Exhibit 10.1
AMENDMENT
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This Agreement (the "Amendment") is made and entered into on November
8, 2000, by and among Xxxxxxx X. Xxxxxx and Wasatch Interactive Learning
Corporation, a Washington corporation (the "Company").
WITNESSETH
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WHEREAS, Xxxxxxx X. Xxxxxx and Wasatch Interactive Learning
Corporation, a Utah Corporation ("WILC-Utah") entered into an Employment
Agreement (the "Agreement") dated January 17, 2000, pursuant to which Xxxxxxx X.
Xxxxxx was employed as President, a Director and Officer of WILC-Utah.
WHEREAS, as a result of the statutory merger with WILC-Utah, on
February 4, 2000, the Company assumed the Agreement by operation of law.
WHEREAS, the parties to this Amendment desire to amend the Agreement
conditioned upon the terms set forth herein.
NOW, THEREFORE, in consideration of the premises and the material
covenants and agreements hereinafter set forth, the parties agree as follows:
1. Section 3.02 of the Agreement is hereby deleted in its entirety and
amended to read as follows: "Employee is granted options to purchase Three
Hundred and Fifty Thousand Shares of Common Stock of the Company, post reverse
merger. Said options shall be vested and exercisable on the following schedule
and terms:
A. 50,000 options vest upon the signing of this Amendment. The
Exercise Price for these options is $0.40 per share.
B. 150,000 options vest on February 9, 2001. The Exercise Price
for these options is $0.40 per share.
C. 50,000 options vest on February 9, 2002. The Exercise Price
for these options is $0.40 per share.
D. 50,000 options vest on February 9, 2003. The Exercise Price
for these options is $0.40 per share.
E. 50,000 options vest on February 9, 2004. The Exercise Price
for these options is $0.40 per share."
2. Section 3.05 of the Agreement is hereby amended to read as follows:
" In the event that Founders cease to "control the Company" or Employee's
employment is terminated as a result of said loss of control,
A. All unvested options shall vest immediately on the date the
Founders cease to control the Company or Employee's employment
is terminated.
B. Employee shall receive a salary of One Hundred Seventy Five
Thousand Dollars ($175,000.00) per year for two years and
continue on the Company's insurance plan (as defined in the
Company Employee Policy Manual) for two years. Said insurance
premiums to be paid 100% by the Company.
Founders' ceasing to "control the Company" is defined as a subsequent
material change in Employee's duties, which is materially adverse to the
Founders, or the Company is acquired, merged, consolidated or otherwise
adversely changed. Resignation by the Employee following a change of control
shall constitute a termination due to loss of control for purposes of this
section. Employee shall be willing to provide up to six (6) months of
cooperative transition support, in the event of termination due to a loss of
control. The Employee will be paid at her then salary rate for the cooperative
transition support and the salary paid for this cooperative transition support
time will be in addition to the salary stated in 3.05 B."
3. Section 1.02 of the Agreement is hereby amended to read as follows:
"Employee shall serve as President and CEO, a Director and Officer of the
Company. Employee shall develop, fund and implement an aggressive growth plan
for the Company, including an Internet strategy, as appropriate funding is
available. At the time of entering into the Employment Agreement the Company was
implementing a strategy for a reverse merger (the "Merger") to become a publicly
traded company, which strategy included a funding plan to capitalize the Company
with a net of $7,500,000. Employee and Xxxxx Xxxxxx agreed to an Anti-Dilution
Percentage (33%) that was based upon complete funding. The Anti Dilution
Percentage would cause the Company to issue additional shares to Employee if the
Company was required to issue more than 9,000,000 shares upon the completion of
net $7,500,000 funding. Employee and Xxxxx Xxxxxx owned collectively 3,000,000
shares and upon the execution of this Addendum shall own collectively an
additional 784,600 shares of the Company from Western Financial Corporation in
consideration of the removal of certain provisions of the Anti Dilution
Percentage subject to future compensation for such removal. The Anti-Dilution
Percentage was based upon 9,000,000 shares outstanding upon completion of the
net funding of $7,500,000. Since the Company's actual funding amounted to a net
of $4,530,000 or 60% of the original funding amount contemplated, the
Anti-Dilution Percentage should be adjusted accordingly to reflect the reduction
in funding received. Employee and Xxxxx Xxxxxx collectively owned 83.75% of the
Company (excluding shares owned as a result of debt forgiveness) prior to the
"Merger". Their ownership percentage would have dropped 50.75% to 33% had
$7,500,000 of funding been generated. Insofar as 60% of the total funding was
received and the Company has ceased its efforts to generate more funding,
Employee and Xxxxx Xxxxxx' ownership percentage should only have decreased
30.45% to 53.30%. Therefore, as consideration for the Company's failure to raise
the net $7,500,000 as set forth in the Employment Agreement, the waiver of
future compensation contemplated upon Employee and Xxxxx Xxxxxx receiving
784,600 additional shares, and the fact that it is unknown at the present time
how many shares of the Company's common stock will ultimately be issued to the
convertible debenture holder upon conversion, the Anti-Dilution Percentage shall
be revised to provide that the Company is required to issue such number of
additional shares at no cost to Employee and Xxxxx Xxxxxx at least annually or
more frequently as deemed necessary for shareholder voting purposes, to maintain
an Anti Dilution Percentage of 53.30%. Such Anti Dilution Percentage is only
applicable to: (i) the 7,500,000 shares issued and outstanding as of the
"Merger" date; (ii) 158,334 shares issued in consideration of $950,000 of
funding received on February 29, 2000; (iii) 423,213 shares issued as a result
of the conversion of $101,000 of debenture debt through November 2, 2000; and
(iv) any additional shares which may be issued in the future upon conversion of
the $3,899,000 replacement debenture issued to an institutional investor on
November 3, 2000. The Company will also reimburse Employee and Xxxxx Xxxxxx in
cash for any federal and state income taxes incurred as a result of the issuance
of such shares."
4. Other than as provided herein, the Agreement remains in full force
and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
WASATCH INTERACTIVE
LEARNING CORPORATION
By: /S/ Xxxxx X. Xxxxxx
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Vice President
By: /S/ Xxxxxxx X. Xxxxxx
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