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As part of the Agreement, Lothian entered into a series of agreements with us, including Development and Exploration Agreements relative to certain properties belonging to our subsidiaries, UHC Petroleum Corporation and UHC New Mexico Corporation, documents titled Deed of Trust, Mortgage, Assignment of Production, Security Agreement and Financing Statement, which created an assignment and assumption interest relative to a portion of our working interest in those properties, promissory notes in the amount of $4,000,000 (later increased to $8,000,000) and $2,500,000 and a Credit Agreement and Secured Credit Agreement, setting forth the terms of the
loans.
On October 7, 2005 Lothian also entered into a Securities Purchase Agreement with certain of our shareholders, including Mr. Mize. Mr. Mize, together with six other shareholders, sold a total of 2,666,665 shares of common stock to Lothian. (Together, Mr. Mize and the other selling shareholders are referred to in this discussion as the “Selling Shareholders”.) Lothian paid an aggregate purchase price of $10,651,000 or $3.99 per share for the common stock. On the date of the sale, Mr. Mize owned a total of 1,709,863 shares of common stock, of which 1,693,530 shares were sold. Mr. Mize retained 16,333 issued and outstanding shares of common
stock as well as an option to purchase 333,333 shares of common stock at a price of $1.50 per share. If not exercised, this option will expire on March 31, 2009.
Lothian paid the purchase price to the Selling Shareholders with a promissory note dated October 7, 2005 (the “Acquisition Date”). The promissory note accrued interest at the prime rate plus 1%. The promissory note was to be paid in installments. The first installment of $3,500,000 was paid on December 20, 2005, the second installment of $2,383,666 was paid on October 7, 2006, the third installment of $2,383,666 was due and payable on the second anniversary of the Acquisition Date and the promissory note was to mature and an installment equal to the remaining unpaid principal amount and all accrued but unpaid interest was to be due and
payable on the third anniversary of the Acquisition Date.
On February 22, 2006, Lothian executed an amendment to the promissory note whereby it agreed to pay $1,000,000 of the principal amount on or before June 30, 2006.
To secure payment of the purchase price, on October 7, 2005 Lothian executed a Stock Pledge Agreement in favor of the Selling Shareholders. As the anniversary installments required by the promissory note were paid, 933,333 shares, 577,777 shares and 1,155,555 shares of common stock, respectively, were to be released.
On November 3, 2006, Mr. Mize loaned $1,000,000 (the “Interim Loan”) to Lothian. The loan was allegedly secured by the guarantees of, among others, Messrs. Bruce Ransom and Kenneth Levy, who were directors. According to its terms, a default of the Interim Loan resulted in a default of the promissory note issued to the Selling Shareholders. The Interim Loan was not repaid by Lothian within the terms of the agreement, and Mr. Mize declared the Interim Loan and the promissory note issued to the Selling Shareholders in default and therefore due and payable.
On April 20, 2007 our board of directors approved two stock option agreements for C. Scott Wilson, our former chief executive officer. The agreements memorialized grants of stock options that had been approved for Mr. Wilson on July 12, 2006, but were never otherwise documented. The option grants were reported on a Form 4 filed by Mr. Wilson on July 12, 2006 and as otherwise required in our reports. The agreements have an effective date of January 3, 2006. One agreement documented the grant of an option to purchase 433,333 shares of our common stock from our 2000 Stock Option Plan and the second agreement documented the grant of an option to purchase
66,667 shares of our common stock from our 1998 Stock Option Plan. The options will expire on January 3, 2011. The exercise price is $1.05 per share. The right to purchase one-third of the shares of common stock vested on January 3, 2006, the right to purchase one-third of the shares vested on the first anniversary on that date and the right to purchase one-third of the shares was to vest on the second anniversary of that date. Upon the termination of Mr. Wilson’s employment as an officer (and specifically as chief executive officer) on October 8, 2007, the unvested portion of the options immediately vested. The options continue to be exercisable by Mr. Wilson on the terms set forth therein until the expiration date.
On June 27, 2005 we received a commitment for an increase in the amount of $2.5 million to the line of credit provided to us by Almac Financial Corporation, a corporation controlled by Mr. Mize. On the date of the commitment, our line of credit with Almac Financial Corporation was $4 million. Of that amount, we had
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drawn $2,946,192.71 against the line of credit as of June 27, 2005. The line of credit was secured by substantially all of our assets and those of our subsidiaries. We believe that this line of credit was on terms at least as favorable to us as terms we could have obtained from an unrelated lender. The line of credit was paid in full and terminated, as described above.
During the 2006 fiscal year, we received the use of office space and equipment from Mr. Mize without charge. Mr. Mize was under no obligation to provide the use of the office space or equipment to us.
On February 22, 2006 we relocated our corporate headquarters to 405 North Marienfeld, Suite 200, Midland, Texas 79701. This facility consisted of approximately 2,070 square feet together with secretarial and other services. The rent was $2,500 per month. We subleased the facility from Shamrock Equipment Company, Inc., which was controlled by Mr. Thomas Kelly, one of our former directors.
On October 30, 2006 we relocated our corporate headquarters to 200 North Lorraine, Suite 400, Midland, Texas 79701. This facility was provided to us by Lothian. The rent paid for the suite was $365 per month.
On July 31, 2007 we entered into an agreement with Lothian titled “Agreement to Settle Intercompany Debt and Other Claims” (the “Lothian Agreement”). The Lothian Agreement was dated July 26, 2007. Pursuant to the terms of the Lothian Agreement, Lothian forgave $1,800,000 that it asserted we owed to it. In exchange for the debt forgiveness, we agreed to deliver to Lothian any funds in excess of $100,000 that we receive from Cano Petroleum, Inc. in connection with the sale of the assets of UHC New Mexico Corporation. We do not anticipate that we will receive any additional funds from Cano Petroleum, Inc. as a result of the asset
sale.
The Lothian Agreement was conditioned upon the execution of a Settlement Agreement between Lothian and Mr. Mize (the “Mize Agreement”). The Mize Agreement was also dated July 26, 2007 and was effective on July 31, 2007. Pursuant to the terms of the Mize Agreement, in exchange for a payment of $250,000 from Mr. Mize to Lothian and forgiveness by Mr. Mize of debt totaling $5,318,149.18, Lothian transferred to Mr. Mize all of its United Heritage common stock and warrants.
The Lothian Agreement and the Mize Agreement were subject to the approval of the bankruptcy court overseeing the bankruptcy of Lothian. The court approved the Lothian Agreement and the Mize Agreement on July 31, 2007.
On September 26, 2007 Mr. Mize entered into a Restated Stock Sale Agreement which was effective as of September 18, 2007 with Blackwood Ventures LLC (“Blackwood”), a Delaware limited liability company, pursuant to which Blackwood purchased from Mr. Mize (i) 3,759,999 shares of our common stock, (ii) a warrant for the purchase of 953,333 shares of our common stock at an exercise price of $3.15 per share, (iii) a warrant for the purchase of 1,000,000 shares of our common stock at an exercise price of $3.36 per share, and (iv) a warrant for the purchase of 953,333 shares of our common stock at an exercise price of $3.75 per share. The purchase
price for the securities was $5,017,000. As a result of this transaction, Blackwood now owns approximately 53.7% of our outstanding voting securities. Blackwood purchased the securities by transferring to Mr. Mize $375,000 in cash and two promissory notes, one in the face amount of $3,767,000 and the second in the face amount of $875,000. The funds transferred to Mr. Mize from Blackwood to purchase the securities were Blackwood’s personal funds.
On October 8, 2007 Mr. Joseph F. Langston Jr. was appointed as our interim chief executive officer, interim president and our chief financial officer. As an inducement to having Mr. Langston provide his services as an interim officer to us, we agreed to issue shares of our common stock to him and to pay him $2,500 in cash per month. For the period from October 2007 through December 2007, we paid Mr. Langston a total of $7,500 in cash and we are required to issue 20,000 shares of common stock to him. As of January 15, 2008, Mr. Langston agreed to accept the positions of president, chief financial officer and secretary for which we will pay him an
annual salary of $60,000. We may pay this amount in cash or in shares of our common stock, at our discretion. We will also issue 80,000 shares of our common stock to Mr. Langston as an inducement to sign an employment agreement. The term of his employment will be one year. If we renew Mr. Langston’s employment after the initial term ends, we will issue to him shares of common stock equal to 100% of his annual salary. We have also agreed to issue options to Mr. Langston as follows: (i) an option to purchase 300,000 shares of our common stock at a purchase price of $1.50 per share will vest upon completion of a
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financing in excess of $1 million; (ii) an option to purchase 300,000 shares of our common stock at a purchase price of $2.00 per share will vest upon our announcement that we will move forward with a development program based on the results of the pilot program undertaken in the Wardlaw field; (iii) an option to purchase 300,000 shares of common stock at a purchase price of $2.00 per share will vest when our average production over a 30 day period reaches 1,000 barrels of oil equivalent per day; (iv) an option to purchase 300,000 shares of common stock at a purchase price of $2.50 per share will vest when our average production over a 30 day period
reaches 2,000 barrels of oil equivalent per day; and (v) an option to purchase 300,000 shares of common stock at a purchase price of $3.00 per share will vest when our average production over a 30 day period reaches 3,000 barrels of oil equivalent per day. The value of the options granted to Mr. Langston is $297,000. The value was computed using the Black Scholes Option Pricing Model using the following assumptions: market price of $0.82; strike price from $1.50 to $3.00; risk free rate between 3.05% and 2.53%; no dividend rate; an expected term of five months to 24.5 months; and a volatility rate of 148.1% to 93.6%.
On November 27, 2007 we entered into a consulting agreement with DK True Energy Development Ltd. DK True Energy Development Ltd. is a member of Blackwood Ventures LLC, our largest shareholder. Details of the consulting agreement, including a discussion of the compensation to be paid to DK True Energy Development Ltd., can be found in the discussion of proposal 3 above.
Also on November 27, 2007 we entered into consulting agreements with Applewood Energy, Inc. and GWB Petroleum Consultants Ltd. By signing these agreements, we obtained the services of Mr. Paul D. Watson as our chief operating officer and a director and Mr. Geoffrey W. Beatson as our vice president of engineering and development. Details of the consulting agreements, including a discussion of the compensation to be paid to Messrs. Watson and Beatson, can be found in the discussion of proposal 4 above. Mr. Watson has since been appointed as our chief executive officer.
