Recitals
Exhibit
10.1 Binding
Letter of Intent
This
Letter of Intent is entered into on this 17th
day of
November, 2006, for the purpose of confirming the proposed basic terms of an
understanding by and among LitFunding Corp, a Nevada corporation ("LitFunding"),
Xxxxxx Xxxx, an individual ("Xxxx") and CardMart Plus, Inc., a California
corporation ("CardMart"), relating to the acquisition by CardMart of a
controlling equity interest in LitFunding..
I
Recitals
LitFunding
is seeking a merger or other business transaction with another business entity
in order to obtain additional liquidity and assets and to maximize shareholder
value.
A) 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.
B) CardMart
desires to enter into a transaction with LitFunding (the “Transaction”), and
desires to acquire a common stock interest in LitFunding equal to at least
51%
of the outstanding common stock.
C) By
and
through this Letter of Intent, LitFunding, Xxxx and XxxxXxxx desire to confirm
the proposed basic terms that will be set forth in a subsequent definitive
agreement to be entered into between the parties on or before November 30,
2006
unless such date is extended by mutual consent of the parties signatory
hereto.
II
Basic
Terms
1. Xxxx
Stock.
CardMart will acquire the 5.0 million shares of common stock owned by Xxxx,
and
currently held by the Court as collateral in connection with Xxxx’x personal
bankruptcy under a Chapter 13 proceeding, for the sum of $200,000 to be paid
directly to the Court. Upon the acquisition of this block of common stock,
Xxxx
shall resign from LitFunding and a new Chief Executive Officer shall be named
by
the Board of Directors. To the extent required, this transaction shall be
subject to, and contingent upon, approval by the Bankruptcy Court or Trustee.
2. Additional
Xxxx Stock.
Xxxx
shall sell to CardMart, 3 million shares for a total of $40,000, in the form
of
a note payable to Xxxx by CardMart.
3. Xxxx
Debt.
Xxxx
shall assign to CardMart $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 common stock of LitFunding, for the sum of $35,000 payable
by
XxxxXxxx to Xxxx in cash. 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 the then-current market value of the shares at the time of the
conversion and CardMart’s purchase of this accrued salary is contingent upon
acknowledgment by LitFunding’s Board that such claim may be converted into
shares of common stock of LitFunding at the then-current market value of the
shares at the time of the conversion.
4. Easy
Money Express Funding.
As part
of the Transaction, an additional $300,000 will be deposited by CardMart into
Easy Money Express, Inc., a fully owned subsidiary of LitFunding. LitFunding
will issue 6 million shares to CardMart in consideration for this funding.
5. Consulting
Agreement.
Xxxx
agrees to stay on as a consultant for a period of no more than one year for
compensation to be determined.
6. Creditor
Conversion.
As part
of the Transaction (i) Xxxxx Xxxxx shall have agreed to convert the $100,000
debt owed to him by LitFunding into shares of LitFunding and immediately
exchange such shares for 20,000 shares of CardMart (ii) Xxxxxx Xxxxx shall
have
agreed to convert the $500,000 debt owed to him by LitFunding into shares of
LitFunding and immediately exchange such shares for 100,000 shares of CardMart
and (iii) the obligation owed to Xxxxxxxx Xxxxxxx shall have been paid through
the issuance of 1 million shares of LitFunding common stock. These transactions
must take place prior to, or simultaneous with the closing of the Transaction
under the definitive agreement.
7. Merger
with CardMart.
As part
of the Transaction, the current Board of Directors of LitFunding shall vote
to
acquire 100% of the outstanding capital stock of CardMart in exchange for
approximately 44 million shares of LitFunding. After effecting this Merger,
the
shareholders of CardMart will own approximately 65% of LitFunding.
8. Contingency.
The
consummation of the Transaction shall be contingent upon the negotiation of
a
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 CardMart, including, without limitation,
satisfactory due diligence review by CardMart.
9. Board
Consent.
The
parties acknowledge that Xxxxxxx Xxxxxx is a member of LitFunding’s Board of
Directors. LitFunding represents that its Board of Directors has approved the
basic terms of the Transaction contemplated by the parties and has authorized
Xxxx, as its CEO, to enter into a Definitive Agreement upon terms and conditions
which are mutually satisfactory to the parties and in the best interests of
LitFunding and CardMart.
III
Miscellaneous
10. No
Encumbrances.
All
shares of LitFunding acquired by CardMart 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 CardMart is not executed
on
or before 5:30 p.m. (PST) on November 30, 2006.
12. No
Assurances; Binding.
This
Letter of Intent is contractual and binding upon all parties signatory hereto.
LitFunding agrees with CardMart 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 of Intent and the consummation of the Transaction
contemplated hereby. The prevailing party in any suit or proceeding arising
under this Letter of Intent shall recover its reasonable costs and expenses
including a reasonable sum as attorneys’ fees.
16. Good
Faith Deposit.Concurrent
with the execution of this Letter of Intent, XxxxXxxx will deliver a good faith
deposit of $25,000 to be applied to the obligations upon completion of this
Transaction.
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: /s/ Xxxxxx Xxxx | Date: November 17, 2006 | ||
|
Name:
Xxxxxx Xxxx, CEO
|
|||
| By: /s/ Xxxxxx Xxxx | Date: November 17, 2006 | ||
|
Xxxxxx Xxxx, an individual |
|||
“CARDMART”
CardMart
Plus, Inc.
| By: /s/ Xxxxxx X. Xxxxxx | Date: November 17, 2006 | ||
|
Name:
Xxxxxx X. Xxxxxx, CEO
|
|||
