Gosselin, 32, was challenged by Lohan to a $120,000 fight last week and it is understood that the papers are to be signed this Friday.
For those not in the know, Lohan – Lindsay’s estranged father – is friends with former tabloid reporter Kate Major, who had a brief affair with Gosselin last year. He was also once pals with Gosselin, but the two have since fallen out mainly because of Gosselin’s post-affair dealings with Major.
Celebrity boxing promoter Damon Feldman is reportedly handling the deal. Feldman had once hired another Gosselin paramour, Hailey Glassman, as a referee.
Gosselin, who’s reality show, ‘Jon & Kate Plus 8′ was canceled by TLC in November, is barred via a court order from making any appearances until his contract is up with the network in May.