MEETINGS OF THE BOARD OF DIRECTORS
Our records show that the board of directors held six meetings during the 2007 fiscal year. In addition, action was taken by the board of directors by unanimous written consent in lieu of a meeting four times. Due to a change in management, we cannot state with certainty whether or not each director attended all of the meetings of the board during the fiscal year ended March 31, 2007.
COMMUNICATIONS WITH MEMBERS OF THE BOARD OF DIRECTORS
The board of directors has not established a formal process for shareholders to send communications to its members. Any shareholder may send a communication to any member of the board of directors, in care of our address, Suite 200, One Energy Square, 4925 Greenville Avenue, Dallas, Texas 75206. We will forward any such communication to the board member. If the shareholder would like the communication to be confidential, it should be so marked.
ATTENDANCE OF BOARD MEMBERS AT ANNUAL SHAREHOLDERS’ MEETING
We do not currently have a policy with regard to attendance by the members of our board of directors at the annual meeting of our shareholders. A single member of the board of directors, Mr. Scott C. Wilson, attended the previous annual meeting of our shareholders, which was held on March 31, 2007.
REPORT ON COMMITTEES
The board of directors has one standing committee, its audit committee. The board of directors does not have a compensation committee or a nominating committee.
We are a controlled company and as such we are exempt from the requirements of Nasdaq Marketplace Rule 4350(c)(3), which requires independent directors to set the compensation for the executive officers, and 4350(c)(4), which requires independent directors to select director-nominees. During the 2007 fiscal year and until their termination in October 2007, no compensation was paid to our executive officers. The compensation to be paid to our current executive officers was negotiated by these officers with a representative of Blackwood Ventures LLC and was subsequently approved by the board of directors.
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Information regarding the manner in which director-nominees are selected is included below, in the section titled “Director Nomination Process”.
Audit Committee.
The audit committee is responsible for recommending to the board of directors the selection of independent public accountants to audit our books and records annually, to discuss with the independent auditors and internal auditors the scope and results of any audit, to review and approve any nonaudit services performed by our independent auditing firm, and to review certain related party transactions. The audit committee acts pursuant to a written charter adopted by the board of directors. The current members of the audit committee are Messrs. Franz A. Skryanz, Theodore D. Williams and Paul K. Hickey. The members of the
audit committee during the 2007 fiscal year were Messrs. Thomas Kelly, Larry W. Wilton and Raoul J. Baxter. The audit committee met four times in the 2007 fiscal year. The members of the audit committee are independent as that term is defined in section (a)15 of Rule 4200 of the Nasdaq Marketplace Rules.
DIRECTOR NOMINATION PROCESS
Because we are a controlled company, we do not have a standing nominating committee. Nominees to our board of directors are selected by Blackwood Ventures LLC, our largest shareholder. Each nominee to our board of directors expressed a willingness to serve until the next annual meeting of our shareholders and, based on a review of their qualifications, were deemed to be suitable candidates for nomination.
Our board of directors does not have a formal policy with regard to the consideration of any director candidates recommended by shareholders and, as a controlled company, the board of directors does not currently intend to adopt such a policy. While the board of directors may consider candidates recommended by shareholders, there is currently no requirement that it do so. To date, no shareholder other than Blackwood Ventures LLC has recommended a candidate for nomination to the board. We have not paid a fee to any third party to identify or evaluate or assist in identifying or evaluating potential nominees.
We do not have specific minimum qualifications that must be met before a nominee to our board of directors may be considered. Instead, the members of the board look at the total qualifications presented by the candidate which may include, but not be limited to, business experience, experience in the oil and gas industry, an understanding of the accounting principles applicable to the oil and gas industry and generally accepted accounting principles, and education. A candidate for director must agree to abide by our Code of Business Conduct and Ethics.
REPORT OF THE AUDIT COMMITTEE
The audit committee of the board of directors is currently composed of three directors who are independent directors as defined under Nasdaq Rule 4200(a)(14). The audit committee operates under a written charter adopted by the board of directors.
The audit committee oversees our financial reporting process on behalf of the board of directors. Management is responsible for our financial statements and the financial reporting process, including the system of internal controls. The independent auditors are responsible for expressing an opinion on the conformity of those audited financial statements with generally accepted accounting principles. In fulfilling its oversight responsibilities, the audit committee reviewed and discussed with management and the independent auditors the audited financial statements that were included in our Annual Report on Form 10-KSB for the year ended March 31,
2007.
The audit committee discussed with the independent auditors the matters required to be discussed by Statement on Auditing Standards No. 61,
Communication with Audit Committees
, as amended. In addition, the audit committee discussed with the independent auditors the auditors’ independence from the company and its management including the matters in the written disclosures provided to the audit committee as required by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees
.
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Based on the foregoing, the audit committee recommended to the board of directors, and the board of directors approved, the inclusion of the audited financial statements in the Annual Report on Form 10-KSB for the 2007 fiscal year for filing with the Securities and Exchange Commission. The audit committee also recommended the selection of the company’s independent auditors for the fiscal year ending March 31, 2007.
Members of the Audit Committee (fiscal year ended March 31, 2007)
Thomas Kelly
Larry W. Wilton
Raoul J. Baxter
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers, directors, and persons who own more than 10% of a registered class of our equity securities to file reports of ownership with the Securities and Exchange Commission.
Based upon a review of forms 3 and 4 and any amendments thereto furnished to us during the fiscal year ended March 31, 2007, management has determined that, during such fiscal year, no director, officer or 10% beneficial owner of our common stock failed to file on a timely basis with the Securities and Exchange Commission a report required report by Section 16(a).
SHAREHOLDER PROPOSALS FOR 2009 ANNUAL MEETING
Pursuant to Rule 14a-8 of the Securities Exchange Act of 1934, any shareholder who intends to present a proposal at the annual meeting in the 2009 fiscal year must deliver the proposal to our principal executive office no later than the close of business on September 20, 2008.
Notice of intention to present a proposal at the 2009 annual meeting should be addressed to Corporate Secretary, United Heritage Corporation, Suite 200, One Energy Square, 4925 Greenville Avenue, Dallas, Texas 75206. We reserve the right to vote against, reject, rule out of order, or take other appropriate action with respect to any proposal that does not comply with these requirements.
TRANSACTION OF OTHER BUSINESS
Management does not know of any matters to be brought before the meeting other than those referred to in this proxy statement. If any matters which are not specifically set forth in the form of proxy and this proxy statement properly come before the meeting, the persons designated as proxies will vote thereon in accordance with their best judgment.
INCORPORATION BY REFERENCE
We incorporate by reference our consolidated financial statements and related notes and “Management’s Discussion and Analysis or Plan of Operation” included in our Annual Report on Form 10-KSB for the year ended March 31, 2007 and our Quarterly Reports on Form 10-QSB for the quarters ended June 30, 2007 and September 30, 2007.
We have mailed with this proxy statement a copy of our Annual Report on Form 10-KSB for the year ended March 31, 2007, however, we have not mailed copies of the above-referenced Quarterly Reports on Form 10-QSB. This information is available to you without charge upon written or oral request. Copies of these documents can be obtained through the SEC’s website at
http://www.sec.gov
or by requesting them in writing or by telephone from us at the following address and telephone number:
United Heritage Corporation
Suite 200, One Energy Square
4925 Greenville Avenue
Dallas, Texas 75206
Telephone: (214) 800-2663
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UNITED HERITAGE CORPORATION
2007 EQUITY INCENTIVE PLAN
As Adopted by the Board of Directors on January___, 2008
1. PURPOSE.
The purpose of this Plan is to provide incentives to attract, retain and motivate eligible persons whose present and potential contributions are important to the success of the Company and its Subsidiaries by offering them an opportunity to participate in the Company’s future performance through awards of Options, the right to purchase Common Stock and Stock Bonuses. Capitalized terms not defined in the text are defined in Section 2.
2. DEFINITIONS.
As used in this Plan, the following terms will have the following meanings:
“
AWARD
” means any award under this Plan, including any Option, Stock Award or Stock Bonus.
“
AWARD AGREEMENT
” means, with respect to each Award, the signed written agreement between the Company and the Participant setting forth the terms and conditions of the Award.
“
BOARD
” means the Board of Directors of the Company.
“
CAUSE
” means any cause, as defined by applicable law, for the termination of a Participant’s employment with the Company or a Parent or Subsidiary of the Company.
“
CODE
” means the Internal Revenue Code of 1986, as amended.
“
COMPANY
” means United Heritage Corporation, a Utah corporation, or any successor corporation.
“
DISABILITY
” means a disability, whether temporary or permanent, partial or total, as determined by the Board.
“
EXCHANGE ACT
” means the Securities Exchange Act of 1934, as amended.
“
EXERCISE PRICE
” means the price at which a holder of an Option may purchase the Shares issuable upon exercise of the Option.
“
FAIR MARKET VALUE
” means, as of any date, the value of a share of the Company’s Common Stock determined as follows:
(a) if such Common Stock is publicly traded and is then listed on a national securities exchange, its closing price on the date of determination if at least one hundred shares were traded on such date, otherwise the closing price on the last preceding date on which at least one hundred shares were traded, on the principal national securities exchange on which the Common Stock is listed or admitted to trading;
(b) if such Common Stock is quoted on the NASDAQ National Market or the NASDAQ Capital Market, its closing price on the NASDAQ National Market or the NASDAQ Capital Market, respectively, on the date of determination;
(c) if neither of the foregoing is applicable, by the Board in good faith.
“
INSIDER
” means an officer or director of the Company or any other person whose transactions in the Company’s Common Stock are subject to Section 16 of the Exchange Act.
“
OPTION
” means an award of an option to purchase Shares pursuant to Section 6.
“
PARENT
” means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company if each of such corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.
“
PARTICIPANT
” means a person who receives an Award under this Plan.
