WASATCH PHARMACEUTICAL
X. Xxxx Xxxxxx
Stock Option Plan
OPTION TO PURCHASE UP TO
4,100,000 SHARES OF
COMMON STOCK
This Stock Option, dated as of December 21, 2000 ("Date of Grant"), is
granted by Wasatch Pharmaceutical, Inc., a Utah corporation ("Company"), to X.
Xxxx Xxxxxx ("Optionee"), pursuant to the terms of the Business Consulting
Agreement, dated December 19, 2000 (the "Consulting Agreement). The Consulting
Agreement contains terms governing the grant of the Stock Options by the Company
to Optionee, and all provisions of the Consulting Agreement are hereby
incorporated herein in full by reference. Except as otherwise indicated herein,
terms used in this Stock Option Plan has the same meanings set forth in the
Consulting Agreement.
NOW, THEREFORE, in consideration of the covenants and agreements herein
contained and other good and valuable consideration rendered to the Company by
Optionee, the receipt and sufficiency of which the Company acknowledges, the
parties hereto hereby agree as follows:
1. Grant. The Company hereby grants to the Optionee an option (the
"Option") to purchase up to Four Million One Hundred Thousand (4,100,000) shares
of the Company's common stock, no par value per share (the "Option Shares") at
the following prices per share (the "Purchase Price" or "Exercise Price"):
a. 100.000 shares will be exercisable at $0.001 per share;
b. 250,000 shares will be exercisable at $0.25 per share;
c. 2,150,000 shares will be exercisable at $0.25 per share; and
d. 1,600,000 shares will be exercisable at a price per share that equals
seventy percent (70%) of the closing bid price on the date that the
Company receives the Optionee's Notice of Exercise (Attached hereto as
Exhibit A). The minimum applicable closing bid price for determining
the Exercise Price for the shares in this subsection 1. (d) will be
$0.37. The minimum Exercise Price is, therefore, $0.26 per share.
Both the Purchase Price and the number of Option Shares purchasable may
be adjusted pursuant to Paragraph 7 hereof.
2. Term and Vesting. The Option granted herein is fully vested on the
date of grant and is exercisable in whole or from time to time in part during
the period beginning on the Date of Grant, ending at 12:00 o'clock a.m.
(Mountain Time) on December 30, 2006, except as provided in Paragraph 4 hereof
or otherwise herein.
3. Exercise of Option. During the Optionee's life, this Option may only
be exercised by Optionee or a permitted assign. This Option may only be
exercised by (and shall be deemed exercised upon) presentation of this at the
principal offices of the Company with written notice to the Company's Secretary
advising the Company of the Optionee's election to purchase Option Shares,
specifying the number of Option Shares being purchased and accompanied by due
payment. No Option Shares shall be issued until full payment is made therefor.
Optionee shall make payment in cash, represented by bank or cashier's check,
certified check or money order, personal check, or made by bank wire transfer
to:
KEY BANK
0000 Xxxxx Xxxxx Xxxxxx
Xxxxxx, XX 00000
BANK ABA #: 000000000
TO ACCOUNT OF: WASATCH PHARMACEUTICAL, INC.
ACCOUNT #: 440411145616
4. Issuance of Option Shares; Registration. Upon proper exercise of
this Option, the Company shall mail or deliver to the Optionee, as promptly as
practicable, a stock certificate or certificates representing the Option Shares
purchased. The Company shall not be required to sell or issue any shares under
the Option if the issuance of such shares shall constitute a violation of any
applicable law or regulation or of any requirements of any securities exchange
or quotation medium upon which the Company's common stock may be listed.
If the Option Shares purchasable have not been registered under the
Securities Act of 1933, as amended (the "Act"), under cover of Form S-8 at the
time the Optionee desires to make any exercise thereof, then the Company agrees
that it will and shall be obligated to register the Option Shares promptly under
the Act, on Form S-8, at the Company's sole expense. If for any reason Form S-8
is not then available for the registration of the Option Shares, then (i) the
Company agrees that it will at its expense take such steps as may be required to
become eligible to use Form S-8, including if necessary the filing of an
appropriate registration statement under Section 12(g) of the Securities
Exchange Act of 1934, as amended, at the Company's sole expense, and (ii) the
term during which this Option may be exercised shall be automatically extended
for the period of time from the Optionee's first request for exercise of this
Option through the date the registration statement on Form S-8 becomes
effective.
If Form S-8 has been withdrawn and no similar form then is available,
then the Company shall be required to exercise the Option Shares at its sole
expense under cover of a different available registration statement. The
Optionee's right to obtain registration of the Option Shares under cover of Form
S-8 or other appropriate form is judicially enforceable, and the Company shall
bear and reimburse all of Optionee's expenses, including actual attorneys' fees,
incurred in judicially enforcing this right.
5. Limitations on Transfer or Encumbrance of this Option. This Option
may not be transferred or assigned in any manner by the Optionee, except as
permitted in this Section.
(a) This Option may be transferred by will or trust upon the Optionee's
death, or under the laws of descent and distribution, or pursuant to a
"qualified domestic relations order" as defined in Title I of the Employee
Retirement Income Security Act (ERISA) or as otherwise permitted by Title I of
ERISA. The same restrictions on transfer or assignment shall apply to any heirs,
devisees, beneficiaries, legal representatives or other persons acquiring this
Option or an interest herein under such an instrument or by operation of law.
Further, this Option shall not be pledged, hypothecated or otherwise
encumbered, by operation of law or otherwise, nor shall it be subject to
execution, attachment or similar process. Any attempt to transfer or otherwise
dispose of this Option in contravention of its terms shall void this Option.
(b) After the death of the Optionee, his executors, administrators or
personal representatives, or any person or persons to whom the Option may be
transferred by will, trust or by the laws of descent and distribution, shall
have the right, at any time prior to termination hereof, to exercise this Option
pursuant to its terms. However, nothing contained in this Option shall be
construed to extend its term or to permit exercise of this Option after
expiration of its term, nor shall it be construed to increase the number of
shares as to which this Option is exercisable from the amount exercisable on the
date of termination of the Optionee's employment or relationship as a consultant
or director.
(c) This Option confers no right upon the Optionee with respect to the
continuation of his employment (or his position as an officer, director or other
provider of services) with the Company or any parent or subsidiary of the
Company, and shall not interfere with the right of the Company, or any parent or
subsidiary of the Company, to terminate such relationship(s) at any time in
accordance with law and any agreements then in force.
6. No Rights as Stockholder. The Optionee shall have no rights as a
stockholder with respect to Option Shares until the date a stock certificate is
issued for such shares. No adjustment for dividends, or otherwise, except as
provided in Paragraph 7, shall be made if the record date therefor is prior to
the date of exercise of such Option.
7. Changes in the Company's Capital Structure. The existence of this
Option shall not limit or affect in any way the right or power of the Company or
its shareholders to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or its
business, or any merger or consolidation of the Company, or any issue of bonds,
debentures, preferred or prior preference stock ahead of or affecting the Option
Shares or the rights thereof, or the dissolution or liquidation of the Company,
or any sale or transfer of all or any part of its assets or business, or any
other corporate act or proceeding, whether of a similar character or otherwise.
The Option Shares are shares of the Common Stock of the Company as currently
constituted. In certain instances, the number of Option Shares purchasable and
the exercise price of this Option shall be adjusted as provided herein. Every
adjustment in this Option shall be made without change in the total exercise
price payable but with a corresponding adjustment in the exercise price per
share and number (and if applicable, kind) of Option Shares purchasable. In the
event of the dissolution or liquidation of the Company, any outstanding and
unexercised options shall terminate as of a future date to be fixed by the Board
of Directors.
(a) If, prior to the Company's delivery of all the Option Shares
subject to this Option, the Company shall effect a subdivision (split) or
combination (reverse split) of shares or other capital readjustment, the payment
of a common stock dividend, or other increase or reduction of the number of
shares of common stock outstanding, without receiving compensation therefor in
money, services or property, then (i) in the event of an increase in the number
of such shares outstanding, the Purchase Price shall be proportionately reduced
and the number of Option Shares then still purchasable shall be proportionately
increased; and (ii) in the event of a reduction in the number of such shares
outstanding, the Purchase Price payable per share shall be proportionately
increased and the number of Option Shares then still purchasable shall be
proportionately reduced. If the Company shall effect any change in the nature of
a recapitalization or reclassification which changes the Common Shares into a
different class or type of shares, then this Option shall thereafter permit the
purchase of such number of the different class or type of shares into which the
number of Option Shares purchasable (if then outstanding) would have been
changed as of the date of the change.
(b) If, prior to the Company's delivery of all the Option Shares
subject to this Option, the outstanding Common Stock shall be hereafter
increased or decreased, or changed into or exchanged for a different number or
kind of shares or other securities of the Company or of another corporation, by
reason of any "Reorganization," defined as any reorganization, merger,
consolidation, share exchange or other business combination involving the
Company, or any sale or lease of all or substantially all of the assets of the
Company, then appropriate adjustment shall be made in the number and kind of
shares as to which this Option shall be exercisable, to the end that the
proportionate interest of the Optionee shall, to the extent practicable, be
maintained as before the occurrence of such event. The Board of Directors shall
provide to Optionee not less than thirty (30) calendar days' advance written
notice of any date fixed by the Board of Directors pursuant to this Paragraph 7
and of the terms of any Reorganization. Optionee shall have the right during
such period to exercise this Option only to the extent that the Option was
exercisable on the date such notice was provided to the Optionee.
(c) Except as hereinbefore expressly provided, the issue by the Company
of shares of stock of any class, or securities convertible into shares of stock
of any class, for cash or property, or for labor or services either upon direct
sale or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to, the Purchase Price or the number of Option Shares then
subject to this Option.
8. Withholding Taxes. Pursuant to applicable federal and state laws,
the Company may be required to collect withholding taxes upon any exercise of
this Option. The Company may require, as a condition to any exercise of this
Option, that the Optionee concurrently pay to the Company the entire amount or a
portion of any taxes which the Company is required to withhold by reason of such
exercise, in such amount as the Board of Directors or Compensation Board of
Directors of the Board in its discretion may determine. In lieu of part or all
of any such payment, the Optionee may elect, with the consent of the Board of
Directors or Compensation Committee, to have the Company withhold from the
Option Shares to be issued upon exercise of this Option that number of shares
having a fair market value equal to the amount which the Company is required to
withhold.
9. Notices. Any notice hereunder by the Optionee shall be given to the
Company in writing, and such notice and any payment by the Optionee hereunder
shall be deemed duly given or made only upon receipt thereof at the Company's
office at 000 Xxxx 0000 Xxxxx, Xxxxx 000, Xxxxxx, XX. 00000, or at such other
address as the Company may designate by notice to the Optionee. Any notice or
other communication to the Optionee hereunder shall be in writing and shall be
deemed duly given or made if mailed or delivered to the Optionee at the last
address as the Optionee may have on file with the Company's Secretary.
10. Litigation. By accepting this Option, the Optionee agrees that, in
the event Optionee or Optionee's successor should bring any lawsuit or other
action or proceeding ("Action") against the Company or an Affiliated Company
based upon or arising in relation to this Option, the party not prevailing in
the Action shall be required to reimburse the costs and expenses, including
reasonable attorneys' fees, incurred by the party prevailing in such action and
appealing any award by a lower court.
12. Governing Law. This Option shall be governed under and construed in
accordance with the laws of the State of Utah or applicable successor law if the
Company should redomicile from the State of Colorado to a different
jurisdiction. This address shall be binding on the Company and the Optionee and
all successors, assigns, heirs, devisees and personal representatives thereof.
13. Option Status. This Option is not granted under any stock option or
similar plan of the Company but is a written compensation contract that shall
constitute an "employee benefit plan of the Company within the meaning of Rule
405 of the General Rules and Regulations under the Securities Act of 1933, as
amended.
IN WITNESS WHEREOF, the Company has executed this Stock Option as of
December 21, 2000.
WASATCH PHARMECEUTICAL, INC.
By /s/ Xxxx X. Xxxxxx
-----------------------------
Authorized Officer
By /s/ Xxxxx X. Xxxxx
-----------------------
Secretary
