Exhibit 99.1
BUSINESS CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT, made this 16th day of November, 2001 by and
between Xxxxx X. Xxxxxxx, whose address is: 0 Xx. Xxxxx Xxxx, Xxxxxxxx, XX 00000
(hereinafter referred to as "Consultant"), and Wasatch Pharmaceutical, Inc., 000
Xxxx 0000 Xxxxx, Xxxxx 000, Xxxxxx, Xxxx 00000, a Utah corporation, (hereinafter
referred to as "Company").
WITNESSETH
RECITALS
WHEREAS, the Company desires to obtain Xx. Xxxxxxx'x assistance and
consulting services in identifying and securing the acquisition of medical
clinics for the purpose of marketing, distributing and selling the Company's
products.
WHEREAS, the Consultant agrees to provide his consulting services to
the Company.
NOW THEREFORE, in consideration of the premises the mutual promises and
covenants as herein contained, the parties have agreed as follows:
1. SERVICES
The Consultant shall identify for acquisition by the Company existing
medical clinics. The Consultant shall assist the Company in identifying and
negotiating the acquisition of the controlling interest in at least six medical
clinics from November 1, 2001 up to and until November 1, 2002; in at least six
medical clinics from November 1, 2002, up to and until November 1, 2003; and at
least six medical clinics from November 1, 2002, up to and until November 1,
2003. Each medical clinic acquired must agree to distribute the Company's
products.
The Consultant, further, agrees that the Company's minimum acquisition
criteria, for each medical clinic are:
(a) The clinic must be located in a metropolitan city in the United
States with a population of least one million people;
(b) The clinic's gross annual revenues must be at least $5 million;
(c) The clinic's net profits, before physician salaries, must be at
least $1 million; and
(d) At the time of the acquisition, the clinic does not provide
dermatology services.
The Company acknowledges and agrees that the Consultant
services are not exclusive, and therefore, the Consultant may provide
the same or similar services to other companies or individuals, so long
as the Consultant applies reasonable time to providing his services to
the Company. The Consultant agrees to provide reasonable time to
providing his services to the Company, and agrees that his failure to
do so constitutes a breach of this Agreement. Upon such breach, the
Company may immediately terminate this Agreement, without further
obligation to the Consultant, and any shares held in trust or escrow,
pursuant to Section 3 herein, at the time of such termination will be
returned to the Company.
2. COMPENSATION
As Compensation for the Consultant's services, the Company will issue
to the Consultant shares of its common stock with a market value of $1,000,000
based upon the closing bid price on November 16, 2001. The Company shall issue
to the Consultant 10,000,000 shares, after execution of this agreement pursuant
to the terms set forth in sections 3 and 4.
3. CONDITIONS FOR ISSUANCE OR FORFEITURE OF SHARES
The Company and Consultant agree that the Company shall issue
10,000,000 shares of common stock (evidenced by share certificates) to a trust
or into an escrow mutually designated by the Company and the Consultant. The
trust or escrow instructions shall, among other things, include instructions
that state the following:
"If on or prior to November 1, 2002, the Company has executed contracts
to purchase six medical clinics, either for the assets of the clinics or at
least eighty (80) percent of the clinic's shares of stock, meeting the criteria
set forth in paragraph 1of the Consulting Agreement, the trustee or escrow
officer will distribute to the Consultant 3,333,334 shares of common stock,
without further restriction.
If on November 1, 2002, the Company has not executed contracts to
purchase six medical clinics, meeting the criteria set forth in paragraph 1, the
trustee or escrow officer shall immediately return the share certificates,
evidencing the 10,000,000 shares of common stock, to the Company by no later
than November 5, 2002.
If on or prior to November 1, 2002, the Company has executed contracts
to purchase six medical clinics, either for the assets of the clinics at least
eighty (80) percent of the clinic's shares of stock, and if on or prior to
November 1, 2003, the Company has executed contracts to purchase six additional
medical clinics (for aggregate of twelve medical clinics), either for the assets
of the clinics or at least eighty (80) percent of the clinic's shares of stock,
meeting the criteria set forth in paragraph 1 of the Consulting Agreement, the
trustee or escrow officer will distribute to the Consultant an additional
3,333,334 shares of common stock, without further restriction.
If on November 1, 2002, the Company has executed contracts to purchase
six medical clinics, meeting the criteria set forth in paragraph 1, but if on
November 1, 2003, the Company has not executed contracts to purchase six
additional medical clinics, meeting the criteria set forth in paragraph 1, the
trustee or escrow officer shall immediately return the remaining share
certificates, evidencing 6,666,666 shares of common stock, to the Company by no
later than November 5, 2003.
If on or prior to November 1, 2003, the Company has executed contracts
to purchase an aggregate of twelve medical clinics, either for the assets of the
clinics at least eighty (80) percent of the clinic's shares of stock, and if on
or prior to November 1, 2004, the Company has executed contracts to purchase six
additional medical clinics (for aggregate of eighteen medical clinics), either
for the assets of the clinics or at least eighty (80) percent of the clinic's
shares of stock, meeting the criteria set forth in paragraph 1 of the Consulting
Agreement, the trustee or escrow officer will distribute to the Consultant the
remaining 3,333,332 shares of common stock, without further restriction.
If on November 1, 2003, the Company has executed contracts to purchase
twelve medical clinics, meeting the criteria set forth in paragraph 1, but if on
November 1, 2004, the Company has not executed contracts to purchase six
additional medical clinics, meeting the criteria set forth in paragraph 1, the
trustee or escrow officer shall immediately return the remaining share
certificates, evidencing the 3,333,332 shares of common stock, to the Company by
no later than November 5, 2004.
If the Consultant dies, or otherwise becomes unable to perform his
services, or is judged by a court to be unable to provide the services
contemplated by this Agreement prior to the Consultant completing the conditions
set forth in these instructions for the periodic release of the common shares
held in either trust or escrow, the trustee or escrow officer will immediately
return the shares held in escrow on the date of the Consultant's death or
disability.
If termination of the Agreement occurs pursuant to the causes set forth
in Section 10, or if the Company terminates the Agreement upon the breach of
contract by the Consultant, prior to the Consultant completing the conditions
set forth in these instructions for the periodic release of the common shares
held in either trust or escrow, then any shares held in trust or escrow at the
time of such termination will be returned to the Company."
The Consultant agrees that he cannot transfer, without the Company's
Chief Executive Officer and Chief Financial Officer's prior written consent, any
of the shares of common stock described herein, until the shares of common stock
are released by the trustee or escrow officer from the trust or escrow pursuant
to the instruction set forth above.
4. REGISTRATION
Upon execution of this Agreement, and prior to the issuance of the
10,000,000 shares of common stock, the Company agrees to register all of the
shares of common stock using the Securities and Exchange Commission Registration
Form S-8.
5. TERM
This Agreement shall remain in full force and effect for a period of
three (3) years from the date hereof unless terminated earlier by mutual
consent.
6. RELATIONSHIP OF PARTIES
Consultant, which shall include all of its employees, is an independent
contractor and not an employee of the Company, and as such no employer-employee
relationship has been created by this agreement, and the Company shall first
approve all documents or items to be released by Consultant. Consultant will
report the cash paid or the shares received hereinunder as compensation due
under this Agreement and will pay any applicable taxes thereon. Consultant
agrees to pay his own expenses.
7. CONFIDENTIALITY
Consultant agrees not to disclose any Confidential Information of the
Company and to take all reasonable precautions to prevent unauthorized
dissemination of any Confidential Information gained during and after this
Agreement. Consultant agrees not to use any of the Company's Confidential
Information for its own benefit or for the benefit of anyone other than the
Company. Confidential Information means information relating to the research,
development, products, methods of manufacturing, trade secrets, business plans,
customers, finances, and personnel data relating to the business affairs of the
Company. Confidential Information does not include any information: (a) which
Consultant knew before the Company disclosed it; (b) which has become publicly
known through no wrongful acts of Consultant or which Consultant developed
independently as evidenced by appropriate documentation.
6 NON-COMPETITION
To induce the Company to enter into this Agreement, Consultant
covenants and agrees that during the term of this Agreement, Consultant shall
not directly or indirectly for his own account or either, as agent, servant, or
employee, or as a shareholder of any corporation or member of any firm, own,
manage, operate, join, control, be employed by, or participate in the ownership,
management, operation, or control of any individual, entity, or business that
conducts a business that is now directly or indirectly in competition with the
Company.
7. NON-SALE PROVISION
The parties hereto hereby represent to the other that the services
contracted for and to be rendered hereunder do not involve, or are not in any
way, connected to the offer or sale of securities in any capital raising
transaction.
8. GOVERNING LAWS
This Agreement shall be interpreted and governed by the laws of the
state of Utah.
9. NOTICES
All notices to be delivered hereinunder shall be deemed given if
addressed to the parties at the addresses first set forth above.
10. TERMINATION
Termination shall occur at the conclusion of the time specified above,
or in the event this Agreement or performance hereunder shall contravene public
policy, or constitute a material violation of any law or regulation of any
federal or state government agency, or either party becomes insolvent, or is
adjudicated bankrupted, or seeks the protection of any provision of the National
Bankruptcy Act, or either party is enjoined, or consents to, any order relating
to any violation of any state or federal securities law, then this Agreement
shall be terminated, and be deemed null and void upon such termination; neither
party shall be obligated hereunder and neither party shall have any further
liability to the other.
Either party may terminate this Agreement upon breach by the other
party of any material provisions of this Agreement.
The Company has the option to terminate this Agreement for the
Consultant's failure to perform services. Consultant's failure perform services
includes the Consultant's failure to provide reasonable time to his services, in
the sole discretion of the Company; and the Consultant's failure to acquire at
least six medical clinics by November 1, 2002, at least six additional medical
clinics (an aggregate of twelve medical clinics) by November 1, 2003, and at
least six additional medical clinics (an aggregate of eighteen medical clinics)
by November 1, 2004.
11. ARBITRATION
Any controversy or claim arising out of or related to this Agreement
shall be settled by arbitration in accordance with the rules and under the
auspices of the American Arbitration Association; and any arbitration shall be
conducted in the Salt Lake County, Utah. Any findings of the arbitration will be
final and enforceable in state and federal court.
12. ENTIRE AGREEMENT; MODIFICATION; WAIVER AND SEVERABILITY
This Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof and supersedes all prior
negotiations, understandings, agreements, arrangements, and understandings, both
oral and written, among the parties hereto with respect to such subject matter.
This Agreement may not be amended or modified in any respect, except by
the mutual written agreement of the parties hereto.
The waiver by any of the parties hereto of any other party's prompt and
complete performance, or breach or violation, of any provision of this Agreement
shall not operate nor be construed as a waiver of any subsequent breach or
violation, and the waiver by any of the parties hereto to exercise any right or
remedy which it may possess hereunder shall not operate nor be construed as a
bar to the exercise of such right or remedy by such party upon the occurrence of
any subsequent breach or violation.
The invalidity of any one or more of the words, phrases, sentences,
clauses, sections, or subsections contained in the Agreement shall not effect
the enforceability of the remaining portions of this Agreement or any part
hereof, all of which are inserted conditionally on their being valid in law,
and, in the event that any one or more of the words, phrases, sentences,
clauses, sections, or subsections contained in this Agreement shall be declared
invalid by a court of competent jurisdiction, this Agreement shall be construed
as if such invalid word or words, phrase or phrases, sentence or sentences,
clause or clauses, section or sections, or subsection or subsections had not
been inserted.
13. COUNTERPARTS
This Agreement may be executed in one or more counterparts, all of
which together shall constitute only one Agreement.
IN WITNESS WHEREOF, the parties hereto have caused these presents to be signed
and their respective seals to be hereunto affixed the day and year above
written.
WASATCH PHARMACEUTICAL, INC.
/s/ Xxxx X. Xxxxxx November 16, 2001
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Xxxx X. Xxxxxx, President Date
XXXXX X. XXXXXXX
/s/ Xxxxx X. Xxxxxxx November 16, 2001
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Consultant Date
