Spondoolies-Tech Ltd.

 

May 12, 2015

 

Charles W. Allen

Bitcoin Shop Inc.

1901 North Fort Myer Drive, Suite #1105

Arlington, VA 22209

Dear Mr. Allen:

 

Reference is made to that certain Letter of Intent (the “LOI”) dated April 5,
2015 between Spondoolies-Tech Ltd., an Israel corporation (“ST”), and Bitcoin
Shop Inc., a Nevada corporation (“BTCS,” and together with ST, the “Parties”).
This letter agreement sets forth certain understandings and binding agreements
of the Parties related to the obligations set forth in the LOI and the
transactions contemplated thereby (the “Proposed Transaction”) and shall first
become effective upon the date of the closing of the proposed investment of
$1,500,000.00 by BTCS into ST pursuant to a Joinder to Series B Preferred Share
Purchase Agreement dated as of October 19th, 2014, as amended by and among ST
and the Investors listed therein (the “Effective Date”).

 

1.Exclusivity. Between the Effective Date and the earlier of (a) the
consummation of the Proposed Transaction and (b) the nine month anniversary of
the Effective Date (the “Initial Period”), ST shall not, and shall cause its
affiliates not to, directly or indirectly through any of their respective
Representatives (as defined below), initiate, solicit or knowingly encourage any
proposals or offers from, or enter into any agreements with, any third party
relating to (i) any investment in, or acquisition of, equity interests (whether
by way of merger, purchase or otherwise) of ST or any of ST’s subsidiaries or
(ii) any possible sale or other disposition of all or any material portion of
assets of ST or ST’s subsidiaries. Notwithstanding the foregoing, in the event
that the Parties enter into a definitive agreement for the Proposed Transaction
within the Initial Period, then the obligations of ST and its Representatives in
the preceding sentence shall be superseded by a substantially similar provision
in such definitive agreement which shall provide for the obligations thereunder
to survive until the nine month anniversary of the Effective Date (the “Extended
Period”). For purposes of this letter agreement, the term “Representatives”
shall mean an entity’s officers, directors, employees, representatives, agents,
professional advisors or authorized representatives.

 

2. Expenses and Fees. Except as otherwise expressly provided in this letter
agreement, each Party will bear its own expenses and disbursements in connection
with the Proposed Transaction. If the Proposed Transaction is not consummated
because a necessary consent or approval of a governmental agency is not obtained
within the Extended Period, then upon final failure of such condition to be
satisfied, ST shall pay to BTCS $50,000.00 by wire transfer of immediately
available funds to a bank account designated in writing by BTCS no later than
two (2) business days after such failure. In addition, if the Proposed
Transaction is (i) not consummated because the approval of ST’s board of
directors or shareholders for the Proposed Transaction is not obtained as
described in Section 2(b)(ii) of the LOI, and (ii) ST consummates a Competing
Transaction within the Extended Period, then upon the satisfaction of both of
such conditions, ST shall pay to BTCS $1,000,000.00 (the “Break Fee”) by wire
transfer of immediately available funds to a bank account designated in writing
by BTCS no later than two (2) business days after such failure. “Competing
Transaction” shall mean a transaction pursuant to which all or substantially all
of the ST’s shares or assets are sold or licensed to a third party for an
aggregate purchase price exceeding $10 million.

 

 

 

 

3. Non-Circumvention. ST hereby covenants and agrees that ST will not seek to
avoid or delay obtaining a necessary consent or approval of a governmental
agency with respect to the Proposed Transaction in order to circumvent paying
the Break Fee.

 

4. Key Man. The obligations and provisions of this letter agreement shall
terminate and be of no further force and effect immediately upon (i) the
termination of Charles Allen as CEO of BTCS or (ii) Charles Allen tendering his
resignation as CEO of BTCS.

 

5. Equipment Sales. If the Proposed Transaction is not consummated and ST
continues to design and manufacture ASIC digital currency mining hardware
(“Hardware”) then ST agrees to continue to sell Hardware to BTCS for a period of
3 years (the “Sales Term”) from the Effective Date at a price equal to cost plus
10% (the “Initial Price”). Provided however that the gross sales to BTCS at the
Initial Price will be limited to $1,500,000, thereafter any sales to BTCS during
the Sales Term will be at a price equal to cost plus 30% margin.

 

6. Term. Except as provided for in Section 3, this letter agreement shall
automatically terminate and be of no further force and effect at the earlier of
(a) the Extended Period (or, in the event that the Parties do not enter into a
definitive agreement for the Proposed Transaction, the Initial Period) , and (b)
termination or expiration of the LOI. For avoidance of doubt, ST’s obligations
under Sections 1, 2, and 5 of this letter will survive any expiration or
termination of this letter agreement (but only to the extent any such
obligations are incurred prior to any such expiration or termination).

 

7. Amendments; Waivers. Modifications of this letter agreement or waiver of the
terms and conditions hereof shall not be binding upon any Party, unless approved
in writing by each Party. Each Party agrees that no failure or delay by the
other Party in exercising any right, power or privilege hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege hereunder.

 

8. Governing Law. This letter agreement shall be governed by and construed in
accordance with the internal laws of the State of New York, regardless of the
laws that might otherwise govern under applicable principles of conflicts of
laws thereof.

 

9. Jurisdiction; Consent to Service. Each Party hereby (a) consents to submit to
the personal jurisdiction of a Federal court located in the Southern District of
New York or, if such court does not have jurisdiction, any New York State court
located in the Borough of Manhattan in the City of New York, with respect to all
actions and proceedings arising out of or relating to this letter agreement, (b)
agrees not to attempt to deny such personal jurisdiction by motion or other
request for leave from any such court, (c) agrees not to bring any action
arising out of or relating to this letter agreement or of any of the
transactions contemplated by this letter agreement in any court other than a
Federal court located in the Southern District of New York or, if such court
does not have jurisdiction, in any New York State court located in the Borough
of Manhattan in the City of New York, (d) agrees that all claims with respect to
any such action or proceeding may be heard and determined in such Federal or New
York State court, (e) waives the defense of an inconvenient forum and (f) agrees
that a final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law.

 

10. Waiver of Jury Trial. Each of the Parties irrevocably waives any and all
right to trial by jury in any legal proceedings arising out of or relating to
this letter agreement.

 

11. Severability. If any provision of this letter agreement shall be held to be
invalid and unenforceable, such invalidity or unenforceability shall not affect
any other provision of this letter agreement. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
Parties shall negotiate in good faith to modify this letter agreement so as to
effect the original intent of the Parties as closely as possible in an
acceptable manner to the end that transactions contemplated hereby are fulfilled
to the extent possible.

 

12. Counterparts. This letter agreement may be executed in counterparts which,
taken together, shall constitute a single original document. Facsimile
signatures shall be deemed binding and enforceable.

 

 

 

 

Please indicate your agreement with the terms and provisions of this letter
agreement by signing where indicated below.

 

 

  SPONDOOLIES-TECH LTD         By:     Name:     Title:  

 

Accepted and agreed as of the date first
written above.

 

BITCOIN SHOP INC.         By:     Name:     Title: