EX-99
COMPENSATORY STOCK ISSUE AGREEMENT
This Compensatory Stock Issue Agreement (herein after referred to as The
Agreement) has been entered into by Wasatch Pharmaceutical, Inc. (herein after
referred to as "Wasatch"), Xxxx Xxxxxx, Wasatch CEO, Xxxxx Xxxxx, Wasatch CFO,
and Xxxxxx Xxxxx, Wasatch Director, (herein after collectively referred to as
"Officers") and Standard Registrar & Transfer Co., Inc. (herein after referred
to as "Share Administrator") for the purpose of providing the aforementioned
Officers with assurance that they will be adequately compensated for their loyal
past and future services.
WHEREAS, Wasatch is a development stage company that has, to date, been
extremely short of cash resources, it has been unable to meet its agreed upon
compensation payments to the Officers and is indebted to the Officers in an
aggregate totaling $918,975 at December 31, 2001. As security for the
compensation obligation and in order to retain the Officers much needed services
and skills, Wasatch has agreed to issue 110,000,000 shares of its common stock
to the officers as an inducement for their continued service. Such shares will
be distributed to the Officers on the following basis:
Name Shares Issued
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Xxxx Xxxxxx 58,158,589
Xxxxx Xxxxx 45,032,787
Xxxxxx Xxxxx 6,808,624
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Total 110,000,000
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This share issue will be considered as exchanged for the following unpaid
Officer's fees and compensation; Xxxx Xxxxxx $491,024, Xxxxx Xxxxx $377,951, and
Xxxxxx Xxxxx $50,000. In addition, such shares will be used as security for
future fees, interest and compensation that may inure to the Officers.
WHEREAS, Wasatch agrees that the shares will constitute a fully vested issue
with full voting power. Wasatch is granted a right of first refusal, which
allows it to purchase such shares, based on the value established in
subparagraph 3. of the immediately following paragraph, before the Officers can
sell a portion or all of the Wasatch stock derived from this issue. Such right
will remain in place until the Officers have received an amount of money equal
to the unpaid compensation, covered by The Agreement, adjusted for the interest,
calculated at 3% per annum of the covered compensation obligation, that would
have accrued from the execution date of The Agreement. It is intended that The
Agreement and its provisions are intended to provide the Officers with security
and, consequently, the number of shares of common stock released to the Officers
by the Share Administrator should be dramatically less as the value of the stock
increases in the market place.
THEREFORE, the parties agree that the Share Administrator will hold, in escrow,
the officers' three certificates totaling 110,000,000 shares of common stock
under the following terms:
These shares will be held in escrow for the Officers until unpaid past and
future compensation obligations are paid in cash or exchanged for Wasatch's
common stock as provided for in The Agreement. It is agreed that at the
conclusion of each calendar quarter subsequent to December 31, 2001, the
Officers will make an election as to whether unpaid compensation will be added
to The Agreement or retained as a liability and accounts payable for Wasatch. In
addition, Wasatch will evaluate the current market value of the shares securing
the underlying obligation and increase or decrease such shares as is deemed
necessary.
To fund the liquidation of the compensation obligations, Wasatch will repurchase
the compensation shares at the average bid price of its common stock traded in a
recognized public capital market place during the three days prior to the
repurchase. In lieu of the cash payment, the officers will have an option to
remove from escrow the shares that would have been returned to Wasatch in the
cash payment If the compensation obligations are liquidated by cash payments,
the Officers will direct the Share Administrator to release a pro-rata
equivalent number of shares and return them to Wasatch using the per share value
set forth in paragraph 3 above. It is the intention of the parties that The
Agreement not be treated as an income taxable event by Wasatch or the Officers
until such time when the officers receive cash or equivalent shares distributed
by the Share Administrator. If income taxes are assessed prematurely, Wasatch
agrees to reimburse such assessments incurred by the Officers. Reimbursed
premature income tax assessments will be recovered by Wasatch when such shares
or cash are distributed by the Share Administrator under the terms of The
Agreement. It is the intention of the parties to The Agreement that the cash or
cash equivalent compensation paid to the Officers would not exceed the amount of
the interest adjusted compensation obligation.
Any common shares remaining in the hands of the Share Administrator after
liquidation of the compensation obligation will be returned to the treasury at
no cost to Wasatch. If the compensation obligation is not fully paid after
liquidating the shares held by the Share Administrator the unpaid balance will
remain an obligation and liability of Wasatch.
The Share Administrator assumes no responsibility or liability other than the
due care necessary to carry out the terms The Agreement. Wasatch and the
Officers agree to hold the Share Administrator harmless from any liability
arising from The Agreement.
It is agreed by Wasatch and the Officers that, with their mutual consent, The
Agreement may be amended or terminated.
Dated this 10th day of January, 2002
/s/ Xxxx X. Xxxxxx, CEO /s/ Xxxxxx Xxxxx
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Wasatch Pharmaceutical Xxxxxx Xxxxx
/s/ Xxxx X. Xxxxxx /s/ Xxxxxx Xxxxxxxxxx, President
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Xxxx X. Xxxxxx Standard Registrar
/s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx
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