EXHIBIT 10.1

ARISEAN CAPITAL LTD.
4 Five Ponds Drive
Waccabuc, New York 10597
 
May 31, 2007
 
Debt Resolve, Inc.
707 Westchester Avenue, Suite L7
White Plains, New York 10604
 
Gentlemen:
 
This letter agreement sets forth the terms and conditions under which Arisean
Capital Ltd., a New York corporation ("Arisean"), agrees to provide a $500,000
line of credit to Debt Resolve, Inc., a Delaware corporation ("Debt Resolve").
 
1. Line of Credit.
 
(a) Subject to the terms and conditions hereof, the Security Agreement of even
date herewith between Arisean and Debt Resolve (the “Security Agreement”) and
the Non-Negotiable Promissory Note of even date herewith made by Debt Resolve in
favor of Arisean (the "Note"), Arisean agrees from time to time to make loans
(each, a "Loan") to Debt Resolve up to a maximum aggregate amount of $500,000.
Debt Resolve shall use the proceeds of each Loan for its working capital needs,
including to support the operations of Debt Resolve’s debt-collection
subsidiary, First Performance Corporation. Interest on the outstanding principal
amount of the Note shall be at a rate of twelve percent (12%) per annum, as more
fully set forth in the Note. Debt Resolve’s obligations under the Note shall be
secured by a lien and security interest in the Collateral, as more fully set
forth in the Security Agreement.
 
(b) By written request to Arisean, accompanied by a description of the use(s) of
such loan proceeds, Debt Resolve may from time to time request that Arisean make
a Loan in the amount specified therein and Arisean will make such Loan. Subject
to Arisean's review and approval of the written request, Arisean shall disburse
the amount of the Loan requested by wire transfer in immediately available funds
to an account or accounts designated in writing by Debt Resolve, or by check if
mutually agreed, within two (2) business days following Debt Resolve's written
request. Each such request for a Loan shall constitute Debt Resolve's
representation and warranty to Arisean that no Event of Default (as such term is
defined in the Note) exists at such time, or would occur after giving effect to
any such Loan.
 
(c) Except as otherwise provided in Section 2 below, by not less than thirty
(30) days’ written notice to Debt Resolve, Arisean may demand that payment of
the entire principal balance then outstanding of the Note, together with accrued
interest, be made on any date after the date hereof, and Debt Resolve will pay
the entire amount thereof in cash on such date. The Note may, at the option of
Debt Resolve, be prepaid at any time in whole or in part, without premium or
penalty.
 
(d) Debt Resolve shall pay to Arisean a 1% origination fee in connection with
arranging the Loans, upon funding.
 

 
 

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2. Mandatory Payments. During the term of the Note, Debt Resolve will pay, in
whole or in part, the principal balance then outstanding of the Note, together
with accrued interest, with the cash proceeds from the issuance of any note,
bond, debenture, evidence of indebtedness, share of capital stock or any other
security ("securities"), other than working capital financing or secured
financing of assets in the ordinary course of business, issued by Debt Resolve
after the date hereof (a "Financing"). The obligation of Debt Resolve to pay the
outstanding balance under the Note pursuant to the preceding sentence shall be
superior and first in priority to any other use of the proceeds of a Financing,
and, without Arisean’s prior written consent, Debt Resolve agrees not to enter
into any agreement or instrument during the term of the Note which would modify
or alter the foregoing priority.
 
3. Change in Control. A Change in Control (as defined below) during the term of
the Note shall be considered an Event of Default, in which case Debt Resolve
shall be required, unless waived by Arisean in whole or in part, to pay the
entire principal balance then outstanding of the Note, together with accrued
interest, on or within ten (10) days following the Change in Control. A "Change
in Control" shall be deemed to have occurred when (a) a third person, including
a "group," as such term is defined in Section 13(d)(3) of the Securities
Exchange Act of 1934, other than Arisean or its affiliates, becomes (other than
as a result of a purchase from Debt Resolve) the beneficial owner of shares of
Debt Resolve having 50% or more of the total number of votes that may be cast
for the election of directors of Debt Resolve and such beneficial owner
continues for five consecutive days, or (b) as a result of, or in connection
with, any cash tender or exchange offer, merger or other business combination,
sale of assets or contested election or any combination of the foregoing
transactions, the persons who were directors of Debt Resolve before such
transaction shall cease for any reason to constitute at least a majority of the
Board of Directors of Debt Resolve or any successor.
 
4. Representations. Each of the parties hereto represents severally and as to
itself only that this letter agreement has been duly authorized, executed and
delivered by it and, assuming the due authorization, execution and delivery of
this letter agreement by the other party hereto, constitutes its legal, valid
and binding obligation, enforceable against it in accordance with its terms,
except to the extent that enforceability (x) may be limited by bankruptcy,
insolvency or other similar laws affecting or relating to the enforcement of
creditors' rights generally and (y) is subject to general principles of equity
(whether such enforceability is considered in a proceeding in equity or at law).
 
5. Notices. All notices, requests and demands to or upon Debt Resolve or Arisean
to be effective shall be in writing and shall be deemed to have been duly given
or made when delivered by hand, or when sent by certified mail, postage prepaid,
addressed as follows or to such other address as may hereafter be notified by
the respective parties hereto:
 
Debt Resolve:
Debt Resolve Inc.
 
707 Westchester Avenue, Suite L7
 
White Plains, New York 10604
 
Attn: Mr. James D. Burchetta,
 
   Co-Chairman and Chief Executive Officer
   
Arisean:
Arisean Capital Ltd.
 
4 Five Ponds Drive
 
Waccabuc, New York 10597
 
Attn: Mr. Charles S. Brofman,
 
President

 
 

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6. Miscellaneous. This letter agreement, the Security Agreement and the Note
represent the entire agreement and understanding between Arisean and Debt
Resolve with respect to the subject matter hereof. This letter agreement, the
Security Agreement and the Note may not be amended except by an instrument in
writing executed by Arisean and Debt Resolve. This letter agreement shall be
governed by and construed in accordance with the laws of the State of New York,
without giving effect to its choice of law rules. This letter agreement may be
executed in counterparts.
 
If the foregoing correctly sets forth our agreement, please acknowledge your
acceptance of the terms of this letter agreement by signing and returning a copy
of this letter agreement, the Security Agreement and the Note to the
undersigned.
 

 
Very truly yours,
     
ARISEAN CAPITAL LTD.
             
By:
/s/ Charles S. Brofman
   
Charles S. Brofman
   
President

 
Agreed and Accepted
this May 31, 2007
 
DEBT RESOLVE INC.
 
By:  /s/ James D. Burchetta                   
James D. Burchetta
Co-Chairman and Chief Executive Officer

 
 

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NON-NEGOTIABLE PROMISSORY NOTE

Dated: May 31, 2007
 
FOR VALUE RECEIVED, the undersigned, DEBT RESOLVE, INC., a Delaware corporation
("Debt Resolve"), promises to pay to ARISEAN CAPITAL LTD, a New York corporation
("Arisean"), at the offices of Arisean, 4 Five Ponds Drive, Waccabuc, New York
10597, or at such commercial bank within the United States of America as Arisean
may designate to Debt Resolve from time to time, in lawful money of the United
States of America and in immediately available funds, the outstanding amount of
all loans made by Arisean to Debt Resolve from time to time in accordance with
the provisions hereof. Debt Resolve further agrees to pay interest in like money
at such office or commercial bank on the unpaid aggregate principal amount
hereof at a rate equal to twelve percent (12%) per annum.
 
1. Principal and interest shall be due and payable in the manner set forth
below:
 
(a) Accrued interest on the unpaid principal amount hereof shall be paid monthly
in cash;
 
(b) Debt Resolve will pay, in whole or in part, the principal balance then
outstanding of this Note, together with accrued interest, on or within two (2)
days after each date Debt Resolve receives cash proceeds of a Financing, as such
term is defined in the letter agreement of even date herewith between Debt
Resolve and Arisean (the "Letter Agreement").
 
