LETTER AGREEMENT
Exhibit
10.1 Binding
Letter Agreement
LETTER
AGREEMENT
This
Letter Agreement is entered into on this 5th day of March, 2007, for the
purpose
of confirming the general terms of a legally binding agreement by and among
LitFunding Corp, a Nevada corporation ("LitFunding"), Xxxxxx Xxxx, an individual
("Xxxx") and Rochester Capital Partners, LP, a Nevada Limited Partnership
("RCP"), relating to the acquisition by RCP of a controlling equity interest
in
LitFunding.
I
Recitals
A) LitFunding
is seeking a merger or financing “Transaction” with an investor in order to
obtain additional liquidity, pursue its business plan and to maximize
shareholder value.
B) Xxxx,
the
current Chief Executive Officer of LitFunding, and its largest shareholder,
desires to retire from the corporation and to sell his equity interest in
the
corporation. Xxxx currently holds 8,141,563 shares of LitFunding common
stock.
C) RCP
desires to enter into a transaction with LitFunding (the “Transaction”), and
desires to acquire a common stock interest in LitFunding equal to at least
55%
of the outstanding common stock.
D) By
and
through this Letter Agreement, LitFunding, Xxxx and RCP desire to confirm
the
proposed basic terms of the Transaction that will be set forth in a subsequent,
definitive agreement (“Definitive Agreement”) to be entered into between the
parties on or before April 13, 2007, unless such date is extended by mutual
agreement of the parties hereto.
II
Basic
Terms
1. Acquisition
of LitFunding Stock.
RCP
will acquire 40 million shares of common stock from LitFunding’s treasury in
exchange for the sum of Two Hundred Fifty Thousand and 00/100 ($250,000.00)
Dollars. Upon execution of this Letter Agreement, LitFunding will issue 21
million shares to Lehars Handels Ges., M.b.H., located in Graz, Austria
(“Lehars”), as an assignee of RCP, and the balance of 19 million shares will be
issued in the name of RCP. The purchase shall be paid by promissory note,
delivered upon execution hereof, and shall be due upon RCP’s receipt of
financing from Lehars, but not later than sixty (60) days from the date the
LitFunding stock is issued. In the event that RCP shall fail to remit payment
of
its promissory note when due, LitFunding shall have the sole right to cancel
all
share certificates issued and to rescind the Transaction in its entirety.
In
such event, RCP covenants with LitFunding that it shall immediately return
all
certificates and shall not assert any claim of ownership. Further terms as
mutually agreed upon by the parties shall be set forth in the Definitive
Agreement.
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2. Additional
Funding.
RCP
shall use its best efforts to obtain funding from third parties in an additional
amount of up to $180,000 to be used by LitFunding to pay off the balance
of the
debt Xxxx owes in connection with Xxxx’x Chapter 13 proceeding. In the event
that RCP is able to fund the amounts needed to satisfy Xxxx’x Chapter 13 debt,
RCP shall be entitled to receive Xxxx’x 5 million shares of LitFunding common
stock that are currently serving as collateral for his Chapter 13 debt, without
additional payment.
3. Xxxx
Stock.
Xxxx
shall sell to RCP, a total of three million (3,000,000) shares for a total
of
$30,000, in the form of a note payable to Xxxx by RCP, upon terms to be set
forth under the Definitive Agreement.
4. Xxxx
Debt.
Xxxx
shall assign to RCP $350,000 of his claim for accrued salary that is owed
to
Xxxx by LitFunding, inclusive of his right to convert such sums due from
LitFunding into shares of common stock of LitFunding, for the sum of $35,000
payable by RCP to Xxxx. Xxxx represents that from the Board of Directors,
he has
acquired the right to convert the amounts due into shares of common stock
of
LitFunding at a reasonable discount from the then-current market value of
the
shares at the time of the conversion and RCP’s purchase of this accrued salary
is contingent upon LitFunding’s actual conversion of said claim into shares of
common stock of LitFunding at a price which is both reasonable for transactions
of a similar nature (i.e. debt conversion into restricted common stock by
a
corporation that is illiquid) and is mutually acceptable to the parties.
5. Easy
Money Express Funding.
The
parties agree that a minimum of $50,000 of the funds received from RCP in
the
Acquisition of LitFunding stock will be deposited directly into a separate
bank
account registered in the name of Easy Money Express, Inc., a wholly owned
subsidiary of LitFunding, to commence its intended plan of business.
6. Consulting
Agreements.
| x. |
Xxxx
agrees to stay on as a consultant for a period of no more than one
year
for compensation to be determined and set forth in the Definitive
Agreement.
|
| b. |
RCP
shall receive a consulting agreement to provide management services
to
Easy Money Express upon terms to be negotiated prior to and set forth
in
the Definitive Agreement.
|
7. Major
Creditor Understandings.
As part
of the Transaction (i) Xxxxx Xxxxx shall have agreed to either convert into
shares of LitFunding common stock or consent to an extension of the maturity
date of the terms of the $100,000 debt owed to him by LitFunding, and (ii)
Xxxxxx Xxxxx, or his assignee, shall have similarly agreed to either convert
or
extend the terms of the $500,000 debt owed to him by LitFunding, both
conversions or extensions shall be upon terms that are acceptable to RCP.
Further, the obligation owed to Xxxxxxxx Xxxxxxx shall have been renegotiated
upon terms acceptable to RCP. These transactions must take place prior to,
or
simultaneous with the execution of the Definitive Agreement.
2
8. Contingency.
The
consummation of the Transaction shall be contingent upon the negotiation
of the
Definitive Agreement for the Transaction upon terms which are mutually
satisfactory to the parties. The terms of the Transaction are to be negotiated
by the parties and will be subject to closing conditions and contingencies
to be
determined in the sole discretion of RCP, including, without limitation,
satisfactory due diligence review by RCP.