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“
PERFORMANCE FACTORS
” means the factors selected by the Board, in its sole and absolute discretion, to determine whether the performance goals applicable to Awards have been satisfied, including, without limitation, the following factors:
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(a)
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Net revenue and/or net revenue growth;
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(b)
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Earnings before income taxes and amortization and/or earnings before income taxes and amortization growth;
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(c)
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Operating income and/or operating income growth;
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(d)
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Net income and/or net income growth;
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(e)
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Earnings per share and/or earnings per share growth;
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(f)
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Total stockholder return and/or total stockholder return growth;
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(h)
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Operating cash flow return on income;
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(i)
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Adjusted operating cash flow return on income;
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(j)
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Economic value added; and
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(k)
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Individual business objectives.
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“
PERFORMANCE PERIOD
” means the period of service determined by the Board, not to exceed five years, during which years of service or performance is to be measured for Stock Awards or Stock Bonuses, if such Awards are restricted.
“
PLAN
” means this United Heritage Corporation 2008 Equity Incentive Plan, as amended from time to time.
“
PURCHASE PRICE
” means the price at which the Participant of a Stock Award may purchase the Shares.
“
SEC
” means the Securities and Exchange Commission.
“
SECURITIES ACT
” means the Securities Act of 1933, as amended.
“
SHARES
” means shares of the Company’s Common Stock reserved for issuance under this Plan, as adjusted pursuant to Sections 3 and 19, and any successor security.
“
STOCK AWARD
” means an award of Shares pursuant to Section 7.
“
STOCK BONUS
” means an award of Shares, or cash in lieu of Shares, pursuant to Section 8.
“
SUBSIDIARY
” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.
“
TERMINATION
” or “
TERMINATED
” means, for purposes of this Plan with respect to a Participant, that the Participant has for any reason ceased to provide services as an employee, officer, director, consultant, independent contractor or advisor to the Company or a Parent or Subsidiary of the Company. An employee will not be deemed to have ceased to provide services in the case of (i) sick leave, (ii) military leave, or (iii) any other leave of absence approved by the Company, provided that such leave is for a period of not more than 90 days, unless reemployment upon the expiration of such leave is guaranteed by contract
or statute or unless provided otherwise pursuant to a formal policy adopted from time to time by the Company and issued and promulgated to employees in writing. In the case of any employee on an approved leave of absence, the Board may make such provisions respecting suspension of vesting of the Award while on leave from the employ of the Company or a Subsidiary as it may deem appropriate, except that in no event may an Option be exercised after the expiration of the term set forth in the
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Option agreement. The Board will have sole discretion to determine whether a Participant has ceased to provide services and the effective date on which the Participant ceased to provide services (the “Termination Date”).
3. SHARES SUBJECT TO THE PLAN.
3.1
Number of Shares Available
. Subject to Sections 3.2 and 19, the total aggregate number of Shares reserved and available for grant and issuance pursuant to this Plan shall be _______ Shares and will include Shares that are subject to: (a) issuance upon exercise of an Option but cease to be subject to such Option for any reason other than exercise of such Option; (b) an Award granted hereunder but forfeited or repurchased by the Company at the original issue price; and (c) an Award that otherwise terminates without Shares being issued. At all times the Company shall reserve and keep available a sufficient number of Shares as shall be
required to satisfy the requirements of all outstanding Options granted under this Plan and all other outstanding but unvested Awards granted under this Plan.
3.2
Adjustment of Shares
. In the event that the number of outstanding shares is changed by a stock dividend, recapitalization, stock split, reverse stock split, subdivision, combination, reclassification or similar change in the capital structure of the Company without consideration, then (a) the number of Shares reserved for issuance under this Plan, (b) the Exercise Prices of and number of Shares subject to outstanding Options, and (c) the number of Shares subject to other outstanding Awards will be proportionately adjusted, subject to any required action by the Board or the stockholders of the Company and compliance with applicable
securities laws;
provided
,
however
, that fractions of a Share will not be issued but will either be replaced by a cash payment equal to the Fair Market Value of such fraction of a Share or will be rounded up to the nearest whole Share, as determined by the Board.
4. ELIGIBILITY.
ISOs (as defined in Section 6 below) may be granted only to employees (including officers and directors who are deemed to be employees) of the Company or of a Parent or Subsidiary of the Company. All other Awards may be granted to officers, directors, employees, agents and consultants of the Company or any Parent or Subsidiary of the Company, provided such consultants, independent contractors and advisors render bona-fide services not in connection with the offer and sale of securities in a capital-raising transaction or promotion of the Company’s securities. A person may be granted more than one Award under this Plan.
5. ADMINISTRATION.
5.1
Board
. The Plan shall be administered and interpreted by the Board.
5.2
Board Authority
. The Board will have the authority to:
(a) construe and interpret this Plan, any Award Agreement and any other agreement or document executed pursuant to this Plan;
(b) prescribe, amend and rescind rules and regulations relating to this Plan or any Award;
(c) select persons to receive Awards;
(d) determine the form, terms and conditions of Awards;
(e) determine the number of Shares or other consideration subject to Awards;
(f) determine whether Awards will be granted singly, in combination with, in tandem with, in replacement of, or as alternatives to, other Awards under this Plan or any other incentive or compensation plan of the Company or any Parent or Subsidiary of the Company;
(g) grant waivers of Plan or Award conditions;
(h) determine the vesting, exercisability and payment of Awards;
(i) correct any defect, supply any omission or reconcile any inconsistency in this Plan, any Award or any Award Agreement;
(j) determine whether an Award has been earned;
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(k) amend or terminate the Plan,
provided, however,
the Board will not amend the Plan in any manner that requires shareholder approval without such approval; and
(l) make all other determinations necessary or advisable for the administration of this Plan.
5.3
Board Discretion
. Any determination made by the Board with respect to any Award will be made at the time of grant of the Award or, unless in contravention of any express term of this Plan or Award, at any later time, and such determination will be final and binding on the Company and on all persons having an interest in any Award under this Plan. The Board may delegate to one or more officers of the Company the authority to grant an Award under this Plan to Participants who are not Insiders of the Company. No member of the Board shall be personally liable for any action taken or decision made in good faith relating to this Plan, and all
members of the Board shall be fully protected and indemnified to the fullest extent permitted under applicable law by the Company in respect to any such action, determination, or interpretation.
6. OPTIONS.
The Board may grant Options to eligible persons and will determine whether such Options will be Incentive Stock Options within the meaning of the Code (“ISO”) or Nonqualified Stock Options (“NQSOs”), the number of Shares subject to the Option, the Exercise Price of the Option, the period during which the Option may be exercised, and all other terms and conditions of the Option, subject to the following:
6.1
Form of Option Grant
. Each Option granted under this Plan will be evidenced by an Award Agreement which will expressly identify the Option as an ISO or an NQSO (hereinafter referred to as the “Stock Option Agreement”), and will be in such form and contain such provisions (which need not be the same for each Participant) as the Board may from time to time approve, and which will comply with and be subject to the terms and conditions of this Plan.
6.2
Date of Grant
. The date of grant of an Option will be the date on which the Board makes the determination to grant such Option, unless otherwise specified by the Board. The Stock Option Agreement and a copy of this Plan will be delivered to the Participant within a reasonable time after the granting of the Option.
6.3
Exercise Period
. Options may be exercisable within the times or upon the events determined by the Board as set forth in the Stock Option Agreement governing such Option;
provided
,
however
, that no Option will be exercisable after the expiration of ten (10) years from the date the Option is granted; and provided further that no ISO granted to a person who directly or by attribution owns more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of any Parent or Subsidiary of the Company (“Ten Percent Stockholder”) will be exercisable after the expiration of five (5) years
from the date the ISO is granted. The Board also may provide for Options to become exercisable at one time or from time to time, periodically or otherwise, in such number of Shares or percentage of Shares as the Board determines,
provided
,
however
, that in all events a Participant will be entitled to exercise an Option at the rate of at least 20% per year over five years from the date of grant, subject to reasonable conditions such as continued employment; and further provided that an Option granted to a Participant who is an officer or director may become fully exercisable at any time or during any period established by the Company.
6.4
Exercise Price
. The Exercise Price of an Option will be determined by the Board when the Option is granted and may not be less than 85% of the Fair Market Value of the Shares on the date of grant; provided that: (a) the Exercise Price of an ISO will be not less than 100% of the Fair Market Value of the Shares on the date of grant; and (b) the Exercise Price of any Option granted to a Ten Percent Stockholder will not be less than 110% of the Fair Market Value of the Shares on the date of grant. Payment for the Shares purchased must be made in accordance with Section 9 of this Plan.
6.5
Method of Exercise
. Options may be exercised only by delivery to the Company of a written stock option exercise agreement (the “Exercise Agreement”) in a form approved by the Board, (which need not be the same for each Participant), stating the number of Shares being purchased, the restrictions imposed on the Shares purchased under such Exercise Agreement, if any, and such representations and agreements regarding the Participant’s investment intent and access to information and other matters, if any, as may be required or desirable by the Company to comply with applicable securities laws, together with payment in full of the
Exercise Price for the number of Shares being purchased.
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6.6
Termination
. Notwithstanding the exercise periods set forth in the Stock Option Agreement, exercise of an Option will always be subject to the following:
(a) If the Participant’s service is Terminated for any reason except death or Disability, then the Participant may exercise such Participant’s Options only to the extent that such Options would have been exercisable upon the Termination Date, but must be exercised no later than three (3) months after the Termination Date (or such longer time period not exceeding five (5) years as may be approved by the Board, with any exercise beyond three (3) months after the Termination Date deemed to be an NQSO).
(b) If the Participant’s service is Terminated because of the Participant’s death or Disability (or the Participant dies within three (3) months after a Termination other than for Cause or because of Participant’s Disability), then the Participant’s Options may be exercised only to the extent that such Options would have been exercisable by the Participant on the Termination Date and must be exercised by the Participant (or the Participant’s legal representative) no later than twelve (12) months after the Termination Date (or such longer time period not exceeding five (5) years as may be approved by the Board, with any such
exercise beyond (i) three (3) months after the Termination Date when the Termination is for any reason other than the Participant’s death or Disability, or (ii) twelve (12) months after the Termination Date when the Termination is for Participant’s death or Disability, deemed to be an NQSO).
(c) Notwithstanding the provisions in paragraph 6.6(a) above, if the Participant’s service is Terminated for Cause, neither the Participant, the Participant’s estate nor such other person who may then hold the Option shall be entitled to exercise any Option with respect to any Shares whatsoever, after Termination, whether or not after Termination the Participant may receive payment from the Company or a Subsidiary for vacation pay, for services rendered prior to Termination, for services rendered for the day on which Termination occurs, for salary in lieu of notice, or for any other benefits. For the purpose of this paragraph, Termination
shall be deemed to occur on the date when the Company dispatches notice or advice to the Participant that his or her service is Terminated.
6.7
Limitations on Exercise
. The Board may specify a reasonable minimum number of Shares that may be purchased on any exercise of an Option, provided that such minimum number will not prevent the Participant from exercising an Option for the full number of Shares for which it is then exercisable.
6.8
Limitations on ISO
. The aggregate Fair Market Value (determined as of the date of grant) of Shares with respect to which ISO are exercisable for the first time by a Participant during any calendar year (under this Plan or under any other incentive stock option plan of the Company, Parent or Subsidiary of the Company) will not exceed $100,000. If the Fair Market Value of Shares on the date of grant with respect to which ISO are exercisable for the first time by a Participant during any calendar year exceeds $100,000, then the Options for the first $100,000 worth of Shares to become exercisable in such calendar year will be ISO and the
Options for the amount in excess of $100,000 that become exercisable in that calendar year will be NQSOs. In the event that the Code or the regulations promulgated thereunder are amended after the Effective Date of this Plan to provide for a different limit on the Fair Market Value of Shares permitted to be subject to ISO, such different limit will be automatically incorporated herein and will apply to any Options granted after the effective date of such amendment.
6.9
Modification, Extension or Renewal
. The Board may modify, extend or renew outstanding Options and authorize the grant of new Options in substitution therefore, provided that any such action may not, without the written consent of a Participant, impair any of such Participant’s rights under any Option previously granted. Any outstanding ISO that is modified, extended, renewed or otherwise altered will be treated in accordance with Section 424(h) of the Code. The Board may reduce the Exercise Price of outstanding Options without the consent of Participants affected by a written notice to them;
provided
,
however
, that the
Exercise Price may not be reduced below the minimum Exercise Price that would be permitted under Section 6.4 of this Plan for Options granted on the date the action is taken to reduce the Exercise Price.
6.10
No Disqualification
. Notwithstanding any other provision in this Plan, no term of this Plan relating to ISO will be interpreted, amended or altered, nor will any discretion or authority granted under this Plan be exercised, so as to disqualify this Plan under Section 422 of the Code or, without the consent of the Participant affected, to disqualify any ISO under Section 422 of the Code.
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7. STOCK AWARD.
A Stock Award is an offer by the Company to sell to an eligible person Shares that may or may not be subject to restrictions. The Board will determine to whom an offer will be made, the number of Shares the person may purchase, the price to be paid (the “Purchase Price”), the restrictions to which the Shares will be subject, if any, and all other terms and conditions of the Stock Award, subject to the following:
7.1
Form of Stock Award
. All purchases under a Stock Award made pursuant to this Plan will be evidenced by an Award Agreement (the “Stock Purchase Agreement”) that will be in such form (which need not be the same for each Participant) as the Board will from time to time approve, and will comply with and be subject to the terms and conditions of this Plan. The offer of a Stock Award will be accepted by the Participant’s execution and delivery of the Stock Purchase Agreement and payment for the Shares to the Company in accordance with the Stock Purchase Agreement.
7.2
Purchase Price
. The Purchase Price of Shares sold pursuant to a Stock Award will be determined by the Board on the date the Stock Award is granted and may not be less than 85% of the Fair Market Value of the Shares on the grant date, except in the case of a sale to a Ten Percent Stockholder, in which case the Purchase Price will be 100% of the Fair Market Value. Payment of the Purchase Price must be made in accordance with Section 9 of this Plan.
7.3
Terms of Stock Awards
. Stock Awards may be subject to such restrictions as the Board may impose. These restrictions may be based upon completion of a specified number of years of service with the Company or upon completion of the performance goals as set out in advance in the Participant’s individual Stock Purchase Agreement. Stock Awards may vary from Participant to Participant and between groups of Participants. Prior to the grant of a Stock Award subject to restrictions, the Board shall: (a) determine the nature, length and starting date of any Performance Period for the Stock Award; (b) select from among the Performance Factors to
be used to measure performance goals, if any; and (c) determine the number of Shares that may be awarded to the Participant. Prior to the transfer of any Stock Award, the Board shall determine the extent to which such Stock Award has been earned. Performance Periods may overlap and Participants may participate simultaneously with respect to Stock Awards that are subject to different Performance Periods and have different performance goals and other criteria.
7.4 Termination During Performance Period . If a Participant is Terminated during a Performance Period for any reason, then such Participant will be entitled to payment (whether in Shares, cash or otherwise) with respect to the Stock Award only to the extent earned as of the date of Termination in accordance with the Stock Purchase Agreement, unless the Board determines otherwise.
8. STOCK BONUSES.
8.1
Awards of Stock Bonuses
. A Stock Bonus is an award of Shares for extraordinary services rendered to the Company or any Parent or Subsidiary of the Company. A Stock Bonus will be awarded pursuant to an Award Agreement (the “Stock Bonus Agreement”) that will be in such form (which need not be the same for each Participant) as the Board will from time to time approve, and will comply with and be subject to the terms and conditions of this Plan. A Stock Bonus may be awarded upon satisfaction of such performance goals as are set out in advance in the Participant’s individual Award Agreement (the “Performance Stock Bonus
Agreement”). Stock Bonuses may vary from Participant to Participant and between groups of Participants, and may be based upon the achievement of the Company, Parent or Subsidiary and/or individual performance factors or upon such other criteria as the Board may determine.
8.2
Terms of Stock Bonuses
. The Board will determine the number of Shares to be awarded to the Participant. If the Stock Bonus is being earned upon the satisfaction of performance goals pursuant to a Performance Stock Bonus Agreement, then the Board will: (a) determine the nature, length and starting date of any Performance Period for each Stock Bonus; (b) select from among the Performance Factors to be used to measure the performance, if any; and (c) determine the number of Shares that may be awarded to the Participant. Prior to the payment of any Stock Bonus, the Board shall determine the extent to which such Stock Bonuses have been earned.
Performance Periods may overlap and Participants may participate simultaneously with respect to Stock Bonuses that are subject to different Performance Periods and different performance goals and other criteria. The number of Shares may be fixed or may vary in accordance with such performance goals and
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criteria as may be determined by the Board. The Board may adjust the performance goals applicable to the Stock Bonuses to take into account changes in law and accounting or tax rules and to make such adjustments as the Board deems necessary or appropriate to reflect the impact of extraordinary or unusual items, events or circumstances to avoid windfalls or hardships.
8.3
Form of Payment
. The earned portion of a Stock Bonus may be paid to the Participant by the Company either currently or on a deferred basis, as agreed by the Participant and the Company, with such interest or dividend equivalent, if any, as the Board may determine. Payment of an interest or dividend equivalent (if any) may be made in the form of cash or whole Shares or a combination thereof, either in a lump sum payment or in installments, as the Board will determine.
9. PAYMENT FOR SHARE PURCHASES.
Payment for Shares purchased pursuant to this Plan must be made in cash (by check) or, where expressly approved for the Participant by the Board and where permitted by law:
(a) by cancellation of indebtedness of the Company to the Participant;
(b) by surrender of shares that either: (1) have been owned by the Participant for more than six (6) months and have been paid for within the meaning of SEC Rule 144; or (2) were obtained by the Participant in the public market;
(c) by waiver of compensation due or accrued to the Participant for services rendered;
(d) with respect only to purchases upon exercise of an Option, and provided that a public market for the Company’s stock exists:
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(1)
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through a “same day sale” commitment from the Participant and a broker-dealer that is a member of the National Association of Securities Dealers (an “NASD Dealer”) whereby the Participant irrevocably elects to exercise the Option and to sell a portion of the Shares so purchased to pay for the Exercise Price, and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to forward the Exercise Price directly to the Company; or
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(2)
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through a “margin” commitment from the Participant and a NASD Dealer whereby the Participant irrevocably elects to exercise the Option and to pledge the Shares so purchased to the NASD Dealer in a margin account as security for a loan from the NASD Dealer in the amount of the Exercise Price, and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to forward the Exercise Price directly to the Company; or
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(e) by any combination of the foregoing.
10. WITHHOLDING TAXES.
10.1
Withholding Generally
. Whenever Shares are to be issued in satisfaction of Awards granted under this Plan, the Company may require the Participant to remit to the Company an amount sufficient to satisfy federal, state and local withholding tax requirements prior to the delivery of any certificate or certificates for such Shares. Whenever, under this Plan, payments in satisfaction of Awards are to be made in cash, such payment will be net of an amount sufficient to satisfy federal, state, and local withholding tax requirements.
10.2
Stock Withholding
. When, under applicable tax laws, a participant incurs tax liability in connection with the exercise or vesting of any Award that is subject to tax withholding and the Participant is obligated to pay the Company the amount required to be withheld, the Board may allow the Participant to satisfy the minimum withholding tax obligation by electing to have the Company withhold from the Shares to be issued that number of Shares having a Fair Market Value equal to the minimum amount required to be withheld, determined on the date that the amount of tax to be withheld is to be determined. All elections by a Participant to have
Shares withheld for this purpose will be made in accordance with the requirements established by the Board and will be in writing in a form acceptable to the Board.
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11. PRIVILEGES OF STOCK OWNERSHIP.
11.1
Voting and Dividends
. No Participant will have any of the rights of a stockholder with respect to any Shares until the Shares are issued to the Participant. After Shares are issued to the Participant, the Participant will be a stockholder and will have all the rights of a stockholder with respect to such Shares, including the right to vote and receive all dividends or other distributions made or paid with respect to such Shares; provided, that if such Shares are issued pursuant to a Stock Award with restrictions, then any new, additional or different securities the Participant may become entitled to receive with respect to such Shares by
virtue of a stock dividend, stock split or any other change in the corporate or capital structure of the Company will be subject to the same restrictions as the Stock Award; provided, further, that the Participant will have no right to retain such stock dividends or stock distributions with respect to Shares that are repurchased at the Participant’s Purchase Price or Exercise Price pursuant to Section 13.
11.2
Financial Statements
. The Company will provide publicly available financial information,, including financial statements to each Participant prior to such Participant’s purchase of Shares under this Plan, and to each Participant annually during the period such Participant has Awards outstanding;
provided
,
however
, the Company will not be required to provide such financial statements to Participants whose services in connection with the Company assure them access to equivalent information.
12. NON-TRANSFERABILITY.
Awards of Shares granted under this Plan, and any interest therein, will not be transferable or assignable by the Participant, and may not be made subject to execution, attachment or similar process, other than by will or by the laws of descent and distribution. Awards of Options granted under this Plan, and any interest therein, will not be transferable or assignable by the Participant, and may not be made subject to execution, attachment or similar process, other than by will or by the laws of descent and distribution, by instrument to an inter vivos or testamentary trust in which the options are to be passed to beneficiaries upon the death of the
trustor, or by gift to “immediate family” as that term is defined in 17 C.F.R. 240.16a-1(e). During the lifetime of the Participant an Award will be exercisable only by the Participant. During the lifetime of the Participant, any elections with respect to an Award may be made only by the Participant unless otherwise determined by the Board and set forth in the Award Agreement with respect to Awards that are not ISOs.
13. RESERVED.
14. CERTIFICATES.
All certificates for Shares or other securities delivered under this Plan will be subject to such stop transfer orders, legends and other restrictions as the Board may deem necessary or advisable, including restrictions under any applicable federal, state or foreign securities law, or any rules, regulations and other requirements of the SEC or any stock exchange or automated quotation system upon which the Shares may be listed or quoted.
15. ESCROW; PLEDGE OF SHARES.
To enforce any restrictions on a Participant’s Shares, the Board may require the Participant to deposit all certificates representing Shares, together with stock powers or other instruments of transfer approved by the Board appropriately endorsed in blank, with the Company or an agent designated by the Company to hold in escrow until such restrictions have lapsed or terminated, and the Board may cause a legend or legends referencing such restrictions to be placed on the certificates.
16. EXCHANGE AND BUYOUT OF AWARDS.
The Board may, at any time or from time to time, authorize the Company, with the consent of the respective Participants, to issue new Awards in exchange for the surrender and cancellation of any or all outstanding Awards. The Board may at any time buy from a Participant an Award previously granted with payment in cash, Shares or other consideration, based on such terms and conditions as the Board and the Participant may agree.
17. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE.
An Award will not be effective unless such Award is in compliance with all applicable federal and state securities laws, rules and regulations of any governmental body, and the requirements of any stock exchange
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or automated quotation system upon which the Shares may then be listed or quoted, as they are in effect on the date of grant of the Award and also on the date of exercise or other issuance. Notwithstanding any other provision in this Plan, the Company will have no obligation to issue or deliver certificates for Shares under this Plan prior to: (a) obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and/or (b) completion of any registration or other qualification of such Shares under any state or federal law or ruling of any governmental body that the Company determines to be necessary or
advisable. The Company will be under no obligation to register the Shares with the SEC or to effect compliance with the registration, qualification or listing requirements of any state securities laws, stock exchange or automated quotation system, and the Company will have no liability for any inability or failure to do so.
18. NO OBLIGATION TO EMPLOY.
Nothing in this Plan or any Award granted under this Plan will confer or be deemed to confer on any Participant any right to continue in the employ of, or to continue any other relationship with, the Company or any Parent or Subsidiary of the Company or limit in any way the right of the Company or any Parent or Subsidiary of the Company to terminate Participant’s employment or other relationship at any time, with or without cause.
19. CORPORATE TRANSACTIONS.
19.1
Assumption or Replacement of Awards by Successor
. In the event of (a) a dissolution or liquidation of the Company, (b) a merger or consolidation in which the Company is not the surviving corporation (other than a merger or consolidation with a wholly-owned subsidiary, a reincorporation of the Company in a different jurisdiction, or other transaction in which there is no substantial change in the stockholders of the Company or their relative stock holdings and the Awards granted under this Plan are assumed, converted or replaced by the successor corporation, which assumption will be binding on all Participants), (c) a merger in which the
Company is the surviving corporation but after which the stockholders of the Company immediately prior to such merger (other than any stockholder that merges, or which owns or controls another corporation that merges, with the Company in such merger) cease to own their shares or other equity interest in the Company, (d) the sale of substantially all of the assets of the Company, or (e) the acquisition, sale, or transfer of more than 50% of the outstanding shares of the Company by tender offer or similar transaction, any or all outstanding Awards may be assumed, converted or replaced by the successor corporation (if any), which assumption, conversion or replacement will be binding on all Participants. In the alternative, the successor corporation may substitute equivalent Awards or provide substantially similar consideration to Participants as was provided to stockholders (after taking into account the existing provisions of the Awards). The successor corporation may also issue, in
place of outstanding Shares of the Company held by the Participant, substantially similar shares or other property subject to repurchase restrictions no less favorable to the Participant. In the event such successor corporation (if any) refuses to assume or substitute Awards, as provided above, pursuant to a transaction described in this Subsection 19.1, (i) the vesting of any or all Awards granted pursuant to this Plan will accelerate upon a transaction described in this Section 19 and (ii) any or all Options granted pursuant to this Plan will become exercisable in full prior to the consummation of such event at such time and on such conditions as the Board determines. If such Options are not exercised prior to the consummation of the corporate transaction, they shall terminate at such time as determined by the Board.
19.2
Other Treatment of Awards
. Subject to any greater rights granted to Participants under the foregoing provisions of this Section 19, in the event of the occurrence of any transaction described in Section 19.1, any outstanding Awards will be treated as provided in the applicable agreement or plan of merger, consolidation, dissolution, liquidation, or sale of assets.
19.3
Assumption of Awards by the Company
. The Company, from time to time, also may substitute or assume outstanding awards granted by another company, whether in connection with an acquisition of such other company or otherwise, by either; (a) granting an Award under this Plan in substitution of such other company’s award; or (b) assuming such award as if it had been granted under this Plan if the terms of such assumed award could be applied to an Award granted under this Plan. Such substitution or assumption will be permissible if the holder of the substituted or assumed award would have been eligible to be granted an Award under this
Plan if the other company had applied the rules of this Plan to such grant. In the event the Company assumes an award granted by another company, the terms and conditions of such award will remain
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unchanged (except that the exercise price and the number and nature of Shares issuable upon exercise of any such option will be adjusted appropriately pursuant to Section 424(a) of the Code). In the event the Company elects to grant a new Option rather than assuming an existing option, such new Option may be granted with a similarly adjusted Exercise Price.
20. ADOPTION AND STOCKHOLDER APPROVAL.
This Plan will become effective on the date on which it is adopted by the Board (the “Effective Date”). Upon the Effective Date, the Board may grant Awards pursuant to this Plan. The Company intends to seek stockholder approval of the Plan within twelve (12) months after the date this Plan is adopted by the Board;
provided
,
however
, if the Company fails to obtain stockholder approval of the Plan during such 12-month period, pursuant to Section 422 of the Code, any Option granted as an ISO at any time under the Plan will not qualify as an ISO within the meaning of the Code and will be deemed to be an NQSO.
21. TERM OF PLAN/GOVERNING LAW.
Unless earlier terminated as provided herein, this Plan will terminate ten (10) years from the date this Plan is adopted by the Board or, if earlier, the date of stockholder approval. This Plan and all agreements thereunder shall be governed by and construed in accordance with the laws of the State of Texas.
22. AMENDMENT OR TERMINATION OF PLAN.
The Board may at any time terminate or amend this Plan in any respect, including without limitation amendment of any form of Award Agreement or instrument to be executed pursuant to this Plan;
provided
,
however
, that the Board will not, without the approval of the stockholders of the Company, amend this Plan in any manner that requires such stockholder approval.
23. NONEXCLUSIVITY OF THE PLAN.
Neither the adoption of this Plan by the Board, the submission of this Plan to the stockholders of the Company for approval, nor any provision of this Plan will be construed as creating any limitations on the power of the Board to adopt such additional compensation arrangements as it may deem desirable, including, without limitation, the granting of stock options and bonuses otherwise than under this Plan, and such arrangements may be either generally applicable or applicable only in specific cases.
24. ACTION BY BOARD.
Any action permitted or required to be taken by the Board or any decision or determination permitted or required to be made by the Board pursuant to this Plan shall be taken or made in the Board’s sole and absolute discretion.
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (hereinafter referred to as this “Agreement”) dated as of _____________ ___, 2008, is made and entered into by and between United Heritage Corporation, a Utah corporation (the “Parent”) and Glen Rose Petroleum Corporation, a Delaware corporation (the “Subsidiary”).
RECITALS:
A. The Parent is a corporation organized and existing under the laws of the State of Utah.
B. The Subsidiary is a corporation organized and existing under the laws of the State of Delaware and is a wholly-owned subsidiary of the Parent.
C. The Parent and the Subsidiary and their respective boards of directors deem it advisable and to the advantage, welfare, and best interests of the corporations and their respective shareholders to merge Parent with and into Subsidiary pursuant to the provisions of the Utah Revised Business Corporation Act (the “Utah Act”) and the Delaware General Corporation Law (the “Delaware Law”) upon the terms and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the premises, the mutual covenants herein contained and other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree that the Parent shall be merged into the Subsidiary (the “Merger”) upon the terms and conditions hereinafter set forth.
ARTICLE I
PRINCIPAL TERMS OF THE MERGER
SECTION 1.1. Merger. On the Effective Date (as defined in Section 4.1 hereof), the Parent shall be merged with and into the Subsidiary, the separate existence of the Parent shall cease and the Subsidiary (sometimes hereinafter referred to as the “Surviving Corporation”) shall operate under the name “Glen Rose Petroleum Corporation” by virtue of, and shall be governed by, the laws of the State of Delaware. The address of the registered office of the Surviving Corporation in the State of Delaware will be Parasec, 40 East Division Street, Suite A, Dover, Delaware 19901.
SECTION 1.2. Certificate of Incorporation of the Surviving Corporation. The Certificate of Incorporation of the Surviving Corporation shall be the Certificate of Incorporation of the Subsidiary as in effect on the date hereof (without change, unless and until amended in accordance with applicable law).
