Exhibit 10.2
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
----------------- -------------
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 totaling110,000,000 shares of common stock under
the following terms:
1. 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.
2. 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.
3. 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.
4. 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.
5. 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.
6. 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.
7. 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.
8. 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.
9. 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 10 day of January, 2002
/s/ Xxxx X. Xxxxxx /s/ Xxxxxx Xxxxx
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Wasatch Pharmaceutical Xxxxxx Xxxxx
/s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx Standard Registrar
/s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx
