discretionary bonus payable in January of each year,
in an amount to be determined by the Board of Directors. The contract
is for three years, with two one-year extension options, and includes an
acceleration clause, making the full amount of the contract due and
payable in full, in the event of the sale or takeover of the Company. The
contract also provides for the grant of options to purchase up to 360,000
shares of Common Stock vesting on the following schedule:
60,000 vesting at hire date (i.e. March 1, 1997)
60,000 vesting at 1st anniversary
60,000 shares vesting at 2nd anniversary
60,000 shares vesting at 3rd anniversary
60,000 shares vesting at 4th anniversary
60,000 shares vesting at 5th anniversary
On September 26, 1997, the Board of Directors approved an
employment contract with Timothy Sadler, as Vice President of
Operations. The contract provides for a base salary of $80,000 per year
from the effective date (e.g. May 1, 1997) until receipt by the Company
of not less than $2.5 million in additional equity capital. At that time,
the base salary is to increase to $100,000 per year, with an annual
increase of 5% at each anniversary date, and the Company will provide
reimbursement for relocation expenses in an amount not to exceed
$10,000. The contract also provides for an annual discretionary bonus
payable in January of each year, in an amount to be proposed by the
President and approved by the Board of Directors. The contract is for
three years, with two one-year extension options, and includes an
acceleration clause, making the full amount of the contract due and
payable in full, in the event of the sale or takeover of the Company. The
contract also provides for the grant of options to purchase up to 195,000
shares of Common Stock vesting on the following schedule:
20,000 vesting at hire date (i.e. May 1, 1997)
25,000 vesting at 1st anniversary
30,000 shares vesting at 2nd anniversary
35,000 shares vesting at 3rd anniversary
40,000 shares vesting at 4th anniversary
45,000 shares vesting at 5th anniversary
The options granted to Mr. Sparks and Mr. Sadler are for a ten-year
term at an exercise price of $1.67 (determined to be equal to 100% of
the fair market value as of the date of grant). Such options may be
exercised only while the optionee is serving as an officer of the
Company, or within 6 months after his resignation or dismissal, and
within 12 months after termination by death or disability.
PROPOSAL TWO
APPROVAL OF ADOPTION OF 1997 STOCK OPTION PLAN
The 1997 Stock Option Plan adopted by the Board of Directors on
September 26, 1997, is intended to provide an incentive to executive
officers, directors, and key employees of the Company to attract them
to consider employment with the Company, to encourage their continued
employment, to encourage their continued employment, and to encourage
them to provide their best efforts to the Company for purposes of
enhancing Shareholder value.
The plan adopted by the Board of Directors reserves a total of up to
1,500,000 shares for issuance of options to eligible persons in the form
of either incentive stock options or non-statutory options. The exercise
price of any incentive stock options must generally be not less than
100% of the fair market value of the stock on the date of grant of the
option, and the exercise price of non-statutory options must be not less
than 85% of the fair market value of the stock on the date of the grant
of the option. The aggregate fair market value of the stock options
exercisable by any optionee during any particular calendar year may not
exceed $100,000.
Options granted under the plan are not assignable or transferable, and
generally may not be exercised more than ten years after the date of
their grant. In addition, such options may be exercised for a limited
period of time following either the voluntary termination of employment
of the optionee, or the involuntary termination of employment as a result
of death, disability or retirement.
Persons who own more than 10% of the outstanding stock of the
Company are not eligible to receive incentive stock options under the
plan unless the exercise price is at least 110% of the fair market value
of the stock on the date of grant of the options, and such options are not
exercisable for a period of more than five years after the date of the
grant.
As previously described in this Proxy Statement, on September 26,
1997, the Board of Directors granted options for the total of 1,230,000
shares to the Company's two current outside directors and to two of its
two current executive officers. The options granted as summarized as
follows:
<TABLE>
<CAPTION>
Options Exercise or Expiration
Name Granted Base Price Date
<S> <C> <C> <C>
Gregory B. Sparks 360,000 $1.67 9/26/07
Timothy Sadler 195,000 $1.67 9/26/07
Douglas Drumwright 160,000 $1.67 9/26/07
Gary S. Joiner 160,000 $1.67 9/26/07
</TABLE>
Vote Required; Recommendation of the Board of Directors
Approval of the adoption of the 1997 Stock Option Plan will require the
affirmative vote of a majority of the shares represented, in person or by
proxy, and voting at the Annual Meeting, which shares voting
affirmatively also constitute at least a majority of the required quorum.
In the event the shareholders do not approve adoption of the 1997 Stock
Option Plan, the plan will be reconsidered by the Board of Directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A
VOTE "FOR" APPROVAL OF ADOPTION OF THE 1997 STOCK
OPTION PLAN.
PROPOSAL THREE
RATIFICATION OF APPOINTMENT OF INDEPENDENT
AUDITORS
The Board of Directors has selected Raimondo, Pettit & Glassman,
independent auditors, to audit the financial statements of the Company
for the fiscal year ending January 31, 1998. Raimondo, Pettit and
Glassman has audited the Company's financial statements for each of the
two previous fiscal years. A representative of Raimondo, Pettit &
Glassman is expected to be present at the meeting, will have the
opportunity to make a statement, and is expected to be available to
respond to appropriate questions.