SECTION 1.3. Bylaws of the Surviving Corporation. The Bylaws of the Surviving Corporation shall be the Bylaws of the Subsidiary as in effect on the date hereof without change unless and until amended or repealed in accordance with applicable law.
SECTION 1.4. Directors and Officers. At the Effective Date of the Merger, the directors and officers of the Subsidiary in office at the Effective Date of the Merger shall become the directors and officers, respectively, of the Surviving Corporation, each of such directors and officers to hold office, subject to the applicable provisions of the Certificate of Incorporation and Bylaws of the Surviving Corporation and the Delaware Law, until his or her successor is duly elected or appointed and qualified.
ARTICLE II
CONVERSION, CERTIFICATES AND PLANS
SECTION 2.1. Conversion of Shares. At the Effective Date of the Merger, each of the following transactions shall be deemed to occur simultaneously:
(a) Common Stock. Each share of the Parent’s common stock, $0.001 par value per share (the “Parent’s Common Stock”), issued and outstanding immediately prior to the Effective Date of the Merger shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into and become one validly issued, fully paid and nonassessable share of the Surviving Corporation’s common stock, $.001 par value per share (the “Surviving Corporation’s Common Stock”).
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(b) Series A Convertible Preferred Stock. Each share of the Parent’s Series A Convertible Preferred stock, $0.0001 par value per share (the “Parent’s Series A Convertible Preferred Stock”), issued and outstanding immediately prior to the Effective Date of the Merger shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into and become one validly issued, fully paid and nonassessable share of the Surviving Corporation’s Series A Convertible Preferred Stock, $0.0001 par value per share. The Parent represents that no shares of the Parent’s Series A Convertible Preferred Stock
have been issued or are outstanding.
(c) Series B Convertible Preferred Stock. Each share of the Parent’s Series B Convertible Preferred stock, $0.0001 par value per share (the “Parent’s Series B Convertible Preferred Stock”), issued and outstanding immediately prior to the Effective Date of the Merger shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into and become one validly issued, fully paid and nonassessable share of the Surviving Corporation’s Series B Convertible Preferred Stock, $0.001 par value per share. The Parent represents that no shares of the Parent’s Series B Convertible Preferred Stock
have been issued or are outstanding.
(d) Options and Warrants. Each option or warrant to acquire shares of the Parent’s Common Stock, Series A Preferred Stock or Series B Preferred Stock outstanding immediately prior to the Effective Date of the Merger shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into and become an equivalent option or warrant to acquire, upon the same terms and conditions, the number of shares of the Surviving Corporation’s Common Stock, which is equal to the number of shares of the Parent’s Common Stock that the optionee or warrant holder would have received had the optionee or warrant holder
exercised such option or warrant, as the case may be, in full immediately prior to the Effective Date of the Merger (whether or not such option or warrant was then exercisable) and the exercise price per share under each of said options or warrants shall be equal to the exercise price per share thereunder immediately prior to the Effective Date of the Merger, unless otherwise provided in the instrument granting such option or warrant.
(e) Other Rights. Any other right, by contract or otherwise, to acquire shares of the Parent’s Common Stock outstanding immediately prior to the Effective Date of the Merger shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into and become a right to acquire, upon the same terms and conditions, the number of shares of the Surviving Corporation’s Common Stock which is equal to the number of shares of the Parent’s Common Stock that the right holder would have received had the right holder exercised such right in full immediately prior to the Effective Date of the Merger (whether or not
such right was then exercisable) and the exercise price per share under each of said rights shall be equal to the exercise price per share thereunder immediately prior to the Effective Date of the Merger, unless otherwise provided in the agreement granting such right.
(f) Cancellation of Subsidiary Shares Held by Parent. Each share of the Subsidiary’s common stock issued and outstanding immediately prior to the Effective Date of the Merger and held by the Parent shall be canceled without any consideration being issued or paid therefor.
SECTION 2.2. Stock Certificates. At and after the Effective Date, all of the outstanding certificates that, prior to that date, represented shares of the Parent’s Common Stock shall be deemed for all purposes to evidence ownership of and to represent the number of shares of the Surviving Corporation’s Common Stock into which such shares of the Parent’s Common Stock are converted as provided herein. At and after the Effective Date, all of the outstanding certificates that, prior to that date, represented shares of a series of the Parent’s Preferred Stock shall be deemed for all purposes to evidence ownership of and to represent the
number of shares of the Surviving Corporation’s Preferred Stock into which such shares of the Parent’s Preferred Stock are converted as provided herein. The registered owner on the books and records of the Parent of any such outstanding stock certificate for the Parent’s Common Stock or the Parent’s Preferred Stock shall, until such certificate is surrendered for transfer or otherwise accounted for to the Surviving Corporation or its transfer agent, be entitled to exercise any voting and other rights with respect to, and to receive any dividend and other
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distributions upon, the shares of the Surviving Corporation’s Common Stock or the Surviving Corporation’s Preferred Stock evidenced by such outstanding certificate as provided above.
SECTION 2.3. Employee Benefit and Compensation Plans. At the Effective Date of the Merger, each employee benefit plan, incentive compensation plan and other similar plans to which the Parent is then a party shall be assumed by, and continue to be the plan of, the Surviving Corporation. To the extent any employee benefit plan, incentive compensation plan or other similar plan of the Parent provides for the issuance or purchase of, or otherwise relates to, the Parent’s Common Stock, after the Effective Date of the Merger such plan shall be deemed to provide for the issuance or purchase of, or otherwise relate to, the same class and series of the
Surviving Corporation’s common stock.
ARTICLE III
TRANSFER AND CONVEYANCE OF
ASSETS AND ASSUMPTION OF LIABILITIES
SECTION 3.1. Effects of the Merger. At the Effective Date of the Merger, the Merger shall have the effects specified in the Utah Act, the Delaware Law and this Agreement. Without limiting the generality of the foregoing, and subject thereto, at the Effective Date of the Merger, the Surviving Corporation shall possess all the rights, privileges, powers and franchises, of a public as well as a private nature, and shall be subject to all the restrictions, disabilities and duties of each of the parties to this Agreement; the rights, privileges, powers and franchises of the Parent and the Subsidiary, and all property, real, personal and mixed, and all
debts due to each of them on whatever account, shall be vested in the Surviving Corporation; and all property, rights, privileges, powers and franchises, and all and every other interest shall be thereafter the property of the Surviving Corporation, as they were of the respective constituent entities, and the title to any real estate whether by deed or otherwise vested in the Parent and the Subsidiary or either of them, shall not revert to be in any way impaired by reason of the Merger; but all rights of creditors and all liens upon any property of the parties hereto shall be preserved unimpaired, and all debts, liabilities and duties of the respective constituent entities shall thenceforth attach to the Surviving Corporation, and may be enforced against it to the same extent as if said debts, liabilities and duties had been incurred or contracted by it.
SECTION 3.2. Additional Actions. If, at any time after the Effective Date of the Merger, the Surviving Corporation shall consider or be advised that any further assignments or assurances in law or any other acts are necessary or desirable (a) to vest, perfect or confirm, of record or otherwise, in the Surviving Corporation, title to and possession of any property or right of the Parent acquired or to be acquired by reason of, or as a result of, the Merger, or (b) otherwise to carry out the purposes of this Agreement, the Parent and its proper officers and directors shall be deemed to have granted to the Surviving Corporation an irrevocable power of
attorney to execute and deliver all such proper deeds, assignments and assurances in law and to do all acts necessary or proper to vest, perfect or confirm title to and possession of such property or rights in the Surviving Corporation and otherwise to carry out the purposes of this Agreement. The proper officers and directors of the Surviving Corporation are fully authorized in the name of the Parent or otherwise to take any and all such action.
ARTICLE IV
APPROVAL BY SHAREHOLDERS; AMENDMENT; EFFECTIVE DATE
SECTION 4.1. Approval. This Agreement and the Merger contemplated hereby are subject to approval by the requisite vote of shareholders in accordance with applicable Utah law. As promptly as practicable after approval of this Agreement by shareholders in accordance with applicable law, duly authorized officers of the respective parties shall make and execute Articles of Merger and a Certificate of Merger and shall cause such documents to be filed with the Secretary of State of Utah and the Secretary of State of Delaware, respectively, in accordance with the laws of the States of Utah and Delaware. The effective date (the “Effective Date”) of
the Merger shall be the date on which the Merger becomes effective under the laws of Utah or the date on which the Merger becomes effective under the laws of Delaware, whichever occurs later.
SECTION 4.2. Amendments. The Board of Directors of the Parent may amend this Agreement at any time prior to the Effective Date, provided that an amendment made subsequent to the approval of the Merger
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by the shareholders of the Parent shall not (1) alter or change the amount or kind of shares to be received in exchange for or on conversion of all or any of the shares of the Parent’s Common Stock, (2) alter or change any term of the Certificate of Incorporation of the Subsidiary, or (3) alter or change any of the terms and conditions of this Agreement if such alteration or change would adversely affect the holders of the Parent’s Common Stock.
ARTICLE V
MISCELLANEOUS
SECTION 5.1. Termination. This Agreement may be terminated and the Merger abandoned at any time prior to the filing of this Agreement with the Secretary of State of Utah and the Secretary of State of Delaware, whether before or after shareholder approval of this Agreement, by the consent of the Board of Directors of the Parent and the Subsidiary.
SECTION 5.2. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be considered to be an original instrument.
SECTION 5.3. Descriptive Headings. The descriptive headings are for convenience of reference only and shall not control or affect the meaning or construction of any provision of this Agreement.
SECTION 5.4. Governing Law. This Agreement shall be construed in accordance with the laws of the State of Delaware, except to the extent the laws of the State of Utah apply to the Merger.
IN WITNESS WHEREOF, the undersigned officers of each of the parties to this Agreement, pursuant to authority duly given by their respective boards of directors, have caused this Agreement to be duly executed on the date set forth above.
UNITED HERITAGE CORPORATION,
a Utah corporation
By:
Paul D. Watson, Chief Executive Officer
GLEN ROSE PETROLEUM CORPORATION,
a Delaware Corporation
By:
Paul D. Watson, Chief Executive Officer
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ARTICLES OF MERGER
OF
UNITED HERITAGE CORPORATION
A Utah Corporation
(the non-surviving corporation)
and
GLEN ROSE PETROLEUM CORPORATION
A Delaware Corporation
(the surviving corporation)
ARTICLE I – Surviving Corporation
The name of the subsidiary corporation, which is the corporation surviving the merger (“Merger”), is Glen Rose Petroleum Corporation (the “Subsidiary”). The Subsidiary is a foreign corporation incorporated on ____________, 2008 and existing pursuant to the provisions of the Delaware General Corporation Law.
ARTICLE II – Non-Surviving Corporations
The name of the parent corporation, which is the non-surviving corporation, is United Heritage Corporation, a Utah corporation (the “Parent”). The Parent is a domestic corporation incorporated on April 30, 1981 and existing pursuant to the provisions of the Utah Revised Business Corporation Act.
ARTICLE III – Agreement and Plan of Merger
The Agreement and Plan of Merger containing such information as is required by 16-10a-1101 of the Utah Revised Business Corporation Act is set forth in Exhibit A, attached hereto and made a part hereof.
ARTICLE IV – Amendment to Articles of Incorporation
The Certificate of Incorporation of the Subsidiary shall, on the Merger becoming effective, be and constitute the Certificate of Incorporation of the surviving corporation.
ARTICLE V – Manner of Adoption and Vote of Surviving Corporation
Pursuant to 16-10a-1104(3) of the Utah Revised Business Corporation Act, a vote of the shareholders of the Subsidiary is not required with respect to the Merger.
ARTICLE VI – Manner of Adoption and Vote of Non-Surviving Corporation
The designation of the voting group of the Parent that voted on the Agreement and Plan of Merger was Common Stock. No shares of Preferred Stock are issued and outstanding.
The number of outstanding shares of the Parent’s Common Stock and the number of votes entitled to be cast by the holders of such shares, as of ____________, 2008, was __________. The number of undisputed votes of the Parent’s Common Stock voting group cast for the Agreement and Plan of Merger was _____________. The number of votes cast for the Agreement and Plan of Merger by the only voting group entitled to vote was sufficient for approval by that voting group.
ARTICLE VII – Ownership of Parent
Immediately prior to the Merger, the Parent owned at least 90% of the outstanding shares of each class of the Subsidiary.
ARTICLE VIII – Effective Date of Merger
The effective date of the Merger shall be the date upon which articles of merger or a certificate of merger giving effect to the Agreement and Plan of Merger shall be duly executed and acknowledged by the Subsidiary, and thereafter (a) delivered to the Secretary of State of the State of Delaware, for filing, as provided in
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Delaware Law, and (b) delivered to the Utah Department of Commerce, Division of Corporations and Commercial Code, as provided in Utah law. The Merger shall become effective upon the later to occur of (a) or (b) above. The effective date of the Merger complies with 16-10a-1104(5) of the Utah Revised Business Corporation Act.
In witness whereof, the undersigned, being the Chief Executive Officer of the Subsidiary, which is the surviving corporation, executes these Articles of Merger subject to penalties of perjury that the statements contained herein are true on this _____ day of _________ 2008.
Paul D. Watson, Chief Executive Officer
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Exhibit A
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (hereinafter referred to as this “Agreement”) dated as of _____________ ___, 2008, is made and entered into by and between United Heritage Corporation, a Utah corporation (the “Parent”) and Glen Rose Petroleum Corporation, a Delaware corporation (the “Subsidiary”).
RECITALS:
A. The Parent is a corporation organized and existing under the laws of the State of Utah.
B. The Subsidiary is a corporation organized and existing under the laws of the State of Delaware and is a wholly-owned subsidiary of the Parent.
C. The Parent and the Subsidiary and their respective boards of directors deem it advisable and to the advantage, welfare, and best interests of the corporations and their respective shareholders to merge Parent with and into Subsidiary pursuant to the provisions of the Utah Revised Business Corporation Act (the “Utah Act”) and the Delaware General Corporation Law (the “Delaware Law”) upon the terms and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the premises, the mutual covenants herein contained and other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree that the Parent shall be merged into the Subsidiary (the “Merger”) upon the terms and conditions hereinafter set forth.
ARTICLE I
PRINCIPAL TERMS OF THE MERGER
SECTION 1.1. Merger. On the Effective Date (as defined in Section 4.1 hereof), the Parent shall be merged with and into the Subsidiary, the separate existence of the Parent shall cease and the Subsidiary (sometimes hereinafter referred to as the “Surviving Corporation”) shall operate under the name “Glen Rose Petroleum Corporation” by virtue of, and shall be governed by, the laws of the State of Delaware. The address of the registered office of the Surviving Corporation in the State of Delaware will be Parasec, 40 East Division Street, Suite A, Dover, Delaware 19901.
SECTION 1.2. Certificate of Incorporation of the Surviving Corporation. The Certificate of Incorporation of the Surviving Corporation shall be the Certificate of Incorporation of the Subsidiary as in effect on the date hereof (without change, unless and until amended in accordance with applicable law).
SECTION 1.3. Bylaws of the Surviving Corporation. The Bylaws of the Surviving Corporation shall be the Bylaws of the Subsidiary as in effect on the date hereof without change unless and until amended or repealed in accordance with applicable law.
SECTION 1.4. Directors and Officers. At the Effective Date of the Merger, the directors and officers of the Subsidiary in office at the Effective Date of the Merger shall become the directors and officers, respectively, of the Surviving Corporation, each of such directors and officers to hold office, subject to the applicable provisions of the Certificate of Incorporation and Bylaws of the Surviving Corporation and the Delaware Law, until his or her successor is duly elected or appointed and qualified.
ARTICLE II
CONVERSION, CERTIFICATES AND PLANS
SECTION 2.1. Conversion of Shares. At the Effective Date of the Merger, each of the following transactions shall be deemed to occur simultaneously:
(a) Common Stock. Each share of the Parent’s common stock, $0.001 par value per share (the “Parent’s Common Stock”), issued and outstanding immediately prior to the Effective Date of the Merger shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into and become one validly issued, fully paid and nonassessable share of the Surviving Corporation’s common stock, $.001 par value per share (the “Surviving Corporation’s Common Stock”).
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(b) Series A Convertible Preferred Stock. Each share of the Parent’s Series A Convertible Preferred stock, $0.0001 par value per share (the “Parent’s Series A Convertible Preferred Stock”), issued and outstanding immediately prior to the Effective Date of the Merger shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into and become one validly issued, fully paid and nonassessable share of the Surviving Corporation’s Series A Convertible Preferred Stock, $0.0001 par value per share. The Parent represents that no shares of the Parent’s Series A Convertible Preferred Stock
have been issued or are outstanding.
(c) Series B Convertible Preferred Stock. Each share of the Parent’s Series B Convertible Preferred stock, $0.0001 par value per share (the “Parent’s Series B Convertible Preferred Stock”), issued and outstanding immediately prior to the Effective Date of the Merger shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into and become one validly issued, fully paid and nonassessable share of the Surviving Corporation’s Series B Convertible Preferred Stock, $0.001 par value per share. The Parent represents that no shares of the Parent’s Series B Convertible Preferred Stock
have been issued or are outstanding.
(d) Options and Warrants. Each option or warrant to acquire shares of the Parent’s Common Stock, Series A Preferred Stock or Series B Preferred Stock outstanding immediately prior to the Effective Date of the Merger shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into and become an equivalent option or warrant to acquire, upon the same terms and conditions, the number of shares of the Surviving Corporation’s Common Stock, which is equal to the number of shares of the Parent’s Common Stock that the optionee or warrant holder would have received had the optionee or warrant holder
exercised such option or warrant, as the case may be, in full immediately prior to the Effective Date of the Merger (whether or not such option or warrant was then exercisable) and the exercise price per share under each of said options or warrants shall be equal to the exercise price per share thereunder immediately prior to the Effective Date of the Merger, unless otherwise provided in the instrument granting such option or warrant.
(e) Other Rights. Any other right, by contract or otherwise, to acquire shares of the Parent’s Common Stock outstanding immediately prior to the Effective Date of the Merger shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into and become a right to acquire, upon the same terms and conditions, the number of shares of the Surviving Corporation’s Common Stock which is equal to the number of shares of the Parent’s Common Stock that the right holder would have received had the right holder exercised such right in full immediately prior to the Effective Date of the Merger (whether or not
such right was then exercisable) and the exercise price per share under each of said rights shall be equal to the exercise price per share thereunder immediately prior to the Effective Date of the Merger, unless otherwise provided in the agreement granting such right.
(f) Cancellation of Subsidiary Shares Held by Parent. Each share of the Subsidiary’s common stock issued and outstanding immediately prior to the Effective Date of the Merger and held by the Parent shall be canceled without any consideration being issued or paid therefor.
SECTION 2.2. Stock Certificates. At and after the Effective Date, all of the outstanding certificates that, prior to that date, represented shares of the Parent’s Common Stock shall be deemed for all purposes to evidence ownership of and to represent the number of shares of the Surviving Corporation’s Common Stock into which such shares of the Parent’s Common Stock are converted as provided herein. At and after the Effective Date, all of the outstanding certificates that, prior to that date, represented shares of a series of the Parent’s Preferred Stock shall be deemed for all purposes to evidence ownership of and to represent the
number of shares of the Surviving Corporation’s Preferred Stock into which such shares of the Parent’s Preferred Stock are converted as provided herein. The registered owner on the books and records of the Parent of any such outstanding stock certificate for the Parent’s Common Stock or the Parent’s Preferred Stock shall, until such certificate is surrendered for transfer or otherwise accounted for to the Surviving Corporation or its transfer agent, be entitled to exercise any voting and other rights with respect to, and to receive any dividend and other distributions upon, the shares of the Surviving Corporation’s Common Stock or the Surviving Corporation’s Preferred Stock evidenced by such outstanding certificate as provided above.
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SECTION 2.3. Employee Benefit and Compensation Plans. At the Effective Date of the Merger, each employee benefit plan, incentive compensation plan and other similar plans to which the Parent is then a party shall be assumed by, and continue to be the plan of, the Surviving Corporation. To the extent any employee benefit plan, incentive compensation plan or other similar plan of the Parent provides for the issuance or purchase of, or otherwise relates to, the Parent’s Common Stock, after the Effective Date of the Merger such plan shall be deemed to provide for the issuance or purchase of, or otherwise relate to, the same class and series of the
Surviving Corporation’s common stock.
