STOCK OPTION AGREEMENT
This
STOCK OPTION AGREEMENT (“Agreement”) is dated and made effective as of the 3rd
day of January 2006 (the “Grant Date”) between United Heritage Corporation, a
Utah corporation (the “Company”), and C. Xxxxx Xxxxxx, hereinafter called the
Optionee.
The
Company desires, by affording the Optionee an opportunity to purchase shares
of
its $0.001 par value common stock (the “Common Stock”), as hereinafter provided,
to carry out the purpose of the 1998 Stock Option Plan of United Heritage
Corporation (the “Plan”), approved and adopted by its directors.
NOW,
THEREFORE, in consideration of the mutual covenants hereinafter set forth and
for other good and valuable consideration, the parties hereto agree as
follows:
1. Grant
of
Option. The Company hereby irrevocably grants to the Optionee the right and
option (the “Option”) to purchase all or any part of an aggregate of 66,667
shares of Common Stock (such number being subject to adjustment as provided
in
Section 8 of the Plan) on the terms and conditions herein set forth and subject
further to all of the terms and provisions of the Plan which are incorporated
herein by reference for all purposes. For purposes of the Plan and this
Agreement, the terms “employment” or “employ” shall also include serving as a
director, officer, or consultant to the Company and/or its subsidiaries, and
the
term “employee” shall include any of such persons.
2. Purchase
Price. The purchase price of the Common Stock covered by the Option shall be
$1.05 per share.
3. Term
of
Option. Subject to earlier termination as provided in paragraphs 5 and 6 hereof,
the term of the Option, and any limitations on number of shares or time periods
that it may be exercised are as follows:
The
Option shall expire at 5:00 p.m. (Central Time) on January 3, 2011 (the
“Expiration Date”). The Option shall vest as follows: the right to purchase
22,223 shares shall vest on the Grant Date, the right to purchase 22,222 shares
shall vest on the first anniversary of the Grant Date, and the right to purchase
22,222 shares shall vest on the second anniversary of the Grant Date,
provided,
however,
that in
the event of a termination of Optionee’s employment as an officer (and
specifically as Chief Executive Officer) by the Company for any reason other
than cause, as defined by applicable law, any unvested portion of the Option
shall immediately vest. The Option shall not terminate or lapse as a result
of a
termination of Optionee’s employment by the Company for any reason other than
cause, but shall continue to be exercisable by the Optionee on the terms set
forth herein until the Expiration Date.
Unless
otherwise stated above, the Options may be exercised, prior to expiration or
termination, at any time or from time to time, as to any part or all of the
shares covered thereby; provided, however, that the Option may not be exercised
as to less than 100 shares at any one time (or the remaining shares then
purchasable under the Option, if less than 100 shares). The purchase price
of
the shares as to which the Option shall be exercised shall be paid in full
in
cash, or by the delivery of other shares of Common Stock of the Company, at
the
time of exercise and as provided by the Plan.
Except
as
provided in this paragraph 3 and in paragraphs 5 and 6 hereof, the Option may
not be exercised at any time unless the Optionee shall have been in the
continuous employ of the Company and/or of one or more of its subsidiaries,
from
the date hereof to the date of the exercise of the Option. The holder of the
Option shall not have any of the rights of a shareholder with respect to the
shares covered by the Option except to the extent that one or more certificates
for such shares shall be delivered to him upon the due exercise of the Option.
The Option may not be exercised unless at the date of exercise a registration
statement on Form S-8 under the Securities Act of 1933, as amended (the “Act”),
relating to the shares covered by the Option shall be in effect, or if, in
the
opinion of counsel for the Company, the exercise and issuance of Common Stock
would be exempt from registration requirements under the Act and under
applicable securities laws. The Company is under no obligation to register
the
shares covered by the Option under the Act.
4. Nontransferability.
The Option shall not be transferable otherwise than by will or the laws of
descent and distribution, or pursuant to a qualified domestic relations order
as
defined by the Internal Revenue Code of 1986, as amended, or Title I of the
Employee Retirement Income Security Act, or the rules thereunder, and the Option
may be exercised, during the lifetime of the Optionee, only by him. More
particularly (but without limiting the generality of the foregoing), the Option
may not be assigned, transferred (except as provided above), pledged or
hypothecated in any way, shall not be assignable by operation of law, and shall
not be subject to execution, attachment or similar process. Any attempted
assignment, transfer, pledge, hypothecation or other disposition of the Option
contrary to the provisions hereof, and they levy of any execution, attachment
or
similar process upon the Option, shall be null and void and without
effect.
5. Termination.
If the Optionee’s service is terminated by the Company for any reason except
death, then the Optionee may exercise the Option until the Expiration Date.
Notwithstanding the foregoing, if the Optionee’s service is terminated for
cause, as defined by applicable law, neither the Optionee, the Optionee’s estate
nor such other person who may then hold the Option shall be entitled to exercise
the Option after termination. For the purpose of this paragraph, subject to
the
foregoing, termination shall be deemed to occur on the date when the Company
dispatches notice or advice to the Optionee that his service is
terminated.
6. Death
of
Optionee. If the Optionee shall die while he shall be employed by the Company
or
one or more of its subsidiaries, the Option may be exercised (to the extent
that
the Optionee shall have been entitled to do so at the date of his death) by
a
legatee or legatees of the Optionee under his last will, or by his personal
representatives or distributees, at any time until the Expiration
Date.
7. Method
of
Exercising Option. This Option may be exercised by written notice to the
Company.
8. Subsidiary.
As used herein, the term “subsidiary” shall mean any present or future
corporation which would be a “subsidiary corporation” of the Company, as that
term is defined in Section 425 of the Internal Revenue Code of
1986.
9. Other
Matters. The Optionee acknowledges receipt of a copy of the Plan, a copy of
which is annexed hereto, and represents that the Optionee is familiar with
the
terms and provisions thereof. The Optionee hereby accepts this Option subject
to
all of the terms and provisions of the Plan, except as they may be modified
by
this Agreement. As a condition to the issuance of shares of Common Stock of
the
Company under this Agreement, the Optionee authorizes the Company to withhold
in
accordance with applicable law from any regular cash compensation payable to
him
any taxes required to be withheld by the Company under federal, state or local
law as a result of his exercise of this Option.
IN
WITNESS WHEREOF, the Company has caused this Agreement to be duly executed
by
its officers thereunto duly authorized, and the Optionee has hereunto set his
hand, as of the ____ day of April 2007.