Vote Required; Recommendation of the Board of Directors
The Board of Directors has conditioned its appointment of the
Company's independent auditors upon receipt of the affirmative vote of
a majority of the shares represented, in person or by proxy, and voting
at the Annual Meeting, which shares voting affirmatively also constitute
at least a majority of the required quorum. In the event the shareholders
do not approve the selection of Raimondo, Pettit & Glassman, the
appointment of the independent auditors will be reconsidered by the
Board of Directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A
VOTE "FOR" THIS PROPOSAL.
OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting.
If any other matters properly come before the meeting, it is the intention
of the persons named in the enclosed proxy to vote the shares they
represent as the Company may recommend.
THE BOARD OF DIRECTORS
Durango, Colorado
October 27, 1997
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
Heritage Mines, Ltd.
1199 Main Avenue
Suite 221
Durango, CO 81503
The undersigned, a registered shareholder of the Corporation, hereby
appoints Gregory B. Sparks,or failing him, Douglas Drumwright, both
directors of the Corporation, as proxyholder, with power of substitution,
to attend and vote for the undersigned at the Annual meeting of
shareholders of the Corporation to be held on November 21, 1997, and
at any adjournment thereof. The undersigned hereby revokes any
instrument of proxy heretofore given with respect to the meeting or any
adjournment thereof.
Shareholders are entitled to specify that the shares represented by
this proxy be voted or withheld from voting on the election of directors,
approval of the 1997 Stock Option Plan or the appointment of auditors.
The Proxyholder is hereby directed to vote on any poll as follows:
1. To elect the following persons as directors of the Corporation for
the ensuing year:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Gregory B. Sparks FOR ( ) AGAINST( ) WITHHOLD ( )
Peter Wilson FOR ( ) AGAINST( ) WITHHOLD ( )
Douglas Drumwright FOR ( ) AGAINST( ) WITHHOLD ( )
Gary S. Joiner FOR ( ) AGAINST( ) WITHHOLD ( )
Robert K. Hanson FOR ( ) AGAINST( ) WITHHOLD ( )
</TABLE>
2. To approve adoption of the 1997 Stock Option Plan.
FOR ( ) AGAINST( ) WITHHOLD ( )
<PAGE>
3. To appoint Raimondo, Pettit & Glassman, certified public
accountants, as auditor of the Corporation for the ensuing year at a
remuneration to be fixed by the directors.
FOR ( ) AGAINST( ) WITHHOLD ( )
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED
OR WITHHELD FROM VOTING ON ANY BALLOT IN
ACCORDANCE WITH THE INSTRUCTIONS OF THE
SHAREHOLDER. WHERE THE UNDERSIGNED HAS NOT
SPECIFIED A CHOICE WITH RESPECT TO ANY OF THE
FOREGOING MATTERS, THIS PROXY CONFERS
DISCRETIONARY AUTHORITY WITH RESPECT TO SUCH
MATTER(S) UPON THE ABOVE-NAMED PROXYHOLDER. IF NO
SPECIFICATION IS MADE, THE SHARES REPRESENTED BY THIS
PROXY WILL BE VOTED IN FAVOR OF THOSE ITEMS.
THIS PROXY CONFERS DISCRETIONARY AUTHORITY WITH
RESPECT TO AMENDMENTS OR VARIATIONS OF THE
MATTERS IDENTIFIED IN THE NOTICE OF MEETING AND
WITH RESPECT TO OTHER MATTERS WHICH MIGHT
PROPERLY COME BEFORE THE MEETING.
NOTES:
1. SHAREHOLDERS HAVE THE RIGHT TO APPOINT A PERSON
(WHO NEED NOT BE A SHAREHOLDER) TO REPRESENT THEM
AT THE ANNUAL MEETING OF SHAREHOLDERS OTHER THAN
THE MANAGEMENT NOMINEES. If you designate as proxyholder
a person other than Gregory B. Sparks, or failing him Douglas
Drumwright, the management nominees, you should either strike out
their names and insert in the space provided the name of the person you
desire to designate as proxyholder or complete another proper form of
proxy.
2. A proxy, to be valid, must be dated and signed by the shareholder
or by his attorney authorized in writing or, where the shareholder is a
corporation, under its corporate seal or by a duly authorized and
appointed officer, attorney or representative of the corporation. Please
sign exactly as you name appears on the proxy. If the proxy is executed
by an attorney for an individual shareholder or by an officer, attorney
or representative of a corporate shareholder, the instrument so
empowering the officer, attorney or representative, as the case may be,
or a notarial copy thereof, must accompany the proxy instrument. If this
proxy is not dated in the space below, it is deemed to bear the date on
which it is mailed to the shareholder.
Signature:___
Printed Name:___
Address:___
Number of Shares:___
Dated this ___ day of November, 1997.