ARTICLE III
TRANSFER AND CONVEYANCE OF ASSETS AND ASSUMPTION OF LIABILITIES
SECTION 3.1. Effects of the Merger. At the Effective Date of the Merger, the Merger shall have the effects specified in the Utah Act, the Delaware Law and this Agreement. Without limiting the generality of the foregoing, and subject thereto, at the Effective Date of the Merger, the Surviving Corporation shall possess all the rights, privileges, powers and franchises, of a public as well as a private nature, and shall be subject to all the restrictions, disabilities and duties of each of the parties to this Agreement; the rights, privileges, powers and franchises of the Parent and the Subsidiary, and all property, real, personal and mixed, and all
debts due to each of them on whatever account, shall be vested in the Surviving Corporation; and all property, rights, privileges, powers and franchises, and all and every other interest shall be thereafter the property of the Surviving Corporation, as they were of the respective constituent entities, and the title to any real estate whether by deed or otherwise vested in the Parent and the Subsidiary or either of them, shall not revert to be in any way impaired by reason of the Merger; but all rights of creditors and all liens upon any property of the parties hereto shall be preserved unimpaired, and all debts, liabilities and duties of the respective constituent entities shall thenceforth attach to the Surviving Corporation, and may be enforced against it to the same extent as if said debts, liabilities and duties had been incurred or contracted by it.
SECTION 3.2. Additional Actions. If, at any time after the Effective Date of the Merger, the Surviving Corporation shall consider or be advised that any further assignments or assurances in law or any other acts are necessary or desirable (a) to vest, perfect or confirm, of record or otherwise, in the Surviving Corporation, title to and possession of any property or right of the Parent acquired or to be acquired by reason of, or as a result of, the Merger, or (b) otherwise to carry out the purposes of this Agreement, the Parent and its proper officers and directors shall be deemed to have granted to the Surviving Corporation an irrevocable power of
attorney to execute and deliver all such proper deeds, assignments and assurances in law and to do all acts necessary or proper to vest, perfect or confirm title to and possession of such property or rights in the Surviving Corporation and otherwise to carry out the purposes of this Agreement. The proper officers and directors of the Surviving Corporation are fully authorized in the name of the Parent or otherwise to take any and all such action.
ARTICLE IV
APPROVAL BY SHAREHOLDERS; AMENDMENT; EFFECTIVE DATE
SECTION 4.1. Approval. This Agreement and the Merger contemplated hereby are subject to approval by the requisite vote of shareholders in accordance with applicable Utah law. As promptly as practicable after approval of this Agreement by shareholders in accordance with applicable law, duly authorized officers of the respective parties shall make and execute Articles of Merger and a Certificate of Merger and shall cause such documents to be filed with the Secretary of State of Utah and the Secretary of State of Delaware, respectively, in accordance with the laws of the States of Utah and Delaware. The effective date (the “Effective Date”) of
the Merger shall be the date on which the Merger becomes effective under the laws of Utah or the date on which the Merger becomes effective under the laws of Delaware, whichever occurs later.
SECTION 4.2. Amendments. The Board of Directors of the Parent may amend this Agreement at any time prior to the Effective Date, provided that an amendment made subsequent to the approval of the Merger by the shareholders of the Parent shall not (1) alter or change the amount or kind of shares to be received in exchange for or on conversion of all or any of the shares of the Parent’s Common Stock, (2) alter or change
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any term of the Certificate of Incorporation of the Subsidiary, or (3) alter or change any of the terms and conditions of this Agreement if such alteration or change would adversely affect the holders of the Parent’s Common Stock.
ARTICLE V
MISCELLANEOUS
SECTION 5.1. Termination. This Agreement may be terminated and the Merger abandoned at any time prior to the filing of this Agreement with the Secretary of State of Utah and the Secretary of State of Delaware, whether before or after shareholder approval of this Agreement, by the consent of the Board of Directors of the Parent and the Subsidiary.
SECTION 5.2. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be considered to be an original instrument.
SECTION 5.3. Descriptive Headings. The descriptive headings are for convenience of reference only and shall not control or affect the meaning or construction of any provision of this Agreement.
SECTION 5.4. Governing Law. This Agreement shall be construed in accordance with the laws of the State of Delaware, except to the extent the laws of the State of Utah apply to the Merger.
IN WITNESS WHEREOF, the undersigned officers of each of the parties to this Agreement, pursuant to authority duly given by their respective boards of directors, have caused this Agreement to be duly executed on the date set forth above.
UNITED HERITAGE CORPORATION,
a Utah corporation
By:
Paul D. Watson, Chief Executive Officer
GLEN ROSE PETROLEUM CORPORATION,
a Delaware Corporation
By:
Paul D. Watson, Chief Executive Officer
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CERTIFICATE OF MERGER
OF
GLEN ROSE PETROLEUM CORPORATION
A Delaware Corporation
(the surviving corporation)
and
UNITED HERITAGE CORPORATION
A Utah Corporation
(the non-surviving corporation)
Pursuant to Title 8, Section 252 of the Delaware General Corporation Law, the undersigned corporation executed the following Certificate of Merger:
FIRST:
The name of the surviving corporation is Glen Rose Petroleum Corporation, a Delaware corporation, and the name of the corporation being merged into this surviving corporation is United Heritage Corporation, a Utah corporation.
SECOND:
The Agreement and Plan of Merger has been approved, adopted, certified, executed and acknowledged by each of the constituent corporations pursuant to Title 8, Section 252 of the General Corporation Law of the State of Delaware.
THIRD:
The name of the surviving corporation is Glen Rose Petroleum Corporation, a Delaware corporation.
FOURTH:
The Certificate of Incorporation of the surviving corporation shall be its Certificate of Incorporation.
FIFTH:
The authorized stock and par value of the non-Delaware corporation is 125,000,000 shares of common stock, $0.001 par value and 5,000,000 shares of Preferred Stock, $0.0001 par value of which 176,000 shares constitute Series A Preferred Stock, 40,000 shares constitute Series B-1 Preferred Stock and 60,000 shares constitute Series B-2 Preferred Stock.
SIXTH:
The effective date of the Merger shall be the date upon which articles of merger or a certificate of merger giving effect to the Agreement and Plan of Merger shall be duly executed and acknowledged by Glen Rose Petroleum Corporation, and thereafter (a) delivered to the Secretary of State of the State of Delaware, for filing, as provided in Delaware Law, and (b) delivered to the Utah Department of Commerce, Division of Corporations and Commercial Code, as provided in Utah law. The Merger shall become effective upon the later to occur of (a) or (b) above.
SEVENTH:
The Agreement and Plan of Merger is on file at Suite 200, One Energy Square, 4825 Greenville Avenue, Dallas, Texas 75206, an office of the surviving corporation.
EIGHTH:
A copy of the Agreement and Plan of Merger will be furnished by the surviving corporation on request, without cost to any stockholder of the constituent corporations.
IN WITNESS WHEREOF,
the surviving corporation, Glen Rose Petroleum Corporation, has caused this certificate to be signed by an authorized officer, this ______ day of ____________ 2008.
By:
Paul D. Watson, Chief Executive Officer
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PROXY
UNITED HERITAGE CORPORATION
This Proxy is Solicited on Behalf of the Board of Directors
for the Annual Meeting on March 28, 2008
This proxy will be voted as specified by the shareholder. If no specification is made, all shares will be voted “FOR” the approval of the three proposals set forth in the proxy statement.
The shareholder(s) represented herein appoint(s) Joseph Langston Jr. and Paul D. Watson and each of them, proxies with the power of substitution to vote all shares of common stock entitled to be voted by said shareholder(s) at the annual meeting of the shareholders of United Heritage Corporation to be held at Suite 200, One Energy Square, 4925 Greenville Avenue, Dallas, Texas 75206, on March __, 2008 at 10:00 a.m. local time, and in any adjournment or postponement thereof as specified in this proxy.
PROPOSAL 1 — ELECTION OF DIRECTORS.
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Joseph F. Langston Jr.
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FOR
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AGAINST
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ABSTAIN
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Paul D. Watson
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FOR
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AGAINST
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ABSTAIN
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Franz A. Skryanz
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FOR
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AGAINST
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ABSTAIN
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Theodore D. Williams
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FOR
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AGAINST
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ABSTAIN
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Paul K. Hickey
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FOR
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AGAINST
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ABSTAIN
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PROPOSAL 2 — RATIFICATION OF INDEPENDENT AUDITORS FOR THE 2008 FISCAL YEAR.
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FOR
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AGAINST
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ABSTAIN
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PROPOSAL 3 — APPROVE THE ISSUANCE OF WARRANTS TO DK TRUE ENERGY DEVELOPMENT AND RTP SECURE ENERGY CORP. FOR SERVICES RENDERED PURSUANT TO A CONSULTING AGREEMENT
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FOR
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AGAINST
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ABSTAIN
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PROPOSAL 4 — APPROVE THE ISSUANCE OF COMMON STOCK AND WARRANTS TO APPLEWOOD ENERGY, INC. AND GWB PETROLEUM CONSULTANTS LTD. FOR SERVICES TO BE RENDERED PURSUANT TO CONSULTING AGREEMENTS
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AGAINST
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ABSTAIN
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PROPOSAL 5 — APPROVE THE ISSUANCE OF WARRANTS TO RICHARDSON & PATEL LLP AS PARTIAL COMPENSATION FOR SERVICES RENDERED.
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FOR
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AGAINST
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ABSTAIN
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PROPOSAL 6 — APPROVE THE ISSUANCE OF COMMON STOCK AND WARRANTS TO CHADBOURN SECURITIES AS COMPENSATION FOR SERVICES TO BE RENDERED.
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FOR
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AGAINST
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ABSTAIN
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PROPOSAL 7 — APPROVE THE ISSUANCE OF A WARRANT TO BLACKWOOD CAPITAL LIMITED IN EXCHANGE FOR SERVICES RENDERED AND TO BE RENDERED PURSUANT TO A CONSULTING AGREEMENT
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