INVESTMENT MANAGEMENT
OF AMERICA, INC.
000 Xxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxx Xxxxxx, Xx 00000
(000) 000-0000
BINDING LETTER OF AGREEMENT
This Letter of Agreement will confirm various discussions with Xxxxx Xxxxxx and
his management team (hereinafter Team) and Investment Management of America,
Inc. (hereinafter IMA), and Orion Financial, Ltd. (hereinafter OFL). The
objective of our discussions has been to outline IMA's intent and objective to
bring the "Funtastix" brand shoe back into existence by providing various levels
of funding, as required, to meet the cash flow obligations as reflected in the
pro forma provided by the Team. The agreement will be as follows:
1. OFL agrees to issue 26,129,941 shares of OFL to IMA and its related persons
in return for $35,000.
2. OFL will raise a minimum of eight hundred eighty-thousand dollars
($880,000) in the form of convertible debt ("Convertible Debt") or equity.
The Convertible Debt or equity will be dilutive in nature to all
stockholders at the time of a secondary offering. The convertible debt will
be sold at par, will have a term of ten (10) years and will bear interest
not to exceed 10% per annum with accumulated interest due on the due date
of the convertible note. The convertible debt will be required to be
converted at the time of any secondary offering with a conversion price
equal to the greater of $4.50 or a price equal to 75% of the public
offering price.
3. An agreement will be in effect between OFL and the Colby, Kansas investor
group and/or the nine AM bridge loan investors which would require the
issuance of 1,162,780 shares of stock.
4. Key OFL shareholders will agree to exercise their respective options which
total 2,400,000 shares.
5. All OFL stock owned by IMA, the six stock option shareholders of OFL, the
Team and Asia Pacific Industries Development Group (hereinafter APIDG) will
be restricted for (1) year from the date of closing.
6. Future options and stock incentive programs will be put in place for the
management team. In addition, a qualified Board of Directors will be formed
on an equitable basis. Any person serving on the new board of directors of
OFL will receive a 500,000 share after 10 for one split, 50,000 shares at
$3.00 per share option to purchase stock at $.30 per share exercisable as
any time up to the earlier of 5 years after the date of issuance or six
months after completion of a secondary offering.
Page (01)
7. Upon closing, the number of shares of OFL will be as follows:
No. of Shs.
-----------
Orion Financial Currently Outstanding 4,641,522
Stock Options 2,400,000
Total 7,041,522
AFI Mgmt. 6,604,838
APIDG 4,548,787
IMA 26,129,941
Colby/Bridge Ln. 1,162,780
TOTAL 45,487,867
The parties agree that this contemplated transaction will be consummated no
later than May 15, 1998, the ("Closing Date"). The "Closing Date" may be
extended if both parties mutually agree.
A. Due Diligence. Prior to the closing of the transaction, The Team
and OFL will provide IMA all documentation relative to the
completion of the transaction in order to successfully complete
its Due Diligence, including, but not limited to:
a. Pertinent corporate documents - incorporation papers,
certificates, resolutions, etc. Of all companies and
subsidiaries.
b. Financial statements.
c. Stockholder lists and corporate records.
d. All past and pending litigation.
e. Make all necessary information and key personnel available
to assist in the development of a complete business plan for
IMA.
B. Responsibility. No Party shall be responsible for any of the
other's expenses in connection with the negotiations and due
diligence contemplated.
Page (02)
C. Additional Terms. The transaction is subject to the following
additional terms and conditions.
(1) The approval and consent of the Board of Directors of OFL
and IMA shall have been obtained prior to the closing date.
(2) All necessary filings with, or approvals by state and
federal governmental agencies or regulatory bodies shall be
made by each party.
(3) As part of the closing, key employees of the Team agree to
enter into employment agreements, including but not limited
to compensation, benefits, bonus plans, etc. Employment
agreements will contain a non compete clause.
D. Exclusive. Prior to the closing and during the term of this
Letter of Agreement, neither the Team nor the directors and/or
shareholders of OFL will discuss or negotiate with any other
corporation, firm or person, or entertain or consider any
inquiries or proposals relating to the possible sale of a
material portion of its stock or their assets.
