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EXHIBIT 10.1
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EARN OUT AGREEMENT
This Agreement (the "Agreement"), dated as of November 17, 2000, is by and
between Fantasticon, Inc., a Nevada corporation (the "Company"), the persons and
entities indicated on the signature pages hereof (the "Founding Stockholders")
and Michael C. Lee ("Mr. Lee").
WHEREAS, the Company entered into an Agreement and Plan of Merger (the
"Merger Agreement"), dated as of September 1, 2000, by and between the Company
and its wholly-owned subsidiary ("Merger Sub"), and FantastiCon.com, Inc., a
Delaware corporation ("FantastiCon"), Madman Backstage Productions, Inc., a
Michigan corporation ("Madman") and Impact Interactive, Inc., a Michigan
corporation ("Impact"), pursuant to which FantastiCon, Madman and Impact merged
into Merger Sub and the Company changed its name from Santa Maria Resources,
Inc. to Fantasticon, Inc., and
WHEREAS, pursuant to the Merger Agreement, an aggregate of six million and
twenty-five thousand (6,025,000) shares of the common stock, par value $0.01 per
share, of the Company are issuable to the Founding Stockholders (the "Founders'
Shares"), and
WHEREAS, the Company and the Founding Stockholders have agreed that the
Founders' Shares shall be put into an escrow, to be released upon satisfaction
of certain performance criteria set forth herein.
Therefore, the Parties agree as follows:
1. Establishment of Escrow: Upon execution of this Agreement, the Company
shall instruct its transfer agent, U.S. Stock Transfer & Trust
Company, that the Founders' Shares issuable to the Founding
Stockholders shall be retained by the transfer agent until such time
as the transfer agent receives written instruction that the conditions
to release of the Founders' Shares set forth herein have been
satisfied.
2. Conditions to Release of Shares: The Founders' Shares shall be
released from the escrow in accordance with the following schedule:
a) No shares shall be released unless and until revenue in "Counted
Business Dollars" reaches $500,000;
b) When such revenue reaches $500,000, the Founding Stockholders
shall be entitled to the release from the escrow of shares, on a
pro rata basis, representing 10% of the aggregate Founders'
Shares.
c) Upon receipt of each additional $100,000 in such revenue by the
Company, the Founding Stockholders shall be entitled to the
release from the escrow of shares, on a pro rata basis, of an
additional 15% of the aggregate Founders' Shares.
d) Upon receipt of $1,100,000 in such revenue, the entire escrow
shall be released.
e) Notwithstanding the foregoing, (i) 10% of the value of any
private placement funds received after the date hereof shall
count toward the achievement of the revenue target and (ii) the
entire escrow shall be released in the event of a business
combination involving the Company which would include
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acquisition of the Founders' Shares at a price per share (whether
in cash or stock) of not less than $1.25.
For purposes of this provisions "Counted Business Dollars" shall mean
revenue for which there has been (i) an invoice to a customer from the
Company, (ii) payment by the customer for all or part of such invoice and
(iii) a deposit slip in the Company's general bank account representing
deposit of such funds.
3. Covenants of the Company and Mr. Lee: During the existence of the
escrow provided for herein, the Company agrees that it will not issue
any securities in substitution for the shares represented hereby,
without the prior written consent of Mr. Lee. This provision shall not
prevent the Company from (i) establishing a reasonable stock option
plan or plans to provide incentives to its employees and/or
consultants or (ii) issuing its securities to employees, consultants
or others in furtherance of its business objectives. Mr. Lee agrees
(i) to use his best efforts to continue to raise private placement
funding and (ii) to release the existing private placement
subscriptions, and any future such funding, into the Company's bank
account, for which signature power will be held by Richard Kraniak and
Russel VanHouten.
4. Rights of Founding Stockholders: For the duration of the Escrow
Agreement, the Founding Stockholders shall retain all normal and
customary rights to the Founders' Shares, including the right to vote
such shares at a meeting or meetings of the stockholders of the
Company, except the right to receive such shares and/or to make any
transfer or other disposition thereof.
5. Modification: This Agreement may be amended, supplemented, or modified
by action taken by or on behalf of the Parties hereto at any time. No
such amendment, supplement, or modification shall be effective unless
set forth in a written instrument duly executed by or on behalf of
each Party hereto.
6. Waiver: Any waiver by any Party of a breach of any term of this
Agreement shall not operate as or be construed to be a waiver of any
other breach of that term or of any breach of any other term of this
Agreement. The failure of a party to insist upon strict adherence to
any term of this Agreement on one or more occasions will not be
considered a waiver or deprive that party of the right thereafter to
insist upon strict adherence to that term or any other term of this
Agreement. Any waiver must be in writing and be authorized by a
resolution of the Board of Directors of the Company or by each of the
Founding Stockholders.
7. Binding Effect: The provisions of this Agreement shall be binding upon
and inure to the benefit of the Company and the Founding Stockholders.
8. No Third-Party Beneficiaries: This Agreement does not create, and
shall not be construed as creating, any rights enforceable by any
person or entity not a Party to this Agreement.
9. Severability: If any provision of this Agreement is hereafter held to
be invalid, illegal or unenforceable for any reason, such provision
shall be reformed to the maximum extent permitted so as to preserve
the parties' original intent, failing
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which, it shall be severed. If any provision of this Agreement is
hereafter held to be invalid, illegal, or unenforceable for any
reason, such provision shall be reformed to the maximum extent
permitted so as to preserve the Parties' original intent, failing
which, it shall be severed from this Agreement, with the balance of
this Agreement continuing in full force and effect. If any provision
of this Agreement is so broad as to be unenforceable, the provision
shall be interpreted to be only so broad as is enforceable. If any
provision is inapplicable to any person or circumstance, it shall
nevertheless remain applicable to all other persons and circumstances.
10. Merger; Assignability: This Agreement sets forth the entire
understanding of the Parties with respect to the subject matter hereof
and supersede all existing agreements concerning such subject matter.
This Agreement may not be assigned by any party without the prior
written consent of each other Party to this Agreement.
11. Headings: The headings in this Agreement are solely for convenience of
reference and shall be given no effect in the construction or
interpretation of this Agreement.
12. Counterparts; Governing Law; Jurisdiction: This Agreement may be
executed in any number of counterparts (and by facsimile), each of
which shall be deemed an original, but all of which together shall
constitute one and the same instrument. This Agreement shall be
governed by, and construed in accordance with, the laws of the State
of Michigan, without giving effect to the rules governing the conflict
of laws. Any action, suit, or proceeding arising out of, based on, or
in connection with this Agreement, or the other transactions
contemplated hereby, or any document relating hereto or delivered in
connection with the transactions contemplated hereby, may be brought
only and exclusively in the Federal or State Courts located in the
State of Michigan; and each party covenants and agrees not to assert,
by way of motion, as a defense or otherwise, in any such action, suit
or proceeding, any claim that it is not subject personally to the
jurisdiction of such court if it has been duly served with process,
that its property is exempt or immune from attachment or execution,
that the action, suit, or proceeding is brought in an inconvenient
forum, that the venue of the action, suit, or proceeding is improper,
or that this Agreement has been executed by duly authorized subject
matter hereof may not be enforced in or by such court.
IN WITNESS WHEREOF, this Agreement has been executed by duly authorized
officers of each of the Parties hereto as of the date first above written.
FANTASTICON, INC.
_________________________ ___________________________
Michael C. Lee By: Henry T. Mayers
Its: President
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FOUNDING STOCKHOLDERS:
__________________________________ ______________________________________
Henry T. Mayers Jill Mayers
ISAAC A. MAYERS TRUST
__________________________________ ______________________________________
By: Henry T. Mayers Walter Mayers
Its: Trustee (with respect to 100,000 shares only)
__________________________________ ______________________________________
Desmond Jones Arvell Jones
K & N KRANIAK 2000 LLC GREAT LAKES PROFILES, INC.
__________________________________ ______________________________________
By: Richard Kraniak By: Richard W. Brescoll
Its: President Its: President
PROGRESSIVE TECHNOLOGY
PARTNERS, INC.
__________________________________ ______________________________________
Richard Kraniak By: Michael C. Lee
Its: President
M & J INVESTMENT TRUST, INC. LEE CHILDRENS' TRUST
__________________________________ ______________________________________
By: Michael C. Lee By: Jane M. Lee
Its: President Its: Trustee
__________________________________ ______________________________________
Anthony C & Janet M. Gentile (JTWROS) Paul & Rose Anne Musto
(JTWROS)
__________________________________ ______________________________________
Paul Keogh Victor Chen
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_____________________________________ ___________________________________
Irwin Olian Ben Catalano
_____________________________________ ___________________________________
Paul Burke Julie Curtis
(with respect to 250,000 shares only)
_____________________________________ ___________________________________
Sue Skinner Doug Fowler
_____________________________________ ___________________________________
Andre McGarrity Darrious D. Hilmon
_____________________________________ ___________________________________
Russel D. VanHouten Chris Miles
_____________________________________ ___________________________________
Ken Cross Will Bernard
_____________________________________ ___________________________________
Adam Yanalunas Tavis Bell
_____________________________________ ___________________________________
Iole Taranta Kevin Hewitt
_____________________________________ ___________________________________
Casey Hampson Matt Nesbary
_____________________________________ ___________________________________
Jim McFarland Jim Zsenyuk
_____________________________________ ___________________________________
Kim Ayers Joel Stein
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