(c) By not less than thirty (30) days’ written notice to Debt Resolve, Arisean
may demand that payment of the entire principal balance then outstanding of this
Note, together with accrued interest, be made on any date after the date hereof,
and Debt Resolve will pay the entire amount thereof in cash on such date.
 
(d) All payments (including prepayments) made hereunder shall be applied first
to the payment of accrued and unpaid interest, with the balance remaining
applied to the payment of the unpaid principal balance of this Note.
 
(e) This Note may, at the option of Debt Resolve, be prepaid at any time in
whole or in part, without premium or penalty.
 
2. Debt Resolve is borrowing the principal sum of this Note pursuant to the
Letter Agreement, the terms of which are incorporated herein by reference and
supersede the terms of this Note in the event of any conflict. This Note shall
be non-negotiable.
 
3. Payment of this Note is secured by certain collateral (the “Collateral”)
under the terms of the Security Agreement of even date herewith between Debt
Resolve and Arisean (the “Security Agreement”).
 
4. Arisean is authorized to record the date and amount of each loan made by it
and the date and amount of each payment, prepayment or reduction of the
principal amount hereof on the schedule annexed hereto and made a part hereof,
and any such recordation shall constitute prima facie evidence of the accuracy
of the information so recorded.
 

 
 

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5. Notwithstanding any provision to the contrary contained in this Note, it is
expressly agreed that the entire principal amount outstanding at any time under
this Note, and all accrued and unpaid interest, shall immediately become due and
payable (without demand for payment, notice of non-payment, presentment, notice
of dishonor, protest, notice of protest or any other notice, all of which are
hereby expressly waived by Debt Resolve):
 
(a) upon the default in the payment of any interest or principal due under this
Note, which default continues uncured for a period of ten (10) days;
 
(b) if Debt Resolve shall make an assignment for the benefit of creditors; or
shall admit in writing its inability to pay its debts; or if a receiver or
trustee shall be appointed for Debt Resolve or for substantially all of its
assets and, if appointed without its consent, such appointment is not discharged
or stayed within thirty (30) days; or if proceedings under any law relating to
bankruptcy, insolvency or the reorganization or relief of debtors are instituted
by or against the Debt Resolve and, if contested by it, are not dismissed or
stayed within thirty (30) days; or if any writ of attachment or execution or any
similar process is issued or levied against Debt Resolve or any significant part
of its property and is not released, stayed, bonded or vacated within thirty
(30) days after its issue or levy; or if Debt Resolve takes corporate action in
furtherance of any of the foregoing;
 
(c) in the event of any default or event of default under the Security
Agreement, which default is not cured following the giving of notice and within
five (5) days;
 
(d) after a Change in Control, as provided, and as such term is defined, in the
Letter Agreement (each, an "Event of Default"); or
 
(e) any event of default which results in the acceleration of indebtedness of
Debt Resolve to any other person under any note, indenture, agreement or
undertaking and that is not cured within thirty (30) days.
 
5. All notices, requests and demands to or upon Debt Resolve or Arisean to be
effective shall be in writing and shall be deemed to have been duly given or
made when delivered by hand, or when sent by certified mail, postage prepaid,
addressed as follows or to such other address as may hereafter be notified by
the respective parties hereto:
 
Debt Resolve:
Debt Resolve, Inc.
 
707 Westchester Avenue, Suite L7
 
White Plains, New York 10604
 
Attn: Mr. James D. Burchetta,
 
  Co-Chairman and Chief Executive Officer
   
Arisean:
Arisean Capital Ltd.
 
4 Five Ponds Drive
 
Waccabuc, New York 10597
 
Attn: Mr. Charles S. Brofman
 
  President

 
6. No failure or delay on the part of Arisean in exercising any of its rights,
powers or privileges hereunder shall operate as a waiver thereof, nor shall a
single or partial exercise thereof preclude any other or further exercise of any
right, power or privilege. Debt Resolve hereby waives demand for payment, notice
of non-payment, presentment, notice of dishonor, protest, notice of protest or
any other notice in connection with the delivery, acceptance, performance or
enforcement of this Note.
 

 
 

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7. In case any one or more Events of Default shall occur and be continuing,
Arisean may proceed to protect and enforce its rights by an action at law, suit
in equity or other appropriate proceeding. Debt Resolve shall pay all reasonable
costs of collection when incurred, including reasonable attorneys' fees.
 
8. This Note shall be governed by and construed in accordance with the laws of
the State of New York, without giving effect to its choice of law rules.
 
IN WITNESS WHEREOF, Debt Resolve has executed this Non-Negotiable Promissory
Note as of the date first above written.
 

 
DEBT RESOLVE, INC.
         
By:
  
 
 
James D. Burchetta
 
 
Co-Chairman and Chief Executive Officer

 
 

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GRID PROMISSORY NOTE SCHEDULE

 
 
   Date   
 
Amount of
   Loan   
Amount of
Principal Paid
or Prepaid   
Unpaid Principal
Amount of
  Note     
Available
Line of
   Credit     
 
Notation
  Made By  
                                                                               
                                                                               
                                                                               
                                                                          

 
 

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SECURITY AGREEMENT

SECURITY AGREEMENT, dated as of May 31, 2007, by and between ARISEAN CAPITAL
LTD., a New York corporation ("Arisean"), having its offices located at 4 Five
Ponds Drive, Waccabuc, New York 10597, and DEBT RESOLVE, INC., a Delaware
corporation ("Debt Resolve"), having its principal executive offices at 707
Westchester Avenue, Suite L7, White Plains, New York 10604.
 
1. Definitions of Terms. As used herein, (a) "Obligations" shall mean (i) all
indebtedness of Debt Resolve to Arisean arising on or after the date hereof
under the Non-Negotiable Promissory Note of even date herewith made by Debt
Resolve in favor of Arisean (the "Note"), pursuant to the Letter Agreement of
even date herewith (the "Letter Agreement"), between Debt Resolve and Arisean,
and any extensions or substitutions thereof, (ii) all costs incurred by Arisean
to obtain, preserve and enforce the security interest granted hereby, collect
all amounts due under the Note and this Security Agreement, and maintain and
preserve the Collateral (as such term is defined below), including, but not
limited to, taxes, assessments, insurance premiums, repairs, reasonable
attorneys' fees and expenses, rent, storage costs and expenses of sale, and
(iii) interest on the above amounts as provided in the Note; and (b)
"Collateral" shall mean all of Debt Resolve's present and future right, title
and interest in the Debt Resolve's assets of every kind and description,
including, but not limited to, all right, title and interest of the Debt Resolve
in, to and under the following property, whether now owned or hereafter created
or acquired: (i) all of the Debt Resolve's accounts receivable and all proceeds,
renewals, substitutions for, and replacements thereof (collectively, the
"Accounts Receivable"), (ii) all promissory notes, chattel paper, documents and
other instruments, whether now or hereafter existing or acquired, evidencing any
obligation to Debt Resolve under the Accounts Receivable, (iii) all interest of
Debt Resolve in any goods, including but not limited to returned goods, the sale
or lease of which shall have given rise to any of the foregoing, (iv) any and
all contract rights of the Debt Resolve, and (v) all cash or non-cash products
and proceeds of any of the foregoing, including insurance proceeds.
 
2. Security Interest. As security for the full and timely payment of the
Obligations in accordance with the terms thereof and of the respective
instruments or agreements now or hereafter evidencing the Obligations or
pursuant to which the Obligations arise, Debt Resolve agrees that Arisean shall
have, and Debt Resolve hereby grants to and creates in favor of Arisean, a
security interest in and to all now-owned and hereafter acquired Collateral.
 
3. Fixtures. If the Collateral is or is about to become affixed to realty, Debt
Resolve will, at Arisean's request, furnish Arisean a writing executed by the
owner and/or mortgagee of the realty whereby the owner and/or mortgagee
subordinates its rights and priorities to Arisean's security interest in the
Collateral. If the Collateral is or may become subject to a landlord's lien, the
Debt Resolve will, at Arisean's request, furnish Arisean with a landlord's
waiver satisfactory in form to Arisean.
 
4. Insurance. Until this Agreement is terminated, Debt Resolve will have and
maintain insurance on the Collateral against all customarily insured risks to
which it is exposed, such insurance to be payable to Arisean and Debt Resolve as
their interests may appear; all policies shall provide for ten (10) days'
written minimum cancellation notice to Arisean. Arisean may act as attorney for
Debt Resolve in obtaining, adjusting, settling and canceling such insurance.
 
5. Default. Upon the occurrence of any Default (as such term is defined in the
Note), Debt Resolve agrees upon demand to deliver the Collateral to Arisean, or
Arisean may, with or without legal process, and with or without previous notice
or demand for performance, enter any premises wherein the Collateral may be
located, and take possession of the same, together with anything therein; and
Arisean may collect upon and/or make disposition of the Collateral subject to
any and all applicable provisions of the law. If the Collateral is sold at
public sale, Arisean may purchase the Collateral at such sale. Arisean, provided
it has sent the statutory notice of default, may retain from the proceeds of
such sale all reasonable costs incurred in the said taking and sale and also,
all other sums then owing by Debt Resolve to Arisean, and any surplus of any
such sale shall be paid to Debt Resolve or as otherwise directed by court order.
In the case of any deficiency, Arisean may collect such deficiency from Debt
Resolve.
 

 
 

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6. General Agreements. Debt Resolve agrees (a) to pay the costs of filing
financing statements and of conducting searches in connection with this
Agreement; (b) to allow Arisean through any of its officers or agents, at all
reasonable times, to examine or inspect any of the Collateral and to examine,
inspect and make extracts from Debt Resolve's books and records relating to the
Collateral; (c) to promptly pay when due all taxes and assessments upon the
Collateral or for its use or operation or upon the proceeds thereof or upon this
Agreement or upon any instrument or instruments evidencing the Obligations; and
(d) that Arisean is authorized to file appropriate financing statements and any
amendments thereto without the signature of Debt Resolve, such authorization
being limited to the security interest granted by this Agreement. At its option,
Arisean may discharge taxes, liens or security interests or other encumbrances
at any time levied or placed on the Collateral, and may pay for the maintenance,
preservation and/or insurance of the Collateral, and Debt Resolve agrees to
reimburse Arisean on demand for any payment made or any expense incurred by
Arisean pursuant to the foregoing authorization, including attorneys’ fees and
disbursements incurred or expended by Arisean in connection with this Agreement.
Arisean shall not be deemed to have waived any of its rights hereunder or under
any other agreement, instrument or paper signed by Debt Resolve by reason of
Arisean's performance of any of Debt Resolve's obligations as aforesaid, or in
any other manner unless such waiver is in writing and signed by Arisean. No
delay or omission on the part of Arisean in exercising any right shall operate
as a waiver thereof or of any other right. A waiver upon any one occasion shall
not be construed as a bar or a waiver of any right or remedy on any future
occasion. All of the rights and remedies of Arisean, whether evidenced hereby or
by any other agreement, instrument or paper, shall be cumulative and may be
exercised singly or concurrently. This Agreement shall be construed in
accordance with the laws of the State of New York, without giving effect to its
choice of law rules.
 

 
DEBT RESOLVE, INC.
             
By:
 
   
James D. Burchetta
   
Co-Chairman and Chief Executive Officer
       
ARISEAN CAPITAL LTD.
             
By:
 
   
Charles S. Brofman
   
President