E. Announcements. Public announcements by a party herein concerning
the execution of this letter and the transactions contemplated
hereby shall be submitted for prior review and approval (such
approval not to be unreasonably withheld) by the other party.
F. Obligation of Good Faith. The Team, IMA and OFL shall proceed
forward and be obligated in good faith to negotiate the terms and
conditions of this transaction.
G. Notices. All notices, consents, requirements, approvals and
notices and other communications provided herein shall be in
writing, and shall be deemed given when delivered personally or
mailed by certified mail, postage prepaid.
Page (03)
As to the Team:
X. Xxxxx X. Xxxxxx
000 X. Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000 c/o Xxxxx Xxxxxx
As to IMA:
Xx. Xxxxxx X. Xxxxxx
000 Xxxxxxxx Xxxxxxx #000
Xxxxxx Xxxxxx, Xxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
As to OFL:
ORION FINANCIAL, LTD.
Xx. Xxxx Xxxxxxxx, President & CEO
00 X. Xxxx Xx.
Xxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
H. Acceptance. If the foregoing is acceptable to you, please
indicate your acceptance by signing and returning a copy of this
letter. It is mutually agreed that the law firm of Xxxxx
XxXxxxxxxx, P.C. or Xxxxxx X. Xxxxx will prepare the closing
documents.
I. Letter of Agreement. No party shall bear any liability to the
other in the event of non-completion of said transaction by all
panties on or before May 15, 1998. If this transaction does not
occur, this letter of Agreement shall be null and void unless an
extension is mutually agreed upon prior to the aforementioned
date.
J. This binding Letter of Agreement is contingent upon consummation
of an agreement between OFL and APIDG satisfactory to IMA to
provide a minimum three million dollar ($3,000,000) inventory
financing to OFL with a minimum of 120 day dating.
Page (04)
AGREED AND ACCEPTED;
INVESTMENT MANAGEMENT OF AMERICA, INC.
By /s/ Xxxxxx X. Xxxxxx Attested: /s/ Xxxxxx X. Xxxxxx
------------------------------- -----------------------------------
Xxxxxx X. Xxxxxx, President
Date: April 23, 1998
The Team:
By /s/ Xxxxx X. Xxxxxx Attested: /s/ Xxxxx X. Xxxxxx
------------------------------- -----------------------------------
Xxxxx X. Xxxxxx, Individually
Date: April 23, 1998
AGREED AND ACCEPTED
ORION FINANCIAL, LTD.
By /s/ Xxxx Xxxxxxxx Attested: /s/ Xxxx X. Xxxxxxxx
------------------------------- -----------------------------------
Xxxx Xxxxxxxx, President
Date: April 23, 1998
AGREED AND ACCEPTED
Page (05)
AMENDMENT NUMBER ONE TO BINDING LETTER OF AGREEMENT
THIS AMENDMENT NUMBER ONE TO BINDING LETTER OF AGREEMENT among Orion
Financial, Ltd. ("OFL"), Xxxxx Xxxxxx and Investment Management of America, Inc.
("IMA") is dated May 1, 1998.
OFL, Xxxxx Xxxxxx and IMA hereby agree that the Binding Letter of Agreement
dated April 23, 1998 ("Agreement") is amended by replacing paragraph 4 of the
Agreement with the following:
4. Key OFL shareholders, except for Xxxxxx X. Xxxxx, will
exercise their respective options for a total of 2,000,000 shares.
AGREED AND ACCEPTED:
Investment Management of America, Inc.
/s/ Xxxxxx X. Xxxxxx
--------------------------------------
Xxxxxx X. Xxxxxx, President
Date: May 1, 1998
AGREED AND ACCEPTED:
/s/ Xxxxx X. Xxxxxx
--------------------------------------
Xxxxx X. Xxxxxx, Individually
Date: May 1, 1998
AGREED AND ACCEPTED:
Orion Financial, Ltd.
/s/ Xxxx X. Xxxxxxxx
--------------------------------------
Xxxx X. Xxxxxxxx, President
Date: May 1, 1998
