Preview
FILED: QUEENS COUNTY CLERK 10/17/2023 05:26 PM INDEX NO. 721999/2023
NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 10/17/2023
Exhibit A
FILED: QUEENS COUNTY CLERK 10/17/2023 05:26 PM INDEX NO. 721999/2023
NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 10/17/2023
CLOUDFUND LLC
400 Rella Blvd. Suite 165-101, Suffern, NY 10901
FUTURE RECEIPTS SALE AND PURCHASE AGREEMENT
This agreement (this "Agreement"), dated 9/11/2023, between CLOUDFUND LLC ("Buyer") and the seller(s) listed
herein (collectively, the "Seller") (all capitalized terms shall have the meanings ascribed to them below):
Business Legal Name: BLEACHERS SB&G LLC
D/B/A: BLEACHERS SB&G d/b/a BLEACHERS SPORTS BAR AND GRILL
Form of Business Entity: LLC EIN
Physical Address: 4317 LINDEN AVE, DAYTON, OH 45432
Mailing Address: 4245 OLD RIVERSIDE DR, DAYTON, OH 45405
PURCHASE PRICE: PURCHASED AMOUNT: SPECIFIED PERCENTAGE:
$18,000.00 $26,982.00 17 %
AMOUNT:*
REMITTANCE REMITTANCE PERIOD:
$269.00 DAILY
LESS CLOSING COSTS:
DUE DILIGENCE FEE: ORIGINATION FEE: UCC FEE:
$180.00 $540.00 $60.00
LESS PRIOR BALANCE(S) (IF APPLICABLE)
$0.00
NET AMOUNT FUNDED TO SELLER:
$17,220.00
FOR THE SELLER #1 FOR THE SELLER #2
By: By:
Name: TODD A SMITH Name: N/A
Title: Owner/Agent/Manager Title: N/A
Email: Email: N/A
Business Phone: Business Phone: N/A
*Please refer to Section 13 of this Agreement to learn how the Remittance Amount can be changed.
Concurrently with the execution of this Agreement by Seller, and as condition to the effectiveness hereof, Seller has
A"
caused the Personal Guarantee of Performance in the form attached hereto as "Exhibit (the "Guaranty") to be
signed and delivered to Buyer by the following Owner(s)/Guarantor(s) of Seller.
OWNER/GUARANTOR #1 OWNER/GUARANTOR #2
By: By:
Name: TODD A SMITH Name: N/A
SSN: SSN: N/A
Phone Phone: N/A
Address: 4245 OLD RIVERSIDE DR, DAYTON, OH Address: N/A
45405
Furthermore, in the event the Seller and/or Guarantor are comprised of more than one entity and/or individuals, then
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ALL such entities and/or individuals, respectively, shall sign the Addendum to this Agreement in the form attached
hereto as Exhibit B (the “Addendum”).
WHEREAS, Seller is desirous to sell to Buyer, and Buyer is desirous to purchase from Seller a Specified Percentage of the
Seller’s Future Receipts, but only on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, for good and valuable consideration, the mutual receipts and sufficiency of which is hereby
acknowledged by both parties, Buyer and Seller hereby agree to the foregoing and as follows:
1. Basic Terms and Definitions.
a. “Effective Date” shall mean the later of: (i) the date set forth in the preamble to this Agreement, and (ii) the
date when Buyer paid the Net Amount Funded to Seller.
b. “Specified Percentage” is the percentage identified above and refers to a percentage of each and every sale
made by Seller until the Purchased Amount is delivered to Seller.
c. “Future Receipts” shall mean, collectively, all of Seller’s receipts for the sale of goods and services after the
Effective Date of this Agreement; which payments or deliveries of monies can be made in the form of cash, check, credit,
charge, or debit card, Automated Clearing House (“ACH”) or other electronic transfer or any other form of monetary
payment and/or pecuniary benefit received by Seller.
d. “Periodic Receipts” shall mean the amount of Future Receipts received by Seller during each Remittance
Period.
e. “Purchased Amount” is the amount identified above and refers to the total amount of Future Receipts that
Seller shall be under obligation to deliver to Buyer pursuant to this Agreement.
f. “Purchase Price” is the amount identified above and refers to the total amount that Buyer agrees to pay for the
Purchased Amount. Seller acknowledges that the amount that Seller will actually receive from Buyer pursuant to this
Agreement will be the Net Amount Funded to Seller.
g. “Closing Costs” shall mean, collectively, all initial costs and fees that identified above and in Section 16 that
Seller agrees to pay to Buyer as consideration for agreeing to enter into this Agreement.
h. “Net Amount Funded to Seller” is the amount identified above and refers to the Purchase Price less the total
Closing Costs identified above and in Section 16 and less Prior Balance identified above and in Section 17.
i. “Remittance Amount” shall mean the amount that Seller shall deliver to Buyer at the end of each Remittance
Period as part of the Purchased Amount. The initial Remittance Amount is the amount first described above. The parties
agree that the initial Remittance Amount is a good faith approximation of the Specified Percentage of Seller’s Future
Receipts during the first Remittance Period, based upon the information provided by Seller to Buyer concerning Seller’s
most recent accounts receivables, including representations by the Seller to Buyer regarding the Seller’s estimated
Future Receipts. The Remittance Amount is subject to Seller’s right of adjustment/reconciliation set forth in this
Agreement.
j. “Remittance Period” shall mean the daily or weekly period by the end of which a Remittance Amount shall be
delivered by Seller to Buyer.
k. “Workday” shall mean Monday through Friday except on days when banking institutions are closed for the
holidays and do not process ACH payments.
l. “Prior Balance” shall mean the sum of all amounts that Seller may owe to Buyer and/or third party(s) as of the
Effective Date of this Agreement. Seller agrees that: (i) the Prior Balance, if any, as described in Section 17 of this
Agreement, will be deducted from the Purchase Price prior to delivering it to Seller pursuant to Seller’s authorization set
forth in Rider 1 to this Agreement; and (ii) such deduction of the Prior Balance shall not be deemed to reduce the agreed
upon Purchase Price.
m “Origination Fee” shall mean the fee that Seller and a Broker have agreed to in conjunction with brokering this
Agreement, which amount Seller authorizes Buyer to withhold from the Purchase Price and pay to said Broker. The
Origination Fee, if any, is described in Section 17 of this Agreement and will be deducted from the Purchase Price prior to
delivering it to Seller pursuant to Seller’s authorization set forth in Section 19.
n. In the event “Seller” is comprised of more than one entity, then:
i. The term “Seller” shall mean, individually and collectively, interchangeably, all such entities; and
ii. Each Seller is an “Affiliate” of all other Seller(s). The term “Affiliate” shall mean an entity or an
individual that (1) controls, (2) is under the “Control”, or (3) is under common Control with the entity or individual in
question. The term “Control” shall mean direct or indirect ownership of more than 50% of the outstanding voting stock
of a corporation or other majority equity interest if not a corporation and the possession of power to direct or cause the
direction of the management and policy of such corporation or other entity, whether through ownership of voting
securities, by stature, or by contract; and
iii. The representations, warranties, covenants, obligations and liabilities of each Seller shall be joint
and several under this Agreement; and
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iv. The liability of each Seller under this Agreement shall be direct and immediate and shall not be
conditional or contingent upon the pursuance of any remedies against any other person or entity; and
v. The terms “Specified Percentage”, “Future Receipts”, “Periodic Receipts”, “Remittance Amount” shall
mean the Specified Percentage, the Future Receipts and the Periodic Receipts of each Seller individually; and
vi. Buyer may pursue its rights and remedies under this Agreement against any one or any number of
entities that constitute Seller without obligation to assert, prosecute or exhaust any remedy or claim against any other
Seller or any Guarantor.
o. In the event “Guarantor” is comprised of more than one individual, then:
i. The term “Guarantor” shall mean, individually and collectively, all such individuals; and
ii. Each Guarantor is an Affiliate of all other Guarantor(s); and
iii. The representations, warranties, covenants, obligations and liabilities of each Guarantor shall be
joint and several under this Agreement and the Guaranty; and
iv. The liability of each Guarantor under this Agreement and the Guaranty shall be direct and immediate
and shall not be conditional or contingent upon the pursuance of any remedies against any other person or entity; and
v. Buyer may pursue its rights and remedies under this Agreement and/or Guaranty against any one or
any number of individuals that constitute Guarantor without obligation to assert, prosecute or exhaust any remedy or
claim against any other Guarantor or any Seller.
2. The Term. This Agreement for the purchase and sale of Future Receipts does not have a fixed duration or term, which
is indefinite. Subject to the provisions of Sections 10-13 hereof, the term of this Agreement shall commence on the
Effective Date and terminate on the earlier of: (i) the date (the “Termination Date”) when the Purchased Amount and all
other sums due to Buyer pursuant to this Agreement are received by Buyer in full; and (ii) when Seller’s performance has
been excused pursuant to Section 16(b).
3. Non-Recourse Sale of Purchased Future Receipts. Seller hereby sells, assigns, transfers and conveys (hereinafter,
the “Sale”) unto Buyer all of Seller’s right, title and interest in to the Specified Percentage of the Future Receipts until the
Purchased Amount shall have been delivered by Seller to Buyer (hereinafter, the portion of the Future Receipts sold by
Seller to Buyer pursuant to this Agreement, the “Purchased Future Receipts”); to have and hold the same unto Buyer, its
successors and assigns, forever. This Sale of the Purchased Future Receipts is made without express or implied warranty
to Buyer of collectability of the Purchased Future Receipts by Buyer and without recourse against Seller and/or
Guarantor(s), except as specifically set forth in this Agreement. By virtue of this Agreement, Seller transfers to Buyer full
and complete ownership of the Purchased Future Receipts and Seller retains no legal or equitable interest therein.
4. Payment of Purchase Price. In consideration of the sale by Seller to Buyer of the Purchased Future Receipts pursuant
to this Agreement, Buyer agrees to pay to Seller the Purchase Price by delivering the Net Funded Amount to Seller after
execution of this Agreement.
5. Use of Purchase Price. Seller hereby acknowledges that it fully understands that: (i) Buyer’s ability to collect the
Purchased Amount (or any portion thereof) is contingent upon Seller’s continued operation of its business and
successful generation of the Future Receipts until the Purchased Amount is delivered to Buyer in full; and (ii) that in the
event of decreased efficiency or total failure of Seller’s business, Buyer’s receipt of the full or any portion of the
Purchased Amount may be delayed indefinitely. Based upon the forgoing, Seller agrees to use the Purchase Price
exclusively for the benefit and advancement of Seller’s business operations and for no other purpose.
6. Delivery of Purchased Amount. The Purchased Amount shall be delivered by Seller to Buyer in the amount of the
Remittance Amount (subject adjustment as described below) at the end of each Remittance Period, commencing on the
Effective Date and ending on the Termination Date. Buyer reserves the right to apply amounts received by it under this
Agreement to any fees or other charges due to Buyer from Seller prior to applying such amounts to reduce the
outstanding undelivered balance of the Purchased Amount.
7. Approved Bank Account and Credit Card Processor. During the term of this Agreement, Seller shall: (i) deposit all
Future Receipts into one (and only one) bank account which bank account shall be acceptable and preapproved by Buyer
(the “Approved Bank Account”), (ii) use one (and only one) credit card processor which processor shall be acceptable
and preapproved by Buyer (the “Approved Processor”) and (iii) deposit all credit card receipts into the Approved Bank
Account. In the event the Approved Bank Account or Approved Processor shall become unavailable or shall cease
providing services to Seller during the term of this Agreement, prior to the first date of such unavailability or cessation of
services, Seller shall arrange for another Approved Bank Account or Approved Processor, as the case may be.
8. Authorization to Debit Approved Bank Account. Seller hereby authorizes Buyer, and/or Delta Bridge Funding LLC
(as servicing agent for this Agreement) to initiate electronic checks or ACH debits from the Approved Bank Account
(which as of the Effective Date of this Agreement shall be the account listed on Appendix A hereto) in the amount of the
Remittance Amount at the end of each Remittance Period commencing on the Effective Date until Buyer receives the full
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Purchased Amount (the “ACH Authorization”). This ACH Authorization shall be irrevocable until such time when Seller
shall have performed its obligations under this Agreement in full. Seller acknowledges that the origination of ACH
entries to and from the Approved Bank Account must comply with applicable law and applicable network rules. Seller
agrees to be bound by the Rules and Operating Guidelines of NACHA . Seller will not dispute any ACH entry initiated
pursuant to this ACH Authorization, provided the transaction corresponds to the terms of this authorization. Seller
requests the financial institution that holds the Approved Bank Account to honor all ACH entries initiated in accordance
with this ACH Authorization. If requested by Buyer, Seller shall execute a separate authorization for Buyer and/or Delta
Bridge Funding LLC to arrange for electronic fund transfers (including ACH payments) in the amount of any Remittance
Amount from the Approved Bank Account. Seller shall provide Buyer and/or its authorized agent with all information,
authorizations and passwords necessary to verify Seller’s receivables, receipts and deposits into the Approved Bank
Account.
9. Shortage of Funds and Fees Associated with Debiting Approved Bank Account. It shall be Seller’s exclusive
responsibility to pay to its banking institution and/or Buyer’s banking institution directly (or to compensate Buyer, in
case it is charged) all fees, charges and expenses incurred by either Seller or Buyer due to rejected electronic checks or
ACH debit attempts, overdrafts or rejections by Seller’s banking institution of the transactions contemplated by this
Agreement, including without limitation a $35.00 charge per bounced or rejected ACH debit.
10. Seller’s Right for Reconciliation. Seller and Buyer each acknowledges and agrees that:
a. If at any time during the term of this Agreement Seller will experience unforeseen decrease or increase in its
Periodic Receipts, then so long as Seller is not then in default under the terms of this Agreement, Seller shall have the
right, at its sole and absolute discretion, but subject to the provisions of Section 11 below, to request retroactive
reconciliation of the Remittance Amounts paid during one (1) or more full calendar month(s) immediately preceding the
day when such request for reconciliation is received by Buyer (each such calendar month for which a reconciliation is
requested, a “Reconciliation Month”).
b. Such reconciliation (the “Reconciliation”) of the Seller’s Remittance Amounts for one or more Reconciliation
Month(s) shall be performed by Buyer within five (5) Workdays following its receipt of the Seller’s request for
Reconciliation by either crediting or debiting the difference back to, or from, the Approved Bank Account so that the total
amount debited by Buyer from the Approved Bank Account during the Reconciliation Month(s) at issue is equal to the
Specific Percentage of the Future Receipts that Seller collected during the Reconciliation Month(s) at issue.
c. One or more Reconciliation procedures performed by Buyer may reduce or increase the effective Remittance
Amount during the Reconciliation Month in comparison to the initial Remittance Amount first described in this
Agreement, and, as the result of such reduction, the term of this Agreement during which Buyer will be debiting the
Approved Bank Account may be shortened or extended indefinitely.
11. Request for Reconciliation Procedure.
a. It shall be Seller’s sole responsibility and the right hereunder to initiate Reconciliation of Seller’s actual
Remittance Amounts during any Reconciliation Month by sending a request for Reconciliation to Buyer.
b. Any such request for Reconciliation of the Seller’s Remittance Amounts for specific Reconciliation Month(s)
shall be in writing, shall state the Reconciliation Month(s) for which Reconciliation is requested, and shall include copies
of Seller’s bank statement(s) and credit card processing statements for each Reconciliation Month at issue, and shall be
received by Buyer via email to customerservice@approvalandreconciliation.com, with the subject line “REQUEST
FOR RECONCILIATION” or by other means (to be provided to Seller by Buyer upon request).
c. Reconciliation cannot be made two or more times for the same Reconciliation Month.
d. Commencing in the calendar month immediately following the Effective Date of this Agreement, Seller shall
have the right to request Reconciliation as many times during the term of this Agreement as it deems proper, and Buyer
shall comply with each such request, provided that each such request is made in accordance with the terms of this
Section 11.
e. Nothing set forth in Sections 10 or 11 of this Agreement shall be deemed to: (i) provide Seller with the right to
interfere with Buyer’s right and ability to debit the Approved Bank Account while the request for Reconciliation of
Seller’s receipts is pending or until the Purchased Amount is collected by Buyer in full, or (ii) modify the Remittance
Amount for any calendar month during the term of this Agreement other than during the Reconciliation Month(s) as the
result of the Reconciliation.
12. Adjustment of the Remittance Amount. Seller and Buyer each acknowledge and agree that:
a. If at any time during the term of this Agreement Seller experiences a steady decrease in its Periodic Receipts,
and so long as Seller is not in default under the terms of this Agreement, Seller shall have the right, at its sole and
absolute discretion, but subject to the provisions of Section 13 below, to request modification (“Adjustment”) of the
amount of the Remittance Amount that Seller is obligated to deliver to Buyer at the end of each Remittance Period to
more closely reflect the Seller’s actual Periodic Receipts multiplied by the Specified Percentage (the “Adjusted
Remittance Amount”). Buyer shall provide such Adjustment within five (5) Workdays following its receipt of the Seller’s
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request for Adjustment. The Adjustment shall become effective as of the date it is performed and the Adjusted
Remittance Amount shall replace and supersede the amount of the initial Remittance Amount first described above for
thirty (30) days from and including the date it is granted. Upon the expiration of such 30-day period the amount of the
Remittance Amount shall automatically revert back to the amount of the initial Remittance Amount, absent an additional
request for Adjustment at the expiry of the 30-day period pursuant to this Section 12.
b. The parties acknowledge that any Adjustment that reduces the initial Remittance Amount may have the effect
of extending the period of time needed for Seller to deliver the entire Purchased Amount to Buyer.
13. Request for Adjustment Procedure.
a. It shall be Seller’s sole responsibility and the right to initiate the Adjustment by sending a request for
Adjustment to Buyer.
b. A request for Adjustment (an “Adjustment Request”) shall be in writing, and shall include copies of Seller’s
last three (3) consecutive bank statements of the Approved Bank Account and credit card processing statements
immediately preceding the date of Buyer’s receipt of the Adjustment Request. The Adjustment Request must be received
by Buyer by email at customerservice@approvalandreconciliation.com, with the subject line “REQUEST FOR
ADJUSTMENT” within thirty (30) days after the date that is the later of (i) the last day of the latest bank statement
enclosed with the Adjustment Request and (ii) the last date of the latest credit card processing statement enclosed with
the Adjustment Request.
c. Buyer’s receipt of a Seller’s Adjustment Request after the expiration of the above referenced thirty (30) day
period nullifies and makes obsolete such Adjustment Request.
d. Seller shall have the right to request Adjustment of the initial Remittance Amount (or any Adjusted
Remittance Amount, as the case may be) as many times during the term of this Agreement as it deems proper, and Buyer
shall comply in good faith with such request, provided that:
i. Each such request for Adjustment is made in accordance with the terms of this Section 13; and
ii. No Adjustment shall be made after the Termination Date.
e. Nothing set forth in Sections 12 or 13 of this Agreement shall be deemed to provide Seller with the right to (i)
interfere with Buyer’s right and ability to debit the Approved Bank Account while the request for Adjustment is pending
or until the Purchased Amount is collected by Buyer in full or (ii) request Adjustment retroactively for the portion of the
term of this Agreement preceding the date of an Adjustment Request.
14. Buyer’s Assumption of Risk.
a. Nonrecourse Sale of Future Receipts. Seller is selling a portion of a future revenue stream to Buyer at a discount,
not borrowing money from Buyer. There is no interest rate or payment schedule and no time period during which the
Purchased Amount must be collected by Buyer. Seller acknowledges that it has no right to repurchase the Purchased
Amount from Buyer. Buyer assumes the risk that Future Receipts may be remitted more slowly than Buyer may have
anticipated or projected because Seller’s business has slowed down, and the risk that the full Purchased Amount may
never be remitted because Seller’s business went bankrupt or Seller otherwise ceased operations in the ordinary course
of business, to the extent not cause by Seller’s breach of this Agreement. Buyer is buying the Purchased Amount of
Future Receipts knowing the risks that Seller’s business may slow down or fail, and Buyer assumes these risks based on
Seller’s representations, warranties and covenants in this Agreement that are designed to give Buyer a reasonable and
fair opportunity to receive the benefit of its bargain. By this Agreement, Seller transfers to Buyer full and complete
ownership of the Purchased Amount of Future Receipts and Seller retains no legal or equitable interest therein. Seller
agrees that it will treat the Purchase Price and Purchased Amount in a manner consistent with a sale in its accounting
records and tax returns. Seller agrees that Buyer is entitled to audit Seller’s accounting records upon reasonable Notice
in order to verify compliance. Seller waives any rights of privacy, confidentiality or taxpayer privilege in any such
litigation or arbitration in which Seller asserts that this transaction is anything other than a sale of future receipts.
b. Excused Performance. Buyer agrees to purchase the Purchased Future Receipts knowing the risks that Seller’s
business may slow down or fail, and Buyer assumes this risk based exclusively upon the information provided to it by
Seller and related to the business operations of Seller’s business prior to the date hereof, and upon Seller’s
representations, warranties and covenants contained in this Agreement that are designed to give Buyer a reasonable and
fair opportunity to receive the benefit of its bargain. Furthermore, Buyer hereby acknowledges and agrees that Seller
shall be excused from performing its obligations under this Agreement in the event Seller’s business ceases its
operations exclusively due to the following reasons:
i. adverse business conditions or other circumstances that occurred for reasons outside Seller’s control;
ii. loss of the premises where the business operates (but not due to Seller’s breach of its obligations to its
landlord), provided however that Seller does not continue and/or resume business operations at another
location;
iii. bankruptcy of Seller; and/or
iv. natural disasters or similar occurrences beyond Seller’s control.
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15. Fees and Charges to Buyer (“Closing Costs). Seller acknowledges that any Due Diligence fee, or UCC fees and
described above as “Closing Costs” were agreed upon between Seller and Buyer prior to Seller entering into this
Agreement, and were subject to arms-length negotiation between Buyer and Seller.
16. Origination Fee. Seller acknowledges that any Origination Fee disclosed above as a “Closing Cost” was agreed upon
between Seller and a third-party broker for services related to this Seller’s transaction with Buyer. Buyer is not a party
to any agreement between Seller and its broker. Seller hereby requests and authorizes Buyer to withhold the Origination
Fee from the Purchase Price, and to remit the Origination Fee to such broker.
17. Prior Balance of Purchased Amounts. Seller represents and warrants that Rider 1, which is attached hereto and
made a part hereof, contains true and correct information as to the name(s) of Seller’s creditors and the amounts that
Seller owes each of those creditors as of the Effective Date (and these amounts being a portion of the Prior Balance of
Purchased Amounts), and that as of the date hereof there are no creditors of Seller which may otherwise encumber the
Purchased Future Receipts other than those listed in Rider 1. Seller indemnifies and holds harmless Buyer for any and all
damages and losses (including without limitation legal fees and expenses) incurred by Buyer as the result of such
representation being untrue, incorrect or incomplete.
18. No Reduction of Purchase Price. Seller agrees that deduction of the Closing Costs, the Prior Balance and the
Origination Fee from the Purchase Price shall not be deemed to be a reduction of the Purchase Price.
REPRESENTATIONS, WARRANTIES AND COVENANTS
19. Seller represents, warrants and covenants that as of this date and unless expressly stated otherwise during the term
of this Agreement:
a. Financial Condition and Financial Information. Seller’s bank and financial statements, copies of which
have been furnished to Buyer, and future statements which may be furnished hereafter pursuant to this Agreement or
upon Buyer’s request, fairly represent the financial condition of Seller as of the dates such statements were issued, and
prior to execution of the Agreement there has been no material adverse changes, financial or otherwise, in such
condition, operation or ownership of Seller. Seller shall advise Buyer of any material adverse change in its financial
condition, operation or ownership, and/or online banking log-in credentials. Buyer may request Seller’s bank statements
at any time during the term of this Agreement and Seller shall provide them to Buyer within five (5) Workdays.
b. Governmental Approvals. Seller is in compliance and, during the term of this Agreement, shall be in
compliance with all laws and has valid permits, authorizations and licenses to own, operate and lease its properties and
to conduct the business in which it is presently engaged.
c. Good Standing. Seller is a corporation/limited liability company/limited partnership/other type of entity
that is in good standing and duly incorporated or otherwise organized and validly existing under the laws of its
jurisdiction of incorporation or organization, and has full power and authority necessary to carry its business as it is
now being conducted.
d. Authorization. Seller has all requisite power to execute, deliver and perform this Agreement and
consummate the transactions contemplated hereunder; entering into this Agreement will not result in breach or
violation of, or default under, any agreement or instrument by which Seller is bound or any statute, rule, regulation,
order or other law to which Seller is subject, nor require the obtaining of any consent, approval, permit or license from
any governmental authority having jurisdiction over Seller. All organizational and other proceedings required to be
taken by Seller to authorize the execution, delivery and performance of this Agreement have been taken. The person
signing this Agreement on behalf of Seller has full power and authority to bind Seller to perform its obligations under
this Agreement.
e. Accounting Records and Tax Returns. Seller will treat receipt of the Net Amount Funded to Seller and
payment of the Purchased Amount in a manner evidencing sale of its Future Receipts in its accounting records and tax
returns and further agrees that Buyer is entitled to audit Seller’s accounting records upon reasonable notice in order to
verify compliance. Seller hereby waives any rights of privacy, confidentiality or taxpayer privilege in any litigation or
arbitration arising out of this Agreement in which Seller asserts that this transaction is anything other than a sale of
Future Receipts.
f. Taxes; Workers Compensation Insurance. Seller has paid and will promptly pay, when due, all taxes,
including without limitation, income, employment, sales and use taxes, imposed upon Seller’s business by law, and will
maintain workers compensation insurance required by applicable governmental authorities.
g. Business Insurance. Seller maintains and will maintain general liability and business-interruption insurance
naming Buyer as loss payee and additional insured in the amounts and against risks as are satisfactory to Buyer and shall
provide Buyer with proof of such insurance upon request.
h. Approved Processor and Bank. Seller shall not change its Approved Processor, add terminals, change its
Approved Bank Account(s) or take any other action that could have any adverse effect upon Seller’s obligations or
impede Buyer’s rights under this Agreement, without Buyer’s prior written consent.
i. No Diversion of Future Receipts. Seller shall not allow any event to occur that would cause a diversion of any
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portion of Seller’s Future Receipts from the Approved Bank Account or Approved Processor without Buyer’s written
consent.
j. Change of Name or Location. Seller, any successor-in-interest of Seller, and Guarantor shall not conduct
Seller’s businesses under any name other than as disclosed to the Approved Processor and Buyer, shall not change
and/or transfer ownership in/of the Seller and will not change any of its places of business without first obtaining
Buyer’s written consent.
k. Prohibited Business Transactions. Seller shall not: (i) transfer or sell all or substantially all of its assets
without first obtaining Buyer’s consent; or (ii) make or send notice of its intended bulk sale or transfer.
l. No Closing of Business. Seller will not sell, dispose, transfer or otherwise convey all or substantially all of its
business or assets without first: (i) obtaining the express written consent of Buyer, and (ii) providing Buyer with a
written agreement of a purchaser or transferee of Seller’s business or assets to assume all of Seller’s obligations under
this Agreement pursuant to documentation satisfactory to Buyer. Seller represents that as of the date of Seller’s
execution of this Agreement it has no current plans to close its business either temporarily (for renovations, repairs or
any other purpose), or permanently. Seller agrees that until Buyer shall have received the Purchased Amount in full,
Seller will not voluntarily close its business on a permanent or temporarily basis for renovations, repairs, or any other
purposes. Notwithstanding the foregoing, Seller shall have the right to close its business temporarily if such closing is
necessitated by a requirement to conduct renovations or repairs imposed upon Seller’s business by legal authorities
having jurisdiction over Seller’s business (such as from a health department or fire department), or if such closing is
necessitated by circumstances outside Seller’s reasonable control. Prior to any such temporary closure of its business,
Seller shall provide Buyer ten (10) business days advance notice to the extent practicable.
m. No Pending Bankruptcy. As of the date of Seller’s execution of this Agreement, Seller has not filed, and does
not contemplate filing, any petition for bankruptcy protection under Title 11 of the United States Code and there has
been no involuntary bankruptcy petition brought or pending against Seller. Seller represents that it has not consulted
with a bankruptcy attorney on the issue of filing bankruptcy or some other insolvency proceeding within six months
immediately preceding the date of this Agreement.
n. Estoppel Certificate. Seller will at any time, and from time to time, upon at least one (1) day’s prior notice
from Buyer to Seller, execute, acknowledge and deliver to Buyer and/or to any other person or entity specified by Buyer,
a statement certifying that this Agreement is unmodified and in full force and effect (or, if there have been modifications,
that the same is in full force and effect as modified and stating the modification(s) and stating the date(s) on which the
Purchased Amount or any portion thereof has been repaid.
o. Unencumbered Future Receipts. Seller has and will continue to have good, complete and marketable title to
all Future Receipts, free and clear of any and all liabilities, liens, claims, changes, restrictions, conditions, options, rights,
mortgages, security interests, equities, pledges and encumbrances of any kind or nature whatsoever or any other rights
or interests other than by virtue or entering into this Agreement. Seller specifically warrants and represents that it is not
currently bound by the terms of any future receivables and/or factoring agreement which may encumber in any way the
Future Receipts.
p. No Stacking. Seller shall not further encumber the Future Receipts, without first obtaining written consent of
Buyer.
q. Business Purpose. Seller is entering into this Agreement solely for business purposes and not as a consumer
for personal, family or household purposes.
r. No Default Under Contracts with Third Parties. Seller’s execution of and/or performance of its obligations
under this Agreement will not cause or create an event of default by Seller under any contract, which Seller is or may
become a party to.
s. Right of Access. In order to ensure Seller’s compliance with the terms of this Agreement, Seller hereby grants
Buyer the right to enter, without notice, the premises of Seller’s business for the purpose of inspecting and checking
Seller’s transaction processing terminals to ensure the terminals are properly programmed to submit and/or batch
Seller’s Periodic Receipts to the Approved Processor and to ensure that Seller has not violated any other provision of this
Agreement. Furthermore, Seller hereby grants Buyer and its employees and consultants access to Seller’s employees and
records and all other items of property located at the Seller’s place of business during the term of this Agreement. Seller
hereby agrees to provide Buyer, upon request, all and any information concerning Seller’s business operations, banking
relationships, names and contact information of Seller’s suppliers, vendors and landlord(s), to allow Buyer to interview
any of those parties.
t. Phone Recordings and Contact. Seller agrees that any call between Seller and Buyer, and their respective
owners, managers, employees and agents may be recorded and/or monitored. Furthermore, Seller acknowledges and
agrees that: (i) it has an established business relationship with Buyer, its managers, employees and agents (collectively,
the “Buyer Parties”) and that Seller may be contacted by any of the Buyer Parties from time-to-time regarding Seller’s
performance of its obligations under this Agreement or regarding other business transactions; (ii) it will not claim that
such communications and contacts are unsolicited or inconvenient; and (iii) any such contact may be made by any of the
Buyer Parties in person or at any phone number (including mobile phone number), email addresses, or facsimile number
belonging to Seller’s office, or its owners, managers, officers, or employees.
u. Knowledge and Experience of Decision Makers. The persons authorized to make management and
financial decisions on behalf Seller with respect to this Agreement have such knowledge, experience and skill in financial
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and business matters in general and with respect to transactions of a nature similar to the one contemplated by this
Agreement so as to be capable of evaluating the merits and risks of, and making an informed business decision with
regard to, Seller entering into this Agreement.
v. Seller’s Due Diligence. The person authorized to sign this Agreement on behalf of Seller: (i) has received all
information that such person deemed necessary to make an informed decision with respect to a transaction
contemplated by this Agreement; and (ii) has had unrestricted opportunity to make such investigation as such person
desired pertaining to the transaction contemplated by this Agreement and verify any such information furnished to him
or her by Buyer.
w. Consultation with Counsel. The person(s) signing this Agreement of behalf of Seller: (a) has read and fully
understands the content of this Agreement; (b) has consulted to the extent he/she wished with Seller’s own counsel in
connection with the entering into this Agreement; (c) has made sufficient investigation and inquiry to determine
whether this Agreement is fair and reasonable to Seller, and whether this Agreement adequately reflects his or her
understanding of its terms.
x. No Reliance on Oral Representations. No course of performance or other conduct subsequently pursued or
acquiesced in, and no oral agreement or representation subsequently made, by the Buyer Parties, whether or not relied
or acted upon, and no usage of trade, whether or not relied or acted upon, shall amend this Agreement or impair or
otherwise affect Seller’s obligations pursuant to this Agreement or any rights and remedies of the parties to this
Agreement.
y. No Additional Fees Charged. Seller hereby acknowledges and agrees that: (i) other than the Closing Costs
first described above, if any, Buyer is NOT CHARGING ANY ADDITIONAL FEES OR CLOSING COSTS to Seller; and (ii) if
Seller is charged with any fee and/or cost not described in the Closing Costs hereof, such fee is not charged by Buyer.
20. Acknowledgment of Security Interest and Security Agreement. The Future Receipts sold by Seller to Buyer
pursuant to this Agreement shall constitute and shall be construed and treated for all purposes as a true and complete sale,
conveying good title to the Future Receipts free and clear of any liens and encumbrances, from Seller to Buyer. To the extent
the Future Receipts are “accounts” or “payment intangibles” as those terms are defined in the Uniform Commercial Code as in
effect in the state in which the Seller is located (“UCC”) then: (i) the sale of the Future Receipts creates a security interest as
defined in the UCC; (ii) this Agreement constitutes a “security agreement” under the UCC; and (iii) Buyer has all the rights of a
secured party under the UCC with respect to such Future Receipts. Seller further agrees that, with or without an Event of
Default, Buyer may notify account debtors, or other persons obligated on the Future Receipts, or holding the Future Receipts,
of Seller’s sale of the Future Receipts and may instruct them to make payment or otherwise render performance to or for the
benefit of Buyer.
21. Pledge. As security for the prompt and complete paymen
Preview
FILED: QUEENS COUNTY CLERK 10/17/2023 05:26 PM INDEX NO. 721999/2023 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 10/17/2023 Exhibit A FILED: QUEENS COUNTY CLERK 10/17/2023 05:26 PM INDEX NO. 721999/2023 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 10/17/2023 CLOUDFUND LLC 400 Rella Blvd. Suite 165-101, Suffern, NY 10901 FUTURE RECEIPTS SALE AND PURCHASE AGREEMENT This agreement (this "Agreement"), dated 9/11/2023, between CLOUDFUND LLC ("Buyer") and the seller(s) listed herein (collectively, the "Seller") (all capitalized terms shall have the meanings ascribed to them below): Business Legal Name: BLEACHERS SB&G LLC D/B/A: BLEACHERS SB&G d/b/a BLEACHERS SPORTS BAR AND GRILL Form of Business Entity: LLC EIN Physical Address: 4317 LINDEN AVE, DAYTON, OH 45432 Mailing Address: 4245 OLD RIVERSIDE DR, DAYTON, OH 45405 PURCHASE PRICE: PURCHASED AMOUNT: SPECIFIED PERCENTAGE: $18,000.00 $26,982.00 17 % AMOUNT:* REMITTANCE REMITTANCE PERIOD: $269.00 DAILY LESS CLOSING COSTS: DUE DILIGENCE FEE: ORIGINATION FEE: UCC FEE: $180.00 $540.00 $60.00 LESS PRIOR BALANCE(S) (IF APPLICABLE) $0.00 NET AMOUNT FUNDED TO SELLER: $17,220.00 FOR THE SELLER #1 FOR THE SELLER #2 By: By: Name: TODD A SMITH Name: N/A Title: Owner/Agent/Manager Title: N/A Email: Email: N/A Business Phone: Business Phone: N/A *Please refer to Section 13 of this Agreement to learn how the Remittance Amount can be changed. Concurrently with the execution of this Agreement by Seller, and as condition to the effectiveness hereof, Seller has A" caused the Personal Guarantee of Performance in the form attached hereto as "Exhibit (the "Guaranty") to be signed and delivered to Buyer by the following Owner(s)/Guarantor(s) of Seller. OWNER/GUARANTOR #1 OWNER/GUARANTOR #2 By: By: Name: TODD A SMITH Name: N/A SSN: SSN: N/A Phone Phone: N/A Address: 4245 OLD RIVERSIDE DR, DAYTON, OH Address: N/A 45405 Furthermore, in the event the Seller and/or Guarantor are comprised of more than one entity and/or individuals, then Page 1 of 15 5766898 694 FILED: QUEENS COUNTY CLERK 10/17/2023 05:26 PM INDEX NO. 721999/2023 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 10/17/2023 ALL such entities and/or individuals, respectively, shall sign the Addendum to this Agreement in the form attached hereto as Exhibit B (the “Addendum”). WHEREAS, Seller is desirous to sell to Buyer, and Buyer is desirous to purchase from Seller a Specified Percentage of the Seller’s Future Receipts, but only on the terms and conditions set forth in this Agreement. NOW, THEREFORE, for good and valuable consideration, the mutual receipts and sufficiency of which is hereby acknowledged by both parties, Buyer and Seller hereby agree to the foregoing and as follows: 1. Basic Terms and Definitions. a. “Effective Date” shall mean the later of: (i) the date set forth in the preamble to this Agreement, and (ii) the date when Buyer paid the Net Amount Funded to Seller. b. “Specified Percentage” is the percentage identified above and refers to a percentage of each and every sale made by Seller until the Purchased Amount is delivered to Seller. c. “Future Receipts” shall mean, collectively, all of Seller’s receipts for the sale of goods and services after the Effective Date of this Agreement; which payments or deliveries of monies can be made in the form of cash, check, credit, charge, or debit card, Automated Clearing House (“ACH”) or other electronic transfer or any other form of monetary payment and/or pecuniary benefit received by Seller. d. “Periodic Receipts” shall mean the amount of Future Receipts received by Seller during each Remittance Period. e. “Purchased Amount” is the amount identified above and refers to the total amount of Future Receipts that Seller shall be under obligation to deliver to Buyer pursuant to this Agreement. f. “Purchase Price” is the amount identified above and refers to the total amount that Buyer agrees to pay for the Purchased Amount. Seller acknowledges that the amount that Seller will actually receive from Buyer pursuant to this Agreement will be the Net Amount Funded to Seller. g. “Closing Costs” shall mean, collectively, all initial costs and fees that identified above and in Section 16 that Seller agrees to pay to Buyer as consideration for agreeing to enter into this Agreement. h. “Net Amount Funded to Seller” is the amount identified above and refers to the Purchase Price less the total Closing Costs identified above and in Section 16 and less Prior Balance identified above and in Section 17. i. “Remittance Amount” shall mean the amount that Seller shall deliver to Buyer at the end of each Remittance Period as part of the Purchased Amount. The initial Remittance Amount is the amount first described above. The parties agree that the initial Remittance Amount is a good faith approximation of the Specified Percentage of Seller’s Future Receipts during the first Remittance Period, based upon the information provided by Seller to Buyer concerning Seller’s most recent accounts receivables, including representations by the Seller to Buyer regarding the Seller’s estimated Future Receipts. The Remittance Amount is subject to Seller’s right of adjustment/reconciliation set forth in this Agreement. j. “Remittance Period” shall mean the daily or weekly period by the end of which a Remittance Amount shall be delivered by Seller to Buyer. k. “Workday” shall mean Monday through Friday except on days when banking institutions are closed for the holidays and do not process ACH payments. l. “Prior Balance” shall mean the sum of all amounts that Seller may owe to Buyer and/or third party(s) as of the Effective Date of this Agreement. Seller agrees that: (i) the Prior Balance, if any, as described in Section 17 of this Agreement, will be deducted from the Purchase Price prior to delivering it to Seller pursuant to Seller’s authorization set forth in Rider 1 to this Agreement; and (ii) such deduction of the Prior Balance shall not be deemed to reduce the agreed upon Purchase Price. m “Origination Fee” shall mean the fee that Seller and a Broker have agreed to in conjunction with brokering this Agreement, which amount Seller authorizes Buyer to withhold from the Purchase Price and pay to said Broker. The Origination Fee, if any, is described in Section 17 of this Agreement and will be deducted from the Purchase Price prior to delivering it to Seller pursuant to Seller’s authorization set forth in Section 19. n. In the event “Seller” is comprised of more than one entity, then: i. The term “Seller” shall mean, individually and collectively, interchangeably, all such entities; and ii. Each Seller is an “Affiliate” of all other Seller(s). The term “Affiliate” shall mean an entity or an individual that (1) controls, (2) is under the “Control”, or (3) is under common Control with the entity or individual in question. The term “Control” shall mean direct or indirect ownership of more than 50% of the outstanding voting stock of a corporation or other majority equity interest if not a corporation and the possession of power to direct or cause the direction of the management and policy of such corporation or other entity, whether through ownership of voting securities, by stature, or by contract; and iii. The representations, warranties, covenants, obligations and liabilities of each Seller shall be joint and several under this Agreement; and Page 2 of 15 5766898 694 FILED: QUEENS COUNTY CLERK 10/17/2023 05:26 PM INDEX NO. 721999/2023 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 10/17/2023 iv. The liability of each Seller under this Agreement shall be direct and immediate and shall not be conditional or contingent upon the pursuance of any remedies against any other person or entity; and v. The terms “Specified Percentage”, “Future Receipts”, “Periodic Receipts”, “Remittance Amount” shall mean the Specified Percentage, the Future Receipts and the Periodic Receipts of each Seller individually; and vi. Buyer may pursue its rights and remedies under this Agreement against any one or any number of entities that constitute Seller without obligation to assert, prosecute or exhaust any remedy or claim against any other Seller or any Guarantor. o. In the event “Guarantor” is comprised of more than one individual, then: i. The term “Guarantor” shall mean, individually and collectively, all such individuals; and ii. Each Guarantor is an Affiliate of all other Guarantor(s); and iii. The representations, warranties, covenants, obligations and liabilities of each Guarantor shall be joint and several under this Agreement and the Guaranty; and iv. The liability of each Guarantor under this Agreement and the Guaranty shall be direct and immediate and shall not be conditional or contingent upon the pursuance of any remedies against any other person or entity; and v. Buyer may pursue its rights and remedies under this Agreement and/or Guaranty against any one or any number of individuals that constitute Guarantor without obligation to assert, prosecute or exhaust any remedy or claim against any other Guarantor or any Seller. 2. The Term. This Agreement for the purchase and sale of Future Receipts does not have a fixed duration or term, which is indefinite. Subject to the provisions of Sections 10-13 hereof, the term of this Agreement shall commence on the Effective Date and terminate on the earlier of: (i) the date (the “Termination Date”) when the Purchased Amount and all other sums due to Buyer pursuant to this Agreement are received by Buyer in full; and (ii) when Seller’s performance has been excused pursuant to Section 16(b). 3. Non-Recourse Sale of Purchased Future Receipts. Seller hereby sells, assigns, transfers and conveys (hereinafter, the “Sale”) unto Buyer all of Seller’s right, title and interest in to the Specified Percentage of the Future Receipts until the Purchased Amount shall have been delivered by Seller to Buyer (hereinafter, the portion of the Future Receipts sold by Seller to Buyer pursuant to this Agreement, the “Purchased Future Receipts”); to have and hold the same unto Buyer, its successors and assigns, forever. This Sale of the Purchased Future Receipts is made without express or implied warranty to Buyer of collectability of the Purchased Future Receipts by Buyer and without recourse against Seller and/or Guarantor(s), except as specifically set forth in this Agreement. By virtue of this Agreement, Seller transfers to Buyer full and complete ownership of the Purchased Future Receipts and Seller retains no legal or equitable interest therein. 4. Payment of Purchase Price. In consideration of the sale by Seller to Buyer of the Purchased Future Receipts pursuant to this Agreement, Buyer agrees to pay to Seller the Purchase Price by delivering the Net Funded Amount to Seller after execution of this Agreement. 5. Use of Purchase Price. Seller hereby acknowledges that it fully understands that: (i) Buyer’s ability to collect the Purchased Amount (or any portion thereof) is contingent upon Seller’s continued operation of its business and successful generation of the Future Receipts until the Purchased Amount is delivered to Buyer in full; and (ii) that in the event of decreased efficiency or total failure of Seller’s business, Buyer’s receipt of the full or any portion of the Purchased Amount may be delayed indefinitely. Based upon the forgoing, Seller agrees to use the Purchase Price exclusively for the benefit and advancement of Seller’s business operations and for no other purpose. 6. Delivery of Purchased Amount. The Purchased Amount shall be delivered by Seller to Buyer in the amount of the Remittance Amount (subject adjustment as described below) at the end of each Remittance Period, commencing on the Effective Date and ending on the Termination Date. Buyer reserves the right to apply amounts received by it under this Agreement to any fees or other charges due to Buyer from Seller prior to applying such amounts to reduce the outstanding undelivered balance of the Purchased Amount. 7. Approved Bank Account and Credit Card Processor. During the term of this Agreement, Seller shall: (i) deposit all Future Receipts into one (and only one) bank account which bank account shall be acceptable and preapproved by Buyer (the “Approved Bank Account”), (ii) use one (and only one) credit card processor which processor shall be acceptable and preapproved by Buyer (the “Approved Processor”) and (iii) deposit all credit card receipts into the Approved Bank Account. In the event the Approved Bank Account or Approved Processor shall become unavailable or shall cease providing services to Seller during the term of this Agreement, prior to the first date of such unavailability or cessation of services, Seller shall arrange for another Approved Bank Account or Approved Processor, as the case may be. 8. Authorization to Debit Approved Bank Account. Seller hereby authorizes Buyer, and/or Delta Bridge Funding LLC (as servicing agent for this Agreement) to initiate electronic checks or ACH debits from the Approved Bank Account (which as of the Effective Date of this Agreement shall be the account listed on Appendix A hereto) in the amount of the Remittance Amount at the end of each Remittance Period commencing on the Effective Date until Buyer receives the full Page 3 of 15 5766898 694 FILED: QUEENS COUNTY CLERK 10/17/2023 05:26 PM INDEX NO. 721999/2023 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 10/17/2023 Purchased Amount (the “ACH Authorization”). This ACH Authorization shall be irrevocable until such time when Seller shall have performed its obligations under this Agreement in full. Seller acknowledges that the origination of ACH entries to and from the Approved Bank Account must comply with applicable law and applicable network rules. Seller agrees to be bound by the Rules and Operating Guidelines of NACHA . Seller will not dispute any ACH entry initiated pursuant to this ACH Authorization, provided the transaction corresponds to the terms of this authorization. Seller requests the financial institution that holds the Approved Bank Account to honor all ACH entries initiated in accordance with this ACH Authorization. If requested by Buyer, Seller shall execute a separate authorization for Buyer and/or Delta Bridge Funding LLC to arrange for electronic fund transfers (including ACH payments) in the amount of any Remittance Amount from the Approved Bank Account. Seller shall provide Buyer and/or its authorized agent with all information, authorizations and passwords necessary to verify Seller’s receivables, receipts and deposits into the Approved Bank Account. 9. Shortage of Funds and Fees Associated with Debiting Approved Bank Account. It shall be Seller’s exclusive responsibility to pay to its banking institution and/or Buyer’s banking institution directly (or to compensate Buyer, in case it is charged) all fees, charges and expenses incurred by either Seller or Buyer due to rejected electronic checks or ACH debit attempts, overdrafts or rejections by Seller’s banking institution of the transactions contemplated by this Agreement, including without limitation a $35.00 charge per bounced or rejected ACH debit. 10. Seller’s Right for Reconciliation. Seller and Buyer each acknowledges and agrees that: a. If at any time during the term of this Agreement Seller will experience unforeseen decrease or increase in its Periodic Receipts, then so long as Seller is not then in default under the terms of this Agreement, Seller shall have the right, at its sole and absolute discretion, but subject to the provisions of Section 11 below, to request retroactive reconciliation of the Remittance Amounts paid during one (1) or more full calendar month(s) immediately preceding the day when such request for reconciliation is received by Buyer (each such calendar month for which a reconciliation is requested, a “Reconciliation Month”). b. Such reconciliation (the “Reconciliation”) of the Seller’s Remittance Amounts for one or more Reconciliation Month(s) shall be performed by Buyer within five (5) Workdays following its receipt of the Seller’s request for Reconciliation by either crediting or debiting the difference back to, or from, the Approved Bank Account so that the total amount debited by Buyer from the Approved Bank Account during the Reconciliation Month(s) at issue is equal to the Specific Percentage of the Future Receipts that Seller collected during the Reconciliation Month(s) at issue. c. One or more Reconciliation procedures performed by Buyer may reduce or increase the effective Remittance Amount during the Reconciliation Month in comparison to the initial Remittance Amount first described in this Agreement, and, as the result of such reduction, the term of this Agreement during which Buyer will be debiting the Approved Bank Account may be shortened or extended indefinitely. 11. Request for Reconciliation Procedure. a. It shall be Seller’s sole responsibility and the right hereunder to initiate Reconciliation of Seller’s actual Remittance Amounts during any Reconciliation Month by sending a request for Reconciliation to Buyer. b. Any such request for Reconciliation of the Seller’s Remittance Amounts for specific Reconciliation Month(s) shall be in writing, shall state the Reconciliation Month(s) for which Reconciliation is requested, and shall include copies of Seller’s bank statement(s) and credit card processing statements for each Reconciliation Month at issue, and shall be received by Buyer via email to customerservice@approvalandreconciliation.com, with the subject line “REQUEST FOR RECONCILIATION” or by other means (to be provided to Seller by Buyer upon request). c. Reconciliation cannot be made two or more times for the same Reconciliation Month. d. Commencing in the calendar month immediately following the Effective Date of this Agreement, Seller shall have the right to request Reconciliation as many times during the term of this Agreement as it deems proper, and Buyer shall comply with each such request, provided that each such request is made in accordance with the terms of this Section 11. e. Nothing set forth in Sections 10 or 11 of this Agreement shall be deemed to: (i) provide Seller with the right to interfere with Buyer’s right and ability to debit the Approved Bank Account while the request for Reconciliation of Seller’s receipts is pending or until the Purchased Amount is collected by Buyer in full, or (ii) modify the Remittance Amount for any calendar month during the term of this Agreement other than during the Reconciliation Month(s) as the result of the Reconciliation. 12. Adjustment of the Remittance Amount. Seller and Buyer each acknowledge and agree that: a. If at any time during the term of this Agreement Seller experiences a steady decrease in its Periodic Receipts, and so long as Seller is not in default under the terms of this Agreement, Seller shall have the right, at its sole and absolute discretion, but subject to the provisions of Section 13 below, to request modification (“Adjustment”) of the amount of the Remittance Amount that Seller is obligated to deliver to Buyer at the end of each Remittance Period to more closely reflect the Seller’s actual Periodic Receipts multiplied by the Specified Percentage (the “Adjusted Remittance Amount”). Buyer shall provide such Adjustment within five (5) Workdays following its receipt of the Seller’s Page 4 of 15 5766898 694 FILED: QUEENS COUNTY CLERK 10/17/2023 05:26 PM INDEX NO. 721999/2023 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 10/17/2023 request for Adjustment. The Adjustment shall become effective as of the date it is performed and the Adjusted Remittance Amount shall replace and supersede the amount of the initial Remittance Amount first described above for thirty (30) days from and including the date it is granted. Upon the expiration of such 30-day period the amount of the Remittance Amount shall automatically revert back to the amount of the initial Remittance Amount, absent an additional request for Adjustment at the expiry of the 30-day period pursuant to this Section 12. b. The parties acknowledge that any Adjustment that reduces the initial Remittance Amount may have the effect of extending the period of time needed for Seller to deliver the entire Purchased Amount to Buyer. 13. Request for Adjustment Procedure. a. It shall be Seller’s sole responsibility and the right to initiate the Adjustment by sending a request for Adjustment to Buyer. b. A request for Adjustment (an “Adjustment Request”) shall be in writing, and shall include copies of Seller’s last three (3) consecutive bank statements of the Approved Bank Account and credit card processing statements immediately preceding the date of Buyer’s receipt of the Adjustment Request. The Adjustment Request must be received by Buyer by email at customerservice@approvalandreconciliation.com, with the subject line “REQUEST FOR ADJUSTMENT” within thirty (30) days after the date that is the later of (i) the last day of the latest bank statement enclosed with the Adjustment Request and (ii) the last date of the latest credit card processing statement enclosed with the Adjustment Request. c. Buyer’s receipt of a Seller’s Adjustment Request after the expiration of the above referenced thirty (30) day period nullifies and makes obsolete such Adjustment Request. d. Seller shall have the right to request Adjustment of the initial Remittance Amount (or any Adjusted Remittance Amount, as the case may be) as many times during the term of this Agreement as it deems proper, and Buyer shall comply in good faith with such request, provided that: i. Each such request for Adjustment is made in accordance with the terms of this Section 13; and ii. No Adjustment shall be made after the Termination Date. e. Nothing set forth in Sections 12 or 13 of this Agreement shall be deemed to provide Seller with the right to (i) interfere with Buyer’s right and ability to debit the Approved Bank Account while the request for Adjustment is pending or until the Purchased Amount is collected by Buyer in full or (ii) request Adjustment retroactively for the portion of the term of this Agreement preceding the date of an Adjustment Request. 14. Buyer’s Assumption of Risk. a. Nonrecourse Sale of Future Receipts. Seller is selling a portion of a future revenue stream to Buyer at a discount, not borrowing money from Buyer. There is no interest rate or payment schedule and no time period during which the Purchased Amount must be collected by Buyer. Seller acknowledges that it has no right to repurchase the Purchased Amount from Buyer. Buyer assumes the risk that Future Receipts may be remitted more slowly than Buyer may have anticipated or projected because Seller’s business has slowed down, and the risk that the full Purchased Amount may never be remitted because Seller’s business went bankrupt or Seller otherwise ceased operations in the ordinary course of business, to the extent not cause by Seller’s breach of this Agreement. Buyer is buying the Purchased Amount of Future Receipts knowing the risks that Seller’s business may slow down or fail, and Buyer assumes these risks based on Seller’s representations, warranties and covenants in this Agreement that are designed to give Buyer a reasonable and fair opportunity to receive the benefit of its bargain. By this Agreement, Seller transfers to Buyer full and complete ownership of the Purchased Amount of Future Receipts and Seller retains no legal or equitable interest therein. Seller agrees that it will treat the Purchase Price and Purchased Amount in a manner consistent with a sale in its accounting records and tax returns. Seller agrees that Buyer is entitled to audit Seller’s accounting records upon reasonable Notice in order to verify compliance. Seller waives any rights of privacy, confidentiality or taxpayer privilege in any such litigation or arbitration in which Seller asserts that this transaction is anything other than a sale of future receipts. b. Excused Performance. Buyer agrees to purchase the Purchased Future Receipts knowing the risks that Seller’s business may slow down or fail, and Buyer assumes this risk based exclusively upon the information provided to it by Seller and related to the business operations of Seller’s business prior to the date hereof, and upon Seller’s representations, warranties and covenants contained in this Agreement that are designed to give Buyer a reasonable and fair opportunity to receive the benefit of its bargain. Furthermore, Buyer hereby acknowledges and agrees that Seller shall be excused from performing its obligations under this Agreement in the event Seller’s business ceases its operations exclusively due to the following reasons: i. adverse business conditions or other circumstances that occurred for reasons outside Seller’s control; ii. loss of the premises where the business operates (but not due to Seller’s breach of its obligations to its landlord), provided however that Seller does not continue and/or resume business operations at another location; iii. bankruptcy of Seller; and/or iv. natural disasters or similar occurrences beyond Seller’s control. Page 5 of 15 5766898 694 FILED: QUEENS COUNTY CLERK 10/17/2023 05:26 PM INDEX NO. 721999/2023 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 10/17/2023 15. Fees and Charges to Buyer (“Closing Costs). Seller acknowledges that any Due Diligence fee, or UCC fees and described above as “Closing Costs” were agreed upon between Seller and Buyer prior to Seller entering into this Agreement, and were subject to arms-length negotiation between Buyer and Seller. 16. Origination Fee. Seller acknowledges that any Origination Fee disclosed above as a “Closing Cost” was agreed upon between Seller and a third-party broker for services related to this Seller’s transaction with Buyer. Buyer is not a party to any agreement between Seller and its broker. Seller hereby requests and authorizes Buyer to withhold the Origination Fee from the Purchase Price, and to remit the Origination Fee to such broker. 17. Prior Balance of Purchased Amounts. Seller represents and warrants that Rider 1, which is attached hereto and made a part hereof, contains true and correct information as to the name(s) of Seller’s creditors and the amounts that Seller owes each of those creditors as of the Effective Date (and these amounts being a portion of the Prior Balance of Purchased Amounts), and that as of the date hereof there are no creditors of Seller which may otherwise encumber the Purchased Future Receipts other than those listed in Rider 1. Seller indemnifies and holds harmless Buyer for any and all damages and losses (including without limitation legal fees and expenses) incurred by Buyer as the result of such representation being untrue, incorrect or incomplete. 18. No Reduction of Purchase Price. Seller agrees that deduction of the Closing Costs, the Prior Balance and the Origination Fee from the Purchase Price shall not be deemed to be a reduction of the Purchase Price. REPRESENTATIONS, WARRANTIES AND COVENANTS 19. Seller represents, warrants and covenants that as of this date and unless expressly stated otherwise during the term of this Agreement: a. Financial Condition and Financial Information. Seller’s bank and financial statements, copies of which have been furnished to Buyer, and future statements which may be furnished hereafter pursuant to this Agreement or upon Buyer’s request, fairly represent the financial condition of Seller as of the dates such statements were issued, and prior to execution of the Agreement there has been no material adverse changes, financial or otherwise, in such condition, operation or ownership of Seller. Seller shall advise Buyer of any material adverse change in its financial condition, operation or ownership, and/or online banking log-in credentials. Buyer may request Seller’s bank statements at any time during the term of this Agreement and Seller shall provide them to Buyer within five (5) Workdays. b. Governmental Approvals. Seller is in compliance and, during the term of this Agreement, shall be in compliance with all laws and has valid permits, authorizations and licenses to own, operate and lease its properties and to conduct the business in which it is presently engaged. c. Good Standing. Seller is a corporation/limited liability company/limited partnership/other type of entity that is in good standing and duly incorporated or otherwise organized and validly existing under the laws of its jurisdiction of incorporation or organization, and has full power and authority necessary to carry its business as it is now being conducted. d. Authorization. Seller has all requisite power to execute, deliver and perform this Agreement and consummate the transactions contemplated hereunder; entering into this Agreement will not result in breach or violation of, or default under, any agreement or instrument by which Seller is bound or any statute, rule, regulation, order or other law to which Seller is subject, nor require the obtaining of any consent, approval, permit or license from any governmental authority having jurisdiction over Seller. All organizational and other proceedings required to be taken by Seller to authorize the execution, delivery and performance of this Agreement have been taken. The person signing this Agreement on behalf of Seller has full power and authority to bind Seller to perform its obligations under this Agreement. e. Accounting Records and Tax Returns. Seller will treat receipt of the Net Amount Funded to Seller and payment of the Purchased Amount in a manner evidencing sale of its Future Receipts in its accounting records and tax returns and further agrees that Buyer is entitled to audit Seller’s accounting records upon reasonable notice in order to verify compliance. Seller hereby waives any rights of privacy, confidentiality or taxpayer privilege in any litigation or arbitration arising out of this Agreement in which Seller asserts that this transaction is anything other than a sale of Future Receipts. f. Taxes; Workers Compensation Insurance. Seller has paid and will promptly pay, when due, all taxes, including without limitation, income, employment, sales and use taxes, imposed upon Seller’s business by law, and will maintain workers compensation insurance required by applicable governmental authorities. g. Business Insurance. Seller maintains and will maintain general liability and business-interruption insurance naming Buyer as loss payee and additional insured in the amounts and against risks as are satisfactory to Buyer and shall provide Buyer with proof of such insurance upon request. h. Approved Processor and Bank. Seller shall not change its Approved Processor, add terminals, change its Approved Bank Account(s) or take any other action that could have any adverse effect upon Seller’s obligations or impede Buyer’s rights under this Agreement, without Buyer’s prior written consent. i. No Diversion of Future Receipts. Seller shall not allow any event to occur that would cause a diversion of any Page 6 of 15 5766898 694 FILED: QUEENS COUNTY CLERK 10/17/2023 05:26 PM INDEX NO. 721999/2023 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 10/17/2023 portion of Seller’s Future Receipts from the Approved Bank Account or Approved Processor without Buyer’s written consent. j. Change of Name or Location. Seller, any successor-in-interest of Seller, and Guarantor shall not conduct Seller’s businesses under any name other than as disclosed to the Approved Processor and Buyer, shall not change and/or transfer ownership in/of the Seller and will not change any of its places of business without first obtaining Buyer’s written consent. k. Prohibited Business Transactions. Seller shall not: (i) transfer or sell all or substantially all of its assets without first obtaining Buyer’s consent; or (ii) make or send notice of its intended bulk sale or transfer. l. No Closing of Business. Seller will not sell, dispose, transfer or otherwise convey all or substantially all of its business or assets without first: (i) obtaining the express written consent of Buyer, and (ii) providing Buyer with a written agreement of a purchaser or transferee of Seller’s business or assets to assume all of Seller’s obligations under this Agreement pursuant to documentation satisfactory to Buyer. Seller represents that as of the date of Seller’s execution of this Agreement it has no current plans to close its business either temporarily (for renovations, repairs or any other purpose), or permanently. Seller agrees that until Buyer shall have received the Purchased Amount in full, Seller will not voluntarily close its business on a permanent or temporarily basis for renovations, repairs, or any other purposes. Notwithstanding the foregoing, Seller shall have the right to close its business temporarily if such closing is necessitated by a requirement to conduct renovations or repairs imposed upon Seller’s business by legal authorities having jurisdiction over Seller’s business (such as from a health department or fire department), or if such closing is necessitated by circumstances outside Seller’s reasonable control. Prior to any such temporary closure of its business, Seller shall provide Buyer ten (10) business days advance notice to the extent practicable. m. No Pending Bankruptcy. As of the date of Seller’s execution of this Agreement, Seller has not filed, and does not contemplate filing, any petition for bankruptcy protection under Title 11 of the United States Code and there has been no involuntary bankruptcy petition brought or pending against Seller. Seller represents that it has not consulted with a bankruptcy attorney on the issue of filing bankruptcy or some other insolvency proceeding within six months immediately preceding the date of this Agreement. n. Estoppel Certificate. Seller will at any time, and from time to time, upon at least one (1) day’s prior notice from Buyer to Seller, execute, acknowledge and deliver to Buyer and/or to any other person or entity specified by Buyer, a statement certifying that this Agreement is unmodified and in full force and effect (or, if there have been modifications, that the same is in full force and effect as modified and stating the modification(s) and stating the date(s) on which the Purchased Amount or any portion thereof has been repaid. o. Unencumbered Future Receipts. Seller has and will continue to have good, complete and marketable title to all Future Receipts, free and clear of any and all liabilities, liens, claims, changes, restrictions, conditions, options, rights, mortgages, security interests, equities, pledges and encumbrances of any kind or nature whatsoever or any other rights or interests other than by virtue or entering into this Agreement. Seller specifically warrants and represents that it is not currently bound by the terms of any future receivables and/or factoring agreement which may encumber in any way the Future Receipts. p. No Stacking. Seller shall not further encumber the Future Receipts, without first obtaining written consent of Buyer. q. Business Purpose. Seller is entering into this Agreement solely for business purposes and not as a consumer for personal, family or household purposes. r. No Default Under Contracts with Third Parties. Seller’s execution of and/or performance of its obligations under this Agreement will not cause or create an event of default by Seller under any contract, which Seller is or may become a party to. s. Right of Access. In order to ensure Seller’s compliance with the terms of this Agreement, Seller hereby grants Buyer the right to enter, without notice, the premises of Seller’s business for the purpose of inspecting and checking Seller’s transaction processing terminals to ensure the terminals are properly programmed to submit and/or batch Seller’s Periodic Receipts to the Approved Processor and to ensure that Seller has not violated any other provision of this Agreement. Furthermore, Seller hereby grants Buyer and its employees and consultants access to Seller’s employees and records and all other items of property located at the Seller’s place of business during the term of this Agreement. Seller hereby agrees to provide Buyer, upon request, all and any information concerning Seller’s business operations, banking relationships, names and contact information of Seller’s suppliers, vendors and landlord(s), to allow Buyer to interview any of those parties. t. Phone Recordings and Contact. Seller agrees that any call between Seller and Buyer, and their respective owners, managers, employees and agents may be recorded and/or monitored. Furthermore, Seller acknowledges and agrees that: (i) it has an established business relationship with Buyer, its managers, employees and agents (collectively, the “Buyer Parties”) and that Seller may be contacted by any of the Buyer Parties from time-to-time regarding Seller’s performance of its obligations under this Agreement or regarding other business transactions; (ii) it will not claim that such communications and contacts are unsolicited or inconvenient; and (iii) any such contact may be made by any of the Buyer Parties in person or at any phone number (including mobile phone number), email addresses, or facsimile number belonging to Seller’s office, or its owners, managers, officers, or employees. u. Knowledge and Experience of Decision Makers. The persons authorized to make management and financial decisions on behalf Seller with respect to this Agreement have such knowledge, experience and skill in financial Page 7 of 15 5766898 694 FILED: QUEENS COUNTY CLERK 10/17/2023 05:26 PM INDEX NO. 721999/2023 NYSCEF DOC. NO. 2 RECEIVED NYSCEF: 10/17/2023 and business matters in general and with respect to transactions of a nature similar to the one contemplated by this Agreement so as to be capable of evaluating the merits and risks of, and making an informed business decision with regard to, Seller entering into this Agreement. v. Seller’s Due Diligence. The person authorized to sign this Agreement on behalf of Seller: (i) has received all information that such person deemed necessary to make an informed decision with respect to a transaction contemplated by this Agreement; and (ii) has had unrestricted opportunity to make such investigation as such person desired pertaining to the transaction contemplated by this Agreement and verify any such information furnished to him or her by Buyer. w. Consultation with Counsel. The person(s) signing this Agreement of behalf of Seller: (a) has read and fully understands the content of this Agreement; (b) has consulted to the extent he/she wished with Seller’s own counsel in connection with the entering into this Agreement; (c) has made sufficient investigation and inquiry to determine whether this Agreement is fair and reasonable to Seller, and whether this Agreement adequately reflects his or her understanding of its terms. x. No Reliance on Oral Representations. No course of performance or other conduct subsequently pursued or acquiesced in, and no oral agreement or representation subsequently made, by the Buyer Parties, whether or not relied or acted upon, and no usage of trade, whether or not relied or acted upon, shall amend this Agreement or impair or otherwise affect Seller’s obligations pursuant to this Agreement or any rights and remedies of the parties to this Agreement. y. No Additional Fees Charged. Seller hereby acknowledges and agrees that: (i) other than the Closing Costs first described above, if any, Buyer is NOT CHARGING ANY ADDITIONAL FEES OR CLOSING COSTS to Seller; and (ii) if Seller is charged with any fee and/or cost not described in the Closing Costs hereof, such fee is not charged by Buyer. 20. Acknowledgment of Security Interest and Security Agreement. The Future Receipts sold by Seller to Buyer pursuant to this Agreement shall constitute and shall be construed and treated for all purposes as a true and complete sale, conveying good title to the Future Receipts free and clear of any liens and encumbrances, from Seller to Buyer. To the extent the Future Receipts are “accounts” or “payment intangibles” as those terms are defined in the Uniform Commercial Code as in effect in the state in which the Seller is located (“UCC”) then: (i) the sale of the Future Receipts creates a security interest as defined in the UCC; (ii) this Agreement constitutes a “security agreement” under the UCC; and (iii) Buyer has all the rights of a secured party under the UCC with respect to such Future Receipts. Seller further agrees that, with or without an Event of Default, Buyer may notify account debtors, or other persons obligated on the Future Receipts, or holding the Future Receipts, of Seller’s sale of the Future Receipts and may instruct them to make payment or otherwise render performance to or for the benefit of Buyer. 21. Pledge. As security for the prompt and complete paymen