9. Board
Consent.
LitFunding represents that its Board of Directors, at a meeting duly held
on
February 22, 2007, has approved the basic terms of the Transaction contemplated
by the parties and has authorized Xxxx, as its CEO, to enter into the Definitive
Agreement upon terms and conditions which are mutually satisfactory to the
parties and in the best interests of LitFunding and RCP.
III
Miscellaneous
10. No
Encumbrances.
All
shares of LitFunding acquired by RCP hereunder shall be delivered free and
clear
of any and all encumbrances of any nature whatsoever (other than restrictions
on
resale pursuant to Rule 144 under the Securities Act of 1933) and shall be
validly issued and nonassessable.
11. Termination.
Any
party may terminate this Letter of Intent by providing the other party with
written notice of such termination to the other parties if the Definitive
Agreement for the Transaction between LitFunding and RCP is not executed
on or
before 5:00 p.m. (PST) on April 13, 2007.
12. No
Assurances; Binding.
This
Letter of Intent is contractual and binding upon all parties signatory hereto.
LitFunding agrees with RCP that it will not negotiate with any other parties
pertaining to this contemplated Transaction until this transaction is
consummated or terminated.
13. Counterparts.
This
Letter of Intent is executed in counterparts, each of which shall be deemed
an
original, but all of which together shall constitute one and the same
instrument. Delivery of a signed counterpart by facsimile transmission shall
be
deemed an original for all purposes.
14. Governing
Law.
This
Agreement shall be governed by and construed in accordance with the domestic
laws of Nevada, without reference to any choice of law provisions.
15. Expenses;
Disputes.
Each of
the parties will bear its own costs and expenses (including legal fees) incurred
in connection with this Letter Agreement and the consummation of the Transaction
contemplated hereby. The prevailing party in any suit or proceeding arising
under this Letter Agreement shall be entitled to recover its reasonable costs
and expenses, including a reasonable sum as attorneys’ fees.
3
15. Good
Faith Deposit.
RCP
shall remit the sum of Fifteen Thousand ($15,000.00) Dollars to LitFunding
as a
good faith deposit. The sum of Two Thousand Five Hundred and 00/100 ($2,500.00)
Dollars shall be paid to LitFunding by RCP upon the execution of this Letter
Agreement, and the balance of Twelve Thousand Five Hundred and 00/100
($12,500.00) Dollars shall be paid by RCP directly to LitFunding’s auditor
within ten days for preparation of the annual report. The good faith deposit
shall be evidenced by a convertible promissory note that will ensure return
to
RCP in the event the parties are unable to mutually agree upon the terms
of the
Definitive Agreement.
[Signature
Page Follows]
IN
WITNESS WHEREOF,
the
Parties hereto have executed this Letter of Intent by their duly authorized
representatives or agents as of the date first above written.
“LITFUNDING”
| By: | Date: | ||
|
Name:
Xxxxxx Xxxx, CEO
|
“RCP”
Rochester
Capital Partners, LP.
| By: | Date: | ||
|
Name:
|
“XXXX”
Xxxxxx
Xxxx
| By: | Date: | ||
|
Xxxxxx
Xxxx, an individual
|
4
EXHIBIT
A
PROMISSORY
NOTE
PROMISSORY
NOTE
| Amount: $250,000.00 |
March
5, 2007
|
|
Las
Vegas,
Nevada
|
FOR
VALUE RECEIVED,
ROCHESTER CAPITAL PARTNERS, L.P. (“Maker”), a Nevada limited partnership with
offices at 0000 X. Xxxxxxx Xxxx, Xxxxx 0, Xxx Xxxxx, Xxxxxx 00000, promises
to
pay to the order of LITFUNDING CORP. (“Payee”), a Nevada corporation with
offices at 0000 X. Xxxxx Xxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxx 00000, the principle
sum of Two Hundred and Fifty Thousand Dollars ($250,000.00), with no interest,
to be paid on or before May 5, 2007, in lawful monies of the United States
of
America.
Notwithstanding
the foregoing due date, the Maker promises to prepay this Note prior to the
due
date, in whole or in part, upon Maker’s receipt of funds from Lehars Handels
Ges., M.b.H. Additionally, the Maker may prepay this note at anytime before
the
maturity date without penalty. Maker agrees that any monies due under this
Note
may be used as an offset against any amounts due Maker by the Payee in
accordance with the terms of such other liabilities of Payee.
Upon
any
default in the payment of principal or interest, or any sum due hereunder,
the
whole of the principal sum and all interest accrued hereon shall, at the
Payee's
option, without notice or demand, at once become due and payable, together
with
interest at the rate of seven percent (7%), per annum, collection charges,
and a
reasonable sum as attorney's fees.
This
Note
and all other obligations of any maker or endorser hereof, direct or contingent,
to Payee, shall immediately become due and payable, without notice or demand,
upon the occurrence, with respect to any maker, endorser or guarantor hereof,
of
any of the following events: commencement by or against any of them of any
proceeding, suit or action for bankruptcy or reorganization, whether voluntary
or involuntary.
Maker
hereby waives presentment, demand for payment, notice of dishonor, and any
and
all other notices and demands in connection with the delivery, acceptance,
performance, default or enforcement of this note.
|
ROCHESTER
CAPITAL PARTNERS, L.P.
a
Nevada Limited Partnership
|
||
| |
|
|
| By: | /s/ Xxxx Xxxxxxxxx | |
|
Name:
Xxxx Xxxxxxxxx Revocable Living Trust,
|
||
| Its: General Partner | ||
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